David Shoebridge (NSW, Australian Greens) Share this | Hansard source

I rise to indicate that, with amendments, the Greens support this bill, the Defence Capability Assurance and Oversight Bill 2023. What does the bill seek to do? The bill seeks to embed four key things into Defence procurement test-and-evaluation. They are—and I will read from the explanatory memorandum—firstly:

Independence. The risk identification function must be independent so that assessment is made without bias or influence (intended or unintended). Independence also ensures that the assessor of risk has a voice (NB not a veto) that is heard at each decision-making level of the capability life cycle.

Secondly:

Task-specific competence. Government must ensure staff with the right skills are employed to identify and manage risk. Competence is a matrix of qualifications and experience that are directly relevant to the task at hand.

Thirdly:

Transparency. Previous inquiries highlight that risk assessors working within Defence face various barriers (individual or organisational) that influence whether decision-makers actually consider their assessments. Given the costs and national security implications, the taxpayer deserves to know that decisions are being made on the basis of accurate understanding of risk.

And, fourthly:

Accountability. The DCAA will be underpinned by an audited and enforceable requirement that Defence engages the Agency to evaluate risk across the capability life cycle. DCAA reports are to be specifically included in briefs provided to project managers, assurance bodies, Defence Investment Committee and the National Security Committee of Cabinet.

They seem like four pretty sensible principles to underpin Defence procurement, and they're embedded in the bill.

I don't pretend that this is the only answer to sorting out the enormous difficulties inside procurement in Defence, which have been demonstrated time and time again by costs overrun, delayed projects and projects that, when eventually completed, go nowhere near meeting their initial performance requirements. I'll deal with some of those later in this contribution.

When you look at the sorry tale of Defence procurement over the last two or three decades at least—a chunk of that lies in the coalition's basket of responsibility and another chunk of it lies in Labor's basket of responsibility—what we've seen has been a kind of collective miasma in the parliament when it comes to Defence procurement. It has been a case of not looking, not checking and letting Defence just grind its way through, as it does. But it's not really about identifying who got us to the mess we're in. The question is: how do we get from here to somewhere where defence procurement meets what I think are some pretty core principles that should unite us? It should be transparent, it should be independent, it should be competent and it should be accountable. Maybe it should also meet the defence needs of Australia, but you can't get to the defence needs of Australia unless you go through a process that ticks all of those boxes.

We had some pretty disturbing evidence in the course of this inquiry about what's actually going on at the moment, particularly on test and evaluation. I'll sort of summarise the broad nature of that evidence. There are elements within Defence that have clear expertise and responsibility for test and evaluation. They are staffed by people who know their stuff and, when they are called upon, they provide competent, independent advice. Many of them are understaffed and face morale pressures. They are facing structural challenges. But there are parts within the Defence establishment that have skills and competencies that you'd want to draw upon in this.

But we heard time and time again that, when they came up with an inconvenient conclusion, Defence found three, four, five or six ways to go around their conclusion and to just drive through the project that they had already decided on. No system has integrity when the system is so opaque and so riddled with political, promotional and vested interests that, regardless of what the independent subject matter experts say, projects seem to get a life of their own and get delivered—or not delivered, as the case may be.

I'll cite some of the evidence we got, which is actually included in the government's majority report and yet somehow didn't inform their conclusion. Dr Keith Joiner gave some pretty frank evidence about test and evaluation and the cultural problems inside Defence. He said on 14 September:

… I'll give one quick example. AIR 9000, I think, was the Navy's helicopter project. We were buying, or we had selected, a helicopter that was used to ferry people out to oil rigs. So that was marinised, used and certified to oversee a city. The Police Force were flown around in it. On that basis, they said, 'We don't need to do preview testing on that helicopter.' I started at the project director level and then went to a one-star who was a Navy commodore and flight-test qualified, who was not interested in letting testers go and fly that before we signed the contract. The two-star also wasn't interested. The then head of the DMO, Warren King, was not interested. They feared that we would find something that would delay signing that contract and the funding would go to somebody else.

In the end we came to a compromise with Admiral Jones in a separate group. We paid the $43,000 for 10 flying hours for three staff from AMAFTU—

the Aircraft Maintenance and Flight Trials Unit—

to go and fly that helicopter. That taught me a lot about the cultural issues. You don't always get that sort of level of serious interference, but it is about risk management. There is something wrong in the culture of Defence when people consistently want to hit milestones for fear of losing their reputation and promotion, I guess, as opposed to what we ultimately found, which was a bunch of things that the contract negotiators were able to get into the price. If you know anything about that project, it's 26 years worth of maintenance and support out of Nowra, so every little thing that you find before you go into contract and have as part of the baseline price pays huge dividends over 26 years.

How do you have a system where taxpayers can be signed onto a contract that runs for a quarter of a century and you don't even test fly the helicopter? When your test and evaluation people say, 'Maybe we should spend 10 hours flying the helicopter before we sign onto what might be a $1.5 billion contract,' there's resistance, refusal and obfuscation. That happened because there was fear that they might have found something that said that they shouldn't go ahead with it and then their promotion would have been at risk and funding might have been at risk.

It's a demonstration of the lack of independence and what's wrong with the system. I've got to tell you, that evidence is a tiny part of what the committee actually heard. We heard evidence in camera that puts that in the shade. Nobody, I would have thought, could have fairly sat through that evidence and come to the conclusion that the current pathway for ADF procurement is anything like 'on track'. The contribution we got from the government just then was, 'There are these internal processes and there's a new subcommittee established and a new joint committee established inside defence, and how dare Senator Fawcett raise this because the coalition didn't do anything for 10 years, and shame on the coalition.' And of course there should be shame on the coalition for not doing anything for 10 years. Of course things like the Hunter frigate process were signed off on by the coalition and were disastrous, but you could list another 10 things that happened under Labor's watch with equal political force. That's not really the issue here, is it? The issue is trying to come up with an independent, credible procurement process which involves independent tests and evaluation so that people serving in the Defence Force have equipment that meets the needs of our Defence Force and our national security without bankrupting taxpayers in the process. I would have thought that was something that would unite us, but no—we get pretty shallow politicking and a complete lack of answers.

What is extra frustrating about it is that the bill largely seeks to replicate what's happening in the United States and, to a degree, the United Kingdom. It's not like this was just created in a thought bubble of Senator Fawcett's mind. It's based on existing international practice where independent agencies—who aren't perfect—in other jurisdictions add a huge amount of transparency and accountability to their procurement. What's so special about Australia that we don't need an independent agency doing it? We get some glib line in both the majority report and in that contribution from the government saying, 'Australia's different and special'. Australia is different and special because we do it much worse—we do it at a much higher cost, with much longer delays and producing much less effective outcomes. That's what's special about Australia.

The most recent Australian National Audit Office report into major projects points out that there are some 21 defence projects—and this is just the major projects—where, collectively, there has been a $17.5 billion blowout in costs after the second pass approval. That's in just 21 of the major projects. It also found that defence refuse to provide the ANAO with key information to assess schedule performance. That was in circumstances when the previous report from the ANAO found that 21 projects were collectively one-third of a century late. Is that working? Is Labor happy with that? Is that good? You could just say, 'That's all the coalition's fault.' Yes, absolutely, a big chunk of that's the coalition's fault, but are you happy with that? Is that a solution you're comfortable with? Is that an outcome where Labor's happy to say, 'More of this, please'?

The ANAO's report into defence contract administration for the Defence Industry Security Program found that defence has not been fully effective at implementing or administering its obligations under the Defence Industry Security Program, which is designed to address risks in defence supply chains. The report also found that defence has not established fit-for-purpose arrangements to monitor compliance, and has not established effective arrangements to manage or identify noncompliance. Are we comfortable with that? In March 2021 defence reported that it had some 16,000 active contracts with a total value of $200 billion. In that context, surely it would be beneficial to have a credible and independent body that could ensure value for money and assess risk in defence procurement.

The Greens have amendments to this bill which will put in human rights considerations, public interest considerations and more thorough conflict-of-interest provisions. We would hope for support for those provisions, which should be contained in defence procurement. Of course they should. But if you want to think of just one reason in the current political debate to support this bill, I give you the Hunter class frigates. It is now a $45 billion contract. It's probably gone up to $50 billion. They didn't assess risk. They didn't assess value for money. They're still trying to work out how to build the thing so it doesn't topple over in a heavy sea. It's likely to be almost unusable in any kind of modern conflict, because it's undergunned and underpowered. It's meant to be an antisubmarine warfare vessel, but it's now a bit of everything. It's like a modern-day Bradley fighting machine, brought to you by the Australian defence procurement process. The Hunter class frigate program in itself and the most recent independent review that I've spoken about before in this chamber are a case study in, 'If not this bill, then what?' So, yes, we'll support the bill. We can't bear the prospect of seeing more hundreds and hundreds of billions of dollars of public funds going into this big dark hole to produce the kind of appalling results we've seen to date.