CHAIR —Welcome. The subcommittee prefers all evidence to be given in public but should you at any stage wish to give any part of your evidence in private you may ask to do so and the subcommittee will consider your request. You will not be required to comment on reasons for certain policy decisions or on the advice which you have tendered in the formulation of policy or to express a personal opinion on matters of policy. I understand that you have a number of statements that officers will make on particular areas. I now invite you to make an opening statement and then we will proceed to questions.

Rear Adm. Shalders —Good morning and thank you for the opportunity again to contribute to your deliberations. At the outset, I reemphasise the importance that Defence places on the recruitment and retention of high-quality people. As highlighted many times in the Defence submission to this Senate inquiry, these matters are the highest priority for the Defence leadership. As requested at the last hearing, we have examined all the evidence provided to this inquiry by the public submissions and made a careful review of the Hansard record of public hearings. The original Defence submission and our testimony to this subcommittee address most of the issues raised. Subject to your further questions this morning, I believe that we are in a position to comment on any outstanding matters. The ADF has already put in place many initiatives that focus on the personnel issues raised, and we will continue to look at strategies that fully address the problems of recruitment and retention, which have been raised during this inquiry. I also acknowledge that as an organisation we must communicate better with our people on personnel matters to demonstrate that we are listening and to advise them that we are acting on their concerns wherever that is possible.

This morning, with your agreement, I propose that we have individual spokespersons address the subcommittee on the issues that have been raised to date during this inquiry. Those witnesses are in a position to make a short opening statement keyed to the evidence you have previously been given, and they are all in a position to table additional submissions to cover the issues that we have uncovered in our research. While we are prepared to cover any general questions at this stage, I suggest that we start with issues related to recruiting.

CHAIR —That is fine. It is over to you people.

Col. Bornholt —Rather than read out my opening statement, in the interests of time I will table the statement later. I will go straight to outsourcing, as we have just discussed with MDR where they have been. The majority of comments in the evidence to date I believe are not founded in fact. However, our experience over the past 12 months suggests that we will require a significant number of uniformed personnel in the recruiting organisation to be effective. As a result it is our view that outsourcing is unlikely to be cost effective. However, it is our intention over the next 12 months to run a more robust evaluation procedure, which Malcolm Jackman has outlined, using Deloittes, with firm criteria and evaluation KPIs that have been agreed.

CHAIR —Will you provide us with a copy of those?

Col. Bornholt —I am able to provide you with the terms of reference for that evaluation. During Mr Jackman's introduction, he mentioned conversion rates and he compared figures. I will table for you, rather than straight numbers, percentages that were achieved by the Defence Force Recruiting Organisation, including MDR, in the last financial year in its entirety. They demonstrate that in the 12-month period Manpower achieved approximately 67 per cent of their target, and the Defence Force Recruiting Organisation achieved exactly the same figure. In essence, we perform on a par with them. I will also table for you our results as at last week, on the same basis. They indicate that nationally, year to date, the organisation has achieved 17 per cent of its annual target, and Manpower in southern region has achieved 16 per cent. Clearly, we are still tracking on the same rates of achievement.

We discussed information technology platforms. In recent months we have progressed to the Defence People Council's request for $7.5 million to produce an information technology platform that will enable the recruiting organisation to take us from first inquiry all the way through to the second training course in each service. That is expected to be fielded by the middle of next year. It will be owned by Defence. It may be that we use Powerforce as the model, however we will go out to industry to produce that platform.

The comment that the posting cycle rarely sees individuals returned to recruiting is valid. However, at the junior level quite a number of young corporals and corporal equivalents would return to recruiting in a subsequent posting. Comments about the Internet and our inability at the moment to have a good Internet site: we have been undertaking a project for two years now which will culminate at the end of October this year with the launch of a new Defence jobs Internet site which is interactive. The next step will be to allow people to apply on that site.

Mr Jackman mentioned reduced periods of service as a trial. Army will be able to elaborate on a proposal that they are in the process of implementing in conjunction with DFRO to trial a reduction of initial periods of service to two years in trades, including missile number and operator supply. That trial will be conducted over the next two years. The evaluation of Manpower Defence recruiting: if I can refer you to Defence question on notice 2861, which was asked by Mr Ferguson on 9 August, we have responded to that. I have a copy of the response here. It addresses in detail the future of the trial extension and the evaluation criteria. They are the only points I would make at this stage. I will await questions.

CHAIR —I have no questions at this stage. I think we will pass on and leave you people to do your thing.

Rear Adm. Shalders —I propose we move now to the career management team. The order I propose to do that in is Navy, Army and then Air Force, if you are comfortable with that.

CHAIR —It is up to you.

Cdre Rago —Good morning. Navy's work force situation has been critical. This was due to a variety of external or pull factors such as the state of the economy and internal or push factors such as restructuring. Notwithstanding that, from a low base 12 to 18 months ago, the work force actually has grown by over 300 people. As of 31 August we have 12,565 personnel with a target, under members required in uniform, of 13,800. The increased recruiting achievement, now running at 94 per cent overall, for Navy is an improvement of 41 per cent over the last 12 months, and there has been a one per cent drop in separation rates for the same period. If sustained, this will mean that we will have recovered to our MRU targets by 2004-05. The turnaround improvement has been achieved by a combination of initiatives such as more focused recruiting and we in the Navy improving our processes; better career management and communications as the admiral mentioned earlier; refined training processes, and improvements to conditions of service.

I would now like to summarise two key areas, namely, career management and training, as I am the training person for the Navy as well as the career manager. Career management: the objective is to achieve the right balance between the needs of the service and the individual to meet operational requirements. To do this we have a variety of approaches and, if I may, I will go through about three of them. For each employment group we have category management plans. These have been recently baselined and articulate the numbers of personnel required, the skill sets that they also require, and the distribution of that particular work force. These plans have a 10-year horizon, with the intention then to implement biannual reviews. Each employment group has career models and profiles that remain under review, that assist in developing career plans for individuals. They also link in to the development of ship cycle posting plans, which we hope to have delivered by the end of the year for part of the fleet.

We also have face-to-face career counselling offered to each member of the Navy, and that is provided once a year for staff at sea right in the ships, and we have some people deployed overseas at the moment in those ships, and we visit shore establishments to provide this service. In addition, career briefings and personnel management information conferences are also conducted annually at major establishments to ensure individuals and managers are apprised of developments. With the recently established career management shopfronts with career managers in them which we trialed in Western Australia, if they prove successful, it is intended to extend them nationally. Further, we have established personnel training advisory cells in Sydney, Darwin, Cairns, HMAS Cerberus and HMAS Stirling to provide particular advice to personnel and managers.

We have also made career management information from our career management handbooks and other documents available through our web site. The web site is fully interactive and provides a direct link to individual career managers. In addition, our performance appraisal system incorporates goal setting and three-monthly counselling sessions at the commander and divisional officer level and also provides feedback to the career managers. On the matter of training for career managers, the objective is for all Navy career managers to complete a certificate level course accredited by the Australian Human Resources Institute. That comprises 13 subjects and includes 72 hours of face-to-face instruction. In addition, the Defence Equity Organisation provides a fair go course for ADF career management agencies.

In the interests of time, I would now like to turn to training. The prime purpose of Navy training is to prepare personnel for the jobs they will do in ships and at sea conducting operations. There remains a delicate balance between maintaining operational activities and sustaining the training pipeline to ensure we grow future personnel capability. Navy has 460 accredited courses, leading to 150 certified qualifications, of which the majority are vocational education and training courses. As an example, I turn to technical sailors. They all receive fully accredited and certified trade qualifications under the national training framework and they range from certificate level three up to the diploma level. The training regime is under regular review, and Navy, as a registered quality endorsed training organisation, is in alignment with the Australian National Training Authority to keep apace of national developments. Navy technicians are trained under the same national training guidelines as their civilian counterparts. Full details of Navy's response to the specific questions and issues raised in Hansard and submitted later are included in the written briefing papers which I would like to table, if I may.

CHAIR —Yes.

Cdre Rago —I also seek permission to table an overview that my team have provided of the Navy workforce status.

CHAIR —That is fine. In the interests of time, that is all great.

Rear Adm. Shalders —Mr Chairman, I would like to add to Commodore Rago's last statement. Each of the team members has gone back and answered the questions addressed to us at the last hearing. I hope the committee will find the answers we have given in the tabled papers are comprehensive and that they will be useful.

CHAIR —That is why I raised the issue last time. This is about you people putting on the table your answers to the issues that have been raised with us.

Rear Adm. Shalders —We have tried to keep the answers simple and succinct, but of course the different areas that are represented at the front table—

CHAIR —Of course, you are dealing with senators, so I suppose that is the trouble.

Rear Adm. Shalders —Not at all, Mr Chairman, but it is a book size submission, which I hope will help the committee and the secretariat as you try to answers the questions you put to us.

CHAIR —We appreciate that.

Brig. Evans —There is much going on in Army to improve recruiting and retention. It should be noted that Army, of course, does not own all the levers. Issues that have an impact on us are operational tempo, obviously, readjusting army structure and shape to make a 26,000 full-time force and instating future reserve roles and tasks. Of concern to us at the moment is the number of ab initio officer candidates for both ADFA and RMC, the need to recruit in balance to meet Army's needs in terms of trade and force structure and the need to keep a larger number of senior NCOs, captains and majors for one more posting than they would otherwise do.

Let me tell you a little about recruiting and retention. There is a delicate relationship between recruiting and retention. The better the retention, the fewer the requirements there are for recruiting. Having said that, there is a need to maintain a steady influx of new personnel. Many of our employment categories are better suited to younger people. There is some scope for Army to compensate for a higher separation rate by increasing the number of people to be recruited. However, there are some limitations to this strategy. Firstly, increased recruiting rates impose an increased training burden, both in terms of resources and of the personnel required to conduct training. Secondly, no amount of new recruits will compensate for experience at middle ranking positions within Army. Army is experiencing significant shortfalls at the ranks of captain and major among its officers and at the senior NCO level among the other ranks. Army Reserves are to play a major role in the delivery of Army's future capability. Army Project 2000 is developing the methodology for a widening of the roles and tasks for reserve units and formations.

On the recruiting front, although Army no longer has responsibility for the process we are still closely engaged with DFRO to improve the system. Army has supported DFRO with additional personnel during peak recruiting periods. Army is developing a strategy to return RMC cadets and junior soldiers to old schools to recruit and is preparing to detach high quality young officers for duty with DFRO career lecture teams. Army is also working hard to align recruiting with training availabilities and to increase training capacities. Recruiting in balance is vital for maintaining control of the recruit induction process and optimising the available resources that we have. We are about to introduce a reduced initial period of service trial for two critical trades. The intent is to provide an opportunity for young soldiers to enlist for two years, rather than four, in recognition of the requirements of the new work force. This initiative will hopefully make these trades more attractive to potential recruits.

Army has returned responsibility for reserve recruiting back to its reserve units and formations. The culture reviewed within the reserve is more conducive to units conducting their own recruiting whilst still using the resources of DFRO for testing and enlistment procedures. Unit recruiting officer positions have been created in each of the units that support this initiative. Army has achieved an 86 per cent increase in reserve recruiting outcomes in the last financial year as a consequence of this initiative. Attracting technical tradespeople to the reserve has been a continual problem and we are in the process of developing a reserve apprentice scheme pilot program that will see Army engaging in partnerships with apprentice employers and training institutions. Army will provide apprentices with the opportunity to complete some of their apprenticeship training in the reserve serving as soldiers.

We have developed, in terms of retention, a web site to provide soldiers and their commanders with information about alternative career options that are available within Army. The intent is to encourage trade transfer as an alternative to discharge. The Chief of Army has recently approved an increase in my staff to enable me to better handle pay issues within Army. So there is much going on. I would just ask Brigadier Retter to make a short statement about training initiatives.

CHAIR —Before Brigadier Retter talks, I am curious about the decision to go from four years to two years. On what basis is that made?

Brig. Evans —This is only a trial. It is on the basis that perhaps if we offer a shorter period it may be attractive to some people to undertake an engagement of less than four years. We are going to take a bite at it and see if it works.

CHAIR —Is that going to apply to all or just some recruits?

Brig. Evans —This is only for two particular trades.

CHAIR —Yes, I know. But in those trades are you going to apply it to all of them or are you going to apply it to some of them?

Brig. Evans —They will be given the option when they go to recruiting as to whether or not they wish to go on the four year or the two year engagement in those trades.

Senator WEST —Which particular trades?

Brig. Evans —The two trades are gun number and op supply. They are two critical trades for Army at the moment.

Rear Adm. Shalders —If I could add to that response, we have done quite a deal of personal research and polling—in fact, using a commercial supplier of that sort of service. One of the things they have told us is that generational attitudes to commitment are very different. This proposal actually responds to that research which indicated that there might be real value in reducing the enlistment period. So we have started it in Army. We will see if the research is validated through this process.

CHAIR —I would be interested in that research because I have some for that generation and I do not think two years or four years matters. Anyway, that is a personal view as opposed to you having research. I would be interested in the trial and will look forward to maybe asking questions at estimates at some stage.

Brig. Retter —I too have a formal statement which I will table, and I will just cover the key points now. Training Command, Army has been forced to meet increasing training requirements since 1999, and in particular this year. It is acknowledged that this increase in training requirement has stretched the command's personnel, infrastructure and resources. However, we are now addressing both the training capacity shortfalls that exist and the excessive workloads currently being experienced by people within the command. I believe this is being achieved through a combination of better planning and coordination across the Australian Defence organisation and a series of training related initiatives within the Army, which I will cover very briefly now.

The initiatives we have introduced that both enhance our training capacity and reduce the workload on our training staff have included sourcing additional instructor support from land command specifically to supplement the Army Recruit Training Centre and a number of our initial employment training establishments where manning deficiencies were either limiting capacity or we were finding that the tempo of training was causing undue hardship to the instruction of staff.

CHAIR —So what have you done for Kapooka?

Brig. Retter —In the last few months we have placed an additional 10 corporals at Kapooka to address the significant burden that was being placed on the young NCOs there. As you would know, Chair, they were working approximately 60 hours a week, seven days a week, for that 45-day course.

CHAIR —And then going off for three days and picking up the next course.

Brig. Retter —Correct. In the first instance, we have addressed the manning shortfalls that existed through an 10 additional corporals. It is also our intention in the next month or so to address the longer term issue of looking at the structure of that organisation, with a view to increasing the number of staff there by in the order of 20 to 30 personnel. That is a formal review process which occurs with Army headquarters staff. It is acknowledged that the personnel at Kapooka are working too hard. As a result, that is an issue for both retention in the Army and the capacity of the organisation. That is one of the issues we are dealing with.

But it is not just Kapooka. There are other training organisations that pick up the trained recruits and train them in their particular initial trade, of which we have 165. Of those, there are about 18 in which we find at present we do not have the capacity to meet demand. In those areas we are again seeking supplementation from land command in the first instance and in the longer term we are looking at structural changes and increases in the number of instructors so that we can increase the capacity of the command to deal with the numbers we are facing.

CHAIR —As I understand it, there are quite a lot of people just parked in camps waiting to go into that training. Is that correct? Some of them have been waiting for up to six months.

Brig. Retter —That is true. There have been holding platoons, which is one of the responses that we have made to our inability to meet the numbers coming through. I am pleased to say that those numbers are reducing. As of yesterday, we had 234 personnel in holding platoons. Of that, approximately 40 per cent will be cleared—that is, they will commence or be in trade training—within the next two months, within 60 days. That is not ideal and we acknowledge that, but this is simply a function of the coordination of the recruit training effort with a limited capacity across 156 trades. That issue is also now being addressed. In addition to some of the physical changes that we can make, we have also established an induction management process within Army headquarters, training command and the other agencies involved in this process, including Colonel Bornholt's.

CHAIR —This is not a criticism of you personally, but why are you in this mess?

Brig. Retter —Do you mean the reason that we have had this increase in training capacity requirement?

CHAIR —Why wasn't this foreseen? I am trying to help you out.

Brig. Retter —In 1999—

CHAIR —You were gutted. The real answer to the question is that your group was gutted. That is the real problem, isn't it?

Brig. Retter —I think it is fair to say—

CHAIR —That is not the word that you would use but that is the word that I would use. The DRP knocked the insides out of you and the unintended consequence of that was that it has now put stress throughout your whole organisation at this stage. Even though you are going to have people going into courses in 60 days, I think that is really unacceptable. As I say, that is no criticism of you personally. It seems to me that there is something horribly wrong with your system when you have got people parked in those waiting platoons for 60 days.

Brig. Retter —Could I make two points? First of all, on the issue of our capacity problems, it is fair to say that, in line with the DRP process and Army's requirement to restructure to a 23,000 ARA and a 27,000 reserve sized Army, the Training Command was limited to approximately 3,000 ARA staff. Certainly, that did limit and does limit our capacity. We are in the process of increasing the size of the command to meet an expected increase in the size of Army and, as a result, an increased demand for recruits to be trained, but that is going to take some time to put in place and it is fair to say that we are in catch-up mode. Why are we in catch-up mode? As I am sure you are aware, a significant number of issues have occurred since 1999, such as the increase—at government direction—of 3,000 ARA within Army, the protracted operations in Timor—and, as a result, potentially higher separation rates—and the introduction of significant new equipment in the last few years. All of this has increased the amount of training that we are required to deliver.

I do not deny the fact that Training Command is at present unable, in 18 of the 165 trades, to meet the capacity that is demanded of us; however, the induction process we are putting in place—this management process—will alleviate many of the concerns that you have expressed. The fact is that if we recruit in balance and we match, if you like, the scheduling and programming pipeline, we can in fact avoid the issue of young soldiers sitting for 60 days or more in a holding platoon. I agree with you that it is not ideal.

Rear Adm. Shalders —I also agree that that is unacceptable but I would point out that Army have recognised the unacceptability of this situation and are working very hard to try and do it.

CHAIR —I am not denying that at all. What gets me is that we are even discussing this. That is the point that I am upset about.

Rear Adm. Shalders —One of the issues is—it is ironic in a way—that our recent successes with recruiting have forced us into a situation where these holding platoons are being used. For example, Army recruiting to this point of the year is at 137 per cent of its year-to-date target. We have got a lot more people coming through the door. We need to look at how we can balance their enlistment so that the training pipelines can properly meet our requirements. We are doing all that.

CHAIR —But the recent successes are a manifestation of a problem within the Defence Force. People are leaving because they are dissatisfied with the Australian Defence Force.

Rear Adm. Shalders —That is the other end of the continuum. I accept that.

CHAIR —That is the problem.

Rear Adm. Shalders —Yes, I accept that.

CHAIR —I accept that you have had to have a massive recruitment drive, otherwise at some stage you would end up with no-one there.

Brig. Retter —There are just three other points I would make in terms of how we are increasing our capacity. Again, this will assist in reducing the holding platoon numbers situation and improve the overall capacity of Army's ability to train. We are fast-tracking and implementing a number of outsourced commercial training proposals for things like medical assistance training and basic driver training, where we do not have the capacity to meet the numbers that we are currently experiencing. We are reinforcing our efforts to deliver and develop all induction training models for the reserve in modules; that is, 16-day bite-sized chunks, which should attract and keep more reservists in the services because they are getting the training that they need. We will be examining options for the delivery of more training on a regional basis, utilising both conventional training regimes—in a classroom, for example—and technology based distance education type training products. Training Command is recognised as being one of the world leaders at present, in terms of the ability to produce that technology based training. Again, I see that as indirectly being a retention benefit, in that if we can keep our soldiers closer to home, not going on courses away from their home bases, that too will provide added incentive for a young fellow or young lady to stay in the services.

Finally, as I said earlier, we are restructuring the command through a formal Army headquarters review process which acknowledges that Army is increasing in size and that, as a result, there is a need to look at the size and shape of training command so that it too can meet the capacity requirements that Army has. That is all I would like to say at this time.

CHAIR —Thank you very much, Brigadier. I have one concern, which others might like to address as well—which is the review process you mentioned. I just get the feeling that Defence is review weary. While I applaud a review process, and see the ongoing need for a review of what has happened, I just hold my breath and hope that you are not going to drive people mad with another review.

Brig. Retter —I will explain this review process.

CHAIR —I think I have drawn some sympathy from the other side of the table there.

Brig. Retter —It is about a two-month process. It takes that long. If there is a demonstrable need to improve the size and shape of the unit, it can be agreed as quickly as that and then implemented. The implementation does take time. To get the bodies into the unit, once we have increased the size of the unit, in a liability sense, does accord with the next posting cycle. But, having said that, the process itself—I might add that this is one of the few reviews that people are very happy about because, invariably in our case at the moment, it means an increase in size. But that is a reflection of the fact that it is acknowledged across Army that we are hurting.

CHAIR —What is the impact on the budget? Are you getting more money to operate? If you are getting more personnel, more resources—

Brig. Retter —There is an acknowledgment within Army that as we increase the numbers of people to be trained so the direct training related costs go up, and, yes, I am pleased to say that this year it would appear that we will have sufficient moneys to meet the requirement.

CHAIR —I think the training aspect is probably one of the most important aspects of our defence forces. It is not much use having people and having platform out there, (a), if you do not have the people and, (b), if you cannot train them to use the platform.

Rear Adm. Shalders —I think that Defence would say that that is what differentiates us from other equivalent sized defence forces. The fact that we do train properly and well is what makes us as good as we are.

Air Cdre Cole —Good morning, and thank you for the opportunity of presenting here today. We will also table a written submission but, once again, in the interests of time we will not go through that. However, I will take the opportunity to highlight just a few points. As stated in the submission, the Air Force has a number of recruiting and retention challenges, but we believe they should be viewed in context. In many regards, we have experienced almost a decade of downsizing and, despite our best efforts, in many cases it has taken a toll on our people and a lot of people are change weary.

The committee has heard witnesses describe some of their views in this regard. They are serious and are of concern and must be addressed as soon as possible. Air Force however is not suffering from wholesale separation problems in all areas. As outlined in the submission, most of our retention efforts are principally focused in specific employment groups and specific experience levels. In this regard, there are range of activities currently being targeted to address them. I can give you a table later on, if you would like, detailing those groups, the numbers and the actual percentages, as they are varied.

CHAIR —Yes, please.

Air Cdre Cole —Most of the evidence is centred on conditions of service issues, and this is a particularly challenging area that covers a wide range of personal issues that relate to the basic standards and conditions under which our people serve. We are working with the other services and DPE on ways to address this.

For Air Force, a major requirement is the need to reposition for the future. What might have been acceptable personnel practices 20 years ago, will not necessarily work today and/or tomorrow. Expectations are changing and we need to use more flexible approaches to give our people what they want, to increase their choice and to allow for diversity of personal circumstances. We are aware of shifts in personal expectations and are attempting to accommodate these trends with policy developments and practices.

Air Force is heavily focused on recruiting and retention, and we have been working closely with DFRO throughout this year—and for a significant period before this year—to address a number of specific issues. However, in relative terms, the challenges in recruiting are somewhat less daunting than those of retention, and a lot of that is because if you can maintain retention, you do not have to get as many people in and you also maintain experience, which is crucial. Although we have not solved all of the recruiting problems, the trends are promising and our collaborative efforts with DFRO appear to be bearing fruit. I am confident that this will continue.

I could speak on many specific issues, but many of our problems are similar to those in Navy and Army so, in the interests of time, I will not elaborate on those. It is sufficient to say that Air Force is beginning to better understand what we need to do. We do not underestimate the personal challenges or the effort required to meet them. We are well aware that there are no silver bullets and we are trying to come to grips with the enormity of the task. However, based on the activities already in train, and the initiatives that are currently being developed and working across the ADO, the Air Force senior leadership is quietly confident that, in time and in the not too distant future, we will be able to fully meet the nation's aerospace requirements now and into the future.

Rear Adm. Shalders —With your agreement, Mr Chairman, I propose that any questions to the people at the front table should be dealt with now and we can then bring the next group of presenters forward.

CHAIR —You have another battery?

Rear Adm. Shalders —Yes, there are more to come.

CHAIR —This seems to be a simple question, but who heads the Defence Force Recruiting Organisation?

Rear Adm. Shalders —Colonel Bornholt is the director of the Defence Force Recruiting Organisation. He works through Brigadier Brown who is on my staff, and ultimately I have that responsibility.

CHAIR —Who heads the Defence Force retention organisation?

Rear Adm. Shalders —I suppose I have that responsibility. We do not have a retention branch.

CHAIR —So you do not have a retention organisation?

Rear Adm. Shalders —No.

CHAIR —You have a recruiting organisation, but you do not have a retention organisation?

Rear Adm. Shalders —In fact, we do because one of the principal aims of the Defence Personnel Executive is to retain.

CHAIR —I am not being critical of you, but it seems to me that you have a focus on recruiting, but you have no focus on retention. It is a broad focus which is dissipated throughout the three services. Is it as broad as that?

Rear Adm. Shalders —No, I do not think that it is broad at all. It is very focused. Certainly, Defence leadership is extremely focused on retention so I do not think that it is right to say that it is in any way diffused.

CHAIR —Would it be more effective for you if you had an organisation which was focused on retention? It might not necessarily be a big organisation. I am not trying to build a bigger public service, but it seems to me that that might be part of the answer to some of your problems, and there could then be closer coordination between recruitment and retention. Is that possible? Is there value in that? If there is no value, please say so. We do not want to put things in a report which are useless to you people.

Rear Adm. Shalders —I will start off on that and then I will ask Brigadier Brown to comment, because he has been in this area longer than I have. There could be an advantage in structural adjustments to the way that the DPE is currently configured. We could possibly have a branch focused just on retention. The other way to look at it is that the DPE really is all about people, and retaining our people is a critical part of the people problem. I have not yet formed a view as to whether we are all responsible for that `retention' issue or whether we should have a structural solution to it. It is certainly high on my radar screen at the moment, but I have not made a decision as to which way I might go. Brigadier Brown has been associated with the personnel executive for longer than I have, so perhaps he has a view that could assist.

Brig. Brown —As the Admiral said, we have resisted deliberately setting up a retention branch as such because of a concern that it might send a message that the sole responsibility resides there. There is an acknowledgment that retention is a product of a whole series of issues across the board. By default, my branch often picks up retention focused matters, because I am the interface between the three services at my level. There are a number of working groups and committees which come to the table with me, and we then look at a broad range of recruiting and retention issues. By default, I tend to be the focal point, because I am the conduit between the DPE and the three service personnel organisations.

CHAIR —I rest my case. You have used the words that I thought you might: `by default'. It should not be by default.

Brig. Brown —I was not using those words as a pejorative term.

CHAIR —I hope you weren't.

Brig. Brown —I think there is a lot of logic in the fact that I am there, because I own the recruiting, the workforce planners and whatever else. That is where a lot of the engine room is, in terms of determining targets, et cetera, and keeping tabs on, if you like, the global retention situation. For example, when the ANAO have done reports on retention, it has come to me to coordinate the responses on that, because I have the visibility of the asset and liability global picture, if you like.

Rear Adm. Shalders —Can I take it one step further and say that retention and looking after our people actually goes right across the organisation. It is not something that just the HR part of an organisation or, in our case, Defence personnel looks after. Retention is actually a responsibility of the entire management structure of Defence.

CHAIR —I accept that. I raised it quite simply to see if there is a central focus and that the issue does not get lost in the diffuse organisation.

Rear Adm. Shalders —I can assure you that it does not get lost.

CHAIR —I know it does not get lost, but there is that focus on recruitment, and rightfully so. I was just wondering if there is value in having someone who belts people around the head on the issue of retention. Yesterday, talking to a focus group within Defence, a witness told us that if you solve the problem of retention, you eliminate the problem of recruitment. I visited the DFRO offices at Tuggeranong three weeks ago and, when I got into the building and was welcomed at the door—I was pleased to visit—my initial comment to them was: `Are you some sort of lepers?' I could not believe that they had been stuck out in Tuggeranong. As a matter of fact, I was trying to find out where else someone could put them. It seems to me that such a vital organisation should be right in the centre. I know there are constraints in the logistics of placing people, but there is no more important an organisation. I read their honour board when I went in. DFRO was originally set up under the command of a Lieutenant General—I think that is correct.

Rear Adm. Shalders —Yes.

CHAIR —It is currently under a colonel. My next question was: how long before it is commanded by a corporal? I have a personal concern as to (a) where it is sited—people might say that does not matter, but there is a psychological factor involved—and (b) who is running it. That is not a criticism of the current person who is running it; I might bump him up a notch if I can. That then raises the issue of the role of the Defence Personnel Executive within the Defence Force. It came to light that there is no say by the Defence Personnel Executive directly on the executive of the Defence Force. That is the correct way to interpret it, isn't it? It would seem to me that you could not hope to have a more critical area. I am trying to get you a better say.

Rear Adm. Shalders —I understand that, Mr Chairman. In relation to the first two points you raised, the location of the DFRO headquarters and the rank of the director of the Defence Force Recruiting Organisation, I share your concerns, and we are looking at both those issues.

CHAIR —Thank you.

Rear Adm. Shalders —In terms of the role of the Defence Personnel Executive within Defence, it is correct to say that we have no direct say on the Defence Committee, which is the peak defence executive committee, but there are some nuances to that that I should explain. The first nuance is that I do attend the Chiefs of Staff Committee and I report on a monthly basis on personnel issues to that committee, so there is a very close focus on personnel issues at that level. I am not a member of the Defence Committee, but in terms of personnel issues I have a channel through to that committee through one of the deputy secretaries who is the chairman of the Defence People Committee, one of the subordinate committees below the Defence Committee. As for personnel issues that need to be taken to the Defence Committee, they do invite people to attend and present those issues. In fact, two have been conducted since I have been in the job and I have attended that committee. But, to comment on your initial statement, it is true that I am not a permanent member of the Defence Committee.

CHAIR —I am not asking you to comment on policy, but an observation of mine is that it seems logical to have that with such an important and vital area to our defence forces, because it involves both retention and recruitment and our ability at the end of the day to have platforms out there and to have battalions and squadrons that are operational and properly manned so that we do not end up with the situation that we found as we went around. That situation was very depressing for me as I heard people say, `We've got 60 per cent manning levels,' or `We've got 35 per cent manning levels,' or `If someone goes off sick, then this is not operational.' It is absolutely so that the vital part of Defence is Defence personnel. That is why I raise this.

I am not asking you to comment on it, but I think it is an important issue, as is the positioning of and the rank of the person running the DFRO. As I say, that is not a reflection on Colonel Bornholt, because I might say that, whilst it was not on the Hansard record, the evidence that we received at DFRO was excellent indeed, and I think a very full and frank statement was given by Colonel Bornholt.

The thing that also left an impression on me when I went to DFRO was that they are inquiry weary from an internal process. They had laid out on the table—I have a photograph of it which I can send around to people if they want—the number of internal inquiries in the last seven years. It is just ridiculous. Everyone who has a bright idea has an inquiry, and these poor souls who are trying to do their job find that someone else has come up with a bright idea so what they were trying to implement gets cut off at the pass. Then they have some other intelligentsia's bright idea, and it might be a bright idea but they are not given a chance to implement anything, so they are change weary.

After listening to the evidence during this inquiry, I imagine that that is not uncommon within Defence. The one thing I would hate is that arising out of this inquiry we end up with a lot of changes—I do not know whether we will—and people became even more change-weary. The whole issue boils down to the management of change. I know that you have been in the job only a short period, Admiral, so it is not a criticism of you or your predecessors, but it seems to me that something needs to be done to manage change better and to give people a better expectation of how their lives are going to emerge. I do not know whether exit interviews are relevant to this group or the next group.

Rear Adm. Shalders —Part of Brigadier Brown's branch has a directorate that looks at exit interviews.

CHAIR —I formed the view that the exit interview process was a bit of a patch-up job in some cases and that people did not want the truth to emerge as to why people were leaving the services. That is to protect the possibility of their own future promotion, and I understand that, but it seems to me—again, I am not trying to get you to do another review—that something needs to be done about the exit process.

Brig. Brown —I am surprised that you reached that view. At a local level there may be some concern, and a local commander is always concerned if someone leaves his or her unit, because they feel that it may be a reflection on them. But at our level there are increased research efforts to try to understand why people are leaving. We have now centralised the whole research focus rather than have it dissipated between the three services. The data we are getting, which is driven very strongly by the secretary, to measure why people are leaving has a lot of impetus. There is always caution around exit surveys, because people leave with different emotions and they do not always disclose the real reasons, perhaps, or the reasons are often complex. We have put a much increased effort into trying to get to the heart of why people are leaving, analysing it and then directing our policies towards that. You will have seen in our submission comments about the combination of exit surveys, attitude surveys, and research being done as part of recruiting or whatever to understand our target audience better. We are trying to have a research based solution to a lot of these problems as best we can. Certainly, with the data we are getting now, whilst you might question the validity of it from a statistical point of view, there is a lot of effort to try to get a better view of why people are leaving.

CHAIR —I am not doubting your best shot at this and I am not questioning your integrity or that of others. It just came across in some of the sessions that were conducted that it would be best to say that in some instances some people fudged the exit interview. It may be a combination of the factors that you have described. It may be that the person exiting was not going to be honest. It may be that there was also a process whereby the person doing the interview wanted to protect himself. I accept that. It was one of those things that stuck out in the process.

Brig. Brown —The other point is that there is an increased effort to maintain contact with people who are leaving, to give them options to move into the reserve and to move back, and to establish processes whereby they can remain in contact and encourage people to come back. You have probably seen initiatives in Air Force where they have gone back out to retired Air Force people to bring them back in. We will certainly look at the procedures if there is feedback that they are loose.

CHAIR —I am sure that we will comment on this in the report, and that is why I am giving you the opportunity now. I am raising some of these things in a way that you might think is a bit contentious, but I want your comments so that you have had the chance, and the secretariat and ourselves in compiling the report have given you the opportunity, to answer some of the more challenging issues that we are seeing out there. Does anyone else want to comment on that?

Air Cdre Cole —Yes, I would. We have actually been doing exit surveys now for quite a while. We find that generally the best way of doing them is to sit down with the individual, rather than give them a piece of paper to fill out. Particularly for our pilots, we have actually started interviewing on many occasions the spouses, because we find that quite a lot of the pressure for someone to leave is coming from the spouse. If you just ask the individual, you will sometimes not actually understand where all of the pressure is coming from. We find that it is actually a double whammy—the individual and a lot of family pressure as well.

CHAIR —That is a valid point. Is that happening in the other services as well, with the spouses?

Cdre Rago —Yes, we are just starting to embark on that, having taken a lesson from Air Force. We are going to be trying that process of engaging spouses with DCR in the west very shortly. So that was a good lesson we took. The Navy's exit survey program has been in force since the mid-nineties. The key thing that we found during the counselling process was that, once a SAR officer puts their discharge papers in, the counselling process with the divisional officer or the commanding officer tries to actually fix the problem. In some part we are successful, in some part we are not. We offer them alternatives or choices.

In that event, we also invite them to actually conduct or help them through the exit survey. That is not mandatory, because some of them choose to take the survey away, as Air Commodore Cole said, to go through with their families. They have the option of either passing it through their unit or through their command or independently to DSPRR, which works in Brigadier Brown's organisation or, indeed, to DSC and the career managers, who then take it on board, or, indeed, further to higher command. They are then analysed properly, but, if there are issues that we can fix straightaway we try to. It is my view that the exit survey process is a good process, but it needs improvement to ensure that people are comfortable in telling it like it is.

CHAIR —Does Army want to comment?

Brig. Evans —Firstly, I would like to go back to HDPE's comment that nobody owns retention. This is something that we are all responsible for in the Defence Force. Every NCO and every officer is responsible for retaining their people. I agree that when you get to the exit interview stage it is probably too late. Your retention strategy should be well before the exit interview. Every soldier should receive an exit interview, but what I am saying is that our policies and strategies hopefully target people before they come to make the decision to depart the service.

CHAIR —How well coordinated are the retention strategies across the defence forces, or are they left up to the individual Army, Navy and Air Force?

Rear Adm. Shalders —They are very well coordinated. The formation of the Defence People Committee, which is now just 10 months old, was an illustration of the need to coordinate all those things that we think we need to do in terms of retention. It is a very well coordinated package of initiatives that we are trying to pursue at the moment to increase retention.

Senator HUTCHINS —In my observations from our inspections, it struck me that the greatest retention difficulty was in the Navy. I recall that in one base we interviewed a number of people. A number of the trades—I think that is the term—were in short supply. If a ship goes out to sea for X amount of weeks and then comes back in needing a trade, if there is no-one spare in that trade for that ship that is to go out again, the same people are sent out again.

When people are being interviewed, I imagine they are being asked whether it is the conditions or due to personal matters or whatever else. I put this to any of the services: when the NCO or the commanding officer interviews a person who wants to exit, it may not be a personnel or other issue; it may be an operational issue. As I recall, one of the officers at one of the bases suggested that, rather than having crew assigned to a ship, it would be better to state that a ship needs 50 of these, six of those, seven of those, et cetera, and when that ship has to do service it goes out with those people. Rear Admiral Shalders, I wonder if you would like to comment on whether it goes beyond the middle ranks, the officers. Maybe we should be addressing some operational problems across the services.

Rear Adm. Shalders —I will address the question in a general sense and then invite the directors-general personnel to perhaps comment on it. You have used the Navy example, so I will stick with that. In terms of operational tempo and personnel tempo, Navy and I think the other services have very strict rules about how much we can use our people. The Navy personnel tempo, for example, requires you to do no more than a certain number of days each year at sea and requires that your ship be in its home port for a certain number of days each year. Those personnel tempo rules are widely understood and have been in place now for four years. If people are approaching those limits that are set, you can, as I think I told the inquiry last time, invoke those rules to replace them.

There are occasions, certainly in smaller ships and in minimum manned ships, where people do exceed the stated number of days. That, of course, comes down to our operational role: if there is an operational need to exceed the personnel tempo rules, then sometimes that has to happen. It is not a decision that is taken lightly and that data is tracked very closely at the highest levels of Defence when that happens. I think that is a general answer to the question you were pursuing, but perhaps I will invite Army to add to that. Brigadier Evans, do you have anything to add to that?

CHAIR —The secretary has just said to me that we were getting that more as a matter of course, not as a matter of exception.

Rear Adm. Shalders —I would be interested to know at what level you were getting that as a matter of course because, as I said, it is tracked very closely—certainly, in the Navy.

CHAIR —It may well be that our information is wrong. That is why we are asking.

Senator HUTCHINS —The level was the sailors. I cannot recall what trade they were.

Rear Adm. Shalders —From my experience two years ago when I was tracking these figures myself, across the fleet I think there were only two vessels that had exceeded the number of sea days each year, which is set at 150. That information is tracked on a monthly basis right through the command chain.

CHAIR —Is that available to the committee now? That might be the simplest way to clear that up.

Rear Adm. Shalders —We could get that information for you. I would state also that the information will show—I hate to use the word `blip' but I will—blips which are related directly to operational requirements.

Senator HUTCHINS —You may well be right on that but, as Senator Hogg said, that complaint certainly came out clearly every time we interviewed Navy personnel—unsolicited by us. My point, Admiral, was this: for all I know, the Australian Navy has been operating as a navy the way it has since the British gave it to us, and they have been operating it the same way since Nelson. Perhaps there is someone up here saying, `This may not be the appropriate way to handle personnel anymore.' Is there someone upstairs saying, `Okay, maybe we shouldn't run our Army, Navy and Air Force like the British did or the Americans do; maybe the distance and small population dictates different needs'?

Rear Adm. Shalders —Yes, of course there is. People are looking at those issues all the time. The people who are dealing with those issues on a day-to-day basis are the environmental commanders—the maritime commander, the land commander and the air commander. Those sorts of issues are very high on their radar screens on a daily basis.

Senator WEST —I would like to talk about postings. Just how closely do the career managers actually work with posters? It seems that so many of the postings are to fill vacancies or to fill holes. Would that be a correct assumption, or is that a fair impression that many people are getting?

Rear Adm. Shalders —The Defence submission went into some detail, as you would recall, on the process of postings in each of the three services. Those posting processes are controlled by the directors-general, personnel who are sitting at the front table, so I will throw that question to them. As a general comment—and I have been a poster in an earlier life—your effort is divided, if you like, almost equally. It is not quite equal, because 51 per cent of your effort has to go to meeting the needs of the service, whichever it is, and the other 49 per cent is devoted to meeting the needs of the individual. If the two can be brought together and both sides are happy, that is obviously the optimum outcome. But, if there is a requirement to split your effort and loyalty, it must always come down to the needs of the service. With that general introduction, I will ask Army to lead and then we will go to Air Force and Navy.

Brig. Evans —Within Army's career management agencies, the career advisers and the posters are co-located. Having said that, there is a need obviously for the Director-General, Personnel—Army to ensure that the Army is correctly staffed. When you have a 3,000 asset liability gap, that creates some difficulties, particularly if you have a retention issue on top of that. When people leave, there is a requirement for high priority billets to be manned at all times. That causes some turbulence, and sometimes it also causes people's personal needs not to be met by the organisation. Having said that, our aim is, wherever possible, to have an alignment with an individual's needs and the needs of the service. But, when it all comes down to it, the Army has to be manned efficiently and effectively.

CHAIR —How often are those in conjunction?

Brig. Evans —I think we get a pretty good match, but I would confess that not everybody is happy with their posting.

CHAIR —What is a pretty good match—80 per cent, 60 per cent, 50 per cent?

Brig. Evans —I would say that we are on a 70 per cent match.

CHAIR —You are on 70 per cent now. What, in your mind, would be an acceptable operational level?

Brig. Evans —I would always like—

CHAIR —100 per cent—I understand that.

Brig. Evans —No, I actually work off 80 per cent these days. It is difficult to quantify it in those terms, but essentially not everybody gets the posting that they want and not everybody remains in a location for the length that they want. We have principles that we try to meet for individuals and we have principles that we try to meet for the organisation. As I said, because of the asset liability gap that we have, we cannot always meet individuals' needs, much as we would like to.

CHAIR —We accept that, but we have received some evidence—and this my description of it—that some people are getting giddy going around in circles, trying to fill the gaps everywhere. Four and five postings in seven years were not uncommon examples that were given to us. Let me say that, invariably, it was the spouses who were speaking out about that posting turbulence.

Brig. Evans —Obviously we try to minimise this.

CHAIR —I understand that.

Brig. Evans —But when we have operational units that require manning and when somebody leaves—and some people leave at reasonably short notice—and that position has to be filled, the reality is somebody might not be necessarily happy about where they are being posted to.

CHAIR —Do you work on a ratio of posters to personnel?

Brig. Evans —Yes. I gave you that last time that we were here.

Senator WEST —Following on from that—and the three of the services need to answer, I guess—I have questions about promotional and continuous training. Have you read the Hansards where we have had people say they have not been given release to go on training courses and that has impacted upon their promotion? The ones that spring to my mind are the number of young female soldiers who have been there four, five or six years and are still looking to try and get on a promotion course to get to lance corporal or to corporal—to get a hook. They presented as very competent and capable soldiers but, because of the pressure and the shortage in their units, they were not getting released. That is a complaint we have certainly had. I have had that complaint made to me privately from the other forces as well.

What are you doing to ensure that there is monitoring at a senior level that appropriate training is being offered and undertaken and appropriate promotional opportunities are being offered to soldiers or soldier equivalents and officers? I do not want to see us losing people who are saying, `I know that in 10 years time I will still be at the same rank.' Particularly from the Air Force we heard that in some areas there is a logjam with very senior NCOs. I do not want people saying, `We know that they are not going to move for another 10 years; therefore, until they move, there is no way that we are going to get a promotion.' This can happen also where there has been a reduction in the size of the particular category or muster that they are in. They have got to corporal equivalent and suddenly it has all collapsed on them. They are needed in that category or muster, but they do not see any options for them to get a promotion or to get a sideways move—get a reclassification—to then be able to continue their career path and to maintain and retain their rank level.

We did hear someone as well—and you might have answered it in the answers that you have given and tabled with us—say that the Air Force were bringing in people from an Army mustering and they were keeping their Army sergeant rank. They were going across to the Air Force at sergeant level without the Air Force sergeant training, again cutting off promotional opportunities for Air Force corporals. Those are the sorts of posting, promotion and training issues that I am interested in you pursuing, please. If you need to take some of it on notice and come back to us by Monday, we would be happy.

Rear Adm. Shalders —I think we have answered some of those questions in the material that was tabled this morning. I think at the last hearing we talked about specific blockages, as you put them, in the Air Force and certainly that question has been answered and some of the others you just asked. Perhaps Air Commodore Cole might have an answer to that specific question you just raised about the Army transferees.

Senator WEST —I think I have the right forces going. It was Army going to somewhere.

CHAIR —Yes. It was down at Wagga.

Air Cdre Cole —To be able to answer that specific one, I probably need to know the category and mustering that they came over at. If I could get that, I can definitely answer it.

Senator WEST —I think it is on Hansard from Wagga.

Air Cdre Cole —Was it?

CHAIR —Yes, Hansard from Wagga.

Air Cdre Cole —In general, if we transfer somebody from one service to the other, we try to do that with no detriment to the individual. Not only with transfers: you also referred to promotions where sometimes some people may not be able to be released from work to do—

Senator WEST —That was all three services.

Air Cdre Cole —We have a mechanism whereby we can provisionally promote somebody so that they do not have detriment. One example of that is that we used to have a requirement for promotion to squadron leader; they had to do a course called the Basic Staff Course, and if for some reason they were not able to be released in time to do that course they would still go to the promotion board. They would be considered as if they had done the course. They would get promoted and within two years they had to do the course. Their seniority and everything else was from the date when they would have been promoted substantively. That is one of the methods that we use quite regularly to get around the problem.

Senator WEST —Do you use that for ORs as well as officers?

Air Cdre Cole —As far as I know we do, but I will make sure and get back to you with that answer.

Senator WEST —Do Navy or Army have any comments on it?

Brig. Evans —The issue of people not being allowed to go on courses for operational or directed activity reasons has been a concern for us. The Chief of Army has recently sent a letter to all his functional commanders to say that the highest priority is the attendance on courses, irrespective of the operational requirements of units. Courses are obviously very important for people's career advancement and therefore we are taking the long-term view that courses take priority at this point in time.

Senator WEST —Has Navy got a comment?

Cdre Rago —We have a long-standing program similar to Air Force's called `provisional promotion', and that was last reviewed by the DFRT in 1996. Selection for promotion prerequisite courses, or advancement courses, is by merit. That is done by my career managers—and, incidentally, in the Navy the career managers and posters are one and the same person. Once that selection is made, the information is passed down. If a person cannot be released for operational reasons, that person is then promoted to provisional rank and we then negotiate with the ship, for example, to provide an opportunity for the person to be released. We have an obligation to do that for remuneration—so they get the same pay and the same seniority. I admit that, because we have been short of people, the number of provisionally protected people we have in the Navy is larger than we wish. We have embarked upon a very extensive program of providing additional courses around the country, and that backlog will be cleared by the middle of next year. But nobody is disadvantaged, provided we stick to that process.

Senator WEST —Are you monitoring the access to courses and the career paths of those who are doing not their initial training but their core training? Are you also monitoring who the high-fliers are out of those core training classes and monitoring their progress? Are you also monitoring on a gender basis the access to training and promotional courses? I have had complaints that women were having difficulty getting access to some of the training places, and some of the ones we spoke to were women. I am aware of a couple of cases where women have been the high-fliers coming out of their core training and specialist training area, and within four years they are doing things like going AWOL, not having had a course in the whole four-year period. Is there some monitoring of that? The ones I am talking about in particular are soldiers, sailors and airmen and airwomen—those with no hooks on their sleeves but who have done well at their initial training and have done very well at their core training; and then suddenly, when it comes to looking at who are getting the hooks on their sleeves, they are not there.

Cdre Rago —From Navy's perspective, if you are talking about an able seaman, for example, that able seaman has to meet certain requirements. Through the reporting process, the appraisal system—where there are counselling processes—that sailor will come out on what we term a `promotion list' in a particular order. The career managers would not know whether these people were male or female.

Senator WEST —The career managers might not, but unfortunately some of their junior officers who are senior to them do know.

Cdre Rago —In Navy's case, we have independent promotion cells, so there is no collusion or potential for collusion within the career management cell. The numbers are run, the promotion list is established and then the people go forward. If somebody has not been able to do a course because they have been out there for operational reasons, they would be provisionally promoted in accordance with that promotion list. To my knowledge, I have seen no gender bias one way or the other in the management of getting people on promotion courses and in promotion itself.

Senator WEST —I do not think Navy has a problem. I might be wrong, but that has not been my anecdotal evidence.

Brig. Evans —I think you said that was your experience with Army.

Senator WEST —I think that is probably correct. I do not want to be too specific.

Brig. Evans —I take what you say. The people that you are talking about are very junior soldiers, as I understand.

Senator WEST —Yes, but they came in with an intention of staying there for 10 or 20 years or whatever—to make a career of it.

Brig. Evans —I think the management of those people within Army occurs at unit level. The nomination for courses occurs within units. I do not know the particular instance and would not know why those people were not nominated. I can only assume that it might have been an issue of a vacancy for the course. Other than that, I would not be able to answer. But I do know that at that level it is a unit responsibility to nominate people for courses once they have done a certain time in rank and are seen as suitable. I would assume that, if you were seen as suitable by the commanding officer of that unit, you would be put on a course.

Senator WEST —What is being done to ensure that there is some monitoring of this? I would assume that you have a fairly stable core of senior NCOs in a unit. Even at the corporal level, your junior crew is fairly stable. The commanding officers and even some of your more junior officers, though, churn through. So the only constant people there who are going to be doing the assessing—bearing in mind that these are the `bottom of the food chain' people we are talking about—are those corporals, sergeants and warrant officers who do not churn through and who stay there. They will influence—and can and obviously would influence—junior officers as to what is going on in the running of a particular unit. I am wondering how we overcome that problem. What monitoring is being done of that?

Brig. Evans —The chief non-commissioned person in those units has a lot of input into the management of those people. He or she would be there for about two years, so that is the kind of stability overlap that you have got there. Other than the commanding officer, at those junior levels things are not really monitored until a person gets a stripe on their shoulder. Then the career managers at SCMA start to take more interest in those individuals.

Senator WEST —So you do not know what is happening to those people. That would mostly be in their first four years?

Brig. Evans —That is right.

Senator WEST —Do you see that as possibly a bit of a problem? I realise that you have got large numbers.

Brig. Evans —I see the issue as one of making sure that we have available courses for people to meet the structure of Army so that we have enough courses for NCOs.

Senator WEST —And with the cost saving that has been going on in recent times, over the last five years or so, there has been a shortage of available courses for some areas too, I would think.

Brig. Retter —I cannot speak in specifics about shortages on courses but I can say that some of the initiatives I spoke about earlier, in particular the use of regional training opportunities where we export the training, are in fact going to increase the capacity of Army to deliver that sort of training significantly. The issue then will not be one of capacity. I think the issue you have been alluding to previously is one of the selection process and the corporate governance that exists within a unit to manage that process.

Senator WEST —That sums it up very nicely. How are you going to address that issue, because it is very hard for us at this level to address within a unit the corporate governance issue and the transparency and accountability that should be there?

Brig. Retter —Strictly this is not my area of expertise, but I would say that from my experience the issue of selection of personnel for any course, be it a trade or a promotion course, is a command responsibility. Every commander is beholden—be they corporals, sergeants, all the way up to the commanding officer of every unit—to ensure that all of his or her people are treated equally and fairly and that they are assessed on their merits. I know many soldiers that I have worked with who have reached a ceiling rank at either private or corporal but are very effective at that level. There is a potential that some people, when they confront the issue of not going any further, do cry wolf in some cases and say, `I've been unfairly treated or not given the opportunity.' I would like to think that they are the rare exceptions and that in the main the processes and the leadership qualities that we instil in our people ensure that all of our people get a fair opportunity of being selected if they have the potential to go on.

Senator WEST —I am also wondering about gender issues in that particular area, but we will run out of time if I keep pursuing this so I will leave it there. I have raised my concerns.

CHAIR —Yesterday we had Dr Nick Jans appear before the committee. I do not know if you have seen his evidence of yesterday. He mentioned to us the interesting concept that to get on within the defence forces, particularly in the middle to senior ranks, you have to be more of a generalist than a specialist. If you were a specialist, your chances of promotion were fairly limited—not entirely limited but the Defence Force has more of a generalist approach. In other words, it does not matter whether you are Army, Navy or Air Force; you have to know all the tricks of that particular trade and then you will move on to another trade. In fairness to him, he put to us a broad concept that there might be value in having a more specialist focus such that someone in Defence personnel would work their way through Defence personnel. That might be a slow process in some ways, but it would lead to a greater degree of consistency at the top levels, ensuring that the management of that business was more closely and tightly contained. Is there a view about that?

Rear Adm. Shalders —That is one view, and that is one way to skin that particular cat. I accept that you start off as a specialist and then you transition to becoming more of a generalist. As I look along this table, I note that is exactly the career paths that all these gentlemen have followed. If the point of your question was whether we need an HR specialist category of person that spends all of their life in HR and does nothing else, I would have some concerns with that, because I think you do need to be exposed to what the Defence Force does beyond what might happen in the ivory tower of HR, wherever that might be.

CHAIR —Is there such a place as the ivory tower of HR?

Rear Adm. Shalders —I believe that there would be merit in developing some of our people along that HR stream, and there are people in the Defence Force who are following that path. For example, a member of my staff has a PhD in HR related areas. However, I am not sure whether we should solely follow that path for everybody who works in DPE.

CHAIR —In fairness to the remarks made by Dr Jans, I do not think his comments related solely to DPE; I think they were more broadly spread across the Defence Force.

Rear Adm. Shalders —I am familiar with his research and with the tack that I think he probably put to the committee yesterday.

CHAIR —This probably gets to the heart of it: in terms of recruiting, what can DFRO do that Manpower cannot do? Is there anything? Or is there anything that DFRO cannot do that Manpower can do? In other words, what are the deficiencies in DFRO that would cause a need for outsourcing?

Senator WEST —Or can they be addressed internally?

CHAIR —If it is a matter of processes or more modern technology or techniques, can that be addressed in DFRO, and if it has not been addressed why has it not been addressed?

Rear Adm. Shalders —I will give you a general answer and then ask Colonel Bornholt to comment. The answer to that question will obviously be a central part of the ongoing evaluation on which you were taking evidence this morning. As you heard this morning, that evaluation will be conducted before next September.

CHAIR —That was not my question. My question is: what can DFRO not do now that Manpower can do?

Rear Adm. Shalders —Again, the evidence you heard this morning suggests that the two sides do the job in a very similar way. The percentages given to you this morning suggest that we are very close. We have been asked to conduct a trial, which we are now doing.

CHAIR —But that is a different issue. That is conducting a trial to look at the issue of outsourcing. I am specifically interested in what DFRO cannot do that Manpower can do, and I think that the answer is nothing. In my view, in terms of the capabilities within Defence, I can only speak highly of the people who have come before this committee in terms of their qualifications and their commitment to the job. I understand that there are a number of MBAs floating around and that there are people with higher education qualifications within the Defence Force. It seems to me that the simple answer is that there is nothing that DFRO cannot do that Manpower can do, and vice versa. Sorry, the vice versa does not work, because unless Manpower has military personnel embedded in it, its task of Defence recruiting is difficult.

Rear Adm. Shalders —I would like to keep my powder dry in respect of a response to that. I think that we are doing an appropriate trial and we will get an answer in extensive detail as a result of that trial. I am not sure of the answer to your question, but I am sure that we are going through a process that will give us a solid answer to that question. I am not sure whether Colonel Bornholt has anything to add to that, and, given the timing, I am not sure whether we want to go too far down that track.

CHAIR —Do not turn him off because of time. I welcome Colonel Bornholt's comments.

Col. Bornholt —It would be fair to say that, if we had not downsized the Defence Force Recruiting Organisation as a result of DRP, we would not have gone down the outsourcing trial path.

CHAIR —I accept that.

Col. Bornholt —There is no doubt in my mind that the DFRO can produce comparable results to those of an oursourcer. The question is: how many uniformed people do we need? A trial may or may not prove what that level is. Holistically, we need uniformed people to counsel prospective candidates on Defence careers. Manpower has the potential perhaps to bring to the table better processing than we could provide. We do not know what they cannot do yet. We do not know whether we are buying better quality—

CHAIR —You sell yourselves short. You people have the capability to bring about better processes within your organisation. That is my humble view, and I am not asking you to do anything other than listen to my comment.

Col. Bornholt —I conclude with the submission that I have tabled. I think we know what the solutions are from a recruiting perspective. There is a clear message in all the evidence that has been provided to you, and it is that we need more people to deliver face-to-face services. We need some examinations of a better process, we need to look at some options to allow enlistment to be more flexible, and we need a better IT platform. There is nothing new, from my perspective, in the inquiry; there is nothing that we do not know and there is nothing that we are not acting on.

CHAIR —Colonel Bornholt, would you be able to provide the subcommittee with the number of pilots recruited by Sydney and Melbourne recruiting units separately by quarter; that is, the three months from 1 October 1999 to 30 June 2000, and then from 1 October 2000 to 30 June 2001? If you have already provided that information, please draw it to our attention. It is one specific issue that the subcommittee is concerned with.

Col. Bornholt —I do not have specific information by months—we just do not have that—but I can tell you that in the financial year prior to the outsourcing trial the Australian Defence Force Recruiting Unit in Melbourne put forward 28 candidates for selection. In the last financial year and the period that Manpower were performing the service for us in Victoria, they provided two candidates to the selection board. To give you a comparison, the Central Pilot Selection Agency has been responsible for looking at pilots for the ADF, not just for the Air Force, since the start of this year. I have specific calendar year results to date.

CHAIR —You gave us the two previous financial year results for Melbourne. What about Sydney?

Col. Bornholt —I do not have the Sydney figure.

CHAIR —Can you give us the Sydney figure, please?

Col. Bornholt —Yes, I can, but I can give you this information now to compare Sydney with Melbourne based on this calendar year. In the southern region in this calendar year, for all avenues of pilots, MDR had 69 applications and three of them got to the board. In New South Wales, there were 93 applications and 20 of those went to the board.

CHAIR —Is there any reason for the disparity?

Col. Bornholt —There is no evidence to suggest that there is a trend or that there is a reason. However, Mr Jackman will have indicated to you that he was concerned about the results that Manpower had achieved in the 12 months in officer entry across the board. We share the concern that they have not performed well in officer entry.

CHAIR —Mr Jackman said that he had no problems with any contract being made available to the subcommittee. Do we have that contract?

Col. Bornholt —At the last SLC we indicated that we were happy to give you the contract. I can give you the previous contract and the amended contract, if you desire.

CHAIR —Yes. Please supply that to the secretary. We now call some additional Defence witnesses.

[12.05 p.m.]