Department of Defence

[09:02]

CHAIR: Last night we concluded program 1.7, so we are going to begin this morning with program 1.8, but Senator MacDonald has an additional question he would like to place on notice in relation to program 1.6. Senator MacDonald.

Senator IAN MACDONALD: Thanks, Chair. I refer to the Joint Logistics Unit and the Wearing, Bandiana, issues in Townsville that we talked about. I heard overnight that a lot of the Bandiana work done by BAE actually goes to a subcontractor. My question would be to add to those that have been taken on notice. As I understood, the Admiral said yesterday that he was going to redo the answers. If I could just alert him to the issue relating to subcontractors to BAE at Bandiana and what their part in it is—that is, how the bills are paid and whether the bills from BAE include the bills from this subcontractor there.

Air Marshal Binskin : We will take that on notice, Senator.

CHAIR: Mr Richardson, I have been advised that there are no questions for outcome 1.9, Defence, science and technology, so those officers are excused. So we go to program 1.8, Defence people, and I will give the call to Senator McEwen, because she has to go to another committee.

Senator McEWEN: Thank you. I would like to get an update on the recruitment of women into the ADF—and I asked questions about this at the last estimates—and in particular from the point of view of how we are going getting women into more senior roles into the defence forces. Also an update as to whether or not the women in combat decision has encouraged any more women to join the defence forces of enabled them to move into more senior roles.

Gen. Hurley : I will ask General Fogarty to go through that. He can do the detail on where we are at with recruiting figures and so forth.

Major Gen. Fogarty : Good morning. I will just start with recruitment. Our performance of the recruitment of women into all three services this year has been significantly better than it was last year, particularly the Army. I will ask the Chief of Army to talk about that. A range of new initiatives have been introduced by Army to make it far easier for women to join. They have been very successful to date.

Lt Gen. Morrison : As I briefed at the last estimates, along with the CDF, the vice chief and the other two service chiefs, there is a major focus on not just the recruitment of women but also, as you said in your question, the placement of women in specific areas. That is certainly the case in Army. You may be aware that I publicly named a target for Army to take what was the traditional participation in our army workforce of about 10 per cent to 12 per cent by the time I finish my tenure in the middle of next year. I am very pleased to be able to report that, with the assistance of Defence Force recruiting and the people's group, we have seen a significant increase over the course of this year alone, taking women to 10.7 per cent of the Army workforce. To put it in numerical terms, 0.7 per cent that is just under 300 women who had been recruited and retained in Army above the strength that we had at the beginning of this year. That augurs well for getting close to achieving, or indeed hopefully exceeding, the target that I have set by the middle of next year. In terms of the reserve, that figure is now at 13.4 per cent as of May this year, which again is a significant increase. To give you an idea, permanent force female enlistments for this financial year to date are 15.2 per cent, in comparison with last financial year where enlistments had been 11.7 per cent of our overall recruiting.

We have been able to increase the number of women in particular rank levels in Army as well. For example, the number of female sergeants is now at 11.2 per cent, warrant officers at 9.2 per cent, lieutenant colonels at 11 per cent, colonels at 9.1 per cent and brigadiers at 10.5 per cent. I would point out that they have all come from figures of well below 10 per cent. So we have seen a number of our talented women placed in senior positions either in the other rank’s streams or in the officer’s streams over the course of the last year. I am very satisfied at the moment with the direction that Army is taking.

Senator McEWEN: Can you attribute that welcome increase to any strategies in particular? Are there some things that are working better than others?

Lt Gen. Morrison : I will not speak for the other two service chiefs, but I would certainly say that the interaction that I have had with Elizabeth Broderick, the Sex Discrimination Commissioner, influential groups such as the CEW, the Human Rights Commission and the UN women's area, have all been very influential in providing advice. There has been some great work done by the people's group within army, particularly under the leadership of Carmel McGregor and Gerard Fogarty. I think, too, that the Defence Force recruiting campaigns that have been undertaken have really underscored the opportunities for women not just in the three services but, from my own perspective, in Army. In addition, we have changed some policies with regard to making opportunities available to women to buy leave and to share leave with their service partners. We are looking at some of the housing arrangements to allow an extra room to be part of housing arrangements so that a couple, if they wish to, would be able to employ a live-in carer. That has been very popular. That has yet to be completed but is well on the way to completion.

In Army we have changed the way we are trying to manage talent. That is certainly non-gender specific, but, as I have said, good policy for women tends to be good policy. We have tried to find a different way of judging merit to allow women, particularly through those years where they may wish to do something else with their lives like have a family, to move in a non-traditional career path that sees them return from maternity leave without any detriment in terms of time in service or travelling with their particular peer group. That, too, has given a very important message to the women in Army and those women in the Australian population who are looking at Army potentially as a career.

Senator McEWEN: Because of your family friendly type policies, is there an increase in the numbers of women who may have been permanently in the force, had a family and then joined the reserves?

Lt Gen. Morrison : There is. I will get either the Vice Chief or General Fogarty to talk Plan SUAKIN, which is a very significant human resources initiative inside the department in terms of both regular and reserve services. I would also make the observation that we have asked and had favourable responses from a number of our women in the reserve force as to whether they would like to join the Regular Army. We have seen, because I think some of the initiatives that have been put in place, quite a significant take up there. That all helps make achievable the growth in percentage terms in the workforce, but also at particular rank levels with particular experiences behind them.

Major Gen. Fogarty : What Chief of Army has described is a significant momentum that we are also seeing occur in the other two services. For some time now, many of our serving women have moved from the permanent force to the reserve force, and some have come back to the permanent force. But what we envisage in the future is a much more contemporary employment model, which does not envisage a significant issue as you move from one component of the force to another. So we envisage a series of service categories that would start at casual labour, through to part-time employment, permanent part-time employment and then full-time employment. We envisage a seamless move as you move up and down the continuum, with changes to our remuneration, superannuation and allowance structures to accommodate that. As you know, currently reservists do not earn superannuation. One of the big issues when you are moving from the permanent force to the part-time force, depending on your stage of life, is losing superannuation. We are well advanced in designing that employment continuum, and we envisage that over the next two or three years we will start moving to implement components of that.

Senator McEWEN: Very good. And the Navy and Air Force? Obviously the Army was coming from behind, if you like, in terms of the recruitment for women. I do not necessarily need to hear from those other two services unless there something spectacularly different has happened. I know you have a good record.

Air Marshal Brown : We have not been quite as vocal with what has been going on in the Air Force. I would just like to point out to the Senate that we are up to 17½ per cent. That is a 0.36 per cent increase since January 2013. I think that we have some very significant results in promotion. For 2013 the promotional results is that of the 15.8 per cent of women who were eligible, the overall promotion rate was 19 per cent. For airmen promotions, 15 per cent was our percentage of women and 17 per cent of the promotees were women. For wing commander results, 16 per cent were women and the promotion rate was over 24 per cent. In the one star and above, where we only have a seven per cent participation rate for women, 20 per cent of the promotees were women in that group. We have had a lot to do in all our groups where we have less than 25 per cent. We have done a significant amount of work in expediting recruitment into non-traditional roles by targeting the recruitment of female pilots, developing mentoring networks across the technical and, especially, within aircrews. It has been a significant result. We have looked at actually decreasing the initial minimum service to try and attract more female participation in the RAAF.

Senator McEWEN: So women like flying in planes, too?

Air Marshal Brown : I think so. We have done a lot of work around that area to try and see how we could actually attract more women into that area. So it is a significant focus for us.

Senator McEWEN: Excellent. In terms of women moving to bases, is that an issue? What have you done to accommodate women with children in Air Force?

Air Marshal Brown : What we have looked at is recruitment to agreed preferred locations. That is one of the initiatives that we have taken so that they have a better support network.

Rear Adm. Campbell : I am representing CN here today. Navy is in a pretty good place in respect to women. We have over 18 per cent women, which is over 2,500 people in the Navy. They are across the board in command positions. Not only do they like flying aeroplanes; they do not mind commanding ships or shore establishments either—and they are pretty good at it. We have lifted all of our gender restrictions now. We had one final one in the diving category, and that has now been lifted. So we do not have any restrictions at all, together with the other services. I would echo what Chief of Army said about Broderick: our work there has been great. We have a women's leadership strategy as well, which does a lot of work in mentoring and networking. We have a strategic women's adviser and that is working quite well as well. Our recruiting rates are up slightly. Our recruiting rates for ADFA are up markedly from about 23 per cent to about 35 per cent. So we are pretty comfortable with where we are. We are still working hard to improve.

Gen. Hurley : You will recall that when Ms Broderick did her two reviews— one on the treatment of women at ADFA and one on the treatment of women in the ADF—there was a series of recommendations, obviously, that came out of those reviews. The Chief of Staff Committee considered those last year and this year. Last year we did ask for some more work to be done on some of the more difficult recommendations that face us, which really were a cultural challenge to the organisation. About two months ago COSC met again to look at all of those recommendations and agreed to them all. So there were specific measures in there to set targets for the composition of the forces, in terms of what the ratios would be with women when setting targets over a period and so forth. Looking at the promotional processes, we are going through setting targets for the number of women in each of the promotion groups. I have bought Ms Carmel McGregor, the deputy secretary of defence personnel into the star officer career promotion and selection process. So she sits on that with the service chiefs and so forth. So we have tried to broaden the pool and bring from outside of the normal uniform mix looking at promotions so that women are represented in that process. Major General Fogarty might want to add to that.

Major Gen. Fogarty : The Chiefs of Service Committee agreed to specific targets for participation rates of women over the next decade. Twenty-five per cent is the target for the Navy, 25 per cent for the Air Force and 15 per cent for the Army. It also agreed, as the chief said, to a number of targets at key gates through which members of the Australian Defence Force get selected for senior appointments. So there will be specific targets for women identified at those points. Also, they agreed to specific targets for flexible employment, so that we could track how many of our people, not just women, are actually using flexible employment, and setting a target and then promoting that to achieve the target. We are also ensuring that every promotion board and decision-making body in Defence has at least one woman on the board.

One thing I would like to add is particularly about recruiting, because we have had a very successful campaign over the last year in the recruiting process. We have completely unpicked the recruiting process, identified where the blockages were for women and then addressed them specifically. For example, we found that many women were intimidated when they came to the initial recruiting centre. They found that they were surrounded by 35 men and that they were the only woman. So we have put women to come in together in groups. That has served us enormously well.

We have identified physical fitness as a major issue in terms of getting women into the services. At the moment, Army are trialling taking women in who cannot pass the physical fitness test and then running a special conditioning program over a period of one month to get them over the entry barrier. We have also produced women specific recruiting teams. Some of our brightest young women have come to the recruiting centre for two years and they go out running specific campaigns that are supported by a media campaign focusing just on women.

Gen. Hurley : Your final question was in relation to the take-up of women into combat related categories. Just a reminder that from 1 January this year we opened the following categories to women: clearance divers, mine walkers and clearance diving officers in the Navy; infantry, armoured corps, the remainder of the artillery roles, explosive ordnance disposal squadron—engineers, essentially—and combat engineering squadrons in the Army; and the airfield defence guards and the ground defence officers in the Air Force. That represented seven per cent of the employment categories in the ADF of 77 per cent of the total number of jobs. To date, less than 20 women have applied to take up those positions. Those that have are reporting that they are being well supported in the process of that application and endeavouring to qualify into those processes. Again, to reinforce, we were not expecting to be rushed off our feet initially by this, and we deliberately opened the doors in the first step to women who are currently in the service and who understand the service and the support mechanisms and so forth that are in it. We will continue to push on this to open the door, and we will open the door to the general public I think next year.

Major Gen. Fogarty : 2016.

Gen. Hurley : Sorry, 2016. Again, the important thing that we can say is that for any woman who walks into a recruiting branch of the ADF around the country, all jobs are open to them. If they meet the performance standards they will be supported to have a successful career like any other person.

Senator McEWEN: Thank you very much, gentlemen, for sharing that information with us.

Senator EGGLESTON: What is the comparison between our involvement of women in combat situations to other NATO countries—the American and British forces in particular?

Major Gen. Fogarty : I can answer that in two ways, Senator. Let me first give you our participation rates of women globally compared to some other nations to give you an idea about our current performance. Our current dissipation rate is 14.3 per cent. New Zealand currently has a participation rate of 16.3 per cent.

Senator EGGLESTON: In the armed forces?

Major Gen. Fogarty : In the armed forces. The USA has 14.6 per cent, so we are about equivalent to the USA. Canada has 13.8 per cent, so we are doing better than the Canadians, and the UK has 9.6 per cent. So we are doing better there. That is across the board.

Senator EGGLESTON: Yes, I understood that.

Major Gen. Fogarty : Now in relation to women specifically in combat roles, nations that currently have women serving in their military close combat categories are Canada, Denmark, Finland, France, Germany, the Netherlands, New Zealand, Norway, Poland, Romania, Spain and Sweden.

Senator KROGER: Israel is not one of those?

Major Gen. Fogarty : No, it is not.

Senator EGGLESTON: They have a lot of women in their armed forces.

Major Gen. Fogarty : They do. We closely monitor what the Canadians have been doing in this regard, because it has been over 20 years since the Canadian armed forces opened up all their combat trades to women. Today they have about a 3.8 per cent participation rate directly in their combat trades. So, as CDF said, we were never expecting that we were going to be flooded with women wanting to come to combat trades. In fact, the experience since we opened up our trade since 1 January this year is roughly what we expected. Many of our people who are currently serving are fully satisfied with the work that they are currently doing. It is a big step to actually change employment categories, and many do not wish to because they are thoroughly satisfied.

Senator EGGLESTON: One of the categories you did say you are opening up was infantry. Do you have any figures of the numbers of women who have applied for infantry postings?

Lt Gen. Morrison : The trade is now open to select women. At this stage, no women have indicated that they wish to join infantry. However, I would make the observation that that was always the most likely trade to lag behind. Indeed, I do not think that there will be a large take-up. The countries that General Fogarty mentioned have seen a very small take-up of women going to infantry. However, we have seen an increased number of women who are graduating from the Royal Military College apply for arms corps. We have our first female officer in the armoured corps in its history. She is now serving with the 1st Armoured Regiment in Darwin. She has completed her selection for that and has been able to take up her position there. We have seen an increased number of women in engineering as well as in artillery. So that will come, I think, over time, but I would expect that the take-up rate will be small and slow in infantry.

Senator EGGLESTON: What does armoured corps mean? What do they do? Are they the people who drive tanks?

Lt Gen. Morrison : They do. So she is in fact now a troop commander in a tank squadron in the 1st Armoured Regiment in Darwin. I believe at the moment she is currently in the field with her tanks, taking part in an Exercise Hamel in the lead up to Exercise Talisman Saber.

Senator EGGLESTON: Do you make any special provisions for women in terms of infantry, armoured corps battlefield situations?

Lt Gen. Morrison : No. In fact in all of our discussions with government and with organisations such as that that Liz Broderick heads, the foundation for opening up the trades to Army, and indeed across the Defence Force, has been that we will not change the standards. Supporting the introduction of women into all areas of Army has been underpinned by the physical employment standards that are now required for all of our particular areas in the Army, and they are non-gender specific.

Senator EGGLESTON: Thank you very much, that is a very interesting answer.

Senator KROGER: Just a brief follow-up to General Fogarty. You mentioned blockages before, and I came in on the tail end of this discussion, so I apologise if the breakdown was given earlier on. But I understand that the number of women in the Air Force is around 18½ per cent.

Air Marshal Brown : It is 17 ½ per cent.

Senator KROGER: So that means that Army must be down to around 10 per cent, or something like that to have an average—

Lt Gen. Morrison : It is 10.7 per cent.

Senator KROGER: On that basis, what are the blockages into Army then, because clearly there must be a reason why you have more women being recruited into the Navy and the Air Force than what they are in the army? If you have touched on that earlier on, I am happy to read the transcript. That is fine. I apologise for that. Did you touch on recruitment into Army Reserve of women?

CHAIR: Yes, we did.

Senator KROGER: Great. That is why you should turn up first thing expeditiously at 9 am for estimates and not 20 minutes into the conversation.

Senator IAN MACDONALD: Minister, you announced the government was proposing to amend the Defence Act to enhance the offence of falsely wearing military decorations. What is the timeline for that? I think you announced that about a month ago.

Senator Feeney: I will have to take that on notice in terms of where it is at in the legislative program. I guess our intention is to try and have that legislation passed, but as to—

Senator IAN MACDONALD: Are you likely to deal with it in the final two weeks of sitting in the Senate?

Senator Feeney: That is the question I do not have an answer to. I will need to find out for you.

Senator IAN MACDONALD: Is there no urgency for this?

Senator Feeney: The prioritisation of bills is, tragically, not a matter I get to resolve. I am aware that there is something in the order of 100 bills heading towards the Senate. So where that particular bill sits in that priority list I do not know.

Senator IAN MACDONALD: I would suggest this is probably more important than most of them, Minister.

Senator Feeney: You might say that. Anyway, I take it from your remarks that when it arrives you will be supporting it, which is a splendid thing.

Senator IAN MACDONALD: I am very interested to see it brought forward. It has been around for a long time. The Operational Service Medal will replace the Australian Service Medal and the Australian Active Service Medal for operations declared after its inception. Have all retrospective operational service medals for border protection, defence and civilian personnel now been issued? Can anyone answer that?

Mr Tomkins : No, they have not. It is a matter of some of the campaigns finishing. With the completion of those campaigns, that will be the end of that process.

Senator IAN MACDONALD: Well, I was asking about all retrospective ones. For campaigns that are finished, have they all been issued?

Mr Tomkins : I will have to check on that for you.

Senator IAN MACDONALD: Can you tell me what declared operations that will attract recognition with an OSM have commenced since the inception or creation of the OSM?

Gen. Hurley : None, at the moment.

Senator IAN MACDONALD: Thank you for that. So none have been declared since the OSM was created?

Gen. Hurley : No.

Senator IAN MACDONALD: Okay. It was suggested to me by my office that this question belongs in outcome 1.8. Is it intended to continue participation the pharmacy clinical placements at James Cook University in Townsville? Apparently there has been some delay in getting the placements for this year. Does anyone know anything about that, or am I in the wrong program?

Rear Adm. Walker : I am not aware of that placement program, so we would have to come back to you on that question.

Senator IAN MACDONALD: If you wouldn't mind. It is a good program at JCU. JCU pharmacy students like participating in it, but I understand there has been some delay in signing a memorandum or something.

Rear Adm. Walker : I am not quite sure, because we do not have pharmacy students within the Defence Force. So I will just have to seek some clarification.

Senator IAN MACDONALD: Their have been pharmacy students at Lavarack before. Apparently there is a pharmacy arrangement there. Anyhow, if you can take it on notice and get back to me. That is all I have. Thank you.

Senator FAWCETT: General Fogarty, going back to the defence efficiency review in 1997, the number of three-band civilians in defence was six. It is currently 17. The number of three star officers was 10 and it is currently 23 or 22, which is a significant increase. Particularly after 2007 it really ramped up. Are there any plans to continue that fairly exponential growth of senior officers or are there any plans to decrease the numbers of senior officers in defence?

Major Gen. Fogarty : There certainly are not any plans to increase the numbers.

Gen. Hurley : I didn't pick up the second number you gave. Was it two- or three-star officers?

Senator FAWCETT: No, three-star officers went from 10 to 23.

Gen. Hurley : Not in uniform. I mean, there are only six 3-star officers in the ADF.

Senator FAWCETT: Sorry, that is the total column I am reading. You are correct. That is the total, including the civilians. So three-star equivalents.

Gen. Hurley : I could say from the ADF perspective, there are no plans to either increase or reduce the numbers of three-star officers.

Senator FAWCETT: Sure. I am looking at the whole of defence, particularly the band three—

Mr Richardson : I might add that, in terms of civilians, there are no plans to increase. Like the rest of the Public Service, we operate under an SES cap. In other words, there is a limit to the number of SES officers that we can have in Defence. That cap has been reduced over the last couple of years and we are operating within the cap.

Senator FAWCETT: Are there any plans for further reductions?

Mr Richardson : There are no plans for further reductions at this point.

CHAIR: We now move on to program 1.10, Vice Chief of the Defence Force and Senator Johnston, you have the call.

Senator JOHNSTON: I would like to talk about the employer benefit scheme.

Senator Feeney: The ESPS—the employer support.

Senator JOHNSTON: Yes the support scheme. What has happened to that?

Air Marshal Binskin : It is still there, Senator.

Senator JOHNSTON: So there are no changes to it? It is running smoothly?

Air Marshal Binskin : No, there has been a change in legislation. I will get General Paul Brereton to take us through where we are at.

Major Gen. Brereton : The scheme has been the subject of two tranches of amendments over the last 12 months. The first was in July of last year, and introduced a value for money test for self-employed reservists, and devolved some of the decision-making to service chiefs. The second, with effect from 1 January this year, devolved all of the decision-making to the service chiefs, whereas some had previously been done in the directorate of Employer Support Payment Scheme. It also introduced the sunset clause, under which the scheme will expire on 1 July 2014 unless previously amended or extended. In the light of that, it is defence's intention to undertake a review of the scheme to provide advice to government before the end of this year. As to the future of the scheme, the essential question in that review will be whether the scheme is providing value for money in terms of cost effective capabilities for defence.

Senator JOHNSTON: Very good. Who is doing the review?

Major Gen. Brereton : The principal input to the review will be the service chiefs. It will be undertaken on a tri-service basis by defence, but the principle source of advice to it will be the service chiefs as to whether they are getting value for money from it.

Senator JOHNSTON: The scheme, I think, was very useful with respect to deployments to the Solomon Islands and East Timor. Has that diminishment of operational intensity meant that the scheme has come into question because we do not need the reservists?

Major Gen. Brereton : General Fogarty has already spoken to you about the future of Plan SUAKIN and the ongoing requirement for a significant reserve component. Although there will be a reduction in the level of operational deployments as we draw down from operations, that does not, in defence's view, reduce the requirement for a reserve and the availability of reserves, and the scheme will potentially remain very important in ensuring reserve availability when it is required.

Senator JOHNSTON: I am pleased to hear you say that.

Senator Feeney: Just on that, if I may, I would also point you to Plan Beersheba, which obviously entails a strong role for Army Reserves in 2 Division.

Senator JOHNSTON: Thank you, Minister. How long has this scheme been extent?

Major Gen. Brereton : It was introduced in about 2001. In 2002 it commenced.

Senator JOHNSTON: When did we begin to question its value?

Major Gen. Brereton : I do not think that Defence has questioned its value. What we have looked at is some refinements of it to ensure that we are getting value for money from individual applications of the scheme to individual applicants. But I do not think that Defence has questioned the value of the scheme as a whole in providing capability when required, particularly for the type of operations that you have identified in the Solomon’s and in Timor. So the real question, and what has caused it to be examined, is whether for some individual applications we are getting value for money, not whether the scheme as a whole provides value for money.

Senator JOHNSTON: So the eligibility criteria have been a bit fuzzy?

Major Gen. Brereton : It is probably fair to say that 10 years ago the eligibility criteria were sometimes fuzzy. That has been progressively tightened up in a series of amendments to the scheme over the last decade. As there are for eligibility for entitlements under any scheme, whether it is a pension or anything else, there are always some borderline cases. I do not think that there are proportionately any more in respect to this scheme than anywhere else.

Senator JOHNSTON: So broadly we are attracted to the review from the perspective of the capability manager, namely the service chiefs, looking at what they need and being able to fulfil those requirements more expeditiously and more flexibly than the broad application of the scheme across all reservists? Is that the sort of direction we are headed?

Major Gen. Brereton : We are not set on a particular direction so far as the outcome of the review is concerned. We do not, in military terms, want to situate the appreciation before we carry it out. We want to make sure in the review that the service chiefs are satisfied that the way the scheme is presently structured is providing them with value for money, and is not simply providing a means of supporting employers without extracting value for money from that expenditure of Commonwealth funds.

Air Marshal Binskin : At the end of the day, the three service chiefs, as the capability managers, know their force requirements. So they are best placed to be able to make a decision on a cost capability trade, which is why they have got that. It is the best place, I think.

Senator JOHNSTON: It is not going to be a public document that reviews the scheme. How will we know of the end result of the service chief’s inquiry and what the consensus will yield with respect to these payments?

Major Gen. Brereton : When the committee for scrutiny of delegated legislation sees the amendment to the scheme that extends the sunset date.

Senator JOHNSTON: So the sunset date is the key to the survival of the scheme.

Major Gen. Brereton : Absolutely.

Senator JOHNSTON: What is it costing us at the moment?

Major Gen. Brereton : It has decreased in recent years, essentially as we have drawn down from operational deployments. Off the top of my head, it is about $17 million a year.

Senator JOHNSTON: Thank you for that, General. I appreciate those enlightening comments. Chair, can I move on to the health care program now?

CHAIR: Yes, absolutely.

Senator JOHNSTON: Can I talk to you about the family health care program that has been delayed over some years now? I think we started off back in 2008 with a plan to provide family health care to Personnel. Where are we up to with that and what is the current status of that plan.

Rear Adm. Walker : As you alluded to, the ADF family health care program has been in place for some years. It was set up initially as a trial by government in eight locations, from memory. That provided funding for general practitioner appointments and an amount of money towards some specialty care. The program has changed a little over time. Originally, general practitioners in regions had to sign up to the program. That was changed such that they did not need to sign up. You could go to any general practitioner, and if they were not bulk-billed we would pay the difference between the gap payment. The government has agreed that we will roll that program out nationally to all ADF dependents from January 1 of next year. There is currently a tender process underway for the management of the registrations, management of the enrolment of the dependents, management of the invoicing and the payment of the fees. So I will not talk about that.

Senator JOHNSTON: Does it have a DCP number?

Rear Adm. Walker : No, it does not. It is not part of the DCP. And that is expected to enable us for a roll-out on January 1 next year.

Senator JOHNSTON: Is the cost to that in the forward estimates and the budget?

Rear Adm. Walker : It is in the joint health command budget.

Senator JOHNSTON: And how much is it?

Rear Adm. Walker : It is approximately $61 million next financial year.

Senator JOHNSTON: This is across the eight locations?

Rear Adm. Walker : No, that is across Australia. That is nationally.

Senator JOHNSTON: And we have not chosen a contractor yet to administer—

Rear Adm. Walker : No, the tender process is under way.

Senator JOHNSTON: When will it close?

Rear Adm. Walker : It closed, I believe, last Friday.

Senator JOHNSTON: So it is being evaluated?

Rear Adm. Walker : Yes.

Senator JOHNSTON: When did the trial commence?

Air Marshal Binskin : The trial commenced in May 2009 in five regional and remote areas. In October 2009 we went to an additional three regional and remote areas. So it has progressively grown over time and we have learnt a fair bit out of it as we have gone through.

Senator JOHNSTON: Can you tell me the five and then the three?

Air Marshal Binskin : The trial commenced on 1 May 2009 and was expanded in 1 October 2009. ADF dependents in the following regions were eligible: Singleton in New South Wales, Cairns, Mount Isa, Thursday Island, Townsville and Weipa in Queensland; Alice Springs, Darwin, Katherine and Nhulunbuy in the Northern Territory; Puckapunyal and Sale in Victoria; Broome, Carnarvon, Derby, Exmouth, Karratha, Kununurra, Newman, Port Hedland and Tom Price in Western Australia.

Senator JOHNSTON: That is more than eight.

Air Marshal Binskin : Yes, probably fighter pilot maths. I am sure that some of those would count as regional groups.

Senator JOHNSTON: So Townsville is the big one.

Air Marshal Binskin : Townsville would be.

Rear Adm. Walker : And Darwin.

Senator JOHNSTON: Quite right, and Darwin. So what data have we got from those? What was the take-up like and what was the cost? What can you tell me about Townsville and Darwin? What can we glean from the trial in terms of data?

Rear Adm. Walker : The take-up rate in June 2010 was 24 per cent of the eligible dependents, based on 2007 defence centres data.

Senator JOHNSTON: Is this at Townsville or across the board?

Rear Adm. Walker : No, that is across those locations that were in the trial.

Senator JOHNSTON: Why so low?

Rear Adm. Walker : Part of it was that originally, as it started you had to go to, as I said, to GPs that had signed up to the program. Some of the members in those locations were already seeing practitioners. They were happy. They did not want to change. Some of them were already seeing people that bulk-billed, so it was alright. There are also fringe benefits implications for participation in the scheme which affects some of the family benefit allowances. So individual families make their own decisions.

Senator JOHNSTON: So there is a penalty in using the service scheme, potentially, for some people?

Rear Adm. Walker : Well, I would not call it a penalty.

Senator JOHNSTON: A reduction in benefits.

Rear Adm. Walker : There is an impact on some of the family care benefits.

Senator JOHNSTON: That 24 per cent suggests that in going forward we have a potentially much larger take-up if this scheme is accepted and becomes the norm across all of Australia.

Rear Adm. Walker : It is, but that was in June 2010. The take-up rate in September 2011 was 31 per cent, and in October 2012 it was 38 per cent. So we have made some changes to how they accessed it. We do not believe that 100 per cent of dependents will take it up.

Senator JOHNSTON: What is the percentage you think will take it up over time?

Rear Adm. Walker : Some of the trial evaluation data that we have suggests that 74 per cent of members have rated this as extremely important in influencing their decision to stay in the ADF. Seventy-four per cent of families said they would like to access the family health benefits. So it just depends. That is the type of figure we are looking at, but only time will tell.

Air Marshal Binskin : Those percentages were what we based our costing on.

Senator JOHNSTON: Seventy-four?

Air Marshal Binskin : I will get the exact percentage, but it was not a 100 per cent take up. I think that is where you are heading with that question.

Senator JOHNSTON: The 61 is 74 per cent. Is that fair and reasonable?

Rear Adm. Walker : Yes.

Senator JOHNSTON: Next year's budget is 74 per cent of take-up.

Rear Adm. Walker : It is based on around that, yes.

Senator JOHNSTON: Okay, that sounds reasonable. Can I ask about the other scheme that we are running with Medibank Health Solutions? How's that going? Firstly, how many complaints have we had? You are smiling, so there is obviously good news from your point of view.

Rear Adm. Walker : Since the implementation of the five service packages in September last year to 30 April this year we have had approximately 546,000 episodes of healthcare delivered under the contract.

Senator JOHNSTON: Sorry, what was the beginning date?

Rear Adm. Walker : September. That was the transition of pathology and x-ray—

Senator JOHNSTON: That was in 2012. Until when?

Rear Adm. Walker : To 30 April this year. We have had 546,000 episodes of healthcare.

Senator JOHNSTON: What is the definition of an ‘episode’?

Rear Adm. Walker : Someone seeing a health provider.

Senator JOHNSTON: And a bill being paid?

Rear Adm. Walker : Or an invoice. Or, within the on-base where we provide it, it is the people who are attending the health centres, because we do not bill per item of attendance on our on base. We bill according to the staff that we hire under the contract.

Senator JOHNSTON: Are those all uniformed service personnel in that 500,000 figure?

Rear Adm. Walker : Yes.

Senator JOHNSTON: Goodness me. Is that normal? We are talking six months.

Rear Adm. Walker : That is the health care that we provide, which is acute care, general practice care and it is occupational health, which is the examinations for medical employment reviews. It would be examinations under health surveillance, psychology appointments, mental health appointments, dental appointments and it is rehab appointments. So it is the whole provision of health care that we provide.

Gen. Hurley : The point to take from those is that not everybody who turned up was ill. A lot of it is the preventative processes we go through with annual checks and so forth.

Senator JOHNSTON: I see. So a proactive analysis and consultation. People are not necessarily suffering an ailment, they are just consulted?

Rear Adm. Walker : The health care that we provide is the acute care to people who have an illness or are unwell. It is also the occupational fitness for duty. So it is the assessment of our annual medicals and our preventive dental health examinations. So it is the range of healthcare that we provide so that we have a force that is fit to deploy.

Senator JOHNSTON: So, if I said to you, seven months, 500,000, then we are looking at about 800,000 or 900,000 per annum?

Rear Adm. Walker : We just have to remember that the off base solution and the on base only started in November, so it might be a bit more. We will have the figures.

Senator JOHNSTON: Yes, you're right. Do you have the previous data dating back several years beyond the commencement of the scheme? And is there something we should be aware of in terms of those numbers?

Rear Adm. Walker : No, we do not have the data. That is one of the reasons we went to the contract, because we did not have the data and we were not able to understand, from a corporate sense, what healthcare we were providing. What this data now allows us to do is look into that data, look into what we are providing and compare it within practitioners within the facility within that cohort. You expect a sort of bell curve. Do we have the right amount of servicing? Are we providing the right amount of healthcare? This data now allows us to drill into that.

Senator JOHNSTON: What did we anticipate in the contract for the contractor? What was the contract based upon in terms of broad gross numbers, approximately?

Rear Adm. Walker : We did not have that data.

Senator JOHNSTON: So they are flying blind, and we are realising now that we are looking at about 1 million episodes a year?

Rear Adm. Walker : I do not think we are flying blind. The contractor entered into the arrangement with clear, open eyes. The reality is we have a defence force of 58,000. We have to provide standard healthcare and the occupational health care assessments. So that was clearly articulated. But one of the points of going to the contract was to allow us to understand and have the data that allows us to be able to drill down into our business and give you these types of figures.

Senator JOHNSTON: So the contract is running well in your assessment?

Rear Adm. Walker : The contract is embedding. We are still working with the contractor in some areas to continue to improve the service.

Senator JOHNSTON: What are the problem areas?

Rear Adm. Walker : Currently, there are some issues with the provision of on-base contract health practitioners in some locations.

Senator JOHNSTON: What are the locations?

Rear Adm. Walker : The ones that concern me most are Darwin, Townsville and Kapooka.

Senator JOHNSTON: That is the feedback that I have been getting, and I think members have been getting that sort of feedback—particularly Darwin.

Rear Adm. Walker : Darwin particularly is an area where the civilian health infrastructure is certainly not as large as if you were in a major capital city. However, the contract requires our fill rates on our annual workforce plans—so that is the number of practitioners that they are to provide—to be 100 per cent of critical positions and 94 per cent of what we call non-critical positions. We have not met that to date in Darwin or Townsville, and we are working with the contractor, who is working with their subcontractor to meet those KPIs.

Senator JOHNSTON: I think the civilian population suffers a very similar problem, may I say, in Darwin, as a number of locations in Western Australia have to come to terms with. It is a city, but it still has provider issues. What is the prognosis for Darwin?

Rear Adm. Walker : Our expectation is that we will have all our positions filled by appropriately qualified, credentialed and permanent staff. The vice chief and I met with George Savvides, the CEO of Medibank Private last week, and that position was clearly articulated. They clearly understand our intent and are working on those areas in particular. We will be continuing to engage with them on a regular basis until we have a solution that is acceptable to us.

Senator JOHNSTON: How is the hotline running?

Rear Adm. Walker : The hotline is running well. I can tell you—

Senator JOHNSTON: I hope it is not too hot, I think is the way we might describe the hotline.

Rear Adm. Walker : Since its inception, we have had over 7,000 calls. On average, we receive 700 to 800 per month; but that number doubled during the Christmas holidays, December-January, when our facility was closed. Feedback from our personnel indicates that they are satisfied. They have recorded that call handlers are 'competent, polite and have provided appropriate and comforting advice that met their expectation'. We have had 51 complaints out of that 7,000; but 56 per cent of those complaints have been found to be unsubstantiated when we have investigated.

Senator JOHNSTON: So about 26 complaints were unsubstantiated?

Rear Adm. Walker : There have been instances where a member has been sent to a hospital without an emergency department. We had one incident where a member was sent to a maternity hospital instead of an acute care hospital. Those incidents have all been managed quickly. Part of it is about educating the call handlers about the regions in which our people are, having experience in what the facilities are in those locations and increasing their awareness of our population.

Senator JOHNSTON: Thank you for that. It is much appreciated.

Senator FAWCETT: On GP training, how many registrars do we have who are training with the ADF?

Rear Adm. Walker : I would have to take that on notice; I do not have those figures to hand. As part of our development of medical officers, the majority of ours will go through the RACGP—Royal Australian College of General Practitioners—training program, so the majority of our members become GP trainees. In the services, whilst they are in their first two years post finishing university, where possible, we try to get one of their first GP terms in part of their hospital training. There is a requirement for GP training within a broader population than our own, because we do not have the elderly and children; we do not have the whole gamut of normal GP practices. So there is a requirement for them to do some training in external practices.

We also have a number of GP trainees' trainers as part of our workforce plan and we put them in locations. I am aware that this year there was an issue at one of the Army bases where we did not have a GP trainer in our base. That was probably due to some miscommunication. We were not aware that we were having a number of those trainees in that location. We can amend the workforce plan to have GP trainers where we need them around the country to provide the supervision in our own facilities. We are working with the services to have that forecast well in advance so that we can continue to provide that training experience also within our facilities. Navy also provides remote supervision for our GP registrars in the later parts of their training who are at sea, so we are able to do that by remote training. We can do that also for people who have been on other deployments; when they are at the later stage, we can do that remotely.

Senator FAWCETT: In March this year, in one of the medical journals, there was a discussion about registrars: of the 104 registrars, a number had had to leave the ADF supervised training and go and predominantly spend time in civilian training because the contract that had been let did not allow for the supervision. Is that a correct report?

Rear Adm. Walker : No, it is not correct—well, it is an interpretation. As I have said, our people do need to go and spend time in civilian practices, because we do not have the broad range of patients that is required in order for them to do that. We have GP trainers in most of our major health facilities, for the very reason that we need to continue to provide that training. As I have said, I think there was one where we did not have one; but, if we become aware of that, we can make amendments to our contract and we can put that in place. As I have said, we are working towards making that circumstance not happen, as we forecast the number of new trainees that are coming into the program.

Senator FAWCETT: So your contention is that that report is inaccurate, that there was only one incident and it was just due to a lack of notice as opposed to a lack of capacity or contractual opportunity?

Rear Adm. Walker : The contractor had not been asked to provide that person at that location. It was not a failure of the contract or the contractor; it was the fact that we had not requested to have that position in the contract. You may recall that Joint Health Command has only recently been formed; previously the services were managing each of their own health services. From 1 January last year, Joint Health Command took over the management of all those health facilities. There has been some communication as we bed down the new arrangements. In that location, that was just something that we both were not aware of in terms of the service and ourselves. But we fixed that and, going forward, there is no issue; if we need GP trainers in facilities, the contract will be able to provide for that.

CHAIR: Senator Kroger, do you have questions under Vice Chief of the Defence Force?

Senator KROGER: I have just a couple of quick ones. Firstly, regarding NORFORCE—the reserve unit up in Darwin—has there been a cut overall to the budget for Army Reserve or, at the very least, has the budget not been indexed on an annual basis?

Lt Gen. Morrison : I am not quite sure of what you mean by 'indexed'. In terms of the overall allocation of Army's budget, there have been alterations made in the wake of the defence budget changes that occurred last year to the amount of money or resources that have been provided to the reserve. As I discussed in answer to a question yesterday, I am—and have been throughout—satisfied that the resources that have been provided to all of the Army Reserve units, whether they are in the second division or whether they are in the regional force surveillance units, have been sufficient to allow for the levels of capability that are required from those units, and that certainly still remains the case with NORFORCE.

Senator KROGER: So how are any requests considered by individual units—for instance, NORFORCE? What process do you go through for prioritisation of deployment of resources and so on?

Lt Gen. Morrison : Army receives guidance as to what its resources will be for the forthcoming financial year early enough for us, as an organisation, to go through an extensive bidding and allocation of likely resources to units and organisations above those units. For example, NORFORCE, as one of the 157 Army units, will be told that it has within a certain range these likely resources to operate next year. But it will then look at all of its activities during the course of that year—individual training, collective training and so on and so forth—and it will put what we call its 'bid' into its headquarters. That headquarters—in this case, for NORFORCE 6th Brigade—will look at its allocation in comparison with the other units that make up that brigade. It will then put its overall brigade-level resource bid up to its parent organisation, which is Headquarters Forces Command.

Headquarters Forces Command's budget is significant; it is in excess of $100 million per annum. Part of that allocation will go to NORFORCE. The way we use the resource bidding process is that each unit is required to identify activities that are critical to achieving levels of capability mandated by the Defence Force—by General  Hurley—and by government, and those activities that are important and desirable, indeed. But, should resources not be made available, we focus primarily or exclusively on those critical activities. That has been a very transparent and robust process to allow me, as the final arbiter as to where Army's resources will sit, to look at resource allocation across all of those 157 units within the Army and make a judgement that we can or we cannot achieve all that is required of us.

If we cannot, I go to my boss, the Chief of the Defence Force, and say, 'We can't achieve the following critical tasks.' That was the case during the last financial year where, in discussion with the CDF and the secretary at that time, I said that I did not think we had enough resources, and some further allocation was made to Army. I am satisfied—I know that is quite a long answer to your question—that the resources that have been provided to NORFORCE are sufficient to allow it to meet the capability requirements that I have of it and that the CDF and government place on me.

Senator KROGER: Having you both at the table—and this is just from a civilian perspective—can I just say that, when I visited and went on a night exercise with them a little while back—and they were all blokes—the blokes were great, but it was a bit like a dad's army, the equipment that they were using, to be quite frank. If I had night vision or a better flash on my little $300 digital camera—it was 10 times better than what they were using. The equipment they were using was really, really pretty basic, not to put too fine a point on it. Given the importance of that reserve unit up there in NORFORCE—and I understand it was said yesterday, I think, that there are some 15,000 in the Army Reserve—what they do up there and the demands that are being made on north command with Op RESOLUTE and so on and the operations that are been skewed in the country, I do not think that an Army Reserve unit should be working with equipment that is—as I said, my little $300 Nokia did a better job than what they were using. I do not need you to respond today but, having you all here, if you could revisit what they are working with there—because I think it is pretty basic.

Lt Gen. Morrison : I accept, of course, what you say. There would not be a unit in the Australian Army—if you get the chance during your parliamentary career to visit the other 156, I would not be surprised if the soldiers that make up those units would also take the opportunity of your visit to raise very legitimate concerns about the equipment that they may have to do their job. Even with those at the very top end of the tiers, such as our special forces, quite appropriately, as professional soldiers, they want to have better equipment to do their jobs better.

I accept, too, that in NORFORCE's case, where they sit in a priority order at the moment, given the tempo of operations that we have been conducting over the last decade, they may have a quite reasonable perception that they are not getting the best of equipment at the time that they need it, and I will look into that. But, again, I have to go back to my judgement as the Chief of Army, the capability manager who answers to the CDF and to government. I am confident that they are receiving equipment, modern equipment, to the best of my ability to even it across the force to allow them to do the job that they are being asked to do.

Senator KROGER: From my perspective also, as a country we want to be encouraging more people to sign up as reservists.

Lt Gen. Morrison : I agree.

Senator KROGER: The whole national strategy of the reserve wing of the ADF is incredibly important. To encourage more people to get involved, you have to make it interesting and continuing to be of relevance for them. And using perhaps things that they could bring from home that would be better than what they have been given to use there does not help that process of strengthening, supporting and sustaining the interest in the reserves. That, I guess, is where I am largely coming from. We must make sure that we do not diminish resourcing because of the priorities and the high tempo—and we have talked about it at length over the last 24 hours—of operations in the north-west of Australia. But we must not forget that there is a need to keep encouraging recruitment in the reserves. This is certainly one area that I think saps enthusiasm, or potentially could sap enthusiasm.

Lt Gen. Morrison : Again, I agree with you. But I take the opportunity to point out that, under Plan Beersheba, there are some very significant initiatives to equip the Reserve with the most modern equipment we can. We are rolling out Bushmasters into the Reserve again. There is a growth of the mortar capability in our Reserve. There are provisions under the changes that we are making to our communications equipment—indeed, our battlefield management systems—that is inclusive of the Reserve.

The focus that the Reserve have been able to have on operations in the Solomon Islands and in East Timor, as well as the work that they have done in regard to humanitarian and disaster assistance inside Australia, is a testament, I think, to the strength of the Reserve and the fact that, in overall terms, recruiting to the Reserve remains healthy. Indeed NORFORCE remains certainly our strongest regional force surveillance unit, with over 600 personnel in the unit. Indeed almost 30 per cent of that force—certainly over 20 per cent of that force—are Torres Strait and Aboriginal soldiers. So you are absolutely right. I know that I have a responsibility to ensure that the Reserve receive equipment that attracts people to the roles that we are asking them to perform as reservists. That has to be balanced against an allocation of resources across all of the Army. While I think there are always areas where we can do better, I am satisfied at the moment that, within the parameters within which I work, I am doing that.

Senator IAN MACDONALD: Just following up on that, yesterday we spoke about this, particularly in relation, so far as I am concerned, to 51 FNQR. You indicated to me yesterday that you are quite satisfied that you had all the money you needed for reservists in the RFSUs, which is what you have just said to Senator Kroger as well. But I am surprised to hear you say that last year you did not have the budget—and I do not blame you for this, of course. I do not blame uniform people for lack of money; that is not your call. But I also recall that, when we discussed this last year, you did not indicate that.

Lt Gen. Morrison : Far be it for a servant of government to correct an elected representative, but I would like to perhaps make the observation that I did not say yesterday that I had all the resources that I could possibly want; I do not. I do not have as much—

Senator IAN MACDONALD: I think you said that money was not a reason for the lack of numbers in 51 FNQR; wasn't that what you said?

Lt Gen. Morrison : I do not think I said that either. In the best of all possible worlds, I would certainly provide more resources, be it equipment or money to fund reserve salaries, to enable a growth of capability inside all of the reserve units. I do not have that, but I never will. I need to be able to manage within a finite budget. At the moment I am confident that we are attracting the right Australians to join either the regular or the reserve Army; and, should they choose to join either the Reserve or the Regular Army, they are being given equipment suitable for the jobs that we ask of them. It is not the best equipment in some cases but it is certainly equipment that is suitable for the role that we are asking of them. When you look across the general recruiting levels, certainly for the Reserve, I think I can say, with some confidence, that we are holding our own and, indeed, doing better than that—and that includes the RFSUs.

Senator IAN MACDONALD: That is fine, and we can see what we said yesterday; it does not really matter. But the question I was trying to get the answer to yesterday—or get the assurance from you—was that the lack of training days—I said 51 FNQR but NORFORCE would be the same—is not a result of your inability to find the money to do it, a lack of money for it. I thought you said yesterday that, no, you had enough money and that was not the case; that was not why the training days had been cut back.

Lt Gen. Morrison : No, I am—

Senator IAN MACDONALD: Correct me.

Lt Gen. Morrison : I will if I can.

Senator IAN MACDONALD: I cannot remember what I said five minutes ago, but we can look at it. Remind me of what the situation is.

Lt Gen. Morrison : I am on the public record at estimates and elsewhere as saying that we reduced the Army Reserve budget in the wake of the government's decision in the previous financial year to reduce the Defence budget across the forward estimates by 30 per cent. That obviously had a significant impact on the number of training days that I could fund for the Reserve, whether they were in the RFSUs or in the units of the 2nd Division. That was in financial year 2011­12.

This year we have been able to manage that and, while there has been a reduction in comparison with previous financial years, the number of days available to our reservists sits at around 38 to 39 days per reservist, across that 16½ thousand workforce. That, in my professional judgement, is adequate, satisfactory, for them to do all that we are asking them to do, whether it is committing to operational service in the Solomon Islands or, as has been the case, in Timor Leste, or to meeting levels of capability to provide support to Plan Beersheba or meeting humanitarian disaster relief.

The Army budget is predicted to rise marginally in financial year 2013­14, and I am certainly looking at increasing the amount of money available to better pay for Army Reserve salaries, which will see some degree of increase, although I have yet to work it out, because I have not finished the allocation process in Army at the moment. We will see an increase in training reserve salaries. Again, it will not be ideal, but it will be within the parameters within which the government has made decisions to provide money through Defence to Army, and I am satisfied that levels of capabilities will be maintained.

Senator IAN MACDONALD: You cannot do things that you do not have the money for, and that is not your call; I understand that, and that is certainly not a criticism. But there is concern, certainly in 51 FNQR, that there are not the training days and, therefore, there is not the enthusiasm and, therefore, we lose a resource and we also lose the ability to train the list soldiers, which is a very important role. We went through this yesterday and we all agree with that. But I am interested to hear that last year you concede there was a real issue with funding. This year, hopefully, it is a bit better, and that is good news.

Lt Gen. Morrison : I think that is probably a good way of describing it.

Senator IAN MACDONALD: Minister, where within the budget papers would I find the reserve employer support program? Is this a discretionary fund?

Senator Feeney: It can be found in the service budgets.

Senator IAN MACDONALD: But we do not get those, do we?

Senator Feeney: We will get some advice for you on that. As you heard in evidence a few moments ago from Major General Brereton of CRESD, who has just come to the table, we are talking about around $17 million a year.

Senator IAN MACDONALD: The reserve employer support program: where do I find details of that?

Mr Prior : Each of the service groups has its own allocation for that element.

Senator IAN MACDONALD: So I will not find it in any documents that I have?

Mr Prior : It is not articulated separately; it is part of the overall budget allocation for each of the groups.

Senator IAN MACDONALD: Everything is part of the overall budget allocation; it is a bit of a magician's thing. Is it a completely discretionary fund or are there some rules around it? Can anyone access it?

Major Gen. Brereton : It is certainly not a discretionary fund. Its application is governed by a determination made under section 58 of the Defence Act. That determination empowers the service chiefs now to receive applications and to make determinations, according to the principles set out in that determination, to two categories of employers: arm's length employers of reservists and self-employed reservists. They can apply according to the rules of the scheme set out in the determination and, if they meet those rules—and, in the case of a self-employed reservist, satisfy the value for money test—the service chief is required to approve their application. The approval process is not discretionary; it is a rules-based process which requires particular decisions to be made and provides a right of review now to the Commonwealth Ombudsman in the case of an adverse decision.

Senator IAN MACDONALD: The ultimate decider is the service chief?

Major Gen. Brereton : The service chief or the service chief's delegate. Most of the service chiefs have now delegated their decision-making powers to their director-general of career management, heads of personnel or equivalents.

Senator IAN MACDONALD: Are you aware of any new limitations or restrictions being placed on allowances for military leave for Commonwealth or state government—perhaps you would not know that—employees serving with reserve forces?

Major Gen. Brereton : The short answer is no, I am not aware of any such limitations and, as far as I am aware, the latest version of the DECA, in fact, provides better accommodation for reservists than was previously the case.

Senator IAN MACDONALD: At the last estimates you gave me answers on notice regarding some adjustments in the reserve training days. Can you remind me of what they were? They were a lower number, as I recall, and increased to—

Major Gen. Brereton : I think this might have been a question directed to reserve salary, and General Morrison has just covered part of that. Essentially, in Navy, there has been no change in reserve salary over the last two years and into next year. It varies by a million dollars around the $30 million mark per year. In Air Force, again, there has been no substantive change. As the Chief of Army has explained, in Army, there was a reduction from $130 million to $109 million over the last two years; but that will be restored to about $133 million, on current guidance, for the forthcoming financial year.

Senator IAN MACDONALD: I understand that commanders are provided with a discretion to waive limitations on the maximum number of days served by individual reserve members. Any extensions though are required to be within that unit's original funding allocation, as there is no additional funding available for additional days served. Has that limitation been waived often?

Lt Gen. Morrison : In my experience over the years, very often. Many reservists serve more than the original or the basic limitation—which is, from recollection, 100 days. Formation commanders will routinely extend that to 150 days, and it may be extended beyond that by the Chief of Army.

CHAIR: We will take a break until 10.45 am.

Pr oceedings suspended from 10:30 to 10:45

CHAIR: I call the committee to order. Senator MacDonald, before you proceed with your questions, we have some answers to some questions asked earlier.

Air Marshal Binskin : To clarify the discussion we had with Senator Kroger before on women in combat roles, combat roles for the Israeli Defence Force, there was a bit of confusion. Major General Fogarty was answering a question on countries with no restrictions on employment for women. That question popped up and he said no, they were not in combat roles. To clarify, in the IDF there are some restrictions; only 92 per cent of roles are open to women. So it is a country that still does have restrictions; whereas he was reading out a list of those with no restrictions.

CHAIR: Thank you for that clarification.

Air Vice Marshal Osley : I have an answer to a question on notice about the New Air Combat Capability program from Senator Johnston from last evening. The question was: how much funding for aircraft procurement for the latter 12 of the first 14 JSF aircraft is there in the forward estimates, and in what years? The answer is: at this time, and subject to any future government decisions, the funding for the latter 12 JSF aircraft of the approved first 14 that appear in the forward estimates is, in 2014-15, $14 million. This comprises an initial payment, around mid-2015, for some of the long lead items that I spoke about last evening. In 2015-16, $44 million and, in 2016-17, $195 million. That is set at the PBS 2013-14 rate, Australian dollars, at an exchange rate of 1.0256. That is aircraft only. That does not include other things such as weapons, aircraft mission equipment, pilot flight equipment, training support, et cetera that would support those aircraft, also in the forward estimates.

Senator IAN MACDONALD: Does the Army prescribe the frequency of live-fire training or the volume of live rounds fired for each Army Reserve member or for Army Reserve units? Is there a particular allocation or requirement?

Lt Gen. Morrison : Yes, a number of studies have been done in Army in the last decade to look at how we allocate rounds in order to achieve—across all of the Army, both regular and Reserve—levels of capability within the employment of individual weapons, or indeed crew-served weapons or weapons mounted on vehicles such as tanks. That has also looked at how you can support that achievement of levels of capability through the use of simulated training. A number of Army units have access to simulated rangers or simulated systems that allow, for example, tank operators to have familiarity and indeed levels of capability with the weapons systems on the tank without firing very expensive live rounds. We have been able to determine what is the general number of rounds required per individual to achieve various levels of shooting standards across the Army. We use that in determining how much ammunition—small arms ammunition or different types of ammunition—is allocated to any of the units, and that includes the Reserve.

Senator IAN MACDONALD: I do not particularly want the figures but is there, therefore, a direction that each Reserve or regular soldier will be exposed to X number of live rounds in a period?

Lt Gen. Morrison : In a training year?

Senator IAN MACDONALD: In a training year.

Lt Gen. Morrison : That is correct.

Senator IAN MACDONALD: Is it too difficult to tell me what that allocation is?

Lt Gen. Morrison : I do not have it for each unit, but I would use that question to make the point that what we require of an individual soldier in a Reserve unit at low readiness—so not part of the ready brigades within the Reserve under Plan Beersheba—is very different to what we require of an SASR trooper, for example. The reservist will receive less ammunition because we require less of that individual in terms of shooting standards than we do of someone at the top end. However, under Plan Beersheba that individual will go through a fourth generation cycle that will see him or her required to have higher levels of shooting ability.

Senator IAN MACDONALD: Is it possible for you to pick one at random—an average reservist soldier—and let me know, just for my information, what allocation or what requirement a reserve soldier in a year or in a training period, whatever it is, would be required to be exposed to at the Army's direction?

Lt Gen. Morrison : It would be best if I take that on notice and answer your question formally, to give you confidence that the way we approach this is more science than art.

Senator IAN MACDONALD: All right; it would be great if you could do that. Is there any plan to provide tax exemption status for cadet staff remuneration?

Major Gen. Brereton : The short answer is no. The Cadet Force's allowance has always been regarded as taxable income.

Senator IAN MACDONALD: All uniforms for all cadet units in all services are provided by the services; is that correct?

Major Gen. Brereton : Yes. That is not to say that some individuals will not supplement their uniforms by buying a second or third set, as the case may be. But the basic uniform entitlement is provided by the service in each case.

Senator IAN MACDONALD: If they do buy their own, though, there is no uniform allowance?

Major Gen. Brereton : No, there is no uniform allowance.

Senator IAN MACDONALD: . Thank you for your written answers to my questions, particularly about TS Carpentaria, which is the naval training group on Thursday Island. You indicated to me that they are allocated $30,000 for the financial year 2012-13, of which—at the time of answering this question—they had $22,700 still available. Are guidelines issued on how the allocation of $30,000 per financial year should be spent?

Major Gen. Brereton : I think that is a question for Navy. I suspect the answer came from Director-General Australian Navy Cadets. I will need to take that on notice.

Senator IAN MACDONALD: The answer also said that there is only one staff member at Carpentaria, that every effort is being made to increase staff numbers, that there had been no approved volunteer staff but that a recently received application was being processed. Is there some update on that?

Major Gen. Brereton : I will need to take that one on notice as well.

Senator IAN MACDONALD: Defence provided me with some quite detailed written responses to questions about new cadet units. Following a media release from the parliamentary secretary, who said that the program had been expanding with newly formed units, you gave me a list of Navy, Army and Air Force units. One of them, the Werribee Secondary College Army Cadet Unit, I understand has being operational for three years—so I would not put that in the newly formed units category. Have there been any new cadet units in, say, the last 18 months? I suspect that most of the ones that were given to me in this answer have been around for more than 18 months. I am interested in whether there have been any new units in recent—I had better not say 'recent' because that is the answer I got when I asked for 'recent'—in the last 18 months?

Major Gen. Brereton : We took it that the question looked for an answer to the word 'recent' as about two years, and what we provided in answer to that was that approximate period of two years. Werribee might have been at the extremity of that two-year period. I think it was formally established less than three years ago and within the two-year period. The most recent ones are the new naval training ships Orion and Kookaburra; the 111 Squadron Air Force Cadets at Mt Isa I think is about 18 months old; Murray Bridge is a bit older than that. Mt Isa and Jindabyne, which has just achieved new training ship status, would be the most recent. On the question of growth, the Defence Force Cadets has grown by 8.5 per cent over the three-year period December 2009 to 2012. A lot of that has been achieved by growth within existing units as distinct from new units, but new units have contributed to it.

Senator IAN MACDONALD: I understand that I will never understand how cadets are funded through each of the services, so I will not even try to pursue that. But you did say in this answer that in relation to the Werribee Army cadet unit, funds had been allocated by Army to the Australian Army Cadets, including cadet expansion and enhancement funding originally granted to the Vice Chief and subsequently transferred to each of the services. Then you said additional funds were allocated by Army to cover personnel costs for Army Reserve training salaries and the cadet Air Force allowance. Is that the normal thing?

Major Gen. Brereton : There were basically two funding streams for each of the cadet services: their parent service and the cadet enhancement moneys. The cadet enhancement moneys were, at the request of the cadet services, handed over or transferred from VCDF Group to each of the cadet services in order to assist those services to have a longer term planning ability in respect of their funds. That happened before my time—so about three years ago.

Senator IAN MACDONALD: Was that a one-off fund?

Major Gen. Brereton : It was a recurrent fund of $10 million per year.

Senator IAN MACDONALD: How was that split up?

Major Gen. Brereton : About $3.5 million was retained in the VCDF Group Cadet, Reserve and Employer Support Division to fund expansion of the permanent staff in that area. No—that is not right; less than that was retained. About $3.5 million was used for salaries. That funds additional full-time personnel, in largely Army cadet headquarters but also in some of the other services. The balance of about $6.5 million was transferred to the three services. I cannot tell you at my fingertips how much went to each of the services out of that $6.5 million.

Senator IAN MACDONALD: About equally?

Major Gen. Brereton : Almost certainly not. The services are quite different in size, with Army cadets at about 15,000; Air Force cadets at about 7,000, and Navy at 3,000.

Senator IAN MACDONALD: So that CEE funding is an annual allocation of $10 million?

Major Gen. Brereton : Yes.

Senator IAN MACDONALD: That is allocated within the Chief's budget, is it?

Major Gen. Brereton : Yes.

Senator IAN MACDONALD: It is there for as long as, I guess, the Chief allocates $10 million?

Major Gen. Brereton : It was originally to be $10 million for 10 years, but it has now been incorporated in the funding on an ongoing basis.

Senator IAN MACDONALD: That is good to hear. The additional funds allocated by Army to cover personnel cost of Army Reserve training, salaries and cadet force allowance, that is a normal practice as well?

Major Gen. Brereton : That is just part of Army's allocation to Army cadets. Each year Army will allocate to Army cadets a budget of typically $7.5 million to $10 million. It was lower last year but is higher, we think, in the coming year. Out of that $7.5 to million to $10 million, the Army cadet organisation will then provide the funding for each unit.

Senator IAN MACDONALD: What I am trying to get at, though, is that occurs with all Army cadet units; it was not specific to the Werribee Army cadet unit?

Major Gen. Brereton : Absolutely. All cadet units are funded in exactly the same way.

Senator IAN MACDONALD: It is good to see the Prime Minister taking such an interest in cadet units with the last one, as I understand it, being established in her area, which is good to see.

CHAIR: Minister, you may be able to advise: are cadet units being supported to do anything in particular in the lead up to the centenary of ANZAC?

Senator Feeney: The ADF cadets have a longstanding practice of playing a very prominent role in military ceremonial and commemorative events. Off the top of my head something in the order of 10,000 ADF cadets participated in ANZAC Day, for instance. You will often see ADF cadets at local community commemorations and liaising with local RSLs to deliver that military ceremonial piece to those kinds of events. I guess the answer is: we almost certainly can expect that practice to continue and, no doubt, be intensified for events of that kind of national significance. Major General Brereton will be able to assist me if there are any specific plans in respect to the commemoration that you are speaking of.

Major Gen. Brereton : Thanks, Minister. Senator, to give you one example that has just recently come to hand, we have just been approached by the organising committee that is supporting the centenary celebration of the departure of the Australian Expeditionary Force for Rabaul and Port Moresby, which was the first military activity for Australia of the First World War. We have been requested, effectively, to provide a substantial number of cadets to support that. That is something that we are examining at the moment. Certainly we will be engaged in that type of activity.

CHAIR: Thank you.

Senator IAN MACDONALD: Certainly the cadets do a marvellous job on ANZAC Day, particularly in smaller towns that do not have regular or reserve forces to do the honours. Are there currently any applications for new cadet units on the books?

Major Gen. Brereton : There are about 50 expressions of interest for new cadet units, mostly but not exclusively in Army. I know that Navy is currently considering two or three new training ships. I know that Air Force currently has on its books plans for about five new squadrons. All of that will depend on funding in the next financial year and following financial years. Army at this stage has been focusing on growth through existing units. Again, if there were available some supplementation, that would enable Army to look at establishing new units as well as achieving just growth through existing units.

Senator IAN MACDONALD: You perhaps would not know this, but Canterbury College in the electorate of Forde is one that has been trying desperately to get accredited. Would you know if that is one of those 50?

Major Gen. Brereton : Yes, I do, and it is.

Senator IAN MACDONALD: As I say and as I said to General Morrison earlier, I am not blaming the uniform people for this, but there have been very few new units in the last three years, I think it is, and yet there are 50 expressions of interest, not all of which may morph into something more substantial, I appreciate, but—

Major Gen. Brereton : I think I can speak on behalf of a large number of people in this respect. Sitting around the table of Chiefs of Services Committee, most of the senior officers, the three star officers and the two star officers who appear there from time to time, the majority had their origins in the Australian Defence Force cadets. I do not think there is a single one of us who would not like to see the cadet movement expand. I can say that I have had many discussions with the parliamentary secretary about that and I believe that he very much shares that commitment and ambition as well.

However, to focus on the example that you raise of Canterbury College, within the current fiscal constraints there are about six excellent cadet units within about 30 minutes travel time from the location of Canterbury College. So it is not as if young people in that area do not have ready access to a cadet unit, should they wish to join one. Coming originally from a school based unit myself, I very well understand the desire of many schools to establish units within the school. Again, that is something I would like us to be able to achieve, but it will cost money to do so.

Senator IAN MACDONALD: General, could you, either off the top of your head or on notice, give me a ballpark figure, from previous experience, of what it costs to establish and then recurrent costs for cadet units?

Major Gen. Brereton : With the chief financial officer sitting close to me, I no doubt will be bashed over the head for saying this but yes, I can give you a ballpark figure. Roughly, to establish a new unit of about 100 cadets costs about $200,000 to set up and then about $100,000 recurrent thereafter.

Senator IAN MACDONALD: Thanks for that. That that is all I have for cadets.

Senator Feeney: Senator, I am keen to make one point before we depart the conversation. You have talked about resources. I think it is important to note that amongst the many challenges that confront creating new cadet units is the requirement to have suitable officers of cadets and instructors of cadets. That is a challenge of which Major General Brereton is well acquainted. It is useful to bear in mind that this is not wholly a resources challenge; it is also making sure that we have suitable persons and enough of them to play that very important leadership role.

Senator IAN MACDONALD: I appreciate that, Minister. In the instance I am quoting of course, being a school, I think the school teachers are very willingly prepared to do it. If not, I suggest they might even be regimented by the principal to be willing in good army style.

Senator Feeney: I guess right there you have touched upon an important issue, and that is that obviously cadet organisations look for officers of cadets and instructors of cadets who have a passion and an experience for the task. Your conscription model may not meet all of those criteria.

Senator IAN MACDONALD: That was the secondary model I used. I am sure there are very keen people, particularly in that institution and, I suggest, everywhere. Thanks very much for that. That is very useful.

Senator FAWCETT: On VCDF, I will ask the question in this part but it may be answered by others. The Black review appears to have dropped off the radar from public discussion and discussion in estimates and other parliamentary oversights. Can you give us a bit of an update of where Defence is at in reducing the number or churn or delays caused by the excessive committees identified by Rufus Black?

Air Marshal Binskin : I am not placed to give you all the specific details of committees but we will get the right person to provide that, except to say that while it might have dropped off the public debate, there has been a lot of effort within the department to reduce the number of committees. Those committees that remain do not just sit then for the sake of sitting then. If there is not business to be conducted, we do not just turn up and talk. We make sure that there is a good agenda, good items of discussion and outcomes from those meetings. Those outcomes are followed up. In regard to the specific numbers, there has been a huge reduction that I do not have before me but I can get those for you.

Senator FAWCETT: The other aspect to that question, while we are waiting for those numbers to come through, is: as I look at Rizzo, the two Coles reports, Black, even ANAO, they report that their staff allocate hundreds of hours of additional time to their audit so that they can try and resolve who is accountable for decisions in Defence. Black identifies that it is not the uniform side of the three services—it is predominantly the other groups of that 14 group mass—where a lot of that lack of accountability exists. Black in fact—

Mr Richardson : Accountability exists across Defence. It is not just one part of it. There is a problem in terms of accountability which Black highlighted but it is not restricted to the groups that you identified.

Senator FAWCETT: Thank you.

Mr Richardson : That is okay. Any time.

Senator FAWCETT: Mr Black gave one example in his paper of an accountability matrix where there are 25 columns of different stakeholders who are involved. In this case it is an IT project. Eight of those columns identify people at multiple layers who are accountable for the decision. Five of the columns identify people who, again at multiple levels, have a power of veto over the decision, and six of the columns identify people who are responsible for work to see the decision come through, which shows that there is still, in this matrix shared service construct, incredible inefficiencies as well as lack of accountability. So I guess as well as just the number of committees and the reduction, I am interested in what Defence as a whole—and perhaps, Mr Richardson, this does come back to you—is doing in these times of tight dollars to make the organisation more efficient in the way it runs. Clearly, as that suite of reports has shown, there are great inefficiencies in the way we are currently structured.

Mr Richardson : I think there are a few issues here. One is accountability. Accountability is not always helped by constant flow through of people. If you take projects for instance, a lot of the projects in Defence have enormously long lead times. People are rarely, for understandable reasons, in positions of authority in respect of particular projects to in fact see them right through. That is an issue which the ANAO has gone to from time to time. There is sometimes an overplaced premium on achieving consensus across groups. That can get in the way of, I think, effective decision making and also proper accountability.

Senator FAWCETT: What is being done to address that?

Mr Richardson : That is not a structural issue. That is, in part, cultural and attitudinal issues. Cultural and attitudinal issues take a lot longer to address than structural issues. The senior leadership group are conscious of that and we endeavour to convey that message strongly and consistently, and we also endeavour to manage ourselves collectively within that spirit. In terms of Black and the number of committees that have been reduced and the like, we will take that on notice. I do not have that at my fingertips.

Senator FAWCETT: You mentioned that do you not see it as a structural problem but clearly you have different groups who are responsible for certain outcomes and certain inputs into the whole and Black identifies in this matrix a number of those people. You have indicated before that you have no plans to decrease the number of your SES senior public servants.

Mr Richardson : Beyond what they have already been decreased.

Senator FAWCETT: So they exist.

Mr Richardson : Yes.

Senator FAWCETT: They still have the power of veto. So if they have the power of veto—

Mr Richardson : No. They do not have the power of veto. I think it is wrong to say that they have the power of veto, in my view.

Senator FAWCETT: That is the word that Mr Black ascribed to them.

Mr Richardson : Well he might. I would not. As I said, I think there is an attitudinal issue which goes to an understandable search for consensus. Up to a certain point a search for consensus is a good, constructive thing. Beyond a certain point it can get in the way of, indeed, effective decision making.

Senator FAWCETT: Specifically then, Mr Richardson, what are you doing to enable an accountable individual to have the authority to override those other SES level people when consensus is not reached?

Mr Richardson : What we endeavour to do, what the CDF and I endeavour to do, where there is a blockage of that kind, is to quickly bring it to attention. That sometimes happens; it sometimes does not happen. The easiest thing in the world is to play around with structure. I could change the structure of Defence any time within a week. That is not hard. Structure is normally the superficial surface level of issues. Addressing issues below the structure is far more difficult and, indeed, takes time. I have seen too many cases of people who play around with structure and then walk out and declare victory. More often than not, the big issues you are talking about are not structural. They are attitudinal and they are cultural.

Senator FAWCETT: Structure, though, provides lines of authority and control. If those lines of authority and control are such that one person cannot exercise control over all of the inputs he or she needs to achieve the outcome that they are held accountable for then structure does, indeed, provide a blockage to efficient and effective outcomes. I concur that it is not the only player and that often culture and attitude can be significant, if not more significant. But where they do provide those strict lines of controls, particularly around sign off of finance or approval for procedures and process then whether you call it structure, whether you call it lines of control—you can put any label you like on it, but if you have an organisation that is not led by outcomes but constrained by inputs you will have long term dysfunction.

Mr Richardson : Philosophically, I would agree with you. In practice, I do not believe that is the burden of the challenge we face.

Senator FAWCETT: It is certainly the conclusion that has been reached by a number of these reports. Again, I would have welcomed the update not just on committee numbers but on specific actions you are taking to make the department more responsive and efficient so that the productivity of what they do with taxpayers' capital is substantially raised over what it is at the moment.

Mr Richardson : We can do that. The committee structure was streamlined before I got there. I think it has been streamlined pretty well. I have not played around with it. I do not intend to, unless it is obvious to me that structure is getting in the way of what we need to achieve. Duncan Lewis and the CDF reviewed structure against the background of Black and other reports and refined the structure that we had. I do not see that the structure in itself is, in fact, what is holding us back.

Senator FAWCETT: If we had another Coles report or another Rizzo report—or in the next ANAO audit are we going find that ANAO, for example, can reduce the amount of time they have had to budget to understand who is accountable for particular decisions?

Mr Richardson : No. You will continue to have frustrations in respect of clear identification of accountability. You will have some improvement, but you will continue to have frustration in that respect. I would make no pretence that we have the sense of personal accountability where it ought to be in Defence; we do not.

Air Marshal Binskin : Part of the problem—I agree 100 per cent with the secretary here—is that many of those people that you would have seen in that matrix a couple of years ago when the Black report was done would say they are accountable; but they are accountable for advice, not decisions. That is where some of the confusion arises. We are working hard, and have over a number of years, to understand who the decision makers are and then, once those decisions are made, being able to cascade that down. We have four capability managers, the three service chiefs and dep sec I&S. Obviously we have the secretary and we have the CDF and at various levels the group heads as well. Over the years, through the many, many reviews—we just bed one review down and we get another one coming through without a chance to consolidate—that is what has also created a lot of this confusion. We continue to work on people understanding what they are accountable for. Sometimes when someone says, 'I am accountable' they tend to make it everything; whereas, in fact, they are accountable for accurate advice so the decision makers can make the right decisions.

Senator FAWCETT: Are you able to provide us a more detailed brief as to how you are narrowing, if you like, what I would call the lines of responsibility so that those who—

Mr Richardson : We can do that, Senator.

Air Marshal Binskin : We will roll that in with committee numbers and the whole thing for you.

Senator FAWCETT: Thank you.

CHAIR: Senator Johnston?

Senator JOHNSTON: Logistics, VCDM: JP 2077 2D is a project that I think has been marked as one that has been important in 2006 in the DCP, a high priority project. Are you familiar with this particular JP 2077 2D project?

Air Marshal Binskin : Yes, I am Senator, but I have someone who is more familiar with it sitting next to me, Commander Joint Logistics.

Senator JOHNSTON: He is the man?

Air Marshal Binskin : He is the man.

Senator JOHNSTON: It has been in the DCP and then it came in as a new phase 3 in 2012. I think it was up to a band of $100 million to $500 million and now it is a band of $100 million to $300 million. What is the thinking behind where we are at on that at the moment? Firstly, it is a high priority project. Why is it a high priority project, Rear Admiral?

Rear Adm. Thomas : The structure of joint project 2077 has been divided for many years now into a number of phases. We are currently still in the consolidation period of phase 2.1, which was effectively the large systems upgrade. We are still working through the issues associated with that.

Senator JOHNSTON: Just explain to me what you mean by 'systems upgrade'. What systems and what is the objective?

Rear Adm. Thomas : Senator, the core product of our logistics information system, ERP for Defence, is currently a system known as MILIS—Military Integrated Logistics Information System.

Senator JOHNSTON: MILIS?

Rear Adm. Thomas : MILIS. That system was subject to and continues to be the candidate for joint project 2077. We have just completed, some 18 months ago, the upgrade of that ERP under 2077 phase 2.1.

Senator JOHNSTON: What is wrong with MILIS?

Rear Adm. Thomas : Currently we are working through a bunch of issues associated with upgrade, as any major upgrade of an ERP is. We believe we have stabilised that platform and it is working well. The results in the most recent audit from the Audit Office suggest that is the case also. Your point was more to do with the latest phases of 2077, which is around the developmental parts?

Senator JOHNSTON: I am just trying to get a handle on why it is a high priority project. What actually is MILIS? It is software?

Rear Adm. Thomas : MILIS is the core logistics information system in Defence. It is at the heart of how we manage inventory and how we conduct the various modules in that ERP. It is the core maintenance management system for all our land and ground support equipment. It is also a fundamental part of the accounts process because at its heart it is effectively the system of record, which integrates into our financial systems also. It is a key information system in our suite of systems in Defence.

Senator JOHNSTON: So air and sea are a different logistics system in terms of maintenance?

Rear Adm. Thomas : For maintenance?

Senator JOHNSTON: Yes.

Rear Adm. Thomas : That is correct. MILIS is a Defence enterprise wide system for inventory management. But for the maintenance module the current MILIS system is largely the land and ground support elements for maintenance. There are two separate maintenance systems that are currently in existence in Defence. As part of the 33 logistics information systems that we have, MILIS is the main one. But the two other systems for Air Force maintenance is in a system called CAMM 2. All aviation elements in Defence use CAMM2, including Army and naval aviation elements.

Senator JOHNSTON: For maintenance?

Rear Adm. Thomas : For maintenance. Naval maintenance is in a system called AMPS.

Senator JOHNSTON: AMPS?

Rear Adm. Thomas : That is the system which is right across the maritime maintenance environment from all ships right through to system program officers ashore.

Senator JOHNSTON: Those three systems are not integrated and are stand-alone in terms of maintenance?

Rear Adm. Thomas : In terms of maintenance, that is correct, Senator, yes.

Senator JOHNSTON: Is that a good thing?

Rear Adm. Thomas : That is recognised as a shortcoming in the structure of our maintenance systems in Defence. Indeed, that actually is the answer to why 2077 2D, where that money was earmarked, is largely about the maintenance, better integration and management of our maintenance systems right across Defence. That is, I guess, the substantial part of what that project was intended to be.

Senator JOHNSTON: Phase 3?

Rear Adm. Thomas : Phase 3, as part of the rebalancing of the DCP last year—

Senator JOHNSTON: Rebalancing?

Rear Adm. Thomas : Rebalancing of the DCP. There was a previous project called 2077 2B.2. It is confusing with the numbers. That project has now been closed. That project was intended to enact a deployables element to the current MILIS system. The intent there with that project was to better enable Defence to deploy and to have real time materiel maintenance capability and real time inventory management systems linked to the core system at every point in the supply chain. That was the aspiration of that project. For various reasons, that project was not able to be completed and in the rebalancing the decision was taken that that project would be closed—largely around the technical issues associated with that project. But it was not cancelled in toto. Money was earmarked in the DCP to continue to pursue a deployables element. That was reconstituted by what is now known as 2077 phase 3.

Senator JOHNSTON: We have given up on the integration of the whole inventory wide management maintenance structural visibility concept?

Rear Adm. Thomas : No, Senator; we have not given up on that. There were two elements to that. 2D is about materiel maintenance integration and leading to a better, more integrated approach. That has been our aspiration for some time.

As to your question about timing, it does go back to the point that I made earlier about the earlier phase of 2077 2B.1, which is the current core system. It was deemed, quite sensibly, some 18 months ago—in fact, in the lead-up to the core system upgrade—that what was in Defence's best interests was to upgrade and then stabilise the core product of that system, called MILIS, because the subsequent phases are dependent very much on an upgraded core. All of the subsequent developmental phases need to line up with the core product.

Senator JOHNSTON: But CAMMS and AMPS are not hooked up to MILIS in terms of maintenance?

Rear Adm. Thomas : That is correct, Senator. They are still not within the MILIS suite of modules.

Senator JOHNSTON: Are we going to hook them up? Are we going to integrate them?

Rear Adm. Thomas : The intent under 2 Delta—hook them up is not the right word—is to develop a more integrated maintenance system on a whole-of-Defence basis. Whether in fact that is hooking them up, whether that is a new part of the current MILIS, whether that is a best-of-breed approach, is yet to be determined.

Senator JOHNSTON: Why was the program abandoned previously?

Rear Adm. Thomas : It has not been abandoned, Senator.

Senator JOHNSTON: You said technical difficulties prevented its completion. What happened?

Air Marshal Binskin : That is the deployable. We are getting two mixed up here. With the deployable system, we looked at the risk last year and the technical challenges that face that project and decided that the technical issues precluded us going ahead with it today. As I understand it, the Navy do have a system that they run at the moment and we are looking to leverage off that.

Senator JOHNSTON: What is that system called?

Rear Adm. Thomas : That is AMPS. A lot of effort has been put into that under the Rizzo program to stabilise that platform also.

Air Marshal Binskin : Rather than that term 'sink more money into this', when we realised we had the technical risk that was sitting there, we decided to basically stop, have a pause in this and then look at other technical solutions to the problem.

Senator JOHNSTON: Rear Admiral, what does 'stabilise' mean—'stabilise the program'? How is it unstable?

Rear Adm. Thomas : If COO is around, I am sure he can back me up on ERP upgrades.

Senator JOHNSTON: I am sure he is not that keen to. I think he is happy to leave it—

Rear Adm. Thomas : Of course, the execution of the upgrades is executed through the CO group. Every ERP needs to upgrade routinely to keep pace with the underpinning software and the software support to ensure that it is not outdated and unsupportable. That is where we endeavour with MILIS to continue to have an upgrade path to keep it sustainable and supportable.

We upgraded a couple of years ago, 18 months or so ago, from what was an Ellipse core product version 4. We needed to upgrade to get additional functionality, to make sure that the system was supportable to a version 6.8. There was a whole range of software elements to that but at its core it was about addressing sustainability of the core platform and its continued use into the future and also improving the functionality, largely around the Audit Office recommendations where they identified a range of improvements that would assist, largely around the financials, including that there were better controls put in place. It was a combination of things to upgrade which occurred about 18 months ago.

Senator JOHNSTON: The audit was conducted in 2011 by the Audit Office?

Rear Adm. Thomas : Senator, we are subject to constant audit activity every year.

Senator JOHNSTON: I am looking for the report. I want to read up about this.

Rear Adm. Thomas : There was a specific post-implementation report which was—

Senator JOHNSTON: Tabled?

Rear Adm. Thomas : It was constructed as tabled, and we are working our way through all those recommendations. It is largely complete now. To answer your question about stabilisation, it is more about identifying the lessons learned from any ERP upgrade, improving the processes and making sure that we continue to work through the outstanding code drop problems that exist. Largely, we have done that. The Audit Office have provided advice that they believe we are at that point now also.

Senator JOHNSTON: The program has gone out in the 2012 DCP to 2017-18.

Rear Adm. Thomas : That is in terms of the materiel maintenance upgrade path.

Senator JOHNSTON: That is the bit that I am really interested in.

Rear Adm. Thomas : The Defence focus for the last couple of years has been absolutely—this was a senior-level decision—to focus on making sure that the core product is improved to the point where it is capable of actually being upgraded further or having additional modules put on it. That is where the departmental focus has been—getting the basics right, if you like, and then moving to the next step. That is what the focus has been on.

Senator JOHNSTON: Dr Lawrence, is this part of the tender process we discussed yesterday that is in a sensitive stage?

Dr Lawrence : No, it is not part of that tender process.

Senator JOHNSTON: So where are we going on this project that has been pushed out? It sounds to me like, and it was, a high priority project and we have deferred it. What is happening with this?

Rear Adm. Thomas : Just to make the point, it is about efficiency—

Senator JOHNSTON: Core systems.

Rear Adm. Thomas : The core systems are actually fully functional and working well.

Senator JOHNSTON: But unstable.

Rear Adm. Thomas : No, they are not unstable.

Senator JOHNSTON: Good.

Rear Adm. Thomas : They are just three different systems.

Senator JOHNSTON: They don't talk to each other?

Rear Adm. Thomas : They talk to each other in the sense that they communicate back to the core MILIS product but they do not provide a single maintenance picture across Defence. You can provide a single maintenance picture within, effectively, Army, Navy and Air Force because that is where all the systems grew from.

Senator JOHNSTON: Where will the LHDs be? Will they be in AMPS or MILIS?

Rear Adm. Thomas : The solution for LHD is currently being finalised by the project. My understanding is that it will be as a maritime platform. Its core system will be AMPS, with effectively the same maritime systems that we have in every other ship. That will be its core system. It talks backwards to MILIS through an interface, as does every other ship currently in the Navy. That is the solution for LHD

Senator JOHNSTON: You agree with me that this program is not scheduled to be completed until 2017-18, in the DCP of last year?

Rear Adm. Thomas : Senator, I will have to confirm the years of 2077 2 Delta.

Senator JOHNSTON: It was originally expected to be 2011-12, when it came in in 2006. 2014—

Rear Adm. Thomas : Correct. It has been progressively deferred because the focus has been on ensuring that the core MILIS product is at a state where it is able to take on what is ostensibly a large change in its functionality. That is where the focus has been; noting that the materiel maintenance systems for the three domains are actually fully functional and working satisfactorily. Two Delta was more about trying to continue the developmental part of MILIS, reduce the number of systems over time and better integrate them to have a better overall architecture in Defence. That was a place marker to achieve that. As to the fact that it has been deferred, it is a priority on an efficiency basis, but in terms of Defence being able to do its job, business is being done and will continue to be done.

Senator JOHNSTON: Let us look at AMPS. AMPS is the core capability in maintenance analysis for naval surface combatants; correct?

Rear Adm. Thomas : For all naval platforms.

Senator JOHNSTON: All naval platforms. Is the project that we have been talking about, phase 3, or its predecessor 2D, relevant to the surprise and I think unexpected decommissioning of Manoora and Kanimbla? Is this system and these upgrades relevant to that maintenance observability?

Rear Adm. Thomas : The 2B.2, the deployables element, now recharacterised as phase 3, had no direct relationship with that. It was ostensibly about creating another level of functionality which would better enable not just naval platforms—indeed, the largest piece of functionality in that aspirational project was really about deployed land forces and ensuring that there was better integration of the systems throughout. So they are not specifically related.

Senator JOHNSTON: Navy does not have, save for what you get out of AMPS, technically an automated engineering management and maintenance system?

Air Marshal Binskin : If we can hand to Chief of Navy's representative, here, Senator, he will be able to discuss this from a capability manager perspective.

Senator JOHNSTON: Admiral, does Navy have an automated system for engineering management and maintenance such as we have been talking about with MILIS?

Rear Adm. Campbell : To answer your question, we do have an automated system, as CJLOG has expressed to you. The AMPS system is the basis for all of our maintenance activity. It is automated but it is limited in its automation, as you have pointed out. It is backwardly linked into MILIS, so there is a certain amount of 'mandrolic-ness'; there are a certain amount of spreadsheets required by SPO staff in the DMO to make it work effectively and to ensure that we have the right sparing and the right things ready for our deeper maintenance when it needs to occur.

Senator JOHNSTON: That man in the loop factor is what we are seeking to refine with this project so that we have a much more automated and visible system in terms of naval ship maintenance management?

Rear Adm. Campbell : That is a part of it, Senator.

Senator JOHNSTON: Will we have onboard sensors providing up-to-the-minute data in terms of maintenance operational situational status? I have seen that a lot of commercial vessels have onshore capacity to monitor the functionality of vessels quite some continents away. Will we have something like that? Is this project relevant to any of that?

Rear Adm. Campbell : I will have to take part of that on notice. As you would be aware, LHD and the new DDGs have excellent systems. Both vessels come with an integrated system on board. They will feed into AMPS. I am not sure of the exact functionality there. I will have to take away—

Senator JOHNSTON: You are not sure whether it is real-time?

Rear Adm. Campbell : I am pretty sure it is not real-time. I will have to check that.

Senator JOHNSTON: Thank you for that, Admiral. Phase 2C: what was that about? Is it RFID tracking?

Rear Adm. Thomas : Yes, that is correct.

Senator JOHNSTON: Tell me what RFID stands for, if you will excuse me?

Rear Adm. Thomas : Can do. RFID is radio-frequency identification. It is a technology that is widely used in commercial enterprises. It allows for either passive or active tracking of items that are tagged with certain types of tags so that they can be scanned and tracked through a supply chain. 2077 2C was about enabling that in Defence.

Senator JOHNSTON: What do we do with that project?

Rear Adm. Thomas : That project has been closed for some years and has been enabled. We currently utilise that in all of our operations overseas, largely in the operational supply chains. In fact we track shipments. We do track them outbound through our cargo consolidation points around Australia, all the way through to on the ground in Afghanistan, and previously in Iraq. Certainly we still continue to do that in the Solomons et cetera. It is a fundamental part of our ability to understand where our equipment is in the operational supply chain.

Senator JOHNSTON: Is MILIS the core functionality for that tracking mode?

Rear Adm. Thomas : It is the core system. However, there is a technology layer that sits over the top of MILIS and integrates back into MILIS.

Senator JOHNSTON: What is the name of that technology layer?

Rear Adm. Thomas : That technology is a product. The original equipment manufacturer is Savi Technology, and it is used widely across the world.

Senator JOHNSTON: But we do not use it in-country.

Rear Adm. Thomas : We do use it in-country, but mainly in the operational supply chain.

Senator JOHNSTON: What about 2B.2? What was that about?

Rear Adm. Thomas : I know these numbers are confusing.

Senator JOHNSTON: They are DCP numbers; they are meant to be confusing.

Rear Adm. Thomas : Yes, DCP numbers. 2B.2 was the deployables product that I mentioned to you previously, and VCF mentioned it. Due to a whole range of factors, that project was closed. It will be reconstituted, hopefully, at a later date, when a core product is better available under phase 3. So 2B.2 really has morphed into a phase 3 but for a later time.

Senator JOHNSTON: My final question: in 2006, when we stood up this project, how many disparate logistics systems did we have and how many do we have today?

Rear Adm. Thomas : I can answer the second part of the question. Today we have 33 logistics information systems which I manage, and we have an arrangement with CA group. It is too many. But I will have to take on notice the first part—for 2006, how many we did have.

Senator JOHNSTON: I presume they have gone down since 2006.

Rear Adm. Thomas : Yes.

Senator JOHNSTON: So we have more than 33.

Rear Adm. Thomas : Yes, most certainly.

Senator JOHNSTON: I am sorry to delay the committee, but just explain to me how on earth we have 33 separate logistics systems. Base by base, is it?

Gen. Hurley : If we go back over history, certainly ADF evolved with three services with their own internal logistics systems and everything. As we have grown the ADF into a joint organisation, you have had to collapse those over time to reduce the number of systems we run. That would be across the board—personnel systems, the whole lot. So it is a matter of evolution, in a sense. I think the critical point about JP2077 is that the desire was to establish a single ERP for logistics management in the ADF. But you need to do that by a number of steps to mitigate risk. For deployable systems, for example—part of the project we have been talking about—we looked around the world to see which militaries had successfully implemented deployable systems. We haven't, and most haven't. It has always been a problem. That is why we decided, 'Okay, let's do the core system at home, get that sorted out, have a system that allows us to track for operational purposes where kit is going, integrate that into the system; and look to the future about how you evolve to a single system.' So, rather than try to integrate the three service systems into one model and then go to industry and say, 'Give us an ERP,' we have refreshed our core and will integrate over time. The next major step in evolution would be to look at the financial management system and this system and see whether we can bring that together. But you need to have a stable system that is working, understandable and integrated, before you can take that step.

Mr Richardson : If I can just put that into context, that is 33 logistics systems in the context of about 3,500 total different systems in Defence, which is what the CDF is going to in terms of rationalising them.

Senator JOHNSTON: Yes; it is very spooky.

Mr Richardson : It is indeed.

Mr Prior : It is not unexpected. As the CDF said, this is an organisation that has a history going back 100 years. It is different organisations coming together. From my dialogue with CFOs of other large corporates around the country—and I do that regularly—we are not unique among different large organisations in terms of the number of systems. Some of the big financial institutions have been struggling with a multitude of systems for decades. Like all these big institutions, you cannot just stop and start from scratch.

Senator JOHNSTON: No; the transition is crucial.

Mr Prior : The transition is crucial, and legacy systems take a long time to coalesce together.

Senator JOHNSTON: That is why the social security department model is a very good one—people must be paid. When they switch in and out of their software and systems, we have managed to do that reasonably seamlessly. So the 3,500, plus the 33 logistic—

Dr Lawrence : 'Including'.

Senator JOHNSTON: 'Including'—okay. These 3,500 are individual service contracts for software and for maintenance of hardware. This must be costing us an absolute motza!

Dr Lawrence : A lot of software will be under maintenance agreements, but I cannot put my hand on my heart and say it is all under maintenance agreements. It is hosted on hardware. It is part of the conversation we were having last night around where all that hardware is. The centralised processing will start to unpick some of that. I think you asked me half the question last night—where are we going with some of this? It is absolutely to simplify the landscape. Where we have a lot of applications delivering very similar functionality, we will consolidate down to one. Not to digress too far, but the personnel systems modernisation is about migrating all our personnel systems onto one platform, including the whole management of people data and all the functions that go with it. That is about simplification and standardisation. So we have a long journey to go on, both in people, then in logistics and finances, as we work through the various business domains, and then how that runs into some of the capability in the services as well.

Senator JOHNSTON: So, on notice, could you tell me which DCP plans in 2012—just 2012; we will not speculate as to what comes forward—are relevant to the rationalisation of the 3,500 separate systems. I hope there are numerous. Thank you, Chair; I have no further questions on that subject matter.

Rear Adm. Campbell : The submarines have a different system, as well.

Senator JOHNSTON: I am sure they do.

CHAIR: Are there any further questions on program 1.10? No. Thank you very much. Moving on then, I have been advised that there are no questions for program 1.11—

Air Marshal Binskin : Madam Chair, if possible, I can close out a couple of issues.

CHAIR: Certainly. Please take the opportunity.

Air Marshal Binskin : First of all, I will ask Major General Brereton to come up to the table; he has an answer on TS Carpentaria.

Major Gen. Brereton : Senator Macdonald, you asked about the budget for TS Carpentaria and quoted the figure of $30,000, of which $22,000 was available. Training Ship Carpentaria is one of six training ships in the North Queensland flotilla of the Australian Navy Cadets. The figure of $30,000 is the budget for the current financial year for the North Queensland flotilla for the six ships, not for training ship Carpentaria alone. Of that, about $23,000 remained in March of this year. That budget does not include cadet forces allowance for the officers and instructors of cadets of the North Queensland flotilla, which is funded separately on a national basis. Essentially, it is a budget at the discretion of the North Queensland flotilla commander, which is applied to such expenses as transport, rations, fuel for safety boats, and repairs and maintenance of water craft. They would be the major areas of expenditure of that budget across the six training ships.

Senator IAN MACDONALD: Can you remind me of who the commander of the North Queensland flotilla is?

Major Gen. Brereton : No; but we can get that for you.

Senator IAN MACDONALD: Thank you.

Air Marshal Binskin : Chair, Mr Tomkins can provide an answer on the Operational Service Medal.

CHAIR: Thank you.

Mr Tomkins : Senator Macdonald asked earlier this morning about the number of legacy operations and their names for which the Operational Service Medal has been applied retrospectively, the number of potential recipients and the number issued to date. In total, there have been 19 operations across six different categories; I will detail them for you. The first category is Operational Service Medal-Border Protection. The operations are as follows: CRANBERRY, DIRK, STANHOPE, MISTRAL, TEEBONE, CELESTA, SUTTON, GEMSBOK, RELEX, RELEX II and RESOLUTE. That is a total of 11 operations. The number of potential recipients is in the order of 8,500 to 10,000 retrospectively. There is also an ongoing eligibility for enduring border protection operations, which I referred to this morning in my response. The number of future potential recipients is unknown. The number issued to date is 1,464. That takes me to the second category, which is Operational Service Medal (Civilian) with Clasp 'EAST TIMOR'. There are three operations as follows: TANAGER, CITADEL and SPIRE. The number of potential recipients is unknown at this stage, which is the same for the rest of the categories. The number issued to date is one. The third category is Operational Service Medal (Civilian) with Clasp 'ICAT'. There is one operation, which is operation SLIPPER. The number issued to date is 28. That takes me to the fourth category, which is the Operational Service Medal (Civilian) with Clasp 'IRAQ 2003'. There are a total of two operations as follows: FALCONER and CATALYST. The number issued to date is seven. The next category is Operational Service Medal (Civilian) with Clasp 'SOLOMON IS II'. There was only one operation, and that is operation ANODE, and there is one issued to date. The final category is the Operational Service Medal (Civilian) with Clasp 'TIMOR-LESTE'. There is only one operation, and that is Operation ASTUTE, and there are nine medals issued to date. Just to clarify 'border protection', it is RELEX I and II. The question also asked about amending the Defence Act for the false wearing of military decorations. Perhaps I may assist Parliamentary Secretary Feeney by elaborating on that. Defence has sought a place for this measure on the 2013 winter parliamentary program. However, due to the government drafting priorities, this measure is yet to be finalised. Defence will continue to progress the unofficial service decoration measure when government drafting resources become available.

CHAIR: Thank you very much, Mr Tomkins. We appreciate that. We are moving now to program 1.12. Senator Johnston, you have the call.

[11:59]

Senator JOHNSTON: Submarines—the SEA 1000.

Rear Adm. Moffitt : Senator, good day.

Senator JOHNSTON: How much money for SEA 1000 do we have in the budget?

Rear Adm. Moffitt : The total allocation of funds to date is $234.48 million. That is funding that is allocated from three areas: phase zero money prior to the announcements of May 2012 and the money that has been allocated since that time.

Senator JOHNSTON: How much new money is in 2013­14?

Rear Adm. Moffitt : The additional funds that have been appropriated are in the order of $34 million associated with the land-based propulsion test facility that was announced in the context of the white paper of this year.

Senator JOHNSTON: So $34 million this year for the land-based test facility?

Rear Adm. Moffitt : That is right.

Senator JOHNSTON: And 2014­15?

Rear Adm. Moffitt : The funding is available to us and is apportioned in the DCP spend spread to—

Senator JOHNSTON: It looked as though the $214 million that you got you are going to spread out and you have used about $50 million of it, $30 million of it or whatever the figure is, but the $34 million is going to go on for more than a year?

Rear Adm. Moffitt : Yes.

Senator JOHNSTON: All I am interested in is the new money. We have $34 million this coming year for the land-based test facility. What do we have in the forward estimates for the following three years in terms of new money? You have said that $238 million is your figure, but what is new? What is coming up over the horizon in terms of money?

Rear Adm. Moffitt : The amounts that I have mentioned are the approved funding. The rest of the money is DCP money, which will be approved as government decisions are made to allocate money to the project.

Senator JOHNSTON: So in the forward estimates, all we have is $34 million for this year and the forward—

Rear Adm. Moffitt : No. We have the remaining money from the original phase zero—

Senator JOHNSTON: I am talking new money.

Rear Adm. Moffitt : The only new money that has been announced in the context of the recent budget was the $34 million. But the funding that I have available to me to progress the program—

Senator JOHNSTON: Is the $214 million.

Rear Adm. Moffitt : It is three separate chunks of money: the $34 million that we just mentioned, the $214-odd million that was approved by government in May last year and the original phase zero money, which was slightly less than $20 million—about $19.1 million—some of which remains.

Senator JOHNSTON: So there is no new money, save for the $34 million, in the four­year forward estimates?

Rear Adm. Moffitt : There have not been government approvals to appropriate money for the program at this point for that period, no.

Senator JOHNSTON: What about in the six­year guidance period?

Rear Adm. Moffitt : There is a substantial provisioning in the DCP for SEA 1000—

Senator JOHNSTON: Which we have not seen yet.

Rear Adm. Moffitt : It will be drawn from, as government makes decisions to progress the project.

Senator JOHNSTON: How much will that be?

Rear Adm. Moffitt : We have not yet begun preparing the submissions which will seek from government approval for more funding, and we do not expect to be in a position to do that before probably some time next year.

Senator JOHNSTON: We spent some time yesterday discussing the difference between the budget and the DCP. Perhaps we can just stick to the budget.

Rear Adm. Moffitt : Yes.

Senator JOHNSTON: So we have the budget for four years and then we have the guidance period of six years. The question I am asking is: how much new money—beyond the $34 million, the $214 million and the $20 million that you have mentioned—is coming, is listed and is budgeted into the future for SEA 1000?

Rear Adm. Moffitt : I may not be the best person to explain to you how this works; others, I think, may be better equipped.

Senator JOHNSTON: I am ready, willing and able to listen.

Rear Adm. Moffitt : But that is the way in which the departmental budgeting process works. I can talk about what I am doing with what I have been given and—

Senator JOHNSTON: And we will come back to that in a moment. But I want to know about the new money; I want to know about the funding into the future for this program out 10 years.

Mr King : I will get you the answer on what we have in the forward estimates. But just to recap where we are, we have $234 million approved for work, already approved by government, through three significant decisions. So far we have spent, as I understand it, about $19 million of that, and we have $72.5 million committed. I will get you the answer to how that money is being spread, the $234 million. From that work that we do, we will come back to government with a series of decisions that will involve seeking further funding for further work. As we discussed yesterday, the work we are looking at, for example, is to progress the land-based test site, the specify system, and we have discussed the money there. We are also now seriously undertaking the work on the evolved Collins design, as a suitable candidate, and the new design. From that work will come the information that we will need to go back to government on and advise or request of government funding that we will need for subsequent stages.

Senator JOHNSTON: I cannot—and I do not think the committee or the public can—anticipate the future in terms of requests and all that. All we have to work with is what is in black and white in numbers in the forward estimates and in the six­year guidance period. The question is a simple one: how much money is now, as of today, designated for this program in those periods? I think the answer is $34 million as it stands.

Mr King : No. In the forward estimates—I am assuming that it is within the period of the forward estimates—will be a spread of the $234 million, that is correct.

Senator JOHNSTON: No.

Mr King : Sorry.

Senator JOHNSTON: We know about the $234 million because that was allocated last year. I am asking: is there any new money coming into this program?

Mr King : Unless I have this wrong, there was new money since last year; that was for specify, for a start. So there is new money coming into the program, as we requested.

Senator JOHNSTON: That is the $214 million?

Mr King : Yes; but $34 million new funding for specify.

Senator JOHNSTON: And that is this year and it is in the papers this year.

Mr King : I am not sure that it is all spread in this year. I want to come back to you with that information. From the approved funding—

Senator JOHNSTON: Can you take me to a budget portfolio statement document?

Mr King : I do not think it is in that detail in the budget statement.

Senator JOHNSTON: How much money are we talking about, $34 million?

Mr King : I was saying that in the planned expenditure what we will expend in 2012-13 is $34.7 million; in 2013­14, it is $58.4 million; in 2014­15, it is $44.4 million; and, in 2015­16, it is $40.6 million.

Senator JOHNSTON: $14.6 million?

Mr King : No, $40.6 million. The appropriate table is table 85, page 153.

Senator JOHNSTON: I have approved expenditure of $214 million and I have accumulated of $35 million.

Mr King : That $35 million is the same number—fortunately, it correlates—that we expect to spend this year; and then $58 million next year.

Senator JOHNSTON: This only tells me that we have $58 million.

Mr King : For next year. But I have read out to you the spread for us, which is another $44.4 million in 2014-15.

Senator JOHNSTON: But that is not in the forward estimates.

Mr King : It is not in the table, but I am just adding the next two years to the forward estimates.

Senator JOHNSTON: So we have numbers that you are working with and then we have forward estimates that do not contain those numbers; is that the situation?

Mr King : Apparently they do not contain years 2014-15 and 2015-16 in this table.

Senator JOHNSTON: How is that the case?

Mr Richardson : The portfolio budget statement is for 2013­14 and the detailed table from the portfolio budget statement only goes as far as the budget estimate for next financial year.

Senator JOHNSTON: But there are tables that we were looking at yesterday that take out and go forward over the four years of the forward estimates. All I am asking is: show me where the money that we have been talking about is set out in the budget.

Mr Richardson : I think we have given you what we can.

Senator JOHNSTON: All right. How is it that what you are giving me is not in the documents?

Mr Richardson : Obviously they are different documents serving different purposes.

Senator JOHNSTON: But the document is the document that binds us all and binds government?

Mr Richardson : But the portfolio budget statement does not go into detail out over the full forward estimates.

Senator JOHNSTON: Where is the detail of the moneys that we have talked about that you say have been allocated to this project in the budget in the forward estimates? Each budget has the four years, and we have a four­year funding cycle in the white paper. Where is the reference to this money in the budget?

Mr King : My assumption is that, if we included every detail for every year for every project, the document would be very large. What we have included here under the DMO section is our planned expenditure for this year and next year. Then our requirements, which we call AMCPF, the approved manager capital procurement funding, will be flowed up into the total expenditure planned by Defence in the forward estimates. I cannot explain in any more detail than that about why other years do not appear separately, except for the volume of material that we would have to produce.

Mr Richardson : The other years have not yet been approved, and that is perfectly reasonable. As we need more as a project develops, we will go to government. There will be specific decisions taken and money will be appropriated. What Warren is giving you are the planning figures in the forward estimate years—

Senator JOHNSTON: Not approved.

Mr Richardson : But beyond next financial year, the money has not yet been appropriated. That will be done in next year's budget and then in the year-after's budget et cetera.

Senator JOHNSTON: Appropriated or approved?

Mr King : The numbers that I gave you are the approved numbers but not, as the secretary has—

Senator JOHNSTON: Approved by whom?

Mr King : By government through NSC.

Mr Richardson : Yes.

Senator JOHNSTON: And yet they are not in the budget?

Mr Richardson : No, because they have not been appropriated.

Senator JOHNSTON: No. But there was a whole host of numbers that we were looking at yesterday on programs that go out over the three years beyond next year's budget that have been—

Mr Richardson : Up to a certain point and not in this level of detail.

Senator JOHNSTON: Not in this level of detail?

Mr Richardson : No.

Senator JOHNSTON: This is potentially a $40 billion project—

Mr Richardson : That is right, and we are at the very early—

Senator JOHNSTON: And we have got money that has been approved?

Mr Richardson : Yes.

Senator JOHNSTON: That is not in the budget?

Mr Richardson : No. We are at the very early stages of a $40 billion program, very early, and the money is being appropriated as we go.

Senator JOHNSTON: You are telling me that the money has been approved but not in the budget for the three out years of the forward estimates?

Mr King : I think I could clarify that a little. We produced this table in DMO to show, for information of committees, where we are planning—under the DMO, under approved budgets—to spend money for this year and next. We also flow into the Defence budget in the forward estimates anywhere we anticipate requiring money. That is a feed in to CFO Defence so he can plan expenditure throughout the forward estimates. The fact that we may not have shown in detail year 2014-15 or 2015-16 for the summary is not indicative that we have not programmed it; it is just not shown.

Senator JOHNSTON: There are programs that have approved funding in Defence that are not shown in the budget in the four forward estimate years, and this is one of them?

Mr King : In DMO I have 183 projects. They are not shown either.

Senator JOHNSTON: I am looking at Growler. That is shown as a $200 million appropriated sum in 2014-15.

Mr King : That is right.

Senator JOHNSTON: The four years are all there. Who decides what is going to be disclosed and what is not?

Mr Richardson : Not in detail. The four years for Growler, are they in detail?

Senator JOHNSTON: All I have got is 2014-15, $200 million.

Mr Richardson : That is right. That is what we went over yesterday.

Senator JOHNSTON: Yes, but 2013-14 has got nothing, 2015-16 has got nothing and 2016-17 has got nothing.

Mr Richardson : That is right. That is the same as here. It is consistent.

Senator JOHNSTON: Why would we not have the numbers you have mentioned in there?

Mr Richardson : Because Mr King is reading to you something that is from within DMO for their planning purposes, which is different to what has been appropriated, but it is what they are anticipating and planning.

Senator JOHNSTON: The money has not been appropriated?

Mr Richardson : Not yet. It is appropriated on an annual basis.

Senator JOHNSTON: So the $200 million for Growler has been appropriated?

Mr Richardson : Yes.

Senator JOHNSTON: How much appropriated money is there, save for the $34 million that we talked about—I think it is $35 million, given the table you have taken me to—in the four out years of the forward estimates?

Mr King : We have only appropriated—

Mr Richardson : It is $214 million.

Mr Prior : Just to be clear, to be technically correct, nothing has been appropriated. Nothing will be appropriated for 2013-14 until, I believe, about 10 o'clock on the night of 30 June as the appropriation bills go before parliament. They will be appropriated for only 2013-14. Beyond that year, as we said before, they will be approved by government decision. Some will be approved. Those that are unapproved, of course, are not approved by government decision, as you would appreciate. Those that are approved are approved by government decision, but not yet appropriated—just to be very clear.

Senator JOHNSTON: So the $200 million for not next year but the year after for Growler is approved—

Mr Prior : Is approved but not yet appropriated because we are not in that financial year—approved by government; that is right.

Senator JOHNSTON: What is the calibre of the money you have told me is in the forward estimates for this program?

Mr Prior : Approved, but a government decision is behind it. That is, there is a government decision. That is the government's clear intention. But until you get to those years, it will not be appropriated.

Senator JOHNSTON: Why is it not in any of the documents when other approved unappropriated moneys are?

Mr Prior : As Warren King was alluding to, we have many, many hundreds of programs—

Senator JOHNSTON: Why do you put some in and not others?

Mr Prior : Those programs which have new government money go in as measures.

Senator JOHNSTON: That is what I am asking.

Mr Prior : Those that have new government money above and beyond the already approved budget are listed as measures and they are therefore included. Growler, for instance, was a project that attracted new government money, $200 million.

Senator JOHNSTON: So my question is: new government money in the budget for this program, SEA-1000—there is no money, save for the $35 million?

Mr Prior : Where project funds are sourced from existing approved funds for Defence—we went through this yesterday—in terms of absorbed or reprioritised et cetera, which does not attract new money in a particular budget update, they are not listed as new measures. But where there are projects which do attract then they are listed.

Senator JOHNSTON: I am interested in the new money that is approved but not appropriated in the four years of the budget papers presented last May. The answer, I think, is that, save for the $35 million that I was taken to on page 53 on portfolio budget statement 1.4A, there is nothing else.

Mr Prior : I am just trying to remember back to the last budget round.

Senator JOHNSTON: I want to talk about the $214 million that was allocated. I know about that—

Mr Prior : That is from—

Senator JOHNSTON: I am talking about new money.

Mr Prior : There is no new money announced in this budget for this project.

Senator JOHNSTON: Save for the $35 million for the land-based test facility.

Rear Adm. Moffitt : That is right.

Mr King : You can see that from the table.

Senator JOHNSTON: Yes.

Mr King : The $214 million, plus the new money, comes in. We are expecting to spend $35 million this year and we are expecting, under the appropriation, to get $58 million for next year.

Senator JOHNSTON: Let us talk about the six guidance years for this program. Where do I find the money that is approved but not appropriated for those six years?

Mr Richardson : You do not, Senator.

Senator JOHNSTON: I did not think I did. Where will we publish the guidance funding provisions?

Rear Adm. Moffitt : We do not.

Mr Richardson : We do not.

Senator JOHNSTON: That is classified?

Mr Richardson : The public DCP, of course, as you know, will be out by 30 June. That will provide whatever. We do not go into the detail of the guidance beyond the forward estimates.

Senator JOHNSTON: In other words, there is no commitment to new money, save for the $35 million we have discussed coming forward for the land-based test facility next year, and that is for 10 years?

Mr King : No, Senator; I think we did explain that. We had approval from government to do a body of work. We get appropriated on—

Senator JOHNSTON: No. I realise you got your $214 million you are carrying over.

Mr King : That was foreshadowed to be work for a number of years.

Senator JOHNSTON: Sure.

Mr King : Plus we got the additional $34 million. We are looking to get that $58 million appropriated this year and internally we are planning on how to spend the balance of that money over subsequent years. In the course of those years we will come back to government for additional requests for additional work.

Senator JOHNSTON: None of that is in the budget.

Mr Richardson : No.

Senator JOHNSTON: We are all just left to wonder what you are going to ask for and whether it is going to be given a tick or not?

Mr King : Well, no. We do planning in the DCP.

Senator JOHNSTON: The DCP has moved to the right so often that it is virtually a worthless document in many respects, may I say.

Senator Feeney: It is an organic planning document.

Senator JOHNSTON: It is an organic planning document that has never worked once in terms of schedule, time and cost. Nevertheless, let's go on. We spent some money with the Swedes to buy some IP.

Mr King : Yes.

Senator JOHNSTON: How much did we spend?

Mr King : We spent less than the budget and because we are still finalising it—

Senator JOHNSTON: You are going to tell me it is commercial in confidence?

Mr King : I would prefer not to disclose it, but we can. We did give you in a question on notice the budget element for that.

Senator JOHNSTON: Let us deal with why you think it is commercial in confidence. Have we done a deal or have we not? Is there a contract?

Mr King : Yes, we have.

Senator JOHNSTON: The contract contains a number?

Mr King : It is not a contract because it is an arrangement. It is an implementing arrangement with the Swedish government.

Senator JOHNSTON: What is an 'implementing arrangement', please?

Mr King : It is an arrangement between us and the Swedish government on the amount of money we are paying for the IP to be used both on the Collins submarine and on the future submarine. The reason I am a little—

Senator JOHNSTON: I am all ears.

Mr King : Actually, it is nothing to it with our arrangement with the government, but there is a third party, a company called TKMS, which is an owner of Kockums. We are still finalising our arrangements with Kockums.

Senator JOHNSTON: All right. Is this purchase vital to the planning phase for SEA-1000?

Mr King : Yes.

Senator JOHNSTON: When did you realise that?

Mr King : We have known all along—I do not know; a number of years we have known that we have needed to settle this matter.

Senator JOHNSTON: How many years?

Mr King : I do not know, Senator; two or three years, four years. The reason we know that is that the original purchase of Collins did not deal adequately with IP rights.

Senator JOHNSTON: For as long as we have had Collins we have had an IP issue, have we not?

Mr King : Which we have improved dramatically over the years. It was my strong advice to secretary, CDF and to ministers and government that we not allow ourselves to be in that position again in the pursuit of the future submarine. I was very strong in that advice.

Senator JOHNSTON: I think that is very good advice.

Mr King : In fact, so strong that I said, for example, that I did not feel it was worth pursuing the evolved Collins as a solution unless the IP matters could be substantially agreed in advance that would allow our country to exercise reasonable sovereign rights if we eventually chose to go with the evolved Collins as a solution for the future submarine.

Senator JOHNSTON: When did you say that? Was it last year?

Mr King : Yes, possibly a year ago—that sort of period.

Senator JOHNSTON: But we have known about this problem with respect to option choice 3, the evolved Collins solution for many, many years?

Mr King : We have known that it will be a problem that we will have to deal with, yes.

Senator JOHNSTON: So why have we taken so long?

Mr King : I do not think we have. In fact, my advice to the minister was that it was about the right time to deal with it. Quite frankly, we and the Swedish government need to align on our mutual ambition here. We have an ambition in Australia, or certainly I promote an ambition, that we get sufficient sovereign rights over whatever design we go for that we never get in a Collins position again. The Swedish government have an ambition to be involved in our program because it is very complementary for keeping their defence industry active and alive. It is a central core of their business in Sweden. There is sometimes a time and a place to bring an agreement or a negotiation to a head. I think it was just the right time and the right place.

Senator JOHNSTON: So we have a contract to purchase the IP that you say closes the door on any doubt.

Mr King : Just to be correct: not a contract.

Senator JOHNSTON: So it is not a contract?

Mr King : No.

Senator JOHNSTON: It is not an enforceable document?

Mr King : I will check on the status of it. It is certainly a formal implementing agreement.

Mr Gould : An intergovernment agreement.

Senator JOHNSTON: An intergovernment agreement and we have paid money pursuant to it?

Mr King : We will on signature.

Senator JOHNSTON: It has not been signed yet?

Mr King : We believe it is within days—the implementing agreement. We understand it is within days of signing.

Senator JOHNSTON: You say a third-party commercial entity may have bearing upon that?

Mr King : No, I do not think it will have bearing upon that. The reason I do not want to particularly disclose the value is that—

Senator JOHNSTON: No, I do not want to talk about the value either. I just want to talk about the relationship of the parties and what we are buying.

Mr King : There are two parties, basically. Kockums was purchased by TKMS, a German based company. In structuring that deal, the Swedish government preserved certain rights over the IP, even though the company was owned by a German company. In dealing with the combined rights that we needed as Australia we had two issues to solve, and we are solving. The first is agreement with the Swedish government on their transference of rights to us for use on Collins and use on future submarines; and then a final piece of a commercial agreement, which is the agreement with the company on them working with us using IP.

Senator JOHNSTON: The agreement with the company is about service provision by them to us?

Mr King : Correct. It is a contract.

Senator JOHNSTON: It does not affect or impact the intergovernmental agreement?

Mr King : No, not in that sense. But you need both parties to come to the table.

Senator JOHNSTON: Why?

Mr King : Well, the company will assert it has certain rights over the IP itself.

Senator JOHNSTON: Hang on. That is different to the proposition of a service provider. They are saying they have propriety rights intervening between the two governments. Have they said that to you?

Mr King : No, I do not think they have said that. What they have said is, 'We have purchased a company with intellectual property.'

Senator JOHNSTON: This is just a mess.

Mr King : I will have my lawyer, the deputy CEO, explain.

Senator JOHNSTON: It is 12.30, Mr King. I think it is an opportune time for us all to take a breather.

Proceedings suspended from 12:30 to 13 : 36

ACTING CHAIR ( Senator Eggleston ): We will reopen this session. We expect our Labor colleagues in a minute.

Senator Feeney: That is reassuring.

ACTING CHAIR: It is very reassuring.

Mr Richardson : If it is possible, we could give a couple of answers to some questions which we said we would come back on.

ACTING CHAIR: Yes.

Mr Meekin : These are responses to questions posed last night by senators Johnston and Fawcett. Senator Johnston asked how many times the Australian Government Security Vetting Agency had been consulted by agencies before temporary access was granted to a clearance subject by the agency head. In this financial year, the Australian Government Security Vetting Agency received 4,013 notifications of access being granted by agencies, including Defence, for information at the secret level and below. The security vetting agency has been notified of eight grants of access for non-Defence agencies to information up to top secret level. Third, AGSVA granted access to information classified as top secret for 10 Defence requests. The second question by Senator Fawcett was: what was the cost for each level of clearance conducted for other government departments? The costs are as follows: $333.67 for a baseline clearance; $637.68 for a negative vetting level 1 clearance; $1,757.71 for a negative vetting level 2 clearance; and $6,791.73 for a positive vetting clearance.

Rear Adm. Campbell : We were discussing with Senator Johnston earlier maintenance support for our ships and the linkages between those maintenance systems and logistics support upgrades in the DCP. I indicated to Senator Johnston that I would come back with confirmation about real-time systems or not. I was correct; there are no real-time systems, although the integrated platform monitoring system in LHD and Air Warfare Destroyer, or the DDG, is capable of real-time monitoring ashore. We have that, but it is not linked with the AMPS system or MILIS as yet. We are going to fix that into the future, though. I have other updates. Basically, it is a manual linkage between the air maintenance support system and our logistics system.

ACTING CHAIR: Thank you very much.

Gen. Hurley : I have a response to a question from Senator Macdonald about cadet units raised in the last 18 months. The only air force cadet unit established in the last 18 months is 413 Squadron at Warrnambool in Victoria. The commanding officer was appointed and the unit was formed on 1 March 2012. The first cadets paraded on 3 May 2012.

ACTING CHAIR: There being no other statements, Senator Johnston.

Senator JOHNSTON: Mr King, we were talking about the intergovernmental arrangement between Australia and Sweden with respect to an IP purchase. You indicated you were concerned that there was a commercial entity that had some bearing or impact upon that transaction. Why are you concerned?

Mr King : I would probably use a different phraseology. I am aware that there is a commercial entity that has a right in the IP as well.

Senator JOHNSTON: So the IP is not wholly owned?

Mr King : Jointly, I think.

Senator JOHNSTON: It is jointly owned . So is it an undivided half share, or is it an undivided unequal share?

Mr King : If you do not mind, I will pass to my deputy CEO, who is a lawyer and who can be more accurate in his response.

Mr Dunstall : We have not seen the precise nature of the agreement between TKMS Kockums and the government of Sweden. It was done as part of a broader commercial settlement in relation to the sale of Kockums across to TKMS. However, we have been given advice by both those parties about the nature of their rights and their ability to grant rights to us. That formed the basis for our going forward and doing the negotiations with Sweden and now with Kockums to give effect to the rights that they have.

Senator JOHNSTON: Firstly, TKMS AB is in fact the real name of Kockums now, is it not?

Mr Dunstall : That is right, yes.

Senator JOHNSTON: And it is a wholly owned subsidiary of TKMS GmbH?

Mr Dunstall : Correct.

Senator JOHNSTON: You have not seen the relationship between TKMS AB and the Swedish government?

Mr Dunstall : The exact document we have not seen, no, that is true.

Senator JOHNSTON: I would have thought that is fairly important.

Mr Dunstall : We are aware that Sweden owns the IP rights. We have been given copies of various legal advices from all parties, in fact, as to the nature of the respective rights. Ultimately, either or both are able to grant rights. We will be giving effect to that through the various agreements that we have.

Senator JOHNSTON: Well, there is a right of veto, is there not, with respect to the intellectual property jointly held between the parties?

Mr Dunstall : In broad terms, that is correct for the government of Sweden. As we have seen in relevant provisions and from the advice we have been given, there is a joint ownership arrangement. The government of Sweden has rights, through their export control mechanism, to prevent the granting of those rights by the commercial party in certain circumstances relating to national security and other matters. So it is really an export control mechanism that regulates Kockums-TKMS's ability to grant those rights in reliance on the licence.

Senator JOHNSTON: If the IP is jointly owned, do we not need the consent of both of the parties—that is, the Swedish government and TKMS AB—in order to proceed further with the acquisition of the intellectual property rights?

Mr Dunstall : The government of Sweden's view is that we do not. From our perspective, though, we have stressed the importance of getting the consent of all parties; that is right.

Senator JOHNSTON: When do we expect that consent?

Mr Dunstall : We are now doing that through our negotiations with Kockums for the scoping study work. So part of the contractual arrangement with Kockums, or TKMS AB, will be to get that express consent through that contractual mechanism.

Senator JOHNSTON: Will the payment of the consideration to the government of Sweden precede the finalisation of the agreement with TKMS AB?

Mr Dunstall : I cannot comment precisely on the timing.

Senator JOHNSTON: I would really hope not.

Mr Dunstall : Senator, we do have obligations under the implementing agreement to make a payment within a certain period following signature of the implementing agreement.

Senator JOHNSTON: What is the period?

Mr Dunstall : I believe it is within 30 days.

Mr King : Originally, we sought a tripartite agreement.

Senator JOHNSTON: As you should, I suspect.

Mr King : My original proposal was that we would sign a tripartite agreement so that we could bind up all parties. The two parties involved in the original agreement—that is, the Swedish government, in particular, and TKMS—because of sovereign issues did not want to make Australia a third party. I think their interpretation was that it could diminish some of their rights. So they wanted to do two bilateral agreements. TKMS has conveyed to us their desire to participate on a cost recovery basis in this program. Now the Swedish government has agreed to an implementing arrangement for the IP rights. So that has come together but in a less elegant way than we would have preferred.

Senator JOHNSTON: So this is an agreement between the DMO and the Swedish DMO, is it not?

Mr Dunstall : It is an agreement between the Commonwealth, represented by the Defence Materiel Organisation, and the government of Sweden, represented by FMV, which is our equivalent.

Senator JOHNSTON: So it is an agreement between two agencies of the two respective governments?

Mr Dunstall : No. It is an agreement between two countries. It is a government to government agreement. For that purpose, the government is represented by a particular agency.

Senator JOHNSTON: And we know and understand that the IP we are purchasing pursuant to such an agreement is jointly owned?

Mr Dunstall : Well, there are different aspects to it. The agreement covers extended rights to use the existing Collins technology. It also covers other Swedish background technology—in effect, technology that has been developed since Collins. We started the negotiations around Collins, but it quickly became apparent that it was important to also cover off other background technology because that in large part will be brought to the table as part of the scoping study work for the future submarine.

Senator JOHNSTON: I will come back to the point. What we are purchasing is jointly owned.

Mr Dunstall : We are purchasing extended rights to Collins technology that we already have. So it is extended rights to use.

Senator JOHNSTON: I am not so much interested in what we are getting. I am interested in who we are getting it from.

Mr Dunstall : That is correct. There is a joint ownership arrangement between the government of Sweden, Kockums AB, now TKMS AB, in relation to that Collins technology.

Senator JOHNSTON: And we have agreed with one of the joint owners to acquire those rights?

Mr Dunstall : To acquire extended rights to the technology that we already have, yes.

Senator JOHNSTON: And we are bound to pay pursuant to that agreement or understanding between the two governments?

Mr Dunstall : Upon signing the implementing agreement, yes.

Senator JOHNSTON: Within 30 days?

Mr Dunstall : I believe so, Senator, but I can check that.

Senator JOHNSTON: And we have not nailed down the other owner of the intellectual property rights?

Mr Dunstall : We have had ongoing engagement with both TKMS and Kockums through this process. Sweden has also had ongoing engagement with Kockums throughout this process. There is a significant level of confidence that all parties want to play.

Senator JOHNSTON: And you have not seen the agreement between the Swedish government and TKMS AB?

Mr Dunstall : The full agreement we have not, Senator, because it covers off a number of commercial matters between the government of Sweden and TKMS in relation to their sale of Kockums AB. This is a component of that broader agreement.

Senator JOHNSTON: And all you have is representations that none of those matters bear upon the acquisition we are seeking to make?

Mr Dunstall : We have seen relevant provisions and we have seen legal advice provided to us by both TKMS and the government of Sweden in relation to the operation of those provisions.

Senator JOHNSTON: Do you understand the term 'chain of title'?

Mr Dunstall : Broadly. I am not sure it is a legal term of art.

Senator JOHNSTON: Would you not need to see the agreement between TKMS GmbH and Kockums as to what in fact the Germans purchased when they acquired Kockums?

Mr Dunstall : I think we are pretty confident that Sweden is the sovereign owner of the IP through the sale. Kockums have the rights. They are the joint owner of it. I think we can be pretty reliant on a government to government agreement and commitments given by another sovereign nation.

Senator JOHNSTON: Are you certain that the right of veto over the commercial use of these rights will not adversely impact the acquisition?

Mr Dunstall : The purpose of this agreement is to ensure that we do get that confidence. There were a number of discussions around whether or not we could simply rely on the TKMS granting us the rights. It was very clear to us that, from our perspective, we wanted certainty about what our rights were going to be. That is why, from our perspective, we needed all parties to consent to this transaction—to avoid the very uncertainty that I think you are alluding to.

Senator JOHNSTON: On 16 May, the minister announced that this was a significant milestone agreement. Did we then know that we also needed to have a contractual relationship with TKMS AB?

Mr Dunstall : Yes, we did.

Senator JOHNSTON: So we did not talk about that?

Mr King : The two parties involved did not want to enter into a tripartite agreement. It is their right to do so. The most important part to unblock in priority order, having had parallel discussions between all three parties, and agreeing to the basic situation, was to have the Swedish government agree to release that IP for us to use. That is what the implementing agreement allows. Without that, the rest stops.

Senator JOHNSTON: But we have established, Mr King, that they do not own it.

Mr King : Well, they have joint interest.

Senator JOHNSTON: Precisely.

Mr King : We have correspondence from TKMS explaining that they want to participate in the program and their ability, from their perspective, to release IP to us.

Mr Dunstall : It is really clear. Each party has the ability to deal with the IP. The issue for us is TKMS offering that ability to grant us the extended rights we sought in relation to that IP. While they could have done that, Sweden, through their export control mechanism, could have prevented that if they had felt that that grant of rights was contrary to national security or similar matters. So going into these discussions and negotiations with all parties, we were very aware that we needed all parties to agree to the deal, which is why we wanted to try to do it via a tripartite arrangement.

Senator JOHNSTON: You are aware that TKMS AB is a wholly owned subsidiary of a publicly listed German company?

Mr Dunstall : We are.

Senator JOHNSTON: The ownership and management of which can change at any given time. So we are paying money for a jointly owned right to one of the joint owners without securing the agreement of the other joint owner. That is what you are telling me.

Mr Dunstall : We are. They give us sufficient rights in and of themselves. We can rely on the rights granted to us by Sweden. If TKMS were desirous of resisting that, we would rely on the rights granted to us by Sweden.

Senator JOHNSTON: How old are these rights?

Mr Dunstall : How old is the technical data to which they relate?

Senator JOHNSTON: Yes.

Mr Dunstall : It is all related to Collins.

Senator JOHNSTON: I would suggest it is 35 years.

Mr Dunstall : That is correct. Since the genesis of the Collins submarine.

Senator JOHNSTON: So we have been without this for 35 years on the Collins program?

Mr Dunstall : No. We have rights to use under the Collins program technology for Collins purposes. There are a range of constraints and restrictions around our ability to use and, importantly, disclose that technology to third parties. So when we embarked on this arrangement, we had two key aims. One was to get a broader right to use and disclose Collins intellectual property, Collins technology for Collins purposes and to get rights to use Collins technology for progressing future submarines, to the extent that we needed it. There was a lot of discussion as to the actual extent that we did or did not need Collins technology to progress our future submarine program.

Senator JOHNSTON: How many trips have we taken to Sweden to try to secure these rights?

Mr King : Two groups, I think, Senator. We would have to check.

Senator JOHNSTON: Two groups.

Mr King : I certainly led a group. It was not just that. There was that and other matters. I think Mr Dunstall led a group.

Mr Dunstall : It was in conjunction with bilateral—

Mr King : Bilateral arrangements with Sweden on a broader defence base. Then we had a final negotiation in Bangkok to finalise the deal.

Mr Dunstall : The Swedes came out here on a few occasions as well. I am aware that there have been ministerial discussions on the matter.

Senator JOHNSTON: Over what period are we talking?

Mr King : I would have to check, Senator. I think the first trip I did was late 2011.

Mr Dunstall : And I went in August-September 2012.

Senator JOHNSTON: The minister, in his announcement of 3 May, said, and I quote, regarding the third option:

An evolved design that enhances the capabilities of existing off the shelf designs, including the Collins class.

He went on to talk about an evolved Collins. Have we been talking to any other parties with respect to this option?

Mr Gould : No. We have not.

Senator JOHNSTON: No other parties? We have not been talking to anyone from Britain with respect to this option or anyone from America with respect to this option?

Mr Gould : No. Because neither the UK nor the United States have a conventionally powered submarine.

Senator JOHNSTON: I appreciate that. I certainly appreciate that. The question is: have we been talking to any other parties regarding this particular option?

Mr Gould : Option 3?

Senator JOHNSTON: Option 3.

Mr King : Well, in what sense do you mean talking?

Senator JOHNSTON: Getting advice, having discussions, having some design authority assistance.

Mr Gould : There is an aspect in which we have—

Senator JOHNSTON: There is an aspect?

Mr Gould : It is this: one of the things that the new rights give us is the ability to share the outcomes of the study with the US Navy and, indeed, for that matter, with the Royal Navy so that they can help us evaluate the outcome of the study. So rather than discussing an option 3 of their own, it is evaluating what might come from this work.

Senator JOHNSTON: Any commercial entities in that regard?

Mr Gould : There are commercial entities in there as well.

Senator JOHNSTON: Are you prepared to tell me who they are? I can guess who they are. Are there commercial-in-confidence considerations in disclosing them? Would you rather not?

Mr Gould : I would be very happy to tell you in private. It is just that I would rather consult the Swedish government about what is in that list before we disclose it.

Senator JOHNSTON: We can get ourselves into a real mess here with these agreements and intellectual property rights that are jointly owned passing across when we have not contracted another party and we have other people who are commercially involved.

Mr King : I want to correct that a little. We have actually clarified the record a lot, significantly greater than had been achieved in the previous years. In its own right, the improved rights we have for the sustainment of Collins alone is a substantial outcome of the implementing agreement. Although we are not talking about that today, that alone is a very important part of this acquisition of IP rights. The second point is very much the point you are making. We have a right through a restricted list of folk—and it is totally understandable from Sweden's point of view; their desire to not have their inner most IP related to submarine technology shared just with anybody is fully understandable—to share that information coming out of the design studies, the option 3 studies, with certain parties so that this independent work can be done for us. It is a very important breakthrough.

Senator JOHNSTON: I have no doubt that it is. It staggers me that for 35 years we have not had it.

Mr King : We had increasing rights. One of the reasons I took such a strong line, and I reiterate it again, is that I would rather have not gone into option 3 if we could not have solved this problem because it would take us nowhere. But we have had an improved set of rights. We had an original set, which were extremely limiting. I forget the date—

Mr Dunstall : It was 2004.

Mr King : In 2004, we got an improved set of rights. This gives us very clear and really, to the extent that we need it, unrestricted rights to look after Collins.

Senator JOHNSTON: When, Mr King, will we have all of this nailed down?

Mr King : In effect, it is. We are just finalising the commercial terms with the engagement of Kockums on the evolved design work.

Senator JOHNSTON: I think TKMS AB is the correct enunciation of the company.

Mr King : Sorry, TKMS AB. They have made it very clear as a company; it is understandable. I think you are sort of painting a different balance of interest. The Swedish government had, if I characterise it, as a strong interest in protecting its sovereign IP. It therefore wanted to make sure that adequate controls of both old Collins IP and new IP, more importantly, was dealt with in a manner that they were comfortable with. So that was their interest. TKMS AB, on the other hand, its interest is participating. It is totally understandable that they are driven, as we want them to be, to be involved in this. This is one of the biggest programs in conventional submarines in the world. Any desire for them not to participate would be just incomprehensible.

Senator JOHNSTON: So we are talking to TKMS with a view to, without putting too fine a point on it, coming to an arrangement?

Mr King : It is actually to support the work. It is to do the work.

Senator JOHNSTON: But intellectual property will be part of the agreement?

Mr King : As it is with all contracts.

Senator JOHNSTON: The intellectual property we are buying from the Swedish government will be a part of what we discuss with TKMS AB?

Mr King : They have been already engaged with FMV.

Mr Dunstall : I will clarify. This comes back to the separation. Part of the implementing agreement deals with extended rights to use the Collins technology that we already have, both for Collins itself, which in and of itself is a really great outcome, and Collins technology for future submarines. The second part to the implementing agreement deals with what we call OBT, or other background technology, that Sweden has developed since Collins. That really is the important technology that would be brought to the task of having a look at option 3 in terms of an evolved Collins solution. So the implementing agreement also sets out in a staged way the principles and framework for our rights to use and disclose other background technology. The implementing agreement envisages or provides that that will be incorporated into the contractual arrangement that we negotiate with TKMS AB. But it was very important that we do that work with Sweden because if TKMS AB were to do that negotiation with us by themselves, they would have had to go to Sweden in any event. So it was about ensuring that both parties were clear about the framework for the use and disclosure of other background technology. TKMS AB are fully aware of that.

Senator JOHNSTON: Thank you for that. I want to talk about the combat system in SEA 1000. Question No. 44 was: can you clarify if a legally commercially binding decision can be made on the future submarine's combat system before we know what submarine platform we are getting? You answered yes and said that the early selection of the combat system has been shown to yield considerable benefit et cetera. I am sure you know the question. You will recall that the Senate did a review of acquisitions last year. In recommendation 16, it recommended that we avoid early lock-in through premature weapons systems choices. Indeed, that recommendation was accepted by the minister in his statement, where, in talking about recommendation 16, Mr Gould's appointment and the intent of the recommendation, he said:

The remainder of the recommendation 16 is agreed.

So the minister agreed with recommendation 16 of the Senate committee's report about the early lock-in of weapons systems choices, yet on 13 February you are telling me that we do want to lock in the combat system. Help me reconcile those positions, please.

Rear Adm. Moffitt : The government's announcement in the context of the white paper relating to SEA 1000 is not an acquisition decision. It does not commit to purchase BYG-1 for the future submarine. It simply makes the statement that, for the work that we are now doing on options 3 and 4 to be done sensibly, there must be a combat system. The announcement essentially makes the point that the reference system for that piece of work is the one we have. That is what we have decided to use to do that work. It is the combat system that we have and for which we have extensive data—all the data we need to do the work. Equally, we have no data that is sufficient for that work on any other combat system. We would need to make a selection and go and get that data and get approval to use it for it to make any sense.

Senator JOHNSTON: So there is no lock-in?

Rear Adm. Moffitt : It is an acquisition decision. No. It is a choice of that combat system as the reference combat system to allow us to do this piece of work without making an acquisition decision.

Senator JOHNSTON: Very good.

Rear Adm. Moffitt : There is some sense in choosing what you have in service already if you know that it comes with a known upgrade pathway and you are happy with its performance. In both of those cases, we do know that.

Senator JOHNSTON: And we get into that discussion about all of the reports on that particular system and what have you. But let us not go there. As long as it is not locked in, I am a happy camper.

Rear Adm. Moffitt : Well, I am happy to go there if you wish.

Senator JOHNSTON: No. We would be here all day.

Senator FAWCETT: I also go to the report that Senator Johnston mentioned on the Senate inquiry into defence procurement. There was a fair bit of discussion with Capability Development Group about the very early stages of projects in risk identification. I understand that there is a body of work ongoing with that. Can you give the committee some feedback as to where that is up to?

Major Gen. Caligari : As part of the capability development improvement program, there is a significant amount of work going on in risk. We have in fact engaged a consultant, who is helping us develop our risk methodologies in accordance with the enterprise risk management framework that is being directed by the defence committee. We are building a risk system so that everything that we do in the way of capability development, whether it is down to the expenditure of development funds or the risk of a schedule slipping or cost changing or scope changing, is all tied back to risk. Training will be ongoing. The system is being developed inside SharePoint on our Defence restricted network. We expect that by the end of this year we will have the comprehensive system stitched up.

Senator FAWCETT: General, one of the key criticisms of the report was that Defence is fantastic at having lots of process, lots of system and lots of training but quite often the question is not really seriously looked at in terms of competence, given that competence is a mixture of training and experience that is relevant to the task in hand. Specifically on this issue of early risk identification, it was very clear that the issue of competence for that task was not well addressed. I am afraid your answer at that level does not give me a lot of confidence that that recommendation has been taken seriously. Can you talk to me a little more about how that overarching systems approach and risk management framework will flow down to how and who will be doing risk identification early in capability development?

Major Gen. Caligari : One of the key problems with the risk treatment inside CDG, and particularly in the leading of the integrated planning teams which are across the department, is that there has been very little visibility of the risks. They are kept on Excel spreadsheets that were developed in integrated planning teams and put up on a screen. They were managed essentially by the project manager himself. So the visibility of how those risks would be aggregated up to into program risks or portfolio risks across the entire capability development plan was not a visible thing. The beauty of having it on a single system where it is able to be developed and visible across the entire department is now everyone has visibility of what the risks are. It will take some time to train. Of course, we have a number of soldiers, sailors and airmen who are not trained in risk, so it needs them to understand what that is.

But also we are adopting a risk champion approach, which is not uncommon across industry as well. We have taken some of the examples we had through RPD&E. So we have taken our subprogram directors, which was a recommendation from a previous inquiry. Subprogram directors will take the champion role of dealing with risk and take it away from the project managers. At the subprogram level, as well as the IPTs along with the training, the risk can be viewed right across the department and dealt with as every action needs to refer back to a risk. It has been incorporated now into all of our committees.

From the Capability Gate Review Board through to the Defence Capability Committee, one of the first things that is put up is identification of all the risks, including, for example, the independent assessment that is being done by the capability investment and resources division. On their agenda is critiquing the capability proposal, and each of their agendum recommendations is taken in the context of what risks it addresses. I am confident of that, although it will take some time, as you know, it is a cultural thing. It is not just something where you can snap your fingers and everyone can do risk. There is training involved. In fact, in Capability Development Group, there will be ongoing training because we turn over about one-third of our staff every 12 months. So the training needs to be ongoing. It also needs to be inculcated deeply into the organisation, made significantly transparent by the use of SharePoint and put through the committees so that it can be seen across the entire Defence department.

Senator FAWCETT: I am very comfortable with the concept of transparency up to the various decision-makers. Going back the other way, though, going back to this issue of competence, for each of the areas, whether it is contractual risk, financial risk, technical risk, have you identified the competencies that somebody would need to be able to identify the risk? Subsequent reporting, recording and visibility are all good, but you need to identify the risk. One thing that came through very clearly in the inquiry is that most of the desk officers and people from DSTO and others who are very skilled and competent in their particular areas are not competent for that task. Have you defined the competencies required to identify risk across the spectrum—the brief is part of CDG's activity—so that you can do a gap analysis of your training and make sure that, as you have that posting cycle et cetera, you are making an opportunity for people to be either trained or contracted in to give you the competence you require?

Major Gen. Caligari : We are using two types of categories for the risks. The first one is the source of the risk, which is of particular concern to CDG because many of the sources are the things we need to attack. More importantly, we are using the same risk consequences as the defence committee directed in the enterprise risk management, which are, for example, work health safety, environmental and performance risks et cetera. The ability to reflect it back up through the process to those enterprise risks, for example, that CDG is responsible for, is inculcated. But by using the consequence categories, we are developing expertise in each of them. One is technical, for example. We are looking to DSTO to take the lead in the technical risk. In work health and safety, we have recently taken on board a person inside CDG who specialises in what we are calling upstream work health and safety to make sure that work health and safety as a risk element is built into the proposals as they work their way through the process up to government. So there is the identification of each of the categories of consequence and someone identified to be the champion of each of those in addition to the subprogram champion levels for developing them as programs. So there is that meshing effect.

Senator FAWCETT: You still have not provided an answer. Have you identified the competencies for the people, whether they come from DSTO, industry, within CDG or other parts of Defence? Let us take technical risk as an example. During the inquiry, it was very clearly spelt out that technical risk that actually leads to project failure tends to be in the areas of integration and certification as opposed to the underlying technology. It was made very clear that DSTO does not actually bring competencies to assess certification or integration as opposed to the underlying technology. That was discussed at length in the inquiry. I come back to my same question. I will put it the fourth time. Have you actually clarified and articulated the competencies, whether in accounting contracts or technical risk, so that the people you bring to the task are competent to populate all of your various spreadsheets and systems et cetera?

Major Gen. Caligari : The short answer to having identified the competencies is no. But in order to get to the point where we are able to get to the training needs analysis of what competencies are required, we need to have implemented a system. That system is being implemented now. It will take some time to get it underway. Once that system is working properly and people understand what risks are and how they impact across everything the department does in its capability development process, the training needs analysis can be done to say who is responsible for each risk and what training needs are required.

Senator FAWCETT: General, with all due respect, if people are not identifying the correct risks upfront, no matter how good the system is, it will never function properly. Surely you need competent people to have input into the system. Garbage in, garbage out, that old saying, says that that activity should at least be parallel to, if not leading, your system design so that your system is able to take the kind of information that competent people are feeding into it.

Major Gen. Caligari : Some of the problem is the risks are not being described as apples and apples. As you know, there can be risks that can be follow-on risks to other risks. There needs to be a single approach to risk, using a categorical process where there are categories of consequence defined. I understand exactly what you are talking about in having someone competent to deal with each category, but, from my perspective, the first thing you need is everyone describing risk to the same standards using the same terminology—making sure that the phrases are structured so that when they are assigned a risk rating, we understand that they can be compared. At the moment, one of the biggest conversations is about how you assign a project a level of risk, how you compare technical risk with work health and safety risk and environmental risk, and how you put them all together and say, 'That is the overall enterprise risk for a particular project.' I know where you are heading, and I know what it is we need to do, but the first step to be taken is to institute a risk process so that every person, not just in CDG but in the entire department, understands that risk is at the centre of everything we develop.

Senator FAWCETT: General, during the inquiry we had people tell us that sometimes the risk matrices were populated by people sitting around an office over a cup of tea, knowing that they had a deadline to meet. They populate off the top of their heads, as they drink their tea and eat their scones, the risks they had to put into the system. I still come back to the fact that if you do not start even your system design with people who understand the scope, nature and relative importance of that risk, your system design will not necessarily be effective. I think we have probably discussed it enough. If you can, I want you to take on notice to come back to the committee with a time frame for when you will outline the competencies for those various areas. Include the stakeholders who will have to verify that those competencies are, in fact, appropriate for the task that you are setting out to achieve. I also want to know the difference that may make to your risk process. If there is one thing that drives procurement and procurement dysfunction, it is the lack of an identification of risk. Competence surely must be the starting point for that.

Major Gen. Caligari : Understood.

CHAIR: I understand that there are no other questions of program 1.12, so we will move now to program 1.13. Mr Richardson, I understand that there are no questions for 1.14, 1.15, 1.16 and 1.17. We will go to outcome 2 as soon as we finish.

Senator KROGER: I will be fairly quick. I want to follow up a question I asked at the last estimates. It is in relation to how you are going to account for the money that is spent on aid projects that do not fulfil the UN definition of ODA. Have you had any further thoughts on that?

Mr Prior : When we spoke of this last time, we said that we account for all of our costs in accordance with accounting principles; that is, an employee cost is an employee cost. If you go to our financial statements, a cost of employment will show up as employee costs. There are operating costs et cetera. So the classification process is the same. What you are talking about is, quite apart from that, if it is not ODA but it does contribute in some way to—

Senator KROGER: But it is foreign aid.

Mr Prior : As we have said before, we do not own the definition of 'aid' or 'foreign aid'. That is owned by others. We classify our ODA expenditure in accordance with that classification system. We do not have any plans to classify any of our expenditure as aid or aid-like apart from that which is formally classified as aid in accordance with those international definition sets.

Senator KROGER: For the purposes of positive scrutiny, you do not think it would be possible to classify support in the way in which support services are aligned with ODA defined projects or some such thing so that you could point to support services that Defence provide? It could be overseas and it could be here. You would have disaster relief and so on.

Mr Prior : Certainly outcome structure is constructed around our activities, in terms of responding to community requirements and so on. Outcome 3 is to do with that. As I said before, we follow whatever the definitional requirements are. So if the international bodies who define aid were to adopt the approach you are referring to, of course we would fall into line behind that. One of the problems we would have if we were to launch out on our own with some new definitional approach is that we would not be consistent with other organisations around the world. That would be problematic. So we are bound to comply and follow the definitional requirements of those who set those definitions. We do not, and we are not a position to, do otherwise.

Senator KROGER: You might have answered this last time, but please remind me. You do not quantify the value of disaster relief, do you? For instance, you do not quantify the support in northern Australia for floods and fires, do you?

Mr Prior : I will take you to page 79 of our PBS. I am sorry if you do not have one with you.

Senator KROGER: That is okay. Just take me through it.

Mr Prior : Page 79 of our PBS is our outcome 3. Outcome 3 is budgeted expenditure. We report this in our annual financial statements elsewhere. It is support for the Australian community and civil authorities that is requested by government. That is the outcome title. I will go on further. Defence can be called upon to provide emergency and nonemergency assistance to government and the Australian community in noncombat related roles. It may be required to undertake emergency assistance, search and rescue, disaster recovery et cetera. So we do break the budget into different types, and we do budget for that onshore disaster relief support et cetera. It is done separately and it is under outcome 3.

Senator KROGER: My point is that you can quantify civilian support in Australia?

Mr Prior : Yes.

Senator KROGER: I guess this is a rhetorical question. You have ODA quantified as per the international definition, so why not also have a third category? I hear you saying what comes under that. But why not have overseas civilian support, if you like, which does not fall under the ODA classification?

Mr Prior : Indeed. The classification system is something that is not a decision for us unilaterally. Again, I would take you, if you had it in front of you, to page 75. Our outcome 2 is operations contributing to the security of the immediate neighbourhood. The structure of our budget in a particular way has been developed by government and central agencies. But I hear what you are saying. It is not something we can unilaterally decide to do. We would have to have discussions with others to see whether it would make sense to do it in that way.

Mr Richardson : I might just add this; it may help. As a general rule, if we provide assistance in Australia in operation or in the region in an operation, and it is under $10 million, we absorb it. If it is over $10 million, it is funded by the government on a no win, no loss basis.

Senator KROGER: It would be interesting to see what other nations do and to see whether they deal with this particular issue in a way that might shed some light on it for us. Thanks, Chair. I promise I will not ask another question.

CHAIR: That is okay. I acknowledge the representatives of the Papua New Guinea parliament, who are here in the gallery observing our estimates process. It is good to see you here. Mr Richardson, there are no questions for outcome 2. We are going to go straight to outcome 3.

Senator RHIANNON: I want to pick up on Australia's national action plan on women, peace and security. I was interested to see that Defence is one of the agencies that is working on this. What measures have the ADF put in place to implement the national action plan on women, peace and security in Afghanistan? I have noticed that over the past year the Minister for Defence has not reflected on Australia's role in Afghanistan in promoting women's rights or addressing escalating security concerns facing women and girls. I would appreciate an update.

Gen. Hurley : I think I would struggle to particularly align what we have been doing through the provincial reconstruction team efforts in Afghanistan to precise elements from both the UNSCR 1325 and the national action plan. I would be happy to take on notice to do it, because I am pretty sure we can. But in terms of many of the projects that we have undertaken in Oruzgan and at the national level, the role of women and the consequences of actions for women have been a very important consideration.

Senator RHIANNON: I am sure you will appreciate that was a very general answer with no specifics.

Gen. Hurley : That is why I said I am happy to give you a bit more detail.

Senator RHIANNON: Is there anybody here who can give us an update? This has been happening for more than a year now. It took the government 10 years to even come up with a plan. There seems very little energy or ability to provide information about what is happening. Putting aside for a moment my detailed questions, can you provide any update at all on any aspect of what the ADF is doing with regard to the national action plan on women, peace and security?

Mr Richardson : I will say by way of introduction that a lot of what you go to there is AusAID and not ADF directly. Secondly, in his opening statement yesterday morning, the acting CDF did in fact outline some broad security gains and he provided some statistics in relation to some matters that go to women. We could repeat that if you are interested.

Senator RHIANNON: Firstly, in response to your referring me to AusAID, I understand, Mr Richardson, that the ADF is one of the agencies that has responsibilities under this national action plan. So while I will be asking questions of AusAID, I understand that the ADF has its own clear responsibilities. That is why I am asking these questions.

Mr Richardson : We will go over what we outlined yesterday.

Air Marshal Binskin : I have taken the lead—and I have only just done this—within the department for UNSC resolution 1325 and the subsequent national action plan on women. As you would appreciate, it goes across many areas within Defence. Rather than leave it in the personnel area or the strategy area, they each have their particular parts to play. I have come in and will be starting to tie it together and be accountable for bringing it together within the department. Work has been done in specific areas. The Civil Military Centre—the team at Queanbeyan who work for me but who have people from DFAT, AFP, AusAID and the New Zealand government involved—have taken some of the responsibility for promoting women, peace and security. You would have seen some of those forums around the place. You would have seen in our bid for the UN Security Council in the last year a lot on women, peace and security. The Civil Military Centre, under me, has been doing that. We can provide you with a bit more information, if you like, on notice.

I have a bit more information on what is going on in Afghanistan. We noted that it is DFAT and AusAID. Defence has had a fair part to play in the security side of it. I will look at some of the things that have been happening there. Through national programs funded through Australia's support for the Afghanistan reconstruction trust fund, which has been $262 million since 2003, Australia has contributed to increasing girls school enrolment from virtually zero under the Taliban to about 2.9 million today. I think I said about 40 per cent yesterday in my opening statement. It is 38 per cent. It has increased the number of functioning primary health care facilities by 300 per cent and those with skilled female health workers from 25 per cent in 2003 to 74 per cent in 2012.

Senator RHIANNON: Are these actually part of the national action plan, or is this your general work that is relevant to women?

Air Marshal Binskin : You have asked two questions. I will try to give you a summary of what is happening in Afghanistan. This has not been a part of our national action plan. This has been a part of our focus on growing Afghanistan and the capability within Afghanistan.

Senator RHIANNON: I am sorry if there was a confusion in my question. To save yourself and the committee time, it was in the context of the national action plan. It was what ADF is doing in Afghanistan that sits under the plan.

Air Marshal Binskin : I guess it does not formally sit under the plan. It is not a formal part of our response to the national action plan per se, but it is delivering the output that you are after. So it is delivering a better outcome for women and girls in Afghanistan.

Senator RHIANNON: I obviously totally agree and am interested in the outcomes for women, but I want to understand what you are doing that is your responsibility under the plan.

Air Marshal Binskin : I will have to take that on notice and formally structure the answer for you.

Senator RHIANNON: Thank you. If you are able to provide this, that would be good, but maybe it is not possible: are there any other countries where the work under the plan is being advanced by the ADF according to its requirements for the national action plan?

Air Marshal Binskin : So is that like Timor and the Solomons?

Senator RHIANNON: Yes. Or even if there are any other countries that, for whatever reason, we have not picked up.

Air Marshal Binskin : Okay.

Senator RHIANNON: Are you the official who is responsible for the implementation of the plan within the ADF?

Air Marshal Binskin : Yes. I am the accountable person.

Senator RHIANNON: Thank you. When did you come into the job?

Air Marshal Binskin : As to the national action plan—I will be very honest here—we have been slow in the uptake of the overall plan. The Civil Military Centre has taken responsibility and developed it quite extensively. But there have been other areas of this plan where we have been slower off the mark. In a formal accountability sense, it has been in the last few months.

Senator RHIANNON: Thank you very much for the frank answer. How are you working with other departments, because this, up to a point, is a whole-of-government plan? Have you got a point of contact with other departments? Are you meeting with representatives from the other departments that have a similar responsibility to the ADF?

Air Marshal Binskin : In a formal sense, the more formal interaction would be through the Civil Military Centre, because they work across whole of government. We do support a lot of forums that are across government. In a formal sense, our Defence People Group will have relationships that they will be developing on this, but I do not have the exact details of what meetings they may have held in regard to the national action plan per se.

Gen. Hurley : There is a whole-of-government working group that looks at the implementation of the national action plan. Defence has been a standing member of that. The representative was from the Defence People Group. As the vice chief referred to recently, when I was looking at our progress on that and the discussion with the civilian and military members of our gender equality advisory board, I thought that we were not moving quickly enough in Defence. I have refocussed where the engine room for that will be. To sum up, we have been in regular contact with the relevant government agencies involved in the implementation and we continue to do so. But I have changed the point of leadership. Interestingly, we have a female officer who is presently serving in headquarters ISAF in Kabul who is leading on the NATO ISAF implementation of this plan. She will come back and work for the vice chief on the issue when she returns in a month or so from Afghanistan.

Senator RHIANNON: Thank you for that update. Air Marshal Binskin, when you responded, you talked about the various forums et cetera. Obviously I am interested in them. In your response, could you also detail what is actually happening in the countries as well, both the response in Australia and the real changes that are occurring on the ground?

Air Marshal Binskin : Where I can, I will. Again, while the ADF has a number of actions for this, we would not do this on our own in those nations. It would be as a part of a whole-of-government response—so through DFAT and AusAID. In a lot of cases, it will be AusAID taking the lead, with us in support.

Proceedings suspended from 14: 38 to 14: 49 pm

Senator RHIANNON: I notice that the ADF's ODA spending dropped considerably in 2013-14. Why was that, please?

Mr Prior : For 2013-14, as a projection, it would be partly because we are winding down our activities.

Senator RHIANNON: Because of Afghanistan? Is that why we have dropped down to $0.4 million?

Mr Prior : Yes. That is largely it. You are talking about 2013-14, the budget year, are you not?

Senator RHIANNON: Yes. It is $0.4 million, is it not?

Mr Prior : Yes. Have you got a reference for that?

Senator RHIANNON: It is table 4 at page 132. It was Senator Carr's statement.

Mr Prior : It is not in our portfolio budget statement. Because we are reducing our activity, clearly it follows that we are spending less on those activities as well.

Senator RHIANNON: I want to check up on the $9 million or so spent last year. Could you give us a rundown on what that money was spent on, please?

Mr Prior : Are you talking about 2012-13?

Senator RHIANNON: Yes.

Mr Prior : Just to be clear, we read it into the record for the 2012-13 year to date the last time we appeared at a hearing. The total at that time was $10.190 million. Our latest estimate for the full year for 2012-13 is now $9,157,000. The breakdown I have in front of me is direct project costs of $8,091,000. Defence employee costs are $647,900. Defence employee support costs are $417,800. I do not with me have any further detailed breakdown beyond that, I am sorry.

Senator RHIANNON: Can you take it on notice?

Mr Prior : I can indeed.

Senator RHIANNON: With regard to the $0.4 million, is that all going to be spent in Afghanistan?

Mr Prior : I do not have that detail in front of me.

Senator RHIANNON: Is there anybody here who would know?

Gen. Hurley : We will come back to you with the firm details. In terms of operations next year, we will have ceased in the Solomon Islands in September this year. There might be some tail end of projects in Afghanistan. But we will not be in a position to start anything new in Afghanistan, and we are certainly not doing any in any other operational area at the present time.

Senator RHIANNON: Thank you for that. I am interested in how the ADF is going to report on and monitor this ODA to ensure long-term sustainability. I am partly asking that because you had to revise your figures at the inquiry into Afghanistan with regard to what you define as ODA eligible. Could you explain how you manage this?

Mr Prior : Indeed. We did refine our calculations based on the engagement of other agencies in terms of the definition. We had been including some elements that were not strictly allowed to be classified as ODA, so that is what we went through. In terms of process, if this is your question—

Senator RHIANNON: Yes.

Mr Prior : As we prepare information to be submitted, we go to the authority and we seek their review and scrutiny of our calculations and our approach to definitions. We do not proceed to provide any numbers until they have been signed off by our colleagues.

Senator RHIANNON: When you say the authority and colleagues, do you mean AusAID?

Mr Prior : Yes, I do. They are fully engaged in reviewing all of our information before we submit it to them formally so that we ensure we do not make an error in calculating the ODA.

Senator RHIANNON: Thank you for clarifying that. Considering there has been the criticism both in the one that you have just dealt with about the misallocation of money as ODA and, more generally, military activities linked with aid, were they factors that were taken into account in downsizing ADF's ODA spending? Was it a deliberate strategy? I know you have explained that it is because you are leaving Afghanistan. Australia has activities in many places and there are many requirements. It is such an enormous change. Is there a strategy here?

Mr Prior : No.

Gen. Hurley : There is no strategy. It is simply a reflection of the fact that we will not be in a position to deliver any aid projects because we will not be in the location or have the assets to be able to do it.

Senator RHIANNON: Thank you.

CHAIR: We will move to outcome 3 and, since there are no questions for program 3.1, we will go straight to the Defence Materiel Organisation.

[14.58]