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Tuesday, 14 June 2011
Page: 5962

Mr CLARE (Blaxland—Minister for Defence Materiel) (16:40): I thank the member for Fadden for his question. It is a question that was raised in estimates by the shadow minister for defence, and I might refer the member to the answer that the Secretary of Defence gave in terms of Defence's commitment to increasing the number of projects, both first and second pass, that will be approved by the government, with the assistance of Defence, in the next financial year.

Can I say something generally about Force 2030. It is a big challenge. Implementing it is going to require the ongoing focus of government, Defence and the defence industry. The government remains committed to delivering Force 2030 as set out in the white paper and the DCP. It is important to note that since coming to office the government has approved projects worth over $8 billion and over the course of the next 12 to 18 months the government intends to approve projects worth over $6 billion, including the new naval combat helicopter as well as the new protected medium to heavy weight trucks for the Army. The government is focused on delivering the program that is set out in the white paper, but what is even more important is making sure that we get it right. I, like the Minister for Defence—and I am sure the shadow minister would agree with me here—believe that it is more important to take time and get these projects right than it is to have to fix them up afterwards.

A lot of work has been done over the last few years to improve defence procurement, but there is still a lot more work to do. One of the biggest challenges that Defence faces now and has faced in the past is that of delay. If we buy equipment off the shelf, more than likely it arrives on time and on budget. If we are buying equipment that needs to be modified, on average that equipment is about 23 per cent late. If we are buying equipment that is developmental, then on average that equipment is about 66 per cent late. Right across the suite of defence projects at the moment, on average projects are delivered about 20 per cent late. That is better than the United Kingdom does and it is better than the United States does, but that does not mean that it is good enough. It is vital that we provide the right equipment to our men and women of the Australian Defence Force and that we do it on time. We make big decisions that have strategic consequences and enormous financial implications, and the government will not apologise for taking the appropriate time to consider these important issues when investing billions of dollars of taxpayers' money. There is a lot more that we can do to make Defence more efficient and to improve defence procurement. The Minister for Defence and I announced the first stage of these reforms last month, including requiring Defence to do a cost-benefit analysis if they recommend government does not buy a piece of equipment off the shelf. It also includes an early warning system that is triggered if a project starts to fall behind schedule. The simple reason for this is that the earlier we get that information the earlier we can take action to fix the problem.

An important part of the reforms that were announced by the minister and me last month was the implementation of the Mortimer recommendations. By and large the recommendations set out in Malcolm Kinnaird's report from 2003 have been implemented and are having a major and positive impact on defence procurement. Some of the Mortimer recommendations have been implemented, but not all, and the government has made it very clear to Defence that it expects those to be implemented as a matter of priority. The key recommendations include the one I spoke of, the cost-benefit analysis for projects that are not off the shelf. They also include establishing project directives to provide clear direction to defence on decisions made by the government regarding defence capabilities. They also involve establishing an independent project performance office, regular accountability reporting to government from capability managers, and creating a more disciplined process for changing the scope of a project. In addition to that, we have also written to the Auditor-General asking that the Auditor-General conduct its planned audit of the implementation of the Mortimer report in the second half of this year. All of these things, plus the other reforms we announced on that day, are important parts of improving defence procurement because, as well as getting projects approved, it is important that we get them off to the right start, approve the right projects and identify where problems emerge early so that we can fix them more quickly.