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Tuesday, 24 February 1987
Page: 507


Senator MacGIBBON(3.51) —The statement by the Minister for Defence (Mr Beazley) is the response to the Joint Committee of Public Accounts report 254, a publication which would be 200 or 300 pages long. The response from the Minister for Defence takes about two-thirds of one column of Hansard. The recommendations alone in the Committee report run to 12 pages. It is rather sad that such a detailed report-and a report which is very important in a narrow technical sense-was treated so briefly by the Minister. In essence what the Minister is saying is that he rejects the findings of the Joint Committee of Public Accounts on the central part of its investigation-project DESINE, a project greater than $300m in capital costs. The Committee recommended that project DESINE be split up into two parts to minimise the cost of technical risk to the Commonwealth and also to maximise the Australian content. Indeed, one part of the proposal calls for the setting up of an international defence communications net. The Committee says on page 82:

while the use of international standards called Open Systems Interconnection remains a goal of the DESINE strategy, no such international standards yet exist in complete form and there is considerable uncertainty about when they will be fully developed and agreed;

In other words, one of the essential goals of project DESINE is in a sense hypothetical-it has not yet been developed and it may not be capable of being developed. But the Minister has locked us into a system of having bought the Department of Defence plan and rejected the submission from the Public Accounts Committee. I would like to quote from pages 83 and 84 of the report on three relevant points in relation to the Committee's recommendations. The report states:

The Committee recommends that the procurement arrangements and implementation schedule for Project DESINE be designed to minimise the risk and cost consequences of delay and disruption to the project.

The two points the Committee is making there are that it is a high risk program, it is a new program and there are big costs to the Commonwealth if it starts to go wrong, and furthermore that the delays that will come if it does not develop according to plan will be considerable for the Department of Defence. A second recommendation the Committee makes is:

a part tendering arrangement for the supply of implementation quantities of equipment and software for Project DESINE will provide better prospects for Australian industry participation than a single prime contractor arrangement;

Later on, it recommends:

given the magnitude of the acquisitions proposed under Project DESINE, special measures are justified to ensure a satisfactory level of Australian industry participation in the DESINE contracts.

It is asking there for special preference for Australian computer companies, and that is a very valid consideration. I will come back to that in a minute. The Minister does accept the Public Accounts Committee's recommendation that the Office of Defence Production computerisation be tendered for separately from the rest of the Department of Defence and, later on, that separate contracts for small systems not be proceeded with. But I want to come back to the Australian involvement in the provision of computerisation equipment for project DESINE because we are now locked into a system where we are going to have a prime contractor who will almost certainly be an overseas contractor and who will run the program for five years. The response by the Minister is a very weak response. I quote from his statement:

The Government notes the Committee's concern for Australian industry. My colleagues, the Minister for Industry, Technology and Commerce, the Minister for Local Government and Administrative Services and I have arranged that the request for tender for project DESINE should make it clear that the prime contractor can be an Australian company . . .

That is a very weak assertion, that it `can be an Australian company'. The Minister went on to say:

. . . and that Australian content will be monitored throughout the life of the contract.

That is not doing very much for Australian industry. That leads me to another part of the report of the Committee, where the Committee recommended:

the Department of Defence provide an annual progress report to the Department of Finance and this Committee which summarises progress to date on Project DESINE and its component projects against agreed plans. This report will detail:

The benefits achieved in comparison with those initially asserted at the time of project approval;

The costs incurred to date in comparison with those initially asserted;

The degree of Australian industry participation achieved;

In other words, the Public Accounts Committee called for an annual report on the degree of Australian industry participation. While the Minister says that the Australian content will be monitored, he is not giving us an undertaking that it will be done on an annual basis. This Government-particularly the Minister for Defence-has patted itself on the back and made quite a big thing out of Australian content. Its record in this has been very sad. It is a record of total non-performance.

We have had the business of the new rifle for the Australian Army-the Steyr rifle. If ever there was something which could have been built in Australia it was a rifle for the Australian Army. There was no hurry about this. Designs were available in the country, yet this Government went ahead and bought an Austrian design. This contract initially is around the $180m mark and in the life of the service of this rifle-with re-orders-we might be looking at anything up to $400m or $500m. True, it will be produced in Australia, but there will be licence payments and a considerable cost involved in this purchase of an overseas rifle which was not necessary in any way at all.

Then we had the business of the trainer for the Royal Australian Air Force. The Australian Aircraft Consortium was proceeding with the A10 and the A20 designs. We had already invested $190m of the Australian taxpayers' money and, through bungling by this Government and by the Department of Defence, that project died. We bought the Pilatus PC-9, which is a very fine aircraft. Again, while it will be assembled in Australia and some of its components built here, we have picked up very many hundreds of dollars in the purchase of this aircraft when again we could have had an Australian designed and built aircraft.


Senator Messner —Hundreds of millions.


Senator MacGIBBON —Yes, hundreds of millions of dollars on that. The Government inherited Project Waler-the provision of a new armoured personnel carrier of Australian design for Australian conditions and for Australian forces. That was also abandoned and we now have to buy armoured personnel carriers from overseas at a cost of hundreds of millions of dollars, or we have to modify our present inadequate ones by buying modification kits in the United States of America to modify the M113s we have. Those three big ticket items alone run into hundreds of millions of dollars-not a bad record for only 3 1/2 or four years in government. It really gives substance to the slogan that we are buying Australian! Regrettably, the Minister's response means that the same ambivalent standards are being followed with respect to this computer program.

In conclusion, I would just like to say something about computerisation in the Department of Defence and in the Australian Public Service because it is a very vexed question. Simplifying it, with all the risks that are involved in that, I believe that there is too narrow a technological base both within the Services and the Public Service with respect to computer technology. In the case of the Services that is compounded by the two-year posting system of putting people in, sometimes people with no experience at all in the post they go into, and never having them in a post long enough to learn about it, to control it and to see a program through. This was well demonstrated in another Public Accounts Committee report some years ago when the Committee was chaired by Senator Georges, on the building of HMAS Tobruk.

His Committee showed very clearly the great price we pay of putting service personnel in as project managers and never having them in a job long enough to be able to see it through from start to finish. Regrettably, this applies very much in the Services with respect to computer programs, because the programs are often very complex; they are often innovative, they are of original design; they break new ground, and they are on the forefront of technology. People who do not have as much experience as they should have come in and, by the time they have learnt a little about it, are posted somewhere else. It is very difficult to control a system under such managerial practices.

I think it is rather sad that in Australia we do not have as high a technical level of competence in the Services. The Japanese Maritime Self-Defence Force, or the Japanese navy, is a very fine service. Many of the officers on the ships are technically trained in electronics and modern technology. They actually fix the equipment and do the things that would, in Australia, be done by non-commissioned personnel. Inevitably, the way the society is going, we must upgrade the level of technical competence and expertise in our Services.

We regret that the recommendations of Public Accounts Committee in its report were not followed. Inherent in the Minister's decision is the fact that we are exposed to high technical risks and, if those risks are not coped with quickly and competently, there will be very high costs to the Australian taxpayer. There will be delay and the inevitable confusion that comes in the Department of Defence from that delay. We are concerned that the lessons illustrated in the Auditor-General's report of November 1986, which reported on PISCES-an Army computerisation program-do not seem to have been learnt by the Department of Defence and the Minister.