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Defence policy statement fundamentally flawed-Durack



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MEDIA RELEASE

SENATOR PETER D U RACK, Q C Deputy Leader of the Opposition in the Senate

Shadow Minister for Defence

DEFENCE POLICY STATEMENT FIINDAMRWTAT.T.Y FLAWED — DURACK

The forthcoming Defence policy statement has not been thought through and is fundamentally flawed.

Addressing the Metal Trades Industry Association's Defence Manufacturers' Council today, the Shadow Minister for Defence, Senator Peter Durack, said that there has been no logic or

consistency in the Government's defence review process.

Rather than producing a Defence White Paper which looked at all aspects of defence policy, the Government will outline proposals from a number of uncoordinated and ad hoc Defence Department studies.

Senator Durack's address outlined the Opposition's reactions to the major proposals of the Government's forthcoming Defence policy statement.

The detail of these proposals will, of course, have to be

considered after 30 May.

In considering these proposals, the Opposition;

* will strenuously oppose cutting regular Defence Force

personnel numbers in combat areas.

* endorses more civilianisation and contracting out of

Defence support functions.

* believes that the Ready Reserve proposal is seriously

flawed, and favours instead a re-vitalisation of the existing Reserves.

* urges the creation of a management culture in the Defence Department and reductions of civilian employees.

* acknowledges the scope for base restructuring.

(ends)

May 27, 1991 (24)

More Information: Peter Jennings (06) 277 3725

Telephone: 09/221 1277 06/277 3725. Facsimile: 09/221 3350 06/277 3169

The Government's Defence policy statement

The Opposition view.

Address to the Defence Manufacturers' Council of the

Metal Trades Industry Association,

Canberra, 27 May 1991

Senator the Hon Peter Durack QC

Shadow Minister for Defence

Deputy Leader of the Opposition in the Senate

Durack, Opposition view on Defence statement/...2

I am pleased to have the opportunity to address the MTIA Defence Manufacturer's Council on the subject of the Opposition's response to the forthcoming Defence Ministerial statement.

As you know, on Thursday this week, Senator Ray will announce to Parliament the results of a series of reviews into defence policy.

In this speech, I want to outline the Opposition's policy on the proposed changes to defence. Of course, we will need to look at the final package of proposals, but the broad outline of what the Government intends to do is well enough known.

At the outset let me summarise our position on the main issues:

* We strenuously oppose the cutting of Regular numbers in

combat areas.

* We endorse greater civilianisation and contracting out of Defence support functions.

* We believe that the Ready Reserve proposal is seriously

flawed, and favour instead a re-vitalisation of the

existing Reserves.

* We strongly urge a new management culture in the Defence

Department and reductions in civilian employees.

* We acknowledge the scope for base restructuring, although each proposal will have to be looked at on its own merits.

A fatally flawed Defence review

We should not be too surprised if the Government's defence statement turns out to be fatally flawed. There has been no logic or consistency in the way the review was carried o u t .

Given that the Ministerial statement is supposed to announce the most fundamental series of changes to defence for more than twenty years, it concerns me that the review process has been so ad hoc.

For example, there has been no attempt to make a public review of the now out-dated 1987 Defence White Paper. Therefore the Government is asking us to accept massive changes to the

structure of the ADF without any reference to developments in our strategic environment.

The Opposition has received a lot of support for its call to produce a new defence white paper. This is exactly what many other countries are doing at the moment, and this should have been the process adopted by the Labor Government.

However, instead of conducting one systematic exercise to review defence policy in all its aspects, the Government has called for

a confusing array of reports and internal studies which have been written without reference to each other.

In short, the Ministerial statement has been produced without reference to a coherent overall defence strategy.

The Government has continued pin its defence outlook to the 1987 White Paper. But if this document is supposed to be the last word in strategic thinking, why is there need for such major

changes now?

Scope of the Review

The range of different topics which will be covered in the Labor Government's statement are very wide:

* There is the Force Structure Review, which has been done

without a public update of the 1987 White Paper's strategic outlook.

* There is the Interdepartmental Committee report on Alan Wrigley's study, The Defence Force and the Community. More accurately, the IDC report is on only one part of Wrigley's proposals, they were told to leave out examination of his

reserve proposal.

* There is the report on regional base restructuring.

In addition, Senator Ray has told us that his statement will also cover defence exports and defence industry policy and establish priorities for future equipment acquisitions.

Therefore the scope of this statement will be very wide indeed. It remains to be seen if the Minister has been able to take all these reports and mould them into a single coherent policy. Or if in the final analysis the statement will be a collection of Departmental compromises and half-measures.

The Opposition therefore has some serious concerns about the way the Government has gone about this review.

They should have produced a Defence green paper to allow for a public debate. Instead the whole process has been conducted in secret.

After a discussion paper, the Government should have produced a Defence White Paper which looked at all aspects of defence policy. Instead a collection of internal studies have simply been bundled together into make up the review.

More than anything else, it looks as though this current review has been driven by the need to make cost savings so that the

Government can pay for the expensive equipment acquisitions which were made by Senator Ray's predecessor, Kim Beazlev.

Durack, Opposition view on Defence statement/... 3

In this sense, the review is the product of Government

Durack, Opposition view on Defence statement/... 4

mismanagement of the defence budget, rather than of the

realisation per se that Defence was in dire need of reform.

Civilianisation and Contracting out

Turning then to the detail of the review, I have said that the Opposition will support in principle the civilianisation and contracting out of Defence support activities.

It has been apparent for some time that there is an unacceptably high ratio of support to combat forces in the ADF. The 'teeth to tail' ratio as it is called shows that, since the Vietnam commitment, the ADF has considerably expanded in size but the numbers in combat related areas have not increased.

At present more than half of the 65,000 or so personnel in the ADF are in positions not considered to involve combat operations. In the Regular Army, just over one soldier in four is considered by the Defence Department to be part of the 'Front-line combat

forces'.

There is clearly a need to alter this situation. The Opposition believes that civilianisation and contracting out of Defence support positions will make it possible to give more emphasis to our meagre combat forces.

Having said that, I think it is important to note that there are clearly many support positions in Defence which remain essential to the operations of the ADF, and which cannot realistically be civilianised.

Implementation of the civilianisation proposal will have to take this fact into account. Civilianisation cannot under any circumstances be allowed to limit the combat effectiveness of the ADF.

Where this is not the case, however, we should be looking to civilianise and contract out as much work as possible to the private sector.

These reforms therefore have important implications for the private sector. In many cases, private industry will be able to perform Defence support functions more efficiently and at less cost than their military counterparts.

Civilianisation and contracting our offers defence industry the prospect of expanding their operations and enhancing their contact with the Defence Department and ADF.

This process will be an important factor in securing the longĀ­ term future of Australian defence industry.

It is an opportunity which also places on industry the obligation to deliver the good with as much dependability as the ADF is able to d o .

Durack, Opposition view on Defence statement/... 5

However the Opposition has some concerns about the implementation of the civilianisation process.

First, the Government will need to implement civilianisation with due regard for the interests of ADF personnel, all of whom have made a long term commitment to service in the military.

The Opposition will be watching this issue closely. I note the commitment which has already been given by the Chief of Defence Force that the bulk of personnel cuts will be achieved through natural attrition.

Second, as I have already mentioned, civilianisation should not take place where it could limit the flexibility of our combat forces.

Our third concern is to ensure that the Government will not settle for half-measures. This review offers a major opportunity to restructure and make the ADF more efficient. Getting to this point will require the continued active involvement of the Minister to ensure that the process does not become bogged down.

The Opposition will be watching this matter closely. If the Government does not go far enough in introducing civilianisation, then we will be calling for them to take matters further.

In saying this, of course, we understand that it will take some time for the programme to get fully underway, but every effort must be made to see that we achieve the maximum efficiencies from this review.

No cuts to combat force nnmhprs

These comments lead me on to the question of what we understand is a Labor Government intention to cut two of the six Regular Army combat battalions.

The Opposition believes that this is a disastrous, mistake.

Six standing combat battalions amount to some 3,500 m e n . With the exception of the two battalions which make up the Operational Deployment Force in Townsville, the remaining battalions in Sydney and Brisbane are significantly undermanned and would take some time to work up to operational readiness.

If anything, the Government should be looking to build up the number of personnel in these battalions.

Six battalions is probably the minimum viable number below which the Army should not fall if Australia is expected to be able to deal at short notice with low level insurgency-style conflict in the north.

If two battalions were pruned from this number, we would be unable to support a battalion commitment of troops to peace keeping operations Cambodia, unless we were prepared to do so by

stripping the country of almost any capacity to respond to low level threats in the north.

The Government maintains that its new Ready Reserve will be able to fill this g ap. We in the Opposition doubt the logic of their argument.

For a start, the Government will have to write legislation which makes it possible to call out the Ready Reserve in times of

crisis which fall far short of war.

This, of course can be done, but the more difficult problem is that in any low-level conflict - where few shots may be fired in anger, and where most of the action will take place at the

political level - most Governments would be reluctant to up the military ante by mobilising their reserve forces.

Considerations of this sort would place a very real political constraint on the operations of the Ready Reserve.

I note that media reports last Friday indicated that the

Government has only now sought legal advice about what changes will be needed to call-out legislation.

A report in the Australian said that it would not be for some weeks after Senator Ray makes his statement to Parliament will we have legal advice from the Attorney General' s Department about where and when the ready reserve can be used.1

It is appalling that the Government can be prepared to make major changes of this sort without having done basic preparatory work of this sort.

The whole point of maintaining a standing Army is to have the flexibility to deal with crises at very short notice. Reserves can then be mobilised to deal with graver emergencies.

The Government's Ready Reserve proposal stands this logic on its head by making the Reserves the first line of defence. Even an extended period of part time training will not be sufficient for this task.

It is estimated that the Sydney and Melbourne regular Army battalions will take some time to be readied for deployment. How much longer would be needed for a Ready Reserve to do the same?

Cutting the two battalions will weaken our combat capability. The Opposition strongly disagrees with this action.

We would maintain the six Army battalions, and beef them up by using some of the funds released by civilianisation to augment their equipment, manpower and training opportunities.

Durack, Opposition view on Defence statement/. ..6

1

Tony Parkinson, "Laws on call-out of reserves checked Australian. 24 May 1991. p. 5.

Durack, Opposition view on Defence statement/ ... 7

Ready Reserve proposal has not been thought out:

In addition to rejecting Labor's argument that the Ready Reserve can replace two regular Army battalions, the Opposition believes that other aspects of the Ready Reserve proposal have not been thought through.

In particular the proposal does nothing to solve the problems of the existing reserves.

The existing reserve will become the even poorer cousin of the Ready Reserve. They are already starved of resources, they lack equipment and access to training facilities. This situation will

be made even worse by the creation of the Ready Reserve.

Yet the existing Reserves provide the nucleus of a very capable force to which the Government should have turned rather than trying to create a new reserve system from scratch.

There are enormous problems with the current Reserve force, which range from a lack of needed equipment to a lack of interesting and intelligently defined missions for them to perform.

Not surprisingly, these deficiencies bring about a very high annual turn over of reserve personnel. However the people who stay in have already demonstrated a commitment to the Reserves. They do not need to be recruited again as the Ready Reservists do, and they already have a degree of military training.

The Government has not even bothered to look for a solution to the problem of the existing reserve. It would have made more sense to spend money making the existing reserves more ready than to create a small Ready Reserve force which in the end may not work at all.

And there are very good reasons for worrying that the Ready Reserve may not work.

The first is that the addition of a third tier of military

service could add to, rather than reduce, the size of the Defence bureaucracy. How the three levels of service will operate together remains to be seen.

The second concern is that there is no guarantee that the scheme will successfully attract enough people to make it work, or that they will stay after the cost of training them.

The third concern is that we have not yet to see a detailed

explanation of the costing of the programme. Obviously, the Government will address this to some extent in the Defence policy statement.

But I understand that there have been some quite significant differences between the Army on the one hand and Headquarters ADF on the other hand about the true cost of the proposal. In the light of the differences which exist here, the Government should

Durack, Opposition view on Defence statement/... 8

release detailed costings of the proposal, and show the basis on which those costings have been developed.

Indeed, it has been obvious, since the Chief of the Army appeared in November last year before the Parliamentary inquiry into the Reserves, that the Army and Headquarters ADF have different views about the workability of the Ready Reserve proposal.

The Chief of General Staff, Lieutenant General Coates told the Parliamentary committee that he wanted to be very cautious about the Ready Reserve proposal.

To quote some of his comments, he said:

I am unsure as to the measure of support the business community could give to such a scheme, especially in these stringent economic times. I have therefore asked General Nunn, in his civilian capacity, to seek the opinion of a group of Victorian industry leaders.

I understand that their response was not as

enthusiastic as we might have hoped, and on this basis I have been urging caution in introducing this

scheme.

These concerns must be fully addressed before the Ready Reserve scheme is implemented.

Opposition Concerns about-, the Ready Reserve

Summing all of these issues up, the Opposition does not believe that the Ready Reserve proposal has been fully thought through.

We do not accept that the Ready Reserve will be able to

effectively replace the two standing battalions which the Government plans to cut.

We do not believe that the Government has looked at all the

difficult issues like the call our requirements and the costing implications.

The Opposition would favour instead giving more support to the existing Reserves. Most of the failings of the current reserves come about because they have not received the financial support they need to become a totally effective force.

However, where sections of the reserves have been supported, where they have been provided with the necessary training and equipment and where their roles have been intelligently defined,

Lieutenant General John Coates, Submission to the Parliamentary Joint Committee on Foreign Affairs, Defence and Trade, transcript of hearings into the Reserve Component of the Australian Defence Force,

(Hansard transcript, Canberra, 19 November 1990.) p. 131.

Durack, Opposition view on Defence statement/... 9

the existing reserves have worked very well.

I think the three best examples of this are the mainly reserve Regional Force Surveillance Units, the 51st Far North Queensland Regiment, NORFORCE and the Pilbara Regiment.

I have visited both the Pilbara Regiment and the 51st Far North Queensland Regiment, and I have been greatly impressed with the capability of these units. Their morale is high, and this is because they know that they are doing a worthwhile and necessary

job.

The same principle should be applied to the rest of the reserve.

We in the Opposition therefore believe that the resources which will go into the Ready Reserve would be better spent improving access to training time and equipment for the existing reserve.

In addition, a lot of the proposals to expand the Navy and

Airforce reserve, and to allow these people to fly planes and operate other modern defence equipment should go ahead.

The point is that these activities should not be limited to a separate 'reserve elite'. That would hardly be an incentive for people to serve in the existing reserve.

As important as access to equipment, is the need for the

Government to redefine the roles of the existing reserve, and to give all Reserve units as interesting and useful work as

possible.

The Government made a commitment to do this in its 1987 White Paper, but like so much else in that document, the policy was never delivered.

Cuts to Civilian Numbers

I would like to move now to another reported element of the

Defence statement, which will be to announce a reduction of civilian numbers in the Defence bureaucracy.

The Opposition has for a long time been saying that there is a need to both reduce numbers and to improve management standards in the Defence Department.

In this sense it is pleasing to see that the Government is

following our lead in proposing to make some rationalisations.

In saying this, we recognise that some worthwhile steps have been taken in this direction already. However we believe that there is a need to continue the process further. As far as possible, cuts to numbers should be achieved through natural attrition.

Cutting numbers, however, is really only a partial solution.

What is most urgently needed is to create a culture of

Durack, Opposition view on Defence statement/... 10

'management' rather than 'bureaucracy' in the Department.

Among the things which the Opposition has said it will do to help this process is, as far as practicable, to support the devolution of financial and other responsibility from Russell, and to develop clearer lines of authority in order to make people feel more responsible for the decisions they make.

Only a thorough overhaul of the Department of Defence style of management can achieve this goal. Again, we will have to wait for the statement to see how serious the Government is in seeking to reform the system.

Base restructur-j ngr

On the question of base restructuring, the Opposition is prepared to give in principle support, however we will obviously reserve the right to look at each case as they arise.

The Department of Defence remains the largest land holder in the Commonwealth, and there is a bewildering array of Defence facilities located around the country.

There is clearly a need to alter our basing structure to reflect the strategic concerns of the 1990s rather than some earlier period. As Robert Cooksey said in his 1987 Review of Australia's Defence____ Facilities. "Australia's defence facilities

infrastructure has been developed largely in the context of strategic circumstances which differ from the present situation. "

It is therefore appropriate that the basing structure changes to meet our current needs. Some closures and rationalisations may be needed.

This being the case, the Opposition believes that the Government will have to allow for the phasing in of closures at a pace which recognises the concerns of the communities centred around major bases.

Defence Industry and Export Policy

Aside from the ramifications of civilianisation and contracting out for local industry, there have been almost no indications about what the 30 May statement will contain with regard to defence industry and export policy.

Many of you will know that the Opposition has been critical of the Government's handling of defence exports policy.

We have for some time been engaged in a process of consultation with industry to see if the guidelines governing defence exports cannot be improved. This activity continues now in the context of the Opposition Defence Policy Review, an exercise begun last

January under the chairmanship of Dr Hewson.

The Government too has announced that it will put forward a

Durack, Opposition view on Defence statement/... 11

number of changes to defence export procedures in the 30 May statement.

The Opposition will look at these changes, and we will support them if we believe that they address the inadequacies of the current guidelines.

I would like to stress that the Opposition remains committed to encouraging, within the appropriate guidelines, a healthy defence export sector.

We recognise that local defence industry will need to develop export markets if they are to develop secure foundations.

Therefore the 30 May statement will provide the Government with an important opportunity to improve the Guidelines and to address other aspects of industry policy.

Of course, the one area we know the statement will not address is the one which is most fundamental to the health of the defence industry - and that of course is the health of the economy as a whole.

On this issue, there is a general recognition that the Government has failed to deliver. The consequences are that, for the

foreseeable period, there will only be limited scope for

expansion in any major industry.

Force structure issues

The last issue which I want to discuss is that of additional equipment purchases.

There has been a lot of speculation about the extent to which the Ministerial Statement will make further commitments to purchase defence equipment.

I would be surprised if many major commitments were made. The simple fact is that most of the funds which the review may

release will be required to pay for equipment to which we have already been committed.

The country is now paying for the $25 billion equipment

acquisition programme made by the Former Defence Minister, Kim Beazley.

There is good reason to be worried about the prospects of cost blow-outs in some of these programmes, and therefore good reason to be cautious about making further commitments.

A further issue raised about equipment acquisition is that the 30 May statement will be made without reference to a public assessment of our strategic requirements.

If the 1987 Defence White Paper provides a sufficiently accurate assessment of our strategic circumstances, then why is there a

Durack, Opposition view on Defence statement/. ..12

need to depart from the force structure it outlined?

On the other hand, if our equipment needs have changed because of our changing strategic circumstances, then why has the Government refused to release a new public strategic assessment?

Again, there is a concern that the force structure proposals which may be contained in the 30 May statement, will not have been fully thought through.

The Opposition Defence Policy Review Team - of which I am the deputy chairman - is currently looking at force structure issues in the context of an internal study we have done on global and

regional security developments.

We will give very close consideration to any force structure proposals which the Government may make, and in due course we will announce our own force structure as part of the work of our review committee.

Conclusion

In sum, we believe that the 30 May statement will contain some fundamental flaws.

By not conducting a coherent, overall review of defence policy and producing a new White Paper, the Government has failed to go about the review in a sensible manner.

We are concerned that the Ready Reserve proposal has not been thought through, and worried that it does not address the

problems of the existing reserves.

We are opposed to the cutting of combat numbers from the

services, but support civilianisation and contracting out of defence support positions where this will not compromise our combat capability.

Lastly, this review process has been conducted simply as a cost cutting measure. Defence personnel are being made to pay for the Government's mismanagement of the Defence budget. They really deserve better than this.