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Thursday, 12 August 2004
Page: 26331

Senator CHRIS EVANS (2:10 PM) —My question is to Senator Hill, the Minister for Defence. Can the minister confirm that under his management, because of major deficiencies with supply management and personnel information systems, Defence is unable to account for $6 billion worth of assets and unable to fund over $700 million worth of leave entitlements for ADF personnel? Why is it that these problems continue to be experienced even after the government has spent $80 million trying to fix the problems with the supply management system? Doesn't this waste come on top of other failures on the minister's watch, including the Auditor-General's refusal to approve Defence's financial statements for two years running, and the finding that 10 of the 11 most serious financial risks across the Commonwealth are in the Department of Defence? Can the minister now provide a guarantee that Defence's financial statements will not be qualified by the Auditor-General once again this year?

Senator HILL (Minister for Defence) —I know I have been saying some nice things about Senator Evans recently but I was surprised that he was prepared to reciprocate by sending me a copy of his question in advance. If he does not believe me I will read his supplementary:

Was the Minister aware of the severe problems with SDSS—

are you following it?—

when he personally approved $23 million of extra spending ...

I will come clean. He did not send it to me. He sent it to a friend who sent it to me. It is good that the Labor Party has some friends. To be fair to Senator Evans, I decided not to read it carefully. Let us address the issue.

Senator Faulkner —Off to the Privileges Committee.

Senator HILL —That is typical of Labor: `Off to the Privileges Committee.' They are all about process and pressure. Let us talk about the SDSS system. It is true that it is the backbone of the Defence logistics pipeline and it manages an impressive workload: $1.89 billion of inventory, $4.2 billion worth of assets and 1.7 million catalogue items. It operates across the globe in over 1,000 warehouses. As a logistics system it has worked well. The proof of that is in the effectiveness of the operations. If the logistics system is not working the operations will not succeed. But when we look at our experiences in Iraq, Afghanistan or the Solomon Islands we see that the logistics has been first-class. The best example in recent times is the last I mentioned—the Solomon Islands. Brought together at very short notice was a highly unusual operation involving a coalition of Pacific states. It was a major organisational job for the ADF because they led the force and the logistics support was excellent. So for its primary purpose—its original purpose—it has served Defence well.

In recent years in terms of new levels of accountability it has had to serve other objectives as well. In particular it has had to help meet the requirements of accrual accounting. That has required significant upgrades to the systems. Those upgrades, which have been carried out by the leading companies in the field in Australia, have been highly complex. The cost and the complexity, I think it is fair to say, were underestimated. The government has had to agree to put in new funding to complete the job, and that task is still continuing. The best and latest advice that I have got is that it is about 90 per cent complete now and, in an operational program within the department not requiring new capital expenditure, that task is being completed. It is easy to knock systems that are now having to account to new levels of accountability that were not dreamt of at the time that the system was put in place. It is not as if the ADF is alone in this; every major defence organisation in the world— (Time expired)

Senator CHRIS EVANS —Mr President, I ask a supplementary question. Given that I gave the minister advance warning of the question I thought he would have done better. I will send the questions to him earlier in the day if it helps! Can he address the key question which was: can he provide a guarantee to the Australian public that Defence's accounts won't again be qualified by the Auditor-General because of the gross mismanagement on his watch? Given that they have been qualified for the last two years, can he provide assurance that they will not again be qualified because of the gross mismanagement that is occurring under his ministerial control?

Senator HILL (Minister for Defence) —All I can say is that the Defence accounts are now better than they have ever been.

Senator Chris Evans —That is not what the Auditor-General said.

Senator HILL —No, if you read the Auditor-General's reports I think you will find that he does not dispute what I have just said. There are now ever more requirements of the accounting system—and I mentioned accrual requirements as the most demanding of all—and that is proving to be a very difficult task. But as the systems are upgraded, as the staff are trained to properly utilise those systems, the results in terms of information that is available, the accountability to the public and to the parliament, are constantly improving, and that is why I can confidently say at the moment that it is better than it has ever been before. Through this more demanding process it is not surprising that we also identify particular areas that need more attention, and when they are identified they get that attention. (Time expired)