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Parliamentary Joint Committee on Foreign Affairs, Defence and Trade
16/05/2013
Department of Defence annual report 2011-12

BROWN, Mr James Alexander, Military Fellow, Lowy Institute of International Policy

Subcommittee met at 11:18 .

SUBCOMMITTEE CHAIR ( Senator Furner ): I declare open the public hearing of the Defence subcommittee's review of the Defence Annual Report 2011-12. Although the subcommittee does not require you to give evidence on oath, I should advise you that these hearings are legal proceedings of parliament and therefore have the same standing as proceedings of respective houses. Giving of false or misleading evidence is a serious matter and may be regarded as contempt of parliament. The evidence given today will be recorded by Hansard and attract parliamentary privilege. Do you wish to make a statement before we proceed?

Mr Brown : Thank you very much for having me along today. I know you are busy, and I know the role of your committee is very important. I know that my former colleagues in the Australian Defence Force appreciate the important work that you do. I think, particularly, your recent inquiry into wounded soldiers has had a great impact within the Australian Defence Force. I have the luxury of over 10 years of education in the military, understanding how Defence works and understanding that complex beast, and I hope that I can provide some useful information for your deliberations today.

In 2005, a Navy Sea King helicopter crashed in Nias Island, and not more than 200 metres from here a funeral was held for nine Australian Defence Force members. In 2007, the inquiry into that accident concluded that there were a number of issues to do with the culture within Navy—maintenance was being rushed, there was problematic reporting and, particularly, reporting was overly optimistic. In 2011, not more than 500 metres away from where that report from the board of inquiry was delivered, the Navy's amphibious fleet collapsed entirely. It was unable to leave the dock to respond to tasking for a cyclone in Queensland. The subsequent inquiry into that, undertaken by Rizzo, concluded that one of the problems was that Navy had a 'can do, make do' culture and that reporting into the readiness of the fleet was overly optimistic. These are two incidents, six years apart, where the words used in both of those reports, 'can do, make do', were almost exactly the same by the then Chief of Navy and by Paul Rizzo when he gave his results to the public and to the Navy. In both cases there were serious consequences for the Defence Force, and serious problems were masked by overly optimistic reporting and a failure to address deeper issues.

Today we are talking about the Defence annual report, a report, I believe—and I have argued in my submission—relies extensively on overly optimistic reporting, and which may in fact be masking some deep and more complex issues within the Australian Defence Force. The deeper question I have for your committee is, I think, a simple one, and that is: how good is the Australian Defence Force and how good is the Australian Defence Organisation? It is a question I have been asking for some time, and I am not convinced I know the answer yet. You may know the answer, our defence chiefs may know the answer, but this report will not tell you how good the Australian Defence Force is. For an organisation that is incredibly important, that consumes a large proportion of government expenditure and which employs a large proportion of public servants, to use a three-tick methodology of performance measurement is, I think, crude, and the adoption of that reporting methodology, I think you will agree, is overly optimistic.

I think it is difficult for the defence minister and defence secretary to answer the question of how good the Australian Defence Force is. I have outlined in this submission the amount of churn that happens within the defence portfolio—the short average tenure for defence secretaries compared with secretaries in other departments, the short average tenure of defence ministers over the last 14 years. This is a portfolio that is incredibly complex—at least as complex as other portfolios like health and education—and it is more problematic to get your head around. Not many parliamentarians have experience working in defence or in the military. Unlike health or education, they are unlikely to come into contact with the Defence Force and the defence department in their daily lives until the point where they might be appointed defence minister or to this committee, indeed. The difficulty for leadership within the parliament, and also for yourselves, in getting to grips with the fundamental question of how good the Defence Force is, is also a problem.

In this submission I have also pointed to the difficulty for the public in getting to grips with how good the Defence Force is. The issue I have is that this report makes it very difficult for Defence to be accountable to parliament. There is not a lot of information with which you can measure preparedness for defence, readiness issues or some of the deeper more structural and institutional problems that might be happening within the Australian Defence Organisation.

There are a couple of warning signs when you look at the question of how good the Australian Defence Force is and how good the Australian Defence Organisation is. There is widespread agreement amongst experts, both inside and outside, that there is a widening gap between defence funding and our aspirations for military capability. There is concern within the military about the effect of ongoing restrictions on their budget and on their modernisation initiatives. There is a degree of uncertainty and revaluation about the trajectory of the modernisation of the ADF as well.

I have worked with plenty of excellent soldiers and officers, sailors, and airmen and airwomen. I would like to know for sure and be able to prove that we have a good Australian Defence Force and Australian defence organisation. I have advanced some suggestions in this submission, which I believe might help the parliament to answer that question as well.

Dr JENSEN: First of all, you have put some suggestions down. Could you just run through them for the committee, because I think it is very valuable to have not just identification of problems but actual suggestions for solutions.

Mr Brown : I have made a number of suggestions. The first one is that the committee and the parliament work with the Australian defence organisation to determine a more effective method of measuring and reporting Defence performance. There are a number of examples amongst our allies of ways that their annual reporting to parliament is more transparent in terms of readiness targets for forces, capability options and whether the defence organisation is meeting those options.

In New Zealand, for example, their annual reporting provides a clear indication of whether Defence is meeting its own readiness targets, without divulging any operational security information. There could be some good work to be done there. I do not know whether it would be a public method of reporting—it might be an in camera method of reporting—but a more institutionalised and granular way of letting you know whether or not Defence is hitting its targets.

The second suggestion I have made is that this committee encourage the defence organisation to more routinely publish statistical information for a number of reasons. Firstly, so that my job as a researcher is easier. Secondly, so that both the public and parliament can do their own assessment of where defence is at. Thirdly, so that defence personnel themselves can access this information. I believe that it is just as hard within the organisation to get your hands on statistical information. For example, it took me four months to work out how many Army officers have a tertiary degree. That is not very controversial information in itself. It does not give us a huge degree of insight into how good the Army is, but it is an indicator of how professional our Army Officer Corps is. Four months later I have been given that data by Defence. It turns out that, from their records, 20 per cent of Army officers have a degree—a surprisingly low number. It is a number, I believe, cannot be correct given the number that go through ADFA, and Command and Staff College at ANU. An initiative to convince Defence to publish more of this type of statistical information would be entirely useful. There is a good model for this. The United Kingdom Ministry of Defence has an analytical statistical agency, which basically has economists, statisticians and researchers who work to put together this kind of information and publish it for public, parliament and defence usage.

The third recommendation I have made is that, in your inquiry into this report, you make a recommendation that Defence be extremely wary of overly optimistically reporting, for the reasons I have outlined. In looking at other defence forces around the world and other defence organisations, it is quite clear that some of them use their reporting as an opportunity to flag critical issues and critical shortages. The United Kingdom, for example, in their annual reporting take the opportunity to list where they are critically short of personnel. There are arguments for why you would and would not do that. But when I look through this report I see language that is not entirely useful and I think it is a cultural and institutional trait within Defence. I would hope that you would recommend them to take note of that and address it.

The fourth recommendation I have made is to strengthen the defence research capacity in the Parliamentary Library and also the analytical capacity in the Australian National Audit Office. Your Parliamentary Library do excellent work on, in particular, defence but they have a very small number of researchers allocated to this task. There are three out of 120 focusing on defence issues. That compares with 12 in an area like social policy. Given how complex defence is and given the fact that so few parliamentarians come to addressing this portfolio with experience in the organisation, I think there is a need for the Parliamentary Library to allocate a disproportionate amount of resources to assessing and analysing defence.

The ANAO also do excellent work. I think they also need to have a disproportionate focus on defence as well, particularly given the complexity of some of the procurements issues that Defence needs to deal with.

The next recommendation I have made is that your inquiry recommend to Defence that they review the effectiveness of their operations and strategy in East Timor, the Solomon Islands, Iraq and Afghanistan. We are coming to the end of a decade of high tempo for the Defence Force. I think it is particularly important that we review how successful that has been on a number of levels: the military strategy, the operational effectiveness and the tactical lessons that we have learned as well. Defence does not have a great record of doing this. The Australian National Audit Office concluded that Defence has been very poor, over the last 20 years particularly, at conducting its own reviews of lessons learned and implementing the lessons learned from those reviews as well. I would ask that you direct in your report that Defence to take particular attention to this.

The last recommendation I have made might seem a little bit unusual. It is about developing a more mature parliamentary program for engagement with Defence. I know many of you have been through the ADF Parliamentary Program. It is an excellent program. Defence initiated it in 2001 to address a growing gap between parliamentarians and the military. That program does an excellent job of giving you empathy into what our service people do. I am not sure that it gives you a great degree of insight into military strategic issues or some of the more operational-level issues. I know you conduct your own visits to establishments and you have your own briefings. A more mature program might extend that opportunity to people beyond the Defence committees as well. Rather than doing repeated tactical-level visits and repeated tactical-level placements, they might have the opportunity to grapple with some of those issues as well.

Dr JENSEN: Thank you very much. I agree with your assessment that in effect there is an imbalance, because you have a whole lot of expertise within Defence and even with this subcommittee you have a relative lack of expertise. In the United States armed services committees both in the senate and congress, they have quite a large direct support from researchers and advisers who have technical expertise, basically to balance up the imbalance, if you will, between the expertise on one side of the desk and the relative lack of expertise on the other. Is that something that you would advocate for our parliament? Do you think that would be something that would be valuable here?

Mr Brown : I think that there are a number of avenues in the US system that provide a remarkable level of detail and analysis. I doubt we will get to the point where we can do that, and I think Defence would be particularly nervous about having that level of scrutiny. It might not be appropriate for our system. But you make a good point. I would imagine that even finding advisers who have had experience in the military is quite a difficult task here—not to cast aspersions on your uniformed advisers here attached to this committee. But a way to channel more of that expertise towards your deliberations would be useful.

Ms BRODTMANN: Thank you for the submission. It is a really interesting read. What I found particularly interesting was the comparisons between those who have served in the military in other countries and what happens here. I do not know whether I agree with you on the issue that you make, or the point that you make, but it was an interesting comparison.

I would like to pursue the issue of reporting. An area I have been particularly interested in is in sustainment. I am sure you are aware that—I think it is next financial year—the proportion of spend on the acquisition side becomes less than the spend on sustainment. I think it is the first time ever that we have this shift into the majority of money—not the majority: I think it is an extra bill or so—going into sustainment. Since I have been in the parliament, I have been interested to try to get a greater understanding of what is actually happening in the sustainment space.

You made mention of it before in terms of preparedness and readiness. I know that is operational readiness, but I am thinking about the capability here. I would like to see something like an MPR for sustainment. I do not know whether that is possible, but I would be interested in your thoughts about what actually happens overseas. I understand that there is a greater granularity of reporting on sustainment overseas. I would just be interested in your views on how we could get a greater understanding of that, bearing in mind that there are classified issues and sensitivities that we have to deal with. But I understand that other countries do overcome those sensitivities and that they do get a greater transparency on the sustainment performance.

Mr Brown : You mentioned MPR, what does that mean?

Ms BRODTMANN: The major projects report. Something along those lines in the sustainment space.

Mr Brown : Defence sustainment and procurement is not my area of expertise. There are other people who could more capably answer that question for you. My understanding is that there are issues of incrementalism within the services in terms of the way sustainment is handled. The issues, particularly within Navy, happened because it was very difficult for any one person in any of the logistics areas to get a sense of the entire problem. I think some of the problems that we have in terms of sustainment are quite basic ones to do with sharing of information. Until recently Defence did not have an effective document management systems. With people posting in and out of jobs continuously, it was very hard to learn the history of an issue. Some of the fixes in that area might start with some very basic issues like addressing how you retain corporate memory for sustainment issues.

Ms BRODTMANN: Who is the person who could speak on that?

Mr Brown : ASPI has some people who are very focused on sustainment.

Ms BRODTMANN: From ASPI. Thank you.

Senator MARK BISHOP: Thank you, Mr Brown, for taking the trouble to make the submission and your comments this morning. I do happen to agree with you about a more mature role for the Defence program, particularly at a strategic or policy level. I also found value in your comments about the additional or supplemental people in both the Parliamentary Library and the ANAO. The ANAO has developed quite considerable expertise in procurement matters, costings, risk analysis and the like in the last five to seven years. When projects go to the NSC for approval, submissions are received from Defence—DMO prior to that—and they are signed off by Treasury and finance—particularly on the costings and the risk analysis—before it all goes to the NSC for sign-off. That is the process. When the costings come through, they have been examined by officers in Finance and signed off, and presumably are regarded by members of the NSC, subject to questioning, as authoritative.

In the context of supplementary expertise in both the ANAO and the Parliamentary Library, is there any call in your mind for a significant stand-alone unit in the department of finance that can develop and retain expertise over time in the financial economics of major capability acquisitions? It is a rare beast that requires a lot of knowledge and a lot of understanding at both a conceptual and a technical level, and my observation over the years is that people come in and out of finance, and this is just another part of the workload. Is there any merit in that suggestion?

Mr Brown : Being from a private organisation, I will probably argue as well, to please my boss, that you could do that in the private sector as well. I cannot speak to where that would best be located, whether it would be in the department of finance or in another area, but an organisation purely looking at the data on how those procurements perform, pulling together information from a range of different sources and maintaining some sort of continuity in the personnel doing that would be entirely valuable.

Senator MARK BISHOP: The major projects reviews that Ms Brodtmann referred to have been going on for at least about seven or eight years. They originally came out of a recommendation of the Joint Committee on Public Accounts and Audit, they were accepted by the Howard government, then $1 million of supplemental funding was provided. It has continued under the current government and now quite lengthy and detailed documentation is provided. Ms Brodtmann raised the area of sustainment space. Do you have any views on the utility of the reports on the major projects—major projects are released every six months—bearing in mind your opening comments on the shortcomings in those two Navy issues which resulted in significant loss of life and ongoing cultural issues in Navy? Do you have any comment as to the utility of those project reviews?

Mr Brown : I do not. I have not looked at them specifically as part of making this submission. My focus tends to be away from procurement, although I know that is obviously of vital importance to what you do.

Senator MARK BISHOP: Thank you.

Senator FAWCETT: You comment on trying to raise or narrow the gap between the military and its experts and the parliament, which is often devoid of expertise. Do you have any exposure to the Quadrennial Defense Review approach the Americans take, where essentially on a bipartisan basis civilians with expertise are appointed by both sides of the hill to advise the Congress and the Senate on performance and planning issues in defence? Do you have any comment as to the applicability of that to Australia?

Mr Brown : I think the US has some creative ways of looking at these issues and tapping into wider expertise in the community that could be adapted here not only through the Quadrennial Defense Review process but also through the use of organisations like the Rand Corporation. There are quite extensive histories of using organisation like that to tap into recommendations to develop policy options. That is starting here in an informal sense. My organisation and others are the think tanks, but a more institutionalised way of marrying that expertise outside the parliament with your deliberations would be useful.

SUBCOMMITTEE CHAIR: I have a question about your sixth recommendation. You did not elaborate that much on the development of the parliamentary defence caucus, a crossbench group. How would you see that operating compared to this committee that currently meets what I would consider a consistent mechanism to what you are proposing?

Mr Brown : This is a very formal deliberative process. For some of the issues you might want to develop a background amongst parliamentarians. For some of the questions you might want to ask, there might be a benefit in doing that in a more informal environment. For example, some of the questions about decisions that the parliament might make about the use of military force or responses to crises in our region, issues of military strategy, might be better considered in an informal closed-door environment. For example, I would imagine not many parliamentarians would have had the time to think about how they might want to respond in the event there were a call to provide a military contribution to a Taiwan contingency. You could explore that in this forum, but it might be better to explore it in a more informal bipartisan way through a friends of military strategy group or a defence caucus, for want of a better term.

SUBCOMMITTEE CHAIR: As there are no other questions, thank you for your appearance before this committee. You may be asked to provide additional matters, and if so please see the secretariat. You will be sent a copy of your transcript. If you wish to make any corrections of grammar or fact, please do so and return the transcript to the secretariat.

Mr Brown : Thank you for your time.