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Sharpening our defence capability: address to the 74th congress of the returned services league of Australia, Canberra

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■ M e d i a R e l e a s e ! Ji m CarltonSHADOW MINISTER FOR DEFENCE- · : — ' ..... .... . - ~ ~ ' " ~ " 1 ' ~ " = ^

Attached is an address by the Shadow Minister for Defence,

the Hon J J Carlton MP, to the 74th Congress of The Returned

Services League of Australia.

21 September 1989 19/89

Contacts Jim Carlton or Simon Brooks (062) 77 4152/4145



Address by the Shadow Minister for Defence, the Hon J J Carlton MP, to the 74th Congress of The Returned Services League of Australia, Canberra, 21 September 1989

Mr President, Ladies and Gentlemen

Thank you for the opportunity to address you at your 74th National Congress. It is a special pleasure for me to speak to you for the first time as Shadow Minister for Defence. As one of the fortunate generation which escaped the horrors

of armed combat, I owe a special debt to you and those you represent for their contribution to our freedom and security.

I am old enough to remember the day when my mother received the news of her brother's death over Germany, and as the eldest of five children I had extra jobs to do while my father mapped jungles in Cape York.

Because of their and your efforts all I was called upon to do was to serve in the school cadets and to do three months national service and some time with the Sydney University Regiment. We all have a job to do to convince the younger

generations of this imbalance of sacrifice, and also to teach them the lessons of appeasement. Had the democracies been as strong in the thirties as they have been since 1945 the senseless slaughter of countless millions of innocent

human beings could have been avoided.

My task as Shadow Minister for Defence is to chart the course of Australia's defence policy for the decade ahead. My instructions from my Parliamentary Leader are to prepare for a change of government at the next election, and to take

over as Defence Minister after the election. Such clear instructions add greater urgency and seriousness to my task. I

I would like to pay tribute to my predecessor, Mr Peter White, for the work he has done in preparing a draft defence policy. There is no disrespect to that distinguished soldier and Parliamentary colleague in my

decision to alter the shape, if not the thrust of that document. It is merely that I must reflect my own judgements based on my own briefings and discussions, although of course I have drawn heavily on the material that

he passed on to me.

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My task has been made easier also by the publication of your RSL Defence Paper 1989, prepared by your National Defence Committee under the Chairmanship of General Vincent. The paper was particularly valuable in presenting a critique of

the 1987 Defence White Paper, and in stressing the absence of an effective regional capability for the ADF.

All the questions raised in the paper must be answered. Not all of them can be answered definitively by an Opposition without access to the full range of information available to the Defence Organisation. Nonetheless I would like to raise with you my approach to four key issues I have faced in the

development of a new Liberal-National Defence Policy. These are:

The development of a National Security Strategy;

Strategic Doctrine and Force Structure;

Organisation and Management of the Defence Organisation; and

The Defence Budget.

National Security Strategy

Let me deal first with national security strategy. The nation's security obviously depends on more than defence. Indeed, the first requirement for the effective management of Australia's defence is a framework of national security objectives and strategy, decided at the highest political

level, within which the Minister, the Department and the ADF can operate with confidence.

Such a framework requires the full backing of the Prime Minister, and embraces, as well as Defence, the following areas of policy:

. Treasury and Finance, to ensure the economic strength and financial backing needed to command international respect and adequate funding for defence;

. Foreign Affairs and Trade, to ensure that Australia's diplomatic, overseas aid, cultural and trading activities promote our national security interests;

. Industry and Industrial Relations, to ensure that our civil infrastructure is capable of supporting our defence force, and cannot be held to ransom by industrial disruption;

. Intelligence, Coastal Surveillance and Internal Security, to ensure an integrated approach to external and internal threats, including drug running and terrorism.

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To some degree these policy areas have been drawn together in the past by successive governments, but usually in response to crisis. There is however, no evidence of organised, continuous strategic forward planning along these

lines requiring the participation and commitment of senior Ministers.

There is much evidence to the contrary. Confusion between Foreign Affairs and Defence with regard to South East Asia and the South West Pacific has been endemic under the Hawke Government. There has also been a failure to co-ordinate government financial planning with Defence planning.

To take one critical example of the need for an integrated national security strategy, it would be a tragic situation for Australia if we ever had a serious disagreement with Indonesia over the security of our region. Thus it must be a key objective of our national security strategy to build a much closer relationship with Indonesia without detriment to

our relationships with other countries. All areas of policy are involved in this, right down to such things as student exchanges whereby the youth of both countries can build a better understanding of each other.

It is essential therefore that all the public policy elements of national security be drawn together at the highest level. We need a forward strategy, not a reactive strategy, that is continuously updated. It must be fully understood and supported by the most senior Ministers in the Government.

In my policy draft I am proposing a new mechanism to provide for this. An important outcome of the new approach will be a renewed confidence on the part of the ADF that their role and plans are fully understood at the highest level of political leadership, and that their annual budgetary demands on resources will be understood in advance by Cabinet as fitting into an already agreed development plan

for national security strategy. The critical input of the Ministers to this process will also sharpen the focus of defence planning, ensuring that it does not become a

specialist preserve remote from commonsense questioning.

Strategic Doctrine and Force Structure

Within an agreed set of objectives and strategy for national security we can more confidently determine our strategic doctrine for Defence and define the necessary force structure for the ADF.

There is a great temptation in Opposition, particularly when you are receiving a lot of advice from people outside the current Defence Organisation, to be dogmatic about strategic doctrine, and to draw up shopping lists for equipment.

There is also a temptation in one's enthusiasm to get stuck into the Government to criticise the good as well as the bad, and to get involved in inconsistencies.

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Frankly, I cannot afford these indulgences. If things go as I think they will politically I will be in charge of the Defence Organisation in a few months' time, and therefore I must be responsible. I will therefore disappoint some of those who urge me to be definitive in areas where, without

access to internal advice and classified material I cannot make an informed decision. This applies particularly to our strategy in the surrounding region and the force structure required to fulfil that strategy.

Your Defence Paper provides an excellent critique of the 1987 Defence White Paper. It highlights deficiencies in the argument in the White Paper as well as failures of implementation. It proposes solutions to the problems identified both in terms of strategy and force structure. I

find your arguments persuasive, particularly as I share your concern that Australia's commitment to the region has not been defined by the Government. I am also very concerned that whatever our commitment, there appear to be serious gaps in force structure.

In my draft policy document I draw attention to these deficiencies, but I stop short of prescribing the exact solutions. The gaps in strategy and force structure must be resolved. They are unlikely to be resolved by the present Government. We will have to resolve them urgently on our

return to Government.

Organisation and Management

I now turn to the very important question of how the Defence Organisation, that is, the Department together with the ADF, is managed. There is a great deal of sensitivity on this issue within both the Department and the ADF. I have already had some touchy reactions to remarks I have made in Parliament about management deficiencies. The Minister's

reply to the Cross Report on management also reflected some sensitivity on this issue. Indeed his rather aggressive reply to the very serious issues raised by Cross did not do justice to that report.

Let me begin by acknowledging that quite a lot of change has occurred. The Defence Support Organisation has undergone major and beneficial change, and the new management structure and systems in the Defence Science and Technology

Organisation are a vast improvement. Within the higher Defence structure the changes flowing from the Sanderson Report go in the right direction, and the moves to rationalise some of the logistics functions between the three services are also helpful.

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Undoubtedly all these changes are difficult to implement and cause considerable pain, and the courage and determination of those responsible for them should be acknowledged and commended. Nonetheless I have to say, and I speak with some experience of managing change in large scale enterprises, public and private, that the Defence Organisation still

falls far short of the flexible, responsive and effective instrument one needs for fighting a war.

I know that I will provoke yet more sensitive reaction to what I am about to say, but I stress that I am not in the

business of apportioning blame. The Defence Organisation contains a large number of highly competent individuals, both military and civil, trapped in an organisational structure that impedes action and progress. They also have to labour with management and data processing systems that

are in many cases old fashioned and inappropriate for the task.

The first problem I notice is an extremely cumbersome organisational structure. It is not a structure I would want to go to war with, if you will forgive the hanging preposition. I am utterly unpersuaded by arguments that

distinguish between peacetime and wartime structures. You do not have one organisational structure for Woolworths when you are serious about competition and another for when you are not.

I would have thought that a Defence Organisation above all instruments of government would need to have the most immediately practical organisational structure, ready for any emergency. Yet it seems to have a much more cumbersome structure than any of the other departments, and certainly more so than government trading enterprises.

Military history tells us that over and over again when a war starts time is wasted in dispensing with structures that do not work, and changing military leaders unsuited to the real task. We cannot afford that luxury, so we must build a

fighting machine that is ready to fight, hoping all the time that we will never have to use it, but knowing that the more effective it is the more deterrent capacity it will have.

Too many people in Russell Hill are "two hatted", and too many have their authority diluted or dissipated by committees. You cannot fight a battle wearing two hats, nor can you win it in a committee. To me the top level

organisation is like a Boeing 747 with two sets of controls, and too many people in the cockpit. There is far too much scope for the determined and the competent to be neutered, and far too much opportunity for the indecisive and

ineffective to avoid real responsibility. The Sanderson changes and the introduction of programme budgeting will help to clarify responsibilities to a degree, but the fundamental problems remain.


The lack of clear cut responsibilities at top levels leads to serious problems in resource allocation. For many years managers of the logistics function within the three services have been hampered by inadequate management information

systems. The logistics functions are huge enterprises. Navy expends about $650 million per annum and has an inventory at cost of about $1 billion. Army expends about $500 million per annum with an inventory of about

$1.5 billion and Air Force expends about $700 million with an inventory of about $2 billion. Total expenditures are therefore nearly $2 billion per annum, and total inventory is about $4.5 billion at cost, although no-one is sure about this figure.

The computer systems used to control these enormous inventories vary in effectiveness, but they are all outdated. Some of them are unable to cope with basic inventory management effectively. None of them appears to be able to cope with the operations research techniques necessary to optimise stockholdings in relation to demand. These are serious deficiencies, resulting in misallocation of resources, unnecessarily high costs and poor service. It

is a nonsense to have a shortage of slouch hats for new Army recruits when such large sums are available to be managed. It is even more serious to have a shortage of funds for adequate operations, training and improved service conditions for our sailors, soldiers and airmen when more

funds could clearly be made available if the logistics functions were better managed.

These problems are not the fault of the logistics managers themselves. They know what the problems are, but are prevented from proceeding with essential reforms, particularly in computer systems, while head office designs grand schemes that are always somewhere along the track. All these blockages can and must be sorted out.

My colleague, the Shadow Minister for Defence Science and Personnel, Senator Jocelyn Newman, has been very active in identifying and publicising the morale and personnel wastage problems in the A DF. She has not made herself very popular

at the higher levels in Russell Hill, but she has been absolutely on target with her criticisms and positive proposals for improvement. My survey of the management problems in the Defence Organisation adds weight to her


Good morale in an organisation depends above all on good management. You have to know who the real boss is, and you have to have the confidence that your boss can make the critical decisions and be held responsible. There are

hundreds of good military officers out there hamstrung by petty controls. All we need to do is give them the authority and they will handle the task. Conditions of service matter too, of course, but in themselves cannot

determine morale. Better morale will flow from better management.


The Defence Budget

Finally let me talk about money. Your Defence Paper exposes graphically (in both the literal and metaphorical sense) the failure of the Government to live up to its promises for Defence spending. The Hawke Government has left Defence in a budgetary strait-jacket that poses extremely difficult problems for an incoming Government.

The Department has to provide a defence force based on a recommended real annual increase of 3 per cent (according to the Dibb Report), financial guidelines for the Five Year Defence Plan of 2 per cent, but with an actual budgetary

allocation of zero real increase.

For such a large organisation as Defence, inconsistency can be more damaging than budgetary squeeze. Each budget year under Labor has produced a change in Defence funding, making planning more difficult and leading to waste and


Despite a capital equipment acquisition programme that absorbs 35 to 40 per cent of the budget, and which has already absorbed 90 per cent of projected capital funds for the years ahead, there are still gaps in the force structure defined as high priority in the 1987 Defence White Paper.

The demands of the capital equipment acquisition programme have so drained other areas of spending that the ADF has had to cut operational expenditure and training and hold back on improvements to conditions of service to a degree that has

affected service morale and increased wastage rates alarmingly.

The biggest failure of the Hawke Government in Defence is its economic failure. With an overseas debt of over $100 billion, a massive balance of payments deficit at a time of high commodity prices and an inflation rate double that of our competitors our relative strength in our geographic region is slipping by the hour.

Australia's economic position is grim. Budgets are tight and further cuts will be necessary. I think I can argue successfully for no cuts in Defence, but should I be arguing for more? Your Defence Paper calls for an allocation of not

less than 3.5 per cent of GDP, compared with the present allocation of 2.3 per cent. That would mean an increase in spending of about 52 per cent. Clearly you would not expect that to happen overnight, but even over a longer period, is

it realistic?

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You might be right, but I cannot tell until I know exactly what our defence strategy is, what our regional commitments are and what force structure requirements arise out of that. I do know that better provision must be made for personnel, operations and training, and this must be done quickly. However, I am loth to demand special treatment for Defence

on that score until I see what I can do about the misallocation of resources under the present management structure. I am told by people in the Department and ADF that a shift in resources of only 1 per cent in many cases

would resolve a number of problems, and I know from experience that shifts of that order and more are readily achievable in an organisation of this size. How much more I can achieve internally I do not know until I get there.

The mistake I will not make, despite all the external pressures from the defence community, is to promise the world and deliver nothing. I would rather be stingy and consistent than generous and unreliable. If after I know

the strategic and force structure requirements and the potential improvements in resource allocation I am convinced that more is needed I will go out and and fight for it. I

will put all these considerations into my policy document so you will know where I stand.

I would like to have talked to you about a whole range of other matters, such as my recent visit to New Zealand and my forthcoming visit to Indonesia. I also had an on-the-spot investigation of events in Eastern Europe in

July - a fascinating insight into the Warsaw Pact. However my time has run out. I thank you for inviting me here, and I wish you a successful Congress.

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