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Department of Defence—Report for 2019-20


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A N N U A L

R E P O R T

19-20

ii DEFENCE ANNUAL REPORT 2019-20

Defence at a glance Mission To defend Australia and its national interests in order to advance Australia’s security and prosperity.

Purpose The 2019-20 Defence Corporate Plan notes the core purpose for Defence to deliver for the Government and the Australian community which is to:

• Defend and protect Australia and advance its strategic interests.

Underpinning this purpose are two outcome statements through which we focus our portfolio resourcing and delivery of intended results for Government. These are:

• Defend Australia and its national interests through the conduct of operations and provision of support for the Australian community and civilian authorities in accordance with Government directions; and

• Protect and advance Australia’s strategic interests through the provision of strategic policy, the development, delivery and sustainment of military intelligence and enabling capabilities, and the promotion of regional and global security and stability as directed by Government.

Strategy In 2019-20 Defence undertook a review of its policy settings and force structure to ensure it can meet Government and Defence outcomes and adapt to shifts in the strategic environment and new technology challenges. The 2020 Defence Strategic Update and 2020 Force Structure Plan sets out the new defence strategy with a focus on our near region in the Indo-Pacific. The new strategy - to shape Australia’s strategic environment, deter actions against Australia’s interests and respond with credible military force when required - prioritises the ADF’s focus on our immediate region.

Portfolio structure As at 30 June 2020, the Defence portfolio consisted of:

• the Department of Defence (including the Australian Defence Force)

• the Australian Signals Directorate

• trusts and companies

• statutory offices created by the Defence Force Discipline Act 1982 and the Defence Act 1903

• the Department of Veterans’ Affairs and its associated bodies.

Responsible ministers As at 30 June 2020, the Defence portfolio has four ministers:

• Senator the Hon Linda Reynolds CSC, Minister for Defence

• the Hon Darren Chester MP, Minister for Veterans’ Affairs; Minister for Defence Personnel

• the Hon Alex Hawke MP, Assistant Defence Minister; Minister for International Development and the Pacific

• the Hon Melissa Price MP, Minister for Defence Industry.

Funding and assets For 2019-20, Defence reported a departmental cash underspend of $349.4 million relative to an available appropriation of $38.3 billion. More information about Defence’s financial performance can be found in Chapter 4 - ‘Financial summary’. Defence currently manages $112.3 billion of total assets, including $71.6 billion of specialist military equipment.

Our people As at 30 June 2020, the ADF actual strength was 59,760 members, APS actual full-time equivalent workforce of 16,505 and Reserve force of over 28,500. More information can be found in Chapter 6—‘Strategic workforce management’.

Our projects As at 30 June 2020, Capability Acquisition and Sustainment Group was managing 192 major and 14 minor acquisition projects, worth a total life cycle cost of $130.5 billion.

Where we work Defence has the most extensive land and property holdings in Australia, with over $28.2 billion of buildings and infrastructure including large training areas and bases close to the coastline. Defence has environmental stewardship for over 3.5 million hectares of land in Australia and also operates a number of operational bases around the globe.

iii DEFENCE AT A GLANCE

DEFENCE BASE LOCATIONS

PERTH

DARWIN

CAIRNS

TOWNSVILLE

BRISBANE

SYDNEY

CANBERRA

HOBART

MELBOURNE

ADELAIDE

RAAF Woomera

RAAF Learmonth

RAAF Curtin

RAAF Tindal

RAAF Scherger

Anglesea Barracks

RAAF Williamtown

HMAS Creswell HMAS Albatross

Lone Pine Barracks (Singleton Military Area)

Puckapunyal

RAAF East Sale

RAAF Amberley

Army Aviation Centre Oakey Borneo Barracks

HMAS Cairns

Campbell Barracks Irwin Barracks Leeuwin Barracks RAAF Pearce HMAS Stirling

RAAF Darwin

Larrakeyah Defence Precinct

(Larrakeyah Barracks & HMAS Coonawarra) Robertson Barracks Defence Establishment Berrimah

Edinburgh Defence Precinct Keswick Barracks Woodside Barracks

HMAS Cerberus RAAF Williams Simpson Barracks Victoria Barracks DSTG Fishermans Bend

Blamey Barracks RAAF Wagga

Albury Wodonga Military Area

RAAF Townsville Lavarack Barracks

Victoria Barracks HMAS Moreton Gallipoli Barracks

Garden Island Defence Precinct (inc HMAS Kuttabul) HMAS Penguin HMAS Waterhen HMAS Watson Liverpool Military Area Randwick Barracks Victoria Barracks Defence Establishment Orchard Hills RAAF Richmond RAAF Glenbrook

Defence Headquarters Russell Offices HQJOC HMAS Harman Royal Military College Duntroon / Australian Defence Force Academy Australian Defence College

Kokoda Barracks

About this report This is the Secretary of Defence and Chief of the Defence Force’s performance report to the Minister for Defence, the Parliament of Australia and the Australian public for the 2019-20 financial year. The report addresses the purpose and outcomes of the Department of Defence and the Australian Defence Force—collectively known as Defence.

The report was prepared in accordance with parliamentary reporting and legislative requirements. The requirements table in Appendix E (page 278) identifies for the reader where required information may be found.

Online content An electronic version of this report and supplementary performance information may be accessed at www.defence.gov.au/annualreports. Appendix D of this report (page 277) lists the supplementary information that is available on the Defence website.

The Defence Annual Report 2019-20 is also published on www.transparency.gov.au.

iv DEFENCE ANNUAL REPORT 2019-20

Senator the Hon Linda Reynolds CSC Minister for Defence Parliament House Canberra ACT 2600

Dear Minister,

We present the Department of Defence Annual Report 2019-20 for the year ended 30 June 2020. The report has been prepared for the purposes of section 46 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). Subsection 46(1) of the PGPA Act requires that an annual report be provided to the responsible Minister for presentation to the Parliament.

The report reflects the mandatory requirements as prescribed by the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule). It includes Defence’s audited financial statements, as required by subsection 43(4) of the PGPA Act, and Defence’s annual performance statements, as required by section 39 of the PGPA Act.

Consistent with the requirements set out in Section 10 of the PGPA Rule, we certify that Defence has conducted whole-of-Defence fraud risk assessments as part of its biennial fraud and corruption control planning cycle. We also certify that Defence has in place reasonable and appropriate measures, mechanisms and programs to prevent, detect, investigate, record and confidentially report suspected fraud and corruption.

Yours sincerely,

Greg Moriarty Angus Campbell AO DSC

Secretary General

21 September 2020 Chief of the Defence Force

21 September 2020

cc the Hon Darren Chester MP, the Hon Alex Hawke MP, the Hon Melissa Price MP

v CONTENTS

Contents Defence at a glance ii

About this report iii

Letter of transmittal iv

CHAPTER 1 REVIEWS BY THE SECRETARY AND THE CHIEF OF THE DEFENCE FORCE 1

CHAPTER 2 DEPARTMENTAL OVERVIEW 11

CHAPTER 3 ANNUAL PERFORMANCE STATEMENTS 21

CHAPTER 4 FINANCIAL SUMMARY 65

CHAPTER 5 GOVERNANCE AND EXTERNAL SCRUTINY 79

CHAPTER 6 STRATEGIC WORKFORCE MANAGEMENT 97

CHAPTER 7 ASSET MANAGEMENT 147

CHAPTER 8 ENVIRONMENTAL PERFORMANCE 155

APPENDICES 165

Appendix A: Financial statements 166

Appendix B: Additional workforce tables 249

Appendix C: Other mandatory information 274

Appendix D: Supplementary online material 277

Appendix E: List of requirements 278

Abbreviations and acronyms 282

Definitions 283

List of figures and tables 284

Index 287

Contacts and acknowledgments 294

vi DEFENCE ANNUAL REPORT 2019-20 MH-60R helicopter ‘NOMAD’ conducts essential aviation training with HMAS Adelaide at sunset off the coast of Queensland.

1 CHAPTER 1 | REVIEWS BY THE SECRETARY AND THE CHIEF OF THE DEFENCE FORCE

REVIEWS BY THE SECRETARY AND THE CHIEF OF THE DEFENCE FORCE1

2 DEFENCE ANNUAL REPORT 2019-20

Secretary’s review Defence has risen to extraordinary challenges during the 2019-20 reporting year. Our Australian Public Service (APS), contractor workforce and the Australian Defence Force (ADF) have together responded in the face of bushfires of unprecedented scale, duration, and devastating impact. Our people and their families have all felt the effects of COVID-19 and shown fortitude and dedication in carrying out the Government’s direction and supporting their fellow Australians. I am proud of their achievements and sincerely thank all staff for their contributions to protecting the nation’s security and well-being at home and abroad over the past twelve months.

None of us could have foreseen the scale of the natural disasters that the nation faced as we undertook the tasks set by the Government and our four newly sworn-in ministers last year. In an early speech to the portfolio’s Senior Leadership Group, the Minister for Defence, Senator the Hon Linda Reynolds CSC clearly articulated her expectations in terms of Strategy, Capability and Reform.

The portfolio has embraced these priorities wholeheartedly and has made substantial progress in support of the Government’s agenda, as evidenced in the 2020 Defence Strategic Update and the 2020 Force Structure Plan. These capstone documents mark a significant evolution in Australia’s strategic posture and are a clear-eyed response to the challenges to our national security interests both in our region and further afield.

Although the 2016 Defence White Paper accurately foresaw the key trends, the pace of change has exceeded predictions and our strategic circumstances have deteriorated. This reflects rapid technological advances, greater political instability, the heightening of geostrategic competition in our region, and the use of coercive statecraft that is testing the limits of the rules-based international order.

The 2020 Defence Strategic Update lays out a revised set of objectives for Defence to contribute to whole-of-government efforts to safeguard Australia’s interests and the well-being of our citizens. The ADF will continue to be equipped for global operations in coalition with like-minded nations where our national interests dictate, but our focus is increasingly on our immediate region. The Defence policy approach is aligned with the Government’s Indo-Pacific Strategy.

Defence will continue to deepen and strengthen its long-standing and mutually beneficial ties with Australia’s neighbours and partners, with whom we share not only geography but also common interests in a secure, prosperous and resilient region. In pursuit of this goal we work closely and effectively with other arms of Government.

As the 2020 Force Structure Plan makes clear, the ADF will be designed, equipped, and postured to meet the challenges identified in the 2020 Defence Strategic Update. The Government is backing this with a substantial budget commitment needed to ensure Defence has what it requires to meet present and future challenges. Over the decade ending 2029-30, this will amount to some $270 billion worth of broad and far-reaching capability investment across the three services (Army, Navy and Air Force) and five domains (Land, Air, Sea, Space, and Information and Cyber).

As our services further integrate and become more proficient at joint operations, these ambitious investments will translate into an ADF that is even more capable of shaping, deterring and responding to future challenges.

Our interoperability and the cooperation between the services and across government extends to close industry partnerships. This includes cooperation through the Defence Australian Industry Capability (AIC) Program, which ensures that Australian companies have the opportunity to participate in high-value, high-tech projects that support the development of Australia’s sovereign defence industrial base. A great result of this program was the acquisition

Mr Greg Moriarty, Secretary of Defence.

3 CHAPTER 1 | REVIEWS BY THE SECRETARY AND THE CHIEF OF THE DEFENCE FORCE

contract for 211 Boxer Combat Reconnaissance Vehicles that included an Australian industry commitment of almost $1.3 billion. More than 300 Australian companies are associated with the construction of Navy’s Offshore Patrol Vessels. And, in the past year, Defence has further invested in a range of Australian industrial capabilities.

Our focus on support and partnership with industry will continue to grow and will ensure Australia’s sovereign defence industry capability has a secure future in line with the priorities set by our ministers for building our domestic industrial base, bolstering our skilled workforce, and increasing exports and the global competitiveness of Australian defence industry.

The significant resource commitment government is making to the portfolio imposes particular obligations upon us all to ensure that Defence is agile, responsive and efficient in fulfilling the Government’s direction.

Key to meeting these expectations is our commitment to ongoing reform. By aligning strategy, capability and resources, and pursuing an ongoing reform program, we will realise the full potential of the “One Defence” enterprise that delivers on our mission to defend Australia and its national interests.

During 2019-20, the ‘Defence 2022 - Embedding One Defence’ reform program achieved several milestones that built on the First Principles Review. These included: workforce reform; enhanced integrated service delivery; business transformation; and heightened support for Australia’s Defence industry. Continuous reform is essential to building our response capacity and will remain a focus of the portfolio’s senior leadership.

The community expects Defence to lead by example. We maintain an inclusive culture that drives diversity and high performance. Defence’s Values capture the habits and ways of thinking that are necessary to fulfil this expectation and create an organisational culture that makes Defence a constructive, collegiate, efficient and effective workplace. The behaviours create an organisation that is able to attract and retain the skills and people we need. Our continued focus on culture aims to reflect the highest standards of professionalism, respect and accountability. This process continues through Pathway to Change: Evolving Defence Culture 2017-2022, and these values must be reflected in all levels of the organisation.

Defence has achieved a great deal over the past year, none of which would have been possible without the hard work and dedication of our people. Our commitment to ‘One Defence’ and our collective flexibility and hard work has positioned us well to build upon this years performance. I look forward to working with the Chief of the Defence Force, General Angus Campbell AO DSC, over the coming year to ensure Defence continues to improve and adapt to face the challenges of the future.

Greg Moriarty

Secretary of Defence

Defence civilian Sally Remple speaks to the Commander of the Defence COVID-19 taskforce, Lieutenant General John Frewen DSC, AM, and the Deputy Secretary of Defence People Group Justine Greig, at Services Australia, Canberra.

4 DEFENCE ANNUAL REPORT 2019-20

Chief of the Defence Force’s review In 2019-20, we have experienced significant change, challenging us both at home and within the Indo-Pacific region. The Australian Defence Force has played an essential role in supporting our whole-of-nation responses to these challenges.

In meeting these challenges, the ADF has supported the Commonwealth Government’s response to Australia’s National Bushfire Crisis and the COVID-19 Global Pandemic. The ADF has also continued to conduct ongoing operations such as Operations ACCORDION, GATEWAY and RESOLUTE. We have delivered enhanced regional engagement as part of the Pacific Step-Up programme and the 2020 Defence Strategic Update more broadly.

The ADF remains prepared and ready to deliver on our mission, ‘to apply military power in order to defend Australia and its national interests’.

The 2020 Defence Strategic Update and 2020 Force Structure Plan The publication of the 2020 Defence Strategic Update and 2020 Force Structure Plan sets out the Government’s defence strategy, with a focus on our near region in the Indo-Pacific. It reflects the fact that our strategic environment is now more complex, with Australia’s interests being more directly challenged.

The trends these documents address - growing great power strategic competition, the proliferation of more capable military systems, grey-zone tactics and expanding domestic assistance requirements - have been developing for some time. But recent events have accelerated these changes and magnified these challenges, demanding a decisive and deliberate response in ADF planning and future operations.

Responding to these challenges requires sharper prioritisation of resources to focus on the highest-priority threats to Australia’s national interests. This is what the 2020 Defence Strategic Update and 2020 Force Structure Plan lay out, and it is up to us to deliver on these objectives. The Government’s new defence strategy - to shape Australia’s strategic environment, deter actions against Australia’s interests and respond with credible military force when required - prioritises the ADF’s focus on our immediate region.

This includes $270 billion in investment in Defence capability and an enhanced commitment to ongoing reform across the organisation.

This new defence strategy also prioritises international engagement and ensures the ADF will have the capabilities to support an enhanced posture, positioned to support whole-of-government efforts to build Australia’s partnerships and influence in the region.

General Angus J Campbell AO DSC, Chief of the Defence Force.

5 CHAPTER 1 | REVIEWS BY THE SECRETARY AND THE CHIEF OF THE DEFENCE FORCE

National Bushfire Crisis The 2019-20 Australian bushfire season represented an unprecedented challenge, and resulted in the tasking of about 6,500 full-time and over 2,500 part-time ADF personnel. Defence provided assistance from 6 September 2019 to 26 March 2020, with assistance from nearly 500 personnel from Australia’s international defence force partners to support the emergency response and recovery operations.

Hundreds of other Defence Public Servants, Defence contractors and Defence Industry personnel joined with the ADF in a total Defence enterprise effort to provide critical support in response to the catastrophic bushfires. On 1 January 2020, Joint Task Forces (JTF) were established in Victoria (JTF 646), New South Wales and the Australian Capital Territory (JTF 1110). On 4 January 2020, JTF 1111 was established to support the response in South Australia and Tasmania.

Defence undertook in excess of 1,500 tasks in support of communities and emergency service operations during Operation BUSHFIRE ASSIST 2019-20. Assistance provided included logistical support (stores, refuelling); engineering support (road clearance, firebreak construction); cargo movement (land, air and sea); personnel movement (land, air and sea); imagery (aerial assets providing imagery in support of fire mapping, route availability, damage); base support and accommodation (evacuees, emergency responders); and catering (evacuees, emergency responders).

During the national bushfire crisis, the ADF transported 13,000 tonnes of fodder, over 8 million litres of water, 73,000 litres of fuel and 1,200 tonnes of air cargo. The ADF cleared barriers and provided access to over 4,800 kilometres of road, while repairing 1,250 kilometres of fencing. Additionally, the ADF cleared 240 kilometres of fire breaks, produced a further 10 million litres of drinking water for Kangaroo Island and Bega, while evacuating 527 fire-affected people and preparing over 77,250 meals for locals.

The numbers speak for themselves. The ADF provided a high level of support to Australians reeling from the national bushfire crisis. The ADF stands ready to support Australia.

Support to the COVID-19 Response In extraordinary times, the ADF was ready to help when asked by the Federal, State and Territory Governments to support the response to the COVID-19 pandemic. During the period covered by this report, more than 2,200 Defence personnel supported the whole-of-government response to the COVID-19 pandemic. Defence personnel came together and showed their professionalism, devotion to duty, teamwork and adaptability when faced with exceptional circumstances.

Defence worked hard to ensure the safety and wellbeing of Australians, including assisting Med-Con Pty Ltd in Victoria to significantly increase surgical face mask production, re-opening and supporting the North-West Regional Hospital in Tasmania and assisting contact tracing across the States and Territories, among many other tasks.

The ADF was proud to provide support nationally and internationally. COVID-19 affected every part of our training and operations, and the ADF was required to work in new ways to ensure that we could maintain operations and continue to defend Australia and its national interests.

As the pandemic continues, so too does our support.

Current Operations The ADF remains engaged in 19 current operations and activities, both overseas and at home. These range from Operation COVID ASSIST - which provides essential support to State, Territory, Commonwealth organisations and near regional partners currently managing the COVID-19 global pandemic response - to Operation ACCORDION, which provides overarching support ADF activities within the Middle East Region.

6 DEFENCE ANNUAL REPORT 2019-20

Other operations are in support of United Nations (UN) missions and mandates. This includes Operation ARGOS (UN sanctions on North Korea), Operation LINESMAN (South Korea), Operation ASLAN (South Sudan) and Operation CHARTER (Cyprus).

In the Middle East Region, the ADF works with international partners in the continued fight against Daesh (ISIS or ISIL) in Iraq under Operation OKRA, while supporting other ongoing commitments to regional stability and order. This includes Operation HIGHROAD (Afghanistan), Operation STEADFAST (Iraq), Operation MANITOU (maritime security) and Operations MAZURKA and PALADIN (treaty observation).

The ADF’s focus is the Indo-Pacific region, where we are committed to several operations and activities supporting the stability, peace and prosperity of the region. These include maritime surveillance patrols such as Operations GATEWAY and SOLANIA, and a series of operations that aim to safely dispose of World War II-vintage Explosive Remnants of War from South Pacific island nations through Operation RENDER SAFE. In line with the 2016 Defence White Paper and the 2020 Defence Strategic Update, the ADF also conducts extensive regional engagement efforts under our Enhanced Regional Engagement Program and Indo-Pacific Endeavour.

Finally, Operation RESOLUTE is the ADF’s contribution to the whole-of-government effort to protect Australia's borders and offshore maritime interests through maritime surveillance and response in the maritime approaches to Australia. In addition, Operation SOUTHERN DISCOVERY is the ADF contribution to the whole-of-government, Department of Environment and Energy-led activity in the Antarctic Region - the Australian Antarctic Program. The operation is an enduring peace-time activity in support of Australia's national interests.

Highly Capable and In Demand The ADF remains highly capable and in demand. As the 2020 Defence Strategic Update and 2020 Force Structure Plan highlight, the pace of change in the Indo-Pacific and demand on ADF capabilities is only likely to increase. In this, the ADF must not only be responsive but proactive in the manner in which it shapes and meets these future challenges. We must be prepared and ready to deliver on our mission, ‘to apply military power in order to defend Australia and its national interests.’

I am very proud of the manner in which the ADF and Defence APS, served our local communities and near neighbours during these unprecedented times. The core of all our capabilities remains our people, and their values: service, courage, respect, integrity and excellence. Over the coming year, I will remain focused not just on building and maintaining ADF capability and readiness, but also on the manner in which we all serve our nation in the finest traditions and values of our joint enterprise.

Angus J Campbell AO DSC

General Chief of the Defence Force

7 CHAPTER 1 | REVIEWS BY THE SECRETARY AND THE CHIEF OF THE DEFENCE FORCE

Figure 1.1: ADF operations during 2019-20

Operation RESOLUTE—Border Security

Operation SOUTHERN DISCOVERY—Antarctic

Operation SOLANIA —Pacific Islands

Operation GATEWAY—South-East Asia

Operation PALADIN—Israel, Lebanon, Jordan, Syria and Egypt

Operation FORTITUDE—Israel and Syria

Operation CHARTER—Cyprus

Operation OKRA—Iraq

Operation STEADFAST—Iraq

Operation HIGHROAD—Afghanistan

Operation ACCORDION—Middle East region

Operation MAZURKA—Sinai

Operation ASLAN—South Sudan

Operation MANITOU—Middle East region

Operation AUGURY—PHILIPPINES —transitioned to Enhanced Defence Cooperation Program - Philippines

Operation RENDER SAFE —South West Pacific

ENHANCED REGIONAL ENGAGEMENT —South West Pacific

INDO-PACIFIC ENDEAVOUR —South and South East Asia

Operation COVID-19 ASSIST—Australia

Operation BUSHFIRE ASSIST 2019-20—Australia

Operation DYURRA—ADF Space Operations

Operation ARGOS—UNSC sanctions

Operation LINESMAN —UNSC demilitarisation observation and reporting

8 DEFENCE ANNUAL REPORT 2019-20

Pacific Step-Up—strengthening Pacific ties in uncertain times Defence’s partnership with our Pacific family during 2019-20 included working together on a range of security challenges affecting our region.

We remain committed to our enduring engagement through the Defence Cooperation Program and our contribution to the whole-of-government Pacific Step-Up.

In 2019, Defence worked closely with security partners across the Pacific to deliver tailored maritime and land training activities, as well as sports and health engagements that were priorities for Pacific Island military and security forces.

The inaugural Joint Heads of Pacific Security event, co-hosted by Defence, the Australian

Federal Police and the Australian Border Force, was held in Brisbane in October 2019. Security leaders from Pacific Island nations came together for strategic-level dialogue and demonstrations. Participants engaged in discussions around transnational, organised and serious crime; border security; and humanitarian assistance and disaster relief.

Our collective humanitarian assistance and disaster relief response capabilities were tested in the months that followed by the Australian bushfires and the devastating tropical cyclones Harold and Tino. Our neighbours from the Papua New Guinea Defence Force and the Republic of Fiji Military Forces’ Bula Force came to our aid to support Operation BUSHFIRE ASSIST 2019-2020.

Soldiers from the Australian Army’s 3rd Combat Engineer Regiment and the Papua New Guinea Defence Force arrive at the Royal Australian Air Force base in Townsville at the end of Operation BUSHFIRE ASSIST 2019-2020.

9 CHAPTER 1 | REVIEWS BY THE SECRETARY AND THE CHIEF OF THE DEFENCE FORCE

His Majesty’s Armed Forces of Tonga (HMAF) and the ADF during a Humanitarian Aid and Disaster Relief (HADR) amphibious demonstration in Nuku`alofa, Tonga.

We were able to return the favour when the tropical cyclones passed over the South Pacific Ocean and left communities in need of essential items. In support of Australia’s whole-of-government efforts, several Air Force flights delivered humanitarian aid to Fiji and Vanuatu.

The COVID-19 pandemic has presented a number of logistical challenges for Defence’s international engagement. Defence Cooperation Program staff led the way in country to adapt the program to support Pacific COVID-19 responses and changing security priorities.

Despite the challenges, we continued to partner with Papua New Guinea, Fiji, Vanuatu and Solomon Islands on significant infrastructure projects that will enhance the security capability of the Pacific.

While restrictions were in place in response to COVID-19, we worked with our regional partners

to adjust our support. We were able to continue construction of Fiji’s Blackrock Camp through local contractors; commence early works at Papua New Guinea’s Lombrum Naval Base; and conduct planning and consultation for all infrastructure projects.

The Pacific Maritime Security Program delivered three Guardian class patrol boats to Samoa, Solomon Islands and Fiji. Defence worked closely with our Pacific partners to provide sustainment to patrol boat operations in the region where possible.

Defence is committed to returning to a full program of engagement with our Pacific security partners to support them in their COVID-19 recovery and in the years to follow.

10 DEFENCE ANNUAL REPORT 2019-20

Commander Task Group 629.5 Colonel David Hughes (right) addresses Australian Defence Force personnel and members of the Australian Medical Assistance Team at Burnie Airport before they leave Tasmania following their support to Burnie’s North West Regional Hospital.

11 CHAPTER 2 | DEPARTMENTAL OVERVIEW

DEPARTMENTAL OVERVIEW2

12 DEFENCE ANNUAL REPORT 2019-20

Purpose Purposes are defined in the Public Governance, Performance and Accountability Act 2013 (PGPA Act) as ‘the objectives, functions or role’ of an entity. Defence’s primary role is to protect and advance Australia’s strategic interests through the promotion of security and stability, the provision of military capabilities to defend Australia and its national interests, and the provision of support for the Australian community and civilian authorities as directed by Government.

As stated in the 2019-20 Defence Corporate Plan, the Defence purpose is:

Purpose: Defend and protect Australia and advance its strategic interests.

Further information on Defence’s purpose is in the Corporate Plan, which is available at www.defence.gov.au/publications/corporateplan/. Defence’s performance in achieving its purpose during the 2019-20 reporting period is described in Chapter 3—‘Annual performance statements’.

Strategic direction Considerable effort was invested in 2019-20 to generate adjustments to Defence policy, capability and force structure. These adjustments are reflected in the 2020 Defence Strategic Update and 2020 Force Structure Plan, launched by the Prime Minister and the Minister for Defence on 1 July 2020, which sets out the challenges in Australia’s strategic environment and their implications for Defence planning.

In implementing the 2016 Defence White Paper, substantial progress has been made in transforming the Australian Defence Force (ADF) into a more capable, agile and potent force. This has been underpinned by investment in Australia’s military capabilities and industries; a focus on strengthened international engagement, particularly with the United States, Japan, India, New Zealand, South-East Asia and South Pacific nations, and other allies and partners in our region; and ongoing implementation of organisational reform following the 2015 First Principles Review.

The Government has now directed Defence to implement a new strategic policy framework that signals Australia’s ability and willingness to shape our strategic environment, deter actions against our interests and, when required, respond with credible military force.

These objectives are backed by Government investment of approximately $270 billion over the decade to 2029- 2030 in new and upgraded Defence capabilities, including more potent and longer-range combat systems and more secure supply chains. The Government will also continue deepening our alliance with the United States and strengthening our regional engagement across the Indo-Pacific, including through the Pacific Step-Up, and will increase the ADF’s ability to respond to natural disasters, including within Australia.

The Government’s plans for Defence capability are underpinned by its policies of developing a strong, sustainable and secure Australian defence industry and supporting leading-edge national innovation. The Government is committed to maximising opportunities for Australian industry, including in regional areas, in Defence projects.

13 CHAPTER 2 | DEPARTMENTAL OVERVIEW

Defence portfolio structure As at 30 June 2020, the Defence portfolio has four ministers:

• Senator the Hon Linda Reynolds CSC, Minister for Defence

• the Hon Darren Chester MP, Minister for Veterans’ Affairs and Minister for Defence Personnel

• the Hon Alex Hawke MP, Assistant Defence Minister and Minister for International Development and the Pacific

• the Hon Melissa Price MP, Minister for Defence Industry.

Defence is established as a Department of State under the Administrative Arrangements Order. Defence operates under the Public Service Act 1999 and is a non-corporate Commonwealth entity under the PGPA Act. The ADF is constituted through the Defence Act 1903.

In addition to the Department of Defence and the ADF, the Defence portfolio contains other entities, including Defence Housing Australia; the Australian Defence Force Cadets; and a number of statutory offices, canteens, trusts and companies. Legislation that establishes these entities includes the Defence Housing Australia Act 1987, the Defence Act 1903, the Army and Air Force (Canteen) Regulation 2016, the Navy (Canteen) Regulation 2016, the Services Trust Funds Act 1947, the Royal Australian Air Force Veterans’ Residences Act 1953 and the Corporations Act 2001.

The portfolio also contains the Australian Signals Directorate, designated under the Intelligence Services Act 2001, and the Department of Veterans’ Affairs and associated bodies as designated in the Administrative Arrangements Order.

Changes in ministerial responsibilities On 6 February 2020 the Hon Darren Chester MP, Minister for Veterans’ Affairs and Minister for Defence Personnel, was appointed to the Cabinet. There were no other changes in ministerial responsibilities.

An Air Force F-35A Joint Strike Fighter conducts a fly past during the 2020 Chief of Defence Force parade held at the Australian Defence Force

Academy in Canberra.

14 DEFENCE ANNUAL REPORT 2019-20

Outcomes and programs Defence’s annual Portfolio Budget Statements (PBS) detail the outcomes and program structures for the Defence portfolio. Within this framework, the outcome is the intended result, impact or consequence of our actions. We work towards achieving our outcomes through undertaking activities and delivering results for each program.

Figure 2.1 shows Defence’s purpose. Underpinning this purpose are two outcomes for 2019-20, together with the related programs. The PBS describes the performance criteria and targets to be used in assessing and monitoring the performance of Defence in achieving government outcomes.

Figure 2.1: Defence’s outcomes and programs, 2019-20

Purpose Outcome statement Budget program

Defend and protect Australia and advance its strategic interests.

Outcome 1: Defend Australia and its national interests through the conduct of operations and provision of support for the Australian community and civilian authorities in accordance with Government direction.

1.1 Operations Contributing to the Safety of the Immediate Neighbourhood

1.2 Operations Supporting Wider Interests

1.3 Defence Contribution to National Support Tasks in Australia

Outcome 2: Protect and advance Australia’s strategic interests through the provision of strategic policy, the development, delivery and sustainment of military, intelligence and enabling capabilities, and the promotion of regional and global security and stability as directed by Government.

Departmental 2.1 Strategic Policy and Intelligence 2.2 Defence Executive Support 2.3 Defence Finance 2.4 Joint Capabilities 2.5 Navy Capabilities 2.6 Army Capabilities 2.7 Air Force Capabilities 2.8 Australian Defence Force

Headquarters

2.9 Capability Acquisition and Sustainment 2.10 Estate and Infrastructure 2.11 Chief Information Officer 2.12 Defence People 2.13 Defence Science and Technology

Administered 2.14 Defence Force Superannuation Benefits 2.15 Defence Force Superannuation

Nominal Interest

2.16 Housing Assistance 2.17 Other Administered

15 CHAPTER 2 | DEPARTMENTAL OVERVIEW

Associate Secretary Ms Katherine Jones

Chief Finance Of*cer Mr Steven Groves

Deputy Secretary Strategic Policy and Intelligence Mr Peter Tesch

Deputy Secretary Capability Acquisition and Sustainment Mr Tony Fraser AO CSC

Deputy Secretary National Naval Shipbuilding Mr Tony Dalton

Chief Defence Scientist Prof Tanya Monro

Stars refer to ADF Star rank As at 30 June 2020

Chief Information Of*cer Mr Stephen Pearson

Deputy Secretary Defence People Ms Justine Greig

Deputy Secretary Estate and Infrastructure Mr Steve Grzeskowiak

Vice Chief of the Defence Force Vice Admiral David Johnston AO RAN

Chief of Navy

Vice Admiral Michael Noonan AO RAN

Chief of Army

Lieutenant General Rick Burr AO DSC MVO

Chief of Air Force

Air Marshal Mel Hupfeld AO DSC

Chief of Joint Operations Lieutenant General Greg Bilton AO CSC

Chief of Joint Capabilities Air Marshal Warren McDonald AO CSC

Minister for Defence Senator the Hon Linda Reynolds CSC

Minister for Defence Industry The Hon Melissa Price MP

Assistant Defence Minister Minister for International Development and the Paci*c The Hon Alex Hawke MP

Minister for Veterans’ Affairs Minister for Defence Personnel The Hon Darren Chester MP

Secretary Mr Greg Moriarty

Chief of the Defence Force General Angus Campbell AO DSC

Organisational structure The Secretary of Defence and the Chief of the Defence Force jointly manage Defence as a diarchy. The term ‘diarchy’ reflects the individual and joint responsibilities and accountabilities of the Secretary and the Chief of the Defence Force in ensuring that Defence meets Australian Government requirements. The manner in which the diarchy operates is described in directions given to the Secretary and the Chief of the Defence Force by the Minister for Defence. Figure 2.2 shows the elements and relationships of Defence organisational structure as at 30 June 2020.

Figure 2.2: Defence organisational structure as at 30 June 2020

Note: This organisational chart is correct as at 30 June 2020. For a more current view visit www.defence.gov.au.

16 DEFENCE ANNUAL REPORT 2019-20

Changes in senior leadership • On 4 July 2019, Air Marshal Mel Hupfeld was appointed Chief of Air Force.

• On 22 July 2019, Vice Admiral Stuart Mayer RAN was appointed Deputy Commander United Nations Command Headquarters, Korea.

• On 29 July 2019, Mr Tony Dalton was appointed Deputy Secretary National Naval Shipbuilding in the Capability Acquisition and Sustainment Group.

• On 2 September 2019, Air Marshal Gavin Davies, the previous Chief of Air Force, transferred to the Reserve Service.

• On 9 March 2020, Lieutenant General John Frewen commenced as Commander Defence COVID-19 Taskforce.

• On 16 March 2020, Ms Rebecca Skinner, the previous Associate Secretary, moved to Services Australia.

• On 16 March 2020, Mr Steven Groves commenced acting as Associate Secretary.

• On 16 March 2020, Mr Glen Casson commenced acting as Chief Finance Officer

• On 22 June 2020, Ms Katherine Jones was appointed Associate Secretary.

Financial summary Defence looks to two major indicators to measure its financial performance: the cash-based result against its annual appropriation funding and other cash inflows; and the result presented in the Statement of Comprehensive Income in the financial statements in this Annual Report. In 2019-20, Defence delivered a small cash underspend of $0.3 billion or 0.9 per cent compared to our annual cash-based funding from all sources, and a similar surplus attributable to the Australian Government of $0.3 billion or 0.7 per cent.

These results reflect a strong focus on financial performance in a year punctuated by significant and unplanned events including our response to the COVID-19 pandemic and our support to the Australian community throughout the bushfire crisis. These events had some impact on our activities, including minor underspends in our capital acquisition programs, offset in part by higher operating and sustainment expenses as we pivoted towards supporting the Australian industry during the second half of the financial year. Workforce expenditure trending slightly below budget, in line with lower than budgeted ADF and APS numbers, also contributed to the underspend and surplus results.

Financial performance is discussed in more detail in Chapter 4. The financial statements are in Appendix A.

17 CHAPTER 2 | DEPARTMENTAL OVERVIEW

People summary Defence’s workforce comprises ADF members of the Navy, Army and Air Force, and APS employees. The ADF workforce also includes Gap Year participants.

The ADF’s actual funded strength at 30 June 2020 was 59,760, compared with 58,554 at 30 June 2019. The actual full-time equivalent APS workforce at 30 June 2020 was 16,505, compared with 15,996 at 30 June 2019.

Detailed information on Defence’s workforce is provided in Chapter 6, ‘Strategic workforce management’, and in Appendix B, ‘Additional workforce tables’.

Figure 2.3: ADF and APS comparative funded strength for 2018-19 and 2019-20

0

10,000

30 June 2019

Funded strength

30 June 2020

20,000

30,000

40,000

50,000

60,000

ADF APS

16,505

59,760

15,996

58,554

18 DEFENCE ANNUAL REPORT 2019-20

Royal Australian Air Force C-27J Spartan pilots from No. 35 Squadron work in arduous conditions as they assist evacuees during the bushfires

in Mallacoota, Victoria.

Operation BUSHFIRE ASSIST 2019-2020 —a true collective effort Australia’s intense 2019-20 bushfire season saw fires engulf more than 12.6 million hectares of land, destroy more than 3,000 homes and kill 33 people, including nine firefighters.

During those testing months, Australians showed courage, resilience, mateship and altruism—qualities that have come to define our national character, particularly in times of hardship and adversity.

These attributes were exemplified in the actions and behaviour of Australian Defence Force (ADF) personnel and Defence public servants who contributed to the crisis response, adding to our long tradition of assisting Australians when natural disasters or other tragedies strike.

Defence’s support began on 6 September 2019 in Queensland. As the situation deteriorated, with fires multiplying across the nation and burning more ferociously, Operation BUSHFIRE ASSIST 2019-2020 was stood up on 31 December 2019. It continued until 26 March 2020.

At the operation’s peak, some 6,500 ADF members provided support to emergency services and authorities in six states and territories. They included about 3,000 Reservists—the first compulsory call out of Reserve Brigades in Australia’s history. This assistance was augmented by hundreds of Defence public servants, contractors and industry partners.

With its nation-wide infrastructure, unique capabilities and strengths in logistics, planning and personnel support, Defence was called upon to support national relief, response and recovery efforts in various ways. Over the summer, Defence personnel worked behind bushfire front lines, in the sky and on the sea, and in offices and operational backrooms to support their fellow Australians.

Parts of the Defence estate—like the Albury Wodonga Military Area, Puckapunyal and Simpson Barracks in Victoria; RAAF Base Wagga in New South Wales; and HMAS Harman, Duntroon, the Australian Defence Force Academy and the Majura Training Area

19 CHAPTER 2 | DEPARTMENTAL OVERVIEW

in the Australian Capital Territory—became shelters and joint taskforce command centres. These facilities provided refuge for evacuated and displaced civilians and their pets, while also accommodating police, firefighters, paramedics, Red Cross workers and RSPCA staff alongside military personnel.

Defence’s airfields and naval bases—like RAAF Base East Sale and HMAS Cerberus in Victoria— provided critical infrastructure from which aerial firefighting efforts and rescue operations were launched.

Our maritime and air capabilities—like the Bay class HMAS Choules landing ship, the amphibious HMAS Adelaide, the MV Sycamore training ship, several aircraft including the C-27J Spartan and Boeing C-17A Globemaster, CH-47 Chinook, MRH-90 Taipan and Sikorsky Black Hawk helicopters—helped mobilise ADF personnel, transport emergency supplies and evacuate more than 1,100 civilians.

Around the fire fronts, ADF personnel delivered more than 77,000 meals to firefighters and emergency service workers, cleared 4,800 kilometres of road and 240 kilometres for firebreaks, repaired 1,280 kilometres of fencing,

purified around 10 million litres of water, and provided other services to bushfire-ravaged communities like distributing fodder and fuel and offering pastoral care and counselling to civilians.

Away from the fires, Defence was contributing in other ways. The Customer Service Network’s 1800 DEFENCE contact centre moved to 24/7 operations, serving as a central point of information for Defence personnel and the general public. By 6 January, 29 Defence health centres were delivering care across the eastern seaboard, from Brisbane to Adelaide.

Defence industry played an important part in logistics support. Our partner Broadspectrum helped process time-critical purchase orders to acquire water purification supplies and personal protective equipment such as respirator masks, goggles, helmets, safety vests, coveralls and gloves. These items were speedily distributed to fire-affected regions and emergency workers on the front lines.

High above the Kangaroo Island and Gippsland fires in South Australia and Victoria respectively, Defence Science was at work. A Defence experimentation airborne platform equipped with the country’s most sophisticated sensors and

Petty Officer Marine Technician Brendan McDermott assembles stretcher beds in response to Operation BUSHFIRE ASSIST 2019-2020.

20 DEFENCE ANNUAL REPORT 2019-20

cameras was used to peer through the smoke to monitor fire intensity and damage and provide real-time information to firefighting aircraft and emergency responders. Enabling us to detect new spot fires from a distance, this Defence capability will be valuable in future bushfire seasons.

Australia did not fight the bushfires alone. Thanks to our history of providing humanitarian assistance and disaster relief to our friends and neighbours, we were swiftly sent aid and resources by the governments of Canada, Fiji, Indonesia, Japan, New Zealand, Papua New Guinea, Singapore and the United States. These

nations’ invaluable contributions included more than 450 military personnel. Tragically, three United States aerial firefighters lost their lives.

The significance of Operation BUSHFIRE ASSIST 2019-2020 is twofold. First, it was the largest ever mobilisation of the ADF in response to a domestic disaster. Second, it ushered in a new era in which Defence is called upon in unique ways to assist civil authorities in response to national crises—as would soon be the case with the outbreak of COVID-19.

Soldiers from the 20th Regiment, Royal Australian Artillery, gather around their workstation as they guide their AE Wasp III small unmanned aircraft system over the Orroral Valley fire in the south of the Australian Capital Territory. These small reconnaissance aircraft are fitted with an infrared video camera, which

is ideal for looking into the heart of a spot fire. Integrated into the massive intelligence collection capabilities of the ACT Emergency Services Agency, the aircraft were used to monitor spot fires in the Tharwa area in the early morning hours when helicopters were not operating.

21 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

ANNUAL

PERFORMANCE STATEMENTS3

No. 37 Squadron aircrew Flying Officer Nicholas Charkow (left) and Corporal Siovahn Daly review their pre-flight checklist in a C-130J Hercules before a sortie in the Middle East region.

22 DEFENCE ANNUAL REPORT 2019-20

Statement of preparation As the accountable authority of the Department of Defence, I present the 2019-20 annual performance statements of the Department of Defence, as required under paragraph 39(1)(a)(b) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). In my opinion, these annual performance statements are based on properly maintained records, accurately reflect the performance of the entity, and comply with subsection 39(2) of the PGPA Act.

Greg Moriarty Secretary of the Department of Defence 22 September 2020

The annual performance statements for 2019-20 provide an assessment of Defence’s performance in achieving our purpose by reporting on the performance measures and criteria set out in the 2019-20 Defence Corporate Plan and the performance criteria listed in the Portfolio Budget Statements 2019-20 (PBS) and the Portfolio Additional Estimates Statements 2019-20 (PAES). In 2019-20 the purpose is directly aligned to the Defence outcomes in the PBS.

To enhance readability of the annual performance statements, the performance criteria are organised around the purpose described in the 2019-20 Defence Corporate Plan:

Purpose: Defend and protect Australia and advance its strategic interests.

Outcome statements describe what the Government requires Defence to achieve using resources allocated through the Commonwealth budget process. In 2019-20 Defence had two outcome statements:

Outcome 1: Defend Australia and its national interests through the conduct of operations and provision of support for the Australian community and civilian authorities in accordance with Government direction.

Outcome 2: Protect and advance Australia’s strategic interests through the provision of strategic policy, the development, delivery and sustainment of military, intelligence and enabling capabilities, and the promotion of regional and global security and stability as directed by Government.

The purpose of Defence’s enterprise performance management is to ensure alignment between Government direction, strategy, funding and capability so that the purpose of Defence is achieved.

The aim is to provide a clear line of sight between:

• the Corporate Plan (purpose, activities and performance criteria)

• the PBS (allocation of resources to programs to achieve Government outcomes and a forecast of expected performance)

• the annual performance statements in Defence’s Annual Report (actual performance results for the financial year against the Corporate Plan and the PBS)

• the financial statements in Defence’s Annual Report (provided at Appendix A).

Defence is continuing to develop a mature approach to performance reporting that enables improved traceability in demonstrating our achievement of Government outcomes in accordance with the requirements of the PGPA Act. Figure 3.1 demonstrates the relationship of the annual performance statements with the other elements of the Defence enterprise performance management structure.

23 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Corporate Plan

Portfolio Budget Statements

(Portfolio Additional Estimates Statements)

Annual Report

Annual Performance Statements (non-financial performance)

Financial Statements (financial performance)

Performance Cycle

Plan and Resource Forecast intended results, required resources and

performance measures

Monitor

Measure performance using agreed methodology

Report Actual results against forecast performance

Learn

Improve next cycle

DEFENCE ENTERPRISE PERFORMANCE MANAGEMENT

Plan

Performance

Program Performance

Figure 3.1: Defence enterprise performance management

Defence’s annual performance statements provide an assessment of actual performance in achieving Defence’s purpose. This includes analysis against each performance criterion, using the key:

• Achieved—the intended result was achieved as planned

• Partially achieved—the intended result was not fully achieved during the reporting period.

Note: Due to national security considerations, not all targets are available to be published.

24 DEFENCE ANNUAL REPORT 2019-20

Purpose: Defend and protect Australia and advance its strategic interests Outcome 1: Defend Australia and its national interests through the conduct of operations and provision of support for the Australian community and civilian authorities in accordance with Government direction.

Defence achieved Outcome 1 in 2019-20. The Government successfully deployed the Australian Defence Force (ADF) to meet national objectives. The ADF conducted operations to defend Australia’s interests domestically, through the Indo-Pacific region, and globally to promote stability, integrity and cohesion.

Domestically Defence provided both emergency and non-emergency support in accordance with Defence Assistance to the Civil Community arrangements as part of a whole-of-government response where state or territory capacity or resources did not exist or were not available quickly enough. Defence emergency assistance to civil agencies increased overall in 2019-20 due to major bushfires and the COVID-19 pandemic.

Defence provided significant assistance to bushfire fighting efforts across Australia, with a deterioration in conditions leading to the declaration of Operation BUSHFIRE ASSIST 2019-2020 on 31 December 2019. As part of Operation BUSHFIRE ASSIST 2019-2020 the Governor-General enacted a Call Out of Reserves to undertake continuous full-time service in support of civilian agencies. This was the first wide-scale Call Out of the Reserves for national disaster relief in Australian history. Around 3,000 Reservists supported the Operation—about 2,500 under compulsory Call Out and around 500 providing further support.

Defence responded swiftly to the COVID-19 pandemic, establishing the COVID-19 Taskforce in March 2020 to coordinate Defence’s contribution to the whole-of-government response. A further objective of the taskforce was departmental resilience and operational continuity.

Operation COVID-19 ASSIST was subsequently established in April 2020 under the Defence Assistance to the Civil Community framework, as the ADF supported the Commonwealth, state, and territory governments in partnership to protect public health. Defence assistance has included reconnaissance, planning and contact tracing teams; medical assistance in north-west Tasmania; supporting mandatory quarantine arrangements; and supporting state and territory police border controls. Defence Science and Technology Group provided specialist technical support, including diagnostic platform development, virus survivability and fate research, pandemic modelling, trials of a potential COVID-19 prophylactic, production of personal protective equipment, and ventilator repurposing.

The COVID-19 pandemic affected the conduct of operations and activities, specifically in relation to the movement of personnel within the region. However, adjustments were successfully incorporated to minimise this impact as far as possible. Due to COVID-19 restrictions, a number of training and international engagement activities were cancelled or postponed, including Operation RENDER SAFE, Exercise PACIFIC PARTNERSHIP, several airborne surveillance missions and Indo-Pacific Endeavour 2020.

In 2019-20 Defence continued Australia’s international engagement in our immediate neighbourhood and where our wider interests are engaged. Among other activities, Defence supported the international community and continued Australia’s contribution to the international rules-based order and peacekeeping by engaging in operations in the Middle East and Africa.

Within our immediate neighbourhood, Defence successfully transitioned Operation AUGURY-PHILIPPINES to the Enhanced Defence Cooperation Program—Philippines. We continued airborne maritime surveillance missions in South-East Asia and the South-West Pacific, and provided humanitarian assistance and disaster relief to Vanuatu and Fiji.

The ADF also supported the participation of seven nations from the South-West Pacific in the Royal Edinburgh Military Tattoo staged in Sydney in October 2019. This included providing RAAF transport to and from Australia and ceremonial uniforms for performers. Media coverage of the ADF’s support to the South-West Pacific reached over 100 million people globally and more than half of the South-West Pacific population. The ADF is continuing to build on the successful relationships forged through the event with the development of a South Pacific virtual musical project during the COVID-19 pandemic.

25 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Additionally, the Australian Defence College, in conjunction with Joint Health Command and Joint Logistics Command, developed and implemented a number of online training and awareness courses that were COVID-19 specific. As at end June 2020, Defence organisation personnel had registered approximately 220,000 course completions. The training was also translated into five languages and provided to regional partners on an open web portal, with visitations from 60 countries.

Outside of our immediate region Defence supported enduring coalition and United Nations (UN) operations in the Middle East and Africa; the International Maritime Security Construct and freedom of navigation in the Straits of Hormuz; and enforcement of United Nations sanctions against the Democratic People’s Republic of Korea. Australia’s commitment to training Iraqi forces in the Taji Military Complex ceased, and all personnel successfully returned to Australia.

PBS programs contributing to Outcome 1

PBS1.1 Operations Contributing to the Safety of the Immediate Neighbourhood

PBS1.2 Operations Supporting Wider Interests

PBS1.3 Defence Contributions to National Support Tasks in Australia

Outcome 2: Protect and advance Australia’s strategic interests through the provision of strategic policy, the development, delivery and sustainment of military, intelligence and enabling capabilities, and the promotion of regional and global security and stability as directed by Government.

Defence achieved Outcome 2 in 2019-20 while managing and minimising the impact of COVID-19 related restrictions upon activities.

Defence undertook a Strategic Policy Review to assess the strategic underpinnings of the 2016 Defence White Paper. The outcomes of the review have been published in the 2020 Defence Strategic Update. The Strategic Update and the 2020 Force Structure Plan will ensure the ADF remains agile and ready to respond to a range of developments in Australia’s strategic environment over the coming decade.

Military, intelligence, and enabling capabilities were delivered and sustained to support operational outcomes and meet preparedness requirements. Acquisition projects were delivered to agreed parameters of scope and cost, and sustainment of military equipment met agreed availability targets. Provision of intelligence priorities including high-quality strategic-level intelligence assessments supported operations, organisation and whole-of-government policy, and capability development. Science and technology strategic research activities continued to create opportunities to provide Defence with a capability edge. With the support of enabling service delivery groups, Defence Capability Managers achieved the required preparedness levels and operational outcomes.

Defence successfully generated capabilities to meet preparedness requirements. Preparedness levels were challenged by the unprecedented requirement to support Operation BUSHFIRE ASSIST 2019-2020 and Operation COVID-19 ASSIST, and the impact of COVID-19 on Defence business. Planning and prioritisation were used to generate capability at the required level of preparedness for the defence of Australia and its national interests.

In 2019-20, Defence worked closely with industry to build a robust and internationally competitive defence industrial base. This included extensive consultation in preparing the Sovereign Industrial Capability Priorities. These priorities are:

• Collins class submarine maintenance and technology upgrade

• Continuous shipbuilding program (including rolling submarine acquisition)

• Land combat vehicle and technology upgrade

• Enhanced active and passive phased array radar capability

• Combat clothing survivability and signature reduction technologies

• Advanced signal processing capability in electronic warfare, cyber and information security, and signature management technologies and operations

26 DEFENCE ANNUAL REPORT 2019-20

• Surveillance and intelligence data collection, analysis dissemination and complex systems integration

• Test, evaluation, certification and systems assurance

• Munitions and small arms research, design, development and manufacture

• Aerospace platform deeper maintenance and structural integrity.

Implementation plans for combat clothing and for munitions and small arms were both published in December 2019, and an implementation plan for land combat vehicles will be published in August 2020. Implementation plans for the remaining seven priorities will be released in the second half of 2020.

The Defence Innovation Hub, the Next Generation Technologies Fund, the Global Supply Chain Program and Defence industry grant programs continued to deliver practical outcomes for industry. The Australian Defence Export Office continued to implement the Defence Export Strategy, including through Team Defence Australia led industry attendance at pre-COVID-19 international trade shows and trade missions, and through the Defence Global Competitiveness Grants program.

Defence enhanced international engagement by continuing investment in the Defence Cooperation Program, increasing the number of training positions for international military students in Australia, and raising Defence’s broader international profile. Additional overseas positions were created, notably to enhance Defence science and technology cooperation. Defence also regularly meets with allies and partners to discuss national naval shipbuilding issues.

We continued to enhance health and welfare services to Australian Defence Force members and families through support for transitions, support during casualty and critical incidents, mobility, and community capacity building. Defence’s community capacity building has provided community centres and grants through the Family Support Funding Program. We continued to provide practical support to ADF members transitioning from the military, including transition seminars and expos, and post-transition surveys to enhance transition outcomes for members.

Overall Defence sustained core deliverables during the COVID-19 pandemic and continued to build on the reform initiatives of the First Principles Review throughout 2019-20.

PBS programs contributing to Outcome 2

PBS2.1 Strategic Policy and Intelligence

PBS2.2 Defence Executive Support

PBS2.3 Defence Finance

PBS2.4 Joint Capabilities

PBS2.5 Navy Capabilities

PBS2.6 Army Capabilities

PBS2.7 Air Force Capabilities

PBS2.8 Australian Defence Force Headquarters

PBS2.9 Capability Acquisition and Sustainment

PBS2.10 Estate and Infrastructure

PBS2.11 Chief Information Officer

PBS2.12 Defence People

PBS2.13 Defence Science and Technology

PBS2.14 Defence Force Superannuation Benefits

PBS2.15 Defence Force Superannuation Nominal Interest

PBS2.16 Housing Assistance

PBS2.17 Other Administered

27 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Alignment between Defence’s Purpose, Outcomes, Corporate Plan Performance Criteria and Portfolio Budget Statement Programs Defence maintains a clear line of sight between the Defence Corporate Plan, Portfolio Budget Statements, Portfolio Additional Estimates Statements and Annual Report. Figure 3.2 provides detail of the alignment.

Defence purpose

Outcome 1

Outcome 2

Defence Corporate Plan Performance Criteria

1.1 1.1, 1.2

1.2 1.3

3.1a 2.8

3.1b 2.13

2.4

3.2a

3.2b

2.4, 2.5, 2.6, 2.7, 2.8

3.3

4.1a

2.13

4.1b

2.2, 2.10, 2.11, 2.12

4.1c

2.10

4.2a

2.3

4.2b

2.2

4.3c 2.4, 2.12

4.4a 2.14, 2.15, 2.17

4.4b 2.16

4.1d, 4.1e

2.2

4.3a, 4.3b 2.12

2.12

2.1, 2.2, 2.3, 2.4 2.1

3.4a, 3.4b, 3.4c

2.8

3.5a, 3.5b

2.9

Portfolio Budget Statement Programs

Figure 3.2: Linkages between Defence Purpose, Outcomes, Performance Criteria and Portfolio Budget Statements

Note: An identifying character has been included where multiple criteria relate to the same activity in the 2019-20 Defence Corporate Plan. For example, the three performance criteria for Activity 4.3 will be referred to as 4.3a, 4.3b and 4.3c.

28 DEFENCE ANNUAL REPORT 2019-20

Intended Result 1. Defence meets operational capability requirements and supports the Australian community as directed.

Defence operations and activities were successfully planned and executed as directed by Government, enabled by effective engagement across departments and agencies, and with global partners.

Domestically Defence provided both emergency and non-emergency assistance to the civil community, including in response to major bushfires and the COVID-19 pandemic. Continued support was provided to the nation’s civil maritime security through Defence’s contribution to Maritime Border Command for their operations in the Antarctic.

Internationally Defence contributed to a range of efforts to uphold global security and provide humanitarian assistance and disaster relief in Australia’s near region.

Impacts to operations and activities due to COVID-19, and the associated movement restrictions, were effectively minimised. A number of operations and activities were cancelled as a result of international travel and entry bans imposed by nations.

Defence also collaborated effectively with other departments and agencies on longer-term complex issues such as defeating terrorism, and on future operations requiring Government consideration.

Activity 1.1 Conduct and sustain operations where our interests are engaged

Performance criterion Assessment of operations against directed outcomes agreed with Government

Target All Government-directed tasks are met

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 1.1

Program 1.2

Results Achieved

Analysis Despite the impact of the COVID-19 pandemic, Defence engaged effectively both internationally and domestically to successfully conduct and sustain operations and activities in accordance with Government direction.

Departmental submissions to Government in relation to Defence operations and activities were completed in line with expectations. Additional effort was invested in ensuring that advice to Government effectively and accurately fused policy and operational inputs and was delivered in a consistently timely manner. The use of verbal operational briefs has been expanded to augment written briefs and improve the efficiency and effectiveness of the briefing process.

DEFENCE OPERATIONS IN 2019-20

The number of personnel deployed for each operation is approximate, as personnel numbers fluctuate within the reporting period for various reasons, such as personnel rotations and changes to force structure.

Operation ACCORDION (Middle East region)

Support to operations in the Middle East region, including Operations HIGHROAD, MANITOU and OKRA.

• Personnel deployed: 600 including Air Task Group

Operation AUGURY (Philippines)

Enhance the counter-terrorism and counter violent extremism capabilities of the Armed Forces of the Philippines.

Note: ceased and transitioned to Enhanced Defence Cooperation Program—Philippines arrangements with effect from 1 December 2019.

• Personnel deployed: 263 in 2019-20 noting the operation ceased on 1 December 2019

29 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Operation ARGOS (North-East Asia)

Provide an ADF contribution to a US-led multinational effort to enforce United Nations Security Council sanctions on the Democratic People’s Republic of Korea.

• Personnel deployed: various (numbers commensurate with the platform assigned)

Operation ASLAN (South Sudan)

Contribution of staff and military liaison officers to the UN mission in the Republic of South Sudan.

• Personnel deployed: 20

Operation BANNISTER (worldwide)

Deployment of planning teams in support of local sensitivity assessments or other activities as required.

• Personnel deployed: various (numbers dictated by planning team requirements)

Operation CHARTER

Contribution to the UN Peacekeeping Force in Cyprus.

• Personnel deployed: 3 (note: Major General Pearce, UN Force Commander, is filling a UN position, and is not deployed on Operation CHARTER as part of the ADF contingent, and therefore is not included as a part of the deployed force number of 3)

Operation FORTITUDE (Lebanon/Syria)

Provide mentoring, training, advice and assistance to the Republic of Fiji Military Forces United Nations Disengagement Observer Force contingent in Camp Ziouani, Israeli-occupied Golan Heights.

• Personnel deployed: 1

Operation GATEWAY (North Indian Ocean/South China Sea)

Maritime surveillance patrols in the North Indian Ocean and South China Sea.

• Personnel deployed: periodic deployment of 20

Operation HIGHROAD (Afghanistan)

Contribution to the NATO Resolute Support Mission—Afghanistan.

• Personnel deployed: 200

Operation LINESMEN (Republic of Korea)

Assist United Nations Command with verification activities associated with the withdrawal of Republic of Korea guard posts from the immediate area of the Military Demarcation Line and Demilitarized Zone.

• Personnel deployed: 3

Operation MANITOU (Middle East region / maritime area)

ADF contribution to maritime security operations in the Middle East region and counter-piracy in the Arabian Gulf, the Gulf of Aden, the Red Sea and parts of the Indian Ocean. Includes support to the International Maritime Security Construct and Combined Maritime Forces.

• Personnel deployed: 200

Operation MAZURKA (Egypt)

ADF contribution to the Multinational Force and Observers. ADF personnel in the Sinai are located at Forward Operating Base North (in the vicinity of El Gorah) and South Camp (in the vicinity of Sharm el-Sheikh). Positions are spread across operations, personnel, administration and support functions. From March 2017 to January 2020, Australia provided the two-star force commander.

• Personnel deployed: 27

30 DEFENCE ANNUAL REPORT 2019-20

Operation OKRA (Middle East region and Iraq/Syria)

ADF operations in Iraq and Syria to support the coalition response to the Iraq crisis, including the deployment of forces to disrupt and degrade Daesh.

• Personnel deployed: 300

Operation ORENDA (Mali)

ADF contribution to the United Nations Multidimensional Integrated Stabilization Mission in Mali.

• Personnel deployed: 1 member was to be deployed; however, COVID-19 restrictions prevented this from occurring within the reporting period

Operation PALADIN (Israel/Lebanon/Syria)

ADF contribution of military observers and staff officers (in Lebanon, Syria and Israel) to the United Nations Truce Supervision Organization.

• Personnel deployed: 12

Operation RENDER SAFE (Solomon Islands)

Deployment of specialist engineering, explosive ordnance disposal and supporting capabilities (including Royal Australian Navy platforms) as part of a multinational operation—planned and led by the ADF—to dispose of explosive remnants of war.

• Personnel deployed: various (numbers dictated by requirements of reactive or planned activity)

Operation RESOLUTE (border protection, including support to Operation SOVEREIGN BORDERS)

Contribution to the whole-of-government effort to protect Australia’s offshore maritime interests.

• Personnel deployed: 600

Operation SOLANIA (South-West Pacific)

Provision of surveillance support to the Pacific Islands countries.

• Personnel deployed: various (numbers commensurate with the platform assigned)

Operation SOUTHERN DISCOVERY (Antarctica)

ADF support to whole-of-government activities in the Antarctic region, including airlift and aeromedical evacuation support.

• Personnel deployed: up to 15 during the main summer period (19 December to 20 March)

Operation STEADFAST (Iraq)

Deployment of staff to Headquarters NATO Mission Iraq supporting the continued capacity building of the Iraqi Security Forces.

• Personnel deployed: 2

All Defence operations achieved intended outcomes within the reporting period.

31 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Activity 1.2 Contribute to national security and support tasks

Performance criterion Assessment of Defence support provided to contribute to whole-of-Government outcomes

Target All Government-directed tasks are met

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 1.2

Programs 1.1, 1.3

Results Achieved

Analysis Defence engaged effectively across departments and agencies to contribute to operations and activities in direct support of Australia’s national security and whole-of-government outcomes.

During 2019-20, Defence responded to both emergency and non-emergency requests for ADF assistance made by affected states and territories through Defence Assistance to the Civil Community (DACC) arrangements, the volume of which has increased significantly in recent years. Specific operations and activities included responses to significant bushfires and the COVID-19 pandemic, and the ongoing commitment to civil maritime security through Defence’s contribution to Maritime Border Command for its activities in Antarctica.

DEFENCE OPERATIONS ESTABLISHED UNDER THE DEFENCE ASSISTANCE TO THE CIVIL COMMUNITY FRAMEWORK IN 2019-20

Operation BUSHFIRE ASSIST 2019-2020 (domestic)

ADF support to the state and territory governments, under the provisions of DACC, to provide emergency assistance and initial recovery assistance over the 2019-2020 bushfire season.

• Personnel deployed (approximate): 6,500

From 6 September to 31 December 2019 Defence supported the state and territory authorities in fighting bushfires, through responding to nine DACC 1 (localised, short-term emergency responses) and 85 DACC 2 (large-scale and/or non-localised emergency responses) requests for assistance:

• 55 in New South Wales

• 14 in Victoria

• 5 in Queensland

• 10 in South Australia

• 1 in Western Australia.

After the establishment of Operation BUSHFIRE ASSIST 2019-2020, Defence responded to the following individual requests for assistance under the overarching DACC 2 requests:

• 220 in New South Wales and the Australian Capital Territory

• 123 in Victoria

• 983 in South Australia.

Notable ADF achievements include:

• supporting 527 evacuees at Defence bases

• returning 382 evacuees to their homes by fixed-wing aircraft

• serving over 77,250 meals to locals, including evacuees, emergency service workers and firefighters

• clearing over 4,800 km of roads

• clearing/repairing over 1,250 km of damaged fencing

• purifying around 10 million litres of water in Bega and on Kangaroo Island.

32 DEFENCE ANNUAL REPORT 2019-20

Defence also contributed to the Royal Commission into National Natural Disaster Arrangements. Our input will inform the Royal Commission’s report and its recommendations for mitigating and responding to future natural disasters.

Operation COVID-19 ASSIST (domestic)

ADF support to the federal and state and territory governments and jurisdiction agencies, to respond to the impacts of COVID-19.

• Personnel deployed (approximate): 2,200 at the peak of Operation COVID-19 ASSIST in March and April

Operation COVID-19 ASSIST was established on 1 April 2020, led by Major General Paul Kenny DSC DSM.

ADF members and Defence civilians were deployed across Australia on a range of tasks including:

• support to the Department of Foreign Affairs and Trade in the repatriation of Australian citizens from overseas

• planning support and liaison roles

• support to local law enforcement agencies in ensuring quarantine compliance and operating checkpoints

• frontline medical assistance

• support to the defence industry

• assistance to Australia’s partners in the Indo-Pacific.

Notable achievements include:

• Defence reopened and operated the emergency department in Tasmania’s North West Regional Hospital after staff were sent home for two weeks quarantine following an outbreak of COVID-19. This deployment was crucial to ensuring critical health services in Tasmania were maintained

• Defence personnel assisted health authorities to undertake frontline medical testing across Australia

• Defence personnel contributed to the production of surgical face masks and ventilators

• Chief Defence Scientist Professor Tanya Monro established a Rapid Response Group to research possible methods of repurposing non-invasive ventilators to perform as invasive ventilators

• Defence accelerated the payment of supplier invoices, fast-tracking over $8 billion in payments to help mitigate the economic impacts of COVID-19 on defence industry

• Defence released $870 million of estate works to the market early to provide new jobs and business opportunities across Australia.

33 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Intended Result 2: Defence strategic, international and industry policy guides the design, development, integration and preparedness of Defence capability.

Defence keeps its policy settings and force structure under regular review through the Strategy Framework to ensure we can meet Government and Defence objectives, adapting to shifts in the strategic environment and new technology challenges. These trends include increasing US-China competition, the use of coercive statecraft, regional military modernisation and the emergence of potentially disruptive technologies.

Given these accelerating trends, Defence undertook a review of its policy settings. The 2020 Defence Strategic Update sets out the challenges in Australia’s strategic environment and their implications for Defence planning. The Strategic Update provides a new strategic policy framework to guide all aspects of Defence planning: to shape our strategic environment, deter actions against Australia’s interests, and respond with military force when required.

The 2020 Force Structure Plan builds on the major force structure changes initiated in the 2016 Defence White Paper. Those changes have made the ADF more capable, agile and potent. But, as set out in the 2020 Defence Strategic Update, further adjustments are now required to enhance the lethality of the ADF, expand Defence’s capability to respond to grey-zone challenges, and strengthen the ADF’s self-reliance and ability to deliver deterrent effects at longer ranges.

Defence has also reformed the Strategy Framework by enhancing the Strategic Risk Review process. This reform ensures that strategic policy is directly informed by risk and enables agile policy responses. The Defence Planning Guidance, our lead classified strategy document, was published in July 2019 and updated in 2020 to ensure the alignment of the new Defence strategy and the necessary capability and resources.

Defence is advancing a range of policy initiatives to help build a strong sovereign industrial base capable of supporting the delivery of a more agile and potent ADF. This includes maximising opportunities for small businesses in Defence materiel, non-materiel and infrastructure projects and giving certainty to industry through the development of implementation plans for the 10 Sovereign Industrial Capability Priorities. Additionally, we are connecting small and medium-sized businesses to opportunities in international markets through the Australian Defence Export Office; and supporting the Australian industrial base to develop the skilled workforce Defence will require over the coming decades. The Defence Innovation Hub continues to partner with Australian companies and research institutions to develop advanced technologies with the potential to enhance Defence capability.

Activity 2.1 Defence maintains future-focused strategic policy to guide Defence initiatives and address strategic risks

Performance criterion Our strategic policy is regularly reviewed and updated

Target Defence strategic policy and risk review informs decision making to ensure strategy, capability and resources are aligned to Government priorities

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 2.1

Program 2.1

Results Achieved

Analysis Defence strategic policy and risk review has been regularly reviewed throughout 2019-20 to ensure that strategy, capability and resources are aligned to Government priorities. This has been demonstrated through the development and release of the 2020 Defence Strategic Update and the 2020 Force Structure Plan. The publication of the Defence Planning Guidance and the conduct of Strategic Risk Reviews during the period further ensured that Government direction was implemented across Defence and that policy and risk analysis activities remain timely, relevant and responsive to the needs of Defence leaders and Government decision-makers.

34 DEFENCE ANNUAL REPORT 2019-20

Activity 2.2 Defence protects and advances Australia’s interests globally to address current and future challenges

Performance criterion Defence international engagement meets Defence International Engagement Policy objectives

Target Australia’s strategic position is enhanced through international engagement by Defence

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 2.2

Program 2.1

Results Achieved

Analysis Although global COVID-19 restrictions had an impact in 2020, Defence continued to strengthen and deepen its engagement in the South-West Pacific, South-East Asia, North-East Asia and the Indian Ocean region. This has occurred across multiple functional domains, including military exercises; bilateral and multilateral dialogues; personnel training and exchanges; information sharing; capability development and cooperation; infrastructure development; defence industry, science and technology; and women, peace and security. The links between military forces were strengthened through other national forces deploying to Australia to help with Operation BUSHFIRE ASSIST 2019-2020 in January 2020.

Some Defence Cooperation Program activities were disrupted by COVID-19. Defence Cooperation Program funding was reallocated to assist Pacific and South-East Asian responses to the pandemic, including provision of air and sea lift to provide medical and food supplies to vulnerable populations, and support for defence organisations in South-East Asia to contribute to their national COVID-19 responses.

In the South-West Pacific, Defence focused on advancing the Government’s Pacific Step-Up initiative, including through ongoing investments in infrastructure development in Papua New Guinea, Fiji, Vanuatu, Solomon Islands and Timor-Leste, both in response to bilateral security requests and to support the rollout of the $2 billion Pacific Maritime Security Program. Defence delivered new Guardian class Patrol Boats to Samoa, Solomon Islands and Fiji. These vessels are being used, alongside contracted aerial surveillance, to enhance regional maritime security.

In South-East Asia, Defence advanced key relationships in significant ways. Australia set out its vision for engagement with Association of Southeast Asian Nations (ASEAN) at the inaugural ASEAN-Australia Informal Defence Ministers’ Meeting in February 2020. Australia and Indonesia expanded information sharing and exercises and agreed to a UN peacekeeping co-deployment.

Australia and Singapore signed a treaty on military training, which underpins the largest training arrangement Australia has with any country beyond the United States. Defence enhanced cooperation with the Philippines to support vital counter-terrorism efforts; boosted regional peacekeeping capabilities, including through training and airlift support to Vietnam; and increased personnel exchanges with Malaysia.

In North-East Asia, Defence increased bilateral cooperation with Japan, including via major precedent-setting activities such as the first-ever Australia-Japan fighter jet exercise, Bushido Guardian, held in Japan in September 2019. Such activities have added another pillar to enhance interoperability and ultimately improve our capability to respond to regional contingencies. Defence also maintained its contribution to multilateral enforcement of UN Security Council sanctions with respect to North Korea’s illegal nuclear weapons programs; and deepened bilateral cooperation with South Korea, including contributing to the inter-Korean peace process through support activities in the Demilitarized Zone.

In the Indian Ocean region, Defence made significant strides in expanding bilateral ties with India via agreements to expand cooperation in the areas of information sharing, defence industry, access, and defence science and technology.

35 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Defence deepened regional alliance cooperation with the United States. In major activities like the Marine Rotational Force—Darwin, we were able to modify the deployment to mitigate COVID-19 risks and send an important signal about the alliance’s firm commitment to regional security. Such activities have enhanced our forces’ abilities to confront shared challenges alongside our allies and partners. We conducted the first-ever defence strategy and policy talks as part of a restructured and regularised senior policy dialogue to better inform the annual ministerial-level US-Australia consultations (AUSMIN).

Activity 2.3 Defence engages industry to enhance support of sovereign capability

Performance criterion Defence industry engagement meets requirements of the Defence Industry Policy Statement

Target Defence capability is enabled through industry and innovation

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 2.3

Program 2.1

Results Achieved

Analysis Defence has increased its engagement with industry during the COVID-19 pandemic. Since March 2020, ministers and senior Defence representatives have held regular teleconferences with state and territory defence industry advocates, prominent industry leaders and industry association groups. These engagements have provided updates on Government support to industry and enabled states and territories to raise issues or concerns on behalf of companies in their jurisdictions.

Defence has fast-tracked invoice payments throughout the pandemic to support industry, sustain jobs and help develop sovereign capability. Additionally, 28 grants with a total value of over $11.5 million (excluding GST) were awarded to Australian small businesses under the Sovereign Industrial Capability Grants program in 2019-20. Implementation plans for the 10 Sovereign Industrial Capability Priorities are progressing, with two plans publicly released and the remaining plans to be released as scheduled by the end of 2020. More than 300 industry representatives were consulted in the development of the implementation plans.

Defence continued to work closely with the Centre for Defence Industry Capability (CDIC) to build industrial capability in the defence sector. In 2019-20 the CDIC awarded 119 Capability Improvement Grants totalling over $3.775 million (excluding GST), an increase of 55 grants over the previous year; and 21 Defence Global Competitiveness Grants totalling over $2.2 million (excluding GST), an increase of 12 grants over the previous year.

In support of the Defence Export Strategy, in 2019-20 the Australian Defence Export Office led Australian defence industry delegations to seven international tradeshows as part of the Team Defence Australia program, and a trade mission to Japan.

In 2019-20 the Defence Innovation Hub continued to invest in developing Australian technologies, awarding 51 innovation contracts totalling more than $95.7 million (excluding GST). The Hub’s portfolio of innovation projects is valued at more than $222 million (excluding GST). Eighty-four per cent of its contracts are with Australian micro, small and medium-sized businesses.

36 DEFENCE ANNUAL REPORT 2019-20

Activity 2.4 Defence maintains intelligence analysis and capability to deliver Government and Defence strategic objectives

Performance criterion Defence intelligence outputs align with Government intelligence priorities

Target Intelligence services and capabilities are delivered according to Government priorities

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 2.4

Program 2.1

Results Achieved

Analysis Over the 2019-20 period, Defence met intelligence priorities and legislated requirements through delivering accurate and timely support to the organisation, the National Intelligence Community and the Government. Defence’s geospatial-intelligence production effort included foundation geospatial and mapping support, hydrographic services, and capability development activities that directly supported the planning and conduct of ADF operations and domestic and regional security priorities, including Defence assistance to bushfire fighting.

While managing the impact of some staff undertaking remote work during the COVID-19 pandemic, Defence maintained mission-critical priorities and increased capability through online training.

In 2019-20 Defence provided timely, high-quality strategic-level intelligence assessments in support of ADF operations, the organisation and whole-of-government policy, and capability development.

From March to June 2020 the organisation produced 19 per cent more intelligence products than in the same period in 2019. This increase is attributed to additional COVID-19 related intelligence tasking combined with reduced international travel and engagement, allowing fewer disruptions to analyst availability.

37 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Intended Result 3: The generation and sustainment of Defence capabilities achieves strategic planning objectives and preparedness requirements.

In 2019-20 Defence successfully generated and sustained capabilities required to support its operations and preparedness objectives. With the support of enabling service delivery groups, Defence Capability Managers achieved the required preparedness levels and operational outcomes. Where schedule slippage occurred, Capability Managers and enablers worked together to manage impacts.

In 2019-20 Defence conducted a review of the Capability Program Architecture established in the 2016 Defence White Paper and Integrated Investment Program. The new Capability Program Architecture has clearer responsibilities and accountabilities and gives Capability Managers greater ability to manage risk and drive improvements in effectiveness and efficiency.

Defence continued to implement the Government’s vision of continuous naval shipbuilding through the National Naval Shipbuilding Enterprise, as articulated in the 2017 Naval Shipbuilding Plan. Work across the enterprise is underway and broadly on track, with a new shipyard at Osborne South in South Australia now complete, patrol boats and offshore patrol vessels under construction in Western Australia and South Australia, and the design of new Hunter class frigates and Attack class submarines progressing. Defence is working with industry and the education and training sector to ensure there is a pipeline of highly skilled workers available to meet the projected workforce needs of shipbuilders in the years ahead.

Science and technology activities supported Defence operations, sustainment and capability development through the reporting period, including release of the Defence Science and Technology Strategy in May 2020. Strategic research programs undertaken through the Next Generation Technologies Fund matured with extensive engagement from Australia’s innovation community.

Risks and issues were identified and managed during the reporting period, including the unprecedented requirement to support Operation BUSHFIRE ASSIST 2019-2020 and Operation COVID-19 ASSIST, and the impact of COVID-19 on Defence business. The COVID-19 pandemic has changed Defence’s operating environment. It has significantly impacted how capability is generated and changed the operating profile for deployed units. Despite the challenging circumstances, Defence was successful in managing risk, fatigue and endurance closely to ensure that capability was maintained. These events did not negatively affect our achievement of the overall Intended Result.

5th Aviation Regiment CH-47F Chinook helicopter crewman Warrant Officer Class 2 Darryl Rowe observes the Shoalwater Bay Training Area during a sortie as part of Exercise TALISMAN SABRE 2019, Rockhampton, Queensland.

38 DEFENCE ANNUAL REPORT 2019-20

Activity 3.1a Defence designs the future force to address strategic risks

Performance criterion Our Future Joint force is designed, integrated and developed through the analysis of the future operating environment, development of potential responses and

Government direction

Target The force-in-being and future force are designed and developed in accordance with strategic policy and risk

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 3.1a

Program 2.8

Results Achieved

Analysis In 2019-20 Defence developed an updated Capability Life Cycle Manual incorporating improved business processes to streamline the complexity of major acquisitions and give assurance to decision-making and accountable delivery. The manual contains a capability program architecture to give Domain Leads and Capability Managers visibility and accountability in analysing, managing and reporting on capabilities. The architecture recognises the emergence of two new discrete domains—space; and information and cyber—and that some capabilities need to be managed as multi-domain programs to ensure their coordinated development.

A revised Defence Capability Assessment Program, based on lessons from the last few years, has been implemented. The purpose of this program is to provide a method for Defence to deliver ‘an integrated Joint Force by design’. While continuing to support biannual updates to Government on the implementation of the Integrated Investment Program, the updated Defence Capability Assessment Program improves the force design process to ensure it is responsive to changed opportunities and risks.

A major achievement in the period is the 2020 Force Structure Plan. In 2019, Force Structure Plan development activities were supported by extensive joint experimentation and assessments from Australian intelligence organisations and Five Eyes partners.

Governance of Defence’s force design processes continued through the actions of the Defence Investment Committee and Joint Warfare Committee. Force design was supported by the Emerging Threats and Response Group and in the further development of concepts that identify future opportunities and challenges in the longer term and the potential capability of solutions to military problems.

39 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Activity 3.1b Defence designs the future force to address strategic risks

Performance criterion Strategic research enables Defence to anticipate and exploit advances in science and technology for future Defence capability

Target Strategic research investments (including the Next Generation Technologies Fund) are creating disruptive scientific and technological opportunities for Defence

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 3.1b

Program 2.4

Results Achieved

Analysis Strategic research activities continue to create opportunities to provide Defence with a capability edge and to enhance its science and technology capability.

More, Together: Defence Science and Technology Strategy 2030 was released in May 2020 and is refocussing the future of Defence strategic research. Central to the strategy is the introduction of the Science, Technology and Research (STaR) Shots concept. The eight initial STaR Shots are strategy-led, mission-directed programs designed to focus strategic research and drive the development of future Defence capabilities.

The eight STaR Shots are Agile Command and Control; Quantum-Assured Position, Navigation and Timing; Remote Undersea Surveillance; Battle-Ready Platforms; Operating in CBRN Environments; Disruptive Weapon Effects; Resilient Multi-Mission Space; and Information Warfare. Implementation of the Strategy is underway, with initial efforts focused on establishing the governance arrangements and identifying partners from the national science and technology community.

In 2019-20 research and prototype development occurred across various aspects of a representative intelligence, surveillance and reconnaissance enterprise, with outputs integrated and fielded in Defence and international trials to demonstrate enhanced situational awareness. A prototype has been developed that simulates realistic cybersecurity scenarios for the training of autonomous cyber systems.

Physics-based models of ocean circulation processes affecting acoustic propagation have been improved and verified using at-sea oceanographic measurements. This work has improved our understanding of the undersea environment and is helping shape the conduct of anti-submarine warfare.

The Defence Operations Research Network was launched for modelling complex warfighting. Regular calls to market are building the analysis capability underpinning Defence decision-making. In addition, a new concept of Team Defence Australia, which provides a platform for companies to showcase products and services, has been used to demonstrate simulations where a team of low-cost defender missiles use collaborative guidance to defend against faster and more agile threat missiles.

The EpiFX influenza forecast tool was improved by adding the ability to adjust for evolving testing practices throughout an influenza season. During the COVID-19 outbreak, EpiFX has been further developed with academic partners to cope with forecasting in an environment where there are large numbers of imported cases and significant macro and micro social distancing shifts. It has been serving as the main COVID-19 forecast tool for state and federal health departments.

Strategic research investments were implemented through the Next Generation Technologies Fund. New theme plans were developed and a new approach to benefits management was agreed by the Defence Investment Committee in May 2020. Recent outcomes from the Next Generation Technologies Fund include the exploration of novel sensor and effector technologies, which resulted in a mission planning tool being delivered. The Counter Improvised Threat Grand Challenge was used to facilitate this activity and demonstrate the capability of the technology.

40 DEFENCE ANNUAL REPORT 2019-20

Activity 3.2a Raise, train and sustain Defence capabilities through the coordination of fundamental inputs to capability

Performance criterion Defence’s integrated capabilities, including workforce, are generated, trained and sustained to meet preparedness requirements

Target Forces meet preparedness requirements and are available for the conduct of operations and national support tasks

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 3.2a

Programs 2.4, 2.5, 2.6, 2.7, 2.8, 2.9

Results Achieved

Analysis Defence successfully generated capabilities to meet preparedness requirements.

Preparedness is managed through a classified system ensuring that preparedness settings address short-term to long-term strategic requirements and coordinating the work of Defence leaders in meeting those requirements. In the 2016 Defence White Paper the Government directed the ADF to increase its preparedness levels by raising its overall capability and improving its sustainability on operations.

Over the last year, Defence managed challenges to preparedness resulting from increased Defence Aid to the Civil Community through Operation BUSHFIRE ASSIST 2019-2020 and Operation COVID-19 ASSIST, and the more widespread impact of COVID-19 on Defence and our community, industry and international partners. Through this time, Defence maintained sufficient preparedness, and was able to re-role capability to provide support through all phases of the separate crises. Preparedness was enhanced ahead of the summer bushfire and cyclone season by exercising the compulsory call out of Defence Reserves. Effective preparedness management ensured that the demands of Operations BUSHFIRE ASSIST 2019-2020 and COVID-19 ASSIST had only limited impact on the requirement to be prepared for other contingencies.

The COVID-19 pandemic has fundamentally changed Navy’s operating environment. It has significantly impacted how capability is generated and has changed the operating profile for deployed units. Navy has been successful in managing the risk and, with reduced opportunity for deployed ships to undertake port visits for an operational pause, is managing fatigue and endurance closely to ensure that capability is maintained. As restrictions are relaxed, opportunities are being taken to regenerate capability.

Army’s capacity to generate land capability was demonstrated during Operation BUSHFIRE ASSIST 2019-2020, where it deployed approximately 4,500 personnel while remaining prepared for other response options. Army has remediation plans to address deficiencies, and manages operational demand in consultation with Headquarters Joint Operations Command.

Air Force also maintained the required level of preparedness status while supporting Operation BUSHFIRE ASSIST 2019-2020 and Operation COVID-19 ASSIST. Air Force applies appropriate risk mitigation to address workforce deficiencies in Force-in-Being, Objective Force and Future Force. Air Force Capability Workforce Plans capture the Air Force workforce growth and skills required by new capabilities.

Preparedness management enabled Defence to address challenges to the operation of the Defence enterprise relating to acquisition, sustainment and workforce. COVID-19 has posed particular risks which were, and continue to be, actively managed in concert with community, industry and international partners.

41 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Activity 3.2b Raise, train and sustain Defence capabilities through the coordination of fundamental inputs to capability

Performance criterion Joint enabling elements are generated and sustained at the required rate and standard to support the delivery of Defence capability

Target Joint enabling elements support the delivery of Defence capability

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 3.2b

Program 2.4

Results Achieved

Analysis This performance criterion relates to activities undertaken to raise, train and sustain joint enabling elements to ensure forces are available to meet Government direction. Joint enabling elements that contributed to the achievement of this activity include the following:

• The Australian Defence College contributes to joint enabling elements through the delivery of Joint Professional Military Education at the required quality standards, academic research activities, and short courses to support intellectual mastery of future warfare and maintain Defence’s status as a registered training organisation. The Australian Defence College achieved its activities in the first half of the performance period despite the risk from potential impacts from COVID-19, the requirement to upgrade the infrastructure at the Australian Defence Force Academy and ongoing workforce challenges. While the Australian Defence College’s activities are currently on track, they remain susceptible to these challenges.

• Joint Logistics Command achieved its target of effectively supporting the delivery of Defence capability by developing and delivering a strong Defence Logistics Enterprise, and maintaining compliance with radiation legislation and licensing requirements. Its key reform activities—including the Defence Fuel Transformation Program, the Explosive Ordnance Logistics Reform Program and support to the Enterprise Resource Planning Program—made significant progress in improving future Defence capability requirements, and the delivery and sustainment of capability elements.

• The Joint Military Police Unit generates a professional and focused Military Police capability that protects Defence’s people, values, resources and reputation. The successful implementation of Military Police reform has enabled the Joint Military Police Unit to rapidly achieve an initial operating capability that can generate and sustain joint enabling elements at the required rate and standard to support the delivery of Defence capability.

• The Information Warfare Division supported the delivery of Defence capability by delivering Joint Projects within the Integrated Investment Program. This included securing Government approval of JP2221 (Multi-National Information Sharing), JP9347 (Joint Data Networks), JP9102 (Defence SATCOM System), JP9141 (COMSEC Modernisation), JP9131 (Defensive Cyber Operations for Deployed Systems) and JP9321 (Joint Electronic Warfare Self-Protection Sub-program). JP2008 (SATCOM) is progressing through the new programmatic approach to a mid-2023 combined final operating capability. These capabilities will significantly increase interoperability across the Joint Force.

42 DEFENCE ANNUAL REPORT 2019-20

Activity 3.3 Manage the investments required to realise the future force design through the Integrated Investment Program

Performance criterion Biannual Integrated Investment Program updates are agreed by Government

Target The Integrated Investment Program is delivered as agreed with Government

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 3.3

Program 2.8

Results Achieved

Analysis During the reporting period, Defence continued to refine and prioritise essential changes to the Integrated Investment Program through the program’s biannual updates to Government. In addition, 2019-20 was the final year of the first quadrennial Force Design cycle. This culminated in the 2020 Force Structure Plan, which presented a substantial update to the portfolio of future investments outlined in the 2016 Defence White Paper. Extensive analysis and experimentation underpinned the development of the Force Structure Plan, producing a portfolio of capability investments informed by and responsive to the rapidly changing strategic environment.

Activity 3.4a Manage the acquisition and sustainment of Defence equipment, supplies and services to meet Government and Defence requirements

Performance criterion Assessment of acquisition projects delivery to meet Government and Defence requirements

Target Deliver Government approved acquisition projects to budget, schedule and agreed capability scope

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 3.4a

Programs 2.5, 2.9

Results Achieved

Analysis As at 30 June 2020, the Capability Acquisition and Sustainment Group was managing 192 major and 14 minor acquisition projects at various phases in the Capability Life Cycle, worth a total life cycle cost of $130.5 billion. The 2019-20 acquisition projects budget of $8.6 billion was achieved, and acquisition projects are being delivered within the agreed parameters of scope and cost. Where schedule slippage has occurred, the Capability Acquisition and Sustainment Group is working with the Capability Managers to manage any impacts.

Of the 192 Government-approved major acquisition projects, two had issues with capability, schedule or cost that were significant enough to be included in the Projects of Concern report. A further 15 projects were identified as warranting internal senior management attention, with risks associated with capability, schedule or cost. Additional information on selected major acquisition projects can be found in the Major Projects Report, which is tabled annually with the Joint Committee of Public Accounts and Audit.

During 2019-20, eight major and minor acquisition projects closed. The eight closed projects had a final spend over their life of $5.6 billion against a budget of $5.7 billion. The $0.1 billion difference was spread across all the closed projects. Five of the projects had some variation to delivery—two in relation to the approved scope, two to the approved scope and schedule, and one to the schedule.

Further information on acquisition projects can be found in Appendix D, ‘Supplementary online material’, web tables D.3 to D.5.

43 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Activity 3.4b Manage the acquisition and sustainment of Defence equipment, supplies and services to meet Government and Defence requirements

Performance criterion Progress to deliver a sustainable, sovereign shipbuilding enterprise, as detailed in the Naval Shipbuilding Plan

Target The naval shipbuilding enterprise is designed and developed in accordance with the Naval Shipbuilding Plan and biannual updates to Government

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 3.4b

Program 2.9

Results Achieved

Analysis Defence continues to deliver on the objectives of the 2017 Naval Shipbuilding Plan. Construction of the new Cape class and Guardian class patrol boats and Arafura class offshore patrol vessels is on track. Both the Hunter class frigate and Attack class submarine programs are progressing through their design phases. Notwithstanding some impact flowing from the COVID-19 pandemic, all capabilities are expected to be introduced into service on or close to schedule. All three Hobart class destroyers are now in service with the Royal Australian Navy, with the third and final vessel, HMAS Sydney, commissioned into service on 18 May 2020.

The construction of new shipyard facilities at Osborne South is complete and the handover is underway, ahead of the commencement of Hunter class frigate prototyping at the end of 2020. Works at the new submarine construction yard at Osborne North are underway to support the Attack class submarine program entering the build phase in 2023. Defence has been consulted on and has provided input to the Strategic Infrastructure and Land Use Plan for the Henderson Maritime Precinct, which is under development by the Western Australian Government. A joint Defence and Western Australian Government taskforce will provide further strategic guidance.

Across the National Naval Shipbuilding Enterprise there is a coordinated approach to workforce development through the implementation of initiatives to transition and grow the shipbuilding workforce. Key initiatives include the Naval Shipbuilding College’s national network of education and training providers, which helps ensure a coordinated national approach to skilling.

Defence continues to work with Government and industry partners to grow the motivated, innovative, cost-competitive and sustainable Australian industrial base envisioned in the Naval Shipbuilding Plan. Initiatives such as the pre-qualification of Australian companies and the finalisation of Australian Industry Capability Plans continue to advance. The Dassault Systèmes Virtual Shipyard Training Program is now complete. This program helped to improve the digital supply chain literacy of small to medium enterprises and improve their readiness to participate in global supply chains, including major future defence-related manufacturing opportunities.

44 DEFENCE ANNUAL REPORT 2019-20

Activity 3.4c Manage the acquisition and sustainment of Defence equipment, supplies and services to meet Government and Defence requirements

Performance criterion Assessment of sustainment products delivery to meet Capability Manager requirements

Target Deliver sustainment products to meet Capability Manager requirements

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 3.4c

Program 2.9

Results Achieved

Analysis As at 30 June 2020, the Capability Acquisition and Sustainment Group was managing 110 sustainment products with a total annual budget of $6.7 billion. The Group has supported the Capability Managers in achieving preparedness levels and operational outcomes, through the delivery of sustainment of military equipment to agreed availability targets. Detail of availability of sustainment products can be found in Table 3.1.

Of the 110 sustainment products, nine have demonstrated variances in the areas of availability and cost performance that warrant senior management attention, and are being managed closely.

Further information on sustainment products can be found in Appendix D, ‘Supplementary online material’, web table D.1.

Australian Army soldier Corporal Julie Kling from the Joint Movement Control Office, Townsville, is travelling on a C-130 to Mount Isa from RAAF Base Townsville to coordinate the movement of members currently deployed on Operation COVID-19 ASSIST.

45 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Table 3.1: Unit availability days, flying hours and HydroScheme products

Source Deliverable

2018-19 Actual

2019-20 Revised estimate

2019-20 Actual

Navy 2018-19 2019-20

Portfolio Budget Statements

2019-20 Program 2.5: Navy

Capabilities (Unit Availability

Days1)

17 18 Major Combatants2 3,080.0 2,833 2,736

21 21 Minor Combatants3 3,601.0 3,897 3,621

5 4 Amphibious and Afloat

Support4

1,295.0 919 924

7 10 Maritime Teams5 2,416.0 3,637 3,637

7 7 Hydrographic Force6 1,535.0 1,670 1,670

Navy

Portfolio Budget Statements

2019-20 Program 2.5: Navy

Capabilities (Flying Hours)

24 24 MH-60R 5,380.0 4,900 4,657.3

- - MRH-907 - - -

1 1 Laser airborne depth

sounder aircraft (LADS)8

1,243.0 390 390

Army

Portfolio Budget Statements

2018-19 Program 2.6: Army

Capabilities (Rate of Effort—

Flying Hours)

10 10 CH-47F Chinook9 2,057.0 2,400 2,307.3

34 34 S-70A-9 Black Hawk10 3,158.0 2,500 2,055.7

22 22 ARH Tiger11 4,205.0 4,542 3,456.4

47 47 MRH-90 Taipan12 7,246.0 9,270 5,168.4

Notes:

1 A Unit Availability Day (UAD) is a day when a unit is materielly ready and its personnel state and level of competence enables the unit to safely perform tasks in the unit’s normal operating environment, immediately.

2 Major Combatants comprises Adelaide class Frigates (FFG), Anzac class Frigates (FFH), Hobart class Air Warfare Destroyers (DDG) and Collins class Submarines (CCSM). HMAS Melbourne was decommissioned on 26 Oct 2019. UAD under-achievement due to maintenance and Anzac class Mid-life Capability Assurance Program (AMCAP) periods being extended.

3 Minor Combatants comprises Armidale class Patrol Boats (ACPB), Cape class Patrol Boats (CCPB) and Coastal Minehunters (MHC). UAD under-achievement due to emerging defects across platforms and extensions to planned maintenance periods.

4 Amphibious and Afloat Support comprises the Landing Ship Dock (LSD), the Landing Helicopter Dock ships (LHD), and Oil Tanker (AO). Additional UAD following support to Operation BUSHFIRE ASSIST 2019-2020.

5 Maritime Teams comprises Clearance Diving, Deployable Geospatial Support and Mobile Meteorological and Oceanographic (METOC) teams.

6 Hydrographic Force comprises the hydrographic ships, survey motor launches and meteorological and oceanographic centres.

7 Navy is operating MRH-90s; however, their flying hours have been included under Army Aviation, as Army is joint capability manager for the aircraft.

8 LADS capability was decommissioned on 6 Nov 2019.

9 The minor variance in Rate of Effort in 2019-20 for CH-47F can be attributed to workforce capacity limitation within the operational unit.

10 The minor variance in Rate of Effort in 2019-20 for S-70A-9 can be attributed to workforce capacity in 6 Avn Regt. As the aircraft approaches Planned Withdrawal Date the workforce is progressively transitioned to MRH90.

11 The variance in Rate of Effort in 2019-20 for ARH can be attributed to ongoing issues with supply of repairable aircraft spares, limited restrictions within the operational unit brought on by COVID-19 and a fleet wide failure of a crucial part in the Main Rotor Head of the aircraft that resulted in reduced aircraft availability.

12 The significant under fly of Rate of Effort in 2019-20 for MRH 90 is a result of technical issues and a poorly performing supply chain and support system limiting the availability of aircraft to the operational units

46 DEFENCE ANNUAL REPORT 2019-20

Source Deliverable

2018-19 Actual

2019-20 Revised estimate

2019-20 Actual13

Air Force 2018-19 2019-2014

Portfolio Budget Statements

2019-20 Program 2.7

(Flying Hours)

45 0 PC-9/A15 13,461.0 3,700.0 3,714.5

36 49 PC-2116 3,984.0 19,626.0 12,873.1

12 12 KA350 King Air17 5,722.0 8,300.0 4,556.0

12 12 C-130J Hercules 7,357.0 7,800.0 6,948.1

8 8 C-17A Globemaster III18 6,549.0 7,000.0 5,350.0

10 10 C-27J Spartan19 2,595.0 4,000.0 3,014.0

6 7 KC-30A MRTT 4,836.0 5,780.0 4,674.0

2 2 737 BBJ20 1,288.0 1,400.0 995.0

2 0 CL-604 Challenger21 1,584.4

2,000.0

116.0

2 3 Falcon F7X22 131.0 1,102.0

2 2 AP-3C(EW) Orion 1,751.0 700.0 540.5

8 12 P-8A Poseidon23 4,564.0 5,400.0 4,847.5

6 6 E-7A Wedgetail 3,199.0 3,600.0 3,254.9

69 38 F/A-18A/B Hornet24 10,129.0 8,100.0 6,458.3

24 24 F/A-18F Super Hornet25 3,540.0 4,050.0 3,110.0

33 33 Hawk 12726 5,938.0 6,500.0 4,488.1

11 11 E/A-18G Growler27 1,654.0 2,400.0 1,675.5

14 22 F-35A Lightning II28 2,036.0 4,564.0 3,096.8

13. Most Air Force fleet actual flying hours have been less than the Revised Estimate due to COVID-19 impacts.

14. Fleet sizes represent totals at end of FY2019-20.

15. The decrease in PC-9/A aircraft numbers reflects the phased withdrawal of the aircraft due to transition to the new PC-21 Pilot Training System. Minor variance in flying hours are due to reduced aircraft availability during fleet drawdown.

16. The increase in PC-21 aircraft numbers reflects the phased transition from the PC-9/A to the new PC-21. Increased planned PC-21 hours reflect increase in PC-21 aircraft. Variance in flying hours due to aircraft availability, COVID-19 and impacts of Operation BUSHFIRE ASSIST 2019-2020 flying operations and related weather at East Sale.

17. Variance in flying hours due to COVID-19, changes in operational tasking and reduced aircraft availability.

18. Variance in flying hours due to COVID-19 and reduction in demand to support operations.

19. Variance in flying hours due to aircraft availability issues, reduction in demand to support operations and COVID-19.

20. Variance in flying hours due to reduction in demand to support Government.

21. The decrease in CL-604 aircraft numbers reflects the phased withdrawal of the aircraft due to transition to the F7X. Variance in flying hours due to reduction in demand to support Government.

22. Variance in flying hours due to the reduction in demand to support Government.

23. Variance in flying hours due to COVID-19 and slight reduction in aircraft availability.

24. F/A-18A/B aircraft numbers are reducing due to transition from F/A-18A/B to the F-35. Variance in flying hours due mostly to COVID-19 impact on flying operations, with some attribution to aircraft availability and adverse weather conditions created by bushfire and storms.

25. Variance in flying hours due to COVID-19 and reduction in aircraft availability.

26. Variance in flying hours due to aircraft availability following a temporary suspension of operations for technical reasons.

27. Variance in flying hours due to increased simulator usage and reduction in aircraft and aircrew availability.

28. F-35A aircraft numbers are increasing as Air Force transitions from the F/A-18A/B to the F-35A. Variance in flying hours due to reduction in aircraft availability.

47 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Australian Army officer Brigadier Matt Burr, senior commander of Joint Task Force 646, with the Kumul Force 17 contingent from the Papua New Guinea Defence Force at Puckapunyal in support of Operation BUSHFIRE ASSIST 2019-2020.

Source Deliverable

2018-19 Actual

2019-20 Revised estimate

2019-20 Actual

Strategic Policy and Intelligence

Portfolio Budget Statements

2019-20 Program 2.1

(Hydrographic Products and

Services)

Maritime Safety Updates 100% 100% 100%

Charting Projects 15 12 929

Nautical Publications 30 30 30

Survey Projects 13 13 13

Australian Hydrographic Office Availability 247 249 249

29. In FY 2019-20, nine charting projects were completed, with a further five projects reaching 95 per cent completion.

48 DEFENCE ANNUAL REPORT 2019-20

Activity 3.5a Deliver science and technology research and development to enhance Defence capability

Performance criterion Science and technology research supports Defence operations, sustainment and enhancement of current capability, and the development and acquisition of

future capability

Target The balance of investments in science and technology activities are delivering outcomes in line with agreed Capability Manager priorities

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 3.5a

Program 2.13

Results Achieved

Analysis Specialist technical support was provided to Operation RENDER SAFE, Operation RESOLUTE and Operation BUSHFIRE ASSIST 2019-2020. Support to Operation COVID-19 ASSIST is ongoing. It includes diagnostic platform development, virus survivability and fate research, pandemic modelling, trials of a potential COVID-19 prophylactic, production of personal protective equipment, and ventilator repurposing.

The annual Defence science and technology investment process ensures that research activities are aligned with Defence strategic guidance and Capability Manager priorities.

Science and technology support was provided for the acquisition of the future submarine and Hunter class frigate. Studies of human systems integration and combat system architecture were completed for the Integrated Ship System enterprise. As part of an Australia-US armaments cooperative program for the Mk 48 torpedo and AN/BYG-1 combat system, Defence and its US counterparts created an at-sea-ready reduced space, weight and power prototype of the jointly developed Submarine Combat Control System.

Support for land vehicle modernisation is ongoing, with robotic vehicle trials completed in August 2019. The success of the TORVICE Trial 3 collaboration resulted in the development of a second series of experiments under a new agreement endorsed by Australia and the US. Defence was also involved in international trials focused on novel threat agent characterisation, leading to greater understanding of the hazards around toxic aerosol challenges.

Specialist support to aerospace capabilities has also continued. Monitoring of the Super Hornet cockpit environment has led to safe operation of the ejection seat. The US is now taking the Australian data and using it to reduce the maintenance burden while retaining the same high level of safety. The sensors are also being placed in Australian F-35 cockpits.

Defence modelling and verification activities have enabled the life of ballistic armour stocks for the Armed Reconnaissance Helicopter to be extended. This is estimated to have saved around $4.5 million over the life of the platform.

A range of science and technology support was provided for the development of the 2020 Force Structure Plan. This included developing a portfolio optimisation tool used to automate the programming of capability options. Other outcomes include the demonstration and deployment of prototype automated cloud-hosted development operations infrastructure to leverage rapidly developing technology.

Enhanced sovereign capabilities in the areas of network operations, analytical capabilities and sensing and collecting were delivered during the reporting period, in addition to technical intelligence and analytical capabilities to improve indication and warning times for Defence.

Science and technology support was also provided for broader national security support tasks. This included technical support to the Australian Federal Police for explosive forensic and search capabilities, advice on facial recognition capabilities for border management at Australian airports, and development of the Emergency Response Decision Support System. Defence was also closely involved in developing the National Security Science and Technology Strategy.

49 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Activity 3.5b Deliver science and technology research and development to enhance Defence capability

Performance criterion Defence capability is enhanced by outreach and partnerships with the broader community, including publicly funded research agencies, academia, industry and

allied international research agencies

Target Collaboration and outreach activities are delivering Defence capability in line with agreed Defence priorities

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 3.5b

Program 2.13

Results Achieved

Analysis Science and technology partnerships are integral to providing the capability necessary to deliver innovative solutions for Defence and national security.

Defence’s response to COVID-19 was enhanced by information available through the rapidly established Five Nation Research and Development Council. This was supplemented by leveraging other links, such as CSIRO’s involvement in the Biosafety Level 4 Zoonotic Laboratory Network.

During the reporting period, Defence engagement with industry, academia and publicly funded research agencies increased. This was facilitated by 607 agreements established during the period, representing a 15 per cent increase from the previous financial year.

Defence’s academic partnerships have been expanded to include all 37 public Australian universities under the new Defence Science Partnerships framework implemented in April 2020. Theme-based research networks have also been established with academia to increase collaboration and sovereign capability.

The Defence Science and Technology Group is trialling for Defence a new security framework to safeguard sensitive technologies and capabilities associated with collaborative research activities. The security framework will help ensure that technology advantages being developed for Defence are not compromised or lost to competitors and adversaries.

A new strategic relationship has been agreed with CSIRO, and Defence’s engagement with industry continues to progress through the strategic alliance partnerships. A new governance framework for technology transfer activities has been developed, with over 135 instances of intellectual property evaluated for potential transfer to industry.

The Defence Science and Technology Implementing Arrangement with India was ratified in June 2020 as part of the Australia-India Comprehensive Strategic Partnership. Partnerships with the United States, United Kingdom, Japan, Republic of Korea, Singapore and France were also advanced during the reporting period.

Defence has developed a STEM Outreach and Engagement Plan, with implementation expected to commence towards the end of 2020. The plan builds on the Defence STEM Workforce Strategic Vision and provides a roadmap for developing our STEM workforce pipeline.

With the launch of More, Together: Defence Science and Technology Strategy 2030 in May 2020, Defence is transforming the way it partners with the national science and technology enterprise. Potential partners are being engaged from the outset to ensure early buy-in, remove disconnects in innovation pathways and shorten the time it takes to translate research into Defence capability.

Specific partnering initiatives are being developed to shape the national science and technology enterprise. This includes growing national capabilities in critical areas of science and technology, leveraging research networks and encouraging multi-party collaboration.

50 DEFENCE ANNUAL REPORT 2019-20

Intended Result 4: Strategy, capability, workforce and resources are balanced and aligned through One Defence systems, enabling Defence to anticipate, adapt and respond to changing priorities.

Building on the foundation of the First Principles Review, the initial stage of a continuous reform and improvement agenda was implemented through Defence 2022—Embedding One Defence. The Defence 2022 program is strengthening our strategic centre to ensure Defence is capable of delivering on its objectives and outcomes effectively and efficiently with a continued focus on workforce reform, business transformation, integrated service delivery and support to Australian defence industry.

In 2019-20 key workforce achievements included identifying workforce capability requirements to inform the 2020 Force Structure Plan. This in turn required consideration of workforce requirements, which has commenced with a review of the Defence Strategic Workforce Plan that is expected to be completed in 2021.

In our service delivery reform space several key integration initiatives and Service Delivery Framework milestones were completed, including streamlining on-boarding and off-boarding processes, reducing the number of forms used to do business, and increasing the use of digital workflows. Work continues in this area, as several milestones require further time to implement.

Business transformation continued as processes were streamlined and improved in advance of the implementation of the Enterprise Resource Planning (ERP) program. Release 1A of the ERP has undertaken design work during 2019-20 to establish a new protected cloud environment, a new chart of accounts to support finance reform, a new set of master data management capabilities, and a finance structure and human resources organisation structure. These initiatives place Defence in good stead to achieve organisational transformation in the coming years.

Defence’s enterprise reform agenda has an overarching focus on supporting the implementation of its strategy and the delivery of capability. The detail of the reform program will continue to evolve. Work has commenced to determine the reforms necessary to deliver the outcomes required by the 2020 Defence Strategic Update and 2020 Force Structure Plan, including improving Defence’s accountability and reporting frameworks. This will further strengthen the strategic centre to achieve a higher level of organisational performance, agility and integration.

Activity 4.1a Deliver integrated, secure and fit-for-purpose enabling services

Performance criterion The delivery of services by enabling Groups is progressively integrated

Target Services are delivered in accordance with agreed measures

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 4.1a

Programs 2.2, 2.3, 2.10, 2.11

Results Partially achieved

Analysis A sustained focus on improving the service delivery experience of Defence personnel and greater collaboration in service design is continuing to evolve Defence’s service delivery framework. Integrated Service Delivery aims to reduce complexity for staff within the organisation through a more connected service delivery system, improving the efficiency and effectiveness of the services that Defence delivers.

Defence has made progress towards aligning enabling capabilities to the Service Delivery Framework. Key milestones for 2019-20 were achieved, such as commencing an ICT Service Desk continuous improvement program, progressing process improvement, and establishing customer engagement forums. However, some milestones were not achieved, such as endorsement of a single service delivery brand and 30 per cent reduction in ICT procurement processing times. These milestones will be achieved next financial year.

51 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Achievements include:

• co-locating enabling services in service hubs at bases throughout Australia. This initiative is delivering positive results and continues to expand, with 46 service hubs established by 30 June 2020

• launching an improved, simpler and more modern Defence Intranet home page

• enabling single sign-on functionality for Defence credit card acquittal

• reducing by 21 per cent the total number of forms needed to do business, and transitioning into use of digital workflows

• simplifying and aligning processes for new and departing employees.

Activity 4.1b Deliver integrated, secure and fit-for-purpose enabling services

Performance criterion The management and sustainment of the Estate meets the requirements of the Capability Managers

Target The Defence Estate Strategy implementation plan is delivered as agreed

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 4.1b

Program 2.10

Results Achieved

Analysis Implementation of the 2016-36 Defence Estate Strategy is in its fourth year, with Defence remaining on track to deliver the 2016-21 Defence Estate Strategy Implementation Plan.

Defence estate investment, divestment and acquisition programs are being delivered to align the estate to support current and future Defence capability requirements. Approved Facilities and Infrastructure Project expenditure by state/territory and federal electorate for 2019-20 can be found at Web Table D.9.

Development of the Defence Estate Asset Management Framework and the Estate Engineering, Governance and Integrity System has progressed to the implementation stage. When mature, they will enhance Defence’s delivery and management of the estate to achieve the objective of an estate that is safe, compliant, and fit for purpose to support Defence capability.

Defence continued to undertake environmental management to support capability, particularly in remediation and decontamination. The third year of the Regional Contamination Investigation Program 2017-2020 is in delivery. Unexploded Ordnance and Exploded Ordnance waste demilitarisation and clearance works continue on priority training areas to support estate development. To increase the efficiency of construction project delivery, Construction Environmental Management Plan reforms are progressing to streamline consideration of environmental matters for capability facilities projects.

The Local Industry Capability Plan initiative seeks to maximise the opportunities for local businesses to be involved in Defence’s capital facilities and infrastructure projects. Work has commenced on further initiatives to support this activity.

Defence is ensuring that infrastructure projects being delivered by Australia support our international partners and meet our bilaterally agreed outcomes. To support these initiatives, Defence has acquired additional land around the Shoalwater Bay Training Area. The expansion of this training area will enhance the training environment for Defence and international personnel.

52 DEFENCE ANNUAL REPORT 2019-20

Activity 4.1c Deliver integrated, secure and fit-for-purpose enabling services

Performance criterion Defence’s strategic centre sets priorities, manages resources and steers the organisation to implement Government policy and legislative requirements

Target Defence senior committees and accountable officers undertake informed decision-making to ensure strategy, capability and resources are aligned to highest priorities

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 4.1c

Program 2.2

Results Achieved

Analysis The Enterprise Committee Governance Framework matured through 2019-20 with further work undertaken to improve and refine processes related to the effective functioning of the committees. Improvements included standardising templates, updating guidance and charters, and streamlining meeting outcomes.

There were 83 enterprise committee meetings in 2019-20. These committees were used by the strategic centre to set priorities, manage resources and steer the organisation. For example, the enterprise committee framework was used to progress, prioritise and finalise decisions on changes to Defence strategy and capability in developing the 2020 Defence Strategic Update and 2020 Force Structure Plan.

Activity 4.1d Deliver integrated, secure and fit-for-purpose enabling services

Performance criterion Quality and timeliness of financial advice to the Minister, the Secretary and Chief of the Defence Force

Target Financial advice meets the Minister, Secretary and Chief of the Defence Force’s requirements

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 4.1d

Program 2.3

Results Achieved

Analysis Defence provided professional and timely strategic advice to the Minister for Defence, the Secretary and the Chief of the Defence Force. This included:

• ministerial and Cabinet submissions

• responses to parliamentary questions on notice

• support to Senate Estimates and other public accountability activities

• internal reporting and briefings.

Defence provided financial information and advice based on an understanding of the underlying cost drivers of the business. All financial information was supported by reliable and validated data sources in Defence’s financial systems, meeting the requirements of the Minister, the Secretary and the Chief of the Defence Force.

53 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Activity 4.1e Deliver integrated, secure and fit-for-purpose enabling services

Performance criterion Production of Defence’s Budget and annual Financial Statements

Target Defence meets legislated financial requirements and timeframes

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 4.1e

Program 2.3

Results Achieved

Analysis Defence met the agreed statutory time frames for producing its 2019-20 budget deliverables, including:

• the Defence Portfolio Budget Submission

• the Defence Portfolio Budget Statements

• the Defence Portfolio Additional Estimates Statements

• input to the Commonwealth Budget Management System.

Defence produced audited Defence Financial Statements for publication in this Annual Report. The Australian National Audit Office determined that the Defence Financial Statements:

• complied with the Australian Accounting Standards—Reduced Disclosure Requirements and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015

• presented fairly the financial position of Defence as at 30 June 2020 and its financial performance and cash flow for the year.

Australian Army soldier Trooper Trish Nguyen stands at attention alongside Army and Air Force colleagues while conducting quarantine compliance management at a hotel near Sydney Harbour.

54 DEFENCE ANNUAL REPORT 2019-20

Activity 4.2a Resource, implement and review Defence’s reform programs

Performance criterion Agreed reform programs, including legal services, enterprise resource management, security services, information management and strategic communications, are

progressed as planned

Target Reform implementation plan milestones are met

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 4.2a

Program 2.2

Results Achieved

Analysis The Defence 2022 program is strengthening Defence’s strategic centre to ensure that we are capable of delivering on our objectives and outcomes effectively and efficiently, with a continued focus on workforce reform, business transformation, integrated service delivery and support to Australian defence industry.

Defence progressed agreed reforms as planned in 2019-20. These enterprise-level reforms build on the foundational reforms of the First Principles Review, which created a more efficient and integrated One Defence organisation with strong leadership and accountability.

Legal services

Defence continued to deliver high-quality legal services across its complex and diverse operating environment through a more integrated legal service that includes a joint military law capability. Following the black summer of 2020 and the COVID-19 pandemic, Defence Legal Division has progressed reforms to the Defence Act 1903 to enhance Defence’s response to natural disasters and emergencies. Defence Legal Division continues to identify legal reforms to better enable Defence’s response to current and emerging strategic challenges.

Enterprise resource management

Defence’s Enterprise Resource Planning Program achieved its target milestones in the reporting period. Release 1A design has been undertaken during 2019-20. Release 1A initiatives include establishing a new protected cloud environment, a new chart of accounts to support finance reform, a new set of master data management capabilities, and a finance structure and human resources organisation structure.

Security services

Defence progressed work to transform its security business processes to deliver greater assurance and timeliness of security vetting services for Defence, industry and the whole-of-government workforce. Defence also worked with industry in growing the Defence Industry Security Program to provide industry with more opportunities to work with Defence and easier access to Defence security services.

Information management

The Enterprise Information Management Centre of Expertise is working to deliver the essential governance, standards and change management needed to transform how Defence information is managed.

Strategic communications

The reform of Defence’s media and communications function saw the introduction of a shared service model operating under a strategic centre. The reform is now embedded across Defence and has generated a number of efficiencies that have strengthened support to ministers, shortened response times for media enquiries and improved the management of communication resources. Defence is focused on continual improvement of this function and has published a communication strategy that better aligns communication with organisational objectives, and provides a coherent narrative to reinforce Defence’s strategic priorities.

55 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Activity 4.2b Resource, implement and review Defence’s reform programs

Performance criterion Implementation of the six key cultural priorities

Target Cultural reform priorities are implemented as set out in the Pathway to Change: Evolving Defence Culture 2017-22 strategy

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 4.2b

Program 2.2

Results Partially achieved

Analysis Defence’s focus has remained on reforming, refining and reinforcing culture through the six key cultural reform priorities of Pathway to Change: Evolving Defence Culture 2017-2022:

• Leadership accountability

• Capability through inclusion

• Ethics and workplace behaviours

• Health, wellness and safety

• Workplace agility and flexibility

• Leading and developing integrated teams.

In 2019-20, a review of Defence’s cultural reform initiatives confirmed that there has been progress against each of the six priorities, both within Groups and Services and at the enterprise level. Groups and Services are leveraging enterprise-level initiatives for their local environment, with the majority capturing their efforts in a cultural plan. The cultural programs of the three Services are well established:

• Navy—Next Generation Navy

• Army—Good Soldiering

• Air Force—New Horizon.

Cultural reform progress is measured through a number of internal surveys, which capture organisational climate indicators and the workforce’s shared experience of the One Defence Leadership Behaviours. Defence’s organisational climate indicators are overall positive, with employees and personnel indicating moderate workplace morale, very high team productivity and high workplace engagement in 2019. Survey data from 2019 also indicates that the One Defence Leadership Behaviours are being positively demonstrated in the workplace.

Implementation of the six key cultural reform priorities for 2019-20 is assessed as partially complete, as expected in the third year of a five-year plan. The development of a measurement framework (underway) will further support our efforts to monitor achievement of the activity target over the remaining two years.

56 DEFENCE ANNUAL REPORT 2019-20

Activity 4.3a Develop and support the Defence workforce to enable required capability

Performance criterion Defence’s workforce has the agility and skills to meet current and future demand to deliver capability

Target Milestones within the Defence Strategic Workforce Plan and Total Workforce Model are implemented and critical skillset levels achieved

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 4.3a

Program 2.12

Results Partially achieved

Analysis The Defence Strategic Workforce Plan is reviewed annually for achievement against milestones and to ensure alignment with Defence planning guidance. This review also includes a refreshed environmental scan of influences on the Defence workforce. The 2020 assessment of progress against Defence Strategic Workforce Plan milestones indicated that Defence continued to maintain momentum in most areas of the workforce system, while also identifying actions to achieve the required reform, reshaping and rebalancing of the workforce.

The partially achieved result for this activity pertains to the continuing workforce pressures in critical categories such as cyber, intelligence, engineering, health and information and communication specialists, as Defence grows its demand in these occupations.

Defence will continue to build its capacity to identify future skills requirements, which is critical to acquiring and developing the workforce required to deliver and operate new capabilities and technologies. The Job Family renewal project was successfully implemented and a related body of work is now underway to enhance the assessment of critical occupations within Job Families. A program of work to better capture the skills and expertise Defence has across a large and diverse workforce is another area of focus.

We continue to pursue a capable, agile and resilient workforce that will deliver Defence outcomes in a dynamic strategic environment. Strategic workforce planning has been a significant body of work throughout the year to inform the force structure planning process. The future workforce requirements established through that process will inform a comprehensive update of the Defence Strategic Workforce Plan that commenced during the reporting period and is expected to be released in the latter part of 2021.

Navy’s MRH-90 Taipan helicopters based at HMAS Albatross in Nowra evacuated residents from Fishermans Paradise and North Sassafras on the South Coast, New

South Wales on 21 December 2019.

57 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Activity 4.3b Develop and support the Defence workforce to enable required capability

Performance criterion The workforce is safe and supported

Target Defence is compliant with Work Health and Safety legislation, regulations and standards to ensure the wellbeing of its workforce and members of the broader Australian community

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 4.3b

Program 2.12

Results Partially achieved

Analysis Defence remains committed to providing a compliant work health and safety environment to ensure the wellbeing of the Defence workforce and the broader Australian community.

The number of notifiable incidents per 1,000 Defence personnel reduced from 4.0 in 2018-19 to 3.8 in 2019-20.

Defence also saw a slight improvement in notifications to Comcare. In 2019-20, 64 per cent of initial notifications to Comcare were made within 24 hours of the incident occurring, up from 63 per cent in 2018-19. Written notification time frames also improved, with 57 per cent of notifiable incidents in 2019-20 being reported to Comcare within 48 hours, compared to 54 per cent in 2018-19. To further improve our notification time frames we are streamlining our processes, designing communication campaigns and improving supporting ICT platforms.

The partially achieved result for this activity reflects the ambition of our target, which is to continuously strive towards zero injuries or illnesses while also satisfying legislative requirements. Any injuries to our people are unacceptable. However, injuries are likely to occur due to the nature of Defence’s business. This means we need to make our safety culture the highest priority.

Defence has increased its involvement in innovative mental health initiatives, including the Comcare lead indicators program and the Australian Public Service (APS) Mental Health Capability Taskforce initiatives.

To support the health and safety of personnel, the New Starters Program has been extended to the broader Defence organisation, including ADF members and the families of APS employees.

Activity 4.3c Develop and support the Defence workforce to enable required capability

Performance criterion Appropriate support and services are provided to Defence people and their families

Target Delivery meets appropriate standards, including welfare support, transition services and health services

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 4.3c

Programs 2.12, 2.4

Results Achieved

Analysis Defence delivers a range of support services and measures of practical assistance to members and their families. These are across the themed areas of mobility and absence from home support, support during critical incidents, support to commanders managing their people, and transition support.

A number of mobility support related programs and services are available, including the Partner Employment Assistance Program; the Defence Childcare Program; the Dependants With Special Needs Program; resilience programs, including the SMART suite of programs for Defence families; the Education Assistance Scheme; and regular engagement with families.

58 DEFENCE ANNUAL REPORT 2019-20

In 2019-20 Defence provided 310 ADF partners with employment-related support through the Partner Employment Assistance Program. This includes 26 partners who were able to access support due to expanded eligibility criteria in response to the COVID-19 health crisis.

Defence has 16 childcare centres and three out-of-school-hours care centres across Australia, each providing priority access to ADF families. As of 30 June 2020, 859 children from 679 ADF families were enrolled in Defence childcare centres.

The Defence School Mentor Program provides annual funding and governance support to schools to employ Defence School Mentors to help ADF children to integrate and be actively involved in their school community, improve resilience, strengthen relationships and improve or maintain overall wellbeing. In 2019-20, a total of 248 schools received support under the program.

The Family Support Funding Program provides grant funding and governance support to community organisations that deliver support programs and services to Defence families and the communities in which they live. In 2019-20, 48 not-for-profit community organisations received grant funds under the program.

A total of 950 applications for the Education Assistance Scheme were processed in 2019-20.

The Community Support Coordinator Program provides funding and governance support to Defence community groups to manage the operations of community centres. In 2019-20, 35 Defence community support coordinators were engaged through the program. Defence community centres provide opportunities for Defence members and their families to engage with their local communities, foster friendships, support wellbeing and provide access to information on managing the demands of military life.

Defence also offers assessment, crisis intervention and brief counselling services, and provides referrals to outside services. Services are available 24/7 through the Defence Family Helpline and are complemented by regionally based staff.

Defence also provides individualised, needs-based support to ADF members and their families as they transition from permanent service to civilian life under the Defence Force Transition Program. Defence supported the transition of 5,982 members and their families in 2019-20.

Activity 4.4a Deliver on the outcomes of its administered programs

Performance criterion Timely and accurate administration of the Administered Programs

Target Administration meets agreed requirements

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 4.4a

Program 2.14, 2.15, 2.17

Results Achieved

Analysis The determination of the nominal interest transactions for Defence Forces Retirement Benefits, Defence Force Retirement and Death Benefits and the Military Superannuation and Benefits Scheme were correctly made and recorded in compliance with the monthly financial reporting timetable set by Defence.

‘Other Administered’ transactions were correctly determined and recorded in compliance with the monthly financial reporting timetable set by Defence. ‘Other Administered’ comprises interest on overdue accounts, interest on operational bank accounts, interest on loans to build accommodation, dividends and tax equalisation receipts from Defence Housing Australia, and royalty receipts.

59 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

Activity 4.4b Deliver on the outcomes of its administered programs

Performance criterion Eligible ADF members continue to access the scheme

Target The scheme is consistently identified in surveys as a contributor to the retention of ADF personnel

Source 2019-20 Defence Corporate Plan

Portfolio Budget Statements 2019-20

Activity 4.4b

Program 2.16

Results Achieved

Analysis Australian Defence Force members have consistently identified in surveys that the Defence Home Ownership Assistance Scheme is a key factor influencing them to remain serving. Interest in the scheme remained positive throughout 2019-20. The bushfires and COVID-19 had a negligible impact on numbers, which remained consistent with previous reporting periods.

During 2019-20 the Department of Veterans’ Affairs processed 5,967 Defence Home Ownership Assistance Scheme applications, and 3,273 Defence Home Ownership Assistance Scheme subsidy payments commenced.

Changes to performance criteria for the 2020-21 Annual Performance Statements

Defence has reviewed performance criteria for clarity, reduced duplication and ensured appropriateness to its Purpose during preparation of the 2020-24 Defence Corporate Plan. This has resulted in reducing the number of performance criteria from 28 to 21 for the 2020-21 Annual Performance Statements.

The following performance criteria will remain the same in the next reporting period: 2.1, 2.2, 2.3, 2.4, 3.1a, 3.1b, 3.2a, 3.2b, 3.4b, 4.2a, 4.3b, 4.3c, 4.4a and 4.4b.

The following performance criteria have been merged to reduce duplication;

• 1.1 and 1.2 (consolidated Operations and national support tasks)

• 3.3, 3.4a and 3.4c (consolidated acquisition and sustainment activities)

• 3.5a and 3.5b (consolidated science and technology activities)

• 4.1a, 4.1b and 4.1c (consolidated integrated service delivery activities)

• 4.1d and 4.1e (consolidated financial management activities)

• 4.2b and 4.3a (consolidated workforce capability building and cultural reform activities)

Defence has also added a new performance criteria; “Appropriate support and services are provided to Defence Families.”

60 DEFENCE ANNUAL REPORT 2019-20

The COVID-19 pandemic presented extraordinary challenges for Defence in terms of both supporting the whole-of-government response and maintaining the continuity of our operations.

At the peak of the pandemic in March and April 2020, more than 2,200 personnel supported the state and territory authorities as part of Operation COVID-19 ASSIST, in line with Defence’s mission to ‘defend Australia and its national interests’.

The organisation deployed to all states and territories while managing the complexities of physical distancing, border closures, and enabling more employees to work from home. All Groups and Services rose to the challenges together and supported the Government’s response to COVID-19.

Defence rapidly embraced the changes to the workplace to protect our personnel and their families from the risks of transmission. We successfully provided remote ICT capabilities to much of the workforce as personnel moved to working from home, and distributed essential information on security, work health and safety, and mandatory quarantine leave.

More than anything else, the crisis demonstrated Defence’s ability to deliver significant outcomes for the Australian Government and the Australian people and respond to diverse situations in an agile and coordinated manner.

The Defence COVID-19 Strategy articulated four lines of effort to enable the Australian Government to protect Australians and secure Australia’s national interests as the pandemic evolved:

• Safeguard national security

• Support public health

• Support the economy

• Support the near region.

On 9 March 2020, Defence established its COVID-19 Taskforce, led by Lieutenant General John Frewen DSC AM. Lieutenant General Frewen was supported by the First Assistant Secretary Governance and Reform, Megan Lees. This leadership combination embodied the collaborative, integrated relationship between Defence’s Australian Public Service (APS) workforce and the Australian Defence Force (ADF)—a partnership that made Defence uniquely

Air Force air liaison officers Flight Lieutenant Mike Holding (left) and Flight Lieutenant Joal McCutchen conduct planning at Keswick Barracks.

Operation COVID-19 ASSIST

61 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

able to coordinate the operational and policy aspects of its response.

The COVID-19 Taskforce was established to coordinate Defence’s contribution to the whole-of-government response, ensure departmental resilience and support Defence capabilities with advice, policy initiatives and communications so that our business could continue in a rapidly changing situation.

The health and wellbeing of our personnel was the highest priority, to ensure that we could continue to provide essential Defence capability throughout the developing crisis.

Safeguarding national security— Operation COVID-19 ASSIST

Operation COVID-19 ASSIST was established on 1 April 2020. Led by Major General Paul Kenny DSC DSM, it was an operation built on partnership as the ADF supported the Commonwealth, state and territory governments to protect public health.

ADF members and Defence civilians were deployed across Australia on a range of tasks, including:

• repatriating Australian citizens from overseas

• planning support and liaison roles

• ensuring quarantine compliance with local law enforcement agencies

• providing frontline medical assistance

• supporting the defence industry

• assisting Australia’s partners in the Indo-Pacific.

Defence found ways to support the national effort in ways it had never done before. For example, we provided customised support to Tasmania, where Defence personnel reopened and operated the emergency department at North West Regional Hospital, whose staff were sent home for two weeks quarantine following an outbreak of COVID-19. This deployment was crucial to maintaining critical health services in Tasmania.

As the response to COVID-19 in Australia progressed, Defence personnel assisted health authorities to undertake frontline medical testing across Australia. We provided planning assistance, medical personnel and support personnel to testing centres across Melbourne, New South Wales and Queensland. Defence personnel acted in concert with the rapid whole-of-government measures to control the virus across Australia, providing flexible and willing support where needed.

Australian Army soldier Craftsman Jayden Middenway holds one of the face shield frame components manufactured by members of the 20th Regiment, Royal Australian Artillery.

Royal Australian Navy officer Lieutenant Jessica Kuk at the NSW Health COVID-19 contact tracing centre.

62 DEFENCE ANNUAL REPORT 2019-20

Supporting public health—pandemic health policy

Joint Health Command led Defence’s COVID-19 health response. Headed by Rear Admiral Sarah Sharkey, Commander Joint Health and Surgeon General of the Australian Defence Force, it became the central point for health information within Defence, providing expert policy advice and guidance for the wider organisation.

This included:

• establishing a COVID-19 Operations Cell within Joint Health Command to coordinate the policy effects of the pandemic

• ensuring the ADF had access to the latest medical and policy advice from the Australian Health Protection Principal Committee and a clear view of how the broader healthcare sector was responding

• establishing 29 COVID-19 assessment stations at bases across Australia

• assessing the health risks and communicating them to commanders and leaders to help minimise COVID-19 transmission risks

• rapidly actioning health policy to ensure the organisation aligned with the whole-of- government response

• prioritising services to optimise on-base health care and minimise the impact on the civilian health sector

• providing subject matter expertise and staff support to other government agencies, including the National Incident Room

• conducting COVID-19 tests on 5,867 uniformed personnel as at 21 June 2020— processing 460 tests per day at the peak of the pandemic.

The efforts of Joint Health Command minimised the impacts of COVID-19 on Defence and ensured that Defence personnel remained job ready.

Supporting critical health research— Rapid Response Group

At the request of the Minister for Industry, Science and Technology in response to concerns about Australia’s supply of invasive ventilators, the Chief Defence Scientist, Professor Tanya Monro, formed a Rapid Response Group to research possible methods of repurposing non-invasive ventilators to perform as invasive ventilators.

The Rapid Response Group consisted of Commonwealth, state and territory representatives, as well as key industry and university experts.

Defence scientists and engineers quickly pivoted from developing military hardware to designing precision medical equipment and learning about ventilator operation and oxygen requirements for critical COVID-19 patients.

Australian Army soldier Lance Bombardier Brock Rawson working on COVID-19 contact tracing. Australian Defence Force contact

tracing teams work with authorities in states and territories to help track and understand the spread of COVID-19 in the community.

63 CHAPTER 3 | ANNUAL PERFORMANCE STATEMENTS

They developed a conversion system—the first of its kind—that can be installed on the two most popular non-invasive ventilators in Australia to allow for a controlled amount of oxygen to be delivered to an intubated patient.

Defence also contributed its scientific expertise to a number of national efforts to research the SARS-CoV-2 (COVID-19) virus and how to mitigate it.

Defence was involved in pandemic modelling to investigate the effectiveness of physical distancing measures and the influence of environmental factors. The results were provided to the Australian Health Protection Principal Committee.

In collaboration with CSIRO and members of the Five Nation Research and Development Council, Defence investigated how the COVID-19 virus survived on various surfaces such as metal, glass, plastic and banknotes.

Also in partnership with CSIRO, Defence began work with two Australian companies on the development and manufacture of a rapid point-of-care diagnostic device. This device, which is the size of a shoebox, could allow people to be tested for the virus in their own homes.

Supporting the economy —Defence industry

The COVID-19 pandemic demonstrated a true partnership between government and industry. Defence industry worked extremely hard to keep businesses operating safely and continued to invest in and deliver capability to Defence. In turn, Defence invested in industry, maintaining cash flow in the economy and supporting business growth by linking companies with opportunities across Australia.

The Minister for Defence and the Minister for Defence Industry spoke regularly to chief executives, defence industry bodies, and state and territory defence advocates. The Defence COVID-19 Taskforce Industry Support Cell provided a single contact point for defence industry to engage on a range of issues, from cross-border-restrictions to airfreight delays.

Defence was an exemplar in accelerating the payment of supplier invoices, fast-tracking more than $8 billion to help mitigate the impacts of COVID-19. We also released $870 million of estate works to the market early to open up new jobs and business opportunities, providing a steady pipeline of work for thousands of Australians during the pandemic recovery phase.

Industry and Defence will continue to work together to strengthen Australia’s sovereign

The Secretary of the Department of Social Services, Kathryn Campbell AO CSC (left); the Deputy Secretary of Defence People Group, Justine Greig (centre); and the Commander of the Defence COVID-19 Taskforce, Lieutenant General John

Frewen DSC AM meeting Defence civilians redeployed to Services Australia in Canberra.

64 DEFENCE ANNUAL REPORT 2019-20

defence industrial and manufacturing base to meet the challenges of the changing strategic environment.

https://www.defence.gov.au/covid-19/

https://www.defence.gov.au/covid-19/ defence-industry/

Contact tracing

Small teams of ADF personnel performed critical roles supporting contact tracing teams around Australia.

Full-time and Reserve members were embedded with local health agencies to trace potential paths of infection from confirmed COVID-19 cases. Members with medical and planning backgrounds made particularly effective contributions in the initial stages of establishing contact-tracing operations.

Members without previous specialist skills in the area quickly learned how to interview members of the public about their travel histories, their interactions with other people and the potential symptoms they were experiencing.

This ADF assistance allowed local health agencies to identify thousands of cases of

COVID-19 and helped Australians to access tens of thousands of coronavirus tests.

Defence civilians at Services Australia

Defence APS personnel volunteered for redeployment to assist with critical whole-of-government priorities during the pandemic. More than 200 deployed to Services Australia—most based in Canberra and a small number in Melbourne, Brisbane and Adelaide.

After training by Services Australia, these Defence personnel worked on critical tasks such as processing income support payments for the many Australians who were losing their jobs because of the pandemic. Many took on roles in a call centre environment, speaking with customers over the phone and processing their JobSeeker claims.

This exposure to a social policy agency, outside their regular environment, was a valuable experience for Defence personnel. Many reported back that it was very rewarding to be able to assist someone in the community directly, particularly to process critical payments.

Ms Briony Solomon, human resource services officer from Defence Science and Technology Group, assisting at Services Australia in Adelaide during the

COVID-19 pandemic.

65 CHAPTER 4 | FINANCIAL SUMMARY

FINANCIAL SUMMARY4

Corporal Brodie McIntyre, a Military Working Dog Handler, and Military Working Dog Kesha, providing security to an Air Force C-17A Globemaster

aircraft at RAAF Base Darwin.

66 DEFENCE ANNUAL REPORT 2019-20

Summary Defence looks to two major indicators to measure its financial performance - its cash based result against its annual appropriation funding and other cash inflows and its departmental operating result presented in the Statement of Comprehensive Income contained within its financial statements.

Cash result As outlined in Table 4.1 below, the annual ordinary annual service appropriations ($34.3 billion) and annual other services non-operating appropriation ($4.0 billion) available to Defence for 2019-20 totalled $38.3 billion, an increase of 4.8 per cent in comparison with the prior year. Additional cash inflows in relation to retainable receipts added a further $1.4 billion to funds available to support cash expenditure during the year. Cash payments made across the year totalled $39.4 billion, resulting in a cash underspend of $349.4 million or 0.9 per cent compared to total cash available including appropriations.

Departmental operating result The second indicator is the 2019-20 accrual based result reported in the annual financial statements. After allowing for own-source income, the net cost of services for the year totalled $34.0 billion resulting in a surplus of $0.3 billion or 0.7 per cent of variance to the budgeted net cost of services. Defence is primarily funded through operating departmental appropriation of $34.3 billion. Refer to Appendix A for the 2019-20 Financial Statements.

Net assets Defence’s net asset position of $100.8 billion increased by $4.4 billion compared to $96.4 billion in 2018-19. The increase is largely driven by Specialist Military Equipment (SME) asset procurement of $8.8 billion and the adoption of AASB 16 Leases. The new accounting standard brought $1.4 billion on to the Balance Sheet as Right of Use Assets.

Administered items In 2019-20 Defence Administered had net cost of services of $8.5 billion, compared to $7.0 billion in 2018-19. The additional expenses are primarily due to an increase in the superannuation defined benefit expense of $1.4 billion to $9.8 billion. Defence recognised $25.6 million in dividends and $41.1 million in competitive neutrality revenue on behalf of the Australian Government from Defence Housing Australia.

In 2019-20, Defence paid $3.0 billion in Defence Force Superannuation payments and the Defence Home Ownership Assistance Scheme.

Table 4.1: Defence resource statement, 2019-20

Actual available appropriation for 2019-20

$’000

Payments made 2019-20 $’000

Balance remaining 2019-20 $’000

Departmental Annual Appropriations

Prior year departmental appropriation available 40,0851 40,085 -

Annual appropriations—ordinary annual services 34,334,9481 33,945,4902 389,4582

Receipts retained under PGPA Act - section 74 1,394,851 1,394,851 -

Total departmental annual appropriations 35,769,884 35,380,426 389,458

Departmental Other Services—Non-Operating Appropriations

Prior year—other services—non-operating available - - -

Annual appropriations—other services—non-operating 4,015,029 4,015,029 -

Total departmental other services 4,015,029 4,015,029 -

Total departmental resourcing 39,784,913 39,395,455 -

67 CHAPTER 4 | FINANCIAL SUMMARY

Actual available appropriation for 2019-20

$’000

Payments made 2019-20 $’000

Balance remaining 2019-20 $’000

Special Appropriations

Defence Force Retirement Benefits Act 1948 Part 1, s.15D; and VIC, s.82ZJ - 38,375 -

Defence Force Retirement and Death Benefits Act 1973 Part XII, s.125 - 1,608,370 -

Military Superannuation and Benefits Act 1991 Part V, s.17 - 1,212,418 -

Defence Force (Home Loan Assistance) Act 1990 Part IV, s.38 - 207 -

Australian Defence Force Cover Act 2015 - 12,508 -

Defence Home Ownership Assistance Scheme Act 2008 Part VI, s.84 - 108,933 -

Other administered - - -

Total special appropriations - 2,980,811 -

Special accounts

Opening balance 115,458 - -

Non-appropriation receipts to special accounts 326,669 - -

Payments made - 289,042 -

Total special accounts 442,127 289,042 153,085

Less departmental appropriations drawn from annual/special appropriations and credited to special accounts - - -

Total resourcing and payments 40,227,040 42,665,308 -

Notes:

1. Appropriation amounts disclosed exclude amounts withheld under section 51 of the PGPA Act, amounts transferred to Defence Special Accounts or appropriation acts which have been repealed.

2. Includes No Win No Loss amounts in relation to Operations of $129 million.

Australian Army soldier Lance Corporal Lauren McConnell at work in the Main Operating Base in the Middle East Region.

68 DEFENCE ANNUAL REPORT 2019-20

Expenses by outcomes Table 4.2: Total cost of Defence outcomes and programs on an accrual basis, 2019-20

2019-20 Budget estimate1 $’000

2019-20 Actual result $’000 Variation

$’000

Variation %

Outcome 1: Defend Australia and its national interests through the conduct of operations and provision of support for the Australian community and civilian authorities in accordance with Government direction.

Program 1.1 Operations Contributing to the Security of the Immediate Neighbourhood

Departmental expenses

Departmental appropriation 5,007 8,389 3,382 68%

s74 external revenue - - - -

Departmental total 5,007 8,389 3,382 68%

Total expenses for Program 1.1 5,007 8,389 3,382 68%

Program 1.2 Operations Supporting Wider Interests

Departmental expenses

Departmental appropriation 657,080 545,508 (111,572) (17%)

s.74 external revenue 27,557 10,242 (17,315) (63%)

Departmental total 684,637 555,750 (128,887) (19%)

Total expenses for Program 1.2 684,637 555,750 (128,887) (19%)

Program 1.3 Defence Contribution to National Support Tasks in Australia

Departmental expenses

Departmental appropriation 137,670 205,497 67,827 49%

s.74 external revenue - - - -

Departmental total 137,670 205,497 67,827 49%

Total expenses for Program 1.3 137,670 205,497 67,827 49%

Total expenses for Outcome 1

Total departmental appropriation 799,757 759,394 (40,363) (5%)

Total s74 external revenue 27,557 10,242 (17,315) (63%)

Total expenses for Outcome 1 827,314 769,636 (57,678) (7%)

69 CHAPTER 4 | FINANCIAL SUMMARY

2019-20 Budget estimate1 $’000

2019-20 Actual result $’000 Variation

$’000

Variation %

Outcome 2: Protect and advance Australia’s strategic interests through the provision of strategic policy, the development, delivery and sustainment of military, intelligence and enabling capabilities, and the promotion of regional and global security and stability as directed by Government.

Program 2.1 Strategic Policy and Intelligence

Departmental expenses

Departmental appropriation 864,577 877,561 12,984 2%

s.74 external revenue 5,225 5,326 101 2%

Departmental total 869,802 882,887 13,085 2%

Total expenses for Program 2.1 869,802 882,887 13,085 2%

Program 2.2 Defence Executive Support

Departmental expenses

Departmental appropriation 278,220 426,521 148,301 53%

s.74 external revenue 31,847 36,955 5,108 16%

Departmental total 310,067 463,476 153,409 49%

Total expenses for Program 2.2 310,067 463,476 153,409 49%

Program 2.3 Defence Finance

Departmental expenses

Departmental appropriation 164,433 30,331 (134,102) (82%)

s.74 external revenue 7,315 175,555 168,240 2,300%

Departmental total 171,748 205,886 34,138 20%

Total expenses for Program 2.3 171,748 205,886 34,138 20%

Program 2.4 Joint Capabilities

Departmental expenses

Departmental appropriation 1,877,979 1,479,353 (398,626) (21%)

s.74 external revenue 303,907 122,185 (181,722) (60%)

Departmental total 2,181,886 1,601,538 (580,348) (27%)

Total expenses for Program 2.4 2,181,886 1,601,538 (580,348) (27%)

Program 2.5 Navy Capabilities

Departmental expenses

Departmental appropriation 6,574,886 6,520,630 (54,256) (1%)

s.74 external revenue 267,642 180,724 (86,918) (32%)

Departmental total 6,842,528 6,701,354 (141,174) (2%)

Total expenses for Program 2.5 6,842,528 6,701,354 (141,174) (2%)

Program 2.6 Army Capabilities

Departmental expenses

Departmental appropriation 7,685,546 7,951,265 265,719 3%

s.74 external revenue 97,784 77,675 (20,109) (21%)

Departmental total 7,783,330 8,028,940 245,610 3%

Total expenses for Program 2.6 7,783,330 8,028,940 245,610 3%

Program 2.7 Air Force Capabilities

Departmental expenses

Departmental appropriation 7,577,175 7,091,445 (485,730) (6%)

s.74 external revenue 170,910 47,683 (123,227) (72%)

Departmental total 7,748,085 7,139,128 (608,957) (8%)

Total expenses for Program 2.7 7,748,085 7,139,128 (608,957) (8%)

70 DEFENCE ANNUAL REPORT 2019-20

2019-20 Budget estimate1 $’000

2019-20 Actual result $’000 Variation

$’000

Variation %

Program 2.8 Australian Defence Force Headquarters

Departmental expenses

Departmental appropriation 145,584 176,414 30,830 21%

s.74 external revenue 722 4,921 4,199 582%

Departmental total 146,306 181,335 35,029 24%

Total expenses for Program 2.8 146,306 181,335 35,029 24%

Program 2.9 Capability Acquisition and Sustainment

Departmental expenses

Departmental appropriation 660,392 638,754 (21,638) (3%)

s.74 external revenue 23,001 40,891 17,890 78%

Departmental total 683,393 679,645 (3,748) (1%)

Total expenses for Program 2.9 683,393 679,645 (3,748) (1%)

Program 2.10 Estate and Infrastructure

Departmental expenses

Departmental appropriation 4,949,479 5,068,054 118,575 2%

s.74 external revenue 312,844 602,686 289,842 93%

Departmental total 5,262,323 5,670,740 408,417 8%

Total expenses for Program 2.10 5,262,323 5,670,740 408,417 8%

Program 2.11 Chief Information Officer

Departmental expenses

Departmental appropriation 1,751,969 1,941,046 189,077 11%

s.74 external revenue 51,678 42,602 (9,076) (18%)

Departmental total 1,803,647 1,983,648 180,001 10%

Total expenses for Program 2.11 1,803,647 1,983,648 180,001 10%

Program 2.12 Defence People

Departmental expenses

Departmental appropriation 508,794 547,397 38,603 8%

s.74 external revenue 6 100 94 1,567%

Departmental total 508,800 547,497 38,697 8%

Total expenses for Program 2.12 508,800 547,497 38,697 8%

Program 2.13 Defence Science and Technology

Departmental expenses

Departmental appropriation 509,405 532,027 22,622 4%

s.74 external revenue 4,279 6,514 2,235 52%

Departmental total 513,684 538,541 24,857 5%

Total expenses for Program 2.13 513,684 538,541 24,857 5%

71 CHAPTER 4 | FINANCIAL SUMMARY

2019-20 Budget estimate1 $’000

2019-20 Actual result $’000 Variation

$’000

Variation %

Program 2.14 Defence Force Superannuation Benefits

Defence Force Retirement Benefits Act 1948

Part 1, s.15D; and VIC, s.82ZJ(1)

- - - -

Defence Force Retirements and Death Benefits Act

1973 Part XII, s.125(3)

121,000 124,000 3,000 2%

Military Superannuation and Benefits Act 1991

Part V, s.17

5,485,476 5,543,566 58,090 1%

Australian Defence Force Cover Act 2015 688,900 662,300 (26,600) (4%)

Total administered expenses 6,295,376 6,329,866 34,490 1%

Administered revenue from other sources 1,244,386 1,351,453 107,067 9%

Total expenses for Program 2.14 5,050,990 4,978,413 (72,577) (1%)

Program 2.15 Defence Force Superannuation Nominal Interest

Defence Force Retirement Benefits Act 1948

Part 1, s.15D; and VIC, s.82ZJ(1)

6,937 6,900 (37) (1%)

Defence Force Retirements and Death Benefits Act

1973 Part XII, s.125(3)

1,031,122 1,031,000 (122) 0

Military Superannuation and Benefits Act 1991

Part V, s.17

2,432,016 2,430,000 (2,016) 0

Australian Defence Force Cover Act 2015 20,390 20,200 (190) 0

Total administered expenses 3,490,465 3,488,100 (2,365) 0

Administered revenue from other sources - - - -

Total expenses for Program 2.15 3,490,465 3,488,100 (2,365) 0

Program 2.16 Housing Assistance

Defence Force (Home Loan Assistance) Act 1990

Part IV, s.38

312 - (312) (100%)

Defence Home Ownership Assistance Scheme Act

2008 Part VI, s.84

121,944 110,648 (11,296) (9%)

Total administered expenses 122,256 110,648 (11,608) (9%)

Administered revenue from other sources 16,852 17,384 532 3%

Total Program 2.16 105,404 93,264 (12,140) (12%)

Program 2.17 Other Administered

Total administered expenses - - - -

Administered revenue from other sources 98,303 101,324 3,021 3%

Total Program 2.17 (98,303) (101,324) 3,021 3%

Total expenses for Outcome 2

Departmental total 34,825,599 34,624,615 (200,984) (1%)

Administered total 9,908,097 9,928,614 20,517 0%

Total 44,733,696 44,553,229 (180,467) (0%)

Note:

1. As published in the Portfolio Additional Estimates Statements 2019-20.

72 DEFENCE ANNUAL REPORT 2019-20

Cost of Operations Table 4.3: Net additional cost of operations from 1999-2000 to 2021-22

1999-2000 to 2019-20 Actual result $m

2019-20 Actual result $m

2020-21 Forward estimate1 $m

2021-22 Forward estimate1 $m

Total $m

Operation MANITOU 222.3 64.1 23.9 25.8 336.1

Operation ACCORDION 861.9 207.3 28.8 21.0 1,119.0

Operation HIGHROAD 526.4 76.7 1.1 - 604.2

Operation RESOLUTE2 397.3 57.0 - - 454.3

Operation OKRA 1,319.1 200.5 30.8 19.6 1,570.0

Operation AUGURY—PHILIPPINES 20.0 2.8 - - 22.8

Defence support to the 2018 Commonwealth Games 8.2 - - - 8.2

Operation BUSHFIRE ASSIST 2019-20 - 68.4 - - 68.4

Total net additional costs 3,355.2 676.8 84.6 66.4 4,183.0

Sources of funding for operations

Government supplementation 3,339.5 676.8 84.6 66.4 4,167.3

Department of Defence (absorbed) 15.7 - - - 15.7

Total cost 3,355.2 676.8 84.6 66.4 4,183.0

Notes:

This table reflects ongoing and new operations funded under No Win, No Loss arrangements.

1. As published in the Portfolio Additional Estimates Statements 2019-20, Table 7.

2. Includes funding for activities under Operation Sovereign Borders.

Table 4.4: Net additional cost of operations, 2019-20

2019-20 Budget estimate1 $m

2019-20 Estimated actual2 $m

2019-20 Actual result $m

Variation $m

Operation MANITOU 72.4 73.6 64.1 (9.5)

Operation ACCORDION 215.8 215.8 207.3 (8.5)

Operation HIGHROAD 86.8 86.8 76.7 (10.1)

Operation RESOLUTE3 59.3 59.3 57.0 (2.3)

Operation OKRA 269.3 279.2 200.5 (78.7)

Operation BUSHFIRE ASSIST 2019-20 - 87.9 68.4 (19.5)

Total net additional costs 703.6 802.6 674.04 (128.6)

Notes:

This table reflects operations funded under No Win, No Loss arrangements in 2019-20.

1. As published in the Portfolio Budget Statements 2019-20, Table 3.

2. As published in the Additional Estimates Statements 2019-20 Table 7.

3. Includes funding for activities under Operation SOVEREIGN BORDERS.

4. Does not include Operation AUGURY— PHILIPPINES which was not funded under the No Win, No Loss arrangements in 2019-20.

73 CHAPTER 4 | FINANCIAL SUMMARY

Grants

Information on grants awarded by the Department during 2019-20 is available on the Australian Government’s grant information system, GrantConnect (www.grants.gov.au).

Advertising and market research

During 2019-20, Defence conducted advertising for recruitment and other campaigns. Further information on those advertising campaigns is available at www.defence.gov.au and in the reports on Australian Government advertising prepared by the Department of Finance. Those reports are available at www.finance.gov.au.

Table 4.5 shows total advertising and market research expenditure by Defence during 2019-20. Table 4.6 shows Defence spending on advertising and market research by Service and Group.

Table 4.5: Total advertising and market research expenditure, by type, 2018-19 and 2019-20

Type 2018-19 Expenditure ($) 2019-20 Expenditure ($)

Advertising 13,783,288 12,797,399

Market research 1,737,957 1,728,567

Polling _ _

Direct mail 397 1,830

Media advertising 44,255,875 45,425,387

Total 59,777,516 59,953,183

Note: All figures are GST inclusive.

Table 4.6: Total advertising and market research expenditure, by Service and Group, 2018-19 and 2019-20

Service or Group 2018-19 Expenditure ($) 2019-20 Expenditure ($)

Strategic Policy and Intelligence 661,227 41,102

Defence Executive Support 10,470 486,112

Defence Finance 1,404 11,428

Joint Capability 90,655 111,713

Navy 95,772 132,953

Army 78,659 111,467

Air Force 161,556 221,445

Australian Defence Force Headquarters 47,464 4,365

Capability Acquisition and Sustainment 77,164 77,966

Estate and Infrastructure 121,140 147,818

Chief Information Officer _ 15,022

Defence People 58,283,656 58,437,297

Defence Science and Technology 148,348 154,495

Total 59,777,516 59,953,183

Note: All figures are GST inclusive.

74 DEFENCE ANNUAL REPORT 2019-20

Artificial intelligence enhances the impact of air and space power for the Joint Force Defence faces a significant evolution of technology that will dramatically change the speed and character of warfare. Success in this environment depends on the ability to withstand constant grey-zone competition, command a data-enriched algorithmic battlespace, and exploit transient capability advantages in agile ways.

Artificial intelligence (AI) and autonomous systems will enable Defence to analyse masses of data in complex operating environments. The Joint Capabilities Group established the Defence Artificial Intelligence Centre to build the capability foundations and accelerate the understanding and implementation of AI across Defence.

Air Force’s Plan Jericho continues to work with partners to explore and rapidly prototype AI systems across combat, support, maintenance and enterprise administrative functions to support this understanding. Plan Jericho artificial intelligence driven collaborations include:

• AI Search: a collaboration with the Warfare Innovation Navy Branch and Air Mobility Group’s No. 35 Squadron that has prototyped an AI-enhanced search and rescue system that in initial trials demonstrated a detection rate 29 per cent better than humans

• SARAH (Supply Assistance Robot— Autonomous Hardware): a collaboration with No. 36 Squadron that prototyped the automation of low-skilled and sometimes labour-intensive tasks to free valuable human capital to increase the effectiveness of a unit

• AIMEE: a virtual cognitive assistant developed with Deloitte to accelerate the use of natural language processing, providing an enhanced user experience for Defence personnel undertaking routine processes while increasing their overall efficiency and effectiveness.

Plan Jericho has partnerships with forward-thinking Australian companies to build sovereign capability, including:

• a successful ‘queryable sensor’ concept prototype with Trellis Data. The system’s edge processing can automate the intelligence, surveillance and reconnaissance (ISR) process and provide ‘ISR on demand’ to the warfighter

• an open, scalable unclassified sensor experimentation environment developed in collaboration with Sigma Bravo to prototype networked multi-sensor devices for use in future warfighting scenarios.

Defence Science and Technology Group, in conjunction with Plan Jericho and the Trusted Autonomous Systems Defence Cooperative Research Centre, led an ‘Ethical AI’ workshop in Canberra from 30 July to 1 August 2019 that brought together Australian and international experts in law, ethics, science and technology to address ethics across a range of military AI applications. The principles discussed in the workshop may inform future AI experimentation.

The Defence Artificial Intelligence Centre, supported by Plan Jericho, contributed to Operation COVID-19 ASSIST by developing data visualisation and analytical tools for use by the Australian Defence Force COVID-19 Taskforce in support of state and territory governments.

Wing Commander Michael Gan on board a C-27J Spartan during an artificial intelligence search and rescue training mission.

75 CHAPTER 4 | FINANCIAL SUMMARY

Table 4.7 provides details of individual payments of more than $14,000 (GST inclusive) to persons or organisations for advertising campaigns and market research.

Table 4.7: Individual payments of more than $14,000 to advertising and market research agencies, by Service and Group, 2019-20

Service/Group and agency name 2019-20 expenditure ($) Purpose

Navy Capabilities

Market research

Data Analysis Australia Pty Ltd 40,150 Market research for longitudinal survey

Air Force Capabilities

Advertising

Universal McCann 33,129 Advertising of Edinburgh Air Show

Estate and Infrastructure Group

Advertising

Universal McCann 17,713 Public notices—Defence field firing ranges

Defence People

Advertising

George Patterson Y&R 10,079,021 ADF recruitment advertising

Havas Worldwide Australia 32,384 ADF recruitment advertising

Story Lab Pty Ltd 20,499 ADF recruitment advertising

Market research

Chat House Research Pty Ltd 39,285 Qualitative and quantitative research to maximise

ADF recruitment targets

Digital Transformation Agency 27,500 Qualitative and quantitative research to maximise

ADF recruitment targets

Hall & Partners 571,368 Qualitative and quantitative research to maximise

ADF recruitment targets

Helmsman Services Pty Ltd 107,570 Qualitative and quantitative research to maximise

ADF recruitment targets

Taylor Nelson Sofres Australia 523,178 Qualitative and quantitative research to maximise

ADF recruitment targets

Universal McCann 204,600 Qualitative and quantitative research to maximise

ADF recruitment targets

Media advertising

Australian Public Service Commission 233,215 Public Service Gazette

Universal McCann 92,073 Defence graduate marketing package

Universal McCann 200,922 ADF recruitment advertising

Universal McCann 42,966,596 Planning and placement of campaign advertising

Defence Science and Technology Group

Market research

News Limited 16,500 Australian research—Defence report

Media advertising

Universal McCann 16,014 News media article

76 DEFENCE ANNUAL REPORT 2019-20

Service/Group and agency name 2019-20 expenditure ($) Purpose

Capability Acquisition and Sustainment

Media advertising

Universal McCann 21,673 Advertising of Defence Industry Conference

Defence Executive Support

Advertising

Universal McCann 466,893 Army Reserve bushfire announcement

Note: All figures are GST inclusive.

Legal expenses Expenditure on internal and external legal services in 2019-20 is shown in tables 4.8, 4.9 and 4.10. Internal expenses include salaries for military and civilian staff, divisional operating costs and military justice reimbursements. External expenses are professional fees, disbursements and legal assistance at Commonwealth expense. The figures are GST exclusive.

Table 4.8: Estimated expenditure on internal and external legal services, 2018-19 and 2019-20

Type of legal expenditure 2018-19 $m 2019-20 $m

Internal 49.20 47.48

External 60.68 59.98

Total 109.88 107.46

Table 4.9: Estimated cost breakdown of internal legal expenses, 2018-19 and 2019-20

Type of legal expenditure 2018-19 $m 2019-20 $m

Salaries for military lawyers 21.39 19.02

Salaries for civilian staff 17.73 16.82

ADF Reserve legal officers 6.42 7.03

Operating costs of the division 3.37 4.32

Military justice disbursements 0.29 0.29

Total 49.20 47.48

Table 4.10: Estimated cost breakdown of external legal expenses, 2018-19 and 2019-20

Items 2018-19 $m 2019-20 $m

Professional fees—Defence legal panel 55.14 49.75

Disbursements 5.34 10.13

Legal assistance at Commonwealth expense 0.20 00.10

Total 60.68 59.98

77 CHAPTER 4 | FINANCIAL SUMMARY

Payment of accounts In 2019-20, Defence met 98.7 per cent of all payment transactions by their due date. This result is ahead of the 90 per cent Government benchmark. The volume of payments through Defence Purchasing Cards and Travel Cards represented approximately 76 per cent of all payments, which continued to have a positive effect on the paid-by-due-date result (Table 4.11).

Table 4.11: Accounts paid by due date, 2018-19 to 2019-20

2018-19 2019-20

Number of accounts paid 2,610,782 2,188,743

Accounts paid by due date 2,575,848 2,160,523

Percentage of accounts paid by due date 98.6% 98.6%

Tactical payments scheme The tactical payments scheme was legislated on 1 July 2009, under sections 123H and 123J of the Defence Act 1903. The scheme was introduced in 2009-10 to provide a means for making expeditious non-liability payments resulting from military actions by deployed forces. This scheme is critical for maintaining local community support and thereby ensuring the safety of deployed forces.

In 2019-20, four individual payments totalling $2,458 were made under the scheme. All payments were a consequence of damage to property from motor vehicles.

Royal Australian Air Force Air Commodore Philip Gordon AM, Australian Regular Army Colonel Graeme Goodwin CSC, and Royal Australian Navy Commander Alastair Cooper ADC RAN arrive at Parliament House for the opening of the second session of the 54th Parliament of South Australia

78 DEFENCE ANNUAL REPORT 2019-20

Building the Australian Defence Force’s cyber capability

Defence is investing in the future of its cyber capability by recruiting the best candidates today to lead the fight tomorrow.

The cyber threats faced by the Australian Defence Force (ADF) are not dissimilar to the threats faced by business and industry. We are protecting networks and missions systems. In an increasingly connected world, that extends to equipment used in training and on operations, as well as personal cybersecurity.

The ADF’s entire inventory of aircraft, ships and combat vehicles will soon be digital and therefore extensions of the network. The digital hygiene of those systems is critical.

The ADF is investing in building and training a diverse and agile cyber workforce. In 2019-20 an ADF first was achieved when the Defence Force Remuneration Tribunal aligned remuneration across the cyber trades in Navy, Army and Air Force. We also adopted a policy that permits, on a case-by-case basis, consideration of waivers to traditional ADF entry standards to help attract the best and brightest cyber operators.

Recognising the need to unearth new talent, Defence launched the Cyber Gap Year Program in 2020, with up to 50 students offered financial support, mentoring and work experience with Defence while they study for an impressive cyber qualification. While the participants are not obligated to join Defence at the end of the program, they will be exposed to the extensive employment opportunities available in the Defence cyber domain. The nation will benefit in other ways from the skills and expertise of those who choose not to join.

The Cyber Gap Year program was initially established to support 400 students but will open more widely in 2021. It is expected that up to 800 students will graduate over the next four years.

These steps are important but they are not taken in isolation. Working closely with the Australian Signals Directorate, Five Eyes partners, Defence industry, businesses and academic institutions is vital to understanding the current and emerging information warfare threats the ADF faces. In today’s digital world where connectivity extends to the battlefield, that has never been more important.

79 CHAPTER 5 | GOVERNANCE AND EXTERNAL SCRUTINY

GOVERNANCE AND EXTERNAL SCRUTINY5

Corporal Natalie Ekonomopoulos in a communications cabinet for cyber research and development systems at No. 462 Squadron.

80 DEFENCE ANNUAL REPORT 2019-20

ONE DEFENCE Our continuing reform journey

2014

2015

FPR First Principles Review

Defence 2022 2019

Government commissioned the First Principles Review (FPR) to ensure Defence was fit for purpose and able to respond to

future challenges

75 recommendations agreed to create One Defence—a more unified integrated and strategy-led organisation

Beyond FPR, the Defence 2022 reform program was designed to embed One Defence improvements and drive ongoing reform

Defence 2022 reform focus

Enduring

Defence enterprise reform program drives transformational reform and enables a culture of continuous improvement, innovation and adaptation within Defence

Building on First Principles

Workforce

Business Transformation

Integrated Service Delivery

Defence Industry

81 CHAPTER 5 | GOVERNANCE AND EXTERNAL SCRUTINY

Role of reform Defence is focused on building an enduring enterprise reform program on the strong foundation of the First Principles Review. Through this approach, Defence will drive and enable an organisational culture of continuous improvement, innovation and adaptation.

The role of reform is important in ensuring Defence is a fully integrated system that continuously adjusts its strategy, improves its ability to develop capability, and delivers on its mission for Government within available resources.

Reform

Strategy

Capability Resources

Achievements in 2019-20 Defence progressed a range of reforms in 2019-20 under the Defence 2022 program, including:

• delivering high-quality legal services across its complex and diverse operating environment, through a more integrated legal service that includes a joint military law capability

• transforming its security business processes to deliver greater assurance and timeliness of security vetting services for Defence, industry and the whole-of-government workforce

• achieving the milestones to remain on track for delivery of the Enterprise Resource Management and Enterprise Information Management programs—the largest information and communications technology (ICT) transformation projects ever undertaken by Defence

• enhancing strategic communications through the development of focused and fit-for-purpose communications guidance.

Future of reform Defence is committed to the alignment of strategy, capability, and resources—underpinned by reform—to ensure it has the capacity to deliver on its mission for Government and the Australian people into the future.

Defence will continue to focus on ensuring it is a single strategy-led and centrally directed organisation. In response to our rapidly changing strategic environment, Defence must be agile, proactive and adaptive to effectively shape Australia’s strategic environment, deliver credible deterrence, and respond to challenges to our interests when required.

Defence will continue to improve its capacity and drive further reforms to achieve the outcomes required by the 2020 Defence Strategic Update and 2020 Force Structure Plan.

82 DEFENCE ANNUAL REPORT 2019-20

New C-17 infrastructure telescopic docking capability at RAAF Base Amberley The Air Force’s $219.4 million C-17 infrastructure project has provided a maintenance facility, working accommodation, an aircraft apron and associated facilities at RAAF Base Amberley.

The project includes a state-of-the-art telescopic docking system, the first of its kind in Australia, which was successfully commissioned in the new No. 36 Squadron hangar facility in 2019.

The system comprises two telescoping masts with working platforms that are suspended from a special crane trolley. The platforms are lowered to the hangar floor to allow maintenance personnel to enter, and can then be moved to any required position on the aircraft exterior.

These ‘tele-platforms’ can be used on a wide variety of aircraft, making them much more versatile than traditional hangar platforms. They can carry six personnel and their equipment, and are fitted with breathing air, pneumatic air and electrical power to support a broad range of maintenance tasks. Their design enables significantly better access to the C-17A than legacy elevated work platforms, thanks to their

size, stability, removable barriers and built-in harnesses. A range of safety systems prevent the platforms from striking the aircraft, significantly reducing the risk of inadvertent damage.

The hangar itself has state-of-the-art services including in-ground power, aircraft cooling air, and ground support equipment exhaust extraction. The facility also includes a new tool store, a logistics warehouse, avionics and mechanical workshops, storage for spare engines and ground support equipment, a new paint booth and surface preparation facility, a new welding bay, a metal and composite fabrication workshop, and additional office space and briefing rooms. No. 36 Squadron now has permanent protection from the elements when conducting maintenance, providing a welcome boost to productivity, efficiency, safety and morale.

This project, including the tele-platform system, gives No. 36 Squadron an enhanced functionality and maintenance capability that will continue well into the future. It has been delivered through Defence industry partners RPS Group and CPB Contractors.

Telescopic docking system in No. 36 Squadron hangar facility (photo courtesy of CPB).

83 CHAPTER 5 | GOVERNANCE AND EXTERNAL SCRUTINY

Defence Committee Chair: Secretary Incumbent: Mr Greg Moriarty

Enterprise Business Committee Chair: Associate Secretary Incumbent: Ms Katherine Jones

Defence People Committee Chair: Deputy Secretary Defence People Incumbent: Ms Justine Greig

Strategic Policy Committee Chair: Secretary Incumbent: Mr Greg Moriarty

Defence Security Committee Chair: Deputy Secretary Estate and Infrastructure Incumbent: Mr Stephen Grzeskowiak

Defence Audit and Risk Committee Chair: External Incumbent: Ms Jennifer Clark

Chiefs of Services Committee Chair: Chief of the Defence Force Incumbent: General Angus Campbell

Defence Finance and Resourcing Committee Chair: Chief Finance Officer Incumbent: Mr Steven Groves

Investment Committee Chair: Vice Chief of the Defence Force Incumbent: Vice Admiral David Johnston

Defence Joint Warfare Committee Chair: Vice Chief of the Defence Force Incumbent: Vice Admiral David Johnston

Defence Communications and Information Systems Committee Chair: Chief Information Officer Incumbent: Mr Stephen Pearson

TIER 1

TIER 2

TIER 3

Senior enterprise committees and their roles Defence’s enterprise decision-making and advisory committees are the primary mechanisms for providing direction and assuring that strategy, capability and resources are aligned across the Defence enterprise. The tiered committee structure, as shown in Figure 5.1, supports aggregated reporting, decision-making at the lowest level and mechanisms for escalation and de-escalation as required.

The Defence enterprise committee governance framework was developed to address recommendations from the First Principles Review. Further development of appropriate tools, guidance and systems is expected to provide more effective management of workflow through enterprise committees and improve our achievement of enterprise-level governance, reform, risk and reporting requirements.

Figure 5.1: Defence enterprise committee structure and roles, indicating incumbent Chairs as at 30 June 2020

84 DEFENCE ANNUAL REPORT 2019-20

Defence Audit and Risk Committee The Defence Audit and Risk Committee has been established in accordance with section 45 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and section 17 of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule). Consistent with subsection 17(2) of the PGPA Rule, the committee reviews and provides independent written advice to the Secretary and the Chief of the Defence Force on the appropriateness of Defence’s financial reporting, performance reporting, system of risk oversight and management, and system of internal control.

The committee has five members, three of whom are external to Defence, including the Chair and Deputy Chair. The Vice Chief of the Defence Force and the Associate Secretary are also members of the committee.

During 2019-20 the Audit and Risk Committee met formally nine times. Other committee activities during the year included workshops in relation to Defence’s performance information and the financial statements, attendance at Independent Assurance Reviews, and intersessional review of documents and information to address the requirements of the committee. The external members also chaired and were members of the Financial Reporting Sub-Committee.

An electronic version of the charter of the Defence Audit and Risk Committee is available from the Defence website at www.defence.gov.au/Decisions.asp.

Table 5.1 provides information in accordance with audit committee disclosure requirements for Commonwealth entities (sections 17AG(2A) and 17BE(taa) of the PGPA Rule).

Table 5.1: Audit committee disclosure requirements

Member’s name Qualifications, knowledge, skills or experience

Committee meetings attended / total

Total annual remuneration (exclusive of GST)

Ms Jennifer Clark Ms Clark has an extensive background in business, finance and governance through a career as an investment banker, where her role included Defence major

projects, and as a non-executive director since 1991.

She has been the chair or deputy chair or a member of over 20 audit committees and boards in the Commonwealth and private sectors over the past 30 years. She is a Fellow of the Australian Institute of Company Directors and has substantial experience in financial and performance reporting, audit, risk management and project management.

9/9 $107,404

Ms Elizabeth Montano

Ms Montano holds the degrees of Bachelor of Arts and Bachelor of Laws (UNSW) and is a Fellow of the Australian Institute of Company Directors.

She has over 20 years of experience as chair, deputy chair and member of boards and audit committees across a range of government and not-for-profit entities. She has broad-ranging experience in governance and the machinery of government, including in financial and performance reporting, risk, assurance, and program and project management and oversight.

She is a former chief executive officer in the Commonwealth government and senior financial services lawyer with King & Wood Mallesons.

9/9 $60,910

Mr Mark Ridley

Mr Ridley is a Fellow of the Institute of Chartered Accountants and a graduate of the Australian Institute of Company Directors, with bachelor’s degrees in commerce and accounting.

He has served as independent member and chair of audit and risk committees for several large and medium-sized Commonwealth agencies since 2011, and also assists some entities in the oversight of ICT projects. He was formerly a senior partner of PricewaterhouseCoopers with leadership roles in risk advisory, internal audit and ICT project assurance for large companies in financial services and other industries and for state and federal governments.

9/9 $60,910

85 CHAPTER 5 | GOVERNANCE AND EXTERNAL SCRUTINY

Member’s name Qualifications, knowledge, skills or experience

Committee meetings attended / total

Total annual remuneration (exclusive of GST)

Ms Rebecca Skinner

Ms Skinner was the Associate Secretary of the Department of Defence from September 2018 until March 2020. She has held numerous senior leadership positions within Defence, including with the Australian Signals Directorate and the Defence Intelligence Organisation.

Ms Skinner is a graduate member of the Australian Institute of Company Directors. She has a Bachelor of Science degree and a Graduate Diploma in Education from the University of Melbourne, and a Graduate Diploma in Applied Science (Computer Science) from Swinburne University.

Note: for three meetings from March 2020, the acting Associate Secretary was Mr Steven Groves.

9/9 Not applicable.

Remuneration

is detailed in

Appendix B

Vice Admiral David Johnston

Vice Admiral David Johnston AO RAN is the Vice Chief of the Defence Force. He has an extensive military background, including operational naval tours as Commanding Officer of HMAS Adelaide and HMAS Newcastle. Between 2014 and 2018 he performed the role of Chief of Joint Operations. He was appointed Vice Chief of the Defence Force in July 2018.

Since 2018, he has been the chair of the Investment Committee and Joint Warfare Committee.

Vice Admiral Johnston holds a Master of Science in Operations Research from the United States Naval Postgraduate School in Monterey, California, and a Master of Arts in Strategic Studies from Deakin University.

Note: for one meeting, Vice Admiral Johnston was represented by Major General Kathryn Toohey.

8/9 Not applicable. Remuneration is detailed in Appendix B

Performance and accountability The purpose of enterprise performance management is to monitor performance and keep strategy, capability and resources aligned with Government direction.

Defence’s enterprise performance is achieved by ensuring that Defence strategy and policy requirements are translated into corporate planning and budget allocation, which is implemented and resourced through Group and Service business plans. Performance and risks to achievement are monitored and reported by responsible and accountable officers to senior committees, including the Defence Committee, and to the Minister for Defence.

Defence’s performance reporting for 2019-20 aligns with the performance information in the Portfolio Budget Statements 2019-20 and the 2019-20 Defence Corporate Plan.

Risk Risk management is an essential element of Defence’s good governance and internal control environment. We maintain a system of risk oversight and management to support the achievement of Defence’s outcomes and meet its risk management obligations in accordance with the PGPA Act.

In 2019-20, Defence reviewed and updated its system of enterprise risk management to improve alignment of risk management with corporate planning and to enhance enterprise risk reporting. Key achievements included:

• publication of the updated Defence Risk Management Policy, which outlines a principles-based approach to the management of risk

• development of guidelines to support Defence’s risk management framework

• reporting to senior committees on the effectiveness of enterprise risk management

• a pilot program of deep dives into enterprise risk and control management

• a review of legislative compliance arrangements to enhance visibility of significant legislative compliance issues across the Defence enterprise.

In 2019-20, Defence continued to mature its business continuity program to enable delivery of key outcomes for Government during a disruptive incident, including planning in response to COVID-19.

86 DEFENCE ANNUAL REPORT 2019-20

Major Projects Report The Major Projects Report provides transparency on the progress of Defence’s largest and most complex acquisition projects managed by the Capability Acquisition and Sustainment Group. It reviews overall issues, risks, challenges and complexities affecting major projects and also reviews the status of each of the selected major projects in terms of project cost, schedule and forecast scope delivery. The report was first published in 2008.

The Major Projects Report is an independent limited assurance review coordinated by the Australian National Audit Office (ANAO) and supported with Defence input. The report is prepared in accordance with guidelines endorsed by the parliamentary Joint Committee of Public Accounts and Audit. The latest guidelines, endorsed in September 2019, provide information on the process and projects to be reported on as at 30 June 2020.

The Major Projects Report is scheduled for publication within five months after the end of the financial year. The tabling date is dependent on the resolution of issues that may arise at any given time. The latest report (Auditor-General report No 19 of 2019-20) was published on 16 December 2019. All published reports are available on the ANAO website.

Capability delivery First Principles Review Recommendation 2 called for Defence to ‘Establish a single end-to-end capability development function within the Department to maximise the efficient, effective and professional delivery of military capability’. The Capability Life Cycle is Defence’s response to this recommendation.

The Capability Life Cycle delivers the Government’s capability aspirations outlined in the 2016 Defence White Paper and the accompanying Integrated Investment Program. It has been operating since April 2016.

The Capability Life Cycle provides Defence with an end-to-end process for capability development and delivery of capital projects, and associated through-life support, related to major capital equipment, infrastructure, enterprise enablers and ICT.

The Capability Life Cycle has clarified roles, strengthened accountabilities, improved central agencies engagement and established strong Force Design and Contestability functions that are central to improved decision-making. The Capability Life Cycle introduced tailored investment approval pathways guided by the Smart Buyer decision-making framework, along with an ongoing Force Design process which is being further improved by incorporating process lessons from the 2020 Force Structure Plan. Together these enable the Integrated Investment Program to be agile and responsive to Defence and Government priorities.

As part of Defence’s commitment to ongoing reform, in 2019-20 we conducted a review of the capability program architecture established in the 2016 Defence White Paper and Integrated Investment Program. This resulted in a new capability program architecture, based on five domains, 35 programs and a number of multi-domain programs, which was agreed by Government in January 2020. The new capability program architecture has clearer responsibilities and accountabilities and provides Capability Managers with greater ability to manage risk and drive improvements in effectiveness and efficiency.

Overall, the implementation of the Capability Life Cycle is enabling Defence to deliver on the recapitalisation of Australia’s defence capability outlined originally in the 2016 Defence White Paper and now in the 2020 Defence Strategic Update and associated 2020 Force Structure Plan. This is evidenced by the significant number of capability investment approvals achieved since its introduction in 2016.

87 CHAPTER 5 | GOVERNANCE AND EXTERNAL SCRUTINY

Audit The Defence internal audit program provides independent assurance to senior internal stakeholders on departmental controls and the effectiveness of those controls in mitigating strategic enterprise risks. During 2019-20 a total of 50 internal audit tasks were completed. This comprised 36 tasks from the 2019-20 audit program and 14 commenced in 2018-19. In addition, two management-directed audit tasks were completed: MDT19-048 Review of ADF Sports Governance and Reform; and 20-042 Defence’s Management of Recommendations.

Defence also supported audit activities undertaken by the ANAO. In 2019-20, the Auditor-General completed eight performance audits on Defence, the audit of the Defence financial statements for the period ended 30 June 2020, and the priority assurance review (Major Projects Report).

Defence also monitors the implementation of recommendations from internal audits and ANAO audits, and reports on these to the Defence Audit and Risk Committee and the Enterprise Business Committee.

Fraud and integrity In accordance with the Commonwealth Fraud Control Framework 2017, Defence continues to meet its mandatory obligations to prevent, detect and respond to fraud and corruption. Defence has a mature fraud and corruption control program which has a range of strategies to manage, evaluate and report fraud and corruption activities, including:

• the promotion of integrity and development of a strong ethical culture through mandatory and focused training, publications and an Ethics Advisory Service

• a rigorous fraud and corruption risk assessment program focusing on Defence-wide vulnerabilities

• an intelligence-led and targeted fraud and corruption detection program

• investigation of fraud, corruption, misconduct and unethical conduct, with the application of appropriate criminal, civil, administrative or disciplinary action

• recovery of proceeds from fraudulent and corrupt conduct

• development and strengthening of partnerships, at the Commonwealth and international levels, to facilitate information-sharing arrangements.

Investigations In 2019-20, there were 257 fraud investigations registered within Defence, with 198 investigations completed during the year (some of those completed were registered in previous years). Approximately 52 per cent of completed investigations resulted in criminal, disciplinary or administrative action. Of these, approximately 21 per cent related to disciplinary action under the Defence Force Discipline Act 1982.

Table 5.2: Determined fraud losses and cash recoveries, 2015-16 to 2019-201

2015-16 ($) 2016-17 ($) 2017-18 ($) 2018-19 ($) 2019-20 ($) Total

Loss 535,766 608,593 605,351 445,422 992,515 3,187,647

Cash recovery 269,728 426,007 817,811 823,453 435,920 2,772,919

Note:

1. Fraud losses are recorded against the financial year in which the relevant investigation is closed. Cash recoveries comprise all payments received in the financial year, regardless of the year in which the investigation was closed, and include recoveries relating to matters that are currently the subject of investigation.

88 DEFENCE ANNUAL REPORT 2019-20

Compliance with finance law Section 19 of the PGPA Act requires that agencies notify their responsible Minister of any significant issue that has affected the entity. In 2019-20, Defence advised the Minister of 36 instances of significant non-compliance with finance law; in 2018-19 there were 53 instances of significant non-compliance with finance law.

Table 5.3: Instances of significant non-compliance with finance law, 2019-20

Description of non-compliance Remedial action

Credit Card or Cheque (15 cases)—Defence

experienced loss due to Credit Card non-compliance, primarily related to credit card misuse.

Defence undertook remedial actions ranging from administrative

sanctions or disciplinary action to criminal prosecutions. To reduce the

risk of future credit card misuse, the Department introduced a range of

controls, including establishing a dedicated financial compliance team and

developing a travel card e-learning course.

Deception (1 case)—Defence experienced

deception that resulted in loss to the Department, or

an inappropriate benefit being obtained.

In this case remedial action was taken under the Defence Force

Disciplinary Act. To reduce the recurrence of deceptive conduct resulting

in loss, the Department instituted financial sanctions for deterrent effect

and provided formal counselling.

Entitlement (12 cases)—Defence experienced

losses relating to entitlements due to personnel

failing to disclose information when required to do

so, or inappropriately claiming benefits.

Defence undertook remedial action ranging from administrative sanctions

or disciplinary action to criminal prosecutions in response to entitlement

fraud. To reduce the recurrence of entitlement fraud the Department

introduced a range of controls including planned compliance activities to

provide additional assurance around Defence entitlements.

Misuse of property (1 case)—Defence

experienced misuse of Commonwealth assets,

equipment or facilities resulting in a loss to the

Department.

In this case remedial action was taken under the Defence Force

Disciplinary Act. To reduce the risk of property being misused in the future,

the Department introduced a range of controls including educational

and managerial action in relation to the accountability and governance of

Commonwealth assets.

Theft (6 cases)—Defence experienced theft of

Commonwealth resources, assets or equipment.

Defence undertook remedial action ranging from administrative sanctions

to disciplinary action in response to the theft of Commonwealth resources,

assets or equipment. To reduce the risk of future theft, the Department

introduced a range of controls including initiating a review of relevant

operating procedures around securing Commonwealth assets, increased

staff training and enhancements to physical security controls.

Unethical conduct (1 case)—Defence experienced

a loss due to unethical conduct such as abuse of

position.

Defence undertook remedial action by way of administrative sanctions

in response to unethical conduct. To reduce the risk of future unethical

conduct, the Department introduced a range of additional controls. These

included the provision of targeted guidance in response to unethical

conduct by Defence personnel at the managerial level, compliance activity

to provide assurance of Defence personnel attendance, and undertaking

an awareness campaign to assist Defence personnel declare and actively

manage conflicts of interest.

Exercise of the Defence Minister’s powers under the Customs Act In accordance with the requirements of section 112BC in Division 1AA of the Customs Act 1901, the Minister for Defence must table a statement on the exercise of the Minister’s powers under Division 1AA of the Act for each preceding year. For the period 1 July 2019 to 30 June 2020, the Minister for Defence exercised the powers pursuant to Division 1AA of the Act on one occasion.

89 CHAPTER 5 | GOVERNANCE AND EXTERNAL SCRUTINY

Navy’s amphibious force at full strength

The Royal Australian Navy is now one of the world’s premier amphibious forces, after the fleet’s two Canberra class Landing Helicopter Docks and landing craft achieved final operational capability in November 2019.

By achieving this milestone, the entire amphibious capability acquired under Joint Project 2048— including HMAS Adelaide and HMAS Canberra, their 12 landing craft and amphibious supporting organisations—confirmed its ability to deliver and deploy the full scope of amphibious operations.

The Canberra class, the centrepiece of Australia’s amphibious force, has the ability to complete operations from amphibious warfare through to humanitarian assistance and disaster relief. At 230 metres long and with a possible speed of more than 20 knots, the 27,500 tonne Landing Helicopter Docks are highly reliable and effective

ships with capabilities that include six helicopter positions and four integral ship-to-shore connectors that can carry all of Army’s in-service vehicles, including the M1A1 main battle tank.

Since the Rizzo Review in 2011, Navy has strengthened its governance and management systems to support seaworthiness and ultimately deliver all maritime outcomes required by the Government. The Canberra class milestone brings this objective even closer.

Navy’s preparedness in responding to recent events highlights a stark improvement in the management and associated availability of fleet assets. This has been enabled through the Defence Seaworthiness Management System and the development of strong industry partnerships.

HMAS Adelaide and her sister ship HMAS Canberra steam in company through heavy seas in the East Australian Exercise Area, off the coast of New South Wales.

90 DEFENCE ANNUAL REPORT 2019-20

Report of the Inspector-General of the Australian Defence Force The position of the Inspector-General of the Australian Defence Force (IGADF) is established under section 110B of the Defence Act 1903. The IGADF operates outside the ordinary chain of command to provide an independent and impartial integrity, inquiry and assurance function.

The functions of the IGADF are to:

• provide the Chief of the Defence Force (CDF) with a mechanism for internal audit and review of the military justice system

• provide an avenue by which failures in the military justice system may be examined and remedied

• provide advice on matters concerning the military justice system

• conduct reviews of complaints made under the statutory redress of grievance scheme

• conduct inquiries into deaths of ADF members

• inquire into or investigate matters concerning the ADF as directed by the Minister or CDF.

Despite domestic natural disasters and the COVID-19 pandemic, the operating tempo in the Office of the IGADF remained relatively high in 2019-20 and was comparable with previous reporting periods.

In May 2016, under the direction of the CDF, the IGADF established an inquiry into rumours and allegations of misconduct, including potential breaches of the law of armed conflict, by members of the Special Operations Task Group during deployments in Afghanistan between 2005 and 2016. By the end of the reporting period, significant progress had been made towards completion of the inquiry. Substantial effort continued during the reporting period to ensure all persons involved in the inquiry were provided with relevant information on access to legal assistance and welfare support services.

Between July 2019 and March 2020, the IGADF conducted 39 military justice performance audits and 19 focus group activities. One unit was subject to a re-audit, because the previous audit identified material deficiencies in the unit’s military justice arrangements. Material deficiencies were also identified in two other units. During the conduct of military justice performance audits in the reporting period, 3,179 ADF personnel participated in focus group discussions.

After the introduction of travel restrictions in March 2020 due to COVID-19, the remaining audit schedule for 2019-20 was cancelled. The planned re-audit of units with material deficiencies was postponed; the re-audits will be scheduled as soon as feasible.

The IGADF received 66 new submissions alleging military justice failures in 2019-20. As at 30 June 2020, 73 submissions had been finalised based on the results of an IGADF inquiry or assessment.

In addition the IGADF received 25 complaints of possible breaches of Military Police professional standards. During the reporting period 25 such complaints were finalised; 16 of these were submitted in 2019-20 and the remaining nine in previous reporting periods.

There were 318 new applications for redress of grievance in 2019-20, a decrease of approximately 12 per cent from the 360 received in 2018-19. The IGADF finalised 336 applications (some of which were received in previous reporting periods) during the reporting period.

In 2019-20 the IGADF initiated 44 new reviews and finalised 28 inquiries into the death in service of ADF members. Approximately 30 inquiries were ongoing at the end of the reporting period. In addition, IGADF staff worked closely with key Australian Government stakeholders to support the establishment of the new National Commissioner for Defence and Veteran Suicide Prevention.

At the end of each financial year, under section 110R of the Defence Act 1903, the IGADF prepares an annual report on the operations of the Office of the IGADF for the Minster and for presentation to the Parliament. For more information and to access a copy of the latest IGADF Annual Report, visit www.defence.gov.au/mjs/reports.asp.

91 CHAPTER 5 | GOVERNANCE AND EXTERNAL SCRUTINY

Defence engagement with parliamentary committees In 2019-20, Defence provided evidence at seven public hearings, two Senate estimates hearings and three private briefings.

Defence provided 10 submissions and one government response to parliamentary committee inquiries, including input to six government responses led by other departments.

Defence took 699 questions on notice. Of these, 412 were from estimates hearings; 152 were from parliamentary committee hearings and briefings; 134 were submitted in writing from senators and members; and one was asked through the Parliamentary Library.

Defence’s submissions, responses to questions on notice and transcripts of committee hearings are available on the Parliament of Australia website.

Table 5.4 lists Defence’s involvement in inquiries and reviews by parliamentary committees between 1 July 2019 and 30 June 2020.

Table 5.4: Defence’s involvement with parliamentary committees, 2019-20

SENATE STANDING COMMITTEE ON FOREIGN AFFAIRS, DEFENCE AND TRADE

Opportunities to strengthen Australia’s relationship with the Republic of France

Defence provided a submission and participated in a public hearing.

JOINT STANDING COMMITTEE ON FOREIGN AFFAIRS, DEFENCE AND TRADE

Inquiry into Australia’s Defence relationships with Pacific Island nations

Defence provided a submission and participated in a public hearing and a private briefing.

Remediation of PFAS-related impacts and ongoing scrutiny and review

Defence participated in a public hearing.

PARLIAMENTARY JOINT COMMITTEE ON INTELLIGENCE AND SECURITY

Inquiry into the impact of the exercise of law enforcement and intelligence powers on the freedom of the press

Defence participated in a public hearing.

Review of Administration and Expenditure No. 18 (2018-2019)

Defence provided a submission.

Review of Administration and Expenditure No. 17 (2017-2018)

Defence participated in a classified hearing.

SENATE SELECT COMMITTEE ON THE EFFECTIVENESS OF THE AUSTRALIAN GOVERNMENT’S NORTHERN AUSTRALIA AGENDA

Inquiry into the effectiveness of the Australian Government’s Northern Australia agenda

Defence provided a submission and participated in a public hearing.

SENATE SELECT COMMITTEE ON COVID-19

Inquiry into the Australian Government’s response to the COVID-19 pandemic

Defence provided a submission and participated in a private briefing.

SENATE STANDING COMMITTEE ON FINANCE AND PUBLIC ADMINISTRATION

Lessons to be learned in relation to the Australian bushfire season 2019-20

Defence provided a submission.

JOINT COMMITTEE OF PUBLIC ACCOUNTS AND AUDIT

Report 475: Defence First Principles Review, Naval Construction and Mental Health in the AFP Defence provided a Government response.

Inquiry into the 2018-19 Defence Major Projects Report and the Future Submarine Project—Transition to Design (Auditor-General’s Reports 19 and 22 (2019-20))

Defence provided a submission and participated in a public hearing.

SENATE STANDING COMMITTEE ON LEGAL AND CONSTITUTIONAL AFFAIRS

Impact of changes to service delivery models on the administration and running of Government programs

Defence provided a submission.

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SENATE STANDING COMMITTEE ON ECONOMICS

Australia’s sovereign naval shipbuilding capability

Defence provided a submission and participated in a public hearing.

HOUSE OF REPRESENTATIVES SELECT COMMITTEE ON REGIONAL AUSTRALIA

Inquiry into Regional Australia

Defence provided a submission.

Parliamentary Standing Committee on Public Works In 2019-20, Defence witnesses appeared at six hearings of the Parliamentary Standing Committee on Public Works. Defence referred eight major projects and notified nine medium works projects to the committee. Parliamentary approval was achieved for seven major projects and nine medium works projects.

The Point Wilson Waterside Infrastructure Remediation project, originally referred in June 2018 and the subject of a hearing in 2018-19, was required to be referred again in 2019-20 as a result of the 2019 federal election dissolving the 45th Parliament before the committee’s report was tabled and approved. Point Wilson did not require a second hearing, as the existing report was adopted by the incoming committee and approved by Parliament in 2019-20.

Table 5.5: Defence projects that achieved parliamentary approval through the Parliamentary Standing Committee on Public Works, 2019-20

Project Location Value ($m)

Point Wilson Waterside Infrastructure Remediation Point Wilson (VIC) 218.9

HMAS Watson Redevelopment HMAS Watson (NSW) 430.5

Navy Capability Infrastructure Sub-program (combining facilities for SEA 5000 Phase 1 Future Frigates and SEA 1180 Phase 1 Offshore Patrol Vessels Project)

Multiple 1,800

Shoalwater Bay Training Area Remediation Shoalwater Bay Training Area (QLD) 135.4

RAAF Base Redevelopment Stage 6 and United States Force Posture Initiative RAAF Airfield Tindal Works and Associated Infrastructure Project

RAAF Base Tindal (NT) 1,174

Armoured Fighting Vehicle Facilities Program: Stage One Multiple 235.1

LAND 121 Stage 5B Unit Sustainment Facilities Multiple 183.3

Total 4,177.2

Table 5.6: Defence notifications to the Parliamentary Standing Committee on Public Works, 2019-20

Project Location Value ($m)

Singleton Mid-Term Refresh Singleton Military Area (NSW) 42.2

Facilities to Support SEA 1442 Phase 6 Protected Satellite

Communications

HMAS Harman (ACT)

HMAS Stirling (WA)

24.4

Defence Technology Acceleration Collab Fit-out Project Fairbairn (ACT) 7.03

Facilities to Support the LAND 154 Phase 2 Weapons Technical

Intelligence Capability

Gallipoli Barracks (QLD)

DSTG Edinburgh (SA)

5.9

Facilities to Support LAND 555 Phase 6 Force Level Electronic

Warfare, Signals Intelligence and Vehicles Project

Borneo Barracks (QLD) 29.6

Phase One Mulwala Decontamination and Demolition Project Mulwala (NSW) 47.3

Holsworthy Mid-Term Refresh Holsworthy Barracks (NSW) 29.49

Puckapunyal Health and Well Being Centre Puckapunyal Military Area (VIC) 39.8

Oakey Mid-Term Refresh Swartz Barracks (QLD) 31.3

Total 257.02

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Judicial and administrative tribunal decisions In Smith v Commonwealth of Australia (No 2) [2020] FCA 837, the Federal Court approved the settlement of three class actions (Gavin Smith & Ors v Commonwealth of Australia [NSD1908/2016], Bradley James Hudson & Ors v Commonwealth of Australia [NSD1155/2017] and Kirsty Jane Bartlett & Anor v Commonwealth of Australia [NSD1388/2018]), brought on behalf of a number of individuals located in and around Williamtown (NSW), Oakey (QLD) and Katherine (NT), relating to damages the group members alleged to have suffered by reason of the historical use of a firefighting foam containing per- and poly-fluoroalkyl substances. The Federal Court found that the settlements were fair and reasonable and in the interests of the group members in all three proceedings.

Commonwealth Ombudsman and Defence Force Ombudsman reports Defence did not receive any reports issued by the Ombudsman under sections 15, 16, 17 or 19 of the Ombudsman Act 1976 or by the Defence Force Ombudsman under section 19FA of the Ombudsman Act in relation to Defence during the financial year.

Auditor-General’s reports In 2019-20, the Auditor-General published eight performance audit reports in relation to Defence and one priority assurance review.

Table 5.7: Auditor-General’s performance audit reports on Defence, 2019-20

Report Date presented to Parliament Audit objective

Defence’s Administration of Travel Allowances Paid to APS Employees 22 July 2019 To assess the effectiveness of Defence's

administration of allowances and entitlements paid to its Australian Public Service employees.

Defence’s Quarterly Performance Report on Acquisition and Sustainment 23 July 2019 To examine the effectiveness of Defence's quarterly

performance report as a mechanism to inform senior stakeholders about risks and issues in the delivery of capability to the Australian Defence Force.

OneSKY: Contractual Arrangements 31 July 2019 To assess whether the contract for the acquisition of the Civil Military Air Traffic Management System demonstrably represents value for money.

Commonwealth Resource Management Framework and the Clear Read Principle

27 November 2019 To examine the effectiveness of the design and implementation of the clear read principle under the Commonwealth Resource Management Framework.

Future Submarine Program—Transition to Design 14 January 2020 To examine the effectiveness of Defence’s

administration of the Future Submarine program to date.

Defence’s Management of its Public Communications and Media Activities 28 January 2020 To assess the effectiveness and appropriateness of the Department of Defence’s management of its

public communications and media activities.

Aboriginal and Torres Strait Islander Participation Targets in Major Procurements

20 February 2020 To assess the effectiveness of the administration of the mandatory minimum requirements for Aboriginal and Torres Strait Islander employment targets in government procurement contracts and intergovernmental funding agreements in achieving policy objectives.

Management of Defence Housing Australia

9 April 2020 To assess whether Defence Housing Australia

administers its functions efficiently and effectively, and in accordance with the Government Business Enterprise guidelines.

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Table 5.8: Auditor-General’s priority assurance review involving Defence, 2019-20

Report Date presented to Parliament Review objective

2018-19 Major Projects Report 16 December 2019 To provide the Auditor-General’s independent assurance over the status of the selected major projects.

Organisational capability reviews The Australian Public Service Commission did not conduct a review into Defence’s organisational capability in 2019-20.

Freedom of information During 2019-20, Defence finalised 1,054 requests for information. These requests were a combination of freedom of information requests, enquiries that were handled administratively by agreement with the applicant, and courtesy consultations with other government agencies.

Defence received 619 requests for information under the Freedom of Information Act 1982 and finalised 611, including requests carried over from 2018-19. Of these, 256 were for personal information and 28 were for amendment or annotation of records of personal information, managed under section 48 of the Freedom of Information Act.

Defence managed 443 requests for information which did not proceed to a formal freedom of information decision. Of these requests, 235 were for access to personnel records processed in accordance with section 15A of the Freedom of Information Act, which provides for access to be given in such cases through established administrative channels. Defence also received 63 courtesy consultations from other government agencies in 2019-20.

Defence managed 143 review requests on finalised freedom of information decisions. These reviews were managed internally or by providing detailed submissions to the Office of the Information Commissioner. Of these review requests, 61 were internal reviews of freedom of information decisions. Defence finalised 63 reviews, including cases carried over from the previous financial year.

Defence also managed 82 external review cases submitted to the Office of the Australian Information Commissioner; 25 of these reviews were completed and 57 are awaiting a decision from the Information Commissioner. Defence also managed three cases before the Administrative Appeals Tribunal, of which one was completed.

One external complaint relating to a Defence freedom of information case was received by the Office of the Australian Information Commissioner during 2019-20.

Contracts exempt from publication on AusTender In 2019-20, Defence reported a total of 148 contracts, standing offers or variations, with a total value of $470,585,459 (GST inclusive), subject to an exemption under the Freedom of Information Act 1982. These exemptions were generally applied under the national security provisions of the Act.

Information Publication Scheme Entities subject to the Freedom of Information Act are required to publish information as part of the Information Publication Scheme. Each agency must display on its website a plan showing what information it publishes in accordance with the scheme’s requirements.

Further information is available on Defence’s Information Publication Scheme website, detailed in Appendix D.

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Defence Public Interest Disclosure Scheme The Defence Public Interest Disclosure Scheme is underpinned by a strong reporting culture in Defence. The scheme facilitates and encourages reports of suspected wrongdoing, provides support and protection to disclosers, and ensures that suspected wrongdoing is investigated, where appropriate, consistent with the requirements of the Public Interest Disclosure Act 2013.

During 2019-20, Defence received a total of 194 matters reported under the Defence Public Interest Disclosure Scheme. Of these, Defence accepted 118 matters as public interest disclosures and allocated them for investigation.

Reservists from the 10th/27th Battalion, Royal South Australia Regiment, disembark an Australian Army CH-47 Chinook from the 5th Aviation Regiment at Kangaroo Island Airport as part of Operation BUSHFIRE ASSIST 2019-2020 on 13 January 2020.

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Defence embraces the space domain Space is becoming an increasingly congested and contested environment. Defence recognises the importance of this environment as both an essential enabler of military operations and a warfighting domain in its own right.

Air Force has been designated as the Domain Lead and is responsible for coordinating Defence’s space activities and integrating space effects across all operational domains.

This role will be critical as Defence transitions from being a space ‘user’ to being a space ‘contributor’.

Over the next decade, Defence will invest $7 billion in sovereign space capabilities. This investment will be across all aspects of space, including assured position, navigation and timing information in a contested environment; upgrades and support to existing and future satellite communications systems, including communications satellites and ground control stations that will be under sovereign Australian control; Space Domain Awareness capabilities that will enable better tracking and identification of space objects and threats; and capabilities to assure Australian access to critical space missions.

Space is already keeping Defence very busy. The M2 Pathfinder Satellite (pictured), a collaboration between Air Force and UNSW Canberra, was launched on 13 June 2020 from New Zealand’s Mahia Peninsula. M2 Pathfinder is a type of small satellite, around the size of a loaf of bread, known as a CubeSat. It allows high-technology capabilities to be tested in space at a lower cost than larger (typically fridge sized) satellites. The M2 Pathfinder space mission will test communications architecture and other technologies that, with ongoing Defence

collaboration, will inform future Australian Defence Force capability design. It has already enabled UNSW Canberra to develop space courses and programs to benefit Defence personnel.

The new Space Surveillance Telescope (SST) in Western Australia achieved the significant milestone ‘first light’, meaning the completion of calibration to allow the first images of objects in orbit to be seen using the telescope. Once it is operational, the SST will join the C-Band radar as a jointly operated US- Australian capability providing object information to the global Space Surveillance Network (SSN). The C-Band radar has been contributing to the SSN since 2015, supporting a variety of missions including the first manned SpaceX launch to the International Space Station in May 2020.

Since late 2019, Defence has been using its new commercial imagery satellite infrastructure, which allows the Australian Geospatial-Intelligence Organisation to send tasking commands and receive imagery directly from satellites in orbit. The network of antennas is controlled remotely from an operations centre at RAAF Base Edinburgh.

Complementing these new capabilities, the Defence Innovation Hub has invested over $16.5 million in space domain technologies over the last 24 months, and Defence continues to invest in the SmartSat Cooperative Research Centre as a foundation partner. These early investments in Australian technology advancement are critical to building the foundation of the Australian space industry and Defence’s space capability.

Space-based capabilities are integral to modern life in Australia and are an indispensable component of Australian and allied military power. Space is hard, but continued investments in sovereign capabilities will help us reach for the stars.

Artist’s impression of the M2 Pathfinder, or CubeSat, satellite in orbit over the earth.

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STRATEGIC WORKFORCE MANAGEMENT6

Left to right: Royal Australian Air Force Warrant Officer Janet O’Dea, Defence Civilian Sailesh Rao, Navy Commander Lara Fowler and Lieutenant Colonel Phillip Ellsmore at the

Department of Defence in Canberra.

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Workforce summary Defence continues to pursue a capable, agile and resilient workforce that will deliver Defence outcomes in a highly dynamic strategic environment. The development of the 2020 Defence Strategic Update and accompanying 2020 Force Structure Plan throughout 2019-20 provides further impetus to pursue reform, rebalancing and reshaping of Defence’s workforce.

Defence is in the fourth year of implementing the Defence Strategic Workforce Plan 2016-2026. The actions in the plan are designed to best enable the workforce and provide an integrated, enterprise approach to recruitment, career and talent management; workforce mobility; education and professionalisation; transition and re-engagement; and partnerships with other Government departments, industry and academia. The actions are supported by Defence White Paper People Initiatives valued at $384.3 million over the decade to financial year 2024-25, along with initiatives to implement a more contemporary Australian Defence Force (ADF) employment model and remuneration framework. An updated workforce plan will be released late 2021, to support the workforce growth needed for the complex capabilities outlined in the 2020 Force Structure Plan and to respond to changes in Australia’s strategic, social and economic circumstances.

Defence is leading workforce transformation to support the $270 billion Integrated Investment Program and position the Defence workforce to meet rapidly evolving national security challenges. Defence is building its skill base through training and education, targeted recruitment and balancing our integrated workforce to effectively deliver capability requirements.

In 2019-20, efforts continued with the recruitment and retention of the shipbuilding; cyber; science, technology, engineering and mathematics (STEM); intelligence; and information and communications technology workforces.

Defence now has a more versatile approach to managing its ADF total workforce to provide greater flexibility and agility, through its Total Workforce System. This enables Defence to utilise its workforce more effectively and offers opportunities for employment in key growth areas, including by leveraging offers to provide more work to part-time and standby components of the ADF workforce.

Retention of our workforce and their skills and experience is critical to the effective delivery of Defence capability. The Pathway to Change strategy, evolving a workforce culture, embedding the right Defence leadership behaviours and developing a safety culture are critical to our operational effectiveness and to both attraction and retention of a potent Defence workforce.

The Defence workforce rose to the challenges presented by COVID-19. We delivered outcomes in support of the Australian community and also focused on ensuring the safety and wellbeing of our people and their families. By exemplifying the One Defence Leadership Behaviours and focusing on teamwork and innovation, our workforce successfully supported of whole-of-government COVID-19 response efforts.

• More than 2,000 ADF personnel took part in Operation COVID-19 ASSIST in a variety of roles including repatriation of Australian citizens from overseas; planning support and liaison; ensuring quarantine compliance with local law enforcement agencies; frontline medical assistance; support to the defence industry; and assisting Australia’s partners in the Indo-Pacific.

• More than 240 Australian Public Service (APS) personnel were redeployed to Services Australia and other Government departments to assist in the delivery of critical government functions.

A summary of key initiatives is below.

Recruiting of ADF personnel In 2019-20 Defence recruited more than 7,500 personnel to permanent and Reserve roles in the ADF, resulting in 93 percent of permanent force targets being filled. Defence recruited 526 Indigenous Australians, representing 72 per cent of the target for Indigenous recruitment. Challenges remain in recruiting Army Reserves, officer entry submariners and women in STEM roles. In the fourth quarter of the year, the implementation of online testing and the enhancement of telephony systems broadened our ability to identify the right talent and progress candidates more quickly through the recruitment process.

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Families and transition support In 2019-20 Defence continued reform of its transition programs to provide tailored support to transitioning members and their families using a needs-based approach, including targeted support for at-risk members to achieve civilian employment or meaningful engagement. Defence delivered more support for families, including expanding eligibility for the Partner Employment Assistance Program and surge support to families of members deployed to Operation BUSHFIRE ASSIST 2019-2020.

Transition support was successfully delivered to 3,611 members participating in Operation BUSHFIRE ASSIST 2019-2020 and affected by COVID-19 circumstances. This included 3,297 Reservists on continuous full-time service (Service Option C) and 314 full-time service members (Service Category 6 and 7).

Work health and safety The Defence Work Health and Safety Strategy 2017-2022 sets out Defence’s work health and safety priorities. The strategy and its implementation continue to embed work health and safety into the thinking and behaviours of personnel and in all Defence business and management systems.

Defence 2022 reforms In 2019-20 Defence built on the First Principles Review and Defence 2022 reforms in respect of leadership capability. Our leadership programs maintained a focus on One Defence Leadership Behaviours, ensuring that our current and future leaders are equipped to lead integrated teams in times of change. Accessibility and quality of learning experiences has been enhanced through the development of Defence’s online academy.

Defence Values Our employees conduct their duties in accordance with the Australian Public Service (APS) Code of Conduct, the APS Values, and the Defence and Service-specific values. The purpose of the Defence Force Discipline Act 1982 is to maintain and enforce military discipline necessary for Australian Defence Force (ADF) capability.

The APS and ADF values and rules are the foundation for our work and govern the way we relate to our stakeholders and to each other. Without diminishing the ADF and APS values, specific Defence values have been established to provide a common and unifying thread for all people working in Defence.

Defence has undertaken work on a new single set of unifying Values underpinned by an updated set of Defence Behaviours. This work will culminate in the next reporting period with an updated set of values and behaviours for the Defence organisation.

Cultural reform Pathway to Change: Evolving Defence Culture 2017-2022 underpins Defence’s ongoing commitment to driving authentic, sustainable organisational change and creating an environment where all individuals are accountable for a more positive and inclusive culture. In 2019-20, Defence continued to progress its work on the six key cultural reform priorities: leadership accountability, capability through inclusion, ethics and workplace behaviours, health, wellness and safety, workplace agility and flexibility, and leading and developing integrated teams

Sexual misconduct prevention and response During 2019-20, 19,994 Defence personnel completed Sexual Misconduct Prevention and Response Office education sessions through a mix of face-to-face and online delivery. This represents a notable increase on the previous year’s total of 13,355. The Sexual Misconduct Prevention and Response Office was focused on maximising access to Defence’s values and expected behaviours messages and developed e-learning packages to support distributed learning opportunities.

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Key workforce initiatives and achievements A range of new initiatives, combined with enhancements to previous programs, have been implemented to attract, recruit and build the required workforce, and support ADF members and their families.

• The Total Workforce System (formerly the Total Workforce Model) continued to mature. The application of an integrated workforce, drawing on the diverse skills and strengths in both the permanent and Reserve elements, was demonstrated during Defence’s contribution to the national responses to the bushfire emergency and the COVID-19 pandemic.

• The ADF Cyber Professional Framework was developed to support a common workforce taxonomy and foundational job requirements for cyberspace operator roles. A Cyber Professional Development Blueprint and roadmap outlines key activities to continue professionalisation of the cyber workforce.

• By bringing intelligence capabilities from across the enterprise together into a new Defence Intelligence Group, there will be improved coordination of Defence intelligence to support ADF operations and Defence activities and take advantage of emerging capabilities. Implementation will be phased over 2020, with initial Defence Intelligence Group capability operating from 1 September 2020 and full establishment by 1 January 2021.

• The Defence STEM Council is leading a collaborative approach across Defence and other agencies to develop the talent pipeline for careers in science, technology, engineering and mathematics in the national security sector.

• The Defence Enterprise Learning Strategy 2035 was launched to provide strategic guidance across Defence’s education and training domain, which will improve access to learning and further develop Defence’s intellectual edge.

• Targeted ADF recruitment activities in relation to engineering, health, naval, and intelligence related roles were undertaken. This included a successful competition to encourage potential candidates to consider a career as a submariner.

• Defence continued to use Specialist Recruiting Teams for Women, comprising current serving Defence women, to assist with the promotion of Defence careers for women and provide mentoring support through the recruiting process.

• Information sessions focused on women, mentoring programs, and experience camps intended to address some of the perceived barriers to entry are ongoing.

• Pathway programs to support Indigenous Australians progressing to a career in the ADF were conducted in Cairns, Darwin, Kapooka and Wagga Wagga. In addition, the Defence Work Experience Program hosted 437 Indigenous students across Australia.

• In delivering on the Naval Shipbuilding Plan, demand and supply strategies have been developed. This includes a dedicated Maritime Engineering and Naval Construction APS graduate stream, supported by a mentoring program to best develop the technical and professional skills of this foundation workforce. Recruitment is currently underway for the fifth intake of graduates.

• Services to support ADF families continued to expand, including through the Defence Childcare Program Individual Case Management Service, which assisted 86 families in 2019-20 to source appropriate childcare arrangements when a Defence childcare centre was not available.

• To raise awareness of family and domestic violence, we provided a targeted training and education program for supervisors and commanders.

• A range of mental health initiatives were progressed, including the Periodic Mental Health Screen in all garrison health centres, to provide early identification and intervention for members with mental health concerns.

• Partnerships with industry, other government agencies and the education sector were strengthened to build skills that will yield better results for Defence capability. Key to this was the launch of the Defence Industry Skilling and STEM Strategy.

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Defence 2022 workforce initiatives

Developing staff Defence continues to invest in building the intellectual edge of its workforce to meet the challenges and harness the opportunities of the rapidly evolving strategic environment. Defence offers a comprehensive continuum of skills and capability programs, which range from short micro-learning experiences to transformative leadership programs, to subsidised formal qualifications. For example, in 2019-20, 16 cohorts (630 participants) completed the Leading for Reform program, designed to enhance the ability of Executive Level (EL) leaders to model One Defence Leadership Behaviours and implement reform.

Other recent innovations in Defence learning include:

• In collaboration with the Naval Shipbuilding College, Defence established a tailored educational sponsorship program for engineering undergraduates. This program seeks to build a pipeline to meet future skill needs of both Defence and defence industry within the shipbuilding enterprise and deliver 30 to 40 work-ready graduates to the shipbuilding enterprise annually. The first cohort will commence their careers at the start of 2022.

• The Defence Online Academy was launched in July 2019 as an innovative strategic approach to learning that emphasises learner autonomy and leadership engagement. The academy offers learning pathways for the development of both future-focused and specialist skills. The Defence Online Academy had 909,000 site views in 2019-20.

• Flexible virtual delivery options for leadership programs supported continuity of learning during the COVID-19 pandemic and enabled Defence to maintain and expand industry and academia partnerships for the provision of learning services.

• Defence implemented the Build on You program, a digital suite of micro-learning experiences. In May and June 2020, 1,000 learners, most working remotely, benefited from this program. The broader adoption of digital learning platforms, when layered with face-to- face learning, has yielded significant benefits in terms of cost, inclusiveness and learning outcomes.

Cultural reform Defence continues its drive to be a diverse and inclusive employer of choice—respectful, trusted and proven to deliver. In 2019-20 our focus remained on reforming, refining and reinforcing culture through the six key cultural reform priorities of Pathway to Change: Evolving Defence Culture 2017-2022:

• leadership accountability

• capability through inclusion

• ethics and workplace behaviours

• health, wellness and safety

• workplace agility and flexibility

• leading and developing integrated teams.

Implementation of cultural reform within Defence is undertaken at all levels of the organisation.

On an enterprise level we launched the Defence Reconciliation Action Plan 2019-2022, which contains 61 targeted actions to support Indigenous recruitment and retention, community engagement and Indigenous business.

Cultural change is being implemented through Groups and Services via programs including:

• Next Generation Navy, which formally places the leadership of people and culture at the forefront of Navy’s strategy. The program is supported by five cultural pillars: value our people; develop leaders who value their team; enhance resilience; instil a sense of purpose; and drive to professional mastery. These pillars were most recently used as a foundation to develop and deliver a range of support to Navy people and their families during COVID-19.

102 DEFENCE ANNUAL REPORT 2019-20

• Army’s cultural initiative Good Soldiering, which promotes an enduring culture of optimal performance as individuals, as teams and as an Army. It is founded on a platform of trust, exemplary character, values, and achieving inclusion through teaming.

• New Horizon, Air Force’s cultural program, which focuses on the Air Force values of respect, excellence, agility, dedication, integrity and teamwork. These values ensure a fair, safe and inclusive work environment that supports the One Defence Leadership Behaviours required in a ‘Fifth-Generation Air Force’.

Embedding culture into reform programs

The ADF Military Police Reform Program 2018-2020 established a Joint Military Police Unit in January 2020. Framed as essential to the delivery of effective policing within a unified structure, culture was a key consideration of this reform program from the outset.

Leading up to the establishment of the Joint Military Police Unit, staff were required to submit executive summaries outlining their interpretation of and contribution to cultural reform. This exercise proved useful in developing a widespread understanding of the significance of culture and generated various ideas for realising cultural reform, which were captured in a Cultural Reform Intent Statement and aligned Cultural Reform Plan.

As at 30 June 2020, the implementation of the Cultural Reform Plan is ongoing. However, the effectiveness of the Joint Military Police Unit has already been demonstrated through its support to Operation BUSHFIRE ASSIST 2019-2020 and Operation COVID-19 ASSIST while continuing to provide law enforcement and investigative support to the ADF.

With the organisation moving into the third year of Pathway to Change: Evolving Defence Culture 2017-2022, Defence is focused on enhancing its data measurement framework. This framework will help to evaluate cultural reform progress and identify where to focus future efforts and resourcing. To complement this, Defence has extended its collaboration with the Australian Human Rights Commission for a further two years. The collaboration has been important in monitoring cultural change efforts and making recommendations on how to optimise Defence culture.

Defence diversity Defence’s commitment to building capability through inclusion reinforces our commitment under Pathway to Change 2017-22 to building a highly capable and modern workforce through inclusion. In 2019-20 Defence focused on inclusion, representation, attraction and retention of women; Indigenous Australians; lesbian, gay, bisexual, transgender and intersex persons; people from culturally diverse backgrounds; and people with disabilities.

Defence currently has five diversity streams and associated champion positions, focusing on supporting, promoting and engaging with our diverse Defence community.

Defence proudly continues to participate in days of significance and importance. In 2019-20 we participated in the Sydney Gay and Lesbian Mardi Gras parade and celebrated International Women’s Day; Harmony Week; the International Day Against Homophobia, Biphobia, Interphobia and Transphobia; National Reconciliation Week; and National Aborigines and Islanders Day Observance Committee (NAIDOC) Week.

Women In 2019-20 Defence’s efforts to further gender equality focused on women’s representation in leadership roles, mentoring and networking, capability development, and participation in STEM fields.

Defence was recognised for its commitment to gender equity, receiving the Athena SWAN Bronze Award in 2020. The Athena SWAN Awards are an initiative under the Science in Australia Gender Equity (SAGE) program, which aims to promote equity and diversity in STEM. The Bronze Award recognises Defence’s commitment to advancing the careers of women not only in STEM fields but also across all the Groups and Services.

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Defence, along with other large employers, sponsored the inaugural Catalysing Gender Equity Conference in February 2020 and is committed to championing the Women in STEM Decadal Plan, a shared vision for the STEM sector to attract, retain and advance girls and women in STEM education and careers. As a champion of the Women in STEM Decadal Plan, Defence has agreed to publicly align its gender equity actions with the plan.

To increase the number of women on Defence boards, in line with Australian Government targets, Defence continued its focus on providing board readiness training for women. As at 30 June 2020, Defence boards have 45.9 per cent representation by women, an increase of 1 per cent from last year.

Women in the Australian Defence Force

As at 30 June 2020, the participation rate of women in the permanent ADF reached 19.2 per cent—an increase from 18.6 per cent as at 30 June 2019. In the same period, the number of women serving in the ADF increased by 526, with 15 more women in senior officer positions.

Service-specific initiatives provide mentoring, sponsorship and leadership development opportunities for women:

• The Navy Women’s Development Program 2019-21 is designed to empower Navy’s female workforce through initiatives to support the Service-mandated target of 25 per cent female participation rate by 2023. Under this program the Navy Women’s Mentoring Program has been established, along with Navy Women’s Mentoring and Networking Forums. The Navy Women’s Development Program has sponsored more than 100 Navy women to take part in professional development courses provided through Women and Leadership Australia and has secured Navy representation at numerous women in leadership summits and symposiums around the country. The Navy Women’s Mentoring Program continues its sponsorship of The Future Through Collaboration women in engineering mentor/mentee program and is working with Navy Engineering on initiatives to increase female representation in STEM.

• Army provides a range of professional development activities designed to improve leadership, resilience and mentoring. Current programs include sponsorship of The Future Through Collaboration; Great Leaders Are Made; Chief Executive Women’s Leaders Program groups and executive coaching; and the Army Industry and Corporate Development Program. Army is committed to the successful integration of women into combat roles, and to ensuring they have positive, viable careers. In 2019 Army commenced a program of work to review and adjust the force generation and sustainment of women in combat roles.

• Air Force sponsored women to attend and participate in various internal and external conferences and events. These include The Future Through Collaboration; Women Speaking, a public-speaking development program; the Women’s Integrated Networking Group, a facilitated program providing professional development and networking opportunities for all Air Force women; the Leadership Exchange Program, a professional development forum to enhance leadership effectiveness and share ideas and experiences with other Air Force members from different ranks and occupations; and the Australian Women Pilots’ Association Grant, providing two scholarships annually to support women pilots to further their career and enhance their skills.

Women in the Australian Public Service

As at 30 June 2020, the participation rate of women in the Defence APS reached 45.4 per cent—an increase from 44.3 per cent as at 30 June 2019. In this period, the proportion of women in Executive Level positions increased from 33.8 per cent to 35.7 per cent. There has also been an improvement in the proportion of women in Senior Executive Service (SES) positions, increasing from 37.9 per cent to 42.2 per cent.

Defence has implemented a number of gender equality initiatives, including mentoring opportunities for women designed to enable talented female professionals to build their career resilience and develop their leadership skills through group coaching and peer mentoring.

Defence offers a wide range of leadership programs to all of its APS employees. These include the Mentoring Circles for Women, Gateway, Catalyst, Leading for Reform and Capstone programs.

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One Defence mandate for Australia’s National Action Plan on Women, Peace and Security In 2000 the United Nations Security Council adopted Resolution 1325 (UNSCR 1325), formally recognising the disproportionate impact of conflict on women and girls and the importance of full participation of women in conflict prevention and resolution, peace-building and post-conflict reconstruction.

The Australian Government is committed to achieving the aims of UNSCR 1325, and its roadmap for implementing the Women, Peace and Security agenda is the Australian National Action Plan on Women, Peace and Security. The first national action plan ended in 2019 and the government is currently developing the second national action plan, which will operate until 2029.

Defence’s Gender, Peace and Security Mandate, a high priority for the Minister for Defence, sets out our approach to implementing the priorities of the national action plan. The mandate focuses on six lines of effort:

• putting strategic settings in place through policy and doctrine

• training a broad pool of people across the organisation and job functions

• ensuring we have dedicated personnel for implementing this agenda

• achieving a state of mission readiness through deploying Gender Advisors on operations and exercises

• supporting international partner capability-building

• developing a robust governance and reporting framework to ensure Defence is meeting its UNSCR 1325 obligations.

Australia is proactively taking opportunities to deliver on and raise the profile of the Women, Peace and Security agenda. In May 2020, Defence contributed US$1 million to the Elsie Initiative for Women in Peace Operations. The Elsie Initiative, named after Canadian women’s rights pioneer Elsie MacGill, works to identify and overcome obstacles to women’s meaningful participation in peace and security.

In 2021 the Chief of the Defence Force will host an international conference to celebrate the 20th anniversary of UNSCR 1325 and promote meaningful exchanges to progress the agenda.

Defence will continue to champion the global agenda in regional and bilateral forums and be a positive example of how to progress the agenda beyond rhetoric.

Australian Army soldier Signaller Tara Knight talks to students during a tree-planting ceremony held at the local Parndana school on Kangaroo Island. The tree was planted on behalf of all ADF personnel who served on Kangaroo Island on Operation BUSHFIRE ASSIST 2019-2020.

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Indigenous participation and engagement Defence’s commitment to Closing the Gap is outlined in the Defence Reconciliation Action Plan 2019-2022—the plan’s fourth iteration—which was officially launched by the Secretary and the Chief of the Defence Force in August 2019.

The Reconciliation Action Plan contains 61 targeted actions to support Indigenous recruitment and retention, community engagement and Indigenous businesses. It sets Indigenous representation targets of 5 per cent by 2025 for the ADF and 3 per cent by 2022 for the APS.

Defence continues to prioritise employment opportunities through targeted cadetships, traineeships, graduate placements, affirmative measures recruitment activities, and initiatives to increase Indigenous representation at higher levels of the organisation through career development and progression.

In December 2019, Defence completed a nationwide affirmative measures recruitment activity, with around 150 Indigenous Australians interviewed for positions across the APS 5, APS 6 and EL 1 classifications. More than 100 of these applicants were found suitable and placed on an order of merit list, and approximately 15 engagements, 28 promotions and three transfers were achieved.

Defence employs a variety of initiatives for Indigenous Australians to develop professional and personal skills and to obtain exposure to a career in the Navy, Army or Air Force. These include:

• the Defence Work Experience Program, which attracts talent through community engagement activities, work experience opportunities and partnering with Indigenous organisations to focus on improving future outcomes for Indigenous youth

- In 2019-20 the Defence Work Experience Program hosted 437 Indigenous students across Australia, including through the RAAF Indigenous Youth Program and Army’s flagship Indigenous program, Exercise First Look

• the Navy and Army Indigenous Development Programs, which provide language, literacy, and numeracy training; military skills; physical fitness; vocational education and training, cultural appreciation; leadership and character development. These six-month programs are conducted in Cairns (QLD), Darwin (NT) and Kapooka (NSW). During 2019-20:

- 37 people participated in the Navy Indigenous Development Program

- 105 people participated in the Army Indigenous Development Program

• the Air Force Indigenous Recruitment Pathway, which provides a range of flexible recruitment pathways including education and mentoring programs supported by TAFE courses, tertiary bridging initiatives and undergraduate study programs

- During 2019-20, approximately 100 people participated in the flexible recruitment pathways, and 30 people have since enlisted. These programs have a follow-on recruitment effect as participants return to their communities and promote Defence

- Although a large percentage of participants do not decide to join immediately following the program, many return to follow up on their career aspirations. These programs are critical to Air Force’s long-term plan to continue to improve its standing as an employer of choice within Indigenous communities

• the Indigenous ADF Pre-Recruit Program, which is aimed at Indigenous Australians who meet the general entry medical, education and aptitude recruiting standards but need to develop their confidence, resilience and/or physical fitness to enable them to succeed during recruitment and initial training. This six-week program is conducted at Kapooka (NSW) and Wagga Wagga (NSW)

- Participation in the Pre-Recruit Program in 2019-20 comprised 16 people for Navy, 25 people for Army and 11 people for Air Force.

Overall, Indigenous representation among APS employees decreased slightly from 2.4 per cent on 1 July 2019 to 2.3 per cent on 30 June 2020. The permanent ADF Indigenous workforce increased from 3.1 per cent on 1 July 2019 to 3.2 per cent on 30 June 2020 and is currently exceeding the Australian Government target of 2.7 per cent (see Table 6.1).

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Defence is leading from the top to strengthen the cultural intelligence of our workforce. As part of that commitment, in August 2019 Defence launched its fourth Defence Reconciliation Action Plan. The Defence Reconciliation Action Plan 2019-2022 outlines our approach to reconciliation and ‘Closing the Gap’. It prescribes 61 targeted actions to improve socio-economic outcomes for Indigenous Australians, focusing on key priority areas of recruitment, retention, career development and cultural intelligence.

Defence encourages all levels of the organisation to participate in dates of significance as a way to recognise and respect Indigenous history and culture. For example, every year we mark National Reconciliation Week (NRW) through activities to celebrate Indigenous culture and promote reconciliation in Australia.

This year’s NRW took place during the COVID-19 pandemic. Given the restrictions in place, Defence took an innovative approach by creating a range of virtual activities to capture the NRW 2020 theme ‘In This Together’.

Defence officially launched NRW with a symbolic ‘leave your mark’ art activity in which Defence personnel demonstrated their commitment to reconciliation by marking their fingerprints on a canvas. The Secretary and the Chief of the Defence Force were the first to place their fingerprints on the artwork, followed by the Defence Senior Leadership Group. The activity was then opened to all Canberra-based personnel. The completed artwork illustrates Defence’s unique reconciliation journey, encompassing Navy, Army, Air Force and the Australian Public Service.

Indigenous artist and Directorate of Indigenous Affairs employee Kate Weber designed the NRW artwork, which has cultural meaning as well as representing Defence’s journey of reconciliation. With strong ties to Navy through her family’s service, Kate was particularly proud when the Chief of Navy left his fingerprint.

We are creating a more inclusive organisation and strengthening our professionalism, accountability and leadership at all levels. This approach is aligned to Defence’s overall cultural reform agenda, Pathway to Change: Evolving Defence Culture 2017-2022.

Acting Director Indigenous Affairs Shane Hind, Defence Indigenous Cultural Advisor Norman Laing, First Assistant Secretary People Policy and Culture Pat Hetherington, the Chief of the Defence Force General Angus Campbell, Deputy Secretary Defence People Justine Greig, Secretary of Defence Greg Moriarty and Defence Indigenous Champion Steve Grzeskowiak after 'leaving their mark’ on the 2020 National Reconciliation Week artwork at Russell Offices, Canberra on 29 May 2020.

Defence personnel ‘leave their mark’ in act of reconciliation

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Table 6.1: Indigenous participation

30 June 20191 30 June 2020

Number % of total Number % of total

Navy

Permanent 483 3.4% 527 3.5%

Reserves1 43 1.3% 47 1.3%

Army

Permanent 1,008 3.4% 1,022 3.4%

Reserves1 564 3.0% 626 3.2%

Air Force

Permanent 315 2.2% 356 2.5%

Reserves1 57 1.1% 70 1.2%

Total ADF

Permanent 1,806 3.1% 1,905 3.2%

Reserves1 664 2.4% 743 2.6%

Total APS2 399 2.4% 405 2.3%

Notes:

Data for this table is reliant on self-identification on the Defence human resources system; therefore the data is likely to under-report actual participation rates. Data for 2018-19 does not match the data provided in the Defence Annual Report 2018-19, due to retrospective transactions.

1. Reserves include all members (Service Categories 5, 4 and 3) and Reserves undertaking continuous full-time service (Service Option C).

2. Figures include paid, unpaid, full-time, part-time, ongoing and non-ongoing employees.

The ADF’s outreach includes the Air Force Return to Community initiative, which supports Indigenous members to return to their community for a period of time to use their ADF skills and experience. Army has continued the Army Aboriginal Community Assistance Program, a joint initiative with the Department of the Prime Minister and Cabinet aiming to improve environmental health and living conditions in remote Indigenous communities through the delivery of housing, infrastructure and essential services.

People from culturally and linguistically diverse backgrounds Defence aims to provide an inclusive work environment that respects, values and utilises the contributions of people of different backgrounds, experiences and perspectives. Defence is a corporate member of the Diversity Council Australia, an independent not-for-profit peak body leading diversity and inclusion in the workplace.

In 2019-20, Defence continued to offer the Special Broadcasting Service (SBS) Cultural Competence Course. The course is a multifaceted program that includes a range of multimedia online clips and additional resources designed to effectively train a large number of employees around cultural awareness. The course is available to all Defence members on Campus and Campus Anywhere.

Of the 251 candidates recruited for the 2020 Defence Graduate Program, 35 percent of graduates indicated they either spoke or wrote a second language (other than English). Collectively, the cohort has a proficiency in 34 languages including Cantonese, French, German, Hindi, Japanese, Mandarin, Russian and Spanish.

Lesbian, gay, bisexual, transgender and intersex people Defence capability is reliant on Defence’s capacity to attract and retain the best possible talent regardless of gender, race, religion, disability or sexual orientation. Defence is committed to maintaining a safe and inclusive workforce where lesbian, gay, bisexual, transgender and intersex (LGBTI) members can openly contribute to Defence capability.

Defence is a foundation member of Pride in Diversity, Australia’s first and only national not-for-profit employer support program for all aspects of LGBTI workplace inclusion. As part of our Pride in Diversity membership we hold regular training sessions throughout the year which aim to promote LGBTI inclusion across our organisation and provide information and support to Defence personnel who wish to actively support their LGBTI colleagues.

108 DEFENCE ANNUAL REPORT 2019-20

People with disability Defence has been recognised for excellence in disability employment initiatives and programs in the workplace and for inclusion in public sector employment. We have been awarded Gold membership status by the Australian Network on Disability, a not-for-profit organisation resourced by its members to advance the inclusion of people with disability in all aspects of business.

Defence continues to enhance capability and build positive and sustainable employment through a number of disability employment programs. In 2019-20 these included:

• the Inclusive Employment Program, which currently employs 19 people with intellectual disability at the APS 1 and APS 2 levels

• the Defence Administrative Assistance Program, which supported employment of people with a disability in 10 Defence locations across Australia, through partnership with Australian Disability Enterprises

• Defence support for the Dandelion Program, run in partnership with DXC Technology Australia, which builds information technology skills and careers for people with autism spectrum condition.

Defence’s client-centric approach to supporting people with disability and their managers includes:

• workplace adjustments and assistive technology to eliminate workplace barriers

• participation in the Australian Public Service Commission’s Disability Awareness training course, which is specifically designed to build confidence in staff who supervise people with disability

• a dedicated Accessibility Hub which provides employees with disability, ill health or injury and their managers with information on creating a flexible and inclusive work environment.

Disability reporting mechanisms

Defence’s disability reporting mechanisms include both anonymous survey-based data capture and self-identified human resources reporting.

Official data shows that the percentage of Defence APS employees who have identified as having a disability is at 3.3 per cent (a slight reduction from 3.5 per cent in 2018-19) and the proportion of Defence APS employees with a disability or a chronic medical condition (reported through the last Defence census) is at 19 per cent (a reduction from 20 per cent in 2018-19).

Defence is committed to building capability through inclusion, as articulated in Pathway to Change 2017-2022, and continues its focus on removing barriers for people with disability or chronic illness. This includes strategies to address stigma in the workplace, which should increase the willingness of individuals to share information regarding their disability.

Workforce planning This section provides information on average workforce strength during 2019-20. Like other Commonwealth agencies, Defence uses average workforce strength figures for planning and budgeting purposes.

In 2019-20 implementation of the Defence Strategic Workforce Plan 2016-2026 saw improved outcomes in recruiting, retention, career management and transition support, as well as progress in managing and professionalising the APS workforce through the use of Job Families. ADF recruiting achieved 93 per cent of targets for enlistments into the permanent ADF (ab initio and prior service). Women represented 23.4 per cent of enlistments and, combined with retention efforts, this has resulted in 526 more women serving in the ADF (Service Categories 7 and 6, excluding Service Option G) than 12 months ago. Retention in the ADF permanent force improved, with a decline in separations from 9.7 per cent to 9.0 per cent, close to the five-year average of 9.1 per cent. The APS workforce also saw a decline in separations over the year, from 10.4 per cent to 9.4 per cent.

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Indigenous representation in the permanent ADF improved, with more than 350 Indigenous personnel recruited in 2019-20. Indigenous representation in the permanent ADF is now at 3.2 per cent. In relation to transition services, Defence provided individualised career coaching and mentoring services to 5,982 ADF personnel transitioning from Defence, with the aim of assisting them to achieve meaningful employment or meaningful engagement. An additional 3,297 Reserve members were provided needs-based transition support following Operation BUSHFIRE ASSIST 2019-2020.

Staffing levels and statistics All workforce information in this report is at 30 June 2020, and will differ to the rounded workforce achievement figures stated in the Force Structure Plan, which reflects data at an earlier point in time.

Defence budgets for its ADF workforce on an average funded strength basis and for the APS workforce on an average staffing level basis. Defence uses actual full-time equivalent (FTE), which is paid strength on a particular date, to provide the most accurate indicator of current staffing levels. Workforce planning is based on average funded strength for the ADF and average staffing levels for the APS for the financial year; these averages are used to plan for an affordable workforce.

Defence also records some statistical data by headcount. All personnel are counted equally regardless of the number of hours worked. The figures include all personnel recorded as on duty or on leave, full-time or part-time, with or without pay. This statistical basis is used for information by gender, employment categories and employment location. Defence does not base its workforce planning on headcount figures.

Total Workforce System Over the period 2016 to 2018, Defence transitioned to the Total Workforce Model under Project Suakin. In October 2019, Project Suakin was closed and the model was renamed as the ADF Total Workforce System in recognition that it was operational.

A key feature of the Total Workforce System is the ADF Service Spectrum, encompassing the permanent and Reserve forces. Under the Service Spectrum, the ADF workforce consists of six Service Categories differentiated by their relative obligation, commitment and contribution to capability. Members of the permanent ADF serve in Service Categories 7 and 6. Reservists serve in Service Categories 3, 4 and 5. Members in Service Category 2 are Reservists who do not render service but may be subject to call out.

The Service Categories and options available across the Service Spectrum provide members with the choice and flexibility they need to continue to serve. By accessing the workforce potential available across the Service Spectrum it should be easier for Defence to find the right person at the right time.

A program of work to embed and optimise the Total Workforce System across Defence is being undertaken over the period 2020 to 2023. Key activities include improving transfer between Service Categories, extending transition support services across the Service Spectrum and ensuring that future workforce structures are designed to access the flexibility and agility available across the Service Spectrum.

One of the drivers for introducing the ADF Total Workforce System was members seeking more flexibility in how they can serve and work. The introduction of Service Category 6 in 2018 has enhanced the existing suite of flexible work arrangements available to ADF members by allowing members of the permanent force to work reduced hours on a flexible service arrangement.

Each Service has a target of 2 per cent of the trained workforce accessing formalised flexible work arrangements. As at 30 June 2020, Navy has again exceeded this target for the non-seagoing, trained, permanent and continuous full-time service workforce, with 6.1 per cent; Army has 444 personnel (1.7 per cent) on formal flexible work arrangements and 117 personnel (0.45 per cent) in Service Category 6 in a pattern of service other than full time; and Air Force has 6.5 per cent of its trained workforce on formal, documented flexible work arrangements.

110 DEFENCE ANNUAL REPORT 2019-20

Table 6.2: Total Workforce System—Service Spectrum continuum

Previous description Service Spectrum continuum Additional information

Permanent Full-time service (Service Category 7) Reservists on continuous full-time service

(Service Option C) are included in permanent force funded strength numbers but not in headcount figures.

Other than full-time service (Service Category 6) Members of the permanent forces rendering a pattern of service other than full-time, who are subject to the same obligations as Service Category 7.

Reserves Specific pattern of service and number of days

served (Service Category 5)

Members of the Reserves who provide a contribution to capability that extends across financial years and who have security of tenure for the duration of their approved commitment to serve. They are liable for a call out. They can undertake continuous full-time service (Service Option C).

Providing service, which includes an availability (Service Category 4) Members of the Reserves who serve in a contingent capability at short notice, with their

notice to move defined by their Service. They are liable for call out and available to be ‘called for’. They can undertake continuous full-time service (Service Option C).

Available for service or providing service (Service Category 3) Members of the Reserves who provide a contingent contribution to capability by

indicating their availability to serve or who are rendering service to meet a specified task within a financial year. They are liable for call out. They can undertake continuous full-time service (Service Option C).

Not providing service but can be called out in specific circumstances if required (Service Category 2)

Members of the Reserve forces who do not render service and have no service obligation.

They are liable for call out.

Defence APS employees on deployment Employees of the Defence APS who are force assigned (Service Category 1)

APS employees of Defence who have been seconded or attached to the ADF and are force assigned on operations.

ADF Gap Year Full-time service (Service Option G) The ADF Gap Year is a program that enables

17 to 24 year olds with Year 12 education to experience segments of ADF training and employment for up to 12 months.

Australian Defence Force staffing ADF staffing figures for 2018-19 and 2019-20 are shown in Table 6.3.

Table 6.3: Australian Defence Force staffing figures, 2018-19 and 2019-20

ADF staffing measure 1,2 2018-19 2019-20 Variation

For workforce planning purposes

Actual funded strength (paid strength as at 30 June) 58,554 59,760 1,206

Average funded strength (over the financial year) 58,380 59,109 729

For other statistical data

Permanent headcount (on duty/leave and paid/unpaid) 58,058 59,095 1,037

Notes:

1. Funded strength figures include the ADF Gap Year (Service Option G). For consistency with other tables in this chapter, the headcount figures do not include the ADF Gap Year, which had 566 participants on 30 June 2019, rising to 595 participants on 30 June 2020.

2. Funded strength figures do not include the Reserve workforce other than those on continuous full-time service (Service Option C), who are paid through the same mechanism as permanent force members. For consistency with other tables in this chapter the headcount figures do not include Reserve members.

3. 2018-19 headcount figures have been adjusted from those reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

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Table 6.4 details ADF permanent force average funded strength for 2019-20, which includes ADF Reserves on continuous full-time service. ADF strength was 59,109 in 2019-20, an increase of 729 from 2018-19. Average funded strength for Reserves on continuous full-time service was 1,055 (comprising Navy 312, Army 651 and Air Force 92)—an increase of 277 from 2018-19.

Table 6.4: Australian Defence Force permanent force (Service Categories 7 and 6) and Reserves undertaking continuous full-time service (Service Option C), average funded strength

2018-19

Actual

2019-20 Budget estimate1

2019-20 Revised estimate2

2019-20 Actual

Variation %

Navy 14,176 14,776 14,776 14,821 45 0.3%

Army 29,982 30,821 30,821 29,923 -898 -2.9%

Air Force 14,222 14,493 14,493 14,365 -128 -0.9%

Total average funded strength 58,380 60,090 60,090 59,109 -981 -1.6%

Notes:

Figures in this table are average strengths; they are not a headcount. Reserves undertaking full-time service are included in the figures. Employees on forms of leave without pay are not included.

1. As published in the Portfolio Budget Statements 2019-20.

2. As published in the Portfolio Additional Estimates Statements 2019-20.

ADF enlistments and separations In 2019-20 Defence recruited over 7,500 personnel to a combination of permanent and Reserve roles, an increase of 365 from 2018-19.

ADF enlistments can be categorised as ab initio (those with no prior military service) or prior service enlistments.

While there are specific areas that require further improvement to attain the desired workforce numbers, overall Defence has achieved 93 per cent of its target for the recruitment of full-time ADF members (ab initio and prior service).

In 2019-20 the ADF enlisted 6,277 permanent members, made up of 4,810 men, 1,466 women and one member of indeterminate/intersex/unspecified gender. This was 560 more enlistments than in 2018-19.

Of the 6,277 ADF permanent members enlisted, 1,273 entrants had prior military service in the Reserves (Service Categories 5, 4 and 3), the Gap Year program (Service Option G) or another country, or they had previous permanent force service. There were 5,004 ab initio entrants.

The permanent ADF headcount (Service Categories 7 and 6) increased by 1,037 in 2019-20. This reflects the net difference between enlistments and separations. The Reserve headcount increased by over 1,600, reflecting the implementation of the Total Workforce Summary for how Defence generates personnel capability. This is also reflected in the increased number of days that personnel provided to the Reserve Service.

The Gap Year program (Service Option G) for 2019-20 achieved 99.4 per cent of recruiting targets, which is a slight decrease from 99.7 per cent in 2018-19. The Gap Year program is now established as a key avenue of entry to the ADF, with a high proportion of entrants electing to remain in either the permanent or Reserve workforce.

Tables 6.5 and 6.6 provide comparative information about ADF permanent force (Service Categories 7 and 6) separations over the last two years.

112 DEFENCE ANNUAL REPORT 2019-20

Table 6.5: ADF permanent force (Service Categories 7 and 6) and ongoing APS, 12-month rolling separation rates as at 30 June 2019 and 30 June 2020

12-month rolling separation rate (%)

30 June 2019 30 June 2020

Navy 8.1% 6.6%

Army 11.6% 11.0%

Air Force 7.3% 7.3%

Total ADF permanent force 9.7% 9.0%

APS

Ongoing APS 10.4% 9.4%

Note:

For improved accuracy, separation rates are calculated using monthly average headcounts, not end of financial year headcount figures.

Table 6.6: ADF permanent force (Service Categories 7 and 6) separations, 2018-19 and 2019-20

Voluntary

separations1 Involuntary separations2

Age

retirement

Trainee separations

Total

2018-19

Navy Officers 142 33 8 50 233

Other ranks 558 200 8 128 894

Army Officers 236 117 31 147 531

Other ranks 1,615 856 23 424 2,918

Air Force Officers 219 49 18 45 331

Other ranks 419 204 22 65 710

Total ADF permanent force

Officers 597 199 57 242 1,095

Other ranks 2,592 1,260 53 617 4,522

Total 3,189 1,459 110 859 5,617

2019-20

Navy Officers 100 25 6 36 167

Other ranks 405 251 14 126 796

Army Officers 217 102 22 98 439

Other ranks 1,538 745 19 484 2,786

Air Force Officers 190 57 15 30 292

Other ranks 444 225 22 69 760

Total ADF permanent force Officers 507 184 43 164 898

Other ranks 2,387 1,221 55 679 4,342

Total 2,894 1,405 98 843 5,240

Notes:

Figures in this table show permanent force (Service Categories 7 and 6) substantive headcount numbers. Reserves undertaking continuous full-time service (Service Option C) are not included. Separation groupings are mutually exclusive—an individual is placed in only one group, with age retirement and trainee separations taking precedence over voluntary and involuntary separations. ADF members commencing leave or leave without pay are not included.

1. ‘Voluntary’ includes voluntary redundancies and resignations.

2. ‘Involuntary’ primarily comprises members who are medically transitioned from Defence, and personnel who were unsuitable for further duty, died while serving or were part of ‘Command Initiated Transfer to the Reserve’.

3. Data for 2018-19 does not match the data provided in the Defence Annual Report 2018-19 due to retrospective transactions.

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ADF Reserves The number of days each ADF Reserve member (Service Categories 5, 4 and 3) works in a year can vary substantially depending on personal circumstances and organisational need. To reflect this, Table 6.7 shows both the total number of days served by Reserve members in 2018-19 and the number of Reservists who rendered paid service.

In 2019-20 there was an increase of 109,330 days. service compared to 2018-19, to a total of 1,120,849 (112,514 Navy; 775,012 Army; and 233,323 Air Force), while the number of Reservists undertaking service days increased to 21,189 (1,823 Navy; 15,721 Army; and 3,645 Air Force).

As Table 6.7 shows, the figures for number of days served by Navy, Army and Air Force Reserve members were all greater than forecast (by 17 per cent, 13 per cent and 6 per cent respectively). This was primarily due to the support provided for Operation BUSHFIRE ASSIST 2019-2020 and also for COVID-19 support.

Table 6.7: ADF Reserve paid strength (Service Categories 5, 4 and 3), 2018-19 and 2019-201,2

2018-19 Actual: days served

2019-20 Budget estimate3: days served

(members paid)

2019-20 Revised estimate4: days served

(members paid)

2019-20 Actual: days served (members

paid)

Variation: days served (members paid)

Percentage variation: days served (members

paid)

Navy 102,574 96,000 96,000 112,514 16,514 17%

(1,722) (1,750) (1,750) (1,823) (73) (4%)

Army 691,758 685,000 685,000 775,012 90,012 13%

(15,418) (15,500) (15,500) (15,721) (221) (1%)

Air Force 217,187 219,400 219,400 233,323 13,923 6%

(3,411) (3,200) (3,200) (3,645) (445) (14%)

Total paid Reserves

1,011,519 1,000,400 1,000,400 1,120,849 120,449 12%

(20,551) (20,450) (20,450) (21,189)5 (739) (4%)

Notes:

1. Because the number of days or hours worked by Reserve members can vary greatly, figures in this table show the total number of days’ service rendered, with a headcount of members rendering paid service in brackets.

2. This table includes Service Categories 5, 4 and 3. Reserves on continuous full-time service (Service Option C) are not included in this table; they are included in Table 6.4.

3. As published in the Portfolio Budget Statements 2019-20.

4. As published in the Portfolio Additional Estimates Statements 2019-20.

5. This represents the reserve personnel that rendered service from the around 29, 000 personnel across service categories 5, 4, and 3 that have indicated availability to render service. It does not include around 11,000 personnel in Service Category 2 that are not rendering service and may be called on as required.

Australian Public Service workforce APS staffing figures for 2018-19 and 2019-20 are shown in Table 6.8.

Table 6.8: APS staffing figures, 2018-19 and 2019-20

APS staffing measure 2018-191 2019-20 Variation

For workforce planning purposes

Actual FTE (paid strength as at 30 June) 15,996 16,505 509

Average FTE (over the financial year) 15,925 16,129 204

For other statistical data

Headcount figure (on duty/leave, full-time or part-time, paid/unpaid) 16,888 17,454 566

Notes:

Figures include both ongoing and non-ongoing APS employees.

1. 2018-19 headcount figures have been adjusted from those reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

114 DEFENCE ANNUAL REPORT 2019-20

Table 6.9 shows details of the APS average strength, expressed as average FTE, for 2019-20. APS average strength was 16,129 in 2019-20. This was an increase of 204 from the 2018-19 figure of 15,925.

Table 6.9: APS workforce, average full-time equivalent, 2018-19 and 2019-20

2018-19

Actual

2019-20

Budget estimate1

2019-20

Revised estimate2

2019-20

Actual

Variation %

APS 15,925 16,272 16,271 16,129 -142 -0.9%

Notes:

These figures are average FTE; they are not a headcount.

1. As published in the Portfolio Budget Statements 2019-20.

2. As published in the Portfolio Additional Estimates Statements 2019-20.

Table 6.10 shows the actual FTE at the last pay in 2019-20, which at 16,505 was 509 greater than the final pay figure in 2018-19 of 15,996.

Table 6.10: APS workforce, end-of-year actual full-time equivalent, 2018-19 and 2019-20

2018-19

Actual

2019-20

Actual

Variation

APS 15,996 16,505 509

Note: Figures in this table are actual FTE for the last payday of 2019-20. Employees on forms of leave without pay are not included. The figures differ from Table 6.9 as that table shows the average FTE across the full year.

Australian Public Service recruitment and separations Defence recruited 2,297 APS employees during 2019-20, including 251 as part of the graduate program.

The APS headcount increased by 566, which reflects the net difference between recruitment and separations. The majority of separations were due to resignation or retirement from Defence (Table 6.11).

Table 6.11: APS separations, 2018-19 and 2019-20

Voluntary redundancy1 Involuntary separations2

Resignation/ retirement3 Transfers4 Total

2018-195

Senior Executive Service 1 - 11 10 22

Executive Levels 1 and 2 103 16 335 84 538

Other levels 192 66 869 163 1,290

Total APS 296 82 1,215 257 1,850

2019-20

Senior Executive Service - - 11 7 18

Executive Levels 1 and 2 46 17 307 92 462

Other levels 125 59 894 173 1,251

Total APS 171 76 1,212 272 1,731

Notes:

Figures in this table show ongoing and non-ongoing headcount numbers (substantive headcount).

1. Voluntary redundancies are those that are program initiated.

2. Involuntary figures include breach of conduct, invalidity retirement, involuntary redundancies, lack of qualifications, non-performance, term probation and death.

3. Resignation/retirement figures include resignation, retirement (minimum age and Senior Executive Service) and completion of non-ongoing.

4. Transfers are those who have transferred to other government departments.

5. Some 2018-19 figures have been adjusted from those reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

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The challenges that the Australian Defence Force faces are often dynamic and multifaceted, complicated by shifts in technology, geopolitics, demographics and the environment. Army cannot deal with these challenges alone—it relies on a team approach to bring together people with the expertise and experience needed to address the problem at hand.

Army’s approach to teamwork is reflected in its successful partnerships with industry, academia and national institutions. It prepares its people to work effectively in teams through its culture optimisation program Good Soldiering.

Our partnerships with industry are key to delivering land capability. We work closely with industry to support the development of sovereign capability, improve Army’s ability to generate land power effects and help build the workforce of the future. We engage with industry early and often to seek solutions that provide more capacity for Army’s teams. Activities such as the annual Army Innovation Day enable dialogue with industry to ensure Army is making the best use of new technology.

Army supports key delivery agencies to maximise Australian industry involvement in the Capability Life Cycle. These agencies include the Defence Innovation Hub, the Centre for Defence Industry Capability and the Defence Industry Policy Division.

Army has recently established strategic partnerships with two national institutions to achieve shared goals. It has engaged with the Australian Institute of Sport to advance human cognitive, physical and team performance; and with Broken Hill Proprietary Limited (BHP) to develop capability in education, training, technology and workforce. These partnerships allow both organisations to share knowledge, build the leadership and technical skills of their people and contribute to national resilience.

Defence faces difficult challenges but it does not do this alone. Army’s work to build teams through partnerships and shared experience ensures our national resilience in times of crisis.

An Australian Army Armed Reconnaissance Helicopter and a Royal Australian Navy MH-60R helicopter on the HMAS Canberra flight deck in the Philippine Sea during the

Regional Presence Deployment 2020.

Army’s partnerships—creating capacity and capability

116 DEFENCE ANNUAL REPORT 2019-20

Actual workforce This section provides workforce information as at 30 June 2020 and outlines changes in the workforce that occurred during 2019-20. Tables 6.12 to 6.18 show numbers of people, employment categories, locations and gender information. The numbers of Star-ranked and Senior Executive Service officers are provided at Tables 6.14 and 6.15. The information is based on headcount.

At 30 June 2020, Defence had a permanent workforce of 76,197, comprising 59,095 permanent ADF members (Service Categories 7 and 6, excluding Service Option G) and 17,102 ongoing APS employees. In addition, 352 APS employees were employed on a non-ongoing basis (Table 6.17).

The Reserve (Service Categories 5, 4 and 3) headcount increased by 1,661 to 28,878 (including members on continuous full-time service (Service Option C)). A further 11,000 personnel are in Service Category 2; if personnel in Service Category 2 render service they change their status to Service Category 5, 4 or 3. If people are not able to continue rendering service they transfer to Service Category 2 and are available to be called upon as required.

The total ADF workforce was 87,973, comprising 18,659 Navy permanent and Reserve members, 49,259 Army permanent and Reserve members, and 20,055 Air Force permanent and Reserve members.

At 30 June 2020, 1,172 Reserves were also Defence APS employees.

Table 6.12: Defence workforce headcount as at 30 June 2019 and 30 June 2020

Navy Army Air Force ADF1 APS2

Headcount 30 June 2019 14,206 29,510 14,342 58,058 16,888

Additions 1,784 3,342 1,151 6,277 2,297

Separations 963 3,225 1,052 5,240 1,731

Headcount 30 June 2020 15,027 29,627 14,441 59,095 17,454

Change 821 117 99 1,037 566

Notes:

Figures in this table show substantive headcount numbers.

1. ADF figures are for permanent members (Service Categories 7 and 6) and do not include Reserves (Service Categories 5, 4 3 and 2), Reserves undertaking continuous full-time service (Service Option C) or ADF Gap Year participants (Service Option G).

2. APS figures include paid and unpaid employees, which covers full-time, part-time, suspended, ongoing and non-ongoing employees.

The APS figures in Table 6.13 have historically been reported using substantive location. A review of the location figures in 2019-20 identified that actual location provides a more reliable indication of an APS employee’s location, so actual location has been used for the report this year.

Defence Administration Assistance Program members Sharon Lakin, Roslyn Huntriss, Julian Cook and Jessica Jennings team up to roll up emergency shelters used for training at Combat Survival Training School on 25 June 2020.

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Table 6.13: Defence workforce by employment location as at 30 June 2020

NSW QLD SA TAS VIC1 WA ACT2 NT O/S3 Total

Permanent force4

Navy 6,453 810 169 21 2,085 2,716 1,923 653 197 15,027

Army 5,351 12,344 1,800 52 3,047 904 3,025 2,816 288 29,627

Air Force 4,294 3,380 1,918 10 1,105 273 2,220 924 317 14,441

Subtotal 16,098 16,534 3,887 83 6,237 3,893 7,168 4,393 802 59,095

Reserves5

Navy 1,081 475 104 86 303 329 1,168 83 3 3,632

Army 5,385 4,965 1,651 500 3,489 1,992 1,002 644 4 19,632

Air Force 1,569 1,404 659 60 423 214 1,176 109 - 5,614

Subtotal 8,035 6,844 2,414 646 4,215 2,535 3,346 836 7 28,878

Total ADF 24,133 23,378 6,301 729 10,452 6,428 10,514 5,229 809 87,973

APS6

Total APS 2,502 1,245 2,086 75 3,451 456 7,298 206 135 17,454

Notes:

Figures in this table are based on substantive location for the ADF and actual location for the APS.

1. Victorian figures include individuals located in Albury NSW.

2. Australian Capital Territory figures include individuals located in Jervis Bay (Commonwealth), Queanbeyan (NSW) and Bungendore (NSW).

3. Individuals posted overseas for reasons including long-term duty, training, exchange and liaison.

4. Permanent force (Service Categories 7 and 6) does not include ADF Gap Year participants (Service Option G).

5. Reserves include all members (Service Categories 5, 4 and 3) and Reservists undertaking continuous full-time service (Service Option C).

6. Includes paid and unpaid employees, which covers full-time, part-time, ongoing and non-ongoing employees. The 30 June 2020 figures for the APS include 1,172 APS employees who are also counted as Reserve members.

Table 6.14: Star-ranked officers as at 30 June 2020

Star-ranked officers 1 2019-20 engagements2 2019-20 separations

Men Women Total Men Women Total Men Women Total

Four-star

Navy - - - - - - - - -

Army 1 - 1 - - - - - -

Air Force - - - - - - - - -

Three-star

Navy 3 - 3 1 - 1 - - -

Army 3 - 3 - - - - - -

Air Force 2 - 2 - - - 1 - 1

Two-star

Navy 8 2 10 - 1 1 1 - 1

Army 18 4 22 4 1 5 1 - 1

Air Force 8 1 9 3 - 3 3 1 4

One-star

Navy 38 6 44 8 2 10 3 - 3

Army 51 9 60 11 4 15 7 1 8

Air Force 32 6 38 9 3 12 7 1 8

Total 164 28 192 36 11 47 23 3 26

Notes:

1. Figures in this table show members in Service Categories 7 and 6 (Permanent Service), at their substantive rank.

2. Figures in this table show substantive promotions only.

118 DEFENCE ANNUAL REPORT 2019-20

Table 6.15: APS Senior Executive Service employees as at 30 June 2020

Total Senior Executive Service1 2019-20 engagements2, 3 2019-20 separations2, 4

Men Women Total Men Women Total Men Women Total

Senior Executive

Secretary 1 - 1 - - - - - -

Band 3 7 3 10 1 1 2 - 1 1

Band 25 22 11 33 5 2 7 3 1 4

Band 16 50 50 100 5 1 6 8 3 11

Chief of Division

Grade 2 7 1 8 - - - 1 1 2

Grade 1 2 - 2 - - - - - -

Total 89 65 154 11 4 15 12 6 18

Notes:

1. Figures in this table show employee numbers at their substantive level, including employees on long-term leave (6), secondment (6) and temporary transfer to other departments (5).

2. Gains and losses do not reflect movement of officers between levels in each of the Senior Executive Service and Chief of Division streams.

3. Engagement figures include new engagements and transfers from other agencies only.

4. Separation figures include resignations, retirements, redundancies, and promotions and transfers to other departments.

5. Senior Executive Service Band 2 includes Medical Officer Grade 6.

6. Senior Executive Service Band 1 includes Medical Officer Grade 5.

Table 6.16: APS Executive Level employees and below, by gender and classification as at 30 June 2020

30 June 2020 headcount 2019-20 engagements 2019-20 separations

Men Women Total Men Women Total Men Women Total

Executive Level

Executive Level 2 1,162 493 1,655 49 45 94 102 44 146

Executive Level 1 2,218 1,387 3,605 127 139 266 193 123 316

Subtotal 3,380 1,880 5,260 176 184 360 295 167 462

Other staff

APS Level 6 2,912 2,198 5,110 300 261 561 273 190 463

APS Level 5 1,507 1,412 2,919 179 218 397 177 124 301

APS Level 4 681 1,027 1,708 84 185 269 76 108 184

APS Level 3 449 855 1,304 75 127 202 43 72 115

APS Level 2 358 374 732 191 121 312 91 52 143

APS Level 1 150 113 263 100 78 178 21 21 42

Subtotal 6,057 5,979 12,036 929 990 1,919 681 567 1,248

Total APS 9,437 7,859 17,296 1,105 1,174 2,279 976 734 1,710

Note:

Figures in this table show ongoing and non-ongoing employee substantive headcount numbers. Figures include paid, unpaid, full-time and part-time employees. Figures exclude SES employees. Figures exclude employees who do not exclusively identify as either male or female.

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Table 6.17: APS employees by gender as at 30 June 2019 and 30 June 2020

30 June 20191 30 June 2020

Full time Part time2 Total Full time Part time2 Total

Ongoing employees

Men 9,075 207 9,282 9,145 199 9,344

Women 6,421 965 7,386 6,790 964 7,754

Unspecified 3 2 1 3 3 1 4

Total ongoing 15,498 1,173 16,671 15,938 1,164 17,102

Non-ongoing employees

Men 104 12 116 159 23 182

Women 85 15 100 153 17 170

Unspecified 3 1 - 1 - - 0

Total non-ongoing 190 27 217 312 40 352

Total APS employees

Men 9,179 219 9,398 9,304 222 9,526

Women 6,506 980 7,486 6,943 981 7,924

Unspecified 3 3 1 4 3 1 4

Total 15,688 1,200 16,888 16,250 1,204 17,454

Notes:

Figures in this table show substantive headcount numbers. Figures include paid and unpaid employees.

1. Some 30 June 2019 figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

2. Part-time employees are those with weekly hours less than the standard hours. It does not relate to employees in part-time positions.

3. Figures include employees who have identified as indeterminate, intersex or unspecified.

Table 6.18: ADF permanent (Service Categories 7 and 6), Gap Year (Service Option G) and Reserve forces (Service Categories 5, 4 and 3) and APS by gender as at 30 June 2019 and 30 June 2020

30 June 20191 30 June 2020

Men % Women % Men % Women %

Navy permanent2

Trained force

Officers 2,109 14.8% 561 3.9% 2,199 14.6% 621 4.1%

Other ranks 7,452 52.5% 2,042 14.4% 7,508 50.0% 2,162 14.4%

Training force

Officers 613 4.3% 202 1.4% 692 4.6% 230 1.5%

Other ranks 933 6.6% 291 2.0% 1,269 8.4% 344 2.3%

Total Navy 11,107 78.2% 3,096 21.8% 11,668 77.7% 3,357 22.3%

Army permanent2

Trained force

Officers 4,577 15.5% 904 3.1% 4,608 15.6% 942 3.2%

Other ranks 17,882 60.6% 2,740 9.3% 17,726 59.8% 2,823 9.5%

Training force

Officers 768 2.6% 249 0.8% 770 2.6% 228 0.8%

Other ranks 1,855 6.2% 593 2.0% 2,011 6.8% 466 1.6%

Total Army 25,190 85.4% 4,319 14.6% 25,217 85.1% 4,408 14.9%

120 DEFENCE ANNUAL REPORT 2019-20

30 June 20191 30 June 2020

Men % Women % Men % Women %

Air Force permanent2

Trained force

Officers 3,372 23.5% 1,028 7.2% 3,436 23.8% 1,060 7.3%

Other ranks 6,709 46.8% 1,866 13.0% 6,418 44.5% 2,006 13.9%

Training force

Officers 603 4.2% 240 1.7% 615 4.3% 257 1.8%

Other ranks 277 1.9% 244 1.7% 415 2.9% 231 1.6%

Total Air Force 10,961 76.4% 3,378 23.6% 10,884 75.4% 3,554 24.6%

ADF permanent2

Trained force

Officers 10,058 17.3% 2,493 4.3% 10,243 17.3% 2,623 4.4%

Other ranks 32,043 55.2% 6,648 11.5% 31,652 53.6% 6,991 11.8%

Training force

Officers 1,976 3.4% 665 1.1% 2,038 3.4% 710 1.2%

Other ranks 3,181 5.5% 987 1.7% 3,836 6.5% 995 1.7%

Total ADF permanent 47,258 81.4% 10,793 18.6% 47,769 80.8% 11,319 19.2%

ADF Gap Year

Navy 53 9.4% 74 13.1% 67 11.3% 92 15.5%

Army 199 35.2% 82 14.5% 208 35.0% 78 13.1%

Air Force 73 12.9% 84 14.9% 66 11.1% 84 14.1%

Total ADF Gap Year 325 57.5% 240 42.5% 341 57.3% 254 42.7%

Reserves2,3

Navy 2,584 9.5% 760 2.8% 2,823 9.8% 809 2.8%

Army 15,947 58.6% 2,818 10.4% 16,648 57.6% 2,984 10.3%

Air Force 4,041 14.8% 1,065 3.9% 4,413 15.3% 1,201 4.2%

Total Reserves 22,572 82.9% 4,643 17.1% 23,884 82.7% 4,994 17.3%

APS2,4

Total APS 9,398 55.7% 7,486 44.3% 9,526 54.6% 7,924 45.4%

Notes:

Figures in this table show substantive headcount numbers. Percentage figures are calculated within each section, so that the subtotal for each section adds to 100 per cent. Percentages may not sum due to rounding.

1. Some 30 June 2019 figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

2. Figures exclude employees who do not exclusively identify as either male or female.

3. Reserves include all members (Service Categories 5, 4 and 3) and Reservists undertaking continuous full-time service (Service Option C).

4. Figures include paid, unpaid, full-time, part-time, ongoing and non-ongoing employees. The 30 June 2020 figures for the APS include 1,172 APS employees who are also counted as Reserve members.

ADF Gap Year program The ADF Gap Year program aims to give Australian school-leavers and young adults an exposure to the military way of life and the roles and opportunities on offer in the ADF. It is full-time service and referred to as Service Option G in reporting. A total of 593 participants enlisted in the 2019 ADF Gap Year program (Navy, 125; Army, 300; Air Force, 168). A total of 616 participants have enlisted in the 2020 program (Navy, 145; Army, 301; Air Force, 170). As at 30 June 2020, 41 members from the 2019 program and 555 members from the 2020 program (a total of 596) were still participating.

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Table 6.19: ADF Gap Year (Service Option G) participants as at 30 June 2020

Navy Army Air Force ADF Total

Men

Women

Indeterminate

Men

Women

Indeterminate

Men

Women

Indeterminate

Men

Women

Indeterminate

2019 program

Participants 50 75 - 212 88 - 78 89 1 340 252 1 593

Separated or Reserves

(Service Category 2)

21 18 - 23 8 - 9 13 1 53 39 1 93

Transferred to permanent ADF 21 40 - 134 47 - 61 68 - 216 155 - 371

Transferred to Reserves - - - 48 25 - 7 8 - 55 33 - 88

Still participating in 2019 program 8 17 − 7 8 - 1 − − 16 25 − 41

2020 program

Participants 64 81 - 221 80 - 77 93 - 362 254 - 616

Separated or Reserves

(Service Category 2)

4 3 - 19 8 - 9 8 - 32 19 - 51

Transferred to permanent ADF 1 2 - 1 - - 3 1 - 5 3 - 8

Transferred to Reserves - - - - 2 - - - - - 2 - 2

Still participating in program 59 76 - 201 70 - 65 84 - 325 230 - 555

Reserve Service protection The Defence Reserve Service (Protection) Act 2001 (DRSP Act) provides for the protection of ADF Reserve members in their civilian employment and education. The Act mitigates some of the employment and financial disadvantages that Reserve members may face when undertaking Defence service, making service easier to undertake and so enhancing Defence capability.

Under the DRSP Act, employers and education providers are prohibited from discriminating against Reserve members or hindering them from rendering Defence service. A Reserve member rendering Defence service is entitled to be absent from their employment during that service, and must be permitted to resume work after their Defence service ends. Education providers are required to make reasonable adjustments to accommodate a Reserve member’s Defence service. Under the DRSP Act, employers, education providers and others may be subject to criminal prosecution or civil penalties. An affected person may bring an action for compensation or an injunction in a court, or Defence may bring such an action on behalf of the affected person.

Since April 2019, telephone calls regarding Reserve service protection issues have been directed through the 1800-DEFENCE call centre. This service provides ADF Reservists and employers with extended access to advice, and Defence with accurate data collection on phone enquiries regarding issues related to the DRSP Act. Access to the call centre function proved particularly valuable during Operation BUSHFIRE ASSIST 2019-2020, when the call centre was operating for extended hours.

Between 1 July 2019 and 15 June 2020, 324 calls were received regarding enquiries related to the DRSP Act. Of these, 45 enquiries were resolved at the time of contact through the provision of general information regarding protections and obligations provided by the DRSP Act; 279 complex enquiries were referred to Employer Support and Service Protection staff for specific advice; 274 enquiries were resolved within nine business days; and the remaining enquiries are still open at the time of this report.

The number of enquiries in 2019-20 is commensurate with the number of enquiries reported for 2018-19.

122 DEFENCE ANNUAL REPORT 2019-20

ADF Cadets Throughout 2019-20 Defence continued to deliver and administer several youth development and engagement activities. Foremost among these is the Australian Defence Force Cadets (ADF Cadets) program.

ADF Cadets is a personal development program for young people, supported by the ADF in cooperation with the community. The program benefits the nation by developing the capacity of young Australians to contribute to society.

ADF Cadets comprises three Cadet organisations, which are aligned to and administered by the respective Services. ADF Cadets Headquarters is a separate organisation, which is tasked with the development and governance of common elements of the ADF Cadet program.

Approximately 28,400 Cadets are currently enrolled in the three Cadet programs; 4,200 officers and instructors of Cadets and ‘approved helpers’ supervise and support the young people in the programs; and there are 577 ADF Cadet units across all states and territories.

2019-20 highlights The One Cadet reform program was initiated in October 2016. The program standardises the governance and administration of common elements of the three Services’ Cadet programs, with an emphasis on youth safety, training coordination, communications and enterprise support.

Requirement 3 of the Commonwealth Child Safety Framework directs implementation of the National Principles for Child Safe Organisations. Collectively these requirements and principles align closely to the elements of a safety management system. Hence, youth safety in Defence will be managed within the Defence Work Health and Management System framework as a specialist safety domain. In line with this approach, Defence youth protection policies have been revised.

As part of Defence’s commitment to youth safety, during 2019-20 we embarked on evaluating the Defence Youth Safety Framework within the ADF Cadets. The ADF Cadets Survey (Part A—Youth) was undertaken to evaluate the effectiveness of the Defence Youth Safety Framework in shaping the youth safety culture of ADF Cadets. The second phase of the evaluation, Part B—Adults, has commenced. It consists of a questionnaire for ADF Cadets adult volunteers and the parents/guardians of ADF Cadets, and interviews of adult leaders across the program. Part B of the evaluation will ascertain adult understanding of youth safety, and the perception of youth safety in the ADF Cadets program. The combined results of Part A and Part B will provide Defence with a holistic view of ADF Cadet youth safety.

Australian Navy Cadets Throughout 2019-20 the Australian Navy Cadets progressed a range of initiatives. These included a revision of Australian Navy Cadet Instructor training packages; ongoing replacements for watercraft including new power boats and sail craft; improvements to facilities; replacement of sailing helmets and life jackets and increased participation in major facilities and infrastructure redevelopment projects.

The summer bushfires and COVID-19 restrictions forced the suspension of Australian Navy Cadets parades and weekend camps. When COVID-19 restrictions are relaxed, Cadets will return to routine activities. Throughout the suspension, Cadets continued to be engaged by participating in regular ‘virtual parades’ using teleconferencing technology. Planning is underway to resume annual camps, weekend activities, sailing regattas and national shooting competitions.

Four Maritime Training Centres are being established across Australia. The Maritime Training Centres will standardise sail training and provide Cadets with exciting and hands-on maritime experiences. The Training Centres will also provide greater access for Cadets to participate in the Australian Navy Cadets sail training program and improve the capacity to host sail training camps using clusters of new, world-class sail training vessels. The Australian Navy Cadets Directorate is also working closely with Navy Fleet Support Units to yield mutual benefits in watercraft maintenance and repairs.

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In 2019, Cadets participated in sea familiarisation training using opportunities to sea-ride in Navy ships and in Sail Training Ship Young Endeavour. In January 2020 the Australian Maritime College in Launceston provided 18 Cadets with an excellent vocational insight to careers in the maritime industry, using simulation and modelling technology and training vessels.

The Australian Navy Cadets has 2,193 Cadets. Of these, 733 (27 per cent) are female and 79 (3.6 per cent) are Indigenous.

Australian Army Cadets The Australian Army Cadets experienced a disrupted year in 2019-20 with bushfires in eastern Australia impacting planned field activities over the December-January period. COVID-19 then caused the cessation of all face-to-face activities from March-June. However, the COVID-19 shutdown did present a number of opportunities for innovation: Cadets and volunteer leaders ran effective training activities, including courses of approximately 300 Cadets online, as well as online parading and maintaining contact through social media links.

COVID-19 also provided the opportunity to consolidate the transformation program. This meant there was no loss of momentum, with transformation remaining on track. Initiatives that have been successfully implemented include further professionalisation and distributed learning elements of the Adult Leader Development Continuum to better equip adult volunteers for their roles; and modernisation of the Cadet Development Continuum with the introduction of cyber and unmanned aerial vehicle electives. COVID-19 probably prevented the achievement of growth targets; however, the number of volunteers in the program grew slightly to 1,242 (1,165 last year), and Cadet numbers increased to 17,662 (17,130 last year). The proportion of female Cadets has risen to 23 per cent (22 per cent last year), and Indigenous Cadet numbers have remained consistent at 3 per cent of the Cadet population.

Australian Air Force Cadets During 2019-20 the Royal Australian Air Force accepted into service all eight Diamond DA-40NG aircraft, which included the training of aircrew instructors and rollout of the Civil Aviation Safety Authority licensed Elementary Training Flying School at Point Cook, Richmond and Amberley RAAF Bases. This greatly expands the capacity of the Australian Air Force Cadets to provide high-quality, safe flying experiences and training up to solo standard in a modern aviation platform. To further enhance and modernise aerospace teaching and understanding, contracted services have provided STEM education packages—replacing the previous outdated Cadet curriculum—which include mass distribution of micro-drones to all units and Cadets in the Air Force Cadets.

The Strategic Leadership Group, which includes Air Force Cadets and Air Force senior officer representation, was formed to map a clear strategic pathway for the future development of the Air Force Cadets over a 10-year rolling program.

This financial year saw growth in adult uniform volunteer numbers (from 1,143 to 1,211) and very good growth in Cadet numbers (from 7,525 to 8,563—a 13 per cent increase). The proportion of female Cadets is 25 per cent.

Recruitment activities Defence must grow and reshape the workforce to meet new capability requirements, particularly in areas such as intelligence, cyber, engineering and specialist skills to enable the national shipbuilding enterprise.

Targeted recruitment and retention efforts are ongoing in relation to a number of engineering, science, health, naval (such as submariners) and intelligence related occupations.

The following recruitment-related activities were progressed in 2019-20:

• Strategies for recruitment of Army women and a plan for recruiting into the science, technology, engineering and mathematics roles have been released and are being implemented.

124 DEFENCE ANNUAL REPORT 2019-20

• Additional marketing material was launched to capitalise on the success of the existing Army brand campaign and overcome some perceived barriers to people, especially women and specifically mothers, contemplating an Army career.

• A submariner competition was conducted in February 2020 to encourage potential candidates to consider a career as a submariner in the Navy. Winners were invited to HMAS Stirling to board a submarine and experience life as a submariner.

• The Female Initial Training Preparation (FIT Prep) program, previously the Army Preconditioning Program, was refined to better prepare women for commencement and successful completion of initial military training.

• Tours of Navy ships and establishments were conducted, including Navy-oriented information sessions to familiarise potential applicants with Navy opportunities.

• Flexibility in the Navy intake timing process was introduced to adjust for late-notice recruiting.

• Defence partnered with the Department of Industry, Science, Energy and Resources, through Questacon, to develop the ‘Engineering is Elementary’ program. This program engages and equips Australian teachers with the confidence, skills and capability necessary to cultivate Australia’s next generation of engineers and innovators.

• The STEM Cadetship Program has been expanded and now includes 35 APS Cadets within the Defence Science and Technology Group.

As a result of these activities, ADF recruitment to the permanent workforce increased to 6,277 in 2019-20, compared to 5,717 enlistments in 2018-19. This was 93 per cent of the 2019-20 target of 6,681. Recruitment to the Reserves was 1,419 in 2019-20, which was 79 per cent of the target of 1,804. In 2018-19, the number of ADF permanent force enlistments was 92 per cent of the target of 6,226, and for the Reserve force was 85 per cent of the full-year target of 1,903.

Defence has reformed its approach to APS recruitment with the introduction of a case management model to streamline the recruitment process.

The case management model gives supervisors and managers a single point of contact to provide support throughout the recruitment process, and streamlines administration and processing time. Recruitment advisors work with recruitment system and process experts to develop strategies and innovative approaches that better target critical segments of the labour market.

Digital enhancements to the recruitment system enable key recruitment decisions to be recorded directly into the system, reducing processing times.

The competition for talent has motivated new approaches to recruitment, including to advertising and candidate assessment. Reshaping position descriptions to be meaningful for candidates and using social media for specialist recruitment campaigns is resulting in larger candidate pools. Flexible approaches to recruitment, including greater use of technology for interviews and assessment, enabled Defence to continue to conduct recruitment processes throughout the bushfire and COVID-19 challenges.

Defence has changed the way it manages its Temporary Employment Register, ensuring that when required it will have a talent pool with job-ready people. The introduction of increased candidate screening processes via occupational testing, online interviews and reference checks will ensure increased visibility of available talent.

Throughout the COVID-19 challenge Defence has continued to recruit to the ADF to ensure that force generation requirements are not affected. Using innovative recruitment measures, including online testing and virtualised interviews, Defence Force Recruiting processed 13,077 applicants between 14 April and 23 June, an increase of 5,030 from the same period last financial year.

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At a time when 75 per cent of the fastest growing occupations require science, technology, engineering and mathematics (STEM) skills and knowledge, women make up only 16 per cent of the STEM-skilled workforce in Australia. Defence is committed to increasing the representation of women in STEM roles as part of building a world-leading technology-enabled workforce capable of meeting the challenges of the future.

Defence has publicly reaffirmed its commitment to gender equity by becoming a Women in STEM Decadal Plan Champion, joining 29 other eminent institutions in Australia. The Women in STEM Decadal Plan is a unique whole-of-industry strategy to achieve real and sustained change. The key objectives of the plan are adopted in Defence’s Moving Towards a High-Tech Future for Defence: Workforce Strategic Vision Underpinned by Science, Technology, Engineering and Mathematics 2019-2030.

In February 2020, Defence partnered with the Australian Academy of Science to sponsor the inaugural Catalysing Gender Equity Conference. The conference highlighted practical ways to

achieve the shared industry vision of the Women in STEM Decadal Plan. Defence showcased its key gender equity initiatives in an ‘equity action gallery’. These activities include Jasper, the Air Force engagement program encouraging girls to pursue STEM at school; the Future through Collaboration Mentoring Program for women in defence industry; and the Defence Undergraduate STEM Cadetship Program. The Chief Defence Scientist participated in a panel discussion on how leaders can step up to drive system-wide change in STEM. More than 30 Defence members attended, along with more than 400 delegates from across the science and technology ecosystem.

In recognition of its commitment to diversity and inclusion, the Defence Science and Technology Group was awarded the Athena SWAN Bronze Award accreditation by Science in Australia Gender Equity (SAGE) in early 2020. As a nationwide equity and diversity evaluation and accreditation program, SAGE aims to promote gender equity in STEM. The Bronze certification recognises that an institution has demonstrated a good understanding of the current status of gender equity and is positioned well to implement interventions to address inequities. Defence has committed to 72 actions over the next four years under the SAGE Action Plan 2019-2023.

Defence Science and Technology Group researcher Joyce Mau setting up the new single photon avalanche diode camera for low light and 3D imaging in the testing tunnel at Defence Science and

Technology’s Edinburgh facility.

Women in STEM

126 DEFENCE ANNUAL REPORT 2019-20

Defence Graduate Program The Defence Graduate Program continues to deliver vital people capability to address Defence workforce challenges and to meet the emerging needs of the organisation. Graduates are recruited across 14 career streams, including STEM, intelligence and corporate disciplines to support the delivery of key organisational priorities. These priorities include naval shipbuilding, space-based capability and cybersecurity. In 2019-20, 251 graduates commenced the program, representing 13 per cent of the total ongoing APS workforce recruited to Defence. Approximately 37 per cent of those graduates were recruited to STEM-specific career streams within Defence, which remains a key priority for the portfolio.

Defence STEM Cadetship Program The Defence STEM Cadetship Program provides an entry-level employment pathway for high-performing university students studying a relevant STEM degree. The program addresses the Department’s future STEM workforce needs by providing a diverse workforce to deliver key scientific and technical priorities. In 2019-20, 66 new STEM Cadets commenced the program, representing a 42 per cent increase from 2018-19 participant numbers. Including ongoing participants, there are a total of 87 STEM Cadets participating in 2020.

Defence recruiter Sergeant Alex John speaks to a candidate as part of Defence Force Recruiting’s new virtual YOU sessions.

127 CHAPTER 6 | STRATEGIC WORKFORCE MANAGEMENT

Remuneration and benefits Remuneration is a key component of the Defence employment package. It attracts people to join Defence and plays a significant role in retaining talent. Defence’s employment offer provides fair and competitive remuneration, consistent with the parameters laid down by the Government.

The diverse remuneration structures of the ADF and APS are explained further in this section.

Australian Defence Force members The independent Defence Force Remuneration Tribunal, established under section 58G of the Defence Act 1903, is responsible for setting salary and salary-related allowances for ADF members.

The Workplace Remuneration Arrangement 2017-2020 is the framework that allows for annual wage adjustments for ADF members. It is part of the ADF remuneration initiative aimed at attracting and retaining military personnel, and forms a significant part of ADF members’ total employment package.

The Workplace Remuneration Arrangement increases salary and salary-related allowances in return for enhanced Defence capability. Other conditions of service are determined by the Minister for Defence under section 58B of the Defence Act. The current arrangement came into effect on 2 November 2017. Table 6.20 details salary ranges for permanent ADF members as at 30 June 2020.

Table 6.20: Permanent Australian Defence Force salary ranges as at 30 June 2020

Rank Salary range ($)

Minimum Maximum

Officer of the permanent force (equivalent)

Lieutenant General (E)1 $413,896 $490,614

Major General (E)2 $245,113 $298,914

Brigadier (E)2,3 $201,100 $273,348

Colonel (E)2,3,5 $153,743 $260,960

Lieutenant Colonel (E)2,4 $130,758 $248,321

Major (E)2,4 $91,569 $223,694

Captain (E)2,4 $71,741 $212,322

Lieutenant (E)5 $59,636 $125,008

2nd Lieutenant (E)5 $55,719 $116,699

Other rank of the permanent force (equivalent)

Warrant Officer Class 1 (E) $81,238 $125,033

Warrant Officer Class 2 (E) $74,823 $115,855

Staff Sergeant (E) $72,314 $111,767

Sergeant (E) $64,657 $106,888

Corporal (E) $55,872 $97,740

Lance Corporal (E) $51,395 $90,846

Private Proficient (E) $50,333 $89,784

Private (E) $49,292 $88,748

Notes:

1. Some Lieutenant General (E) rates are set by the Remuneration Tribunal.

2. Includes rates for Medical Officers.

3. Includes rates for Chaplains.

4. Excludes Medical Procedural Specialist.

5. Includes transitional rates for other rank appointed as officer.

128 DEFENCE ANNUAL REPORT 2019-20

Australian Public Service employees APS (non-SES) employees have their terms and conditions of employment set out in an Enterprise Agreement made under the Fair Work Act 2009. The agreement is developed through consultation with employees and their representatives and is negotiated consistent with legislation and the Government’s bargaining policy.

The Defence Enterprise Agreement 2017-2020 nominally expired on 16 August 2020; however, it will continue to operate alongside the determination under section 24(1) of the Public Service Act 1999 signed by the Secretary, which provides three consecutive annual increases to salary and salary-related allowances, and preserves current conditions throughout the three-year period to August 2023.

Given the unprecedented nature of the global COVID-19 pandemic, the Government announced on 9 April 2020 that all Commonwealth agencies are to defer by six months their next scheduled increase to salaries and salary-related allowances. For the APS, this decision came into effect via a determination under section 24(3) of the Public Service Act 1999 signed by the Minister for the Public Service. This power is rarely used, being limited to situations where the circumstances are exceptional. The decision delayed the first Defence APS pay rise by six months from August 2020 to February 2021. The other pay rise dates in August 2021 and August 2022 remain unchanged.

Table 6.21 details Defence APS salary rates as at 30 June 2020. The majority of Defence employees receive salaries within the standard ranges. However, the Enterprise Agreement allows for remuneration and other benefits to be varied so that Defence can develop, attract and retain selected employees with the necessary skills and knowledge to deliver capability.

Table 6.21: Australian Public Service salary ranges as at 30 June 2019

Classification Minimum Maximum Individual arrangements1

Senior Executive Service salary arrangements

SES Band 3 $247,687 $295,107 $540,600

SES Band 22 $199,189 $248,879 $326,400

SES Band 13 $164,152 $210,047 $237,462

Non-Senior Executive Service salary arrangements4

Minimum Maximum Special pay points

Executive Level 2 $118,376 $142,087 $190,2305

Executive Level 1 $101,955 $115,005 $142,0876

APS Level 6 $80,669 $92,150 $94,9307

APS Level 5 $73,636 $78,873 $79,8418

APS Level 4 $67,100 $73,256 -

APS Level 3 $59,237 $65,270 -

APS Level 2 $52,004 $58,463 $59,0659

APS Level 1 $45,952 $51,583 -

Notes:

1. Maximum salary paid under an individual remuneration arrangement shown.

2. Includes rates for Chief of Division Grade 2 and Medical Officer Class 6.

3. Includes rate for Chief of Division Grade 1 and Medical Officer Class 5.

4. Salary ranges provided under the Defence Enterprise Agreement 2017-2020.

5. Maximum rate for Executive Level 2.1, Executive Level 2.2, Legal and Science specialist structures and Medical Officer Class 3 and 4.

6. Maximum rate for Public Affairs and Legal specialist structures and Medical Officer Class 1 and 2.

7. Maximum rate for Public Affairs Grade 2 retained pay point.

8. Maximum rate for Senior Technical Officer Grade 1 retained pay point.

9. Maximum rate for Technical Assistant Grade 2 retained pay point.

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Table 6.22 shows the number of employment arrangements for SES and non-SES employees.

Table 6.22: Employment arrangements of SES and non-SES employees

Arrangement title SES Non-SES Total

Enterprise Agreement - 17,300 17,300

Section 24(1) Public Service Act Determination 154 - 154

Total 154 17,300 17,454

Australian Public Service benefits All Defence APS employees enjoy a range of non-salary-related benefits. These include generous leave entitlements and access to flexible working arrangements such as flex time, part-time work and teleworking. Defence invests heavily in training and development of staff and has a number of formal and informal schemes to recognise exemplary performance and achievements.

Australian Defence Force superannuation The Defence Legislation Amendment (Miscellaneous Measures) Bill 2020 was passed on 14 May 2020, with an effect date of 6 July 2020, allowing ADF members to continue contributing to ADF superannuation after leaving ADF employment.

Senior Leadership Group As part of the response to the COVID-19 pandemic, Defence has supported a request from Government for a stay on increases to remuneration, entitlements and allowances, as well as any performance or incremental adjustments in salary for all SES employees and Star-ranked officers. Increases for higher duties and promotion are exempt from the deferrals.

During the reporting period to 30 June 2020, Defence had 21 executives who met the definition of key management personnel. Their names and lengths of term as key management personnel are shown in Table 6.23.

Table 6.23: Key management personnel, 2019-20

Name Position Term as key management personnel

Mr Greg Moriarty Secretary of Defence Full-year

GEN Angus Campbell Chief of the Defence Force Full-year

VADM David Johnston RAN Vice Chief of the Defence Force Full-year

Ms Rebecca Skinner Associate Secretary Part-year—Ceased 15/03/2020

Mr Steven Groves Associate Secretary Part-year—16/03/2020-22/06/2020

Ms Katherine Jones Associate Secretary Part-year—Appointed 22/06/2020

VADM Michael Noonan RAN Chief of Navy Full-year

LTGEN Richard Burr Chief of Army Full-year

AIRMSHL Gavin Davies Chief of Air Force Part-year—Ceased 03/07/2019

AIRMSHL Mel Hupfeld Chief of Air Force Part-year—Appointed 04/07/2019

Mr Steven Groves Chief Finance Officer Part Year— 01/07/2019-15/03/2020

& 23/06/2020-30/06/2020

Mr Glen Casson Chief Finance Officer Part Year—16/03/2020-22/06/2020

Mr Stephen Pearson Chief Information Officer Full-year

Mr Peter Tesch Deputy Secretary Strategic Policy & Intelligence Full-year

LTGEN Gregory Bilton Chief Joint Operations Full-year

130 DEFENCE ANNUAL REPORT 2019-20

Ms Justine Greig Deputy Secretary Defence People Full-year

AIRMSHL Warren McDonald Chief of Joint Capabilities Full-year

Mr Steven Grzeskowiak Deputy Secretary Estate & Infrastructure Full-year

Prof Tanya Monro Chief Defence Scientist Full-year

Mr Tony Fraser Deputy Secretary Capability Acquisition &

Sustainment

Full-year

Mr Tony Dalton Deputy Secretary National Naval Shipbuilding Part-year—Appointed 29/07/2019

LTGEN John Frewen Commander Defence COVID-19 Taskforce Part-year—Appointed 9/03/2020

Table 6.24: Key management personnel remuneration, 2019-20

$

Short-term benefits:

Base salary1 8,496,289

Bonus 40,000

Other benefits and allowances 365,566

Total short-term benefits 8,901,855

Superannuation 1,713,509

Total post-employment benefits 1,713,509

Other long-term benefits

Long service leave 195,860

Total other long-term benefits 195,860

Termination benefits -

Total key management personnel remuneration 10,811,224

Note:

1. The above key management personnel remuneration excludes the remuneration and other benefits of the Minister for Defence, Minister for Defence Industry, Minister for Veterans and Defence Personnel and Assistant Defence Minister. The remuneration and other benefits for these Ministers are not paid by the Department of Defence.

Australian Defence Force senior officers All ADF senior officers (excluding statutory/public office holders) are remunerated under the 2017-2020 Australian Defence Force Workplace Remuneration Arrangement. Other non-pay-related conditions of service are determined by the Minister for Defence under section 58B of the Defence Act 1903.

Public officeholders Public officeholders, including the Secretary and the Chief of the Defence Force, are remunerated under determinations decided by the independent Remuneration Tribunal under the Remuneration Tribunal Act 1973.

The Remuneration Tribunal determined no adjustment to remuneration for public offices in its jurisdiction for the period from 1 July 2020.

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Senior Executive Service SES terms and conditions of employment are set by a single determination made under section 24(1) of the Public Service Act 1999. The determination is supplemented on an individual basis by a common law agreement covering remuneration.

Performance pay Non-SES APS employees move through their salary range subject to fully effective or better performance. Employees at the top of the range receive a 1 per cent lump sum bonus or a minimum payment of $725.00, whichever is the greater. This bonus is considered a form of performance pay.

SES employees may have their salary increased based on the outcome of their annual performance appraisal. An SES employee may also be paid a bonus at the discretion of the Secretary as a reward for exceptional performance.

Performance-based pay is not a feature of any existing ADF remuneration framework. Career development opportunities, including promotion, are the key means of recognition of performance.

Table 6.25: APS employee performance bonus payments, 2019-20

Classification Number of employees Aggregated amount Average amount

Trainee - - -

APS Level 1 39 $26,816.00 $687.58

APS Level 2 417 $293,180.00 $703.06

APS Level 3 856 $589,177.00 $685.95

APS Level 4 970 $686,113.00 $707.33

APS Level 5 1,662 $1,332,777.00 $801.91

APS Level 6 2,880 $2,633,358.00 $914.36

Executive Level 1 2,240 $2,590,943.00 $1,156.67

Executive Level 2 961 $1,634,968.00 $1,701.31

Total 10,025 $9,787,332.00 $976.00

Notes:

1. Performance cycle is 1 September - 31 August.

2. There were no performance payments made to SES employees.

3. Averages for the APS 1 to APS 4 classifications reflect amounts below the minimum bonus payment. This occurs for part-time employees and employees within 1 per cent of the top of the salary range who receive both performance progression and a partial lump sum payment.

132 DEFENCE ANNUAL REPORT 2019-20

Support services Defence provides a range of support services for ADF members and their families, such as crisis and bereavement support, assistance to families managing the opportunities and challenges associated with military life, supporting members and their families when the member transitions from military to civilian life, and a number of health and wellbeing initiatives. In specific circumstances, support is also provided to Defence APS employees and their families.

ADF members and their families Programs and services that assist Defence families with the unique nature of military service include carers information and advice, intervention and counselling, referrals to specialised community services, and assistance and support in crisis situations. Specific support available to families includes:

• support in adjusting to illness and injury

• a 24-hour counselling and support service for personal or family issues

• information about and referral to community services, for example parenting support, family counselling services and relationship counselling

• information on benefits, entitlements and practical assistance, for example Centrelink payments, disabled parking permits, transport services for injured or ill individuals, and financial counselling services

• absence from home support for ADF members and their families including pre- and post-deployment briefs, support calls to family members, and a range of online resources

• advice to command about how to respond to and support family situations, including family assessments and reports, 24-hour telephone advice, and briefs about available support

• counselling and practical assistance in emergency or crisis situations where there are concerns about an individual’s welfare and/or family safety

• coaching, practical guidance and support to assist when planning the transition from military service.

Defence delivers awareness presentations on family and domestic violence and also provides guidance on responding to allegations of family and domestic violence. The general awareness brief is targeted at all Defence and APS members, while an additional brief is designed to assist commanders and managers in responding appropriately to family and domestic violence.

A range of online resources are available to families, including the comprehensive Absence from home support booklet, tip sheets to assist members and families with active coping, and specific products for children. Defence also delivers programs aimed at enhancing family resilience during a member’s absence from home, and offers webinars and proactive support telephone calls to assist families during different stages in the deployment cycle.

Partner Employment Assistance Program In 2019-20 Defence expanded eligibility for the Partner Employment Assistance Program in response to the COVID-19 pandemic. ADF partners are able to access the program at any time during the posting cycle and regardless of how long they have been in a location.

The Partner Employment Assistance Program provides funding towards employment-related initiatives aimed at contributing to ADF partner employability in their new posting. Employment-related initiatives include professional employment services and mandatory fees for professional re-registration required under legislation. Professional employment services can include résumé development, interview coaching, assistance with identifying transferrable skills, employment options or job placement advice, development of an online employment profile, selection criteria coaching, and interview preparation and presentation.

Since opening up the eligibility for support in April 2020 in response to the COVID-19 pandemic, Defence has seen an increase in applications of 80 per cent compared to the same period in 2019. ADF partners are also able to participate in job search preparation workshops at any time to enhance their preparedness for employment, including seeking promotion.

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Childcare, schools and communities Defence also provides childcare support to ADF families through the Defence Childcare Program, comprising 16 long-day-care and three out-of-school-hours centres and the Individual Case Management Service. Since its launch in May 2016, the Individual Case Management Service has assisted over 765 Defence families to review their childcare requirements and find a childcare centre appropriate to their needs.

The Defence School Mentor Program provides funding to minimise the impact of mobility on education and build schools’ capability to support Defence students, particularly during transitions into and out of the school and during parental absences. In 2019-20, a total of 248 schools and approximately 13,000 Defence children received support under the program.

The Family Support Funding Program provides grants to community organisations to help them deliver support and services of value to Defence families and the community they live in. In 2019-20, 48 not-for-profit community organisations received grant funds under the program. The Community Support Coordinator Program funds Defence community groups to employ a community support coordinator to coordinate the delivery of valuable services and support to Defence families in their local community. In 2019-20, 35 paid Defence community support coordinators were supported through the program.

Transition support Defence continues to work closely with the Department of Veterans’ Affairs to deliver the best possible health and wellbeing outcomes for current and former members of the ADF and their families. These outcomes have been delivered through the Transition Transformation Program.

During the COVID-19 pandemic, Defence continued to provide comprehensive transition support to ADF members and their families. Support continued virtually via phone, video call and email to ensure the safety of staff and of ADF members and their families.

Adaptation to COVID-19 conditions During the COVID-19 pandemic, Defence has continued to provide 24-hour telephone support to ADF members and their families. This has included targeted contact with families who have been impacted by COVID-19. In addition, Defence has adapted to presenting briefs, including deployment briefs, to ADF members virtually. We have also delivered a series of psychosocial webinars to the Defence community on topics such as wellbeing, healthy relationships, and supporting children in isolation.

To support our people and their families during the COVID-19 pandemic, Defence quickly adjusted personnel policies, provided mental health support through the Defence Community Organisation and the Employee Assistance Program, and implemented flexible work practices on an unprecedented scale. Regular communication ensured that our people remained up to date with the latest health advice.

• The Defence Family Helpline answered more than 1,000 enquiries from personnel and their families.

• More than 2,100 personnel accessed webinars provided through our Employee Assistance Program.

• Defence supported the return of 148 personnel and/or their family members from overseas posts.

• The use of Defence’s e-communications platform ForceNet has increased exponentially throughout the COVID-19 response phase, with 25,949 new registrations between 29 February and 30 June 2020. Defence had 92,202 registered users at 30 June 2020.

134 DEFENCE ANNUAL REPORT 2019-20

Health and wellbeing of Defence personnel and veterans Defence continues to deliver services to support the health and wellbeing of ADF personnel and veterans. The services are planned and delivered as a collaborative effort between Joint Health Command, Defence People Group, Navy, Army, Air Force and the Department of Veterans’ Affairs.

Health services In 2019-20, the Services continued to maintain health capabilities, primarily to support their exercises and operations.

The Services also contributed to the delivery of health services by providing uniformed health staff for:

• Garrison Health, which delivers and manages health care for ADF personnel in Australia and on non-operational postings overseas

• Combat Health Support, which delivers health care for ADF personnel on military operations, including Operation BUSHFIRE ASSIST 2019-2020, and Operation COVID-19 ASSIST.

Mental health services Defence has long recognised that the mental health and wellbeing of its workforce is critical to Defence capability. Defence is committed to providing mental health services and support to all ADF members and APS employees, and is focused on making Defence people ‘Fit to Fight, Fit to Work, Fit for Life’.

The Defence Mental Health and Wellbeing Strategy 2018-2023 brings Defence’s mental health and wellbeing actions and priorities together for the first time into one coordinated plan. While there are differences in the types of initiatives and programs available to the ADF and APS workforces, there is a common understanding of the need to ensure a mentally healthy and resilient workforce.

The strategy outlines six strategic objectives for improving the mental health of serving members using evidence-based practice. These objectives are:

• Leadership and shared responsibility

• A thriving culture and healthy workplace

• Responding to the risks of military service

• Person-driven care and recovery

• Building the evidence

• Continually improving.

The Mental Health and Wellbeing Strategy is focused on decreasing stigma, improving the knowledge and skills of all employees and improving the support services available. It includes the delivery of a range of mental health programs and training. During 2019-20 there was an emphasis on the design and development of a continuous improvement framework for mental health support. The implementation phase of the continuous improvement framework will begin in late 2020. It will involve the monitoring and evaluation of mental health initiatives, including suicide prevention and mental health programs and training, and will provide informative data on the impact of the overall strategy.

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Mental health screening

Defence applies a mental health screening continuum that supports operational and post-deployment screening, critical incident mental health screening, and the Periodic Mental Health Screen. The continuum provides opportunities for ADF members to undergo screening regardless of whether they have deployed. The Periodic Mental Health Screen was an enhancement to the mental health screening continuum implemented in 2019.

Operation BUSHFIRE ASSIST 2019-2020 presented an opportunity to apply a streamlined risk-indicated mental health screening process, which provided a useful indicator of the health and wellbeing of ADF members force assigned to the operation. As of May 2020, almost 6,000 ADF personnel had participated in mental health screening relating to BUSHFIRE ASSIST 2019-2020.

Joint Health Command mental health and wellbeing mobile application

The mental health screening continuum will be further enhanced in late 2020 with the development of a smart phone application enabling ADF members to self-check their mental health anonymously and access timely guidance and support on their current levels of mental health and wellbeing. It will enable the integration of mental health services by connecting the current range of websites, applications and resources, providing a central point to navigate and direct users through the system and enabling members to track their mood and complete surveys.

The application will be available to all Groups and Services and to families. It will be a tool to access information that supports the prevention of mental health issues and promotes early intervention and maintenance of wellbeing. It is not a replacement for face-to-face clinical intervention.

Project RESTORE

Project RESTORE is a clinical trial of a treatment for post-traumatic stress disorder known as Prolonged Exposure. The trial is being run to determine whether an intensive delivery of Prolonged Exposure therapy will deliver outcomes comparable to the Prolonged Exposure treatment protocol.

Defence has partnered with the Department of Veterans’ Affairs, Open Arms—Veterans and Families Counselling, and Phoenix Australia to run the clinical trial. The COVID-19 pandemic led to the trial being conducted using video-conferencing and extended to the end of July 2020. It will deliver an initial evaluation of outcomes by the end of 2020. It is hoped that the trial will lead to improved access to, and availability of, effective evidence-based care for post-traumatic stress disorder for both current and former ADF members.

Family Sensitive Practice in Health Care Following a successful trial in 2018, the Family Sensitive Practice in Health Care course for health professionals was developed in the second half of 2019 by The Bouverie Centre at La Trobe University, in partnership with the Department of Defence. The Bouverie Centre trained Defence trainers to deliver the program, enabling Defence trainers to implement the program across all Garrison Health Centres by late 2019. This program facilitates improved opportunities for attendance by families with the member at health appointments and welfare boards, improved exchange of information with families, and improved opportunities for families to convey concerns and information that will support the member’s health management. It assists in validating the important role of the family and in incorporating their preferences and needs, and helps families identify options for additional supports.

Transition from Australian Defence Force Defence is developing a Health Aspects of Transition policy and working closely with the Department of Veterans’ Affairs and the Commonwealth Superannuation Corporation to ensure that this policy achieves early acceptance of initial liability and provides a streamlined approach and greater security for transitioning ADF members.

Defence continually refines the health processes associated with preparing ADF members for transition from service. A collaborative and comprehensive transfer of a member’s health care to the civilian health system now occurs, especially for those undergoing rehabilitation. This includes arranging appointments with a civilian general practitioner before and immediately after transition for those who are medically transitioning.

136 DEFENCE ANNUAL REPORT 2019-20

Work health and safety Defence continued to make the health and safety of its people a key priority in 2019-20.

Defence Work Health and Safety Strategy The Defence Work Health and Safety Strategy sets the direction for Defence to achieve our safety vision. It focuses on embedding an inclusive, proactive and mindful safety culture in support of the health, wellness and safety priority in Pathway to Change: Evolving Defence Culture 2017-2022.

Enterprise work health and safety focus areas In January 2020, following a thorough analysis of work health and safety risks affecting Defence people, Defence identified six work health and safety focus areas: body stressing, chemicals, electrical incidents, noise, mental stress and vehicle incidents.

Defence has developed an Enterprise Work Health and Safety Focus Areas Management Framework that provides a robust system through which the six work health and safety programs will be managed. Implementation of this framework will occur during financial year 2020-21, with the intention of delivering new and innovative initiatives to reduce the risks the focus areas pose to Defence people.

Prosecution under the Work Health and Safety Act 2011 On 9 March 2020, the Commonwealth of Australia (through its responsible agency the Department of Defence) was fined $300,000 by the New South Wales Downing Centre Local Court in relation to an incident involving an Australian Army Cadet that occurred on 19 September 2016.

Following the incident, Defence has taken all reasonably practicable steps to ensure the health and wellness of Defence youth and Cadets by developing a youth safety culture and promoting individual and collective responsibility for youth safety. Defence also has a program of audits and assurance which feeds into ongoing improvements in looking after the safety of our people.

Mental Health and Wellbeing The Defence Mental Health and Wellbeing Strategy 2018-2023 (see page 134 'Health and wellbeing of Defence personnel and veterans') supports a common understanding of the need to ensure a mentally healthy and resilient workforce. A number of mental health and wellbeing initiatives are accessible to Defence personnel to decrease stigma, improve knowledge and support mental health and wellbeing:

• the Defence NewAccess program, which provides a stepped care approach to the provision of support for those experiencing a mental health concern. Defence NewAccess is a tailored version of Beyond Blue’s NewAccess program. Both ADF and APS personnel can use this Defence-only service. NewAccess is provided in addition to the Defence Employee Assistance Program and gives members and employees access to programs that cater for mental health issues of varying levels of complexity

• the Mental Health Speakers Series, which assists in raising awareness and decreasing the stigma associated with mental health concerns

• mental health training for all levels of the organisation, including all employees, managers and the Senior Leadership Group, designed to raise awareness of mental health in the workplace and provide self-care strategies to individuals.

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Defence recognises that the mental health and wellbeing of our workforce has a direct impact on overall Defence capability. It is an active leader in both military and workplace mental health reform for almost 80,000 employees and serving members across the Australian Public Service (APS) and the Australian Defence Force (ADF).

The Defence Mental Health and Wellbeing Strategy 2018-23 has further focused the organisation on strengthening mental health and wellbeing support for our workforce. It has driven increased mental health awareness and access to mental health services to its serving members and public servants.

Defence’s response to the COVID-19 pandemic has highlighted how far we have progressed in developing a whole-of-Defence approach to mental health and wellbeing.

Upon the outbreak of the pandemic in early 2020, Joint Health Command and Defence People Group joined forces to implement an ADF and APS rolling communications plan to promote

evidence-based mental health and wellbeing messages consistently to Defence personnel. During this collaboration we remained responsive to the changing environment caused by COVID-19 and focused on ensuring that Defence personnel remained informed about key mental health and wellbeing considerations.

We updated our resource hub for personnel with links to Defence and community sources that are trusted and reputable. This information was also made available to our contracted workforce.

Between March and July 2020, through our industry partner, we offered 133 wellbeing webinars to all Defence personnel. The webinars focused on assisting Defence personnel to manage life disruption, uncertainty and personal wellbeing in response to COVID-19.

Defence will continue to invest in the mental and physical health and wellbeing of all our people to help them through all phases of their careers and lives and ensure they are ‘Fit to Fight, Fit to Work, Fit for Life’.

Mental health and wellbeing during COVID-19

Employee Assistance Program The Employee Assistance Program is a key mental health and wellbeing service provided to assist Defence employees who are experiencing difficulties of a personal or work-related nature. It offers a confidential work-based intervention program designed to enhance emotional, mental and general psychological wellbeing. The program provides short-term preventive and proactive interventions to address issues that may adversely affect performance and wellbeing. It aims for early detection, identification and resolution of work and personal issues.

The Employee Assistance Program is available to all APS employees (ongoing and non-ongoing), Reservists, Cadets and their immediate families. ADF supervisors of APS employees can access the Manager Assist service for advice and support.

Defence expanded the support available through the Employee Assistance Program during the 2019-20 summer bushfires by setting up drop-in centres at various Defence sites. At Latchford Barracks, Victoria, which was set up as an evacuee centre for members of the public directly affected by the bushfires, counsellors also provided in-person support to over 126 members of the community, including children.

During the COVID-19 pandemic in early 2020, the Employee Assistance Program provided additional services to support the mental health and wellbeing of our people, including:

• Employee Assistance Program Connect, which consists of a welfare check conducted by the Employee Assistance Program provider for APS personnel requiring additional support during COVID-19

• self-guided sessions for APS secondees, supporting mental health and wellbeing for personnel seconded from their usual position in Defence to support the national COVID-19 Government response

• a wellbeing webinar series focusing on mental health and wellbeing issues personnel may face during COVID-19.

138 DEFENCE ANNUAL REPORT 2019-20

Emerging hazards The Work Health and Safety Branch undertakes biannual environmental scans in order to identify emerging hazards that may have an impact on the health and safety of Defence workers. Through the dedicated identification and evaluation of emerging hazards, Defence can proactively develop strategies to control the hazards, allowing the safe and beneficial use of new technologies. The emerging hazards capability consists of occupational health subject-matter experts in the Work Health and Safety Branch, in consultation with the Defence Science and Technology Group, academia, areas of government and industry as appropriate. To date, the capability has reviewed and published guidance information on augmented reality, glyphosate, nanotechnology and three-dimensional printing.

Comcare Defence continues to maintain a strong and collaborative relationship with Comcare. The biannual Defence- Comcare liaison forum and Comcare representation on Defence senior work health and safety committees ensure sharing of information and a better understanding of the priorities of Comcare as a regulator.

In 2019-20, Comcare undertook 187 investigations across Defence, based on known high-risk areas, and issued two notices.

Defence actively investigates safety incidents. In 2019-20, investigations focused on contact with electricity, contact with a chemical or substance, and being hit by falling objects. Defence used these investigations to develop and refine associated hazard reduction programs and improve work health and safety performance.

In addition to partnering with Comcare on investigations, Defence is working closely with Comcare on a number of initiatives. These include:

• the APS Medical Care Pilot, in which Defence has partnered with Comcare to offer early medical services for Defence APS employees in Australia with a new or emerging injury. Defence is working with Comcare to explore opportunities identified in the pilot evaluation report findings and how they may be incorporated into Defence programs and the broader Comcare scheme

• Beyond Blue’s NewAccess stress and anxiety coaching program. Defence supported Comcare in evaluating their trial of the NewAccess program across a number of agencies. The evaluation measured the effectiveness of the NewAccess program by comparing agencies’ results and successes against the Defence NewAccess program. The results will be used by Comcare to offer a streamlined NewAccess program across their jurisdiction, which Defence will look to participate in.

Table 6.26: Number of Comcare work health and safety notices, 2017-18 to 2019-20

Type of notice 2017-18 2018-19 2019-20

Improvement notice1 2 6 -

Prohibition notice2 1 3 -

Non-disturbance notice3 - - 2

Notes:

1. Improvement notices are based on incidents and occurrences that contravene work health and safety legislation.

2. Prohibition notices are issued to remove an immediate threat to the health and safety of workers.

3. Non-disturbance notices are issued for a specific period of time to remove a threat to the health or safety of personnel.

Work health and safety audits In 2019-20 the Work Health and Safety Branch conducted 15 work health and safety audits across Defence. This comprised two safety management systems audits and 13 compliance audits in the risk areas of hazardous chemicals, and the joint special licence for the operation of high-risk plant.

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Notifiable incidents The number of work health and safety incidents declined in 2019-20, as shown in Table 6.27.

Table 6.27: Number of work health and safety incidents and number of people involved, 2017-18 to 2019-20

2017-18 2018-19 2019-20

Number of incidents2

Number of people involved in an incident3

Number of incidents2

Number of people involved in an incident3

Number of incidents2

Number of people involved in an incident3

Fatality1 3 3 4 4 7 7

Serious injury or illness1 239 241 194 196 125 131

Dangerous incident1 251 418 212 309 250 453

Subtotal 493 662 411 510 390 599

Minor injury 9,378 9,492 9,245 9,494 7,566 7,739

Near miss 1,254 1,902 1,540 2,387 1,829 2,904

Exposure 907 3,776 901 6,552 941 4,465

Subtotal 11,539 15,170 11,717 18,475 10,394 15,169

Total 12,032 15,832 12,128 18,985 10,784 15,768

Notes:

Incidents are reported from the date of occurrence. Figures in Table 6.27 can vary from previous Defence annual reports, as reports can be made for incidents that occurred in previous years and severity statuses can be updated. Data is as at 19 June 2019. The Australian Signals Directorate became a separate statutory body on 1 July 2018; therefore their data has been included for 2017-18 and excluded for 2018-19 and 2019-2020.

1. Fatalities, serious injuries or illnesses, and dangerous incidents are notifiable to Comcare. Incidents of these severities that occur while on a Defence declared operation are not notifiable to Comcare and have not been included.

2. The ‘Number of incidents’ columns show the number of incidents occurring in that financial year. A single incident can include multiple individuals.

3. The ‘Number of people involved in an incident’ columns show the number of people involved in the incident. One incident may result in multiple injuries or none.

Honours and awards Reward and recognition, acknowledging positive behaviour and celebrating achievement are key components in creating a strong performance culture. Defence formally recognises the service and achievements of ADF members, veterans and Defence APS employees through the timely issue of honours, decorations, service medals and awards.

In 2020, 193 ADF members were awarded honours or decorations in the Australia Day and Queen’s Birthday Honours lists, in recognition of their distinguished service on operations, as well as significant dedication, outstanding application of skill or meritorious service.

In 2019-20 Defence issued 16,366 operational medals and long service awards to current ADF members, and 5,804 service medals were issued to veterans and their families in recognition of service in conflicts since World War I. Defence recognised 940 APS employees for their commitment to service and presented Secretary’s Awards for Long Service.

Defence is continuing to modernise and improve the legal instruments for Defence honours and awards to ensure they are fit for purpose. To date, three Medal Regulations are progressing to Her Majesty The Queen, with the remainder of the service and campaign awards anticipated to progress later in the year. The review is now expected to be completed by December 2020.

140 DEFENCE ANNUAL REPORT 2019-20

Complaint handling and resolution Defence personnel have the right to complain if they are aggrieved by matters relating to their employment. ADF members (permanent and Reserve) may apply for redress of grievance under the Defence Regulation 2016. APS employees may seek a review of actions under the Public Service Act 1999.

APS review of actions Section 33 of the Public Service Act 1999 establishes a review of actions scheme and allows non-SES APS employees to seek review where they have a complaint about an action or a decision relating to their employment.

In 2019-20 Defence received 51 applications for review of actions, which is comparable with the previous year. Ten applicants then sought secondary review from the Merit Protection Commissioner. Of these, only two applicants had the subject of their review set aside or varied.

The following subjects featured in the applications for review this financial year:

• Performance Feedback Assessment and Development Scheme outcomes

• Management of unacceptable behaviour complaints by line management

• Access to leave or other entitlements.

Figure 6.1: APS review of actions applications, 2014-15 to 2019-20

Unacceptable behaviour Pathway to Change: Evolving Defence Culture 2017-2022 reinforces that all Defence personnel are accountable for their behaviours and actions and for creating a more positive and inclusive culture. To embed this, Defence has prioritised cultural change initiatives focused on early intervention, complaints management and remediation of unacceptable behaviour.

Defence has a comprehensive employment life cycle approach to workplace behaviour. The organisation is focused on creating a workplace environment where expected behaviours are clear at every step of a person’s employment journey.

2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

140

120

100

80

60

40

20

0

77 75

63

72

49 51

119

76

70 69 71

50 49

Received Finalised

113

No. of applications for review

141 CHAPTER 6 | STRATEGIC WORKFORCE MANAGEMENT

All Defence personnel complete mandatory annual Workplace Behaviour training, which reinforces expected behaviours and the process for submitting and managing complaints. Learning and development programs and behaviour training for commanders, managers and supervisors are designed to strengthen leadership capability and accountability in both the early intervention and the effective management of unacceptable behaviour.

When incidents of unacceptable behaviour do occur, Defence has robust systems and processes in place to resolve matters and to hold personnel to account for poor behaviour. Early intervention strategies empower individuals to proactively work toward resolution at the lowest appropriate level, with a range of dispute resolution options available. Readily accessible support and guidance is offered through trained alternative dispute practitioners and a comprehensive network of workplace behaviour advisors to foster early resolution of disputes and effective management of complaints.

Defence continues to look for opportunities to strengthen its approach to early intervention and complaint management. In addition to implementing the recommendations from the Defence Force Ombudsman Health Checks, in 2019-2020 Defence:

• commenced a review of the Complaints and Resolutions Manual to deliver a revised, user-friendly reference for all Defence personnel

• initiated a review of Defence’s unacceptable behaviour reporting systems to simplify, streamline and improve reporting capability

• designed an enhanced complaints-handling service that will be trialled and evaluated in 2020-21.

Defence is committed to creating a safe environment where individuals feel supported to report unacceptable behaviour knowing that incidents will be addressed in a timely and effective manner.

Data from the previous financial years shows that the number of complaints being reported has steadily increased. The number of incidents occurring in 2019-20 also increased from the previous year but was below the five-year average of 857.

Personnel are increasingly willing to report incidents of unacceptable behaviour. Of the total of 1,098 complaints reported during 2019-20, 851 related to incidents that had occurred in the same financial year and 247 to incidents in previous financial years.

Figure 6.2: Unacceptable behaviour complaints reported as received, finalised and having occurred, 2015-16 to 2019-20

The confidence of the workforce to report incidents of unacceptable behaviour continues to be reflected in the Defence Enterprise attitudinal surveys. The 2019 Defence YourSay Organisational Climate Survey indicates that the majority of Defence personnel perceive:

• that incidents of unacceptable behaviour are being managed well

• that Defence has a culture that supports individuals who report fraud, corruption or unethical behaviour.

1,200

1,000

800

600

400

200

0

2015-16 2016-17 2017-18 2018-19 2019-20

776

851

899 895

866

838

788

776

799 782

1016 1098

949

900

812

Complaints received during FY Incidents finalised during FY Incidents that occured during FY

142 DEFENCE ANNUAL REPORT 2019-20

See Figures 6.3 and 6.4 for details. Note that data is only available for this measure from 2017 onwards, as the question was not asked before 2017).

Figure 6.3: Incidents of unacceptable behaviour are managed well in my workplace

Figure 6.4: Defence has a culture that supports individuals who report fraud, corruption or unethical behaviour

Sexual misconduct response Defence provides opportunities for personnel to disclose or report sexual misconduct. Reporting is a description or a formal account that triggers further inquiry or investigation by the Joint Military Police Unit (JMPU) or state/territory police. Disclosure is an opportunity for an affected person to account their experience and ask for support or advice. Defence’s Sexual Misconduct Prevention and Response Office (SeMPRO) is a dedicated avenue for accessing services inside and outside Defence.

0% 10% 20% 30% 40% 50% 60% 70%

Disagree

Neutral

Agree

Disagree

Neutral

Agree

Disagree

Neutral

Agree

Disagree

Neutral

Agree

Disagree

Neutral

Agree

2019 2018 2017 2016 2015

0% 10% 20% 30% 40% 50% 60% 70%

Disagree

Neutral

Agree

Disagree

Neutral

Agree

Disagree

Neutral

Agree

2018 2017 2019

143 CHAPTER 6 | STRATEGIC WORKFORCE MANAGEMENT

Reported sexual assault in the ADF Australian state and territory police use the Australian and New Zealand Standard Offence Classification (ANZSOC) definitions from the Australian Bureau of Statistics. In 2018, Defence adopted ANZSOC for statistical reporting on sexual assaults in Defence to ensure consistency across Government agencies.

Defence’s reports between 2013-14 and 2017-18 used the definitions in the Model Criminal Code, which classifies non-penetrative sexual offences as indecent acts. Reports from 2017-18 onwards use the broader ANZSOC definition of sexual assault, which includes penetrative and non-penetrative sexual offences.

Table 6.28: Reported Defence sexual assault incidents per year

Model Criminal Code ANZSOC ANZSOC ANZSOC

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

60 96 98 84 87 170 166 161

Figures from 2012-13 to 2016-17 cannot be directly compared to figures from 2017-18 onward, due to the use of different reporting frameworks for sexual offences.

The figure of 161 sexual assaults reported to JMPU for 2019-20 (as at 5 July 2020) comprises:

• 88 aggravated sexual assaults (penetrative acts committed without consent, threat of penetrative acts committed with aggravating circumstances, or instances where consent is proscribed)

• 73 non-aggravated sexual assaults.

The 161 aggravated and non-aggravated sexual assault complaints can be categorised as follows (noting that some complaints are in multiple categories):

• 76 cases were reported allegations where the member did not wish to make a statement of complaint or did not want the matter investigated by JMPU or state/territory police

• 53 cases were investigated by state/territory police and remain within their jurisdiction

• 35 cases were reported matters of a historical nature (meaning the incident occurred at least one year prior to reporting)

• 23 cases involved an alleged perpetrator who was either unknown to be a Defence member or known not to be a Defence member

• 11 cases were reported matters involving Cadets and/or volunteers associated with Cadets, and consequently not Defence members

• 21 cases are closed as unable to be substantiated, due to insufficient evidence and/or no identifiable perpetrator.

Approximately 47 per cent of allegations of sexual assault made to JMPU were made by members who did not wish to make a statement of complaint or did not want the matter investigated by JMPU or state/territory police. Respecting the wishes of the victim is consistent with policing principles of maintaining a victim-centric approach but it can inhibit Defence’s ability to substantiate or conclude matters.

The sexual assault figures are drawn from a live policing database and reflect JMPU’s understanding of matters as at 5 July 2020. As initial reports are investigated and/or finalised, these figures may change.

Sexual misconduct prevention and response Defence’s Sexual Misconduct Prevention and Response Office provides confidential support and case management services to Defence personnel directly affected by sexual misconduct, debriefing services for personnel exposed to difficult material at work, assistance with incident management to promote personnel wellbeing, and educational programs and resources.

144 DEFENCE ANNUAL REPORT 2019-20

The SeMPRO team developed and delivered primary prevention educational packages and support to create a workplace climate that upholds Defence and Service values. The following key milestones were achieved in 2019-20:

• Sexual misconduct incident management workshops were delivered for commanders and managers, emphasising trauma-informed application of Defence policy.

• Face-to-face briefings by SeMPRO team members and by the network of Defence members to their peers in location have been reduced due to COVID-19. Remote learning options have been refined and expanded in response.

• Virtual classroom training in sexual misconduct incident management for commanders and managers has been developed for rollout in 2020-21, and development is underway of training targeted to senior non-commissioned officers.

• Continued improvements to online delivery of the sexual misconduct general awareness course have been made to enable training to be undertaken anywhere, at any time.

Sexual misconduct prevention and response training provides a proficiency that is valid for three years. In the ADF, 53 per cent of the permanent force holds the proficiency.

SeMPRO provides a 24/7 telephone response service for those seeking aid. The office assisted 368 clients in 2019-20. It provided case management to 125 clients subjected to sexual offences, sexual harassment or sex-based discrimination in Defence. SeMPRO also provides assistance with system navigation and service coordination, resources and referrals, and education for individuals and their families. These interventions assist wellbeing, build resilience, and facilitate developing self-management strategies and skills. The demand for case management services decreased from 400 in 2018-19 to 368 in 2019-20.

SeMPRO assists commanders, managers, colleagues and friends to improve responses to disclosures and reports. Commanders and managers received assistance with applying Defence’s policy requirements while focusing on the wellbeing of those involved. Colleagues and friends received advice on aiding a person who had disclosed being subjected to sexual misconduct. The uptake of one-on-one assistance with sexual misconduct incident management and disclosures decreased slightly from 265 in 2018-19 to 235 in 2019-20 (see Table 6.29).

Table 6.29: SeMPRO new incident management advice clients, 2013-14 to 2019-20

Financial year Number of SeMPRO advice clients

2013-14 70

2014-15 147

2015-16 131

2016-17 223

2017-18 253

2018-19 266

2019-20 235

Total 2,242

Note:

The data in this table is client data collected during service provision and is subject to change as clients reveal additional information. The figure previously printed for the number of advice clients in 2018-19 was 266.

In 2019-20 SeMPRO provided confidential debriefing to eight clients. Debriefing services are designed to prevent psychological injuries arising from workplace exposure to trauma.

Defence continues to drive best practice through sexual misconduct prevention, incident management and response.

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The National Naval Shipbuilding Enterprise is Australia’s plan to build its naval shipbuilding and sustainment capability to generate industry growth and secure Australian jobs in Defence industry. The enterprise focuses on the sustainable, continuous production of ships, submarines and shipyards in Australia.

In 2019-20 the enterprise was further realised, with the Attack, Hunter, Arafura, Guardian and Cape class programs all advancing at an industrious pace.

Design work on the Attack class submarine is progressing. A number of contracts have been awarded for key equipment, and work has started on a new submarine construction yard at Osborne North in South Australia.

The Hunter class frigate program is on track to commence construction of Ship 1 by the end of 2022. The new shipyard at Osborne South is now complete and Hunter prototyping remains on schedule to commence by late 2020.

Construction of the third Arafura class offshore patrol vessel has commenced, with 10 of these very capable vessels to be built at the Henderson Maritime Precinct in Western Australia. The first two Arafura vessels are being constructed at Osborne South, bridging the gap between the end of the Hobart class air warfare destroyer program and the start of the Hunter program.

The final Hobart class destroyer was commissioned into the fleet in May 2020.

Since commencement of the Pacific Maritime Security Program, the first six of 21 Guardian class patrol boats have been constructed in Western Australia and gifted to Papua New Guinea, Tuvalu, Tonga, Samoa, Solomon Islands and Fiji. Although the COVID-19 pandemic has complicated the training of Pacific Island crews and subsequent handover of new boats, construction continues on schedule and three more boats will be ready for handover before the end of 2020. The first of six Cape class patrol boats is also under construction.

On the sustainment front, in 2019 Defence launched Plan Galileo, which will enhance our approach to naval fleet upkeep. Under the plan, four platform-agnostic regional maintenance centres will be established in Sydney, Perth, Darwin and Cairns. A number of upgrade programs are also underway across the in-service fleet, including major upgrades to the Anzac class frigates and Collins class submarines.

The 2020 Force Structure Plan foreshadowed the expansion of the enterprise to include the acquisition or upgrade of 23 classes of maritime vessels. These new programs will be included in an updated Naval Shipbuilding Plan. The updated plan will map out the next phase in the creation of a sovereign naval shipbuilding industry in Australia.

The two halves of the first Offshore Patrol Vessel Arafura being brought together at Osborne South.

Sovereign shipbuilding powering forward under the National Naval Shipbuilding Enterprise

146 DEFENCE ANNUAL REPORT 2019-20

147 CHAPTER 7 | ASSET MANAGEMENT

7ASSET MANAGEMENT An Australian Army CH-47 helicopter conducts deck landing practice as part of essential training on board HMAS Adelaide off the coast of Queensland.

148 DEFENCE ANNUAL REPORT 2019-20

Asset management Defence manages $112.3 billion of total assets. This comprises approximately:

• $71.6 billion of specialist military equipment

• $28.2 billion of plant, land, buildings and infrastructure

• $7.5 billion of inventory

• $0.5 billion of heritage and cultural assets

• $4.5 billion of other items, including cash, receivables, prepayments and intangibles.

Defence Groups and Services are accountable for the underlying business transactions and records that substantiate the reported financial balances of assets under their control.

Defence undertakes accounting processes to enable accurate and timely reporting of asset balances. This involves managing the financial information of assets held across various logistical systems and ensuring that underlying assumptions in reporting the financial values of these assets are applied consistently. In addition, a significant focus is placed on the valuation of some highly specialised assets—that is, reviewing the asset base for fair values, impairment and completeness of asset balances. This allows Defence to be compliant with the requirements for financial statement reporting defined in the Australian Accounting Standards. 

Defence Single Information Environment Defence is supported by one of the largest and most complex Information and Communications Technology (ICT) undertakings in the nation, operated by the Chief Information Officer Group (CIOG). As well as provisioning and supporting over 100,000 Defence employees’ corporate ICT requirements, CIOG delivers mission-critical systems and services to enable the warfighting capabilities of the Australian Defence Force (ADF) globally. 

With an annual spend of $1.7 billion, CIOG leads the integrated design, cost-effective delivery and sustained operation of Defence’s Single Information Environment (SIE). The SIE encompasses Defence’s information, computing and communications infrastructure, along with the management systems and people to deliver that infrastructure. It includes Defence’s information assets, computing networks, business applications and the data that they generate and carry, as well as the communication standards and spectrum required for Battlespace networks. The infrastructure CIOG provides is essential and integral to core Defence functions such as intelligence, surveillance, reconnaissance, communications, information warfare, command and management. This includes the dispersed, fixed, deployable and mobile networks that underpin ADF operations.

CIOG is dedicated to providing a dependable, secure and integrated ICT environment and is investing in delivering the future of Defence ICT. Investment in new and emerging technology will ensure we maintain our technological edge, with faster and more contemporary ICT systems. This will ensure that the right information is available to Defence decision-makers at the right time. Investment in Defence’s ICT will guarantee the ADF is able to respond quickly to emerging threats and enable Defence business processes to become more efficient and effective.

The past year, 2019-20, was a challenging period for all Australians. Defence has increasingly supported national tasks, which in 2019-20 included responding to the devastating bushfires over summer and combating the global COVID-19 pandemic. ICT capabilities have been increasingly relied upon in these times of crisis. This is particularly the case with the necessary pivot to remote/home working as a measure to address COVID-19.

CIOG undertook a range of activities to increase the resilience of existing ICT infrastructure and introduce new capabilities to support the escalating numbers of personnel working remotely. Usage of the Defence Remote Electronic Access Management System (DREAMS), which is used to connect virtually to the Defence PROTECTED network for remote working, increased by almost 900 per cent as a result of COVID-19 measures and proved critical for business continuity. As Defence staff began to work remotely in March 2020, the demand for collaboration capabilities grew dramatically. CIOG formed a multidisciplinary team to design and field Office 365 at the PROTECTED level, a project that had been planned for delivery in 2021. The Virtual Environment for Remote Access

149 CHAPTER 7 | ASSET MANAGEMENT

(VERA) was developed and delivered for initial release in just eight weeks, with availability across Defence achieved within 11 weeks. VERA can be accessed through personal as well as Defence devices and allows Defence users to:

• access, update and send PROTECTED-level documentation on personal laptops without the need to access DREAMS

• conduct PROTECTED-level voice and video collaboration through Microsoft Teams, which includes the ability to share screens and documents while videoconferencing

• securely collaborate on documents simultaneously and in real time with visibility of who is making amendments

• share a full range of file types and sizes with colleagues and store documents in a secure shared location within the remote environment.  

The VERA implementation has provided Defence with a marked improvement in the suite of tools available to enable personnel to work remotely at the PROTECTED level. This has had a positive effect on productivity and provides greater workplace flexibility.

The COVID-19 pandemic also stimulated demand for other ICT tools. CIOG worked closely with Joint Health Command to develop a virtual assistant or ‘chatbot’ to allow personnel to easily seek assistance on a wide range of frequently asked questions related to COVID-19. It is updated regularly and provides the very latest information to assist commanders and managers to support the health and safety of their people. The success of the COVID-19 virtual assistant provides opportunities for Defence to apply this technology to a range of other uses to improve interaction and service delivery.

In 2019 Defence embarked on a major upgrade of its PROTECTED and SECRET ICT networks to immediately improve performance and user experience. The Chief Information Officer Group established a Network Stability Taskforce to take this work forward.

The combined taskforce was a concentrated surge activity led by Defence but heavily supported by our contracted commercial service providers and other elements of industry, working together to achieve the mission. Our industry partners noted that this focused collaboration was an extremely effective way to cut through process and rapidly achieve outcomes.

The Network Stability Taskforce concluded in December 2019. Its work resulted in many improvements to the environment and an enhanced user experience:

• There was a 54 per cent reduction in incidents affecting the PROTECTED network.

• There was a 40 per cent decrease in call volume to the ICT Service Desk.

• Chief Information Officer Group’s user experience rating rose and is now well above the long-term average.

• Positive feedback increased by 13 per cent.

• Escalation requests dropped by 66 per cent.

• Complaints dropped by 50 per cent in November to December 2019 alone.

These improvements have also assisted in providing a stable network for Defence’s response to Operation BUSHFIRE ASSIST 2019-2020 and to support our response to COVID-19.

Work continues on achieving long-term tasks that the taskforce began. This work is incorporated into Plan BURRUT’TJI—Chief Information Officer Group’s campaign plan to improve operational outcomes, take advantage of emerging technology and innovation, and drive reform to ensure appropriate resources are managed and assigned to agreed and considered Defence ICT priorities.

Chief Information Officer Group seeks to continue collaborative partnerships with industry in the spirit of One Defence and becoming true partners to support Defence’s mission.

Network Stability Taskforce—Defence and industry improve ICT performance

150 DEFENCE ANNUAL REPORT 2019-20

Purchasing Defence undertakes its procurement in accordance with the Commonwealth Procurement Rules and Procurement Connected Policies and with Defence-specific procurement policies. These mandatory procurement requirements are expanded, explained and operationalised through the Defence Procurement Policy Manual. To assist Defence officials to comply, Defence also provides procurement guidance, fact sheets, tools and templates that guide, inform and ensure proper consideration and good governance of Defence procurements.

In accordance with the Commonwealth Procurement Rules, Defence publishes the Defence Annual Procurement Plan on AusTender (www.tenders.gov.au). The Defence Annual Procurement Plan provides notice to industry of proposed Defence procurements and enables industry to prepare for the competitive tendering phase. Defence also publishes all open tenders on AusTender.

Procurement initiatives to support small business Defence supports small business participation in the Commonwealth Government procurement market. Small business participation statistics are available on the Department of Finance website.

Non-corporate Commonwealth entities’ payment terms reflect the Resource Management Guide No 417—Supplier On-Time or Pay Interest Policy. To comply with the policy, Defence reduced the default payment terms for all contracts from 30 days to 20 days to ensure that small businesses are paid on time. The results of the most recent survey of Government payments to small business are available on the Treasury website.

Important measures were also implemented to allow for projects to accelerate payments to Australian suppliers in defence industry to mitigate the effects of COVID-19. These measures were also supported by other Government reforms to speed up payments to small business, including reducing payment times for small businesses using e-invoicing to five days. Defence began piloting five-day payment terms through e-invoicing on contracts valued up to $1 million to ensure that our financial and approval systems can support these timeframes.

In support of transparency, the Government has introduced legislation establishing the Payment Times Reporting Scheme. The scheme will require large businesses and certain government enterprises with over $100 million in annual turnover to publish information on how and when they will pay their small business suppliers. In concert with this policy, the Government is developing a Payment Times Procurement Connected Policy requiring large businesses to pay their suppliers within 20 days.

Indigenous procurement policy Defence contributes to enhancing Indigenous entrepreneurship and business development, including through procurement opportunities in regional and rural Australia to support and grow the Indigenous business sector.

Since the introduction of the Commonwealth Indigenous Procurement Policy, Defence has consistently exceeded its Indigenous Procurement Policy targets. In 2019-20 the Defence target for number of contracts remained at 3 per cent of eligible domestic contracts, equalling 691 contracts for the Defence portfolio. In addition, the Government has introduced a value-based target for contracts awarded to Indigenous businesses. The value target commenced at 1 per cent in 2019-20 and will increase by 0.25 per cent each year to reach 3 per cent by 2027.

In 2019-20 Defence significantly exceeded its number and value targets. Our performance against the portfolio’s annual targets is published on the National Indigenous Australians Agency website (see Appendix D).

Defence’s commitment and pathway to meeting the outcomes of the Commonwealth Indigenous Procurement Policy are articulated in our Indigenous Procurement Strategy. Through strong leadership, raised awareness and clear communication, Defence is well positioned to deliver on supplier diversity and Indigenous engagement outcomes across our procurement environment.

In recognition of Defence’s efforts to support Indigenous procurement, we received the Supply Nation Government Member of the Year Award for 2019.

151 CHAPTER 7 | ASSET MANAGEMENT

Capital investment Throughout 2019-20 Defence undertook a review of its planning and in July 2020 the Government announced the 2020 Force Structure Plan. The 2020 Force Structure Plan builds on investments made in the 2016 Defence White Paper in response to rapid changes in the global strategic environment and will enable approximately $270 billion investment in Defence capability to 2029-30.

In 2019-20 the Government approved a total of $11.9 billion of capital and sustainment investment across major equipment, facilities, infrastructure, ICT, and science and technology.

Capability investment The 2016 Defence White Paper set out the Government’s vision to enhance Australia’s defence capability, deepen our international security partnerships and collaborate with defence industry and science and technology research partners in support of our nation’s security. The Integrated Investment Program published along with the white paper and updated following release of the 2020 Defence Strategic Update and 2020 Force Structure Plan, sets out the Government’s defence capability investment, including new weapons, platforms and systems and the enabling equipment, facilities and infrastructure, workforce, ICT and science and technology.

The Integrated Investment Program is dynamic. It is reviewed by Defence and Government biannually to respond to changing priorities and threats while balancing capability, strategy and resources. The significant events in 2019-20, including the Australian bushfires and the COVID-19 pandemic, underscore the importance of maintaining an Integrated Investment Program that continues to be affordable and is optimised to respond to changing priorities, technology advancements, emerging threats and strategic drivers in the region.

In line with the 2015 First Principles Review, Defence undertakes detailed reviews of its planning to ensure alignment of strategy, capability and resources to respond to the evolving strategic environment. The product of one of these regular reviews, the 2020 Force Structure Plan, was released in early July 2020. The 2020 Force Structure Plan expands and adjusts some of the capability plans and investments outlined within the 2016 Defence White Paper to ensure the ADF is capable of responding to changing priorities, technology advancements, emerging threats and other strategic drivers in the region.

During 2019-20, the Government approved 105 capability-related submissions. It gave 17 ‘First Pass’ approvals, 26 ‘Second Pass’ approvals and 62 ‘Other Pass’ approvals. Of the 62 Other Pass approvals, 16 were granted for submissions that provided advice to Government on current and future capability; and 46 projects were approved for early access to Integrated Investment Program funding. This early funding is used to complete critical capability development work and risk-reduction activities ahead of seeking First Pass and/or Second Pass approval.

Significant government announcements in 2019-20 include the following:

• Maritime domain

- Approval for Arafura Class Offshore Patrol Vessel Transition Plan (Cape Class Patrol Boats). This investment of around $350 million supports the build program for six new Cape class patrol boats for the Royal Australian Navy. The boats will be built by Western Australian company Austal. They will increase the patrol boat force to 16 vessels while the new larger Arafura class offshore patrol vessels are introduced into service.

- Second Pass approval for Hydrographic Data Collection Capability. This project will invest in the order of $150 million in local industry partnerships to secure a sovereign capacity to produce hydrographic information over the next five years. Defence will also investigate options to replace Navy’s current military hydrographic survey capability.

• Land domain

- Second Pass approval for Geospatial Support System for the Land Force—Tranches 1 and 2. This project will invest $150 million in the next generation of Army’s geospatial support capability. The capability will provide advanced imagery to obtain vital terrain and navigation data, delivering a greater understanding of the operation environment and enabling faster decision-making on the battlefield.

152 DEFENCE ANNUAL REPORT 2019-20

- Second Pass approval for Joint Counter Improvised Explosive Device—Tranche 1. This investment of $88 million will deliver 80 mounted and 115 dismounted systems. It will take the ADF closer to the latest technology to combat the threat of improvised explosive devices through improving the ADF’s ability to save and protect lives on operations around the world.

- Second Pass approval for Special Operations Capability Enhancements and Continuous Development Program in the first stage of Project Greyfin. This will provide an initial $500 million of a $3 billion planned investment over 20 years. Greyfin will ensure that Special Forces have the best body armour; weapons; diving, parachuting, roping and climbing systems; medical search and rescue; communications; and human performance training and support to help ensure Australia’s security.

- First Pass approval for Integrated Soldier System—Tranche 2. This will invest $30 million in equipment including shelters, sleeping bags, non-lethal force, adventure training, hand tools, and personal protective equipment to support ADF personnel both in Australia and overseas. Future tranches will invest in Army’s ability to acquire the next generation of body armour, helmet and equipment carriage system, field equipment, combat flotation aids, and simulation and training systems.

• Air domain

- Approval of the F-35 Reprogramming Laboratory partnership between Australia and the United Kingdom (UK), part of the broader Joint Strike Fighter Program. This investment will support Australian and UK F-35s by developing, verifying, validating and issuing F-35 mission data files for F-35s.

• Space domain

- The Government has not made any public announcements on approvals for this domain in 2019-20. However, it is continuing to deliver the capability Defence needs to meet its strategic objectives.

• Information and cyber domain

- The Government has not made any public announcements on approvals for this domain in 2019-20. However, it is continuing to deliver the capability Defence needs to meet its strategic objectives.

• Defence enterprise

- First Pass approval of RAAF Tindal Redevelopment, which is valued in the order of $1.6 billion. This project will ensure the ADF can continue to deliver a potent air combat capability from the Northern Territory. The redevelopment includes runway extensions; a new air movements terminal, parking apron and extra fuel storage facilities; and critical base infrastructure upgrades.

- Second Pass approval for HMAS Watson Redevelopment, valued in the order of $389 million. This project will deliver new and improved training facilities for sailors at HMAS Watson, Navy’s principal warfare and navigation training establishment.

- First Pass approval to upgrade the airfield at Cocos (Keeling) Islands to support P-8 operations. This project, valued in the order of $184 million, will upgrade and refurbish the Cocos (Keeling) Islands airport runway, which is the main access and delivery point for supplies and visitors to the islands. It will strengthen and widen the existing runway and hardstanding, and provide new aeronautical ground lighting to support the P-8A Poseidon maritime surveillance and response aircraft and other aircraft operations.

In 2019-20, eight major capital facilities and infrastructure projects, valued at a total of approximately $4.47 billion, were referred to the Parliamentary Standing Committee on Public Works. This includes the $219 million Point Wilson Waterside Infrastructure Remediation Project, which was originally referred in June 2018 and required to refer a second time in July 2019 due to parliamentary approval process not being finalised before the 2019 federal election dissolved the 45th Parliament. The committee conducted public hearings on six of the eight major capital facilities and infrastructure projects (valued at $3.96 billion in total). Point Wilson did not require a second hearing, as the current committee adopted and tabled the report from the 45th Parliament. A hearing is pending for the eighth referred project (valued at $293.65 million). Seven of the eight projects referred achieved parliamentary approval in 2019-20, at a total value of approximately $4.18 billion (including Point Wilson).

Also in 2019-20, nine medium works capital facilities and infrastructure projects, valued at a total of $257.02 million, were notified to the committee and subsequently approved. Further information on the Parliamentary Standing Committee on Public Works can be found at Chapter 5—‘Governance and external scrutiny’.

153 CHAPTER 7 | ASSET MANAGEMENT

Projects of Concern The Projects of Concern regime is a proven process for managing the remediation of underperforming projects. This is done by implementing an agreed plan to resolve significant commercial, technical, cost and/or schedule difficulties and increasing senior management and ministerial oversight. A Project of Concern Summit was held with the Minister for Defence and the Minister for Defence Industry on 3 December 2019.

Table 7.1 provides a list of Projects of Concern as at 30 June 2020. There has been no change since the 2019-20 reporting period.

Table 7.1: Projects of Concern as at 30 June 2020

Project Project number and phase Date added

Multi-Role Helicopter (MRH-90) AIR 9000 Phases 2, 4 and 6 November 2011

Deployable Defence Air Traffic Management and

Control System

AIR 5431 Phase 1 August 2017

Defence will continue to actively manage the remaining Projects of Concern in 2020-21.

An Australian Army Protected Mobility Vehicle - Light Hawkei undergoes a series of tests during Land Trial 02-18 at the Townsville Field Training Area in North Queensland.

154 DEFENCE ANNUAL REPORT 2019-20

The Chief of Army, Lieutenant General Rick Burr AO DSC MVO, (left) meets with industry partners at Rheinmetall’s MAN Military Vehicle centre in Wacol, Queensland.

Australian Defence projects growing Australian Defence industry Army’s Combat Reconnaissance Vehicles (CRVs), Navy’s offshore patrol vessels (OPVs) and Air Force’s Joint Strike Fighter projects continue to deliver the benefits of Defence’s engagement with Australian industry— keeping Australian workers employed and growing capability for the future.

In the Boxer CRV project, Rheinmetall Defence Australia is delivering and supporting 211 vehicles, through contracts1 valued at approximately $3.3 billion (acquisition) and $192 million over seven years (support), which will generate approximately $1.3 billion2 and $156.3 million in Australian industry participation respectively. Independent modelling over the capability’s life indicates total economic benefit of $10.2 billion.

The project to deliver the Arafura class OPV will generate a peak of 400 direct and 600 indirect jobs for Australian workers. Planned Australian industry participation currently exceeds

60 per cent, or approximately $1.2 billion. The prime contractor, Luerssen Australia, is committed to maximising Australian industry opportunities in its program of work. An example of this commitment is the award of a major subcontract to Marine Technicians Australia in place of a proven international supplier Luerssen already had in place, achieving significant growth of Australian industry early in the program.

The Joint Strike Fighter program uses world-leading thermal processing by Heat Treatment Australia (HTA). This has played a large part in HTA’s skills and technical growth and in the expansion of its operations from one person and one building to more than 65 people across Australia and the United States. HTA’s development of new-to-Australia thermal processes is also enabling its customers to reach into new industries. Its Joint Strike Fighter success has opened up additional domestic and international revenue streams for the company, from aerospace and defence to Formula One motor racing vehicles.

Notes:

1. This represents the value of the contracts when signed in 2018.

2. The AIC commitment of $1.3 billion referred to in the Defence Strategic Update excludes Australian taxes, custom duties, insurances, bank fees, infrastructure, corporate overheads, goods and services. When these values are included, the total AIC value increases to $1.685 billion.

155 CHAPTER 8 | ENVIRONMENTAL PERFORMANCE

ENVIRONMENTAL PERFORMANCE8

Australian Army Gunner Jarrod Collis from the 4th Regiment, Royal Australian Artillery, receives orders during a training scenario at the Combat Training Centre—

Jungle Training Wing, Tully, Queensland.

156 DEFENCE ANNUAL REPORT 2019-20

Defence Environmental Policy and Environmental Strategy 2016-2036 The Defence Environmental Policy outlines five strategic aims:

• Defence will deliver a sustainable estate across Defence maritime, land and aerospace areas, activities and operations

• Defence will understand and manage its environmental impacts

• Defence will minimise future pollution risks and manage existing contamination risks

• Defence will improve the efficiency of its resource consumption and strengthen resource security

• Defence will recognise and manage the Defence estate heritage values.

Defence’s Environment and Heritage Manual, published in January 2019, provides instruction and policy guidance for all Defence personnel on Defence’s legislative obligations and stewardship goals in line with the Defence Environmental Policy and the Defence Environmental Strategy 2016-2036.

Land and water management Throughout 2019-20, Defence implemented a number of improvement initiatives in the areas of bushfire mitigation and improving sustainability performance. Implementation of the recommendations of independent reviews conducted in 2018-19 continued, resulting in greater consistency in application of policy and improved bushfire and land management.

Defence has developed memoranda of understanding with most state and territory bushfire management authorities to strengthen cooperative arrangements between the agencies and ensure better preparedness for bushfire events affecting Defence properties. Defence continues to update and develop bushfire management plans in accordance with policy requirements.

Defence continues to engage Australian Wildlife Conservancy to undertake land management at Yampi Sound Training Area in the West Kimberley region of Western Australia. Australian Wildlife Conservancy’s management activities include monitoring for threatened species, mosaic burning to promote biodiversity, and engaging Traditional Owners in land management activities.

Waste management As a large generator of waste in the Australian Government, Defence was a stakeholder in the development of the Australian Government’s National Waste Policy 2018. Defence has developed a waste minimisation and management policy that reflects the principles of the National Waste Policy, with a focus on a circular economy. Defence also participates in relevant product stewardship schemes.

Defence has adopted a number of specific waste management and policy objectives, including:

• minimising the amount of material being diverted to landfill

• reducing consumption of natural resources

• reducing waste management and disposal costs through waste streaming.

Defence continues to work with industry to identify new opportunities to increase the use of recycled materials.

In collaboration with Defence industry partner Aurecon, the first recycled road on a Defence base was laid at RAAF Base Williams, Point Cook (Victoria) in May 2020. The project used 180 tonnes of PlastiPhalt, which included 600 kilograms of plastic waste. The project also incorporated 210 tonnes of crushed concrete waste from within the project, diverting it from landfill.

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Referrals under the Environment Protection and Biodiversity Conservation Act Defence maintains an environmental assessment and approval program to meet the requirements of Commonwealth environmental legislation, including identifying and understanding potential adverse impacts of its activities.

Defence continues to conduct assessments under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) in order to determine whether a referral to the Minister for the Environment is required under the EPBC Act. In 2019-20 Defence referred one project to the Minister for the Environment for assessment or approval: Demolition of Structures at RAAF Base Point Cook Victoria (Ref. No. 2019/8514). The referral is in progress and a referral decision has not yet been made.

Defence supports Australian Government development of Western Sydney Airport through environmental offsets

Defence is creating an important environmental legacy in Western Sydney by protecting and regenerating bushland to support the development of the Nancy Bird-Walton Airport.

Defence land often provides coincidental protection of natural values, especially on city fringes where natural areas are extensively cleared. Defence Establishment Orchard Hills in Western Sydney contains one of the largest and best examples of critically endangered Cumberland Plain Woodland in the world. This area creates a buffer between the Defence base and surrounding areas and is also used for low-impact Defence training exercises. It will now have broader environmental importance for Western Sydney by offsetting clearance of native vegetation for the development of the new Nancy Bird-Walton Airport, just south of Orchard Hills.

The Australian Government has committed to protecting and improving the locations of habitats that need to be cleared for the airport. Defence Establishment Orchard Hills is one of these sites, and provides an excellent opportunity to generate

real environmental improvements. Natural woodland still grows on the site, and adjoining areas are regenerating after historically being cleared for farming.

An intensive improvement program will allow for permanent removal of pests and reintroduction of locally extinct species such as bandicoots and bettongs that perform important ecosystem functions. Trees and shrubs will be replanted on old farmland to re-create bushland. Specialist burning will improve the health of existing bushland remnants, and research programs will address management challenges such as regional dieback of mature tree canopies.

Defence is privileged to be able to simultaneously support the development of the new airport and the economy of Western Sydney, maintain an operational base, and create an enduring environmental legacy by regenerating and preserving this important area of bushland.

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Environmental improvement initiatives and review

Exercise TALISMAN SABRE Exercise TALISMAN SABRE is a major combined training exercise involving Australian and international armed forces held biennially in Australia. The most recent iteration, Exercise TALISMAN SABRE 2019 (TS19), was conducted in July 2019. TS19 was planned and operated within a robust environmental management framework designed to avoid or mitigate environmental impacts and meet EPBC Act obligations.

Remediation programs Defence is undertaking ongoing contamination and explosive ordnance waste assessments and remediation across priority areas on the Defence estate, and has completed a three-year program of contamination assessments that has resulted in the closure of 650 records of contamination across the estate. Defence has also completed targeted environmental remediation works at Maribyrnong in Victoria and remediation of explosive ordnance waste at multiple air weapons ranges across the estate.

Heritage management on the Defence estate Defence manages heritage values on the Defence estate consistent with the principles and requirements of Commonwealth heritage legislation, including identification and management of risks to heritage assets during planning, development and operation of Defence facilities. Defence continues to progress heritage assessments and development of heritage management plans in accordance with the Defence Estate Heritage Strategy and legislative requirements. This has included consultation with Traditional Owners on country to develop appropriate cultural heritage conservation and management of Aboriginal and Torres Strait Islander heritage sites and areas on the estate. The development of heritage management plans also fosters stronger collaboration with Aboriginal and Torres Strait Islander communities, which supports a range of outcomes under the Defence Reconciliation Action Plan and legislative requirements.

Defence has successfully managed historic archaeological discoveries during works at Anglesea Barracks in Hobart and Victoria Barracks in Sydney. These discoveries have been carefully recorded, and design options to protect the finds have been integrated into works programs.

During 2019-20, Defence worked with Government agencies and community groups regarding the provision of statutory heritage protection post disposal by the Commonwealth for a range of sites currently in the property disposal planning process.

Pollution prevention program Defence is progressing activities to address high-priority pollutants and polluting activities, including the ongoing use of firefighting foams. Defence has conducted testing and trials of environmental aspects of possible fluorine-free replacement foams for use in firefighting vehicles.

Biodiversity In September 2018, Defence signed a memorandum of understanding with the Department of Infrastructure, Regional Development and Cities (now the Department of Infrastructure, Transport, Regional Development and Communications) to contribute to the biodiversity offset requirements for the Western Sydney Airport project. The memorandum commits Defence to improving the condition of 900 hectares of Cumberland Plain Woodland at Defence Establishment Orchard Hills (located in Western Sydney) for a period of 20 years. Defence can continue to undertake activities within the offset area that do not impact on the achievement of conservation outcomes. At the end of the 20-year term Defence will be required to maintain the improved environmental conditions.

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Ecologically sustainable development In 2019-20, a program of ecologically sustainable development activities delivered energy and water efficiency projects to improve the sustainability of the Defence estate and reduce whole-of-life costs. Projects included installation of rooftop solar photovoltaic, lighting upgrades and water-efficient fittings. The total net whole-of-life savings over the past five years of the program is estimated to be $15 million.

Defence is improving its ability to monitor and report on energy and water consumption and waste disposal. The Resource Data Management System (RDMS) currently collates electricity, water and gas meter data as well as waste volumetric data. The RDMS assists in the identification of cost-saving opportunities through increased efficiency in electricity, gas and water use. To date the RDMS has identified over $1.6 million in potential energy and water savings.

Defence’s Smart Infrastructure Handbook sets minimum requirements covering energy, water, waste, materials, climate adaptation, smart procurement and pollution prevention.

Energy In 2018-191 total energy consumption decreased by 11 per cent compared with 2017-18. This decrease can be largely attributed to a 10 per cent decrease in operational diesel use. Stationary energy consumption (electricity, gas and LPG) remained stable in 2018-19.

Defence has committed to a 10-year Defence renewable energy and energy security program to install large-scale renewable energy and energy storage systems across the Defence estate. There is more than 3.5 megawatts of renewable energy installed on the Defence estate, and more than 15 megawatts in development and delivery.

Water Defence spent $38.2 million (including GST) on water and sewage at Defence-owned facilities in 2018-192. Defence has installed hundreds of water meters to monitor water use at major Defence facilities.

Climate adaptation Defence continues to assess climate risks to the Defence estate and plan appropriate adaptation responses.

Defence fuel supply chain reform and initiatives The Defence Fuel Transformation Program is a $1.16 billion program targeted at enabling ADF capability by reducing enterprise risk, increasing resilience and optimising costs across the Defence fuel network. The program is being delivered in a series of tranches which commenced in July 2018 and will conclude by 2045-46.

As the second year of Tranche 1 nears completion, the program continues to deliver on its mission to develop a safer, simpler and assured Defence fuel supply chain in partnership with industry. Major Tranche 1 milestones achieved include the remediation of over 3,600 of the highest priority risk actions, closure of noncompliant and unsafe Defence fuel installations, remediation of critical Defence fuel installation asset data, and strengthening Defence fuel supply chain competencies and training. In May 2020 the first sites commenced construction activities as part of a suite of infrastructure investments focused on risk reduction. Engineering design work for the remaining bases is well advanced, and the construction phase of these projects will take place in the third and final year of Tranche 1.

An innovative transformation project to commercialise the marine fuel installation at HMAS Cairns was executed in October 2019. This contract has enabled Defence to leverage fuel industry expertise to improve operating and maintenance practices and to capture a financial return from the assets. A future fuel services contract is also

1 Figures for energy consumption are calculated and cross-checked using billing data. This data is unavailable for 2019-20 at the time of print. As in previous years, updated figures will be provided to Government through Senate estimates in October 2020. 2 Figures for water consumption are calculated and cross-checked using billing data. This data is unavailable for 2019-20 at the time of print. As in previous years, updated figures will be provided to Government through Senate estimates in October 2020.

160 DEFENCE ANNUAL REPORT 2019-20

being developed to increase integration with fuel industry capability by outsourcing to fuel specialists operations and maintenance activities across the greater part of the network. The request for proposal for the contract was completed this year and attracted a number of competitive responses. Final tendering activities are well advanced and the request for tender process will be completed within Tranche 1.

An overarching framework and implementation plan for governance, assurance and reporting to measure and control the health of the Defence fuel supply chain was developed in 2019-20. This will provide a stronger, more integrated Fuel Services Branch structure for the effective management and governance of the fuel network.

During the year the program also planned Tranche 2 in preparation for Government consideration in early 2021. Tranche 2 will include further targeted investments to reduce the operating risk profile at key Defence fuel installations to improve resilience, and will implement the fuel services contract to sustain the network in accordance with industry standards. Tranche 2 will be delivered over five years, commencing in July 2021.

National PFAS Investigation and Management Program Defence’s National PFAS Investigation and Management Program has been established to manage, contain and remediate the effects of per- and poly-fluoroalkyl substances (PFAS) contamination in and around a number of its properties. It has its origins in reviews looking into where and how firefighting foam was historically used, to identify the properties most likely to be impacted by legacy PFAS contamination.

Defence has now completed detailed site investigations for PFAS contamination both in and around 19 of 28 Defence properties. Where those investigations have been finalised, Defence is actively working to manage and remediate identified environmental contamination risks.

The precautionary principle has been key to Defence’s approach to the management of PFAS risks. While there are uncertainties around the behaviours and impacts of PFAS, there is sufficient knowledge to apply the precautionary principle.

Interim response actions Before the completion of environmental investigations, and usually before a complete understanding of the findings of an investigation are available, Defence, in accordance with the precautionary principle, puts in place a number of interim response actions in and around various Defence properties to address specific risks or break potential exposure pathways. These actions can include the provision of alternative water supplies to affected residents and communities; the implementation of groundwater and surface water treatment technologies; drain maintenance activities; and management of PFAS source areas consistent with relevant state and territory regulations.

Provision of alternative drinking water Health authorities advise that exposure to PFAS can occur from contaminated food, water (groundwater and surface water) and various consumer products. Defence identified that some residents surrounding a number of Defence properties were, or may have been, ingesting groundwater containing PFAS. Where PFAS-contaminated groundwater was the residents’ primary source of drinking water, Defence provided an alternative supply of drinking water (initially bottled water). Defence has provided alternative drinking water to residents in communities surrounding RAAF Base Williamtown, RAAF Base Tindal, RAAF Base Pearce and the Army Aviation Centre Oakey. The following assistance has also been provided:

• In Williamtown, Defence has funded Hunter Water Corporation to connect 342 properties around RAAF Base Williamtown to town water.

• In Oakey, Defence has funded the Toowoomba Regional Council to connect 36 properties around the Army Aviation Centre Oakey to town water.

• In Katherine, Defence worked with local providers to install rainwater tanks and other infrastructure including plumbing and guttering at 67 properties around RAAF Base Tindal.

161 CHAPTER 8 | ENVIRONMENTAL PERFORMANCE

• In Katherine, Defence worked with the Northern Territory Power and Water Corporation (NT PWC) to install and operate an interim groundwater PFAS treatment system at the town water treatment facility to meet current town water demand. In 2019, Defence also provided $21 million to NT PWC for the purchase, installation and initial operational support of a permanent groundwater PFAS treatment system which is large enough to meet the forecast future demand for town water.

• In Bullsbrook, Defence continues to provide 26 residents who have had PFAS detected in their groundwater bores with bottled water until a sustainable long-term solution is found.

Groundwater treatment systems In a similar application of the precautionary principle, before investigations were finalised, Defence installed water treatment plants to treat high-concentration sources at RAAF Base Williamtown, RAAF Base Tindal, RAAF Base Edinburgh and the Army Aviation Centre Oakey.

As at June 2020, 4.6 billion litres of water has been treated through the PFAS water treatment plants currently in operation across the Defence estate. These plants are commissioned to remove the three primary PFAS chemicals of concern—perfluoro-octane sulfonate (PFOS), perfluoro-octanoic acid (PFOA) and perfluoro-hexanoic acid (PFHxS)—to below drinking water guidance values, in accordance with environmental discharge requirements of relevant states or territories. In most cases they have achieved removal to below the limit for reporting.

As part of its response, Defence will assess the contribution existing groundwater water treatment plants make to the reduction of PFAS contamination, or the migration of PFAS contamination, at the relevant source area or site.

PFAS Management Area Plan and Ongoing Monitoring Program Responding to PFAS contamination requires an effective, evidence-based and nationally consistent response. Each Defence site where an investigation has been concluded has a PFAS Management Area Plan (PMAP), which is specific to the conditions at each site and is based on the findings of the investigation. PMAPs recommend remediation actions and related studies at the site to monitor, manage and reduce the risks of PFAS exposure and mitigate the migration of PFAS through groundwater and surface water flows from specific on-base source areas to locations beyond the site. At the completion of planned remedial works, Defence will seek to determine whether minimisation of PFAS migration from a source area has been achieved ‘so far as reasonably practicable’.

As part of each PMAP, Defence is also implementing an Ongoing Monitoring Program to monitor and track PFAS contamination at Defence properties over the coming years. The Ongoing Monitoring Program provides an evidence base for the continuing management of PFAS contamination. It will assist Defence to evaluate the progress and success of remediation activities and to identify where more might need to be done. PMAPs will be reviewed annually or as new technology becomes available, and an annual Ongoing Monitoring Program Interpretive Report will be published.

Defence’s strategy for responding to PFAS contamination is adaptive and recognises the evolving nature of scientific knowledge, technological advances in PFAS treatment, and the need for flexibility. Responses generally involve one or more of the following three principal components:

• source management—by removal, destruction, treatment, disposal and/or other methods, leading to the source no longer being present or the risk being reduced to accepted levels

• pathway management—by capping, containing, stabilising, diverting and/or other methods

• receptor management—by using point-of-use technology (e.g. filters); providing alternative essential services (e.g. drinking water); providing public information and behaviour advisories (e.g. limits on dietary intake); and/ or other methods focused on people, livestock and other environmental receptors.

Using the knowledge and experience gained in recent years, including information about the distribution, concentration and migration of PFAS and exposure pathways at each site, Defence is now focusing on reducing and/or removing high-concentration soils in source areas which leach contamination into surface water and groundwater. Primary remediation options include soil excavation and disposal at appropriately licensed offsite facilities; stabilisation or immobilisation to lock contamination in place; and capping to prevent infiltration of water which would enable leaching of contamination into groundwater or surface water sources.

162 DEFENCE ANNUAL REPORT 2019-20

Remediation technology The range of treatment and technology options that are commercially available to treat PFAS contamination is limited. Commercially proven soil treatment technologies are more limited than water treatment technologies. Issues of scale, efficiency, effectiveness and financial sustainability remain important considerations. Defence continues to support PFAS technology research and development validation, engaging with national and international partners to discuss issues of mutual interest including developments in investigations, remediation and management, and specific technical issues.

As of 30 June 2020, Defence has independently funded 11 research activities valued at approximately $6.8 million. Most relate to trials for remedial technologies for soil, groundwater and concrete. Additional research has supplemented site-specific Human Health and/or Ecological Risk Assessments, including a PFAS plant uptake study (in fruit and vegetables) and a study to evaluate PFAS transfer from chickens to their eggs as a result of drinking PFAS-contaminated water.

In addition to funding a research grants program administered by the Australian Research Council, in 2018 Defence contracted the Commonwealth Scientific and Industrial Research Organisation (CSIRO) to consider a number of critical questions for the management of estate PFAS risks, including when pump and treat systems for contaminated groundwater should be used; when contaminated soil should be excavated and treated; and how to manage PFAS-contaminated asphalt and concrete most efficiently and effectively.

Consultation and collaboration Defence works closely with affected communities, Commonwealth agencies, state and territory environmental and health authorities, local councils, local interest groups and businesses to be open and transparent about the progress of investigations. This consultation facilitates the sharing of sampling results and, where relevant, sharing of precautionary advice developed by state and territory authorities.

Defence aims to provide PFAS-affected communities with transparent, timely and direct communication about the release of investigation outcomes; remediation and management activities; opportunities for residents to discuss their concerns about PFAS contamination; and how residents can access further information. As of the end of June 2020, Defence has held 142 community engagement events for PFAS-affected communities. Defence has also established community information lines and a website for the National PFAS Investigation and Management Program. The website hosts all publications released through the PFAS Investigation and Management Program, as well as site-specific answers to frequently asked questions, information on investigation areas, links to precautionary advice issued by state and territory authorities, and links to other agency websites.

Financial investment Defence’s total spend on PFAS environmental investigations and remediation action for 2019-20 was approximately $80 million. Defence’s total contribution to the whole-of-government response to PFAS contamination since 2015- 16 is approximately $450 million, including $45 million to other agencies for specific initiatives. This expenditure has enabled Defence to determine the nature and extent of PFAS contamination, and to work to manage and remediate contamination across the estate and in surrounding communities.

The cost of each environmental investigation is determined by the physical environment on and around the Defence property, and by the nature of the historical use of legacy firefighting foam. Remediation costs for each property depend on the scope of work and the options selected for remediation and management.

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Army’s autonomous future

Army continues to explore the opportunities of autonomous systems. At the forefront of this exploration is experimentation and concept demonstration conducted by the Robotic and Autonomous Systems Implementation and Coordination Office (RICO).

RICO was formed as part of the Future Land Warfare Branch in Army Headquarters following the release of the Army’s Robotic and Autonomous Systems Strategy in January 2019. Its work of examining emerging technologies for Army includes autonomy, alternative power and energy, and quantum technologies.

In 2019, RICO trialled and experimented with un-crewed ground vehicles, quadruped (four-legged) robots and advanced leader-follower technology. It also produced capstone papers on advanced manufacturing and on power and energy.

In partnership with BAE Systems Australia, Army enhanced two M113AS4 armoured vehicles to enable optional crewing of the platform. In October 2019 a concept demonstration of the

autonomous M113AS4 in a battlefield setting at Majura Training Range (ACT) showed the potential to remove soldiers from some of the most dangerous tasks, and the ability to team humans and robotic systems together.

In the scenario, the combat team used unmanned aerial systems to locate the enemy position and provide persistent surveillance. The optionally crewed combat vehicles autonomously deployed ground robots to search and clear the area. The soldiers then deployed to the enemy position when it was deemed secure by their robotic teammates. Finally the vehicles conducted an autonomous casualty evacuation to a nominated casualty collection point away from the objective.

Army will continue to test and experiment with several robotic and autonomous systems to enhance its combat power.

Australian Army soldier Corporal Josh Green from B Squadron 3rd/4th Cavalry Regiment, School of Armour, commands an M113AS4 and two autonomous M113AS4 optionally crewed combat vehicles during a demonstration at the Majura Training Area, Canberra.

164 DEFENCE ANNUAL REPORT 2019-20

Seaman Boatswain's Mate Alisha Matthew from Fleet Support Unit—West paints a tree blue as part of an Australia-wide mental health initiative on board HMAS Stirling in Western Australia.

165 APPENDIX A: FINANCIAL STATEMENTS

APPENDICES

166 DEFENCE ANNUAL REPORT 2019-20

Appendix A: Financial statements

GPO Box 707 CANBERRA ACT 2601 38 Sydney Avenue FORREST ACT 2603 Phone (02) 6203 7300 Fax (02) 6203 7777

INDEPENDENT AUDITOR’S REPORT

To the Minister for Defence

Opinion

In my opinion, the financial statements of the Department of Defence (Defence) for the year ended 30 June 2020:

(a) comply with Australian Accounting Standards - Reduced Disclosure Requirements and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015; and

(b) present fairly the financial position of Defence as at 30 June 2020 and its financial performance and cash flows for the year then ended.

The financial statements of Defence, which I have audited, comprise the following statements as at 30 June 2020 and for the year then ended:

 Statement by the Accountable Authority and Chief Finance Officer;  Statement of Comprehensive Income;  Statement of Financial Position;  Statement of Changes in Equity;  Cash Flow Statement;  Administered Schedule of Comprehensive Income;  Administered Schedule of Assets and Liabilities;  Administered Reconciliation Schedule;  Administered Cash Flow Statement; and  Notes to and forming part of the financial statements, comprising a Summary of Significant Accounting

Policies and other explanatory information.

Basis for opinion

I conducted my audit in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of Defence in accordance with the relevant ethical requirements for financial statement audits conducted by me. These include the relevant independence requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) to the extent that they are not in conflict with the Auditor-General Act 1997. I have also fulfilled my other responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Key audit matters

Key audit matters are those matters that, in my professional judgement, were of most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters.

167 APPENDIX A: FINANCIAL STATEMENTS

Key audit matter

Valuation of specialist military equipment

Refer to Note 3.2A ‘Reconciliation of the opening and closing balances of property, plant and equipment, and intangibles’

Specialist military equipment includes platform

assets in us e and under construction and spare parts for these assets.

I considered t he valuation of specialist military

equipment to be a key audit matter due to:

 the balance being significant relative to

Defence’s Statement of Financial Position ( $ 71.8 billion as at 30 June 2020) ;

 the high degree of judgement applied by

management to measure specialist military

equipment at fair value due to the highly

specialised nature of these assets ; and

 the subjectivity in the valuation assessment due to the diffi culty in obtaining the replacement

costs of assets with a similar capability in the absence of an active market, the selection and application of appropriate indices, the

determination and assessment of appropriate useful lives , and the identification of indicators

of impairment.

How the audit addressed the matter

To address the key audit matter, I :

 assessed whether the selection of the method for

determining fair value was appropriate for each

class of specialist military equipment ;

 assessed the competence, capability and

objectivity of Defence’s valuation subject matter experts;

 tested the completeness and accuracy of data

used in the year - end valuation process;

 assess ed whether the useful lives applied to

specialist military equipment (for the calculation

of depreciation) were consistent with other

available information including expected

withdrawal dates for these assets;

 tested the accuracy of a sample of cost

attribution models , and approvals of cost

allocations relat ed to specialist mili tary

equipment under construction;

 assess ed whether the assumptions and

judgements used by Defence to determine the

impairment of specialist military equipment are

consistent with other available information

including changes to planned capability and

unscheduled repairs and maintenance; and

 assess ed management’s assurance process for impairment and inspect ed a sample of assets for

indicators of impairment.

Key audit matter

Valuation of general assets

Refer to Note 3.2A ‘Reconciliation of the opening and closing balances of property, plant and equipment, and intangibles’

General assets comprise land and buildings ($20.0

billion) , infrastructure ($6.5 billion) , plant and

equipment ($1.8 billion) , heritage and cultural assets

($474.1 m illion) and intangible s ($ 899.3 m illion) .

Th ese balances include assets under construction by

Defence which are typically long term project s.

I consider t he valuation of Defence’s general assets

to be a key audit matter due to :

 b alances being significant relative to Defence’s Statement of Financial Position;

 the high degree of management judgement

required in respect of classifying project costs as capital or expense and the selection of valuation

methods to measure fair value;

How the audit addressed the matter

To address the key audit matter, I:

 evaluated the appropriateness of Defence’s

methodolog ies and the reasonableness of its key

assumptions utilis ed in the valuation models;

 assess ed th e competence, capability and

objectivity of management’s valuers;

 assessed whether the useful lives applied to the

various asset classes (for the calculation of

depreciation) were consistent with Defence’s planned usage of these assets;

 tested a sample of costs allocated to general

assets under construction to assess the

appropriateness of capitalisation in accordance

with the Australian Accounting Standards ; and

 assessed the reasonableness and

appropriateness of judgements used by Defence to assess non- financial assets for impairment .

This included the process of Defence to monitor impairment indicators specific to an asset’s use in

168 DEFENCE ANNUAL REPORT 2019-20

 the valuation of Defence’s land, buildings, infrastructure, plant and equipment and heritage and cultural assets being dependent on assumptions that require significant

management judgement. These include capitalisation rates, current replacement costs , discount rates, and conditions of the assets. Where observable market data is not available, the valuation is subject to a higher level of judgement; and

 the subjectivity in determining appropriate useful lives and the assessment of the financial impact of indicators of impairment.

the Defence context .

Key audit matter

Existence and completeness of inventories

Refer to Note 3.2B ‘Inventories ’

Defence had a balance of $ 7.4 billion in inventories as at 30 June 20 20 which include general stores

inventories ($2.3 billion), fuel ($ 68.0 m illion) and

explosive ordnance ($ 5.0 billion).

I consider t he existence and completeness of inventories to be a key audit matter due to the variety and number of inventory items which are managed differently across a large number of geographically dispersed locations.

A key element of assurance as to the existence and completeness of Defence’s general stores inventories is the completion of an annual National Asset and Inventory Sample. This statistical approach is developed with the assistance of an expert engaged by Defence. The COVID - 19 pandemic

affected the ability of Defence to fully execute the planned 2019 - 20 activities. Travel and movement restrictions necessitated the selection of alternate locations and resulted in reduced coverage. Travel and movement restrictions also adversely impacted the ability to obtain audit evidence as to the existence and complete ness of inventory in 2019 - 20.

How the audit addressed the matter

To address the key audit matter, I :

 assessed whether Defence’s COVID- affected National Asset and Inventory Sample remained appropriate given the changes to the planned approach;

 observed the performance of Defence’s Nati onal Asset and Inventory Sample at a selection of Defence locations prior to the COVID - 19

pandemic;

 re- performed a sample of counts performed by Defence under its National Asset and Inventory Sample subsequent to its exec uted program where I was unable to observe the initial activity as planned;

 tested the design and operating effectiveness of key controls that apply to system components, processes and data within the logistics and financial management information systems; and

 substantiated a sample of transactions processed through Defence’s logistics information systems by agreeing quantities purchased to invoices, warehouse delivery dockets and stock taking records.

169 APPENDIX A: FINANCIAL STATEMENTS

Key audit matter

Valuation of employee provisions

Refer to Note 4.4A ‘Employee provisions’

Defence administers four defined benefit plans that entitle Australian Defence Force members to retirement and death benefits based on past service.

I consider t he valuation of the administered employee provisions to be a key audit matter due to:

 the balance being significant relative to

Defence’s Administered Schedule of Assets and Liabilities ( $ 188.2 billion as at 30 June 20 20); and

 the measurement of the provision being complex, requiring significant professional judgement in the selection of key long - term assumptions ( including such matters as salary growth and discount rates, pension indexation rate, pension take - up rate and invalidity retirements) to which the valuation of these plans are highly sensitive.

In addition, the Australian Accounting Standards include detailed requirements for the presentation and disclosure in respect of defined benefit plans.

How the audit addressed the matter

To address the key audit matter, I:

 assessed the design and operating effectiveness of key internal controls over membership data used for the valuation of the defined benefit provisions;

 evaluated the reasonableness of the review performed by management’s expert to confirm the integrity of the data used for estimating the defined benefit provisions;

 evaluated the appropriateness of the

methodology and reasonableness of the key assumptions applied in estimating the defined benefits;

 assessed the reasonableness of the results of the valuation including the explanations for the changes in the valuation; and

 evaluated the appropriateness of the disclosure of the significant assumptions applied, including sensitivity analysis.

Accountable Authority’s responsibility for the financial statements

As the Accountable Authority of Defence, the Secretary is responsible under the Public Governance, Performance and Accountability Act 2013 (the Act) for the preparation and fair presentation of annual financial statements that comply with Australian Accounting Standards - Reduced Disclosure Requirements and the rules made under the Act. The Secretary is also responsible for such internal control as the Secretary determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Secretary is responsible for assessing the ability of Defence to continue as a going concern, taking into account whether Defence’s operations wi ll cease as a result of an administrative restructure or for any other reason. The Secretary is also responsible for disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the assessment indicates that it is not appropriate.

Auditor’s responsibilities for the audit of the financial statements

My objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian National Audit Office Auditing Standards will always dete ct a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with the Australian National Audit Office Auditing Standards, I exercise professional judgement and maintain professional scepticis m throughout the audit. I also:

 identify and assess the risks of ma terial misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not d etecting a material

170 DEFENCE ANNUAL REPORT 2019-20

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;  obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of

Defence’s internal control;  evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Accountable Authority;  conclude on the appropriateness of the Accountable Authority’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Defence’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause Defence to cease to continue as a going concern; and  evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transa ctions and events in a manner that achieves fair presentation.

I communicate with the Accountable Authority regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

From the matters communicated with the Accountable Authority, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter s hould not be communicated in my report because the adverse consequences of doing so would reasonabl y be expected to outweigh the public interest benefits of such communication.

Australian National Audit Office

Grant Hehir

Auditor- General

Canberra

1 October 2020

171 APPENDIX A: FINANCIAL STATEMENTS

172 DEFENCE ANNUAL REPORT 2019-20

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173 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence

Financial Statements

For the period ended 30 June 2020

174 DEFENCE ANNUAL REPORT 2019-20

CONTENTS

CERTIFICATION

PRIMARY FINANCIAL STATEMENTS Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Cash Flow Statement

Administered Schedule of Comprehensive Income

Administered Schedule of Assets and Liabilities

Administered Reconciliation Schedule

Administered Cash Flow Statement

OVERVIEW

NOTES TO THE FINANCIAL STATEMENTS 1. Financial Performance 1.1 Expenses

1.2 Own-Source Revenue and Gains

2. Income and Expenses Administered on Behalf of Government 2.1 Administered - Expenses

2.2 Administered - Income

3. Financial Position 3.1 Financial Assets

3.2 Non-Financial Assets

3.3 Payables

3.4 Interest Bearing Liabilities

3.5 Provisions

4. Assets and Liabilities Administered on Behalf of Government 4.1 Administered - Financial Assets

4.2 Administered - Non-Financial Assets

4.3 Administered - Payables

4.4 Administered - Provisions

4.5 Administered - Defined Benefit Plans

5. Funding 5.1 Appropriations

5.2 Special Accounts

6. People and relationships 6.1 Key Management Personnel Remuneration

6.2 Related Party Disclosures

7. Managing uncertainties 7.1 Contingent Assets and Liabilities

7.2 Financial Instruments

7.3 Administered - Financial Instruments

7.4 Fair Value Measurements

7.5 Administered - Fair Value Measurements

8. Other information 8.1 Assets Held in Trust

8.2 Restructuring

8.3 Aggregate Assets and Liabilities 8.4 Restatement of Prior Period Errors

1

175 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence STATEMENT OF COMPREHENSIVE INCOME Restated

2

Original

For the period ended 30 June 2020 2020 2019 Budget

1

$'000 $'000 $'000

NET COST OF SERVICES

Notes

EXPENSES Employee benefits 1.1A 12,342,127 11,921,994 12,341,903

Suppliers expenses 1.1B 15,527,765 14,033,327 15,616,851

Grants 1.1C 164,683 149,376 143,623

Depreciation and amortisation 3.2A 6,258,164 6,063,549 5,474,719

Finance costs 1.1D 125,638 111,272 158,451

Impairment loss allowance on financial instruments 2,706 5,079 -

Write-down and impairment of assets2 1.1E 705,960 1,250,969 944,053

Net foreign exchange losses 1.1F 43,921 36,665 -

Losses from asset sales - 39,754 -

Other expenses 1.1G 223,287 241,200 15,158

Total expenses 35,394,251 33,853,185 34,694,759

LESS:

OWN-SOURCE INCOME Own-source revenue Revenue from contracts with customers2 1.2A 322,735 310,483 557,611

Rental income2 1.2B 251,282 235,715 4,690

Other revenue 1.2C 66,054 24,561 41,365

Total own-source revenue 640,071 570,759 603,667

Gains Gains from asset sales 100,647 - 4,604

Reversals of previous asset write-downs and impairment2 1.2D 380,363 516,483 202,990

Other gains 1.2E 232,978 355,276 5,188

Total gains 713,988 871,759 212,782

Total own-source income 1,354,059 1,442,518 816,449

Net cost of services 34,040,192 32,410,667 33,878,310

Revenue from Government 1.2F 34,290,209 32,525,834 33,878,310

Surplus attributable to the Australian Government 250,017 115,167 -

OTHER COMPREHENSIVE INCOME Items not subject to subsequent reclassification to net cost of services Changes in asset revaluation reserves 3.2A 105,836 1,150,214 -

Total other comprehensive income 105,836 1,150,214 -

Total comprehensive income attributable to the Australian Government 355,853 1,265,381 -

The above statement should be read in conjunction with the accompanying notes

1 Defence's original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from Defence's 2019-20 Portfolio Budget Statements). The budget is not audited.

2 Prior period balances have been restated. Refer to Note 8.4 for further details.

2

176 DEFENCE ANNUAL REPORT 2019-20

Department of Defence STATEMENT OF FINANCIAL POSITION Restated

2

Original

as at 30 June 2020 2020 2019 Budget

1

$'000 $'000 $'000

Notes

ASSETS Financial assets Cash and cash equivalents2 3.1A 427,418 286,961 72,241

Trade and other receivables 3.1B 1,120,443 849,635 385,010

Total financial assets 1,547,861 1,136,596 457,251

Non-financial assets Land and buildings2,3 3.2A 19,965,134 19,472,846 20,003,073

Specialist military equipment2 3.2A 71,753,855 66,547,789 69,492,116

Infrastructure2 3.2A 6,452,925 6,343,885 6,702,992

Plant and equipment2,3 3.2A 1,770,450 1,336,330 1,719,138

Heritage and cultural assets2 3.2A 474,107 474,037 440,444

Intangibles2 3.2A 899,284 870,782 702,787

Inventories2 3.2B 7,369,485 7,036,627 6,256,396

Prepayments 3.2C 1,825,942 2,497,354 1,541,124

Total non-financial assets 110,511,182 104,579,650 106,858,069

Assets held for sale 3.2D 215,822 151,376 47,432

Total assets 8.3A 112,274,865 105,867,622 107,362,752

LIABILITIES Payables Suppliers payables 3.3A 2,719,992 2,511,261 2,221,784

Employee payables 3.3B 145,977 87,122 73,580

Other payables2 3.3C 558,926 570,409 97,576

Total payables 3,424,895 3,168,792 2,392,939

Interest bearing liabilities Leases 3.4A 2,884,524 1,485,329 1,443,160

Total interest bearing liabilities 2,884,524 1,485,329 1,443,160

Provisions Employee provisions 3.5A 3,412,595 3,041,254 3,045,842

Restoration, decontamination and decommissioning 3.5B 1,414,034 1,303,571 1,319,253

Other provisions 3.5C 332,561 432,341 312,565

Total provisions 5,159,190 4,777,166 4,677,660

Total liabilities 8.3A 11,468,609 9,431,287 8,513,760

NET ASSETS 100,806,256 96,436,335 98,848,992

EQUITY Contributed equity 35,794,975 31,781,123 35,575,342

Reserves 27,983,805 27,877,969 26,727,755

Retained surpluses2 37,027,476 36,777,243 36,545,895

Total equity 100,806,256 96,436,335 98,848,992

The above statement should be read in conjunction with the accompanying notes

1 Defence's original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from Defence's 2019-20 Portfolio Budget Statements). The budget is not audited.

2

Prior period balances have been restated. Refer to Note 8.4 for further details.

3 2019-20 reported balances include right-of-use assets associated with Defence leases. Refer to 'New Accounting Standards' in Overview section for further details on the application of AASB 16.

3

177 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence STATEMENT OF CHANGES IN EQUITY Restated

2

Original

For the period ended 30 June 2020 2020 2019 Budget

1

$'000 $'000 $'000

Notes

CONTRIBUTED EQUITY Opening balance Balance carried forward from previous period 31,781,123 28,450,361 31,628,697

Transactions with owners Distribution to owners Returns of capital - lapsed Appropriations (Operating) (87) (18,493) -

Returns of capital - lapsed Appropriations (Equity) - (407,411) -

Restructuring 8.2A - (202,208) -

Transfers to other entities (1,090) (4,608) -

Contribution by owners Equity injection - Appropriations (current year) 5.1A 4,015,029 3,343,482 3,946,645

Equity injection - Appropriations (prior year) 5.1A - 620,000 -

Total transactions with owners 4,013,852 3,330,762 3,946,645

Closing balance as at 30 June 35,794,975 31,781,123 35,575,342

RETAINED EARNINGS Opening balance Balance carried forward from previous period2 36,777,243 36,577,430 36,545,895

Adjustment on initial application of AASB 16 216 - -

Adjustment for errors - 84,646 -

Adjusted opening balance 36,777,459 36,662,076 36,545,895

Comprehensive income Surplus for the period2 250,017 115,167 -

Total comprehensive income 250,017 115,167 -

Closing balance as at 30 June 37,027,476 36,777,243 36,545,895

ASSET REVALUATION RESERVE Opening balance Balance carried forward from previous period 27,877,969 26,727,755 26,727,755

Comprehensive income Other comprehensive income 3.2A 105,836 1,150,214 -

Total comprehensive income 105,836 1,150,214 -

Closing balance as at 30 June 27,983,805 27,877,969 26,727,755

The above statement should be read in conjunction with the accompanying notes

1 Defence's original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from Defence's 2019-20 Portfolio Budget Statements). The budget is not audited.

2

Prior period balances have been restated. Refer to Note 8.4 for further details.

4

178 DEFENCE ANNUAL REPORT 2019-20

Department of Defence STATEMENT OF CHANGES IN EQUITY (continued) Restated

2

Original

For the period ended 30 June 2020 2020 2019 Budget

1

$'000 $'000 $'000

Notes

TOTAL EQUITY Opening balance Balance carried forward from previous period2 96,436,335 91,755,546 94,902,348

Adjustment on initial application of AASB 16 216 - -

Adjustment for errors - 84,646 -

Adjusted opening balance 96,436,551 91,840,192 94,902,348

Comprehensive income Surplus for the period2 250,017 115,167 -

Other comprehensive income 105,836 1,150,214 -

Total comprehensive income 355,853 1,265,381 -

Transactions with owners Distribution to owners Returns of capital - lapsed Appropriations (Operating) (87) (18,493) -

Returns of capital - lapsed Appropriations (Equity) - (407,411) -

Restructuring - (202,208) -

Transfers to other entities (1,090) (4,608) -

Contribution by owners Equity injection - Appropriation (current year) 4,015,029 3,343,482 3,946,645

Equity injection - Appropriation (prior year) - 620,000 -

Total transactions with owners 4,013,852 3,330,762 3,946,645

Closing balance as at 30 June 100,806,256 96,436,335 98,848,992

The above statement should be read in conjunction with the accompanying notes

1 Defence's original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from Defence's 2019-20 Portfolio Budget Statements). The budget is not audited.

2

Prior period balances have been restated. Refer to Note 8.4 for further details.

Accounting Policy (a) Equity Injections Amounts appropriated which are designated as ‘equity injections’ (less any formal reductions) are recognised directly in contributed equity in that year.

(b) Restructuring of Administrative Arrangements Net assets/liabilities received from or relinquished to another Australian Government agency or authority under a restructuring of administrative arrangements are recognised as contributions or distributions of equity respectively, at their net book value.

(c) Other Distributions to Owners including Repayments of Appropriations The Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR) requires that distributions to owners be debited to contributed equity unless it is a dividend. Repayments and reductions of equity appropriations are recognised as a reduction of contributed equity.

5

179 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence CASH FLOW STATEMENT Restated

2

Original

For the period ended 30 June 2020 2020 2019 Budget

1

$'000 $'000 $'000

Notes

OPERATING ACTIVITIES Cash received Appropriations (current year) 34,084,318 32,407,283 33,878,310

Appropriations (prior year) 41,715 - -

Section 74 receipts from OPA2 1,191,013 935,219 -

Goods and services (including cost recovery) 558,697 642,419 557,504

Interest received 11,607 11,856 -

GST received 2,081,767 1,855,282 2,106,010

Other3 183,744 395,692 46,055

Total cash received 38,152,861 36,247,751 36,587,880

Cash used Employees (11,972,383) (11,687,174) (12,285,376)

Suppliers (14,777,443) (12,281,051) (13,501,224)

GST paid (2,046,281) (1,897,105) (2,106,010)

Grants (166,141) (147,888) (143,623)

Interest payments on lease liabilities (23,350) - -

Section 74 receipts transferred to OPA2 (1,191,013) (935,219) -

Cash returned to OPA (13,637) (14,914) -

Other3 (179,498) (228,872) (15,158)

Total cash used (30,369,746) (27,192,223) (28,051,392)

Net cash from operating activities 7,783,115 9,055,528 8,536,488

INVESTING ACTIVITIES Cash received Proceeds from sales of land and buildings 66,473 16,965 104,729

Proceeds from sales of specialist military equipment 144,523 28,269 7,549

Proceeds from sales of plant and equipment 12,848 22,849 20,987

Other 844 2,748 -

Total cash received 224,688 70,831 133,265

Cash used Purchase of land and buildings (804,995) (1,001,210) (1,139,083)

Purchase of specialist military equipment (7,703,468) (8,999,149) (8,421,945)

Purchase of infrastructure (674,945) (665,593) (909,309)

Purchase of plant and equipment (328,973) (263,498) (150,324)

Purchase of heritage and cultural assets - (200) -

Purchase of intangibles (194,155) (84,230) (130,197)

Purchase of inventory (1,803,661) (1,693,173) (1,715,279)

Selling costs on sale of assets (20,495) (16,139) (13,324)

Finance costs (91,924) (100,045) (95,125)

Total cash used (11,622,616) (12,823,237) (12,574,586)

Net cash used by investing activities (11,397,928) (12,752,406) (12,441,321)

The above statement should be read in conjunction with the accompanying notes

1 Defence's original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from Defence's 2019-20 Portfolio Budget Statements). The budget is not audited.

2 Section 74 receipts transferred to and drawn down from the OPA reflect receipts retained by Defence under Section 74 of the Public Governance Performance and Accountability Act 2013 . These predominantly relate to goods and services receipts (including cost recovery), proceeds from sales of assets, claims for damages or other compensation and cash received in relation to procurement arrangements.

3

Prior period balances have been restated. Refer to Note 8.4 for further details

6

180 DEFENCE ANNUAL REPORT 2019-20

Department of Defence CASH FLOW STATEMENT (continued) Restated

2

Original

For the period ended 30 June 2020 2020 2019 Budget

1

$'000 $'000 $'000

Notes

FINANCING ACTIVITIES Cash received Contributed equity (current year) 4,015,029 3,343,482 3,946,645

Contributed equity (prior year) - 620,000 -

Total cash received 4,015,029 3,963,482 3,946,645

Cash used Principal payments of lease liabilities (259,927) (93,333) (41,812)

Total cash used (259,927) (93,333) (41,812)

Net cash from financing activities 3,755,102 3,870,149 3,904,833

Net increase in cash held 2 140,289 173,271 -

Cash and cash equivalents at the beginning of the reporting period2 286,961 111,067 72,241

Effect of exchange rate movements on cash and cash equivalents at the beginning of the reporting period 168 2,623 -

Cash and cash equivalents at the end of the reporting period 2 3.1A 427,418 286,961 72,241

The above statement should be read in conjunction with the accompanying notes

1 Defence's original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from Defence's 2019-20 Portfolio Budget Statements). The budget is not audited.

2

Prior period balances have been restated. Refer to Note 8.4 for further details.

7

181 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence BUDGET VARIANCE COMMENTARY For the period ended 30 June 2020

The following provides an explanation of variances between the original budget as presented in the 2019-20 Portfolio Budget Statements (PBS) and 2019-20 final actual result. The budget is not audited. The budget figures as published in the PBS have been restated to align with the presentation and classification adopted in the financial statements.

Explanations are provided for major budget variances only. Variances are treated as major when it is considered important for reader's understanding or it is relevant to an assessment of the discharge of accountability and for analysis of the Department's performance.

A number of variances are impacted by the timing of the Commonwealth's budget process. This includes:

 Publishing estimated actual outcomes in the 2019-20 PBS before the closing 2018-19 and opening 2019-20 Statement of

Financial Position was known; and

 Amendments to the original budget as presented in the 2019-20 PBS by the Government throughout the year. The

Department's budget for 2019-20 was updated as part of the 2019-20 Mid-Year Economic and Fiscal Outlook (MYEFO), and the 2019-20 Portfolio Additional Estimates Statements (PAES).

A number of significant items within the Department's Statement of Comprehensive Income are subject to factors outside the Department's control and do not necessarily follow historical trends. These items include write-down and impairment of assets, other expenses, reversals of previous asset write-downs and impairment, other revenue and other gains. These items are difficult to establish budget estimates for.

The variance commentary below will make mention of these factors where applicable.

Departmental Statement of Comprehensive Income

Departmental expenses

The total variance between departmental expenses and the original budget is an increase of $699 million (or 2%). The major variances to Budget are outlined below:

Depreciation and amortisation expenses which were $783 million (or 14%) higher than the Original Budget primarily due to

the timing of the preparation of the Original Budget. Asset revaluation activities, and depreciation relating to Right of Use (ROU) assets as a result of the adoption of AASB 16 ($289 million) were not finalised at the time the Original Budget.

Other expenses which were $208 million higher than the Original Budget due to revisions in estimates for restoration,

decontamination, decommissioning and other provisions recorded in 2019-20. These provisions are re-estimated based on the most recent information that is available at the end of the reporting period. Due to the nature of these provisions other expenses do not follow historic trends and are expected to vary from Budget.

Write-down and impairment of assets which were $238 million (or 25%) lower than the Original Budget, primarily due to

lower impairment expenses recorded for explosive ordnance inventory than was anticipated in the original budget.

Finance costs which were $33 million (or 21%) lower than the Original Budget, due to lower interest costs associated with

the unwinding of provisions than was anticipated in the Original Budget. This is largely as a result of lower interest rates at 30 June 2020 than was anticipated in the Budget.

8

182 DEFENCE ANNUAL REPORT 2019-20

Department of Defence BUDGET VARIANCE COMMENTARY (continued) For the period ended 30 June 2020

Departmental income

The total variance between departmental income and the Original Budget is an increase of $538 million (or 66%). Increases in income can be largely attributed to:

Reversals of previous asset write-downs and impairment which were $177 million (or 87%) higher than the Original Budget

due to asset remediation activities during the year. This primarily relates to reversals of previous asset write-downs and impairment of Specialist Military Equipment. Due to the nature of these adjustments, historic trends are not useful in predicting actuals and actuals are expected to vary from budget.

Other gains which were $228 million higher than the Original Budget. This variance is predominantly due to:

-Revisions in estimates for restoration, decontamination, decommissioning and other provisions recorded in 2019-20

($100 million). Decreases in provisions primarily relate to significant changes in parameters such as inflation rates reflecting the current economic conditions, which have been recognised through other gains in the current period. Due to the nature of these provisions, other gains do not follow historic trends and are expected to vary from budget.

-Recognition of other gains for assets received by Defence in relation to the Australia Singapore Military Training

Initiative (ASMTI) agreement ($133 million). Funding for these assets is received from Singapore to pay for training facilities in Australia to which they will have access for part of each year over the life of the agreement.

Gains from sale of assets which were $96 million higher than the Original Budget. Given the unpredictability of asset sales,

variations to budget are expected.

Rental income which were $247 million higher than the Original Budget. This is primarily due to a reclassification from

revenue from contracts with customers to rental income in 2019-20. Refer to Note 8.4 for further details.

Revenue from contracts with customers which were $235 million (or 42%) lower than the Original Budget. This is primarily

due to a reclassification from revenue from contracts with customers to rental income in 2019-20. Refer to Note 8.4 for further details.

Other comprehensive income

The total variance between other comprehensive income and the Original Budget is an increase of $106 million, driven by the revaluation of assets, predominantly increases within Specialist Military Equipment ($990 million) offset by decreases within Land ($462 million) and Buildings ($307 million). Due to the uncertainty of the movement in the market for these assets, these amounts are not budgeted.

Departmental Statement of Financial Position

Departmental assets

The total variance between departmental assets and the Original Budget is an increase of $4,912 million (or 5%). Increases in assets can be largely attributed to:

 Differences in the opening actuals balance in July 2019 and the Original Budget set in 2019 of $2,759 million across all

asset classes.

 The implementation of AASB 16 during 2019-20 which increased the Right of Use asset base by $1,426 million of which

$1,160 million relates to Buildings and $266 million relates to Plant and Equipment, which was not included in the Original Budget.

 Revaluation increases recorded through other comprehensive income of $106 million which are not budgeted.

Higher than budgeted non-financial assets as a result of Government decisions to increase investment in military capabilities.

This impacts property, plant and equipment in addition to inventory (which supports military capabilities) and prepayments (which are primarily capital in nature).

9

183 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence BUDGET VARIANCE COMMENTARY (continued) For the period ended 30 June 2020

Departmental liabilities

The total variance between departmental liabilities and the Original Budget is an increase of $2,955 million (or 35%). Increases in liabilities can be largely attributed to:

Lease liabilities which were $1,441 million or 100% higher than the Original Budget, primarily attributable to the adoption of

AASB 16 during 2019-20 ($1,426 million), which was not included in the Original Budget.

Suppliers payable which were $498 million or 22% higher than the Original Budget. Of this amount, $502 million relates to

the difference in the opening actuals balance compared to the Original Budget.

Recognition of Foreign Government Activities cash and associated liabilities of $149 million. For further details refer to

Note 8.4.

Employee provisions which were $367 million (or 12%) higher than Original Budget, primarily attributable to decreases in

bond rates over the 2019-20 financial period, which were not factored into the Original Budget (2019-20: 0.87%, budget: 1.32%). Bond rates are used to discount employee provisions to present value and consequently, decreases in bond rates result in an increase in the provision.

Departmental equity

The total variance between departmental equity and the Original Budget is an increase of $1,957 million (or 2%). Of this amount, $1,534 million relates to the difference in the opening actuals balance in July 2019 compared to the Original Budget. The remaining increases in equity can be largely attributed to:

Surplus for the period which was $250 million higher than Original Budget. Refer to Departmental Statement of

Comprehensive Income for further details.

Other comprehensive income which was $106 million higher than Original Budget, relating to revaluation adjustments across

asset classes

Departmental Cash Flow Statement

Departmental net cash from operating activities

The total variance between departmental net cash from operating activities and the Original Budget is a decrease of $753 million. This is primarily driven by cash used for suppliers which is $1,276 million (or 9%) higher than Original Budget, offset by cash used for employees which is $313 million lower than Original Budget. This variance is largely a result of changes in operating cash used during the year. This was reflected within subsequent budget updates, whereby the PAES Budget was updated to adjust for revised operating activity spend, in particular supplier cash used of $14,245 million.

The resulting variance between PAES and June actuals net cash from operating activities is a $497 million overspend of which primarily relates to increased supplier cash used (variance to budget of $533 million). The overspend primarily relates to a sustainment overspend (variance of $148 million) due to increases in facilities and infrastructure and ICT operating expenditure. Further contributing to the variance were unplanned legal settlement payments relating to Per-and polyfluorinated alkyl substances (PFAS) claims totalling $213 million.

Departmental net cash used by investing activities

The total variance between departmental net cash used by investing activities and the Original Budget is a decrease of $1,043 million (or 8%). This is primarily driven by cash used for purchase of specialist military equipment ($718 million or 9%) and cash used for purchase of land and buildings ($334 million or 29%) lower than Original Budget. The variance is largely a result of changes in capital expenditure used during the year, some of which was attributable to impacts of the COVID-19 pandemic.

Departmental net cash from financing activities

The total variance between departmental net cash from financing activities and the Original Budget is a decrease of $150 million (or 4%). This is primarily driven by the adoption of AASB 16 and associated principal payments of lease liabilities during 2019-20 which was not included within the Original Budget. In subsequent budgetary updates, impacts of AASB 16 will be included

10

184 DEFENCE ANNUAL REPORT 2019-20

Department of Defence ADMINISTERED SCHEDULE OF COMPREHENSIVE INCOME Original

For the period ended 30 June 2020 2020 2019 Budget

1

$'000 $'000 $'000

NET COST OF SERVICES

Notes

EXPENSES Employee benefits 2.1A 9,817,966 8,408,602 6,821,605

Subsidies 2.1B 110,648 120,325 122,256

Impairment loss allowance on financial instruments 2.1C - 2 -

Total expenses 9,928,614 8,528,929 6,943,861

LESS:

INCOME Revenue Non taxation revenue Fees and fines 2.2A 17,384 16,968 16,852

Interest 2.2B 20,809 24,506 23,335

Dividends 2.2C 25,604 24,545 41,705

Military superannuation contributions 2.2D 1,351,453 1,388,079 1,244,386

Other revenue 2.2E 54,809 56,897 33,263

Foreign exchange gains 2.2F 103 300 -

Total non-taxation revenue 1,470,162 1,511,295 1,359,541

Total revenue 1,470,162 1,511,295 1,359,541

Net cost of services 8,458,452 7,017,634 5,584,320

Deficit attributable to the Australian Government (8,458,452) (7,017,634) (5,584,320)

OTHER COMPREHENSIVE INCOME Items not subject to subsequent reclassification to net cost of services Changes in asset revaluation surplus (177,521) 91,171 -

Actuarial gains/(losses) on defined benefits plans 802,500 (46,023,300) -

Total other comprehensive income/(loss) 624,979 (45,932,129) -

Total comprehensive (loss)/income (7,833,473) (52,949,763) (5,584,320)

The above statement should be read in conjunction with the accompanying notes

1 Defence's original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from Defence's 2019-20 Portfolio Budget Statements). The budget is not audited.

11

185 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence ADMINISTERED SCHEDULE OF ASSETS AND LIABILITIES Original

as at 30 June 2020 2020 2019 Budget

1

$'000 $'000 $'000

Notes

ASSETS Financial assets Cash and cash equivalents 4.1A 146,014 114,576 145,174

Trade and other receivables 4.1B 570,992 547,912 592,078

Equity accounted investments 4.1C 2,711,504 2,889,025 2,776,987

Total financial assets 3,428,510 3,551,513 3,514,239

Non-financial assets Prepayments 4.2A 250,157 249,655 278,335

Total non-financial assets 250,157 249,655 278,335

TOTAL ASSETS ADMINISTERED ON BEHALF OF GOVERNMENT 3,678,667 3,801,168 3,792,574

LIABILITIES Payables Other payables 4.3A 154,574 121,628 154,143

Total payables 154,574 121,628 154,143

Provisions Employee provisions 4.4A 188,151,200 182,018,200 93,128,763

Total provisions 188,151,200 182,018,200 93,128,763

TOTAL LIABILITIES ADMINISTERED ON BEHALF OF GOVERNMENT 188,305,774 182,139,828 93,282,905

NET LIABILITIES (184,627,107) (178,338,660) (89,490,331)

The above schedule should be read in conjunction with the accompanying notes

1 Defence's original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from Defence's 2019-20 Portfolio Budget Statements). The budget is not audited.

12

186 DEFENCE ANNUAL REPORT 2019-20

Department of Defence ADMINISTERED RECONCILIATION SCHEDULE as at 30 June 2020 2020 2019

$'000 $'000

Notes

Opening assets less liabilities as at 1 July (178,338,660) (126,712,136)

Net (cost of)/contribution by services Income 2.2A to F 1,470,162 1,511,295

Expenses Payments to entities other than corporate Payments to entities other than corporate Commonwealth entities Commonwealth entities 2.1A to C (9,928,614) (8,528,929)

Other comprehensive income:

Revaluations taken to/(from) reserves:

- Defence Housing Australia (DHA) 4.1C (178,794) 85,578

- Small portfolio entities 4.1C 1,273 5,593

Actuarial gains/(losses) 4.5 802,500 (46,023,300)

Transfers (to)/from Australian Government:

Appropriation transfers from Official Public Account:

Special appropriations (limited) Payments to entities other than corporate Commonwealth entities 5.1C 207 337

Special appropriations (unlimited) Payments to entities other than corporate Commonwealth entities 5.1C 2,980,604 2,784,304

Transfers to Official Public Account (1,615,447) (1,660,197)

Funded benefit payments to the members, not drawn down from Special Appropriations 179,662 198,795

Closing assets less liabilities as at 30 June (184,627,107) (178,338,660)

The above schedule should be read in conjunction with the accompanying notes

Accounting Policy Cash Transfers to and from the Official Public Account Revenue collected by Defence for use by the Government rather than Defence is administered revenue. Collections are transferred to the Official Public Account (OPA) maintained by the Department of Finance. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriations on behalf of Government. These transfers to and from the OPA are adjustments to the administered cash held by Defence on behalf of the Government and reported as such in the schedule of administered cash flows and in the administered reconciliation schedule.

13

187 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence ADMINISTERED CASH FLOW STATEMENT For the period ended 30 June 2020 2020 2019

$'000 $'000

Notes

OPERATING ACTIVITIES Cash received Fees 17,454 18,867

Interest 20,809 24,506

Superannuation contributions 1,498,429 1,530,626

Other 54,210 59,643

Total cash received 1,590,902 1,633,642

Cash used Subsidies (109,140) (122,236)

Employees (2,871,671) (2,662,350)

Section 77 payments - (55)

Total cash used (2,980,811) (2,784,641)

Net cash used by operating activities (1,389,909) (1,150,999)

INVESTING ACTIVITIES Cash received Dividends 24,545 26,555

Total cash received 24,545 26,555

Net cash flows investing activities 24,545 26,555

Net decrease in cash held (1,365,364) (1,124,444)

Cash from the Official Public Account for:

Appropriations 2,980,811 2,784,641

Special Accounts 237,892 275,321

Total cash from the Official Public Account 3,218,703 3,059,962

Cash to the Official Public Account for:

Appropriations (1,615,447) (1,660,197)

Special Accounts (206,454) (270,717)

Total cash to the Official Public Account (1,821,901) (1,930,914)

Cash and cash equivalents at the end of the reporting period 4.1A 146,014 114,576

The above statement should be read in conjunction with the accompanying notes

14

188 DEFENCE ANNUAL REPORT 2019-20

Department of Defence BUDGET VARIANCE COMMENTARY For the period ended 30 June 2020

Administered Schedule of Comprehensive Income

Administered expenses

The total variance from the Original Budget is an increase of $2,985 million (or 43%). This is largely attributed to an increase in service costs of $3,070 million (or 49%). Service costs relate to the cost of accruing superannuation benefits for serving members, lower interest rates compared to rates assumed in the budget result in higher contribution rates which increase the service costs.

Administered income

The total variance between administered income and the Original Budget of $111 million (or 8%) is due to changes in the membership profile of the superannuation schemes over the course of the financial period that were not factored into the Original Budget. This is impacted by a number of factors including service length, contribution rates and member commencement date.

Administered other comprehensive income

The total variance between administered other comprehensive income and the Original Budget is an increase of $625 million, due to actuarial gains on defined benefit plans of $803 million, offset by decreases to the value of equity accounted investments of $178 million. Due to the uncertainty in the movement of these balances, these amounts are not budgeted.

Administered Schedule of Assets and Liabilities

Administered assets

The total variance between administered assets and the original budget is a decrease of $114 million (or 3%). The major variances are:

Equity accounted investments which were $65 million (or 2%) lower than the Original Budget. The variance is due to differences in the revaluation of investments accounted for using the equity method compared to the Original Budget. Variances are expected given the uncertainty of the movement in the fair value of these assets.

 Prepayments which were $28 million (or 10%) lower than Original Budget. This balance relates to retention benefits paid to eligible Military Superannuation and Benefits Scheme members who have completed at least 15 years of continuous eligible service. The movement compared to budget is largely due to fewer members accessing the allowance, than was anticipated in the Original Budget.

Administered liabilities

The total variance between administered liabilities and the Original Budget is an increase of $95,022 million (or 102%). This is largely attributed to employee provisions which were $95,023 million (or 102%) higher than the Original Budget. The Original Budget was developed using a discount rate of 6%, based on information that was available at the time of preparation, however the 2019-20 balance is based on short term discount rates (between 1.0% and 1.7%), in accordance with AASB 119.

15

189 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

OVERVIEW

Objectives of Defence The Department of Defence is an Australian Government controlled entity. It is a not-for-profit entity. The objective of Defence is to defend Australia and its national interests through the conduct of operations and to protect and advance Australia's strategic interests.

The Basis of Preparation The financial statements including notes are required by section 42 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and are general purpose financial statements.

The financial statements have been prepared in accordance with:  Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and  Australian Accounting Standards and Interpretations - Reduced Disclosure Requirements issued by the Australian Accounting

Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and are in accordance with the historical cost convention, except for certain assets at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

Where necessary, comparatives have been reclassified and repositioned for consistency with current period disclosures.

New Accounting Standards All new accounting standards and interpretations that were issued prior to the sign-off date and are applicable to the current reporting period are disclosed below.

Standard/ Interpretation Nature of change in accounting policy, transitional provisions, and adjustment to financial statements AASB 15, AASB 2016-8 and AASB 1058 became effective 1 July 2019.

AASB 15 Revenue from AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue Contracts with is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue, Customers / AASB AASB 111 Construction Contracts and Interpretation 13 Customer Loyalty Programmes. The core 2016-8 Amendments to principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or Australian Accounting services to customers in an amount that reflects the consideration to which the entity expects to be Standards - Australian entitled in exchange for those goods or services. Implementation Guidance for Not-for- AASB 1058 is relevant in circumstances where AASB 15 does not apply. AASB 1058 replaces most Profit Entities and AASB of the not-for-profit (NFP) provisions of AASB 1004 Contributions and applies to transactions where the 1058 Income of Not-For- consideration to acquire an asset is significantly less than fair value principally to enable the entity to Profit Entities further its objectives, and where volunteer services are received.

The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements. AASB 16 became effective on 1 July 2019.

This new standard has replaced AASB 117 Leases , Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases—Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. AASB 16 Leases AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

Application of AASB 15 Revenue from Contracts with Customers / AASB 1058 Income of Not-For-Profit Entities Defence adopted AASB 15 and AASB 1058 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under the various applicable AASBs and related interpretations.

16

190 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

New Accounting Standards (continued)

Under the new income recognition model Defence shall first determine whether an enforceable agreement exists and whether the promises to transfer goods or services to the customer are ‘sufficiently specific’. If an enforceable agreement exists and the promises are ‘sufficiently specific’ (to a transaction or part of a transaction), Defence applies the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria are not met, Defence shall consider whether AASB 1058 applies.

In relation to AASB 15, Defence elected to apply the new standard to all new and uncompleted contracts from the date of initial application. Defence is required to aggregate the effect of all of the contract modifications that occur before the date of initial application.

In terms of AASB 1058, Defence is required to recognise volunteer services at fair value if those services would have been purchased if not provided voluntarily, and the fair value of those services can be measured reliably.

The impact on transition and of the adoption of AASB 15 and AASB 1058 in the current reporting period is not material to Defence

Application of AASB 16 Leases Defence adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations.

Defence elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Contracts entered into before the transition date that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019.

AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. Defence applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:  Apply a single discount rate to a portfolio of leases with reasonably similar characteristics;

 Exclude initial direct costs from the measurement of right-of-use assets at the date of initial application;  Reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under

AASB 136 Impairment of assets as at the date of initial application; and  Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term

remaining as of the date of initial application.

As a lessee, Defence previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, Defence recognises right-of-use assets and lease liabilities for most leases. However, Defence has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset (less than $10,000) when new or for short-term leases with a lease term of 12 months or less.

On adoption of AASB 16, Defence recognised right-of-use assets and lease liabilities in relation to leases of office space, motor vehicles and other plant and equipment, which had previously been classified as operating leases.

The lease liabilities were measured at the present value of the remaining lease payments, discounted using the Government’s incremental borrowing rate as at 1 July 2019 (as Defence does not borrow money in its own right) unless the lease contract contained an explicit interest rate. The incremental borrowing rate is calculated using a weighted average return on a portfolio of government bonds which best match the expected cash payments under the lease. The weighted-average rate applied across the lease portfolio was 1.46%.

The right-of-use assets were measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments for all leases.

17

191 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

New Accounting Standards (continued)

Impact on transition On transition to AASB 16, Defence recognised additional right-of-use assets and additional lease liabilities, recognising the difference in retained earnings. The impact on transition is summarised below: 1 July 2019

$000's

Right-of-use assets - property, plant and equipment 1,425,719

Sub-Lease receivables 206,985

Lease liabilities (1,577,523)

Lease prepayments previously recognised at 30 June 20191 55,181

1 This represent amounts previously recorded as operating lease prepayments as at 30 June 2019 (Note 3.2C).

The following table reconciles the Departmental lease commitments disclosed in Defence's 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019: 1 July 2019 $000's

Minimum operating lease commitment at 30 June 2019 6,467,486

Less leases not yet commenced at 1 July 2019 (55,266)

Less: short-term and low value leases not recognised under AASB 16 (142,787)

Less commitments relating to variable leases at 1 July 20191 (4,823,960)

Plus: amounts previously not recorded as operating lease commitments 51,382

Plus: effect of extension options reasonable certain to be exercised 261,673

Undiscounted lease payments 1,758,528

Less: effect of discounting using the incremental borrowing rate as at the date of initial application (181,005) Lease liabilities recognised at 1 July 2019 1,577,523

1 This represents amounts previously recorded as operating commitments under contracts for the provision of accommodation for Defence service members. The contractual arrangements in place involve variability in payments and therefore these balances have not been included within lease liabilities under AASB 16.

Taxation Defence is exempt from all forms of taxation except Fringe Benefits Tax (FBT), the Goods and Services Tax (GST) and certain excise and customs duties.

Reporting of Administered activities Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the administered schedules and related notes.

Except where otherwise stated, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.

Breach of Section 83 of the Constitution Section 83 of the Constitution provides that no amount may be paid out of the Consolidated Revenue Fund except under an appropriation made by law. Payments made which are not supported by appropriation are not consistent with section 83 of the Constitution.

Defence has identified a potential issue within two Defence home loan schemes, Defence Force (Home Loans Assistance) Act 1990 and the Defence Home Ownership Assistance Scheme Act 2008 , where overpayments have been made resulting in potential breaches of section 83. It should be noted that both schemes have provisions that allow for the recovery of an overpayment (see s31 of the 1990 Act and s 66-70 of the 2008 Act). The legislation does not currently authorise the appropriation of funds in relation to overpayments. It is unlikely that this matter will be addressed by legislative amendment in the near future. Defence will continue to report on potential section 83 breaches for those schemes.

In 2019-20, Defence identified 4 overpayments totalling $315 in relation to the Defence Force (Home Loans Assistance) Act 1990. Defence undertook recovery action and as at 30 June 2020, $315 had been recovered.

In 2019-20, Defence identified 219 overpayments totalling $182,635 in relation to the Defence Home Ownership Assistance Scheme Act 2008 . Defence undertook recovery action and as at 30 June 2020, $149,553 had been recovered.

These overpayments represent potential breaches of section 83 and have been derived by analysing data on recovery of overpayments and other identified risk areas for 2019-20. Business processes are in place to ensure that identified overpayments are recovered.

18

192 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

Estimation Uncertainty as a result of COVID-19

Departmental As part of preparing the 2019-20 financial statements, Defence has considered the impacts of COVID-19 on all provisions and estimations made within the financial statements. Key assumptions impacted by COVID-19 include inflation rates used in decommissioning, decontamination, restoration and other provisions, and salary growth rates used in employee provisions. Rates used reflect the current economic climate and do not have a material impact on the recorded provisions. Consequently, Defence considers there is no material uncertainty within the resultant provisions reported as at 30 June 2020.

Defence have considered the impact of COVID-19 on fair valuation activities that have been undertaken with respect to Defence's non-financial assets (which includes general assets and specialist military equipment). Valuation activities undertaken over Defence's general assets (excluding specialist military equipment) have incorporated the impacts of COVID-19 into final valuations. Specifically, the valuations of these assets have been reported on the basis that the valuation is current at the date of the valuation only. The value assessed may change significantly over a relatively short period of time, however the valuers have confirmed that this does not mean valuations cannot be relied upon. Rather, that in the current extraordinary circumstances, less certainty should be attached to valuations that would otherwise be the case.

The fair value of specialist military equipment (SME) is subject to movements in relevant producer price indices of the country of manufacture for each Defence platform. Given the current economic climate, there is some uncertainty regarding the movement in these indices, and the impact on the valuation of SME assets. Despite the uncertainty, Defence considers that indices materially reflect the current economic conditions as at 30 June 2020, and therefore there is no material uncertainty with the reported SME balances at 30 June 2020.

While not relating to estimates or assumptions used in the preparation of the financial statements, Defence also notes that inventory stocktaking procedures were impacted by COVID-19. During 2019-20, Defence was required to perform alternate procedures to ensure no material uncertainty was present within the reported inventory balances. At 30 June 2020, Defence has determined that appropriate coverage was achieved and that balances are free from material misstatement.

Administered The only balance subject to assumptions impacted by COVID-19 is the valuation of Administered employee provisions, which includes salary growth rate, demographic experience and discount rate assumptions. Defence in conjunction with the Australian Government Actuary have considered and accounted for these impacts in the development of the Military Superannuation Provisions in light of known salary, demographic and CPI expectations.

Additionally, within Note 4.5, Defence has disclosed the fair value of superannuation plan assets. Given the uncertainties surrounding financial markets due to the COVID-19 pandemic, there is increased uncertainty surrounding the underlying valuation of Australian and overseas equities, and property and infrastructure. While this does not mean that the valuations cannot be relied upon, less certainty should be attached to valuations than would otherwise be the case.

Events After the Reporting Period Departmental Defence have revisited the capitalisation thresholds for a number of asset classes. These changes will be effective from 1 July 2020 and have an estimated opening balance impact in the range of $300-$400 million. The annual impact of the revised thresholds are estimated to result in an annual increase in expenses (or reduction of capitalisation of assets) of $25-$50 million. The final assessment of the impact and the relevant disclosures will form part of the 30 June 2021 financial statements.

Administered On 24 August 2020, PGPA Act Determination (DHA Borrowings Special Account 2020) established a new special account to provide an appropriation mechanism to facilitate lending activities between the Commonwealth and Defence Housing Australia (DHA) under section 36 of the Defence Housing Australia Act 1987. This special account will be administered by the Department of Finance with a commencement date of 1 October 2020. Consequently, the DHA loans totalling $509.6 million, as detailed in Note 4.1B, will no longer be administered by Department of Defence from 1 October 2020.

19

193 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

FINANCIAL PERFORMANCE This section analyses the financial performance of Defence for the year ended 30 June 2020

1.1: Expenses

2020 2019

$'000 $'000

1.1A: Employee benefits Australian Public Service (APS) employee benefits Wages and salaries 1,419,957 1,343,518

Superannuation: Defined contribution plans 142,368 123,778

Defined benefit plans 128,771 135,691

Leave and other entitlements 204,589 228,043

Fringe benefits tax 29,816 6,705

Separation and redundancies 13,354 24,446

Other allowances 34,477 37,981

Health expenses 4,251 4,138

Other employee expenses 1,470 1,145

Total APS employee benefits 1,979,053 1,905,445

Australian Defence Force (ADF) employee benefits Wages and salaries 5,408,705 5,155,545

Superannuation: Defined contribution plans 192,222 131,790

Defined benefit plans 1,499,365 1,568,355

Housing 1

895,228 915,220

Leave and other entitlements 704,386 633,586

Fringe benefits tax 536,506 481,228

Overseas allowances 142,876 164,932

Separation and redundancies 12,393 13,970

Other allowances 350,183 356,662

Health expenses 473,902 476,369

Other employee expenses 147,308 118,892

Total ADF employee benefits 10,363,074 10,016,549

Total employee benefits 12,342,127 11,921,994

1 Housing expenses include lease payments made to Defence Housing Australia (DHA) for the provision of housing for ADF members with families. Due to their nature, and relating to employment agreement between Defence and the ADF members, these payments are classified as employee expenses. Residences leased from DHA are subleased by Defence to ADF members for a nominal charge. Lease expenses are paid by Defence to DHA and recognised as part of ADF housing expenses.

For the current financial period, sublease expenses were $483.9m (2018-19: $534.1m).

Accounting Policy Defence’s workforce comprises APS (i.e. civilians) and ADF (i.e. military) personnel. Employee benefits for each workforce component are based on the relevant employment agreements and legislation. Liabilities for services rendered by employees are recognised at the reporting date to the extent that they have not been settled.

Liabilities for wages and salaries (including non-monetary benefits), annual leave and other entitlements expected to be wholly settled within 12 months of the reporting date are measured at their nominal amounts.

All other employee benefit liabilities (including long service leave) are measured at the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date.

20

194 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

1.1A: Employee benefits (continued)

(a) Leave The liability for employee benefits includes provisions for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of Defence is estimated to be less than the annual entitlement for sick leave. The leave liabilities are calculated on the basis of employees' remuneration, including Defence’s employer superannuation contribution, at the estimated rates that will be applied at the time that leave is taken, to the extent that leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined by reference to the work of the Australian Government Actuary in the current year. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

(b) Separation and Redundancy Provision is made for separation and redundancy benefit payments. Defence recognises a provision for termination when it has a detailed formal plan for the terminations and has informed those employees affected that the terminations will be carried out.

(c) Superannuation - APS Employees Permanently appointed APS employees of Defence are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS Accumulation Plan (PSSap) and other superannuation schemes held outside the Commonwealth.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported by the Department of Finance as an administered item.

Defence makes employer contributions to the employee superannuation schemes at rates determined by an actuary to be sufficient to meet the current cost to the Government of the superannuation entitlements of Defence’s employees. Defence accounts for these contributions as if they were contributions to defined contribution plans in accordance with AASB 119.

The liability for superannuation recognised in the departmental statements as at 30 June represents outstanding contributions yet to be paid.

(d) Superannuation - ADF Members Permanently appointed ADF employees of Defence are members of the Defence Force Retirement and Death Benefits Scheme (DFRDB), the Military Superannuation Benefits Scheme (MSBS) and Australian Defence Force Superannuation (ADF Super), which includes the ADF Cover.

DFRDB and MSBS are defined benefit superannuation plans for ADF members. Defence makes employer contributions to the employee superannuation schemes at rates determined by an actuary to be sufficient to meet the current cost to the Government of the superannuation entitlements of Defence’s employees. Defence accounts for these contributions in its departmental statements as if they were contributions to defined contribution plans in accordance with AASB 119.

ADF Super is a defined contribution scheme. The members of ADF Super are entitled to an insurance cover for death and invalidity benefits under the provisions of the ADF Cover scheme, which is a defined benefit type plan.

The liability for superannuation recognised in the departmental statements as at 30 June represents outstanding contributions yet to be paid. The liabilities for DFRDB, MSBS, ADF Cover defined benefit is recognised and reported by the Department of Defence as an administered item.

(e) Paid Parental Leave Defence provides payments to employees under the Government Paid Parental Scheme. The receipts received are offset by the payments made to the employees and any balance outstanding at the end of the year is recognised as a liability.

Accounting Judgements and Estimates As required by AASB 119 Employee Benefits, the estimate of future cash outflows takes into account estimated attrition, probability factors, future salary rates and ancillary costs. Liabilities for short-term employee benefits not expected to be paid within 12 months of the end of reporting period are measured at the one year Commonwealth government bond rate of 0.24 per cent (2018-19: 1.04 per cent). Liabilities for long term employee benefits are discounted using the 10 year Commonwealth government bond rate of 0.87 per cent (2018-19:1.32 per cent).

21

195 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

1.1A: Employee benefits (continued)

Accounting Judgements and Estimates (continued) When assessing the application of AASB16 to the lease payments made to DHA, Defence considers it is necessary to read the Defence Services Agreement (DSA), the Defence Housing Australia Act 1987 (DHA Act) and the Defence Housing Australia Residence Agreement (DRA) as a whole to understand the commercial arrangements between DHA, Defence and the ADF member. The arrangement between DHA and Defence contains a lease for each individual property, with the term of the lease being greater than 12 months. The amount paid as consideration for each lease is based on usage and considered variable as Defence pays these amounts if and when a property is occupied by an ADF member, and therefore not based on an index or rate. Accordingly, the right-of-use asset and lease liability under AASB 16 Leases has a zero value and payments are expensed through the Statement of Comprehensive Income.

Other key Judgements that support the DSA meeting the definition of a lease under AASB16 are:

The DSA provides Defence the right to control the properties because it directs when the properties are to be used, including the allocations policy and when properties must be vacated. The ADF members only have a right to occupy a DHA property as a result of their employment with Defence and, if the employment is terminated the entitlement under the DRA ends;  Defence does not act as an agent for DHA by collecting rental contributions from ADF members. Defence’s obligation to

pay rent under the DSA is independent of the member’s contribution under the DRA; and Defence Residences leased from DHA are subleased by Defence to ADF members for a nominal charge which is set based upon their personal and employment conditions rather than the market rate. This sublease can be terminated by Defence or the ADF member with 28 days notice and no penalties incurred.

2020 2019

$'000 $'000

1.1B: Suppliers expenses Goods and services supplied or rendered Inventory consumption 951,523 918,821

Sustainment (including repair and overhaul) 5,526,858 5,069,487

Garrison support and mess operations 363,181 327,574

Travel 227,110 268,488

Freight, storage and removal 532,884 503,329

Training 481,122 512,626

Communications and information technology 1,678,261 1,526,758

Professional services/technical advice 530,055 415,870

Estate upkeep 1,655,200 1,376,676

Research and development 390,433 289,067

Utilities 405,810 374,942

Purchase of minor assets 250,168 180,863

Project management costs 449,023 267,247

Administration 660,955 655,683

Other 1,338,567 1,026,312

Total goods and services supplied or rendered 15,441,150 13,713,743

Goods and services supplied or rendered are made up of: Goods supplied 1,833,630 1,789,711

Services rendered 13,607,520 11,924,032

Total goods and services supplied or rendered 15,441,150 13,713,743

Other supplier expenses Operating lease rentals1 - 299,737

Short-term leases 8,965 -

Low value leases 11,233 -

Variable lease payments 47,071 -

Workers compensation premiums 19,346 19,847

Total other supplier expenses 86,615 319,584

Total supplier expenses 15,527,765 14,033,327

1 Defence has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

The above lease disclosures should be read in conjunction with the accompanying notes 1.1D, 1.2B, 3.2 and 3.4.

Accounting Policy Defence has elected not to recognise right-of-use assets and lease liabilities for short-term leases of assets that have a lease term of 12 months or less and leases of low-value assets (less than $10,000). Defence recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

22

196 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

2020 2019

$'000 $'000

1.1C: Grants State and Territory Governments 1,217 4,400

Non-profit organisations 46,270 33,043

Overseas 117,196 111,933

Total grants 164,683 149,376

Accounting Policy Contributions by Defence to other government entities, private sector organisations and individuals which have been identified as a grant are recognised as an expense where grant conditions (such as eligibility criteria) were met.

1.1D: Finance costs Interest on lease liabilties1 115,385 101,628

Unwinding of discount - restoration, decontamination and decommissioning 9,896 9,639

Bank interest 357 5

Total finance costs 125,638 111,272

1 Defence has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

The above lease disclosures should be read in conjunction with the accompanying notes 1.1B, 1.2B, 3.2 and 3.4.

Accounting Policy All borrowing costs are expensed as incurred.

1.1E: Write-down and impairment of assets Write-down and impairment of property, plant and equipment1 304,422 562,341

Write-down and impairment of intangible assets1 25,609 17,445

Write-down and impairment of inventory1 375,929 671,183

Total write-down and impairment of assets 705,960 1,250,969

1

Prior period balances have been restated. Refer to Note 8.4 for further details.

Accounting Policy The relevant account policy for write-down and impairment of assets is detailed in Note 3.2A Reconciliation of the opening and closing balances of property, plant and equipment, and intangibles.

1.1F: Foreign exchange Foreign exchange gains Non-speculative 98,834 41,371

Foreign exchange losses Non-speculative (142,755) (78,036)

Total net (loss)/gain foreign exchange (43,921) (36,665)

Accounting Policy Transactions denominated in a foreign currency are converted at the exchange rate on the date of transaction. Foreign currency receivables and payables are translated at the exchange rate at the balance sheet date.

Non-financial items that are measured at cost in a foreign currency are translated using the spot exchange rate at the date of the initial transaction. Non-financial items that are measured at fair value in a foreign currency are translated using the spot exchange rates at the date when the fair value was determined.

All exchange gains and losses are reported in the Statement of Comprehensive Income.

1.1G: Other expenses Act of grace payments 367 1,235

Tactical Payment Scheme payments 2 9

Defective Administration Scheme payments 3,909 5,289

Restoration, decontamination and decommissioning costs 205,372 146,861

Other 13,637 87,806

Total other expenses 223,287 241,200

23

197 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

1.2: Own-Source Revenue and gains

Own-Source Revenue 2020 2019

$'000 $'000

1.2A: Revenue from contracts with customers Provision of goods Rations and quarters - cost recovery 69,189 62,738

Provision of fuel - cost recovery 29,382 17,150

Other (including sale of obsolete and surplus inventory) 18,737 29,411

Total provision of goods 117,308 109,299

Rendering of services

Logistics support recovery 35,115 32,291

Other recoveries 51,713 42,399

Other governments/agencies1 69,506 72,901

Other 49,093 53,593

Total rendering of services 1 205,427 201,184

Total revenue from contracts with customers 1 322,735 310,483

1

Prior period balances have been restated. Refer to Note 8.4 for further details.

Accounting Policy Revenue from the provision of goods is recognised when all of the following criteria has been met:  the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations;

 Defence can identify each party’s rights regarding the goods or services to be transferred;  Defence can identify the payment terms for the goods or services to be transferred; the contract has commercial substance (i.e. the risk, timing or amount of the entity’s future cash flows is expected to change as a result of the contract); and  it is probable that Defence will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. In evaluating whether collectability of an amount of consideration is probable, Defence shall consider only the customer’s ability and intention to pay that amount of consideration when it is due. The amount of consideration to which Defence will be entitled may be less than the price stated in the contract if the consideration is variable because Defence may offer the customer a price concession.  revenue from the sale of goods is recognised when the risks and rewards of ownership have been transferred to the buyer and Defence retains no managerial involvement or effective control over the goods. The stage of completion of contracts at the reporting date is determined by reference to the services performed to date as a percentage of total services to be performed.

Notwithstanding the above, if a contract that would otherwise be within the scope of AASB 15, does not meet the criteria above as it is unenforceable or not sufficiently specific, Defence will instead consider the requirements of AASB 1058 in accounting for such contracts.

1.2B: Rental income Operating leases:

Group rental scheme1 203,844 205,277

Other1 47,438 30,438

Total rental income 2 251,282 235,715

1

Prior period balances have been restated. Refer to Note 8.4 for further details.

2

Defence has applied AASB 16 using the modified retrospective approach and therefore the comparative information continues to be reported under AASB 117.

Defence earns rental income under property leases to third party service providers at Defence operating locations or in circumstances where asset capacity is excess to short term operational requirements. Commercial arrangements are in place where lessees agree to maintain the value and/or condition of the property or other leased assets. Lease contracts also have termination clauses that can be exercised if required with notice periods that reflect the potential operational need for the underlying asset.

Maturity analysis of operating lease income receivables: Within one year 46,079

One to two years 27,560

Two to three years 27,778

Three to four years 28,044

Four to five years 28,393

More than five years 94,723

Total undiscounted lease payments receivable 252,577

The above lease disclosures should be read in conjunction with the accompanying notes 1.1B, 1.1D, 3.2 and 3.4.

24

198 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

2020 2019

$'000 $'000

1.2C: Other revenue Excise refunds 636 563

Settlement of damages 15,300 589

Foreign military sales refunds 7,563 2,959

Interest revenue1 12,849 11,862

Other refunds 25,515 4,410

Other minor revenues 511 291

Resources received free of charge: Remuneration of auditors 3,675 3,800

Assets received free of charge 5 -

Other resources received free of charge - 87

Total other revenue 66,054 24,561

1 Interest revenue includes $2.729 million in relation to sub-lease receivables.

Maturity analysis of finance lease receivables:

Within one year 13,677

One to two years 14,107

Two to three years 14,139

Three to four years 13,259

Four to five years 13,328

More than five years 152,412

Total undiscounted lease payments receivable 220,922

Unearned finance income (23,708)

Net investment in leases 197,214

Accounting Policy Resources received free of charge for goods and services are recognised as revenue when and only when a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Fair value is determined based on actual full cost if the resources were to be purchased. Resources received free of charge are recorded as either revenue or gains depending on their nature.

Contributions of assets at no cost or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition (with the exception of assets valued at cost), unless received from another Government agency as a consequence of a restructuring of administrative arrangements. Fair value is assessed by asset class as described in 3.2A(f).

1.2D: Reversals of previous asset write-downs and impairment Land and buildings1 948 15,550

Specialist military equipment1 223,926 160,809

Infrastructure1 5,807 12,285

Plant and equipment1 16,577 18,274

Heritage and cultural assets 210 125

Software and intangibles - 759

Total property, plant and equipment and intangibles 3.2A 247,468 207,802

Receivables 5,669 2,976

Inventory 127,226 305,705

Total reversal of previous asset write-downs and impairment 380,363 516,483

1

Prior period balances have been restated. Refer to Note 8.4 for further details.

1.2E: Other gains Reversal/write back of provisions 100,277 179,038

Other gains - ASMTI Contribution 132,701 176,238

Total other gains 232,978 355,276

Accounting Policy Reversal/write back of provisions relate to the movements in provisions based on changes in estimates.

Other gains relate to the Australia Singapore Military Training Initiative (ASMTI) agreement. Under the agreement, the Republic of Singapore makes a contribution to Defence which will be used towards the cost of development of military training facilities. Once developed, these facilities will be used by the Defence forces of Australia and Singapore for the conduct of exercises and other training activities.

25

199 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

2020 2019

$'000 $'000

1.2F: Revenue from Government Appropriations:

Departmental appropriations 34,290,209 32,525,834

Total revenue from Government 34,290,209 32,525,834

Accounting Policy Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as revenue when Defence gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned.

Defence draws down appropriations on a just-in-time basis. The undrawn appropriations as at 30 June 2020 are reflected as a receivable and are available to be drawn down to meet future obligations. Appropriations receivable are recognised at their nominal amounts.

26

200 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

INCOME AND EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT This section analyses the activities that Defence does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

2.1: Administered - Expenses

2020 2019

$'000 $'000

2.1A: Employee benefits Superannuation: Defined benefit plans Net service cost 6,230,300 4,299,300

Net interest cost 3,488,100 4,017,600

Retention benefits 99,566 91,702

Total employee benefits 9,817,966 8,408,602

2.1B: Subsidies Related parties: Defence Home Owner Scheme 207 337

Defence Home Ownership Assistance Scheme 110,441 119,988

Total subsidies 110,648 120,325

2.1C: Impairment loss allowance on financial instruments Impairment on trade and other receivables 7.3B - 2

Total impairment on financial instruments - 2

2.2: Administered - Income

Non-Taxation Revenue

2.2A: Fees and fines License fees 17,384 16,968

Total fees and fines 17,384 16,968

Accounting Policy All administered revenues relate to activities performed by Defence on behalf of the Australian Government. As such, administered appropriations are not revenues of the individual entity that oversees distribution or expenditure of the funds as directed. Administered revenues mainly comprise military superannuation contributions, payments received from the United Nations and foreign governments, bank interest, dividends, loan interest and State Tax Equivalent payments received from Defence Housing Australia and licence fees received under the Defence Home Ownership Assistance Scheme.

Licence fees are charged to home loan providers under the Defence Home Ownership Assistance Scheme (DHOAS), who are required to remit a portion of home loan revenue to the Australian Government. Licence fee revenue is recognised when amounts have been received from customers by the home loan providers.

2.2B: Interest Loans to Defence Housing Australia 20,809 24,506

Total interest 20,809 24,506

Accounting Policy Interest revenue is recognised using the effective interest method.

27

201 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

2020 2019

$'000 $'000

2.2C: Dividends Australian Government entities - Defence Housing Australia 25,604 24,545

Total dividends 25,604 24,545

2.2D: Military superannuation contributions Military superannuation contributions 1,351,453 1,388,079

Total military superannuation contributions 1,351,453 1,388,079

2.2E: Other revenue Competitive neutrality revenue - Defence Housing Australia 41,124 40,552

Other 13,685 16,345

Total other revenue 54,809 56,897

Competitive neutrality revenue relates to State Tax Equivalent payments made by Defence Housing Australia (DHA) under the Australian Government's Competitive Neutrality Policy. The amounts paid include payroll tax, land tax and stamp duty and have been calculated by DHA as being payable under the relevant Acts had they applied

2.2F: Foreign exchange gains Non-speculative 103 300

Total foreign exchange gains 103 300

28

202 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

FINANCIAL POSITION This section analyses Defence's assets used to conduct its operations and the operating liabilities incurred as a result.

3.1: Financial Assets

2020 2019

$'000 $'000

3.1A: Cash and cash equivalents Cash on hand 3,780 4,408

Cash at bank - at call1 423,638 282,553

Total cash and cash equivalents 427,418 286,961

1

Prior period balances have been restated. Refer to Note 8.4 for further details.

Accounting Policy Cash and cash equivalents includes notes and coins held, any deposits in bank accounts held at call with a bank, and cash held in special accounts. Cash is measured at its nominal amount. Cash and cash equivalents denominated in a foreign currency is converted at the exchange rate at the balance date.

3.1B: Trade and other receivables Goods and services receivables Goods and services 51,388 48,047

Total goods and services receivables 51,388 48,047

Appropriations receivable For existing programs 249,000 255,893

Total appropriations receivable 5.1A 249,000 255,893

Other receivables GST receivable from the Australian Taxation Office 229,965 250,481

Accrued revenue 16,614 16,304

Other2 383,719 289,613

Sub-Lease receivables 197,214 -

Total other receivables 827,512 556,398

Total trade and other receivables (gross) 1,127,900 860,338

Less impairment allowance Goods and services (7,457) (10,703)

Total impairment allowance (7,457) (10,703)

Total trade and other receivables (net) 1,120,443 849,635

Credit terms for goods and services were within 1-30 days (2018-19: 1-30 days).

2 The balance contains no win no loss receivables totalling $273.0 million (2018-19: $188.8 million).

Accounting Policy Trade receivables and other receivables are recognised initially at fair value and subsequently measured at amortised cost, less any loss allowance.

The receivables for goods and services are generally receivable within 30 days. The collectability is assessed periodically with allowances made for doubtful debts when there is evidence that Defence will not be able to collect the debt.

29

203 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

3.1B: Trade and other receivables (continued)

Accounting Policy (continued) In accordance with AASB 9, impairment of trade receivables is assessed under an 'expected credit loss' (ECL) model. This impairment model applies to financial assets measured at amortised cost, contract assets and debt instruments measured at fair value through other comprehensive income.

Trade and other receivable assets at amortised cost are assessed for impairment at the end of each reporting period. The simplified approach has been adopted in measuring the impairment loss allowance at an amount equal to lifetime ECL.

30

204 DEFENCE ANNUAL REPORT 2019-20

Department of Defence

_LD _BD _SM _IF _PE _HC _SP _SI _OP _OI

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020 3.2: Non-Financial Assets 3.2A: Reconciliation of the opening and closing balances of property, plant and equipment, and intangibles (2019-2020) Item Land

1

Buildings

1

Specialist Military Equipment

1

Infra-structure

1

Plant and Equipment

1

Heritage and CulturalAssets

1,2

Computer Software - Purchased

1

Computer Software -Internally Generated

Other Intangibles Purchased

Other Intangibles Internally Generated

Total

1

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

As at 1 July 2019 Gross Book value

5,909,374 14,170,930 69,218,413 6,696,559 1,602,894 501,934 1,014,317 814,062 292,801 149,431 100,370,715

Accumulated depreciation/amortisation and impairment

- (607,458) (2,670,624) (352,674) (266,564) (27,897) (733,829) (349,754) (276,995) (39,251) (5,325,046)

Net book value 1 July 2019

5,909,374 13,563,472 66,547,789 6,343,885 1,336,330 474,037 280,488 464,308 15,806 110,180 95,045,669

Recognition of right-of-use asset on initial application of AASB 16

- 1,160,268 - - 265,451 - - - - - 1,425,719

Adjusted net book value 1 July 2019

5,909,374 14,723,740 66,547,789 6,343,885 1,601,781 474,037 280,488 464,308 15,806 110,180 96,471,388

Additions:

By purchase

64,558 837,137 8,758,677 680,359 316,066 - 148,050 - 45,723 - 10,850,570

Internally developed

- - - - - - - 9,716 - - 9,716

Right-of-use assets

- 39,778 - - 72,547 - - - - - 112,325

Revaluations/impairments recognised in other comprehensive income

3

(462,251)

(307,291)

990,461

(183,183)

43,366

24,734

-

-

-

-

105,836

Revaluations/impairments recognised in other comprehensive income for right-of-use assets

3

Reclassification

16,226 (19,677) (27,188) 4,887 15,870 341 (6,388) 16,682 (996) 243 -

Depreciation/amortisation expense

- (612,072) (4,583,457) (375,898) (179,071) (24,237) (40,625) (96,680) (1,583) (20,031) (5,933,654)

Depreciation/amortisation expense on right-of-use assets

5

-

(219,065)

(31,476)

(3,609)

(70,360)

-

-

-

-

-

(324,510)

Revaluations/write-downs and impairment recognised in net cost of services

3,4

(625)

(29,724)

(217,193)

(19,425)

(36,477)

(978)

(25,346)

-

(263)

-

(330,031)

Other movements Reversal of previous asset write-downs and impairment

- 948 223,926 5,807 16,577 210 - - - - 247,468

Transfers in/(out)

- 10,719 283,556 - - - - - - - 294,275

Transfers (to)/from Assets Held for Sale

100,207 590 (165,707) 102 362 - - - - - (64,446)

Disposals:

Other disposals

(83,490) (3,948) (25,533) - (10,211) - - - - - (123,182)

Net book value 30 June 2020

5,543,999 14,421,135 71,753,855 6,452,925 1,770,450 474,107 356,179 394,026 58,687 90,392 101,315,755

Net book value as at 30 June 2020 represented by:

Gross book value

5,543,999 15,437,779 73,817,222 6,851,764 2,052,124 495,429 1,093,730 830,649 124,828 149,674 106,397,198

Accumulated depreciation/amortisation and impairment

- (1,016,644) (2,063,367) (398,839) (281,674) (21,322) (737,551) (436,623) (66,141) (59,282) (5,081,443)

Closing net book value at 30 June 2020

5,543,999 14,421,135 71,753,855 6,452,925 1,770,450 474,107 356,179 394,026 58,687 90,392 101,315,755

Carrying amount of right-of-use assets as at 30 June 2020

5

61,809

1,956,909

288,469

95,398

455,092

-

-

-

-

-

2,857,677

1

Opening balances have been restated. Refer to Note 8.4 for further details. 2

Where land, buildings, infrastructure and plant and equipment meet the definition of a heritage and cultural item, they have been disclosed in the heritage and cultural assets class. 3

All revaluations were conducted in accordance with the revaluation policy stated at Note 3.2A(f). 4

Indicators of impairment identified in the current period relate to assets deemed to be obsolete or no longer functioning as intended. 5 Includes right-of-use assets identified in 2019-20 during the initial application of AASB 16, in addition to leased assets that were already included in the closing balance as at 30 June 2019.

31

205 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

2020 2019

$'000 $'000

Commitments payable relating to property, plant and equipment and intangibles Land and buildings1 1,032,939 1,163,467

Specialist military equipment2 24,416,438 22,860,201

Infrastructure, plant and equipment3 1,010,185 377,857

Intangibles4 60,141 56,981

Total capital commitments 26,519,703 24,458,506

1. Outstanding contractual payments for buildings under construction.

2. Outstanding contractual payments for specialist military equipment under construction.

3. Infrastructure, plant and equipment capital commitments include outstanding contractual payments relating to the Major Capital Facilities (MCF) program.

4. Intangible commitments include contractual payments for software licence agreements.

Accounting Policy (a) Individual Asset Recognition Threshold Purchases of property, plant and equipment including land, buildings and infrastructure are recognised initially at cost where they meet the individual asset recognition threshold. Individual items are capitalised where the individual value is equal to or exceeds $5,000 for buildings, infrastructure and heritage and cultural assets; $2,000 for other plant and equipment; and nil for specialist military equipment and land.

(b) Componentisation Major assets, such as specialist military equipment, are componentised if it is likely that the components will have useful lives that differ significantly from other parts of the asset. The useful lives of components may be determined with reference to the individual component or the related primary asset.

(c) Decontamination, Restoration and Decommissioning Costs Where a legal or constructive obligation arises on acquisition to restore a Defence asset back to its original condition, or dismantle an asset at the end of its useful life, the net present value of estimated restoration and/or decommissioning costs are capitalised and added to the cost of the underlying asset and depreciated over the asset’s useful life.

(d) Reversal of Previous Asset Write-Downs These are amounts relating to assets which have been previously written down or expensed in prior periods. In the current year, these items have been either reversed as a write down or capitalised for the first time due to either exceeding the capitalisation threshold or through identification during stock takes. They may include identification of heritage and cultural assets not previously recognised as assets.

(e) Assets under construction Assets under construction (AUC) include expenditure to date on major military capability and facilities projects. AUC projects are valued at current replacement cost and are reviewed annually for indicators of impairment. Prior to rollout into service, the accumulated AUC balance is reviewed to ensure accurate capitalisation.

3.2A: Reconciliation of the opening and closing balances of property, plant and equipment, and intangibles (continued)

32

206 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

Accounting Policy (continued)

(f) Subsequent valuations All property, plant and equipment, excluding ROU assets, is measured and disclosed at fair value (or an amount not materially different from fair value), less subsequent accumulated depreciation and accumulated impairment losses.

The basis for determining fair value is by reference to the highest and best use that is physically possible, legally permissible and financially feasible. Where an active and liquid market exists, fair value is determined by reference to market values, noting the highest and best use criteria and any specific factors that have been noted by the valuer.

Specialist military equipment is valued internally by the Department of Defence. Valuation techniques include reference to comparable assets, recently purchased assets, recent market data available, and indexation based on the country of manufacture. Valuation for land, buildings, infrastructure, other plant and equipment and heritage and cultural assets are performed by independent external valuers using inputs such as sales prices of comparable assets, replacement cost, expected useful life and adjustments for obsolescence.

Following initial recognition at cost, valuations for land, buildings, infrastructure and specialist military equipment are conducted every year; other plant and equipment are revalued annually on a sample basis and heritage and cultural assets are revalued over a five year period.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reverse a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset is restated to the revalued amount.

(g) Depreciation Property, plant and equipment items having limited useful lives are systematically depreciated over their estimated useful lives on a straight-line basis.

Depreciation rates (useful lives) are determined upon acquisition and are reviewed at each subsequent reporting date, and necessary adjustments are made in the current, or current and future reporting periods, as appropriate. Residual values are reviewed periodically and at least at each reporting date when assets are revalued.

The following are minimum and maximum useful lives for the different asset classes. These are not necessarily indicative of typical useful lives for these asset classes.

2019-20 2018-19

Buildings 1 to 100 years 1 to 100 years

Infrastructure 3 to 99 years 3 to 99 years

Specialist military equipment 2 to 52 years 1 to 50 years

Other plant and equipment 2 to 76 years 2 to 76 years

Heritage and cultural 10 to Indefinite 10 to Indefinite

The depreciation rates for ROU assets are based on the commencement date of the lease to the earlier of the end of the useful life of the ROU asset or the end of the lease term.

3.2A: Reconciliation of the opening and closing balances of property, plant and equipment, and intangibles (continued)

33

207 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

Accounting Policy (continued)

(h) Heritage and Cultural Assets Heritage and cultural items include:  artefacts and memorabilia that are or may be of national historical or cultural significance. While many of these items

represent military achievements, including paintings, memorabilia and other military items, others are associated with developments in science and exploration such as museum pieces, decommissioned aircraft and military equipment, or with significant personal achievements, such as medals, badges, uniforms and other regalia.  buildings of historical or cultural significance. These buildings may be used for office accommodation, residences,

chapels, storage and gymnasiums but are primarily held for heritage and cultural purposes.

Artefacts and memorabilia are stored and managed by Service Museums (Navy, Army and Air Force). Each Service maintains their own documented processes and procedures for the storage, documentation, restoration and preservation of various artefacts depending on their type and sensitivity.

Conservation and preservation policies include the storage of these items under appropriate conditions including, exposure to minimal UV light, stable humidity and temperatures and maintaining a dust and pest free environment as well as cataloguing and maintenance. In addition, conservation programs within Service Museums aim to identify items requiring restoration.

Heritage and cultural estate assets are amortised on a straight-line basis over their anticipated useful lives. Heritage and cultural assets are stored, managed, displayed, repaired and restored in ways that will maintain their cultural or heritage value over time. Where conservation, restoration and preservation activities demonstrate that an asset will be maintained for an indefinite period, these items are considered to have indefinite useful lives and therefore, are not subject to depreciation.

Heritage buildings are managed by Defence Environmental Management. All Defence heritage buildings are included in the Defence Heritage Register and managed using the Defence Heritage Toolkit. This Toolkit sets out the strategies and policies for managing heritage buildings across the Defence estate as well as ensuring all disposals, acquisitions and development activities to these sites look at heritage issues and assess possible risks to any values and mitigation strategies via Heritage Impact Assessments. The Toolkit has been established in accordance with the Environment Protection and Biodiversity Conservation Act 1999 . Further information on heritage management across the Defence estate can be obtained from the following site: http://www.defence.gov.au/estatemanagement/governance/Policy/ Environment/Heritage/default.asp.

(i) Intangible Assets Defence’s intangibles comprise externally acquired and internally developed computer software for internal use and other externally acquired and internally developed intangibles. Intangibles with gross values greater than $150,000 are capitalised when they meet the recognition criteria in AASB 138.

All intangibles are amortised on a straight-line basis over their anticipated useful lives. The useful lives of Defence software are 2 to 24 years (2018-19: 2 to 24 years) and the useful lives of Defence's other intangibles are 4 to 35 years (2018-19: 4 to 35 years). All intangible assets are assessed annually for indications of impairment.

All Defence intangible assets are currently stated at cost less any subsequent accumulated amortisation and accumulated impairment losses.

Acquired intellectual property may form part of the acquisition of particular tangible assets. Where the acquired intellectual property is inseparable from the underlying tangible asset it is reflected in the value of the tangible asset in the statement of financial position.

Defence reviews the useful life of intangible assets annually based on the service potential of the assets. All Defence intangible assets have finite useful lives and are amortised over their anticipated useful lives. Where there is an indication that the service potential of an intangible asset is impaired, the recoverable amount of that asset is determined based on the remaining service potential. Where the recoverable amount is lower than the carrying amount, the asset is written down to its recoverable amount.

3.2A: Reconciliation of the opening and closing balances of property, plant and equipment, and intangibles (continued)

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208 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

Accounting Policy (continued)

(j) Acquisition of Assets Assets are initially recorded at cost on acquisition which includes the fair value of assets exchanged and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration are initially recognised as assets and revenues at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised at the amounts at which they were recognised in the transferor agency’s accounts immediately prior to the restructuring.

(k) Impairment of Assets Defence applies its impairment testing to the smallest identifiable group of assets that is useful to Defence in achieving its objectives and whose utility/usefulness is largely independent of the utility provided to Defence by other assets or groups of assets. All relevant assets were assessed for impairment during the year. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if Defence was deprived of the asset, its value in use is taken to be its depreciated replacement cost.

(l) Derecognition of Assets Assets are derecognised upon disposal or when no further economic benefits or capability are expected from their use or disposal.

(m) Lease Right of Use (ROU) Assets Leased ROU assets are capitalised at the commencement date of the lease and comprise of the initial lease liability initial direct costs incurred when entering into the lease less any lease incentives received. These assets are accounted for by Commonwealth lessees as separate asset classes to corresponding assets owned outright, but included in the same column as where the corresponding underlying assets would be presented if they were owned.

On initial adoption of AASB 16 Defence has adjusted the ROU assets at the date of initial application by the amount of any provision for onerous leases recognised immediately before the date of initial application. Following initial application, an impairment review is undertaken for any right of use lease asset that shows indicators of impairment and an impairment loss is recognised against any right of use lease asset that is impaired. Lease ROU assets continue to be measured at cost after initial recognition in Defence, General Government Sector and Whole of Government financial statements.

Significant Accounting Judgements and Estimates Defence assesses non-financial assets for impairment by monitoring impairment indicators specific to an asset’s use in the Defence context. Where these indicators signify that an asset is impaired, management has made an estimate of the recoverable amount, or the estimated cost of repair to bring the asset back to service, to determine any impairment loss.

Significant judgements applied in assessing assets for indicators of impairment include an assessment of each Defence platform's rate of effort against estimated planned performance over each financial period.

With the exception of intangible assets, Defence's non-financial assets are measured at fair value using revaluation techniques that require significant judgements and estimates to be made. These include judgements and estimates in relation to reference to comparable assets, recently purchased assets, recent market data available and indexation based on the country of manufacture. Furthermore, valuation for land, buildings, infrastructure, other plant and equipment and heritage and cultural assets are performed by independent external valuers using inputs such as sales prices of comparable assets, replacement cost, expected useful life and adjustments for obsolescence.

3.2A: Reconciliation of the opening and closing balances of property, plant and equipment, and intangibles (continued)

35

209 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

2020 2019

$'000 $'000

3.2B: Inventories Inventories - General1 2,335,148 2,307,519

Inventories - Explosive ordnance 4,966,641 4,645,842

Inventories - Fuel 67,696 83,266

Total inventories 7,369,485 7,036,627

1

Prior period balances have been restated. Refer to Note 8.4 for further details.

No items of inventory were recognised at fair value less cost to sell.

The reversal of previous inventory write downs is attributable to price and quantity adjustments in the current financial year.

Accounting Policy Defence holds inventory for its own use and does not ordinarily hold inventory for sale. Sales of inventory relate to minor fuel sales to foreign governments. Inventory held for use is valued at cost adjusted where applicable for loss of service potential. Defence considers that loss of operating capacity due to obsolescence is the most appropriate basis for loss of service potential of its inventories.

Costs incurred in bringing each item of inventory (primarily explosive ordnance and general stores inventory) to its present location and condition that are capable of being allocated on a reasonable basis are assigned to inventory. The costs of inventories are assigned by using the weighted average cost formula.

Inventories acquired at no cost or nominal considerations are measured at current replacement cost at the date of acquisition. The amount of any reversal of any write-down that is recognised as a reduction in the amount of inventories recognised as an expense in the period.

Significant Accounting Judgements and Estimates Significant estimates and assumptions made in relation to inventory include:  For all identified obsolete inventories, it is assumed that the service potential is nil; and  The recognised obsolete inventories are valued using the average of all relevant district weighted average costs rather

than the actual cost of the holding.

3.2C: Prepayments Capital prepayments 906,094 1,737,196

Non-capital prepayments 919,848 760,158

Total prepayments 1,825,942 2,497,354

Accounting Policy Prepayments, excluding those paid to employees as retention benefit payments, are recognised if the value of the payment is $50,000 or greater.

3.2D: Assets held for sale Land 46,148 146,946

Specialist military equipment 169,635 3,928

Other infrastructure, plant and equipment 39 502

Inventories - -

Total assets held for sale 215,822 151,376

Accounting Policy Non-current assets are classified as held for sale if the carrying amount is to be recovered principally through a sale transaction rather than through continuing use. Classification as held for sale occurs when the asset is available for immediate sale in its present condition, and the sale is highly probable. On classification as held for sale, the asset is measured at the lower of its carrying amount and fair value less costs to sell. Any write down to fair value less costs to sell is recognised as an impairment loss. Assets which have been classified as held for sale are no longer subject to depreciation or amortisation.

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210 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

2020 2019

$'000 $'000

3.3: Payables

3.3A: Suppliers payables Trade creditors and accruals 2,719,992 2,511,261

Total suppliers payables 2,719,992 2,511,261

Settlement is usually made within 20 days.

3.3B: Employee payables Australian Public Service (APS) employee payables Salaries and wages 21,829 9,006

Superannuation 4,159 2,024

Australian Defence Force (ADF) employee payables Salaries and wages 89,887 55,890

Superannuation 30,102 20,202

Total employee payables 145,977 87,122

3.3C: Other payables

Statutory payable 275,969 215,459

Other1 282,957 354,950

Total other payables 558,926 570,409

1

Prior period balances have been restated. Refer to Note 8.4 for further details.

3.4: Interest Bearing Liabilities

3.4A: Leases Lease Liabilities1 2,884,524 1,485,329

Total leases 2,884,524 1,485,329

1 Defence has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

Total cash outflow for leases for the year ended 30 June 2020 was $445.3 million.

Accounting Policy Refer overview section for accounting policy on leases.

37

211 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

3.5: Provisions 2020 2019

$'000 $'000

3.5A: Employee provisions

Australian Public Service (APS) employee provisions Leave 744,390 689,103

Total APS employee provisions 744,390 689,103

Australian Defence Force (ADF) employee provisions Leave 2,644,741 2,347,109

Other provisions 23,464 5,042

Total ADF employee provisions 2,668,205 2,352,151

Total employee provisions 1 3,412,595 3,041,254

Employee provisions are expected to be settled in: No more than 12 months 1,040,035 889,141

More than 12 months 2,372,560 2,152,113

Total employee provisions 3,412,595 3,041,254

Accounting Policy

The relevant accounting policy for employee provisions is detailed in Note 1.1A Employee Benefits.

Significant Accounting Judgements and Estimates Provisions for annual leave and long service leave are estimates based on expert actuarial assumptions on the likely tenure of existing staff, patterns of leave claims and payouts, future salary movements and future discount rates.

3.5B: Restoration, decontamination and decommissioning provisions Provisions for restoration and decommissioning 720,981 668,107

Provision for decontamination 693,053 635,464

Total restoration, decontamination and decommissioning provisions 1,414,034 1,303,571

Accounting Policy Where a legal or constructive obligation arises on acquisition to restore an asset back to its original condition, or dismantle an asset at the end of its useful life, the net present value of estimated restoration and/or decommissioning costs are capitalised and added to the cost of the underlying asset and depreciated over the asset’s useful life. At the same time, a corresponding provision is recognised for these costs. The carrying amount of the provision is adjusted to reflect the passage of time and any incremental costs are recognised as finance costs.

Where a legal or constructive obligation arises as a result of operations of Defence (i.e. use of the asset) the cost of restoration is recognised as an expense in the period in which the obligation arises.

One of the following past events would give rise to a constructive obligation:  a public announcement or statement by Government or Defence that a site would be restored;  the existence of an established pattern of past practice of restoring sites of a particular nature or type; or  a specific policy adopted by Government with regard to restoration of sites of a particular nature or type.

The entity currently has 147 (2018-19: 151) agreements for the leasing of premises which have provisions requiring the entity to restore the premises to their original condition at the conclusion of the lease. The entity has made a provision to reflect the present value of this obligation.

Significant Accounting Judgments and Estimates Provisions for specialist military equipment decommissioning are based on Defence's estimates of future obligations relating to the underlying assets. These are management's best estimates based on actual decommissioning costs incurred for similar assets and are reviewed annually. Provisions for land decontamination and site restoration are supported by external valuations. Estimated provisions are adjusted to future value by applying a five year average of forecast consumer price index and discounting back to present value using the long term government bond rate.

Refer to Note 3.5D for a reconciliation of this balance.

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212 DEFENCE ANNUAL REPORT 2019-20

Department of Defence _RAD _DEC _OTH

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

2020 2019

$'000 $'000

3.5C: Other provisions Other provisions 332,561 432,341

Total other provisions 332,561 432,341

Refer to Note 3.5D for a reconciliation of this balance.

3.5D: Reconciliation of provision balances Movement in relation to 2020 Restoration and

decommissioning Decontamination Other provisions provisions provisions

$'000 $'000 $'000

Carrying amount 1 July 2019 668,107 635,464 432,341

Additional provisions made 39,008 204,037 -

Amounts used (21,690) (109,678) (24,984)

Amounts reversed (4,416) (38,781) (26,757)

Unwinding of discount rate 7,885 2,011 -

Parameter changes 32,087 - (48,039)

Closing balance 30 June 2020 720,981 693,053 332,561

39

213 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

ASSETS AND LIABILITIES ADMINISTERED ON BEHALF OF GOVERNMENT This section analyses assets used to conduct operations and the operating liabilities incurred as a result of activities that Defence does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

4.1: Administered - Financial Assets

2020 2019

$'000 $'000

4.1A: Cash and cash equivalents Cash held in the OPA - Special Accounts 146,014 114,576

Total cash and cash equivalents 146,014 114,576

The closing balance of cash in special accounts does not include amounts held in trust of $1.73m (2018-19: $1.69m). See Note 5.2 Special Accounts and Note 8.1 Assets Held in Trust for more information.

4.1B: Trade and other receivables Goods and services: In connection with - external parties 30,545 9,109

Total goods and services receivable 30,545 9,109

Other receivables: Dividends 25,604 24,545

Loans receivable - Defence Housing Australia 509,580 509,580

Competitive neutrality - Defence Housing Australia 5,643 5,106

Total other receivables 540,827 539,231

Total trade and other receivables (gross) 571,372 548,340

Less impairment allowance: Goods and services (380) (428)

Total impairment allowance (380) (428)

Total trade and other receivables (net) 570,992 547,912

Loans to Defence Housing Australia as at 30 June 2020 have remaining terms of up to 6 years. No security is provided. Principal is required to be repaid in full at maturity, however in practice the principal is normally rolled over in a new loan agreement. Interest rates are fixed. Weighted average interest rate is 3.63%. Interest payments are due every quarter or when the loan matures.

Credit terms for goods and services were within 1-30 days (2018-19: 1-30 days).

Accounting Policy Loans and Receivables Where loans and receivables are not subject to concessional treatment, they are carried at amortised cost using the effective interest method. Gains and losses due to impairment, derecognition and amortisation are recognised as income or expense.

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214 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

2020 2019

$'000 $'000

4.1C: Equity accounted investments Other investments shares (or equity in) - Defence Housing Australia 2,630,545 2,809,339

Other investments - Small portfolio entities 80,959 79,686

Total investments accounted for using the equity method 2,711,504 2,889,025

Accounting policy Defence reports the Australian Government’s capital investment in Defence Housing Australia (DHA).

The investment is classified as 'fair value through other comprehensive income' and is measured at fair value using the net assets valuation approach in accordance with the Financial Reporting Rule (FRR). The investment was assessed for impairment at year end and no indicators of impairment were noted.

The Australian Government holds a 100% interest in DHA which is a Government Business Enterprise. The principal activity of DHA is to deliver adequate and suitable housing and housing related services that meet Defence's operational needs.

The following Commonwealth entities and companies are small portfolio bodies within the Defence Portfolio of which the Australian Government holds a 100% interest:

 Australian Strategic Policy Institute Limited;

 Army and Air Force Canteen Service (Frontline Defence Services);

 Australian Military Forces Relief Trust Fund (Army Relief Trust Fund);

 Royal Australian Air Force Veterans’ Residences Trust Fund;

 Royal Australian Air Force Welfare Trust Fund;

 Royal Australian Navy Central Canteens Board;

 Royal Australian Navy Relief Trust Fund;

 AAF Company; and

 RAAF Welfare Recreational Company.

The Australian Strategic Policy Institute Limited is a Commonwealth company that provides policy-relevant research and analysis to inform Government decisions and public understanding of strategic and defence issues.

The remaining bodies were established through either their own enabling legislation or constitution to provide oversight on the investment in these bodies on behalf of the beneficiaries.

These investments are classified as 'fair value through other comprehensive income' and are measured using the net assets valuation approach in accordance with the FRR.

4.2: Administered - Non-Financial Assets

4.2A: Other non-financial assets Prepayments - retention benefits 250,157 249,655

Total other non-financial assets 250,157 249,655

Accounting policy Certain categories of ADF personnel, who are members of the Military Superannuation Benefits Scheme (MSBS) and have had 15 years of service, receive retention benefits as an incentive for continued service. Retention benefit payments are initially recorded as prepayments and amortised over the expected period of service.

4.3: Administered - Payables

4.3A: Other payables Other payables 8,560 7,052

Special accounts liability 146,014 114,576

Total other payables 154,574 121,628

41

215 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

4.4: Administered - Provisions l

Overview of Schemes Permanently appointed ADF employees of Defence are members of the Defence Forces Retirement Benefits Scheme (DFRB), the Defence Force Retirement and Death Benefits Scheme (DFRDB), the Military Superannuation and Benefits Scheme (MSBS) or the Australian Defence Force Superannuation (ADF Super)1. DFRB and DFRDB are fully unfunded defined benefit plans while MSBS is a partially funded defined benefit plan. DFRB, DFRDB and MSBS are closed to new members. All new members of the ADF are now eligible to enter ADF Super which is a defined contribution plan fully funded by employer contributions of 16.4% of member's full earnings. All new ADF members are entitled to an insurance cover for death and invalidity benefits under the provisions of the ADF Cover arrangement. ADF Cover is a fully unfunded scheme with all costs met by the Australian Government. It is a defined benefit plan.

Defence makes employer contributions for DFRB, DFRDB and MSBS based on an agreed employer contribution rate. The employer contributions assist the Government in meeting the cost of the superannuation entitlements under these defined benefit plans. Defence accounts for these employer contributions as contributions to defined contribution plans in accordance with AASB 119 in its departmental financial statements.

Defence, on behalf of the Australian Government, is responsible for administering the four defined benefit plans relating to DFRB, DFRDB, MSBS and ADF Cover. Defence recognises an administered liability for the present value of the Australian Government's expected future payments arising from the four defined benefit plans. These liabilities are based on an annual actuarial assessment performed by the Australian Government Actuary (AGA). Defence also has the responsibility to record the Australian Government's transactions in relation to the four defined benefit plans.

Accounting Policy and Measurement In addition to the annual actuarial assessment, the AGA also completes a full review of the unfunded liabilities for the four defined benefit plans every three years and issues a Long Term Cost Report (LTCR). The demographic assumptions underlying the annual actuarial assessment are updated every three years as part of the LTCR. The economic assumptions underlying the actuarial assessment are updated annually. The most recent LTCR was issued for the 30 June 2017 financial year and forms the basis for the demographic assumptions applied in calculation of the net defined benefit liability (unfunded) for DFRB, DFRDB, MSBS and ADF Cover as at 30 June 2020.

Actuarial gains or losses arising from the annual actuarial assessment are recognised in Other Comprehensive Income in equity in the year in which they occur. Current and past service cost and interest on the net defined benefit liability are recognised in the line item 'employee benefits expense' in the Administered Schedule of Comprehensive Income. The return on fair value of plan assets excluding the amount included in interest income is recognised in equity. The net defined benefit liability is calculated annually as the present value of future obligations less the fair value of plan assets. The net defined benefit liability recognised in the Administered Schedule of Assets and Liabilities under the line item 'employee provisions' represents the actual deficit or surplus in Defence's four defined benefit plans.

1 Individuals eligible for ADF Super can choose to join a superannuation scheme of their choice to receive employer contributions.

Amounts recognised in the Schedule of Assets and Liabilities 2020 2019

$'000 $'000

4.4A: Employee provisions Superannuation - DFRB 460,300 513,900

Superannuation - DFRDB 51,559,000 55,023,000

Superannuation - MSBS 134,511,000 125,745,000

Insurance cover - ADFC 1,620,900 736,300

Total employee provisions 188,151,200 182,018,200

Employee provisions are expected to be settled in:

No more than 12 months 2,737,000 2,558,000

More than 12 months 185,414,200 179,460,200

Total employee provisions 188,151,200 182,018,200

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216 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

4.5: Administered - Defined Benefit Plans

Scheme Information

Funding Arrangements The funding arrangements for the various schemes and the ADF Cover arrangement are as follows:

Scheme Funding DFRB The scheme has no active members and therefore no employer contributions are made into the scheme. Benefits are paid from consolidated revenue on an emerging cost (or pay as you go) basis, which results in contributions from consolidated revenue made into the scheme equalling the benefits paid out from the scheme. DFRDB Unfunded as employer contributions and member contributions made to assist the Government in meeting the costs of

the scheme are not held by the scheme, but paid directly into consolidated revenue. DFRDB's members contribute 5.5 per cent of the highest incremental salary for rank plus service allowance, which is paid into consolidated revenue. Benefits are paid from consolidated revenue on an emerging cost (or pay as you go) basis, which results in contributions made into the scheme equalling the benefits paid out from the scheme. Employer contributions also include the 3 per cent productivity contributions. Member contributions paid are included within the service cost.

MSBS Partially funded as member contributions and some employer contributions are paid into the scheme, that is the MSB Fund, while the remaining employer contributions are paid directly into consolidated revenue. Employer productivity contributions of 3 per cent of superannuation salary, member contributions, usually of 5 per cent of superannuation salary, employee salary sacrifice contributions and Superannuation Guarantee top up payments are paid into the MSB Fund. The balance of superannuation benefits payable, after allowing for any funded part of the benefit, under the Military Superannuation and Benefits Act 1991, are paid from consolidated revenue on an emerging (or pay as you go) basis.

ADF Cover Unfunded. No employer contributions are made in relation to ADF Cover as this arrangement is only providing death and invalidity benefits as these arise for employees that are eligible to be members of the ADF Super defined contribution plan. Benefits are paid from consolidated revenue on an emerging cost (or pay as you go) basis, which results in contributions made into the scheme equalling the benefits paid out from the scheme.

Benefits Paid The nature of the benefits provided under the schemes are as follows:

Scheme Benefits Paid

DFRB All remaining DFRB members are in receipt of indexed lifetime pensions.

DFRDB Length of service is the primary factor that determines benefit entitlement. Members who retire from the Australian Defence Force after twenty years of effective service (or after fifteen years of service at retirement age for rank) are entitled to an indexed lifetime pension1 based on a percentage of their annual pay on retirement, some of which can be commuted to a lump sum. Members are entitled to a productivity benefit based on contributions of 3 per cent of pay increased with interest, which is paid as a lump sum in addition to the defined benefits. Most members are currently in receipt of a lifetime pension.

MSBS Benefits payable comprise a lump sum of accumulated member contributions and an employer financed defined benefit. The employer financed defined benefit is calculated on the basis of the member's final average salary, length of contributory service and includes the 3 per cent of salary productivity component. Benefits arising from member's contributions are determined by the value of contributions and investment returns. The employer financed defined benefits payable may be taken as a lump sum or as an indexed lifetime pension1 or as a combination of lump sum and pension. MSBS also has an ancillary accumulation section which can accept other employer contributions and member contributions for the provision of fully funded accumulation lump sum benefits.

An Invalidity benefit may also be payable, which depends on the level of invalidity suffered. Invalidity benefit type A pensions (60%-100% incapacity) are larger and have a higher cost compared to the invalidity benefit types B (30%-59% incapacity) and C (less than 30% incapacity). ADF Cover ADF Cover provides death and invalidity benefits for ADF personnel eligible to join the ADF Super accumulation scheme. A lump sum payment is payable upon the death of a member whilst in service based on prospective future service to age sixty and salary at death. A surviving spouse can opt to receive a pension in lieu of the lump sum death benefit. On an invalidity exit, the invalidity benefit type A is calculated based on a lifetime pension1 of (60 - member's age at invalidity exit) x 2.2% x superannuation salary at exit plus a temporary top up pension payable to age 60 of completed years of service at exit x 2.2% x superannuation salary at exit. For Invalidity B benefits, a percentage of 1.1% is used to calculate benefits, while no benefits are payable for invalidity type C. Invalidity types for ADF Cover are determined using the same incapacity rates that apply for MSBS as outlined above.

1 These pensions have an attaching lifetime reversionary pension payable to a surviving spouse following the death of the member.

43

217 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

4.5: Administered - Defined Benefit Plans (continued)

Regulatory Framework The applicable regulatory framework for each scheme and arrangement is as follows:

Scheme Enabling Act Period open for Requirement

new members

DFRB Defence Forces Retirement Benefits Act 1948 From July 1948 to Exempt from Superannuation Industry 30 September 1972 (Supervision) Act 1993 DFRDB Defence Force Retirement and Death Benefits From 1 October 1972 to Exempt from Superannuation Industry Act 1973 and the Defence Force Act 1903 30 September 1991 (Supervision) Act 1993 MSBS Military Superannuation and Benefits Act 1991 From 1 October 1991 to Compliance with Superannuation Industry

30 June 2016 (Supervision) Act 1993

ADF Cover Australian Defence Force Cover Act 2015 From 1 July 2016 Exempt from Superannuation Industry (Supervision) Act 1993

Governance of the defined benefit schemes Commonwealth Superannuation Corporation (CSC) was established under the Governance of Australian Government Superannuation Schemes Act 2011 and is responsible for:

 Providing administration services for each scheme;  Management and investment of scheme assets;  Compliance with superannuation taxation and other applicable laws; and Compliance with relevant legislation including the Governance of Australian Government Superannuation Schemes Act 2011.

CSC is supported by a custodian and other specialist providers. CSC is legally separate from Defence.

Risks The scheme specific risks, as detailed below, apply to all four schemes and arrangements, unless specified otherwise.

Risk Exposure

Interest The present value of the scheme liability (referred to as the defined benefit obligation) is calculated using a discount Rate Risk rate determined by reference to the government bond rate consistent with the term of the liability for each scheme. This rate has no regard to the actual return on any assets of the scheme. A decrease in the bond rate will increase the defined benefit obligation.

Longevity The present value of the defined benefit obligation is calculated by reference to the best estimate of the mortality of Risk scheme participants and their spouses both during and after their employment. An increase in the life expectancy of the scheme participants and their spouses will increase the defined benefit obligation.

Salary Risk The present value of the defined benefit obligation is calculated by reference to the future salaries of scheme participants. An increase in the salary (in excess of that assumed) of the participants prior to retirement will increase the defined benefit obligation. This risk does not apply to the DFRB and has minimal application to ADF Cover.

Pension The present value of the defined benefit obligation is calculated by reference to the level of future pension indexation.

Increase For MSBS and ADF Cover pensioners, and DFRB and DFRDB pensioners under age 55, the pensions are linked to Risk increases in the Consumer Price Index (CPI). For DFRB pensioners and DFRDB pensioners aged 55 or more, pension increases are calculated as the greater of CPI and Pensioner and Beneficiary Living Cost Index and benchmarked against a Male Total Average Weekly Earnings index. Higher than assumed pension increases will

increase the defined benefit obligation.

Invalidity Benefits are in the form of an indexed pension payable for life and the benefit formula is based on service to retirement Exit Risk age and level of invalidity suffered by the member. A temporary top up pension to age 60 is also payable for ADF Cover members. An increase in invalidity exits will increase the defined benefit obligation for MSBS and ADF Cover schemes only. This risk is not relevant for the DFRB and has minimal application to the DFRDB due to the absence of active

members in these schemes.

Pension This risk is relevant for the MSBS scheme only. For MSBS, retiring members and surviving spouses of members who Take-up die in service have the option to receive the employer benefit as a part or full pension, compared to the alternative lump Risk sum. When an individual opts to receive a pension on retirement, the actuarial value of the pension is greater than the value of the lump sum benefit foregone. Higher pension take up rates will increase the defined benefit obligation.

44

218 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

4.5: Administered - Defined Benefit Plans (continued)

Assumptions The economic assumptions outlined below are significant factors affecting the estimate of the scheme liability. However, the relationship between these assumptions is significant. Changes of equal magnitude in the absolute levels of each of the rates can have a major effect on nominal cash flows but may have only a minor effect on the liability and service cost.

For the defined benefit obligation, a range of other assumptions have also been made regarding rates of retirement, death (for active, preserved and pension members), mortality improvements, invalidity, resignation, retrenchment, retention and take up rates of pensions in the schemes. Assumptions have also been made for the ages of spouses and the proportion of members married at the time of their death.

Membership data for DFRB, DFRDB, MSBS and ADF Cover as at 30 June 2019 was used to calculate liabilities in the AASB 119 update. These liabilities were then projected forward to 30 June 2020, allowing for assumptions in accordance with the 2017 LTCR.

The liabilities were then adjusted for aggregate experience over the year. In particular, actual experience relating to invalidity exits, pension increase rates, general salary increase rates, benefit payments, salaries per payroll data and the MSBS invested fund was incorporated.

Principal actuarial assumptions for the various schemes are as follows:

The demographic assumptions utilised for the 30 June 2020 actuarial estimate of DFRB, DFRDB, MSBS and ADF Cover are based on the assumptions used in the 30 June 2017 LTCR. 2020 2019

DFRB Discount rate at 30 June 1.0% 1.4%

Expected pension increase rate1 4.0% 4.0%

Expected salary increase rate2 - -

1 Pension increase rate is determined using the short term pension increases for the first four years from 2020-21 to 2023-24 (1.7%) before reverting to the long term pension increases (4.0%) using the Age Pension methodology. 2

Salary growth rate is nil as members are all pensioners.

DFRDB Discount rate at 30 June 1.7% 1.9%

Expected salary increase rate3 4.0% 4.0%

Expected pension increase rate (aged 55 or more)4 4.0% 4.0%

Expected pension increase rate (aged less than 55)5 2.5% 2.5%

3 Separate promotional salary scales are used to allow for promotional salary increase. For the first four years from 2020-21 to 2023-24, assumed salary growth is 2.0% per annum before reverting to 4.0% from the 2024-25 financial year.

4 For members aged 55 or more, pension increase rate is based on the Age Pension methodology.

5 Pension increase rate is determined using the short term pension increases for the first four years from 2020-21 to 2023-24 (1.7%) before reverting to the long term pension increases (2.5%) based on CPI.

45

219 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

4.5: Administered - Defined Benefit Plans (continued)

2020 2019

MSBS Discount rate at 30 June (active members and pensioners) 1.7% 1.9%

Expected rate of return on plan assets 1.7% 1.9%

Expected salary increase rate1 4.0% 4.0%

Expected pension increase rate2 2.5% 2.5%

Invalidity exits - new3 (approximate) 1,000 p.a. 1,000 p.a.

Invalidity exits - retrospective3 150 p.a. 150 p.a.

Pension take-up rate for direct retirements (officers/other ranks)4 100%/90% 100%/90%

Pension take-up rate for current preserved members (officers/other ranks)4 85%/65% 85%/65%

Pension take-up rate for current serving members projected to exit with a preserved benefit and retire some time later (officers/other ranks)3 90%/80% 90%/80%

1 Separate promotional salary scales are used to allow for promotional salary increase. For the first four years from 2020-21 to 2023-24, assumed salary growth is 2.0% per annum before reverting to 4.0% from the 2024-25 financial year.

2 Pension increase rate is determined using the short term pension increases for the first four years from 2020-21 to 2023-24 (1.7%) before reverting to the long term pension increases (2.5%) based on CPI.

3 In the 2017 LTCR, approximately 1,000 ongoing new invalidity pensions were assumed for 2017-18. In addition, new retrospective invalidity pension commencements have also been included as an assumption, as there is a growing awareness of the ability to make a claim for a possible retrospective invalidity pension. The number of new retrospective invalidity pensions assumed are: 150 for 2017-18 and 2018-19; 110 for 2019-20; 80 for 2020-21;50 for 2021-22; and 20 for 2022-23.

4 The pension take-up rates for members that exit directly from service are much higher compared to those who exited service, became preserved members and then retired some time later.

ADF Cover Discount rate at 30 June 1.7% 1.9%

Expected pension increase rate5 2.5% 2.5%

Invalidity exits - new6 324 232

5 Pension increase rate is determined using the short term pension increases for the first four years from 2020-21 to 2023-24 (1.7%) before reverting to the long term pension increases (2.5%) based on CPI.

6 This represents the number of claims that are expected to emerge in respect of incidents that take place each year, based on the

same age dependent rates as those used for MSBS and the number of members in ADF Cover as at 30 June 2020. This represents

approximately 1.75% of the current membership base of about 18,500.

Maturity Profile The maturity profiles of the defined benefit obligation under the schemes are as follows:

Scheme Maturity profile of defined benefit obligation DFRB The interest rate and probability weighted mean term of the liabilities is 10.7 years. DFRDB The interest rate and probability weighted mean term of the liabilities is 18.6 years. MSBS The interest rate and probability weighted mean term of the liabilities is 31.2 years.

ADF Cover The interest rate and probability weighted mean term of the liabilities is 34.3 years.

Expected Contributions The expected contributions which are the expected amount of benefit payments under the schemes are as follows:

Scheme Expected contributions DFRB The expected employer contribution for 2020-21 is $35m (2019-20 actual: $38.4m).

DFRDB The expected contribution (including 3% productivity contributions) for 2020-21 is $1,640m (2019-20 actual: $1,626m).

Note that member contributions paid to consolidated revenue would be an offset to this.

MSBS The expected contribution for 2020-21 is $1,195m (2019-20 actual: $1,106m). This includes expected employer contributions to meet unfunded benefit payments and funding via the MSBS Fund.

ADF Cover The expected contribution for 2020-21 is $22m (2019-20 actual: $12.5m).

46

220 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

4.5: Administered - Defined Benefit Plans (continued)

Sensitivity analysis for significant actuarial assumptions The impact of a change in the defined benefit obligation reported as at 30 June 2020 under several scenarios is presented below.

Impact on defined benefit obligation

Change in Increase in Decrease in

assumption1 assumption assumption

$m $m

DFRB Reported $460.3m

Discount rate +/- 0.5% (23.1) 25.2

Pension increase rate +/- 0.5% 23.9 (22.2)

DFRDB Reported $51,559m

Discount rate +/- 0.5% (4,399) 5,044

Salary and Age Pension methodology +/- 0.5% 3,803 (3,399)

CPI increase rate (aged under 55) +/- 0.5% 924 (908)

MSBS Reported $144,784m

Discount rate +/- 0.5% (19,000) 23,000

Salary increase rate +/- 0.5% 3,000 (3,000)

CPI increase rate +/- 0.5% 18,000 (16,000)

Invalidity exits - new +/- 40% 2,000 (3,000)

Pension take-up rate +/-10% 5,000 (7,000)

ADF Cover Reported $1,620.9m

Discount rate +/- 0.5% (248.0) 294.0

Pension increase rate +/- 0.5% 294.0 (248.0)

Invalidity exits +/- 40% 272.0 (272.0)

1 Change in assumption reflects additive adjustments, except for invalidity exits, which reflect a multiplicative adjustment. The sensitivity analysis is based on the change in a particular assumption, keeping all other assumptions constant. The sensitivity analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another.

The factors used to conduct the sensitivity analysis are based on an expectation of a realistic and potential movement in the defined benefit obligation, based on historical experience. The underlying results of the sensitivity factors used are deemed to be materially accurate as they are in line with historical experience and management's understanding of the underlying defined benefit obligation.

There has been no change from previous periods in the methods and assumptions used to prepare the sensitivity analysis for economic assumptions. For demographic assumptions, the methods and assumptions used to undertake the sensitivity analysis are based on the 2017 LTCR.

Sensitivity analysis of economic assumptions of +0.5% and -0.5% for all four schemes is generally based on the methodology used for estimating the reported liability, except where noted below. These economic assumptions include the discount rate, pension increase rate (based on CPI or Salary and Age Pension methodology), CPI increase rate, and salary increase rate.

For ADF Cover, the sensitivity analysis for the discount rate of -0.5% is based on the experience of MSBS. The extrapolation is modelled based on the impact that a lower discount rate had on the MSBS reported liability, compared to the impact of a higher discount rate. This has been applied to extrapolate the -0.5% movement in the discount rate for ADF Cover.

The -0.5% sensitivity assumption used for the DFRB pension increase rate; DFRDB Salary and Age Pension methodology; and DFRDB CPI increase rate are modelled by extrapolation from the +0.5% calculation, assuming that the additive percentage increase in liability due to a higher +0.5% assumption will apply as a percentage decrease due to a lower -0.5% assumption.

47

221 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

4.5: Administered - Defined Benefit Plans (continued)

Sensitivity analysis of the invalidity exits assumption for MSBS is based on the sensitivity analysis included in the 2017 LTCR and only focuses on new invalidity pensions. Given the uncertainty in invalidity exits, the sensitivity analysis in the 2017 LTCR allows for the ongoing level of invalidity exits to be 40 per cent higher than the assumed rate of 1,000 p.a for new invalidity pensions. This sensitivity analysis effectively assumes that there would be around 1,400 new invalidity pensions p.a. commencing each year. A sensitivity analysis has not been performed in relation to new retrospective invalidity pensions as these typically represent only about 10 per cent on average of the total invalidity pensions commencing annually over the 2018-19 to 2022-23 financial years.

Sensitivity analysis of the pension take-up rate assumption for MSBS is based on the sensitivity analysis included in the 2017 LTCR which shows the impact of a 100 per cent pension take-up rate. The factor of 100 per cent provides a theoretical upper bound on the cost impact from this process as the actuarial value of the pension is much greater than the value of the lump sum benefit from the member's perspective. In practice, there will be individuals who will prefer the lump sum over the alternative pension. Sensitivity analysis of pension increase rate (based on CPI) and invalidity exits for ADF Cover are based on the assumptions used for the MSBS sensitivity analysis, using the ADF Cover member data.

48

222 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

4.5: Administered - Defined Benefit Plans (continued)

The actuarial estimate of the net defined benefit liability for DFRB, DFRDB, MSBS, ADF Cover and in aggregate is presented below. The net defined benefit liability equals the present value of the future defined benefit obligation less the fair value of defined benefit plan assets. The most recent actuarial estimates were calculated by the AGA as at 30 June 2020. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

The reconciliations included below show movements in the net defined benefit liability, the present value of the defined benefit obligation and the fair value of the defined benefit plan assets. The disclosures below are in line with requirements of AASB 119.

2020 2020 2020 2020 2020

$'000 $'000 $'000 $'000 $'000

DFRB DFRDB MSBS ADF Cover Total

The amounts recognised in the Administered Schedule of Assets and Liabilities are as follows:

Present value of funded obligations - - 10,273,000 - 10,273,000

Fair Value of plan assets - - (10,273,000) - (10,273,000)

Present value of unfunded obligations 460,300 51,559,000 134,511,000 1,620,900 188,151,200

Net liability recorded: 460,300 51,559,000 134,511,000 1,620,900 188,151,200

The amount recognised in the Administered Schedule of Comprehensive Income are as follows:

Current service cost - 124,000 5,444,000 662,300 6,230,300

Interest on obligation 6,900 1,031,000 2,626,000 20,200 3,684,100

Expected return on plan assets - - (196,000) - (196,000)

Total expense recognised: 6,900 1,155,000 7,874,000 682,500 9,718,400

Actuarial losses/(gains) on liabilities recognised (22,100) (2,993,000) 1,709,000 214,600 (1,091,500)

Expected return on plan assets - - 196,000 - 196,000

Actual return on plan assets (interest income) - - 93,000 - 93,000

Actuarial (gains)/losses on plan assets recognised - - 289,000 - 289,000

Other Comprehensive Income recorded: (22,100) (2,993,000) 1,998,000 214,600 (802,500)

2019 2019 2019 2019 2019

$'000 $'000 $'000 $'000 $'000

DFRB DFRDB MSBS ADF Cover Total

The amounts recognised in the Administered Schedule of Assets and Liabilities are as follows: Present value of funded obligations - - 10,263,000 - 10,263,000

Fair Value of plan assets - - (10,263,000) - (10,263,000)

Present value of unfunded obligations 513,900 55,023,000 125,745,000 736,300 182,018,200

Net liability recorded: 513,900 55,023,000 125,745,000 736,300 182,018,200

The amount recognised in the Administered Schedule of Comprehensive Income are as follows: Current service cost - 114,000 3,881,000 304,300 4,299,300

Interest on obligation 12,600 1,364,000 2,921,000 12,000 4,309,600

Expected return on plan assets - - (292,000) - (292,000)

Total expense recognised: 12,600 1,478,000 6,510,000 316,300 8,316,900

Actuarial losses/(gains) on liabilities recognised 56,300 8,946,000 37,277,000 189,000 46,468,300

Expected return on plan assets - - 292,000 - 292,000

Actual return on plan assets (interest income) - - (737,000) - (737,000)

Actuarial (gains)/losses on plan assets recognised - - (445,000) - (445,000)

Other Comprehensive Income recorded: 56,300 8,946,000 36,832,000 189,000 46,023,300

49

223 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

4.5: Administered - Defined Benefit Plans (continued)

2020 2020 2020 2020 2020

$'000 $'000 $'000 $'000 $'000

DFRB DFRDB MSBS ADF Cover Total

Reconciliation of the net defined benefit liability Opening value at 1 July 513,900 55,023,000 125,745,000 736,300 182,018,200

Current Service cost - 124,000 5,444,000 662,300 6,230,300

Interest cost 6,900 1,031,000 2,626,000 20,200 3,684,100

Expected return on plan assets (interest income) - - (196,000) - (196,000)

Losses/(gains) on curtailments and settlements - - - - -

Total expense 6,900 1,155,000 7,874,000 682,500 9,718,400

Actuarial losses/(gains) in plan assets recognised - - 289,000 - 289,000

Actuarial losses /(gains) in liabilities arising from:

Changes in liability experience (6,500) (874,000) (239,000) 157,000 (962,500)

Changes in financial assumptions (15,600) (2,119,000) 1,948,000 57,600 (129,000)

Changes in demographic assumptions* - - - - -

Contributions (38,400) (1,626,000) (1,106,000) (12,500) (2,782,900)

Net defined benefit liability as at 30 June 460,300 51,559,000 134,511,000 1,620,900 188,151,200

Reconciliation of the present value of the defined benefit obligation Opening present value at 1 July 513,900 55,023,000 136,008,000 736,300 192,281,200

Current Service cost - 124,000 5,444,000 662,300 6,230,300

Interest cost 6,900 1,031,000 2,626,000 20,200 3,684,100

Losses/(gains) on curtailments and settlements - - - - -

Funded contributions by plan participants - - 280,000 - 280,000

Actuarial losses /(gains) in liabilities arising from:

Changes in liability experience (6,500) (874,000) (239,000) 157,000 (962,500)

Changes in financial assumptions (15,600) (2,119,000) 1,948,000 57,600 (129,000)

Changes in demographic assumptions* - - - - -

Benefits paid (38,400) (1,626,000) (1,283,000) (12,500) (2,959,900)

Defined benefit obligation as at 30 June 460,300 51,559,000 144,784,000 1,620,900 198,424,200

* The demographic assumptions used for the 30 June 2020 actuarial estimate are based on the 30 June 2017 LTCR.

Reconciliation of the fair value of plan assets Opening fair value at 1 July - - 10,263,000 - 10,263,000

Expected return on plan assets (interest income) - - 196,000 - 196,000

Experience actuarial gains/(losses) - - (289,000) - (289,000)

Contributions 38,400 1,626,000 1,106,000 12,500 2,782,900

Funded contributions by plan participants - - 280,000 - 280,000

Benefits paid (38,400) (1,626,000) (1,283,000) (12,500) (2,959,900)

Fair value of plan assets at 30 June - - 10,273,000 - 10,273,000

The major categories of plan assets at the end of the reporting period for each category, as follows:

Australian equities - - 2,362,790 - 2,362,790

Overseas equities - - 2,362,790 - 2,362,790

Property and infrastructure - - 1,232,760 - 1,232,760

Private equity - - 719,110 - 719,110

Cash, debt instruments - - 2,157,330 - 2,157,330

Other liabilities - - 1,438,220 - 1,438,220

Subtotal - - 10,273,000 - 10,273,000

The actual return on plan assets was a loss of $93m (2018-19: gain of $737m). The fair value of scheme assets relates to investments in the CSC Pooled Superannuation Trust. These are disclosed as level 2 in the fair value hierarchy, where the net market value is derived from observable inputs (other than quoted prices) such as prices or derived from prices.

50

224 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

4.5: Administered - Defined Benefit Plans (continued)

2019 2019 2019 2019 2019

$'000 $'000 $'000 $'000 $'000

DFRB DFRDB MSBS ADF Cover Total

Reconciliation of the net defined benefit liability Opening value at 1 July 485,600 46,228,000 83,344,000 236,600 130,294,200

Current Service cost - 114,000 3,881,000 304,300 4,299,300

Interest cost 12,600 1,364,000 2,921,000 12,000 4,309,600

Expected return on plan assets (interest income) - - (292,000) - (292,000)

Losses/(gains) on curtailments and settlements - - - - -

Total expense 12,600 1,478,000 6,510,000 316,300 8,316,900

Actuarial losses/(gains) in plan assets recognised - - (445,000) - (445,000)

Actuarial losses /(gains) in liabilities arising from:

Changes in liability experience (6,100) (730,000) 134,000 (28,000) (630,100)

Changes in financial assumptions 62,400 9,676,000 37,143,000 217,000 47,098,400

Changes in demographic assumptions* - - - - -

Contributions (40,600) (1,629,000) (941,000) (5,600) (2,616,200)

Net defined benefit liability as at 30 June 513,900 55,023,000 125,745,000 736,300 182,018,200

Reconciliation of the present value of the defined benefit obligation Opening present value at 1 July 485,600 46,228,000 92,659,000 236,600 139,609,200

Current Service cost - 114,000 3,881,000 304,300 4,299,300

Interest cost 12,600 1,364,000 2,921,000 12,000 4,309,600

Losses/(gains) on curtailments and settlements - - - - -

Funded contributions by plan participants - - 273,000 - 273,000

Actuarial losses /(gains) in liabilities arising from:

Changes in liability experience (6,100) (730,000) 134,000 (28,000) (630,100)

Changes in financial assumptions 62,400 9,676,000 37,143,000 217,000 47,098,400

Changes in demographic assumptions* - - - - -

Benefits paid (40,600) (1,629,000) (1,003,000) (5,600) (2,678,200)

Defined benefit obligation as at 30 June 513,900 55,023,000 136,008,000 736,300 192,281,200

* The demographic assumptions used for the 30 June 2019 actuarial estimate are based on the 30 June 2017 LTCR.

Reconciliation of the fair value of plan assets Opening fair value at 1 July - - 9,315,000 - 9,315,000

Expected return on plan assets (interest income) - - 292,000 - 292,000

Experience actuarial gains/(losses) - - 445,000 - 445,000

Contributions 40,600 1,629,000 941,000 5,600 2,616,200

Funded contributions by plan participants - - 273,000 - 273,000

Benefits paid (40,600) (1,629,000) (1,003,000) (5,600) (2,678,200)

Fair value of plan assets at 30 June - - 10,263,000 - 10,263,000

The major categories of plan assets at the end of the reporting period for each category, as follows:

Australian equities - - 2,463,120 - 2,463,120

Overseas equities - - 2,463,120 - 2,463,120

Property and infrastructure - - 1,231,560 - 1,231,560

Private equity - - 718,410 - 718,410

Cash, debt instruments - - 1,642,080 - 1,642,080

Other liabilities - - 1,744,710 - 1,744,710

Subtotal - - 10,263,000 - 10,263,000

The actual return on plan assets was $737m. The fair value of scheme assets relates to investments in the CSC Pooled Superannuation Trust. These are disclosed as level 2 in the fair value hierarchy, where the net market value is derived from observable inputs (other than quoted prices) such as prices or derived from prices.

51

225 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence

_AAP

_SUB

_AIY

_VAR

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020 FUNDING This section identifies Defence's funding structure. 5.1: Appropriations 5.1A: Annual appropriations ('Recoverable GST exclusive') Annual Appropriations for 2019-20

Appropriation applied in 2020

Annual

Adjustments to

Total

(Current and

Appropriation

1

appropriation

2

Appropriation

prior years)

Variance

3

$'000

$'000

$'000

$'000

$'000

DEPARTMENTAL Ordinary annual services 34,348,197 1,394,851 35,743,048 (35,417,543) 325,505

Capital budget - - - - -

Other services Equity injection 4,040,461 - 4,040,461 (4,015,029) 25,432

Total departmental

38,388,658 1,394,851 39,783,509 (39,432,572) 350,937

52

226 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

5.1: Appropriations (continued)

5.1A: Annual appropriations ('Recoverable GST exclusive') (continued)

Notes:

1. Details of quarantined appropriations are as follows: $’000

Amounts withheld under section 51 determinations

2017-18 Appropriation Act 2 369,788

2017-18 Appropriation Act 3 22,521

2017-18 Appropriation Act 5 194,202

2018-19 Appropriation Act 1 50,562

2018-19 Appropriation Act 3 215,614

2019-20 Appropriation Act 3 13,249

2019-20 Appropriation Act 4 25,432

Total Quarantined 891,368

2. Adjustment to appropriations relate to PGPA Section 74 receipts.

3. Reasons for material variance:

Ordinary Equity

Annual Service $’000 $’000

Unspent departmental annual appropriations 2019-20 389,458 -

Prior year appropriation drawn down (41,715) -

Net GST payments made not yet recovered (35,487) -

2019-20 Appropriation Act 3 withheld under Section 51 13,249 -

2019-20 Appropriation Act 4 withheld under Section 51 - 25,432

Total 325,505 25,432

53

227 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence

_AAP

_AAP

_SUB

_AIY

_VAR

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020 5.1: Appropriations (continued) 5.1A: Annual appropriations ('Recoverable GST exclusive') (continued) Annual Appropriations for 2018-19

Appropriation applied in 2019

Annual

Adjustments to

Total

(Current and

Appropriation

1

appropriation

2,4,5

Appropriation

prior years)

5,6

Variance

3

$'000

$'000

$'000

$'000

$'000

DEPARTMENTAL Ordinary annual services 32,688,310 1,469,771 34,158,081 (33,631,910) 526,171

Capital Budget - - - - -

Other services Equity injection 3,343,482 - 3,343,482 (3,963,482) (620,000)

Total departmental 36,031,792 1,469,771 37,501,563 (37,595,392) (93,829)

54

228 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

5.1: Appropriations (continued)

5.1A: Annual appropriations ('Recoverable GST exclusive') (continued)

Notes: 1. Details of quarantined appropriations are as follows: $’000

Quarantined appropriations

2016-17 Appropriation Act 1 35

Amounts withheld under section 51 determinations

2016-17 Appropriation Act 1 9,725

2016-17 Appropriation Act 2 636,623

2017-18 Appropriation Act 2 369,788

2017-18 Appropriation Act 3 22,521

2017-18 Appropriation Act 5 194,202

2018-19 Appropriation Act 1 50,562

Total Quarantined 1,283,456

2. Adjustment to appropriations relate to PGPA Section 74 receipts.

3. Reasons for material variance:

Ordinary Equity

Annual Service $’000 $’000

Unspent departmental annual appropriations 2018-19 433,222 -

Net GST payments made not yet recovered 42,387 -

Prior year appropriation released under Section 51 - (620,000)

2018-19 Appropriation Act 1 withheld under Section 51 50,562 -

Total 526,171 (620,000)

4. Trust moneys have been received in the current period as retainable receipts and credited to a Departmental appropriation. These are recognised as Assets Held in Trust within note 8.1. $1.52m held in trust for the Young Endeavour Youth Program Public Fund (Trust) is excluded from the below appropriation receivable balances (2018-19 Appropriation Act 1), as these amounts are not controlled by the Department or held for the benefit of the Commonwealth.

5. It has been identified in 2019-20 that notional receipts recorded by the Department in relation to rental contributions recovered from employees were not recorded as s74 receipts in 2018-19. As these represent retainable receipts of Defence, both 'Adjustments to Appropriation' and 'Appropriation Applied in 2019' have been restated by $205.279 million. This has no impact on the available Appropriation or reported Appropriation receivable in 2018-19.

6. It has been identified in 2019-20 that amounts drawn down from Departmental Appropriations which were unspent at 30 June 2020 ($175.893 million) were included in the amount disclosed as Appropriation applied in 2018-19. As these amounts were not actually spent by the Department, 'Appropriation Applied in 2019' and 'unspent departmental annual appropriations' have been restated by $175.9 million. This has no impact on the available Appropriation or reported Appropriation receivable in 2018-19.

Reconciliation to appropriation receivable:

Notes $'000

2016-17 Appropriation Act 1 87

2018-19 Appropriation Act 1 11,222

2018-19 Appropriation Act 3 244,584

3.1B 255,893

55

229 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

5.1B: Unspent annual appropriations ('Recoverable GST exclusive') Authority 2020 2019

$'000 $'000

DEPARTMENTAL Operating Act 1 2019-201 531,418 -

Act 1 2018-192 50,562 392,655

3

Act 1 2016-174 - 9,812

5

Act 3 2019-206 158,249 -

Act 3 2018-192 215,614 244,584

Act 3 2017-182 22,521 22,521

Act 5 2017-182 194,202 194,202

5

Total Operating 1,172,566 863,774

3,5

Equity Act 4 2019-202 25,432 -

Act 2 2017-182 369,788 369,788

Act 2 2016-174 - 636,623

Total Equity 395,220 1,006,411

Total 1,567,786 1,870,185

Total unspent annual appropriations 7 1,567,786 1,870,185

Notes 1. Includes unspent amounts held within cash and cash equivalents of $427.418m.

2. Unspent annual appropriations have been formally reduced by the Department of Finance. 3. Prior year unspent appropriations have been adjusted to include amounts held within cash and cash equivalents of $286.961m which were not disclosed against an Appropriation Act in the prior period. The amount reported as cash and cash equivalents has also been adjusted as a result of restatement, refer to Note 8.4 for further details.

4. Appropriation Acts have been repealed in the current period.

5. Prior year unspent appropriations have been adjusted to account for GST receipts that have been recovered by the Department subsequent to the end of the relevant financial period but which should have been attributed to the Act to which they relate. 6. Unspent annual appropriations have been partially reduced by the Department of Finance. Of the $158.249m of unspent appropriations, $13.249m has been formally reduced by the Department of Finance.

7. The unspent annual appropriations are $1,567.786m, allocated as follows:

a) $891.368m has been formally extinguished by Department of Finance; and b) $676.418m of unspent annual appropriations (including cash and cash equivalents) available to the Department.

56

230 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020 5.1: Appropriations (continued) 5.1C: Special appropriations ('Recoverable GST exclusive')

Appropriation Applied 2020

2019

Authority

Nature

Type

Purpose

$'000

$'000

Defence Force Retirement Benefits Administered Unlimited Amount To provide Retirement Benefits for Members of the Defence Force Act

1948

, Administered

(a)

who enlisted before 1 October 1972, and for other purposes.

38,375

40,648

Defence Force Retirement and Death Administered Unlimited Amount To make provision for and in relation to a Scheme for Retirement and Benefits Act

1973

, Administered

(a)

Death Benefits for Members of the Defence Force who enlisted before 1 October 1991.

1,608,370

1,601,998

Military Superannuation and Benefits Administered Unlimited Amount To make provision for and in relation to an occupational Act 1991

, Administered

(a)

superannuation scheme for, and the payment of other benefits to members of the Defence Force, and for related purposes.

1,112,392

911,698

Military Superannuation and Benefits Administered Unlimited Amount To make provision for and in relation to retention benefits for ADF Act 1991

, Administered

personnel.

100,026

102,396

Defence Force (Home Loans Assistance)

Administered Limited Amount To provide for the payment of home loan subsidies in respect of

Act 1990

, Administered

certain members of the Defence Force and certain other persons, and for related purposes.

207

331

Defence Home Ownership Assistance Administered Unlimited Amount To provide financial assistance to members of the Defence Force and Scheme Act 2008

, Administered

certain other persons, for the purchase, maintenance and development of their homes, and for related purposes.

108,933

121,905

Australian Defence Force Cover Act Administered Unlimited Amount To make provision for benefits for incapacity or death suffered by 2015

, Administered

(a)

certain members of the Australian Defence Force, and for related purposes.

12,508

5,610

Public Governance, Performance and Administered Unlimited Amount Accountability Act 2013

, Administered

- 55

Total 2,980,811 2,784,641

(a) Commonwealth Superannuation Corporation draw funds from the CRF on behalf of Defence.

Note Defence is responsible for the following additional Special Appropriations. No payments have been made from these Special Appropriations for this financial year.

 Defence Forces Retirement Benefits (Pension Increases) Act 1961  Defence Forces Retirement Benefits (Pension Increases) Act 1967

 Defence Forces Retirement Benefits (Pension Increases) Act 1971  Defence Forces Retirement Benefits (Pension Increases) Act 1973

 Defence Force Retirement and Death Benefits (Pension Increases) Act 1974  Defence Force Retirement and Death Benefits (Pension Increases) Act 1976



War Gratuity Act 1945

To make provision for and in relation to funds that have been received by the Commonwealth or Commonwealth entities that are required or permitted to be repaid where there is no other appropriation for the repayment.

57

231 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence

_NEW _NEW _SO _SO _YE _YE _EN _EN _FE _FE

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020 5.2: Special Accounts

Defence Endowments, Bequests and Other Entities And Trust Young Endeavour Trust Moneys Special Moneys Defence Youth Program Defence Endowments Fedorczenko Legacy Account

1,6

Special Account

2,6

Special Account

3,6

Special Account

4

Special Account

5,6

2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Balance brought forward from previous period - - 115,240 111,519 - 1,578 51 50 167 164

Total increases 324,817 - 1,852 267,964 - 52 - 1 - 3

Available for payments 324,817 - 117,092 379,483 - 1,630 51 51 167 167

Decreases: Departmental Total Departmental - - - - - - - - - -

Administered Total Administered (171,732) - (117,092) (264,243) - (1,630) (51) - (167) -

Total Decreases (171,732) - (117,092) (264,243) - (1,630) (51) - (167) -

Total Balance to be carried forward to next period 153,085 - - 115,240 - - - 51 - 167

Balance represented by: Cash held in entity bank accounts - - - - - - - - - -

Cash held in the Official Public Account 153,085 - - 115,240 - - - 51 - 167

Notes 1. Appropriation: Public Governance, Performance and Accountability (PGPA) Act 2013 section 78.

 Establishing Instrument: PGPA Act Determination (Defence Endowments, Bequests and Other Trust Moneys Special Account 2019).  Purpose: This account was created to:

(a) disburse amounts held on trust or otherwise for the benefit of persons other than the Commonwealth; (b) carry out activities consistent with the Fedorczenko Trust; (c) undertake activities approved by the Young Endeavour Youth Program Board of Management, or the Commonwealth, in relation to the STS Young Endeavour; (d) to disburse an amount in connection with services performed for or on behalf of any entities or bodies other than non-corporate Commonwealth entities; (e) to disburse an amount in connection with services performed for, on behalf of, or together with, another government, or in connection with an agreement between the Commonwealth and another government; (f) to credit an amount to the ASD account; (g) to repay an amount where a court order, Act or other law requires or permits the repayment of an amount received; (h) to carry out activities that ae incidental to one or more of the purposes of the special account, including costs of administering the special account; (i) to reduce the balance of the special account (and, therefore, the available appropriation for the special account) without making a real or notional payment.

 This special account was established on 15 July 2019 and replaces Defence's existing special accounts which were repealed under section 78(3) of the PGPA Act. The opening balance is equal to the sum of the amounts standing to the credit of Defence's existing special accounts immediately prior to 15 July 2019.  Special account is disclosed on a recoverable GST exclusive basis.  This account is non-interest bearing.

Service for Other

58

232 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020 5.2: Special Accounts (continued) 2. Appropriation: Public Governance, Performance and Accountability Act 2013 section 78.  Establishing Instrument: Financial Management and Accountability Determination 2009/15.  Purpose: This account was created to disburse amounts held on trust or otherwise for the benefit of persons other than the Commonwealth.  Special account is disclosed on a recoverable GST exclusive basis.  This account is non-interest bearing.  This account was repealed on 15 July 2019 through the PGPA Act Determination (Defence Endowments, Bequests and Other Trust Moneys Special Account 2019) in accordance with section 78(3) of the PGPA Act. 3. Appropriation: Public Governance, Performance and Accountability Act 2013 section 78.  Establishing Instrument: Financial Management and Accountability Determination 2009/02.  Purpose: For the receipt and payment of money in connection with the operations and activities of the STS Young Endeavour, as specified by the Young Endeavour Program

Board of Management or by the Commonwealth.  Special account is disclosed on a recoverable GST exclusive basis.  This account is interest bearing.  This account sunset on 1 April 2019. The Minister for Finance and the Public Service authorised the transfer of the balance to 2018-19 Appropriation Act 1 in accordance with item 9 in subsection 27 (2) of the

Public Governance, Performance and Accountability Rule 2014

. This amount was subsequently transferred to the Defence Endowments,

Bequests and Other Trust Moneys Special Account upon its establishment. 4. Appropriation: Public Governance, Performance and Accountability Act 2013 section 78.  Establishing Instrument: Financial Management and Accountability Determination 2009/11.  Purpose: For expenditure in accordance with the terms provided for in the endowments.  Special account is disclosed on a recoverable GST exclusive basis.  This account is interest bearing.  This account was repealed on 15 July 2019 through the PGPA Act Determination (Defence Endowments, Bequests and Other Trust Moneys Special Account 2019) in accordance with section 78(3) of the PGPA Act. 5. Appropriation: Public Governance, Performance and Accountability Act 2013 section 78.

 Establishing Instrument: Financial Management and Accountability Determination 2009/13.  Purpose: For expenditure in relation to the defence of Australia of the residual of the estate of the late Petro Fedorczenko.  Special account is disclosed on a recoverable GST exclusive basis.  This account is interest bearing.  This account was repealed on 15 July 2019 through the PGPA Act Determination (Defence Endowments, Bequests and Other Trust Moneys Special Account 2019) in accordance with section 78(3) of the PGPA Act.

6. Moneys held in trust:

This Special Account contains monetary assets held in trust. Further details are disclosed in Note 8.1 Assets Held in Trust.

59

233 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

PEOPLE AND RELATIONSHIPS This section describes our relationship with key people.

6.1: Key Management Personnel Remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of Defence, directly or indirectly. The key management personnel of Defence are considered to be the:

i) Minister for Defence; ii) Minister for Defence Industry; iii) Minister for Veterans and Defence Personnel; iv) Assistant Defence Minister; v) Secretary, Department of Defence; vi) Chief of the Defence Force; vii) Vice Chief of the Defence Force; viii) Associate Secretary, Department of Defence; ix) Chief of Navy; x) Chief of Army; xi) Chief of Air Force; xii) Chief of Joint Operations; xiii) Chief of Joint Capabilities; xiv) Chief Finance Officer; xv) Deputy Secretary Strategic Policy and Intelligence; xvi) Deputy Secretary Capability Acquisition and Sustainment; xvii) Chief Information Officer; xviii) Chief Defence Scientist; xix) Deputy Secretary Estate and Infrastructure; xx) Deputy Secretary Defence People; xxi) Deputy Secretary National Naval Shipbuilding and Infrastructure; and xxii) Commander Defence COVID-19 Task Force

Key management personnel remuneration is reported in the table below.

2020 2019

$ $

Short-term employee benefits 8,901,855 8,312,966

Post-employment benefits 1,713,509 1,639,908

Long-term benefits 195,860 144,356

Total key management personnel remuneration expenses 1 10,811,224 10,097,230

Notes 1. The above key management personnel remuneration excludes the remuneration and other benefits of the Minister for Defence, Assistant Minister of Defence, Minister for Defence Industry and Minister for Veterans and Defence Personnel. The remuneration and other benefits of these Ministers are not paid by the Department of Defence. Consequently, the total number of key management personnel that are disclosed within the remuneration expense balance is 21 (2018-19: 26). This includes instances where multiple individuals have fulfilled the same role within the period.

60

234 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

6.2: Related Party Disclosures

Related party relationships:

Defence is an Australian Government controlled entity. Related parties to this entity are: i) Key Management Personnel (as detailed in Note 6.1); ii) Spouse or domestic partners (also known as de facto partner) of a KMP; iii) Children or dependents of a KMP or their spouse or domestic partner; iv) Entities, individually or jointly, controlled by the above individuals; v) Cabinet Ministers; and vi) Other Australian Government entities.

Transactions with related parties:

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include the payment or refund of taxes, receipt of a Medicare rebate or higher education loans. These transactions have not been separately disclosed in this note.

No transactions with related parties occurred during the financial year (2018-19: Nil).

Significant transactions with related parties can include:

i) the payments of grants or loans; ii) purchases of goods and services; iii) asset purchases, sales transfers or leases; iv) debts forgiven; and v) guarantees.

Giving consideration to relationships with related entities, and transactions entered into during the reporting period (including comparative year) by Defence, it has been determined that there are no related party transactions to be separately disclosed.

Defence from time to time may gift items such as historical military pieces to other related parties.

61

235 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

MANAGING UNCERTAINTIES This section analyses how Defence manages financial risk within its operating environment.

7.1: Contingent Liabilities and Assets

7.1A: Contingent liabilities and assets Claims for damages / costs Total

2020 2019 2020 2019

$'000 $'000 $'000 $'000

Contingent Assets Balance from previous period 1,500 2,200 1,500 2,200

New - 1,500 - 1,500

Re-measurement (1,500) (2,200) (1,500) (2,200)

Assets realised - - - -

Rights expired - - - -

Total contingent assets - 1,500 - 1,500

Contingent Liabilities Balance from previous period 67,460 53,777 67,460 53,777

New 55,900 63,220 55,900 63,220

Re-measurement 154,563 4,768 154,563 4,768

Liabilities realised (212,523) (28) (212,523) (28)

Obligations expired - (54,277) - (54,277)

Total Contingent liabilities 65,400 67,460 65,400 67,460

Net contingent assets (liabilities) (65,400) (65,960) (65,400) (65,960)

Quantifiable Contingencies Contingent Assets: At 30 June 2020, there are no instances (2018-19: 1) of non-remote, quantifiable contingent assets in respect of claims by the Department (2018-19: $1.5m).

Contingent Liabilities: At 30 June 2020, there are 6 (2018-19: 9) instances of non-remote, quantifiable contingent liabilities in respect of claims on the Department valued at $65.4m (2018-19: $67.5m). The estimated figure is determined by conducting an objective analysis of the probable amount payable for all the matters managed by firms engaged by Defence through the Attorney General's Legal Services Multi Use List and those being handled in-house by Defence Legal Division. However, the exact amount payable under those claims is uncertain. The Department is defending the claims or is trying to resolve them by recourse to alternative dispute resolution measures.

Unquantifiable Contingencies Contingent Assets: At 30 June 2020 Defence had no instances (2018-19: 2) of unquantifiable non-remote contingent assets.

Contingent Liabilities: At 30 June 2020 Defence had 1 (2018-19: 1) instance of unquantifiable non-remote contingent liabilities.

Land decontamination, site restoration and decommissioning of Defence assets: Defence has made a financial provision for the future estimates involved in land decontamination, site restoration and decommissioning of Defence assets where a legal or constructive obligation has arisen. For those decontamination, restoration and decommissioning activities for which there is no legal or constructive obligation, the potential costs have not been assessed and are unquantifiable. Where there is a possible legal or constructive obligation, but the potential cost could not be quantified, the obligations have been assessed as unquantifiable contingencies. It was not possible to estimate the amounts of any eventual payments or receipts that may have eventuated in relation to these claims.

Costs associated with the Royal Commission into Institutional Responses to Child Sexual Abuse have not been assessed and are considered unquantifiable at this time. It is currently not possible to estimate the amounts of any payments that may eventuate in relation to any such claims.

Quantifiable Remote Contingencies Remote Contingent Assets: At 30 June 2020 Defence had 1 (2018-19: 2) instances of quantifiable remote contingent assets valued at $0.7m (2018-19: $0.7m).

Remote Contingent Liabilities: At 30 June 2020 Defence had 152 (2018-19: 171) instances of quantifiable remote contingent liabilities valued at $4,501m (2018-19: $5,312m). This balance relates to an Indemnity Register, which Defence maintains and records all potential quantifiable and unquantifiable contingent liabilities arising from Defence’s legal and contractual obligations.

62

236 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

7.1: Contingent Liabilities and Assets (continued)

Unquantifiable Remote Contingencies Contingent Assets: At 30 June 2020 Defence had 3 instances of unquantifiable remote contingent assets (2018-19: nil).

Contingent Liabilities: At 30 June 2020 Defence had 1,326 instances of unquantifiable remote contingent liabilities (2018-19: 1,377).

Accounting Policy Contingent liabilities and contingent assets are not recognised in the statement of financial position but are disclosed in the relevant notes. They may arise from uncertainty as to the existence of a liability or asset, or represent an existing liability or asset in respect of which settlement is not probable or the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain, and contingent liabilities are disclosed when settlement is greater than remote.

63

237 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

7.2: Financial Instruments

Notes 2020 2019

$'000 $'000

7.2A: Categories of financial instruments Financial assets at amortised cost Cash and cash equivalents 3.1A 427,418 286,961

Loans and receivables: Trade and other receivables 641,478 343,261

Total financial assets at amortised cost 1,068,896 630,222

Carrying amount of financial assets 1,068,896 630,222

Financial Liabilities Financial liabilities measured at amortised cost: Suppliers 3.3A 2,719,992 2,511,261

Other payables 341,512 354,879

Leases 3.4A 2,884,524 1,485,329

Total financial liabilities measured at amortised cost 5,946,028 4,351,469

Carrying amount of financial liabilities 5,946,028 4,351,469

As Defence is a government appropriated entity, its total financial assets are primarily funded through appropriations which are utilised to meet the department's liabilities as and when they fall due. The department's liabilities are considered as part of the yearly appropriation process. As the department will continue to be funded on an appropriation basis, this will enable the department to meet its liabilities as and when they fall due. Consequently, no liquidity issues are present as at 30 June 2020.

Accounting Policy Financial Assets Defence classifies its financial assets in the following categories:

a) financial assets at fair value through profit or loss; b) financial assets at fair value through other comprehensive income; and c) financial assets measured at amortised cost.

The classification depends on both Defence's business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when Defence becomes a party to the contract and, as a consequence, has a legal right to receive or a legal obligation to pay cash and derecognised when the contractual rights to the cash flows from the financial asset expire or are transferred upon trade date.

(a) Financial Assets at Amortised Cost Financial assets included in this category need to meet two criteria:

1. the financial asset is held in order to collect the contractual cash flows; and 2. the cash flows are solely payments of principal and interest on the principal outstanding amount.

Amortised cost is determined using the effective interest method.

(b) Effective Interest Method The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Income is recognised on an effective interest rate basis except for financial assets that are recognised at fair value through profit or loss.

(c) Impairment of Financial Assets Financial assets are assessed for impairment at the end of each reporting period based on Expected Credit Losses, using the general approach which measures the loss allowance based on an amount equal to lifetime expected credit losses where risk has significantly increased, or an amount equal to 12‐month expected credit losses if risk has not increased.

Financial assets held at amortised cost - if there is objective evidence that an impairment loss has been incurred for loans and receivables or held to maturity investments held at amortised cost, the amount of loss is measured using the simplified approach of the expected credit loss model at an amount equal to lifetime expected credit losses. The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income.

64

238 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

7.2: Financial Instruments (continued)

Accounting Policy (continued)

Financial Liabilities Financial liabilities are classified as either financial liabilities 'at fair value through profit or loss' or other financial liabilities. Financial liabilities are recognised and derecognised upon trade date.

(a) Financial Liabilities at Fair Value Through Profit or Loss Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

(b) Financial Liabilities at Amortised Cost Financial liabilities at amortised cost, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis.

Defence's supplier and other payables are generally payable within the short term and are recognised at the amount of cash or cash equivalents required to settle the liability. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

Financial Risk Management Under relevant legislation and Australian Government policy, Defence is restricted from entering into borrowings, some investments and entering into derivative transactions to offset risk exposure. As such, Defence’s exposure to risk is primarily related to credit risk on trade receivables and foreign currency risk in relation to payments to overseas suppliers of goods and services received. However, this exposure is minimal in terms of the operations of Defence as Defence is subject to a no win/no loss funding arrangement for foreign exchange gains and losses.

Defence is also exposed to some contract price escalation risk. This risk exposure is due to the difference in the basis on which Defence is funded for price escalations from government to the price escalation clauses embedded within the contracts. The risk of increased cost is managed by Defence to ensure exposure to the Australian Government is minimised.

Derecognition of Financial Assets and Liabilities Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire or the assets with the associated risks and rewards are transferred to another entity. Financial liabilities are derecognised when the obligation under the contract is discharged, cancelled or has expired.

2020 2019

$'000 $'000

7.2B: Net gains or losses on financial assets Financial assets at amortised cost Exchange gain 994 3,083

Impairment reversal/(loss) 2,963 (2,103)

Net gain on financial assets at amortised cost 3,957 980

Net gain on financial assets 3,957 980

The net interest income from financial assets not at fair value through net cost of services is nil (2018-19: nil).

7.2C: Net gains or losses on financial liabilities Financial liabilities measured at amortised cost Exchange (loss) (44,915) (39,748)

Interest expense (115,742) (101,633)

Net (loss) on financial liabilities measured at amortised cost (160,657) (141,381)

Net (loss) on financial liabilities (160,657) (141,381)

The net interest expense from financial liabilities not at fair value through net cost of services is nil (2018-19: nil).

65

239 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

7.3: Administered - Financial Instruments

Details of the significant accounting policies and methods adopted, including the criteria for recognition and the basis for measurement in respect of each class of financial asset and financial liability are disclosed in Note 7.2A Financial Instruments.

Notes 2020 2019

$'000 $'000

7.3A: Categories of financial instruments Financial assets at amortised cost Cash and cash equivalents 4.1A 114,576

Loans and receivables: Trade and other receivables 4.1B 547,912

Total financial assets at amortised cost 662,488

Financial assets at fair value through other comprehensive income (investments in equity instruments) Investment - Defence Housing Australia 4.1C 2,809,339

Investment - Small Portfolio bodies 4.1C 79,686

Total financial assets at fair value through other comprehensive income (investments in equity instruments) 2,889,025

Carrying amount of financial assets 3,551,513

Financial Liabilities Financial liabilities measured at amortised cost: Other payables 4.3A 7,052

Special accounts 4.3A 114,576

Total financial liabilities measured at amortised cost 121,628

Carrying amount of financial liabilities 121,628

7.3B: Net gains or losses on financial assets Financial assets at amortised cost Interest revenue 2.2B 24,506

Impairment (2)

Exchange gains/(loss) 2.2F 300

Net gains on financial assets at amortised cost 24,804

Investments in equity instruments at fair value through other comprehensive income (designated) Dividend revenue 4.1B 24,545

Net gains on investments in equity instruments at fair value through other comprehensive income (designated) 24,545

Net gain on financial assets 49,349

The net interest income from financial assets not at fair value through net cost of service is nil (2018-19: nil).

7.3C: Net gains or losses on financial liabilities

There was no net gain/(loss) from financial liabilities.

146,014

103

154,574

25,604

25,604

46,516

20,912

-

146,014

570,992

8,560

154,574

20,809

717,006

2,630,545 80,959

2,711,504 3,428,510

66

240 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

7.4: Fair Value Measurements

The following disclosures provide an analysis of assets and liabilities that are measured at fair value. The remaining assets and liabilities disclosed in the statement of financial position do not apply to the fair value hierarchy.

The different levels of the fair value are detailed below:  Level 1: Quote prices (unadjusted) in the active market for identical assets or liabilities that the entity can access at

measurement date.

 Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or

indirectly.

 Level 3: Unobservable inputs for an asset or liability.

Accounting Policy In estimating the fair value of an asset or a liability, Defence uses market-observable data to the extent it is available. For level 2 and 3 inputs, Defence engages third party qualified valuers and internal experts to establish the appropriate valuation techniques and inputs to the models to ensure the valuations are in line with AASB 13.

The Asset Accounting branch reviews all reports received from third party valuers and internal experts to ensure unobservable inputs used align with Defence's own assumptions and understanding of the market. This review includes investigation of significant fluctuations in the fair value of the assets and liabilities and that the report includes sufficient information to ensure compliance with AASB 13.

Defence deems transfers between levels of fair value hierarchy to have occurred when there has been a change to the inputs to the fair value measurement (for instance from observable to unobservable and vice versa) and the significance that the changed input has in determining the fair value measurement.

2020 2019

$'000 $'000

7.4A: Fair Value Measurements Non-financial assets - Recurring fair value Land 3.2A 5,543,999 5,909,374

Buildings 3.2A 14,421,135 13,563,472

Specialist military equipment 3.2A 71,753,855 66,547,789

Infrastructure 3.2A 6,452,925 6,343,885

Plant and equipment 3.2A 1,770,450 1,336,330

Heritage and cultural 3.2A 474,107 474,037

Assets held for sale2 3.2D 215,822 151,376

Total Non-financial assets - Recurring fair value 100,632,293 94,326,263

Assets not measured at fair value in the statement of financial position1 Financial assets Cash and cash equivalents 3.1A 427,418 286,961

Trade and other receivables 3.1B 1,120,443 849,635

Non-financial assets Inventories 3.2B 7,369,485 7,036,627

Intangibles 3.2A 899,284 870,782

Prepayments 3.2C 1,825,942 2,497,354

Total assets not measured at fair value in the statement of financial position 11,642,572 11,541,359

1

These items carrying amounts equate to their approximate fair values. 2 Assets held for sale are measured at fair value in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations

Fair value measurements at the end of the reporting period

67

241 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

2020 2019

$'000 $'000

7.4: Fair Value Measurements (continued) Liabilities not measured at fair value in the statement of financial position1 Payables Suppliers 3.3A 2,719,992 2,511,261

Other payables and personal benefits 3.3B, 3.3C 704,903 657,531

Interest bearing liabilities Finance lease payables 3.4A 2,884,524 1,485,329

Provisions Employee provisions 3.5A 3,412,595 3,041,254

Restoration, decontamination and decommissioning 3.5B 1,414,034 1,303,571

Other provisions 3.5C 332,561 432,341

Total liabilities not measured at fair value in the statement of financial position 11,468,609 9,431,287

1

These items carrying amounts equate to their approximate fair values.

68

242 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

7.5: Administered - Fair Value Measurements

Accounting Policy The following tables provide an analysis of the assets and liabilities that are measured at fair value. The remaining assets and liabilities disclosed in the statement of financial position do not apply the fair value hierarchy.

The different levels of the fair value are detailed below:  Level 1: Quote prices (unadjusted) in the active market for identical assets or liabilities that the entity can access at

measurement date.

 Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly

or indirectly.

 Level 3: Unobservable inputs for an asset or liability.

Administered investments are valued using the net assets valuation approach.

2020 2019

$'000 $'000

7.5A: Administered Fair value measurements Financial assets Administered Investment 4.1C 2,711,504 2,889,025

Total Financial Assets 2,711,504 2,889,025

Assets not measured at fair value in the statement of financial position1 Cash and cash equivalents 4.1A 146,014 114,576

Trade and other receivables 4.1B 570,992 547,912

Prepayments 4.2A 250,157 249,655

Total assets not measured at fair value in the statement of financial position 967,163 912,143

Liabilities not measured at fair value in the statement of financial position1 Other payables 4.3A 154,574 121,628

Employee provisions 4.4A 188,151,200 182,018,200

Total liabilities not measured at fair value in the statement of financial position 188,305,774 182,139,828

1 These items carrying amounts equate to their approximate fair values.

Fair value measurements at the end of the reporting period

69

243 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

OTHER INFORMATION

8.1: Assets Held in Trust

2020 2019

$'000 $'000

Young Endeavour Youth Program Public Fund (Trust) As at 30 June 2020, monetary assets held in trust were also disclosed in Note 5.2 Special Accounts in the table titled "Defence Endowments, Bequests and Other Trust Moneys Special Account".

As at 30 June 2019, monetary assets held in trust were also disclosed in Note 5.1A Appropriations. This is due to these amounts being credited to Departmental appropriations as a result of the sunsetting of the Young Endeavour Youth Program Special Account on 1 April 2019.

Purpose of trust arrangement: To create a capital fund for the purpose of furthering youth development initiatives to make specific acquisitions and to support the Young Endeavour Youth Scheme through sail training for young Australians.

The fund is listed as a deductible gift recipient.

Total amount held at the beginning of the reporting period 1,523 1,495

Other receipts 42 34

Total credits 1,565 1,529

Payment made to suppliers (2) (6)

Total debits (2) (6)

Total amount held at the end of the reporting period 1,563 1,523

Peter Mitchell Trust Fund (Trust) As at 30 June 2020, monetary assets held in trust were also disclosed in Note 5.2 Special Accounts in the table titled "Defence Endowments, Bequests and Other Trust Moneys Special Account".

As at 30 June 2019, monetary assets held in trust were also disclosed in Note 5.2 Special Accounts in the table titled "Services for Other Entities and Trust Monies".

Purpose of trust arrangement: To disburse amounts held on trust or otherwise for the benefit of a person other than the Commonwealth.

Total amount held at the beginning of the reporting period 1 6

Other receipts 9 3

Total credits 10 9

Payment made to suppliers (7) (8)

Total debits (7) (8)

Total amount held at the end of the reporting period 3 1

Fedorczenko Legacy Fund Special Account (Trust) As at 30 June 2020, monetary assets held in trust were also disclosed in Note 5.2 Special Accounts in the table titled "Defence Endowments, Bequests and Other Trust Moneys Special Account".

As at 30 June 2019, monetary assets held in trust were also disclosed in Note 5.2 Special Accounts in the table titled "Fedorczenko Legacy Special Account".

Purpose of trust arrangement: For expenditure in relation to the defence of Australia of the residual of the estate of the late Petro Fedorczenko.

Total amount held at the beginning of the reporting period 167 164

Other receipts 2 3

Total credits 169 167

Payment made to suppliers (4) -

Total debits (4) -

Total amount held at the end of the reporting period 165 167

70

244 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

In July 2017, the Government agreed with the recommendations of the Independent Intelligence Review, that the Australian Signals Directorate (ASD) become a separate statutory agency from the Department of Defence. Following the passage of the enabling legislation through the Parliament on 28 March 2018, the change to ASD's status to become a statutory agency occurred on 1 July 2018.

Functions Relinquished Gaining entity

Collect foreign signals intelligence ASD

Communicate foreign signals intelligence ASD

Support military operations ASD

Cooperate with and assist the national security community's performance of its functions ASD

8.2A Departmental Restructuring

2020 2019

FUNCTIONS RELINQUISHED $'000

ASD $'000

Assets Relinquished Trade and other receivables - 296

Land and buildings - 61

Infrastructure - 1,586

Plant and equipment - 199,886

Heritage and cultural assets - 244

Intangibles - 30,352

Prepayments - 30,586

Total assets relinquished - 263,011

Liabilities Relinquished Employee provisions - 60,803

Total liabilities relinquished - 60,803

Net assets relinquished - 202,208

8.2 Restructuring

71

245 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

8.3: Aggregate Assets and Liabilities

8.3A: Aggregate Assets and Liabilities

2020 2019

$'000 $'000

Assets expected to be recovered in No more than 12 months 4,322,696 4,590,152

More than 12 months 107,952,169 101,277,470

Total assets 112,274,865 105,867,622

Liabilities expected to be settled in No more than 12 months 4,943,300 4,945,101

More than 12 months 6,525,309 4,486,186

Total liabilities 11,468,609 9,431,287

8.3B: Administered - Aggregate Assets and Liabilities

Assets expected to be recovered in No more than 12 months 352,564 311,517

More than 12 months 3,326,103 3,489,651

Total assets 3,678,667 3,801,168

Liabilities expected to be settled in No more than 12 months 2,891,574 2,679,628

More than 12 months 185,414,200 179,460,200

Total liabilities 188,305,774 182,139,828

72

246 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

8.4A Restatement of Prior Period Errors

In the 2019-20 financial period, Defence has identified a number of errors relating to balances reported in prior financial periods resulting in the restatement of comparatives within the 2019-20 financial statements. The impact of the restatement was to:

i. reduce the reported 2018-19 surplus by $242.9 million (restated 2018-19 surplus of $115.2 million); ii. reduce the reported 2018-19 net asset value by $210.2 million (restated 2018-19 net assets of $96,436.3 million); and iii. reduce the reported opening retained surpluses of 2018-19 by $32.7 million.

2018-19

Original Balance

2018-19

Restated Balance

Increase/ (Decrease)

STATEMENT OF COMPREHENSIVE INCOME $'000 $'000 $'000

Expenses Write-down and impairment of assets1 860,259 1,250,969 390,710

Own-Source Income Revenue from contracts with customers2 539,654 310,483 (229,171)

Rental Income2 6,544 235,715 229,171

Gains Reversals of previous asset write-downs and impairment1 368,665 516,483 147,818

Surplus attributable to the Australian Government 358,059 115,167 (242,892)

STATEMENT OF FINANCIAL POSITION Financial assets Cash and cash equivalents3 76,179 286,961 210,782

Non-financial assets Land and buildings1 19,454,331 19,472,846 18,515

Specialist military equipment1 66,559,643 66,547,789 (11,854)

Infrastructure1 6,342,088 6,343,885 1,797

Plant and equipment1 1,393,661 1,336,330 (57,331)

Heritage and cultural assets 1

473,307 474,037 730

Intangibles1 890,442 870,782 (19,660)

Inventories1 7,178,986 7,036,627 (142,359)

Payables Other payables3 359,627 570,409 210,782

NET ASSETS 96,646,497 96,436,335 (210,162)

Equity Retained surpluses1 36,987,405 36,777,243 (210,162)

CASH FLOW STATEMENT Cash received Other3 66,418 395,692 329,274

Cash used Other3 (71,554) (228,872) (157,318)

Net increase/(decrease) in cash held 1,315 173,271 171,956

Increases/(decreases) to balances are reflected as positive/(negative) amounts above, irrespective of the nature of the balance.

8.4: Restatement of Prior Period Errors

73

247 APPENDIX A: FINANCIAL STATEMENTS

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

8.4A Restatement of Prior Period Errors (continued)

Notes:

1. In the 2019-20 financial period, asset review activities have identified significant write-downs and impairment of assets that should have been recorded in prior financial periods:

a) $390.7 million of write-down and impairment of asset expenses have been restated in 2018-19 comparatives, relating to land and buildings, specialist military equipment, infrastructure, plant and equipment, intangibles and general inventories. These were identified through asset remediation activities undertaken in 2019-20, representing only 0.4% of the 2018-19 closing balance of non-financial assets.

b) $147.8 million of reversals of previous asset write-downs have been restated in 2018-19 comparatives, relating to land and buildings, specialist military equipment, infrastructure, and plant and equipment. These were identified through asset remediation activities undertaken in 2019-20, representing only 0.1% of the 2018-19 closing balance of non-financial assets.

c) A net impact of $32.7 million of write-downs and impairment of asset expenses, and reversals of previous asset write-downs relating to financial periods prior to 2018-19, have been restated in 2018-19 comparatives for retained surpluses. This restatement relates to the cumulative impact of restatements to land and buildings, specialist military equipment, infrastructure, plant and equipment, heritage and cultural assets, intangibles and inventories relating to financial periods prior to 2018-19.

2. Group rental scheme income which represent contributions made by Defence service members for residences sub-leased by Defence were classified as revenue from customer contracts in 2018-19. In the current financial period, upon further guidance and review by Defence, it has been determined that this represents rental income and has subsequently been reclassified. Given the size of the reclassification, prior period comparatives have been restated to reflect this change ($205.3 million), however there is no change to the 2018-19 or 2019-20 reported surplus.

Additionally, $23.9 million of revenue recorded in the prior period has been reclassified from rendering of services to Other rental income. This relates to amounts received from ASD specifically in relation to ASD's ongoing use of buildings owned by Defence that was previously recorded as revenue from contracts with customers. This has no impact on the 2018-19 or 2019-20 reported surplus.

3. Defence has entered into a number of arrangements to perform activities on behalf of foreign governments under which funding is received in advance of expenditure being incurred. In 2018-19, funding received was reported as assets held in relation to activities performed on behalf of foreign governments, and subsequently not reported within Defence's statement of financial position. In 2019-20, it has been determined the funding received represents both cash and cash equivalents of Defence, in addition to amounts payable, as the funding received is only to be utilised for specific purposes. The restatement of comparatives in the current period ($210.8 million) also includes a restatement of comparatives within the cash flow statement to recognise additional other cash received, other cash used and opening cash ($38.8 million) to reflect the cash flows associated with the restated cash balance.

Refer to Note 8.4B for the quantum of the adjustment for each financial statement line item impacted.

8.4A: Restatement of Prior Period Errors (continued)

74

248 DEFENCE ANNUAL REPORT 2019-20

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the period ended 30 June 2020

8.4: Restatement of Prior Period Errors (continued)

8.4B: Reconciliation of Adjustments (Adj) to 2018-19 Financial Statements

Adj 1a Adj 1b Adj 1c Adj 2 Adj 3

Total

Adjustments

$'000s $'000s $'000s $'000s $'000s $'000s

STATEMENT OF COMPREHENSIVE INCOME Expenses Write-down and impairment of assets 390,710 - - - - 390,710

Own-Source Income Revenue from contracts with customers - - - (229,171) - (229,171)

Rental Income - - - 229,171 - 229,171

Gains Reversals of previous asset write-downs and impairment - 147,818 - - - 147,818

Increase/(Decrease) in surplus attributable to the Australian Government (390,710) 147,818 - - - (242,892)

STATEMENT OF FINANCIAL POSITION Financial assets Cash and cash equivalents - - - - 210,782 210,782

Non-financial assets Land and buildings (8,952) 4,354 23,113 - - 18,515

Specialist military equipment (282,946) 127,573 143,519 - - (11,854)

Infrastructure (6,924) 11,925 (3,204) - - 1,797

Plant and equipment (11,010) 3,966 (50,287) - - (57,331)

Heritage and cultural assets - - 730 - - 730

Intangibles (15,488) - (4,172) - - (19,660)

Inventories (65,390) - (76,969) - - (142,359)

Payables Other payables - - - - 210,782 210,782

NET ASSETS (390,710) 147,818 32,730 - - (210,162)

Equity Retained surpluses (390,710) 147,818 32,730 - - (210,162)

CASH FLOW STATEMENT Cash received Other - - - - 329,274 329,274

Cash used Other - - - - (157,318) (157,318)

Net increase/(decrease) in cash held - - - - 171,956 171,956

Increases/(decreases) to balances are reflected as positive/(negative) amounts above, irrespective of the nature of the balance.

75

249 APPENDIX B: ADDITIONAL WORKFORCE TABLES

Appendix B: Additional workforce tables Table B.1: All ongoing APS employees by location, 2019-20

Male Female Indeterminate Total

Full time Part

time

Total male

Full time Part

time

Total female

Full time

Part time

Total

indeterminate

NSW 1,336 20 1,356 955 162 1,117 - - - 2,473

Qld 622 12 634 523 73 596 - - - 1,230

SA 1,451 35 1,486 480 73 553 - 1 1 2,040

Tas 31 2 33 31 5 36 - - - 69

Vic1 2,017 47 2,064 1,087 167 1,254 1 - 1 3,319

WA 262 1 263 163 25 188 - - - 451

ACT2 3,257 79 3,336 3,390 454 3,844 2 - 2 7,182

NT 87 2 89 111 4 115 - - - 204

External Territories

- - - - - - - - - -

Overseas 82 1 83 50 1 51 - - - 134

Total 9,145 199 9,344 6,790 964 7,754 3 1 4 17,102

Notes: Figures in this table show headcount, based on actual location. Figures include paid and unpaid employees. Part-time employees are those with weekly hours less than the standard hours. It does not relate to employees in part-time positions.

1. Victorian figures include individuals located in Albury NSW.

2. Australian Capital Territory figures include individuals located in Jervis Bay (Commonwealth), Queanbeyan (NSW) and Bungendore (NSW).

Table B.2: All ongoing APS employees by location, 2018-19

Male Female Indeterminate Total

Full time Part

time

Total male

Full time Part

time

Total female

Full time

Part time

Total

indeterminate

NSW 1,347 26 1,373 930 174 1,104 - - - 2,477

Qld 615 14 629 530 65 595 - - - 1,224

SA 1,420 38 1,458 454 78 532 - 1 1 1,991

Tas 28 2 30 32 7 39 - - - 69

Vic1 2,067 48 2,115 1,074 173 1,247 1 - 1 3,363

WA 271 1 272 160 27 187 - - - 459

ACT2 3,136 75 3,211 3,091 437 3,528 1 - 1 6,740

NT 98 2 100 105 4 109 - - - 209

External

Territories

- - - - - - - - - -

Overseas 93 1 94 45 - 45 - - - 139

Total 9,075 207 9,282 6,421 965 7,386 2 1 3 16,671

Notes: Figures in this table show substantive headcount numbers. Figures include paid and unpaid employees. Part-time employees are those with weekly hours less than the standard hours. It does not relate to employees in part-time positions. Some figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

1. Victorian figures include individuals located in Albury NSW.

2. Australian Capital Territory figures include individuals located in Jervis Bay (Commonwealth), Queanbeyan (NSW) and Bungendore (NSW).

250 DEFENCE ANNUAL REPORT 2019-20

Table B.3: All non-ongoing APS employees by location, 2019-20

Male Female Indeterminate Total

Full time

Part time

Total male

Full time Part time Total female

Full time

Part time Total

indeterminate

NSW 10 2 12 15 2 17 - - - 29

Qld 6 - 6 9 - 9 - - - 15

SA 16 17 33 10 3 13 - - - 46

Tas 1 - 1 5 - 5 - - - 6

Vic1 71 3 74 58 - 58 - - - 132

WA 2 - 2 3 - 3 - - - 5

ACT2 52 1 53 51 12 63 - - - 116

NT - - - 2 - 2 - - - 2

External Territories

- - - - - - - - - -

Overseas 1 - 1 - - - - - - 1

Total 159 23 182 153 17 170 - - - 352

Notes: Figures in this table show headcount, based on actual location. Figures include paid and unpaid employees. Part-time employees are those with weekly hours less than the standard hours. It does not relate to employees in part-time positions.

1. Victorian figures include individuals located in Albury NSW.

2. Australian Capital Territory figures include individuals located in Jervis Bay (Commonwealth), Queanbeyan (NSW) and Bungendore (NSW).

Table B.4: All non-ongoing APS employees by location, 2018-19

Male Female Indeterminate Total

Full time

Part time

Total male

Full time Part time Total female

Full time

Part time Total

indeterminate

NSW 5 1 6 4 - 4 - - - 10

Qld 5 - 5 3 1 4 - - - 9

SA 21 10 31 5 3 8 - - - 39

Tas - - - - - - - - - -

Vic1 37 - 37 39 - 39 - - - 76

WA 1 - 1 1 - 1 - - - 2

ACT2 34 1 35 32 11 43 1 - 1 79

NT - - - 1 - 1 - - - 1

External

Territories

- - - - - - - - - 0

Overseas 1 - 1 - - - - - - 1

Total 104 12 116 85 15 100 1 - 1 217

Notes: Figures in this table show substantive headcount numbers. Figures include paid and unpaid employees. Part-time employees are those with weekly hours less than the standard hours. It does not relate to employees in part-time positions. Some figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

1. Victorian figures include individuals located in Albury NSW.

2. Australian Capital Territory figures include individuals located in Jervis Bay (Commonwealth), Queanbeyan (NSW) and Bungendore (NSW).

251 APPENDIX B: ADDITIONAL WORKFORCE TABLES

Table B.5: Australian Public Service Act ongoing employees, 2019-20

Male Female Indeterminate Total

Full time

Part time

Total male

Full time Part time Total female

Full time

Part time Total

indeterminate

Secretary 1 - 1 - - - - - - 1

SES 3  5 - 5 3 - 3 - - - 8

SES 2  29 - 29 12 - 12 - - - 41

SES 1 47 1 48 50 - 50 - - - 98

EL 2 1,120 21 1,141 461 26 487 - - - 1,628

EL 1 2,161 40 2,201 1,217 161 1,378 1 1 2 3,581

APS 6 2,825 58 2,883 1,845 328 2,173 - - - 5,056

APS 5 1,464 29 1,493 1,244 140 1,384 - - - 2,877

APS 4 654 18 672 878 121 999 - - - 1,671

APS 3 414 15 429 694 135 829 - - - 1,258

APS 2 328 8 336 307 43 350 2 - 2 688

APS 1 97 9 106 79 10 89 - - - 195

Other - - - - - - - - - -

Total 9,145 199 9,344 6,790 964 7,754 3 1 4 17,102

Note: Figures in this table show substantive headcount numbers. Figures include paid and unpaid employees. Part-time employees are those with weekly hours less than the standard hours. It does not relate to employees in part-time positions.

Table B.6: Australian Public Service Act ongoing employees, 2018-19

Male Female Indeterminate Total

Full time

Part time

Total male

Full time Part time Total female

Full time

Part time Total

indeterminate

Secretary 1 - 1 - - - - - - 1

SES 3  5 - 5 3 - 3 - - - 8

SES 2  27 - 27 10 - 10 - - - 37

SES 1 49 1 50 40 - 40 - - - 90

EL 2 1,109 14 1,123 420 25 445 - - - 1,568

EL 1 2,115 33 2,148 1,073 158 1,231 - 1 1 3,380

APS 6 2,735 80 2,815 1,702 312 2,014 1 - 1 4,830

APS 5 1,476 29 1,505 1,166 141 1,307 - - - 2,812

APS 4 716 15 731 852 129 981 - - - 1,712

APS 3 413 16 429 719 149 868 - - - 1,297

APS 2 337 11 348 365 40 405 1 - 1 754

APS 1 92 8 100 71 11 82 - - - 182

Other - - - - - - - - - -

Total 9,075 207 9,282 6,421 965 7,386 2 1 3 16,671

Note: Figures in this table show substantive headcount numbers. Figures include paid and unpaid employees. Part-time employees are those with weekly hours less than the standard hours. It does not relate to employees in part-time positions. Some figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

252 DEFENCE ANNUAL REPORT 2019-20

Table B.7: Australian Public Service Act non-ongoing employees, 2019-20

Male Female Indeterminate Total

Full time

Part time

Total male

Full time

Part time

Total female

Full time

Part time

Total

indeterminate

Secretary  - - - - - - - - - -

SES 3  2 - 2 - - - - - - 2

SES 2  2 - 2 - - - - - - 2

SES 1 2 - 2 - - - - - - 2

EL 2 7 14 21 5 1 6 - - - 27

EL 1 14 3 17 6 3 9 - - - 26

APS 6 25 4 29 20 5 25 - - - 54

APS 5 13 1 14 24 4 28 - - - 42

APS 4 9 - 9 25 3 28 - - - 37

APS 3 19 1 20 26 - 26 - - - 46

APS 2 22 - 22 23 1 24 - - - 46

APS 1 44 - 44 24 - 24 - - - 68

Other - - - - - - - - - -

Total 159 23 182 153 17 170 - - - 352

Notes: Figures in this table show substantive headcount numbers. Figures include paid and unpaid employees. Part-time employees are those with weekly hours less than the standard hours. It does not relate to employees in part-time positions.

Table B.8: Australian Public Service Act non-ongoing employees, 2018-19

Male Female Indeterminate Total

Full time

Part time

Total male

Full time

Part time

Total female

Full time

Part time

Total

indeterminate

Secretary  - - - - - - - - - -

SES 3  1 - 1 - - - - - - 1

SES 2  2 - 2 - - - - - - 2

SES 1 1 - 1 - - - - - - 1

EL 2 6 7 13 2 - 2 - - - 15

EL 1 9 2 11 5 2 7 - - - 18

APS 6 24 1 25 15 2 17 1 - 1 43

APS 5 11 - 11 11 6 17 - - - 28

APS 4 10 1 11 19 4 23 - - - 34

APS 3 10 1 11 14 1 15 - - - 26

APS 2 16 - 16 11 - 11 - - - 27

APS 1 14 - 14 8 - 8 - - - 22

Other - - - - - - - - - -

Total 104 12 116 85 15 100 1 - 1 217

Note: Figures in this table show substantive headcount numbers. Figures include paid and unpaid employees. Part-time employees are those with weekly hours less than the standard hours. It does not relate to employees in part-time positions. Some figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

253 APPENDIX B: ADDITIONAL WORKFORCE TABLES

Table B.9: Australian Public Service Act employees by full-time and part-time status, 2019-20

Ongoing Non-ongoing Total

Full time

Part time

Total ongoing

Full time Part

time

Total

non-ongoing

Secretary 1 - 1 - - - 1

SES 3  8 - 8 2 - 2 10

SES 2  41 - 41 2 - 2 43

SES 1 97 1 98 2 - 2 100

EL 2 1,581 47 1,628 12 15 27 1,655

EL 1 3,379 202 3,581 20 6 26 3,607

APS 6 4,670 386 5,056 45 9 54 5,110

APS 5 2,708 169 2,877 37 5 42 2,919

APS 4 1,532 139 1,671 34 3 37 1,708

APS 3 1,108 150 1,258 45 1 46 1,304

APS 2 637 51 688 45 1 46 734

APS 1 176 19 195 68 - 68 263

Other - - - - - - -

Total 15,938 1,164 17,102 312 40 352 17,454

Notes: Figures in this table show substantive headcount numbers. Figures include paid and unpaid employees. Part-time employees are those with weekly hours less than the standard hours. It does not relate to employees in part-time positions.

Table B.10: Australian Public Service Act employees by full-time and part-time status, 2018-19

Ongoing Non-ongoing Total

Full time

Part time

Total ongoing

Full time Part

time

Total

non-ongoing

Secretary 1 - 1 - - - 1

SES 3  8 - 8 1 - 1 9

SES 2  37 - 37 2 - 2 39

SES 1 89 1 90 1 - 1 91

EL 2 1,529 39 1,568 8 7 15 1,583

EL 1 3,188 192 3,380 14 4 18 3,398

APS 6 4,438 392 4,830 40 3 43 4,873

APS 5 2,642 170 2,812 22 6 28 2,840

APS 4 1,568 144 1,712 29 5 34 1,746

APS 3 1,132 165 1,297 24 2 26 1,323

APS 2 703 51 754 27 - 27 781

APS 1 163 19 182 22 - 22 204

Other - - - - - - -

Total 15,498 1,173 16,671 190 27 217 16,888

Note: Figures in this table show substantive headcount numbers. Figures include paid and unpaid employees. Part-time employees are those with weekly hours less than the standard hours. It does not relate to employees in part-time positions. Some figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

254 DEFENCE ANNUAL REPORT 2019-20

Table B.11: Permanent ADF members by location, 2019-20

Male Female Indeterminate Total

Navy Army Air Force ADF Navy Army Air Force ADF Navy Army Air Force ADF Navy Army Air Force ADF

NSW 5,109 4,608 3,292 13,009 1,344 743 1,001 3,088 - - 1 1 6,453 5,351 4,294 16,098

Qld 604 10,433 2,547 13,584 206 1,910 833 2,949 - 1 - 1 810 12,344 3,380 16,534

SA 150 1,619 1,510 3,279 19 181 408 608 - - - - 169 1,800 1,918 3,887

Tas 17 40 6 63 4 12 4 20 - - - - 21 52 10 83

Vic

1

1,604 2,617 807 5,028 481 430 298 1,209 - - - - 2,085 3,047 1,105 6,237

WA 2,188 812 219 3,219 527 92 54 673 1 - - 1 2,716 904 273 3,893

ACT

2

1,339 2,429 1,538 5,306 583 595 680 1,858 1 1 2 4 1,923 3,025 2,220 7,168

NT 490 2,398 690 3,578 163 418 234 815 - - - - 653 2,816 924 4,393

Overseas

3

167 261 275 703 30 27 42 99 - - - - 197 288 317 802

Total 11,668 25,217 10,884 47,769 3,357 4,408 3,554 11,319 2 2 3 7 15,027 29,627 14,441 59,095

Notes: Figures in this table are headcount and are for permanent members (Service Categories 7 and 6) and do not include Reserves (Service Categories 5, 4, 3 and 2), Reserves undertaking continuous full-time service (Service Option C) or ADF Gap Year participants (Service Option G). Figures in this table are based on substantive location for the ADF.

1. Victorian figures include individuals located in Albury NSW.

2. Australian Capital Territory figures include individuals located in Jervis Bay (Commonwealth), Queanbeyan (NSW) and Bungendore (NSW).

3. Individuals posted overseas for reasons including long-term duty, training, exchange and liaison.

Table B.12: Permanent ADF members by location, 2018-19

Male Female Indeterminate Total

Navy Army Air Force ADF Navy Army Air Force ADF Navy Army Air Force ADF Navy Army Air Force ADF

NSW 4,964 4,439 3,303 12,706 1,280 709 958 2,947 - - 2 2 6,244 5,148 4,263 15,655

Qld 601 10,417 2,558 13,576 203 1,845 825 2,873 - - - - 804 12,262 3,383 16,449

SA 117 1,712 1,538 3,367 16 176 360 552 - - - - 133 1,888 1,898 3,919

Tas 19 48 8 75 3 8 3 14 - - - - 22 56 11 89

Vic

1

1,437 2,591 805 4,833 437 475 278 1,190 1 - - 1 1,875 3,066 1,083 6,024

WA 2,030 817 238 3,085 488 93 61 642 1 - - 1 2,519 910 299 3,728

ACT

2

1,312 2,381 1,510 5,203 516 569 649 1,734 1 1 1 3 1,829 2,951 2,160 6,940

NT 451 2,488 718 3,657 127 419 203 749 - - - - 578 2,907 921 4,406

Overseas

3

176 297 283 756 26 25 41 92 - - - - 202 322 324 848

Total 11,107 25,190 10,961 47,258 3,096 4,319 3,378 10,793 3 1 3 7 14,206 29,510 14,342 58,058

Notes: Figures in this table are headcount and are for permanent members (Service Categories 7 and 6) and do not include Reserves (Service Categories 5, 4, 3 and 2), Reserves undertaking continuous full-time service (Service Option C) or ADF Gap Year participants (Service Option G). Some 30 June 2019 figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions. Figures in this table are based on substantive location for the ADF.

1. Victorian figures include individuals located in Albury NSW.

2. Australian Capital Territory figures include individuals located in Jervis Bay (Commonwealth), Queanbeyan (NSW) and Bungendore (NSW).

3. Individuals posted overseas for reasons including long-term duty, training, exchange and liaison.

255 APPENDIX B: ADDITIONAL WORKFORCE TABLES

Table B.13: Reserve members by location, 2019-20

Male Female Indeterminate Total

Navy Army Air Force ADF Navy Army Air Force ADF Navy Army Air Force ADF Navy Army Air Force ADF

NSW 859 4,638 1,257 6,754 222 747 312 1,281 - - - - 1,081 5,385 1,569 8,035

Qld 375 4,147 1,088 5,610 100 818 316 1,234 - - - - 475 4,965 1,404 6,844

SA 78 1,363 537 1,978 26 288 122 436 - - - - 104 1,651 659 2,414

Tas 68 416 43 527 18 84 17 119 - - - - 86 500 60 646

Vic

1

232 3,010 351 3,593 71 479 72 622 - - - - 303 3,489 423 4,215

WA 261 1,702 169 2,132 68 290 45 403 - - - - 329 1,992 214 2,535

ACT

2

882 832 891 2,605 286 170 285 741 - - - - 1,168 1,002 1,176 3,346

NT 65 536 77 678 18 108 32 158 - - - - 83 644 109 836

Overseas

3

3 4 - 7 - - - - - - - - 3 4 - 7

Total 2,823 16,648 4,413 23,884 809 2,984 1,201 4,994 - - - - 3,632 19,632 5,614 28,878

Notes: Figures in this table are headcount. Reserves include all members who render Reserve service in Service Categories 5, 4 and 3, and Reserves undertaking continuous full-time service (Service Option C). Figures in this table are based on substantive location for the ADF. This does not include members in Service Category 2, who do not render service.

1. Victorian figures include individuals located in Albury NSW.

2. Australian Capital Territory figures include individuals located in Jervis Bay (Commonwealth), Queanbeyan (NSW) and Bungendore (NSW).

3. Individuals posted overseas for reasons including long-term duty, training, exchange and liaison.

Table B.14: Reserve members by location, 2018-19

Male Female Indeterminate Total

Navy Army Air Force ADF Navy Army Air Force ADF Navy Army Air Force ADF Navy Army Air Force ADF

NSW 792 4,537 1,054 6,383 219 717 255 1,191 - - - - 1,011 5,254 1,309 7,574

Qld 378 4,005 1,088 5,471 103 796 295 1,194 - 2 - 2 481 4,803 1,383 6,667

SA 77 1,238 429 1,744 22 259 102 383 - - - - 99 1,497 531 2,127

Tas 67 419 44 530 15 84 16 115 - - - - 82 503 60 645

Vic

1

218 2,855 337 3,410 68 447 60 575 - - - - 286 3,302 397 3,985

WA 217 1,606 173 1,996 60 260 45 365 - - - - 277 1,866 218 2,361

ACT

2

758 813 841 2,412 255 155 266 676 - - - - 1,013 968 1,107 3,088

NT 69 469 75 613 18 100 26 144 - - - - 87 569 101 757

Overseas

3

8 5 - 13 - - - - - - - - 8 5 - 13

Total 2,584 15,947 4,041 22,572 760 2,818 1,065 4,643 - 2 - 2 3,344 18,767 5,106 27,217

Notes: Figures in this table are headcount. Reserves include all members who render Reserve service in Service Categories 5, 4 and 3, and Reserves undertaking continuous full-time service (Service Option C). Some 30 June 2019 figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions. Figures in this table are based on substantive location for the ADF. This does not include members in Service Category 2, who do not render service.

1. Victorian figures include individuals located in Albury NSW.

2. Australian Capital Territory figures include individuals located in Jervis Bay (Commonwealth), Queanbeyan (NSW) and Bungendore (NSW).

3. Individuals posted overseas for reasons including long-term duty, training, exchange and liaison.

256 DEFENCE ANNUAL REPORT 2019-20

Table B.15: ADF permanent members, 2019-20

Male Female Indeterminate Total

Navy Army Air

Force

ADF Navy Army Air

Force

ADF Navy Army Air

Force

ADF Navy Army Air

Force

ADF

Officer

General (E) - 1 - 1 - - - - - - - - - 1 - 1

Lieutenant General (E) 3 3 2 8 - - - - - - - - 3 3 2 8

Major General (E) 8 18 8 34 2 4 1 7 - - - - 10 22 9 41

Brigadier (E) 38 51 32 121 6 9 6 21 - - - - 44 60 38 142

Colonel (E) 139 164 135 438 29 28 25 82 - - - - 168 192 160 520

Lieutenant Colonel (E) 403 607 434 1,444 102 107 105 314 1 - - 1 506 714 539 1,759

Major (E) 689 1,591 871 3,151 183 281 259 723 - - - - 872 1,872 1,130 3,874

Captain (E) 915 1,515 1,482 3,912 282 301 461 1,044 - - 1 1 1,197 1,816 1,944 4,957

Lieutenant (E) 290 834 513 1,637 90 293 214 597 - 1 - 1 380 1,128 727 2,235

2nd Lieutenant (E) 51 3 331 385 10 - 111 121 - - 1 1 61 3 443 507

Officer Cadet (E) 355 552 243 1,150 147 142 135 424 - - - - 502 694 378 1,574

Officer total 2,891 5,339 4,051 12,281 851 1,165 1,317 3,333 1 1 2 4 3,743 6,505 5,370 15,618

Other ranks

Regimental Sergeant Major (E) - 1 - 1 1 - 1 2 - - - - 1 1 1 3

Warrant Officer Class 1 (E) 227 611 476 1,314 25 71 72 168 - - - - 252 682 548 1,482

Warrant Officer Class 2 (E) 913 1,765 647 3,325 131 178 117 426 - - - - 1,044 1,943 764 3,751

Staff Sergeant (E) - 2 - 2 - - - - - - - - - 2 - 2

Sergeant (E) 1,295 2,148 1,278 4,721 272 272 263 807 - - - - 1,567 2,420 1,541 5,528

Corporal (E) 2,038 3,670 1,772 7,480 573 619 473 1,665 - 1 - 1 2,611 4,290 2,245 9,146

Lance Corporal (E) - 1,408 - 1,408 - 165 - 165 - - - - - 1,573 - 1,573

Private Proficient (E) 2,500 6,684 1,978 11,162 905 1,164 826 2,895 - - 1 1 3,405 7,848 2,805 14,058

Private (E) 600 1,663 267 2,530 268 371 254 893 1 - - 1 869 2,034 521 3,424

Private Trainee (E) 914 1,339 316 2,569 218 235 165 618 - - - - 1,132 1,574 481 3,187

Recruit (E) 290 587 99 976 113 168 66 347 - - - - 403 755 165 1,323

Other ranks total 8,777 19,878 6,833 35,488 2,506 3,243 2,237 7,986 1 1 1 3 11,284 23,122 9,071 43,477

Total ADF 11,668 25,217 10,884 47,769 3,357 4,408 3,554 11,319 2 2 3 7 15,027 29,627 14,441 59,095

Note: Figures in this table are headcount for permanent members (Service Categories 7 and 6) and do not include Reserves (Service Categories 5, 4, 3 and 2), Reserves undertaking continuous full-time service (Service Option C) or ADF Gap Year participants (Service Option G).

257 APPENDIX B: ADDITIONAL WORKFORCE TABLES

Table B.16: ADF permanent members, 2018-19

Male Female Indeterminate Total

Navy Army Air

Force

ADF Navy Army Air

Force

ADF Navy Army Air

Force

ADF Navy Army Air

Force

ADF

Officer

General (E) - 1 - 1 - - - - - - - - - 1 - 1

Lieutenant General (E) 2 3 3 8 - - - - - - - - 2 3 3 8

Major General (E) 10 15 8 33 1 3 2 6 - - - - 11 18 10 39

Brigadier (E) 33 51 33 117 5 7 4 16 - - - - 38 58 37 133

Colonel (E) 126 169 126 421 22 29 22 73 - - - - 148 198 148 494

Lieutenant Colonel (E) 372 594 432 1,398 77 100 103 280 - - - - 449 694 535 1,678

Major (E) 647 1,582 890 3,119 172 281 248 701 1 - - 1 820 1,863 1,138 3,821

Captain (E) 929 1,525 1,419 3,873 283 277 467 1,027 - - 1 1 1,212 1,802 1,887 4,901

Lieutenant (E) 251 828 512 1,591 69 289 192 550 - - - - 320 1,117 704 2,141

2nd Lieutenant (E) 45 7 307 359 8 1 103 112 - - - - 53 8 410 471

Officer Cadet (E) 307 562 245 1,114 126 140 127 393 - 1 1 2 433 703 373 1,509

Officer total 2,722 5,337 3,975 12,034 763 1,127 1,268 3,158 1 1 2 4 3,486 6,465 5,245 15,196

Other ranks

Regimental Sergeant Major (E) 1 1 1 3 - - - - - - - - 1 1 1 3

Warrant Officer Class 1 (E) 214 593 495 1,302 20 71 77 168 - - - - 234 664 572 1,470

Warrant Officer Class 2 (E) 874 1,747 646 3,267 113 173 111 397 - - - - 987 1,920 757 3,664

Staff Sergeant (E) - 2 - 2 - - - - - - - - - 2 - 2

Sergeant (E) 1,206 2,128 1,317 4,651 242 267 268 777 - - - - 1,448 2,395 1,585 5,428

Corporal (E) 1,893 3,686 1,800 7,379 519 600 463 1,582 1 - - 1 2,413 4,286 2,263 8,962

Lance Corporal (E) - 1,343 - 1,343 - 147 - 147 - - - - - 1,490 - 1,490

Private Proficient (E) 2,709 7,178 2,161 12,048 894 1,037 693 2,624 - - 1 1 3,603 8,215 2,855 14,673

Private (E) 616 1,456 289 2,361 273 453 254 980 - - - - 889 1,909 543 3,341

Private Trainee (E) 658 1,270 188 2,116 208 297 186 691 1 - - 1 867 1,567 374 2,808

Recruit (E) 214 449 89 752 64 147 58 269 - - - - 278 596 147 1,021

Other ranks total 8,385 19,853 6,986 35,224 2,333 3,192 2,110 7,635 2 - 1 3 10,720 23,045 9,097 42,862

Total ADF 11,107 25,190 10,961 47,258 3,096 4,319 3,378 10,793 3 1 3 7 14,206 29,510 14,342 58,058

Notes: Figures in this table are headcount for permanent members (Service Categories 7 and 6) and do not include Reserves (Service Categories 5, 4, 3 and 2), Reserves undertaking continuous full-time service (Service Option C) or ADF Gap Year participants (Service Option G). Some 30 June 2019 figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

258 DEFENCE ANNUAL REPORT 2019-20

Table B.17: ADF Reserve members, 2019-20

Male Female Indeterminate Total

Navy Army Air

Force

ADF Navy Army Air

Force

ADF Navy Army Air

Force

ADF Navy Army Air

Force

ADF

Officer

General (E) - - 1 1 - - - - - - - - - - 1 1

Lieutenant General (E) 4 2 3 9 - - - - - - - - 4 2 3 9

Major General (E) 19 16 25 60 2 2 2 6 - - - - 21 18 27 66

Brigadier (E) 51 80 69 200 4 8 7 19 - - - - 55 88 76 219

Colonel (E) 114 240 171 525 6 28 23 57 - - - - 120 268 194 582

Lieutenant Colonel (E) 280 499 327 1,106 41 70 61 172 - - - - 321 569 388 1,278

Major (E) 381 1,128 643 2,152 90 199 151 440 - - - - 471 1,327 794 2,592

Captain (E) 393 1,012 615 2,020 131 237 235 603 - - - - 524 1,249 850 2,623

Lieutenant (E) 6 425 30 461 8 178 27 213 - - - - 14 603 57 674

2nd Lieutenant (E) - 1 - 1 - - 1 1 - - - - - 1 1 2

Officer Cadet (E) - 414 - 414 - 88 88 - - - - - 502 - 502

Officer total 1,248 3,817 1,884 6,949 282 810 507 1,599 - - - - 1,530 4,627 2,391 8,548

Other ranks

Regimental Sergeant Major (E) - - - - - - - - - - - - - - - -

Warrant Officer Class 1 (E) 120 446 366 932 5 65 36 106 - - - - 125 511 402 1,038

Warrant Officer Class 2 (E) 327 639 254 1,220 49 75 53 177 - - - - 376 714 307 1,397

Staff Sergeant (E) - 13 - 13 - 1 1 - - - - - 14 - 14

Sergeant (E) 279 1,012 411 1,702 110 197 144 451 - - - - 389 1,209 555 2,153

Corporal (E) 445 1,945 669 3,059 195 372 208 775 - - - - 640 2,317 877 3,834

Lance Corporal (E) - 1,075 - 1,075 - 108 108 - - - - - 1,183 - 1,183

Private Proficient (E) 396 3,829 673 4,898 162 620 201 983 - - - - 558 4,449 874 5,881

Private (E) 5 2,159 101 2,265 5 391 32 428 - - - - 10 2,550 133 2,693

Private Trainee (E) 1 837 41 879 1 180 15 196 - - - - 2 1,017 56 1,075

Recruit (E) 2 876

14 892 - 165 5 170 - - - - 2 1,041 19 1,062

Other ranks total 1,575 12,831 2,529 16,935 527 2,174 694 3,395 - - - - 2,102 15,005 3,223 20,330

Total ADF 2,823 16,648 4,413 23,884 809 2,984 1,201 4,994 - - - - 3,632 19,632 5,614 28,878

Note: Figures in this table are headcount. Reserves include all members who render Reserve service in Service Categories 5, 4 and 3 and Reserves undertaking continuous full-time service (Service Option C). This does not include members in Service Category 2, who do not render service.

259 APPENDIX B: ADDITIONAL WORKFORCE TABLES

Table B.18: ADF Reserve members, 2018-19

Male Female Indeterminate Total

Navy Army Air

Force

ADF Navy Army Air

Force

ADF Navy Army Air

Force

ADF Navy Army Air

Force

ADF

Officer

General (E) - - 1 1 - - - - - - - - - - 1 1

Lieutenant General (E) 4 2 2 8 - - - - - - - - 4 2 2 8

Major General (E) 18 20 21 59 2 2 1 5 - - - - 20 22 22 64

Brigadier (E) 51 72 64 187 3 7 4 14 - - - - 54 79 68 201

Colonel (E) 106 227 167 500 7 22 24 53 - - - - 113 249 191 553

Lieutenant Colonel (E) 253 496 320 1,069 40 70 55 165 - - - - 293 566 375 1,234

Major (E) 364 1,101 608 2,073 92 186 143 421 - - - - 456 1,287 751 2,494

Captain (E) 374 991 576 1,941 123 233 206 562 - - - - 497 1,224 782 2,503

Lieutenant (E) 5 408 32 445 5 161 22 188 - - - - 10 569 54 633

2nd Lieutenant (E) - 2 - 2 - 1 1 2 - - - - - 3 1 4

Officer Cadet (E) - 454 - 454 - 102 - 102 - - - - - 556 - 556

Officer total 1,175 3,773 1,791 6,739 272 784 456 1,512 - - - - 1,447 4,557 2,247 8,251

Other ranks

Regimental Sergeant Major (E) - - - - - - - - - - - - - - - -

Warrant Officer Class 1 (E) 114 469 334 917 5 61 30 96 - - - - 119 530 364 1,013

Warrant Officer Class 2 (E) 315 650 244 1,209 45 73 44 162 - - - - 360 723 288 1,371

Staff Sergeant (E) - 18 - 18 - 1 - 1 - - - - - 19 - 19

Sergeant (E) 246 996 366 1,608 109 187 131 427 - - - - 355 1,183 497 2,035

Corporal (E) 385 1,768 593 2,746 172 350 186 708 - - - - 557 2,118 779 3,454

Lance Corporal (E) - 955 - 955 - 95 - 95 - 1 - 1 - 1,051 - 1,051

Private Proficient (E) 341 3,636 571 4,548 150 601 177 928 - - - - 491 4,237 748 5,476

Private (E) 6 1,910 105 2,021 6 301 30 337 - - - - 12 2,211 135 2,358

Private Trainee (E) - 806 24 830 - 165 9 174 - - - - - 971 33 1,004

Recruit (E) 2 966 13 981 1 200 2 203 - 1 - 1 3 1,167 15 1,185

Other ranks total 1,409 12,174 2,250 15,833 488 2,034 609 3,131 - 2 - 2 1,897 14,210 2,859 18,966

Total ADF 2,584 15,947 4,041 22,572 760 2,818 1,065 4,643 - 2 - 2 3,344 18,767 5,106 27,217

Notes: Figures in this table are headcount. Reserves include all members who render Reserve service in Service Categories 5, 4 and 3 and Reserves undertaking continuous full-time service (Service Option C). This does not include members in Service Category 2, who do not render service. Some 30 June 2019 figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

260 DEFENCE ANNUAL REPORT 2019-20

Table B.19: ADF permanent and Reserve members, 2019-20

Permanent1 Reserve2

Navy Army Air

Force

ADF Navy Army Air

Force

ADF

Officer

General (E) - 1 - 1 - - 1 1

Lieutenant General (E) 3 3 2 8 4 2 3 9

Major General (E) 10 22 9 41 21 18 27 66

Brigadier (E) 44 60 38 142 55 88 76 219

Colonel (E) 168 192 160 520 120 268 194 582

Lieutenant Colonel (E) 506 714 539 1,759 321 569 388 1,278

Major (E) 872 1,872 1,130 3,874 471 1,327 794 2,592

Captain (E) 1,197 1,816 1,944 4,957 524 1,249 850 2,623

Lieutenant (E) 380 1,128 727 2,235 14 603 57 674

2nd Lieutenant (E) 61 3 443 507 - 1 1 2

Officer Cadet (E) 502 694 378 1,574 - 502 - 502

Officer total 3,743 6,505 5,370 15,618 1,530 4,627 2,391 8,548

Other ranks                

Regimental Sergeant Major (E) 1 1 1 3 - - - -

Warrant Officer Class 1 (E) 252 682 548 1,482 125 511 402 1,038

Warrant Officer Class 2 (E) 1,044 1,943 764 3,751 376 714 307 1,397

Staff Sergeant (E) - 2 - 2 - 14 - 14

Sergeant (E) 1,567 2,420 1,541 5,528 389 1,209 555 2,153

Corporal (E) 2,611 4,290 2,245 9,146 640 2,317 877 3,834

Lance Corporal (E) - 1,573 - 1,573 - 1,183 - 1,183

Private Proficient (E) 3,405 7,848 2,805 14,058 558 4,449 874 5,881

Private (E) 869 2,034 521 3,424 10 2,550 133 2,693

Private Trainee (E) 1,132 1,574 481 3,187 2 1,017 56 1,075

Recruit (E) 403 755 165 1,323 2 1,041 19 1,062

Other ranks total 11,284 23,122 9,071 43,477 2,102 15,005 3,223 20,330

Total ADF 15,027 29,627 14,441 59,095 3,632 19,632 5,614 28,878

Notes:

1. Figures are for permanent members (Service Categories 7 and 6) and do not include Reserves (Service Categories 5, 4, 3 and 2), Reserves undertaking continuous full-time service (Service Option C) or ADF Gap Year participants (Service Option G).

2. Reserves include all members rendering service in Service Categories 5, 4 and 3 and Reserves undertaking continuous full-time service (Service Option C). This does not include members in Service Category 2, who do not render service.

261 APPENDIX B: ADDITIONAL WORKFORCE TABLES

Table B.20: ADF permanent and Reserve members, 2018-19

Permanent1 Reserve2

Navy Army Air

Force

ADF Navy Army Air

Force

ADF

Officer

General (E) - 1 - 1 - - 1 1

Lieutenant General (E) 2 3 3 8 4 2 2 8

Major General (E) 11 18 10 39 20 22 22 64

Brigadier (E) 38 58 37 133 54 79 68 201

Colonel (E) 148 198 148 494 113 249 191 553

Lieutenant Colonel (E) 449 694 535 1,678 293 566 375 1,234

Major (E) 820 1,863 1,138 3,821 456 1,287 751 2,494

Captain (E) 1,212 1,802 1,887 4,901 497 1,224 782 2,503

Lieutenant (E) 320 1,117 704 2,141 10 569 54 633

2nd Lieutenant (E) 53 8 410 471 - 3 1 4

Officer Cadet (E) 433 703 373 1,509 - 556 - 556

Officer total 3,486 6,465 5,245 15,196 1,447 4,557 2,247 8,251

Other ranks

Regimental Sergeant Major (E) 1 1 1 3 - - - -

Warrant Officer Class 1 (E) 234 664 572 1,470 119 530 364 1,013

Warrant Officer Class 2 (E) 987 1,920 757 3,664 360 723 288 1,371

Staff Sergeant (E) - 2 - 2 - 19 - 19

Sergeant (E) 1,448 2,395 1,585 5,428 355 1,183 497 2,035

Corporal (E) 2,413 4,286 2,263 8,962 557 2,118 779 3,454

Lance Corporal (E) - 1,490 - 1,490 - 1,051 - 1,051

Private Proficient (E) 3,603 8,215 2,855 14,673 491 4,237 748 5,476

Private (E) 889 1,909 543 3,341 12 2,211 135 2,358

Private Trainee (E) 867 1,567 374 2,808 - 971 33 1,004

Recruit (E) 278 596 147 1,021 3 1,167 15 1,185

Other ranks total 10,720 23,045 9,097 42,862 1,897 14,210 2,859 18,966

Total ADF 14,206 29,510 14,342 58,058 3,344 18,767 5,106 27,217

Notes: Some 30 June 2019 figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

1. Figures are for permanent members (Service Categories 7 and 6) and do not include Reserves (Service Categories 5, 4, 3 and 2), Reserves undertaking continuous full-time service (Service Option C) or ADF Gap Year participants (Service Option G).

2. Reserves include all members rendering service in Service Categories 5, 4 and 3 and Reserves undertaking continuous full-time service (Service Option C). This does not include members in Service Category 2, who do not render service.

262 DEFENCE ANNUAL REPORT 2019-20

Table B.21: Australian Public Service Act employment type by location, 2019-20

Ongoing Non-ongoing Total

NSW 2,473 29 2,502

Qld 1,230 15 1,245

SA 2,040 46 2,086

Tas 69 6 75

Vic1 3,319 132 3,451

WA 451 5 456

ACT2 7,182 116 7,298

NT 204 2 206

External Territories

Overseas 134 1 135

Total 17,102 352 17,454

Notes: Figures in this table show headcount, based on actual location. Figures include paid and unpaid employees. Part-time employees are those with weekly hours less than the standard hours. It does not relate to employees in part-time positions.

1. Victorian figures include individuals located in Albury NSW.

2. Australian Capital Territory figures include individuals located in Jervis Bay (Commonwealth), Queanbeyan (NSW) and Bungendore (NSW).

Table B.22: Australian Public Service Act employment type by location, 2018-19

Ongoing Non-ongoing Total

NSW 2,477 10 2,487

Qld 1,224 9 1,233

SA 1,991 39 2,030

Tas 69 - 69

Vic1 3,363 76 3,439

WA 459 3 462

ACT2 6,740 78 6,818

NT 209 1 210

External Territories - - -

Overseas 139 1 140

Total 16,671 217 16,888

Notes: Figures in this table show headcount, based on actual location. Figures include paid and unpaid employees. Part-time employees are those with weekly hours less than the standard hours. It does not relate to employees in part-time positions. Some 30 June 2019 figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

1. Victorian figures include individuals located in Albury NSW.

2. Australian Capital Territory figures include individuals located in Jervis Bay (Commonwealth), Queanbeyan (NSW) and Bungendore (NSW).

263 APPENDIX B: ADDITIONAL WORKFORCE TABLES

Table B.23: ADF permanent and Reserve members by location, 2019-20

Permanent1 Reserve2 Total

NSW 16,098 8,035 24,133

Qld 16,534 6,844 23,378

SA 3,887 2,414 6,301

Tas 83 646 729

Vic3 6,237 4,215 10,452

WA 3,893 2,535 6,428

ACT4 7,168 3,346 10,514

NT 4,393 836 5,229

External Territories

Overseas5 802 7 809

Total 59,095 28,878 87,973

Notes: Figures in this table show headcount, based on substantive location.

1. Figures are for permanent members (Service Categories 7 and 6) and do not include Reserves (Service Categories 5, 4, 3 and 2), Reserves undertaking continuous full-time service (Service Option C) or ADF Gap Year participants (Service Option G).

2. Reserves include active members rendering service in Service Categories 5, 4 and 3 and Reserves undertaking continuous full-time service (Service Option C). This does not include members in Service Category 2, who do not render service.

3. Victorian figures include individuals located in Albury NSW.

4. Australian Capital Territory figures include individuals located in Jervis Bay (Commonwealth), Queanbeyan (NSW) and Bungendore (NSW).

5. Individuals posted overseas for reasons including long-term duty, training, exchange and liaison.

Table B.24: ADF permanent and Reserve members by location, 2018-19

Permanent1 Reserve2 Total

NSW 15,655 7,574 23,229

Qld 16,449 6,667 23,116

SA 3,919 2,127 6,046

Tas 89 645 734

Vic3 6,024 3,985 10,009

WA 3,728 2,361 6,089

ACT4 6,940 3,088 10,028

NT 4,406 757 5,163

External Territories

Overseas5 848 13 861

Total 58,058 27,217 85,275

Notes: Some figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions. Figures in this table are based on substantive location for the ADF. Figures are a headcount.

1. Figures are for permanent members (Service Categories 7 and 6) and do not include Reserves (Service Categories 5, 4, 3 and 2), Reserves undertaking continuous full-time service (Service Option C) or ADF Gap Year participants (Service Option G).

2. Reserves include all members (Service Categories 5, 4 and 3) and Reserves undertaking continuous full-time service (Service Option C). This does not include members in Service Category 2, who do not render service.

3. Victorian figures include individuals located in Albury NSW.

4. Australian Capital Territory figures include individuals located in Jervis Bay (Commonwealth), Queanbeyan (NSW) and Bungendore (NSW).

5. Individuals posted overseas for reasons including long-term duty, training, exchange and liaison.

264 DEFENCE ANNUAL REPORT 2019-20

Table B.25: Australian Public Service Act Indigenous employment, 2019-20

Total

Ongoing 399

Non-ongoing 6

Total 405

Note: Figures in this table show substantive headcount numbers. Data for this table is reliant on self-identification on the Defence human resources system; therefore, the data is likely to under-report actual participation rates.

Table B.26: Australian Public Service Act Indigenous employment, 2018-19

Total

Ongoing 396

Non-ongoing 3

Total 399

Note: Figures in this table show substantive headcount numbers. Data for this table is reliant on self-identification on the Defence human resources system; therefore, the data is likely to under-report actual participation rates. Some figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

Table B.27: ADF Indigenous members, 2019-20

Navy Army Air Force Total

Permanent1 527 1,022 356 1,905

Reserve2 47 626 70 743

Total 574 1,648 426 2,648

Note: Figures in this table show Indigenous headcount numbers. Data for this table is reliant on self-identification on the Defence human resources system; therefore, the data is likely to under-report actual participation rates.

1. Figures are for permanent members (Service Categories 7 and 6) and do not include Reserves (Service Categories 5, 4, 3 and 2), Reserves undertaking continuous full-time service (Service Option C) or ADF Gap Year participants (Service Option G).

2. Reserves include all active members (Service Categories 5, 4 and 3) and Reserves undertaking continuous full-time service (Service Option C). This does not include members in Service Category 2, who do not render service.

Table B.28: ADF Indigenous members, 2018-19

Navy Army Air Force Total

Permanent1 483 1,008 315 1,806

Reserve2 43 564 57 664

Total 526 1,572 372 2,470

Note: Figures in this table show Indigenous headcount numbers. Data for this table is reliant on self-identification on the Defence human resources system; therefore, the data is likely to under-report actual participation rates. Some figures have been adjusted from what was reported in the Defence Annual Report 2018-19 to account for retrospective transactions.

1. Figures are for permanent members (Service Categories 7 and 6) and do not include Reserves (Service Categories 5, 4, 3 and 2), Reserves undertaking continuous full-time service (Service Option C) or ADF Gap Year participants (Service Option G).

2. Reserves include all active members (Service Categories 5, 4 and 3) and Reserves undertaking continuous full-time service (Service Option C). This does not include members in Service Category 2, who do not render service.

265 APPENDIX B: ADDITIONAL WORKFORCE TABLES

Table B.29: Australian Public Service Act employment salary ranges by classification level, 2019-20

Minimum salary Maximum salary

Secretary 775,910 864,5801

SES 3  247,687 540,6002

SES 2  199,189 375,4383

SES 1 164,152 290,4374

EL 2 118,376 190,2305

EL 1 101,955 142,0876

APS 6 80,669 94,9307

APS 5 73,636 79,8418

APS 4 67,100 73,256

APS 3 59,237 65,270

APS 2 52,004 59,0659

APS 1 45,952 51,583

Other

Minimum/Maximum range 45,952 864,580

Notes:

1. Pay points for the offices of Departmental Secretary are set by the Remuneration Tribunal, with the Secretary of the Department of Defence determined as Level 1.

2. Maximum salary paid under an individual remuneration arrangement shown.

3. Includes rates for Chief of Division Grade 2 and Medical Officer Class 6.

4. Includes rates for Chief of Division Grade 1 and Medical Officer Class 5.

5. Maximum rate includes Executive Level 2.1, Executive Level 2.2, Legal and Science specialist structures and Medical Officer Class 3 and 4.

6. Maximum rate includes Public Affairs and Legal specialist structures and Medical Officer Class 1 and 2.

7. Maximum rate includes Public Affairs Grade 2 retained pay point.

8. Maximum rate includes Senior Technical Officer Grade 1 retained pay point.

9. Maximum rate includes Technical Assistant Grade 2 retained pay point.

266 DEFENCE ANNUAL REPORT 2019-20

Table B.30: Permanent ADF salary ranges by rank, 2019-20

Minimum salary Maximum salary

Officer of permanent force (equivalent)

Lieutenant General (E)1 413,896 490,614

Major General (E)2 245,113 298,914

Brigadier (E)2, 3 201,100 273,348

Colonel (E)2, 3, 5 153,743 260,960

Lieutenant Colonel (E)2, 4 130,758 248,321

Major (E)2, 4 91,569 223,694

Captain (E)2, 4 71,741 212,322

Lieutenant (E)5 59,636 125,008

2nd Lieutenant (E)5 55,719 116,699

Other rank of permanent force (equivalent)

Warrant Officer Class 1 (E) 81,238 125,033

Warrant Officer Class 2 (E) 74,823 115,855

Staff Sergeant (E) 72,314 111,767

Sergeant (E) 64,657 106,888

Corporal (E) 55,872 97,740

Lance Corporal (E) 51,395 90,846

Private Proficient (E) 50,333 89,784

Private (E) 49,292 88,748

Notes:

1. Some Lieutenant General (E) rates are set by the Remuneration Tribunal.

2. Includes rates for Medical Officers.

3. Includes rates for Chaplains.

4. Excludes Medical Procedural Specialist.

5. Includes transitional rates for other rank appointed as officer.

267 APPENDIX B: ADDITIONAL WORKFORCE TABLES

Table B.31: Australian Public Service Act employment performance pay by classification level, 2019-20

Number of employees receiving performance pay

Aggregate (sum total) of all payments made

Average of all payments made Minimum payment made to employees

Maximum payment made to employees

SES 3  - - - - -

SES 2  - - - - -

SES 1 - - - - -

EL 2 961 1,634,968.00 1,701.31 14.00 30,000.00

EL 1 2,240 2,590,943.00 1,156.67 11.00 14,951.00

APS 6 2,880 2,633,358.00 914.36 27.00 9,584.00

APS 5 1,662 1,332,777.00 801.91 52.00 4,338.00

APS 4 970 686,113.00 707.33 53.00 1,465.00

APS 3 856 589,177.00 685.95 74.00 1,088.00

APS 2 417 293,180.00 703.06 309.00 1,450.00

APS 1 39 26,816.00 687.58 309.00 1,088.00

Other - - - - -

Total 10,025 9,787,332.00 976.00 - -

Table B.32: Details of accountable authority during the reporting period, 2019-20

Period as the accountable authority or member within the reporting period

Name Position title / Position held Date of commencement Date of cessation

Greg Moriarty Secretary 4 September 2017 -

268 DEFENCE ANNUAL REPORT 2019-20

Table B.33: Key management personnel remuneration, 2019-20

Name Position

1

Short-term benefits

Post-employment benefits Other long-term benefits

Termination benefits ($)

Total

remuneration ($) Base salary ($) Bonuses ($)

Other

benefits and allowances

2

($)

Superannuation contributions ($) Long service

leave ($)

Other long-term benefits ($)

Mr Greg Moriarty Secretary 823,320 - - 109,115 22,080 - - 954,515

GEN Angus Campbell Chief of the Defence

Force

798,453 - 30,125 217,865 16,675 - - 1,063,118

VADM David Johnston Vice Chief of the

Defence Force

557,167 - 475 153,622 12,227 - - 723,491

Ms Rebecca Skinner Associate Secretary 315,957 - - 53,648 8,054 - - 377,659

Ms Katherine Jones Associate Secretary 12,693 - - 3,862 - - - 16,555

VADM Michael Noonan Chief of Navy 522,922 - 12,369 146,642 11,671 - - 693,604

LTGEN Richard Burr Chief of Army 534,083 - 5,235 146,642 11,691 - - 697,652

AIRMSHL Gavin Davies Chief of Air Force 4,450 - 1,833 1,202 - - - 7,485

AIRMSHL Mel Hupfeld Chief of Air Force 520,704 - 12,661 122,349 11,594 - - 667,308

Mr Steven Groves Chief Finance Officer 386,069 - 18,607 67,485 10,682 - - 482,843

Mr Glen Casson Chief Finance Officer 71,523 - 7,798 13,161 1,772 - - 94,254

Mr Stephen Pearson Chief Information

Officer

474,650 - 45,786 20,762 9,110 - - 550,308

Mr Peter Tesch Deputy Secretary

Strategic Policy &

Intelligence

340,286 - 28,711 55,362 9,643 - - 434,002

LT GEN Gregory Bilton Chief Joint Operations 506,418 - 55,380 147,909 11,801 - - 721,508

Ms Justine Greig Deputy Secretary

Defence People

338,626 - 33,428 63,598 9,643 - - 445,295

AIRMSHL Warren McDonald Chief of Joint

Capabilities

418,751 - - 147,909 11,704 - - 578,364

Mr Steven Grzeskowiak Deputy Secretary

Estate & Infrastructure

348,296 - 30,321 64,179 10,219 - - 453,015

269 APPENDIX B: ADDITIONAL WORKFORCE TABLES

Name Position

1

Short-term benefits

Post-employment benefits Other long-term benefits

Termination benefits ($)

Total

remuneration ($) Base salary ($) Bonuses ($)

Other

benefits and allowances

2

($)

Superannuation contributions ($) Long service

leave ($)

Other long-term benefits ($)

Prof Tanya Monro Chief Defence

Scientist

454,588 40,000 17,570 25,137 7,698 - - 544,993

Mr Tony Fraser Deputy Secretary

Capability Acquisition

& Sustainment

564,726 - 10,457 83,163 9,645 - - 667,991

Mr Tony Dalton Deputy Secretary

National Naval

Shipbuilding

366,252 - 52,058 23,489 5,991 - - 447,790

LTGEN John Frewen Commander Defence

COVID-19 Task Force

136,355 - 2,751 46,408 3,959 - - 189,474

Total 8,496,289 40,000 365,566 1,713,509 195,860 0 0 10,811,224

Notes:

1. Those staff who were permanently appointed to or acted in a KMP position for a period of 12 or more continuous weeks were included in the KMP disclosures. Those staff who acted in a KMP role for a shorter period were not included as its unlikely they would have made significant strategic decisions affecting Defence’s long term capability.

2. Other Benefits and Allowances includes the value of items such as housing (including overseas), motor vehicle allowances, retention bonuses and cost of living allowances (to support members and their families in remote or overseas locations) and any Reportable Fringe Benefits Tax payable by Defence. This column includes non-cash benefits.

270 DEFENCE ANNUAL REPORT 2019-20

Table B.34: Senior executive Australian Public Service (APS) remuneration, 2019-20 Remuneration band

Number of senior executives

1

Short-term benefits

Post-employment benefits Other long-term benefits

Termination benefits

Total

remuneration

Average base salary ($) Average bonuses ($)

Average other benefits and allowances

2 ($)

Average superannuation contributions ($)

Average long service leave ($)

Average other long-term benefits ($)

Average termination benefits

3 ($)

Average total remuneration ($)

$0 - $220,000 53 82,108 351 13,129 14,971 2,688 - 4,576 117,824

$220,001 - $245,000 32 172,107 333 24,855 29,505 4,854 - - 231,653

$245,001 - $270,000 39 189,738 - 25,524 34,303 5,271 - - 254,836

$270,001 - $295,000 18 211,657 651 26,318 37,794 5,588 - - 282,008

$295,001 - $320,000 15 230,704 1,405 30,216 40,927 6,397 - - 309,650

$320,001 - $345,000 9 241,463 - 37,100 44,715 6,907 - - 330,185

$345,001 - $370,000 3 268,849 - 34,765 46,495 6,767 - - 356,875

$370,001 - $395,000 1 257,124 - 79,932 46,845 7,124 - - 391,026

$395,001 - $420,000 - - - - - - - - -

$420,001 - $445,000 - - - - - - - - -

$445,001 - $470,000 1 343,470 - 53,132 54,537 5,746 - - 456,885

Notes:

1. The number of senior executives listed above is the number of individual SES not the number of SES positions. Staff who were permanently appointed to or acted in an SES level position for a period longer than 6 months are included.

2. Other Benefits and Allowances includes the value of items such as housing (including overseas), motor vehicle allowances, retention bonuses, cost of living allowances (to support members and their families in remote or overseas locations), and any Reportable Fringe Benefits Tax payable by Defence. This column includes non-cash benefits.

3. In accordance with APSC Guidelines, as a general rule, the standard formula of two weeks’ pay per year of service, to a maximum of 48 weeks, is an appropriate reference point for calculating termination payments under an incentive to retire package.

271 APPENDIX B: ADDITIONAL WORKFORCE TABLES

Table B.35: Star ranked Australian Defence Force (ADF) personnel remuneration, 2019-20 Remuneration band

Number of Star ranks

1

Short-term benefits

Post-employment benefits Other long-term benefits

Termination benefits

Total

remuneration

Average base salary ($) Average bonuses ($)

Average other benefits and allowances ($)

2

Average superannuation contributions ($)

Average long service leave ($)

Average other long-term benefits ($)

Average termination benefits ($)

3

Average total remuneration ($)

$0 - $220,000 39 85,393 0 18,341 26,774 2,309 0 2,331 135,147

$220,001 - $245,000 2 155,396 0 23,550 50,128 4,385 0 0 233,459

$245,001 - $270,000 7 164,145 0 35,971 54,983 4,879 0 0 259,978

$270,001 - $295,000 4 109,842 0 20,363 35,421 3,141 0 116,716 285,482

$295,001 - $320,000 18 190,583 0 32,033 63,610 5,786 0 22,457 314,469

$320,001 - $345,000 45 219,252 0 34,175 70,591 6,282 0 0 330,300

$345,001 - $370,000 26 229,430 0 48,888 72,740 7,215 0 0 358,272

$370,001 - $395,000 31 230,151 2,304 61,655 71,880 7,102 0 7,681 380,772

$395,001 - $420,000 13 212,030 7,692 46,113 71,853 6,358 0 59,532 403,578

$420,001 - $445,000 14 222,367 0 60,241 70,534 6,769 0 72,362 432,273

$445,001 - $470,000 8 210,892 0 94,916 66,892 6,086 0 76,011 454,796

$470,001 - $495,000 4 286,261 0 120,202 71,229 8,019 0 0 485,710

$495,001 - $520,000 3 255,621 0 169,164 72,472 6,869 0 0 504,125

$520,001 - $545,000 1 186,827 0 28,609 58,201 5,834 0 251,630 531,101

$570,001 - $595,000 1 202,516 0 26,213 62,902 6,311 0 275,165 573,106

$595,001 - $620,000 2 218,901 0 99,759 66,598 6,490 0 220,189 611,936

$620,001 -$645,000 - - - - - - - - -

$645,001 -$670,000 - - - - - - - - -

$670,001 -$695,000 - - - - - - - - -

$695,001 - $720,000 1 425,985 - 151,901 121,781 13,994 0 0 713,660

Notes:

1. The number of ADF Star Ranks listed above is the number of individuals not the number of positions. Staff who were permanently appointed to or acted in a Star Rank ADF position for a period longer than 6 months are included in the table.

2. Other Benefits and Allowances includes the value of items such as housing (including overseas), motor vehicle allowances, retention bonuses, cost of living allowances (to support members and their families in remote or overseas locations), and any Reportable Fringe Benefits Tax payable by Defence. This column includes non-cash benefits.

3. Defence members compulsorily transferred to the Reserves may be eligible for a special benefit payment. The amount of a special benefit payment is based on the member’s period of service and is an amount equal to two weeks’ pay for every year of service, to a maximum of 48 weeks.

272 DEFENCE ANNUAL REPORT 2019-20

Table B.36: Other highly paid staff—Australian Defence Force remuneration, 2019-20 Remuneration band

Number of highly paid ADF personnel

Short-term benefits

Post-employment benefits Other long-term benefits

Termination benefits

Total

remuneration

Average base salary ($) Average bonuses ($)

Average other benefits and allowances ($)

1

Average superannuation contributions ($)

Average long service leave ($)

Average other long-term benefits ($)

Average termination benefits ($) Average total

remuneration ($)

$225,001 - $245,000 1,517 134,566 12,498 33,790 48,333 4,548 0 658 234,394

$245,001 - $270,000 1,170 143,684 14,745 42,124 51,105 4,915 0 548 257,122

$270,001 - $295,000 575 155,830 15,527 49,006 54,375 5,264 0 434 280,435

$295,001 - $320,000 263 153,461 34,777 59,876 53,954 5,309 0 540 307,917

$320,001 - $345,000 215 150,259 67,953 51,579 53,250 4,881 0 4,148 332,071

$345,001 - $370,000 118 160,618 56,038 70,813 55,554 5,309 0 8,791 357,123

$370,001 - $395,000 79 158,432 82,129 64,007 55,967 5,229 0 15,689 381,453

$395,001 - $420,000 43 161,021 112,637 66,019 56,219 5,262 0 4,391 405,549

$420,001 - $445,000 27 165,372 109,049 67,493 58,041 5,357 0 26,371 431,683

$445,001 - $470,000 11 198,386 99,413 65,946 68,088 6,361 0 16,310 454,504

$470,001 - $495,000 4 210,738 134,079 48,141 75,365 7,089 0 0 475,413

$495,001 - $520,000 3 313,381 67,403 5,452 103,995 6,938 0 0 497,169

$520,001 - $545,000 1 225,221 226,836 10,075 74,888 6,557 0 0 543,578

Notes

1. Other Benefits and Allowances includes the value of items such as housing (including overseas), motor vehicle allowances, retention bonuses, cost of living allowances (to support members and their families in remote or overseas locations), and any Reportable Fringe Benefits Tax payable by Defence. This column includes non-cash benefits.

273 APPENDIX B: ADDITIONAL WORKFORCE TABLES

Table B.37: Other highly paid staff—Australian Public Service remuneration, 2019-20 Remuneration band

Number of highly paid APS staff

Short-term benefits

Post-employment benefits Other long-term benefits

Termination benefits

Total

remuneration

Average base salary ($) Average bonuses ($)

Average other benefits and allowances ($)

1

Average superannuation contributions ($)

Average long service leave ($)

Average other long-term benefits ($)

Average termination benefits ($) Average total

remuneration ($)

$225,001 - $245,000 40 155,896 2,242 22,388 27,348 4,221 0 21,312 233,407

$245,001 - $270,000 26 148,940 2,417 55,336 27,292 4,264 0 16,776 255,025

$270,001 - $295,000 8 221,581 2,934 10,385 39,734 5,871 0 1,875 282,380

$295,001 - $320,000 5 218,673 2,216 37,933 40,527 5,508 0 0 304,856

$320,001 - $345,000 14 264,039 3,125 15,885 41,598 6,851 0 0 331,498

$345,001 - $370,000 1 292,404 2,794 0 52,294 7,999 0 0 355,491

$420,001 - $445,000 3 357,445 8,282 1,146 50,674 9,568 0 0 427,115

Note:

1. Other Benefits and Allowances includes the value of items such as housing (including overseas), motor vehicle allowances, retention bonuses, cost of living allowances (to support members and their families in remote or overseas locations), and any Reportable Fringe Benefits Tax payable by Defence. This column includes non-cash benefits.

274 DEFENCE ANNUAL REPORT 2019-20

Appendix C: Other mandatory information

Consulting contracts Defence engages consultants where it lacks specialist expertise or when independent research and assessment is required. The

process for selecting consultants is consistent with Defence procurement policies and the Commonwealth Procurement Rules.

This annual report contains information about the number of contracts and total contract value of new consultancy contracts let in

2019-20 based on AusTender (Table C.1) and the actual expenditure on contracts for consultancies (Table C.2). Further information

on the value of individual contracts and consultancies is available on the AusTender website, www.tenders.gov.au.

In 2019-20, Defence entered into 330 new consultancy contracts, based on information presented on AusTender, involving total

contract value of $66.6 million and actual expenditure of $42.0 million (including GST) for 2019-20. In addition, 310 existing

consultancy contracts were active during the 2019-20 reporting year, with total actual expenditure of $68.1 million (including GST).

Table C.1 shows a summary, sorted by Defence Program, of new consultancy contracts entered into during 2019-20 (including

GST), based on information presented on AusTender.

Table C.1: New consultancy contracts entered into during 2019-20 (based on AusTender), by program (including GST)

Program Number of new contracts Total contract value ($)

Program 2.1 Strategic Policy and Intelligence 29 4,063,864

Program 2.2 Defence Executive Support 15 3,354,123

Program 2.3 Defence Finance 3 198,019

Program 2.4 Joint Capabilities 45 8,859,229

Program 2.5 Navy Capabilities 13 3,147,358

Program 2.6 Army Capabilities 5 772,470

Program 2.7 Air Force Capabilities 25 3,784,143

Program 2.8 Australian Defence Force Headquarters 13 1,491,799

Program 2.9 Capability Acquisition and Sustainment 96 23,380,748

Program 2.10 Estate and Infrastructure 28 7,514,135

Program 2.11 Chief Information Officer 13 4,097,146

Program 2.12 Defence People 34 4,077,663

Program 2.13 Defence Science and Technology 11 1,832,469

Total 330 66,573,166

Table C.2 records total expenditure in-year for consulting contracts rather than the full value of the contract.

Table C.2: Total expenditure on consulting contracts, 2017-18 to 2019-20

2017-18 ($m) 2018-19 ($m) 2019-20 ($m)

Defence 108.8 109.6 114.2

Note: Figures are GST inclusive.

275 APPENDIX C: OTHER MANDATORY INFORMATION

Australian National Audit Office access clause The Defence contracting templates include standard clauses providing the Auditor-General access to contractors’ and major subcontractors’ premises, records and accounts. During 2019-20, Defence had 26 contracts that did not include the clause providing access to the Auditor-General (Table C.3).

Table C.3: Contracts that do not include the ANAO access clause, 2019-20

Group and company 2019-20

($)

Purpose Reason for non-

inclusion of ANAO access clause

Army

United States Government 465,996.80 Training Foreign Military Sale

Total for the Army 465,997

Estate and Infrastructure Group (E&IG)

United States Government 55,352,563.26 Decontamination Services Foreign Military Sale

Total for E&IG 55,352,563

Chief Information Officer Group (CIOG)

United States Government 148,920.25 Software Support Foreign Military Sale

Total for CIOG 148,920

Capability Acquisition and Sustainment Group (CASG)

United States Government 970,742.34 Technical and Engineering

Services

Foreign Military Sale

United States Government 4,229,161.58 Technical Data and Support Foreign Military Sale

United States Government 397,287.44 Explosive Ordnance Foreign Military Sale

United States Government 13,719,934.47 Special Military Equipment Foreign Military Sale

United States Government 22,970,772.00 Special Military Equipment Foreign Military Sale

United States Government 2,884,556.44 Special Military Equipment Foreign Military Sale

United States Government 8,122,172.74 Explosive Ordnance Foreign Military Sale

United States Government 258,875.79 Laboratory and scientific

equipment

Foreign Military Sale

United States Government 11,906,818.90 Special Military Equipment Foreign Military Sale

United States Government 465,602.86 Technical Data and Support Foreign Military Sale

United States Government 2,627,489.35 Communication equipment Foreign Military Sale

United States Government 1,310,616.00 Communication equipment Foreign Military Sale

United States Government 1,300,591.92 Communication equipment Foreign Military Sale

United States Government 1,444,081.50 Communication equipment Foreign Military Sale

United States Government 1,087,665.66 Communication equipment Foreign Military Sale

United States Government 589,202,327.42 Explosive Ordnance Foreign Military Sale

United States Government 2,183,476.31 Explosive Ordnance Foreign Military Sale

United States Government 3,520,051.00 Electronic hardware and

component parts

Foreign Military Sale

United States Government 1,966,269.15 Communication equipment Foreign Military Sale

276 DEFENCE ANNUAL REPORT 2019-20

Group and company 2019-20

($)

Purpose Reason for non-

inclusion of ANAO access clause

United States Government 2,961,878.84 Technical and Engineering

Services

Foreign Military Sale

United States Government 226,199.21 Training Foreign Military Sale

United States Government 40,002,543.02 Communication equipment Foreign Military Sale

United States Government 65,529,000.00 Electronic hardware and

component parts

Foreign Military Sale

Total for CASG 779,288,114

Total Groups and Services 835,255,594

Notes:

All figures are GST inclusive.

Defence uses the United States Department of Defense’s Foreign Military Sales program, which facilitates sales of US arms, defence equipment, defence services and military training to foreign governments. The standard terms and conditions of Foreign Military Sales contracts do not contain ANAO access provisions.

Omissions and errors The Defence Annual Report 2018-19 contained the following errors:

Table 6.15: APS Executive Level employees and below, by gender and classification, as at 30 June 2019 (page 95)

The 2018-19 separation details by gender were entered in the wrong columns. A data transfer error occurred with the 'Men' and 'Women' separation figures being entered in the wrong columns. Correct separation totals should have been 1,067 men and 752 women.

Table B.30: APS Permanent Australian Defence Force salary ranges by rank, 2018-19 (page 248)

Table B.30 reported the salary ranges for the ranks of Lieutenant General (E), Major General (E), Brigadier (E) and Colonel (E) twice.

Defence Diversity—Women (page 114)

Representation of women on Defence boards was reported as 48 per cent. The correct representation was 44.9 per cent.

Figure 6.1 — Indigenous Participation (page 116)

Indigenous participation in ADF Reserves as at 01 Jul 2019 was represented as 369 in Figure 6.1. The correct total was 639 as indicated in Table 6.27 (page 115).

277 APPENDIX D: SUPPLEMENTARY ONLINE MATERIAL

Appendix D: Supplementary online material The following supplementary performance information is available on the Defence website.

Table D.1: Additional online information

Report Website

Report of the Inspector-General ADF www.defence.gov.au/mjs/reports.asp

Women in ADF Report https://www.defence.gov.au/annualreports/

Acquisition, sustainment, facilities and infrastructure information

Top 30 sustainment products by expenditure 2019-20 Web table D.1

Top 30 acquisition projects by expenditure 2019-20 Web table D.2

Top 30 acquisition projects by expenditure (variations), 2019-20 Web table D.3

Major acquisition projects closed in 2019-20 Web table D.4

New major acquisition projects approved by Government 2019-20 Web table D.5

Performance of major capital facilities projects 2019-20 Web table D.6

Major Defence establishments and bases Web table D.7

Status of capital facilities projects considered by the Parliamentary Standing Committee on Public Works Web table D.8

Approved facilities and infrastructure projects by state and federal electorate (financial and non-financial input) Web table D.9

Table D.2: Reference websites and supporting documentation

Reference Website

2019 -20 Defence Corporate Plan www.defence.gov.au/publications/corporateplan/

Transparency portal www.transparency.gov.au

Defence Annual Reports www.defence.gov.au/annualreports

GrantConnect www.grants.gov.au

AusTender www.tenders.gov.au

Australian Hydrographic Office www.hydro.gov.au

Australian National Audit Office www.anao.gov.au

Defence’s Information Publication Scheme www.defence.gov.au/ips

Indigenous procurement https://niaa.gov.au/indigenous-affairs/economic-development/

indigenous-procurement-policy-ipp

278 DEFENCE ANNUAL REPORT 2019-20

Appendix E: List of requirements PGPA Rule reference Part of report Description Requirement

17AD(g) Letter of transmittal

17AI Page iv A copy of the letter of transmittal signed and dated by accountable

authority on date final text approved, with statement that the report has been prepared in accordance with section 46 of the Act and any enabling legislation that specifies additional requirements in relation to the annual report.

Mandatory

17AD(h) Aids to access

17AJ(a) Page v Table of contents. Mandatory

17AJ(b) Pages 287-293 Alphabetical index. Mandatory

17AJ(c) Page 282-283 Glossary of abbreviations, acronyms and definititions. Mandatory

17AJ(d) Page 278 List of requirements. Mandatory

17AJ(e) Page 294 Details of contact officer. Mandatory

17AJ(f) Page 294 Entity’s website address. Mandatory

17AJ(g) Page 294 Electronic address of report. Mandatory

17AD(a) Review by accountable authority

17AD(a) Page 2 A review by the accountable authority of the entity. Mandatory

17AD(b) Overview of the entity

17AE(1)(a)(i) Page 12 A description of the role and functions of the entity. Mandatory

17AE(1)(a)(ii) Page 15 A description of the organisational structure of the entity. Mandatory

17AE(1)(a)(iii) Page 14 A description of the outcomes and programmes administered by the entity. Mandatory

17AE(1)(a)(iv) Page 12 A description of the purposes of the entity as included in corporate plan. Mandatory

17AE(1)(aa)(i) Page 267 Name of the accountable authority or each member of the accountable authority. Mandatory

17AE(1)(aa)(ii) Page 267 Position title of the accountable authority or each member of the accountable authority. Mandatory

17AE(1)(aa)(iii) Page 267 Period as the accountable authority or member of the accountable authority within the reporting period. Mandatory

17AE(1)(b) Page 13 An outline of the structure of the portfolio of the entity. Portfolio

departments mandatory

17AE(2) N/A Where the outcomes and programs administered by the entity differ

from any Portfolio Budget Statement, Portfolio Additional Estimates Statement or other portfolio estimates statement that was prepared for the entity for the period, include details of variation and reasons for change.

If applicable, mandatory

17AD(c) Report on the performance of the entity

Annual performance statements

17AD(c)(i); 16F Pages 22-64 Annual performance statement in accordance with paragraph 39(1)(b) of the Act and section 16F of the Rule. Mandatory

17AD(c)(ii) Report on financial performance

17AF(1)(a) Pages 66-78 A discussion and analysis of the entity’s financial performance. Mandatory

17AF(1)(b) Page 66 A table summarising the total resources and total payments of the entity. Mandatory

279 APPENDIX E: LIST OF REQUIREMENTS

PGPA Rule reference Part of report Description Requirement

17AF(2) N/A If there may be significant changes in the financial results during or

after the previous or current reporting period, information on those changes, including: the cause of any operating loss of the entity; how the entity has responded to the loss and the actions that have been taken in relation to the loss; and any matter or circumstances that it can reasonably be anticipated will have a significant impact on the entity’s future operation or financial results.

If applicable, mandatory

17AD(d) Management and accountability

Corporate governance

17AG(2)(a) Page iv Information on compliance with section 10 (fraud systems). Mandatory

17AG(2)(b)(i) Page iv A certification by accountable authority that fraud risk assessments and fraud control plans have been prepared. Mandatory

17AG(2)(b)(ii) Page iv A certification by accountable authority that appropriate mechanisms for preventing, detecting incidents of, investigating or otherwise dealing with, and recording or reporting fraud that meet the specific needs of the entity are in place.

Mandatory

17AG(2)(b)(iii) Page iv A certification by accountable authority that all reasonable measures have been taken to deal appropriately with fraud relating to the entity. Mandatory

17AG(2)(c) Pages 83-88 An outline of structures and processes in place for the entity to implement principles and objectives of corporate governance. Mandatory

17AG(2)(d) - (e) Page 88 A statement of significant issues reported to Minister under paragraph 19(1)(e) of the Act that relates to non-compliance with Finance law and action taken to remedy non-compliance.

If applicable, mandatory

Audit committee

17AG(2A)(a) Page 84 A direct electronic address of the charter determining the functions of the entity’s audit committee. Mandatory

17AG(2A)(b) Pages 84-85 The name of each member of the entity’s audit committee. Mandatory

17AG(2A)(c) Pages 84-85 The qualifications, knowledge, skills or experience of each member of the entity’s audit committee. Mandatory

17AG(2A)(d) Pages 84-85 Information about the attendance of each member of the entity’s audit committee at committee meetings. Mandatory

17AG(2A)(e) Pages 84-85 The remuneration of each member of the entity’s audit committee. Mandatory

External scrutiny

17AG(3) Pages 93-95 Information on the most significant developments in external scrutiny and the entity’s response to the scrutiny. Mandatory

17AG(3)(a) Page 93 Information on judicial decisions and decisions of administrative tribunals and by the Australian Information Commissioner that may have a significant effect on the operations of the entity.

If applicable, mandatory

17AG(3)(b) Page 93 Information on any reports on operations of the entity by the Auditor-General (other than report under section 43 of the Act), a Parliamentary Committee, or the Commonwealth Ombudsman.

If applicable, mandatory

17AG(3)(c) Page 94 Information on any capability reviews on the entity that were released during the period. If applicable, mandatory

Management of human resources

17AG(4)(a) Pages 95-145 An assessment of the entity’s effectiveness in managing and developing employees to achieve entity objectives. Mandatory

17AG(4)(aa) Pages 110-121 249-264 Statistics on the entity’s employees on an ongoing and non ongoing basis, including the following:

(a) statistics on full time employees;

(b) statistics on part time employees;

(c) statistics on gender

(d) statistics on staff location.

Mandatory

280 DEFENCE ANNUAL REPORT 2019-20

PGPA Rule reference Part of report Description Requirement

17AG(4)(b) Pages 110-121 249-264 265-272

Statistics on the entity’s APS employees on an ongoing and non-ongoing basis; including the following:

• Statistics on staffing classification level;

• Statistics on full-time employees;

• Statistics on part-time employees;

• Statistics on gender;

• Statistics on staff location;

• Statistics on employees who identify as Indigenous.

Mandatory

17AG(4)(c) Pages 127-128 267-262 Information on any enterprise agreements, individual flexibility arrangements, Australian workplace agreements, common law

contracts and determinations under subsection 24(1) of the Public Service Act 1999.

Mandatory

17AG(4)(c)(i) Page 129 Information on the number of SES and non SES employees covered by agreements etc identified in paragraph 17AG(4)(c). Mandatory

17AG(4)(c)(ii) Page 128 The salary ranges available for APS employees by classification level. Mandatory

17AG(4)(c)(iii) Page 130 A description of non-salary benefits provided to employees. Mandatory

17AG(4)(d)(i) Page 131 Information on the number of employees at each classification level who received performance pay. If applicable, mandatory

17AG(4)(d)(ii) Page 131 Information on aggregate amounts of performance pay at each classification level. If applicable, mandatory

17AG(4)(d)(iii) Page 131 Information on the average amount of performance payment, and range of such payments, at each classification level. If applicable, mandatory

17AG(4)(d)(iv) Page 131 Information on aggregate amount of performance payments. If applicable, mandatory

Assets management

17AG(5) Pages 148-154 An assessment of effectiveness of assets management where asset management is a significant part of the entity’s activities. If applicable, mandatory

Purchasing

17AG(6) Page 150 An assessment of entity performance against the Commonwealth Procurement Rules. Mandatory

Consultants

17AG(7)(a) Page 274 A summary statement detailing the number of new contracts engaging consultants entered into during the period; the total actual expenditure on all new consultancy contracts entered into during the period (inclusive of GST); the number of ongoing consultancy contracts that were entered into during a previous reporting period; and the total actual expenditure in the reporting year on the ongoing consultancy contracts (inclusive of GST).

Mandatory

17AG(7)(b) Page 274 A statement that “During [reporting period], [specified number] new consultancy contracts were entered into involving total actual expenditure of $[specified million]. In addition, [specified number] ongoing consultancy contracts were active during the period, involving total actual expenditure of $[specified million]”.

Mandatory

17AG(7)(c) Page 274 A summary of the policies and procedures for selecting and engaging consultants and the main categories of purposes for which consultants were selected and engaged.

Mandatory

17AG(7)(d) Page 274 A statement that “Annual reports contain information about actual expenditure on contracts for consultancies. Information on the value of contracts and consultancies is available on the AusTender website.”

Mandatory

281 APPENDIX E: LIST OF REQUIREMENTS

PGPA Rule reference Part of report Description Requirement

Australian National Audit Office access clauses

17AG(8) Pages 274-275 If an entity entered into a contract with a value of more than $100 000 (inclusive of GST) and the contract did not provide the Auditor-General with access to the contractor’s premises, the report must include the name of the contractor, purpose and value of the contract, and the reason why a clause allowing access was not included in the contract.

If applicable, mandatory

Exempt contracts

17AG(9) Page 94 If an entity entered into a contract or there is a standing offer with a value greater than $10 000 (inclusive of GST) which has been exempted from being published in AusTender because it would disclose exempt matters under the FOI Act, the annual report must include a statement that the contract or standing offer has been exempted, and the value of the contract or standing offer, to the extent that doing so does not disclose the exempt matters.

If applicable, mandatory

Small business

17AG(10)(a) Pages 150 A statement that “[Name of entity] supports small business participation in the Commonwealth Government procurement market. Small and Medium Enterprises (SME) and Small Enterprise participation statistics are available on the Department of Finance’s website.”

Mandatory

17AG(10)(b) Pages 150 An outline of the ways in which the procurement practices of the entity support small and medium enterprises. Mandatory

17AG(10)(c) Pages 150 If the entity is considered by the Department administered by the Finance Minister as material in nature—a statement that “[Name of entity] recognises the importance of ensuring that small businesses are paid on time. The results of the Survey of Australian Government Payments to Small Business are available on the Treasury’s website.”

If applicable, mandatory

Financial statements

17AD(e) Pages 166-248 Inclusion of the annual financial statements in accordance with subsection 43(4) of the Act. Mandatory

Executive remuneration

17AD(da) Pages 130-131 267-272 Information about executive remuneration in accordance with Subdivision C of Division 3A of Part 2-3 of the Rule.

Mandatory

17AD(f) Other mandatory information

17AH(1)(a)(i) Pages 75-77 If the entity conducted advertising campaigns, a statement that “During [reporting period], the [name of entity] conducted the following advertising campaigns: [name of advertising campaigns undertaken]. Further information on those advertising campaigns is available at [address of entity’s website] and in the reports on Australian Government advertising prepared by the Department of Finance. Those reports are available on the Department of Finance’s website.”

If applicable, mandatory

17AH(1)(a)(ii) N/A If the entity did not conduct advertising campaigns, a statement to that effect. If applicable, mandatory

17AH(1)(b) Pages 75 A statement that “Information on grants awarded by [name of entity] during [reporting period] is available at [address of entity’s website].” If applicable, mandatory

17AH(1)(c) Pages 108 Outline of mechanisms of disability reporting, including reference to website for further information. Mandatory

17AH(1)(d) Pages 94 Website reference to where the entity’s Information Publication Scheme statement pursuant to Part II of FOI Act can be found. Mandatory

17AH(1)(e) Pages 275 Correction of material errors in previous annual report. If applicable,

mandatory

17AH(2) Pages 75-77

77-78 88 121-123

Information required by other legislation. Mandatory

282 DEFENCE ANNUAL REPORT 2019-20

Abbreviations and acronyms

ADF Australian Defence Force

ANAO Australian National Audit Office

APS Australian Public Service

ASEAN Association of Southeast Asian Nations

CASG Capability, Acquisition and Sustainment Group

CDF Chief of the Defence Force

CIOG Chief Information Officer Group

DACC Defence Assistance to the Civil Community

DIO Defence Intelligence Organisation

DREAMS Defence Remote Electronic Access Management System

DRSP Act Defence Reserve Service (Protection) Act 2001

DSTG Defence Science and Technology Group

EL Executive Level

FTE full-time equivalent

GST goods and services tax

HMAS Her Majesty’s Australian Ship

ICT information and communications technology

IGADF Inspector-General of the Australian Defence Force

JMPU Joint Military Police Unit

LGBTI lesbian, gay, bisexual, transgender and intersex

MP Member of Parliament

PBS Portfolio Budget Statements

PFAS per- and poly-fluoroalkyl substances

PGPA Act Public Governance, Performance and Accountability Act 2013

PGPA Rule Public Governance, Performance and Accountability Rule 2014

RAN Royal Australian Navy

SeMPRO Sexual Misconduct Prevention and Response Office

SES Senior Executive Service

STEM science, technology, engineering and mathematics

UN United Nations

VERA Virtual Environment for Remote Access

283 APPENDIX E: LIST OF REQUIREMENTS

Definitions Capability Manager—Responsible for raising, training and sustaining capabilities as directed by the Secretary and Chief of the Defence Force.

Capability Program Architecture— A framework that aligns accountabilities and resourcing, and provides links between decisions and strategic guidance.

Domain Lead—A Capability Manager who is responsible to the Joint Force Authority, and manages prioritisation proposals for capital investment and sustainment decisions and any variations to budgets within that Domain agreed as part of the formal Investment Committee budget process.

Force-in-Being—The current disposition of the Australian Defence Force, including all elements of the fundamental inputs to capability, as well as force structure and posture.

Objective Force—The Force-in-Being along with the Planned Force out to 10 years, as set out in the Integrated Investment Program.

284 DEFENCE ANNUAL REPORT 2019-20

List of figures and tables

Figures Figure 1.1: ADF operations during 2019-20 7

Figure 2.1: Defence’s outcomes and programs, 2019-20 14

Figure 2.2: Defence organisational structure as at 30 June 2020 15

Figure 2.3: ADF and APS comparative funded strength for 2018-19 and 2019-20 17

Figure 3.1: Defence enterprise performance management 23

Figure 3.2: Linkages between Defence Purpose, Outcomes, Performance Criteria and Portfolio Budget Statements 27

Figure 5.1: Defence enterprise committee structure and roles, indicating incumbent Chairs as at 30 June 2020 83

Figure 6.1: APS review of actions applications, 2014-15 to 2019-20 140

Figure 6.2: Unacceptable behaviour complaints reported as received, finalised and having occurred, 2015-16 to 2019-20 141

Figure 6.3: Incidents of unacceptable behaviour are managed well in my workplace 142

Figure 6.4: Defence has a culture that supports individuals who report fraud, corruption or unethical Behaviour 142

Tables Table 3.1: Unit availability days, flying hours and HydroScheme products 45

Table 4.1: Defence resource statement, 2019-20 66

Table 4.2: Total cost of Defence outcomes and programs on an accrual basis, 2019-20 68

Table 4.3: Net additional cost of operations from 1999-2000 to 2023-24 73

Table 4.4: Net Cost of Defence Operations 2019-20 75

Table 4.5: Total advertising and market research, by type, 2018-19 and 2019-20 75

Table 4.6: Total advertising and market research expenditure, by Service and Group, 2018-19 and 2019-20 75

Table 4.7: Individual payments of more than $14,000 to advertising and market research agencies, by Service and Group, 2019-20 76

Table 4.8: Estimated expenditure on internal and external legal services, 2018-19 and 2019-20 77

Table 4.9: Estimated cost breakdown of internal legal expenses, 2018-19 and 2019-20 77

Table 4.10: Estimated cost breakdown of external legal expenses, 2018-19 and 2019-20 77

Table 4.11: Accounts paid by due date, 2018-19 to 2019-20 78

Table 5.1 Audit committee disclosure requirements 84

Table 5.2: Determined fraud losses and cash recoveries, 2015-16 to 2019-20 87

Table 5.3 Instances of significant non-compliance with financial law 2019-20 88

Table 5.4: Defence’s involvement with parliamentary committees, 2019-20 91

Table 5.5: Defence projects that achieved parliamentary approval through the Parliamentary Standing Committee on Public Works, 2019-20 92

Table 5.6 Defence notifications to the Parliamentary Standing Committee on Public Works, 2019-20 92

Table 5.7: Auditor-General’s performance audit reports on Defence, 2019-20 93

Table 5.8: Auditor-General’s priority assurance review involving Defence, 2019-20 94

285 LIST OF FIGURES AND TABLES

Table 6.1: Indigenous participation 107

Table 6.2: Total Workforce System—Service Spectrum continuum 110

Table 6.3: Australian Defence Force staffing figures, 2018-19 and 2019-20 110

Table 6.4: Australian Defence Force permanent force (Service Categories 7 and 6) and Reserves undertaking continuous full-time service (Service Option C), average funded strength 111

Table 6.5: ADF permanent force (Service Categories 7 and 6) and ongoing APS, 12-month rolling separation rates as at 30 June 2019 and 30 June 2020 112

Table 6.6: ADF permanent force (Service Categories 7 and 6) separations, 2018-19 and 2019-20 112

Table 6.7: ADF Reserve paid strength (Service Categories 5, 4 and 3), 2018-19 and 2019-20 113

Table 6.8: APS staffing figures, 2018-19 and 2019-20 113

Table 6.9: APS workforce, average full-time equivalent, 2018-19 and 2019-20 114

Table 6.10: APS workforce, end-of-year actual full time equivalent, 2018-19 and 2019-20 114

Table 6.11: APS separations, 2018-19 and 2019-20 114

Table 6.12: Defence workforce headcount as at 30 June 2019 and 30 June 2020 116

Table 6.13: Defence workforce by employment location as at 30 June 2020 117

Table 6.14: Star-ranked officers as at 30 June 2020 117

Table 6.15: APS Senior Executive Service employees as at 30 June 2020 118

Table 6.16: APS Executive Level employees and below, by gender and classification as at 30 June 2020 118

Table 6.17: APS employees by gender as at 30 June 2019 and 30 June 2020 119

Table 6.18: ADF permanent (Service Categories 7 and 6), Gap Year (Service Option G) and Reserve forces (Service Categories 5, 4 and 3) and APS by gender as at 30 June 2019 and 30 June 2020 119

Table 6.19: ADF Gap Year (Service Option G) participants as at 30 June 2020 121

Table 6.20: Permanent Australian Defence Force salary ranges as at 30 June 2020 127

Table 6.21: Australian Public Service salary ranges as at 30 June 2019 128

Table 6.22: Employment arrangements of SES and non-SES employees 129

Table 6.23: Key management personnel, 2019-20 129

Table 6.24: Key management personnel remuneration, 2019-20 130

Table 6.25: APS employee performance bonus payments, 2019-20 131

Table 6.26: Number of Comcare work health and safety notices, 2017-18 to 2019-20 138

Table 6.27: Number of work health and safety incidents and number of people involved, 2017-18 to 2019-20 139

Table 6.28: Reported Defence sexual assault incidents per year 143

Table 6.29: SeMPRO new incident management advice clients, 2013-14 to 2019-20 144

Table 7.1: Projects of Concern as at 30 June 2020 153

Table B.1: All ongoing APS employees by location, 2019-20 249

Table B.2: All ongoing APS employees by location, 2018-19 249

Table B.3: All non-ongoing APS employees by location, 2019-20 250

Table B.4: All non-ongoing APS employees by location, 2018-19 250

Table B.5: Australian Public Service Act ongoing employees, 2019-20 251

Table B.6: Australian Public Service Act ongoing employees, 2018-19 251

Table B.7: Australian Public Service Act non-ongoing employees, 2019-20 252

Table B.8: Australian Public Service Act non-ongoing employees, 2018-19 252

Table B.9: Australian Public Service Act employees by full-time and part-time status, 2019-20 253

Table B.10: Australian Public Service Act employees by full-time and part-time status, 2018-19 253

Table B.11: Permanent ADF members by location, 2019-20 254

286 DEFENCE ANNUAL REPORT 2019-20

Table B.12: Permanent ADF members by location, 2018-19 254

Table B.13: Reserve members by location, 2019-20 255

Table B.14: Reserve members by location, 2018-19 255

Table B.15: ADF permanent members, 2019-20 256

Table B.16: ADF permanent members, 2018-19 257

Table B.17: ADF Reserve members, 2019-20 258

Table B.18: ADF Reserve members, 2018-19 259

Table B.19: ADF permanent and Reserve members, 2019-20 260

Table B.20: ADF permanent and Reserve members, 2018-19 261

Table B.21: Australian Public Service Act employment type by location, 2019-20 262

Table B.22: Australian Public Service Act employment type by location, 2018-19 262

Table B.23: ADF permanent and Reserve members by location, 2019-20 263

Table B.24: ADF permanent and Reserve members by location, 2018-19 263

Table B.25: Australian Public Service Act Indigenous employment, 2019-20 264

Table B.26: Australian Public Service Act Indigenous employment, 2018-19 264

Table B.27: ADF Indigenous members, 2019-20 264

Table B.28: ADF Indigenous members, 2018-19 264

Table B.29: Australian Public Service Act employment salary ranges by classification level, 2019-20 265

Table B.30: Permanent ADF salary ranges by rank, 2019-20 266

Table B.31: Australian Public Service Act employment performance pay by classification level, 2019-20 267

Table B.32: Details of accountable authority during the reporting period, 2019-20 267

Table B.33: Key management personnel remuneration, 2019-20 268

Table B.34: Senior executive Australian Public Service (APS) remuneration, 2019-20 269

Table B.35: Star rank Australian Defence Force (ADF) personnel remuneration, 2019-20 270

Table B.36: Other highly paid staff—Australian Defence Force remuneration, 2019-20 271

Table B.37: Other highly paid staff—Australian Public Service remuneration, 2019-20 272

Table C.1: New consultancy contracts entered into during 2019-20 (based on AusTender), by program (including GST) 274

Table C.2: : Total expenditure on consulting contracts, 2017-18 to 2019-20 274

Table C.3: Contracts that do not include the ANAO access clause, 2019-20 274

Table D.1: Additional online information 277

Table D.2: Reference websites and supporting documentation 277

287 INDEX

Index A abbreviations and acronyms, 282 accounts paid by due date, 78 acquisition projects, 42 ADF members and their families, support for,

26, 58, 99, 100, 132-133 administered items, 66-67 administered programs, 59 Administrative Arrangements Order, 13 advertising and market research, 75-77 advice to Government, 28 aerial surveillance, 34 aeromedical evacuation, 30 aerospace capability, 48 aerospace platform maintenance, 25 African peacekeeping operations, 24-25 AIMEE cognitive assistant, 74 air capability, 3, 19, 152 Air Force Indigenous Recruitment Pathway, 105 Air Force Plan Jericho, 74 amphibious landing and assault capability, 3, 89 ANAO access clauses, 274 annual performance statements, 22-64 Antarctic operations, 28, 30, 31 appropriation, 16 Approved Facilities and Infrastructure Project, 51 APS Executive Level employees, 118 APS review of actions scheme, 140 Arafura class patrol boats, 3, 43, 145, 151, 154 Armed Reconnaissance Helicopter, 48 artificial intelligence and autonomous systems, 74 ASEAN-Australia Informal Defence

Ministers’ Meeting, 34 asset management, 51, 148 Assistant Defence Minister, 13, 15 Association of Southeast Asian Nations (ASEAN), 12 Attack class submarines, 3, 37, 43, 154 audit external, 53, 87 internal, 87, 90 work health and safety, 138 Auditor-General’s reports, 93-94 AUSMIN US-Australia consultations, 35 AusTender, 94 Australia-India Comprehensive Strategic

Partnership, 49 Australia-Japan fighter jet exercise, 34 Australian Defence College, 41 Australian Defence Export Office, 26, 33 Australian Defence Force Academy, 41 Australian Defence Force Cadets, 13

Australian Defence Force staffing, 110-112, 116-121, 258-261, 263, 266, 270-271 Australian Federal Police, 48 Australian Geospatial-Intelligence Organisation, 36 Australian Industry Capability Plans, 43 Australian Maritime College Tasmania, 3 Australian National Audit Office, 53, 86, 87, 274-276 Australian Public Service workforce, 113-114,

116-120, 248-253, 262-265, 267-269, 272 enlistments and separations, 114-115 Australian Signals Directorate, 13, 78 awards see honours and awards B base COVID-19 assessment stations, 62 base service hubs, 51 biodiversity offsets, 158 Biosafety Level 4 Zoonotic Laboratory Network, 49 border control, assistance with, 24, 32 border protection operations, 30 Boxer 211 reconnaissance vehicles, 3, 154 budget deliverables, 53 Build on You program, 101 bushfire monitoring technology, 19-20 bushfires 2019-2020, 16, 18-20, 24-25, 28, 31-32

see also Operation BUSHFIRE ASSIST 2019-20 Bushido Guardian, 34 C C-17 infrastructure project, 82 Cadets, 122-123 Campbell, General Angus J (Chief of the

Defence Force), 5-8, 15 Canberra class landing helicopter docks, 89 Capability Improvement Grants, 35 capability investment and development, 12, 25-26,

33, 39-42, 86, 151-152, 154 Capability Life Cycle, 42, 86 Capability Life Cycle Manual, 38 Cape class patrol boats, 3, 43 capital projects see capability investment

and development cash result, 66 Centre for Defence Industry Capability, 35 chart of accounts, new, 54 Chester, the Hon Darren MP, 13, 15 Chief of the Defence Force, 13, 15 review 2019-20, 5-8 childcare centres, 58, 100, 133 children of ADF service members, 58 civil community and civilian agencies, assistance to,

16, 18-20, 24-25, 28, 31-32 climate adaptation, 159 Collins class submarine, 25

288 DEFENCE ANNUAL REPORT 2019-20

combat clothing, 25 Combat Reconnaissance Vehicles, 154 combat systems development, 12 Combined Maritime Forces, 29 Comcare, 57, 138 Commonwealth Budget Management System, 53 Commonwealth Ombudsman, 93 communication strategy, 55 community capacity building, ADF members, 26 Community Support Coordinator Program, 58 complaint handling and resolution, 140 compliance with financial law, 88 compulsory call out, Reserve Brigades, 18-20, 24, 40 conferences and events, 102-103 Construction Environmental Management Plan, 51 consultancy contracts, 273 consumer engagement forums, 50 contact tracing teams, 24, 64 continuous shipbuilding program, 25, 37 contracts and standing offers, 94 corporate plan see Defence Corporate Plan, 2019-20 Corporations Act 2001, 13 counselling and crisis intervention, 58, 132 Counter Improvised Threat Grand Challenge, 39 COVID-19 Operations Cell, Defence, 62 COVID-19 pandemic, 16, 25-26, 28, 31-32, 35, 49 assistance during, 24-25, 28, 39, 60, 62, 64 effect on operating environment, 24, 40 effect on preparedness, 25, 40, 62, 85 impacts of, 9, 28, 34, 37, 43, 90, 98 remote working, 36 workforce supports, 36, 62, 98, 99, 101, 133, 137 see also Operation COVID-19 ASSIST COVID-19 Taskforce, 24, 60 COVID-19 Taskforce Industry Support Cell, 63 credit card acquittal improvements, 51 CSIRO, 49, 63 cultural and linguistic diversity, 107 cultural reform priorities, 55, 99, 101 culture, organisational, 4, 55, 98, 140-142 Customs Act 1901, Minister for Defence’s

statement under, 88 cyber and intelligence security, 25 cyber capability, 3, 78 Cyber Gap Year Program, 78 Cyber Professional Framework, 100 D Daesh, operation to disrupt, 30 Dassault Systemes Virtual Shipyard Training

Program, 43 days of significance, participation in, 102 deaths of ADF members, inquiries into, 90 Defence 2022—Embedding One Defence,

50, 99, 80-81, 99, 101-102

Defence Act 1903, 12, 13, 54, 90 Defence Artificial Intelligence Centre, 74 Defence Assistance to the Civil Community arrangements, 24-25, 31-32, 40

Defence Audit and Risk Committee, 83-85 Defence Australian Industry Capability Program, 3 Defence Capability Assessment Program, revised, 38 Defence Childcare Program, 58, 133 Defence Committee, 83 Defence Cooperation Program, 26, 34 Defence Corporate Plan, 2019-20, 12, 22-23, 85 Defence COVID-19 Strategy, 60 Defence Enterprise Learning Strategy 2035, 100 Defence Estate Asset Management Framework, 51 Defence Estate Strategy, 2016-36, 51 Defence Export Strategy, 26, 35 Defence Family Helpline, 58 Defence Force Discipline Act 1982, 87 Defence Force Ombudsman, 93 Defence Force Retirement and Death Benefits, 59 Defence Force Transition Program, 58 Defence Forces Retirement Benefits, 59 Defence Fuel Transformation Program, 41 Defence Global Competitiveness Grants program, 26,

35

Defence Graduate Program, 126 Defence Home Ownership Assistance Scheme, 59 Defence Housing Australia, 13 Defence Housing Australia Act 1987, 13 Defence Industry Security Program, 54 Defence Industry Skilling and STEM Strategy, 100 Defence Innovation Hub, 25, 33, 35, 96 Defence Intelligence Organisation, 36 Defence Investment Committee, 38, 39 Defence Logistics Enterprise, 41 Defence Mental Health and Wellbeing Strategy

2018-2023, 136-137 Defence Online Academy, 101 Defence Operations Research Network, 39 Defence Planning Guidance, 33 Defence Portfolio Budget Submission, 53 Defence Public Interest Disclosure Scheme, 95 Defence Reserve Service (Protection) Act 2001, 121 Defence Risk Management Policy, 85 Defence School Mentor Program, 58, 133 Defence Science and Technology Implementing

Arrangement with India, 49 Defence Science and Technology Strategy, 37 Defence Science Partnerships, 49 Defence Seaworthiness Management System, 89 Defence Single Information Environment, 148-149 Defence STEM Cadetship Program, 126 Defence STEM Council, 100 Defence STEM Workforce Strategic Vision, 49

289 INDEX

Defence Strategic Update, 2020, 12, 25, 33, 50, 81, 98 Defence Strategic Workforce Plan 2016-2026, 50, 56, 98, 108 Defence values, 4 Defence White Paper, 2016, 12, 25, 33, 37, 40, 42,

86, 151-152 Defence White Paper People Initiatives, 98 Defence Work Experience Program, 105 Defence Work Health and Safety Strategy, 136 definitions, 286 Department of Foreign Affairs and Trade, 32 Department of Veterans’ Affairs, 13, 59 departmental overview, 12-20 Dependants With Special Needs Program, 58 diagnostic platform development, 24, 48, 63 dialogues, bilateral and multilateral, 34 digital workflows, 51 disability reporting, 107 disability, people with, 107 disaster relief assistance, 24, 28-30 diversity initiatives, 102-108 E ecologically sustainable development, 159 Education Assistance Scheme, 58 education sector, engagement with, 100, 101 emergency response see natural disasters and

emergencies Emergency Response Decision Support System, 48 emergency supplies, transport of, 19 emerging hazards, 138 Emerging Threats and Response Group, 38 Employee Assistance Program, 137 energy consumption, 159 Enhanced Defence Cooperation Program—

Philippines, 24, 28 enlistments and separations, 111-112 Enterprise Committee Governance Framework, 52 Enterprise Information Management, 54, 81 Enterprise Information Management Centre of

Expertise, 54 enterprise performance management, 22-23, 85 Enterprise Resource Management, 4, 54, 81 Enterprise Resource Planning Program, 41, 50, 54 enterprise risk management, 85 Environment Protection and Biodiversity Conservation

Act 1999 referrals, 157 environmental management, 51 environmental performance, 156-163 EpiFX influenza forecast tool, 39 Estate Engineering, Governance and

Integrity System, 51 Ethics Advisory Service, 87 ethics and workplace behaviours, 55, 87

evacuations, aeromedical, 30 evacuations, bushfire, 18-19, 31 Exercise TALISMAN SABRE, 158 expenses by outcomes, 68-75 explosive ordnance disposal, 30 Explosive Ordnance Logistics Reform Program, 41 F families, ADF, see ADF members and their

families, support for family and domestic violence awareness, 100, 132 Family Sensitive Practice in Health Care, 135 Family Support Funding Program, 26, 133 financial statements, 53, 166-248 financial summary, 16, 66-78 firefighters, assistance to, 19-20, 31 First Principles Review, 12, 50, 54, 80-81, 99 Five Eyes partners, 38, 78 Five Nation Research and Development

Council, 49, 63 flexible work arrangements, 109 flying hours, 45-47 Force Structure Plan, 2020, 25, 33, 38, 42, 48,

50, 81, 86, 98 fraud and corruption control, 87 freedom of information, 94-95 fuel supply chain reform and initiatives, 159-160 funded strength, workforce, 17, 108, 111 G Gap Year program, 17, 110, 111, 120-121 geospatial intelligence, 36 Geospatial Support System for Land Force, 151 Global Supply Chain Program, 25 Good Soldiering cultural program, 55, 102 governance committees see senior enterprise

committees graduate program, 126 grants, 26, 35, 75 grey-zone challenges, response to, 2, 33, 74 Guardian class patrol boats, 34, 43, 145 H Hawke, the Hon Alex MP, 13, 15 health and welfare services, ADF members, 26,

134-135 see also mental health initiatives and services Health Aspects of Transition policy, 135 helicopter docks, 89 Henderson Maritime Precinct, 43 heritage management, 158 highly paid staff, 276 HMAS Sydney, 43 Hobart class destroyers, 43 honours and awards, 102, 139 humanitarian assistance, 24, 28-30 Hunter class frigates, 3, 37, 43, 145

290 DEFENCE ANNUAL REPORT 2019-20

Hydrographic Data Collection Capability, 151 HydroScheme products, 45-47 I ICT Service Desk improvement program, 50 Indigenous ADF Pre-Recruit Program, 105 Indigenous Australians in Defence, 98, 100, 105,

107, 109, 264 Indigenous procurement, 150 industry, defence, 12, 35, 78, 82, 100, 115, 154 opportunities for, 26, 33, priorities, 25,

support for, 16, 32 information and communications technology, 81, 148-149 information management, 54 Information Publication Scheme, 95 injuries and illnesses, 57, 132, 138 innovation projects and contracts, 35 Inspector-General of the Australian Defence

Force report, 90 Integrated Investment Program, 37, 38, 41, 42, 86, 98, 151-152 Integrated Service Delivery, 50 Integrated Ship System enterprise, 48 Integrated Soldier System—Tranche 2, 3, 152 intelligence products, 36 Intelligence Services Act 2001, 13 international assistance, bushfires 2019-2020, 20 international engagement, 12, 26, 28-30,

34-35, 49, 51 International Maritime Security Construct, 25, 29 international trade shows and missions, 26, 35 Intranet home page improvements, 51 investment, defence, 3, 37, 38, 42 invoice payments, supplier, 35, 63 Iraqi Security Forces, capability building, 25, 30 J Jindalee Operational Radar, 3 Job Family renewal project, 56 Joint Counter Improvised Explosive Device, 151 joint enabling elements, 41 Joint Professional Military Education, 41 Joint Strike Fighter projects, 152, 154 Joint Warfare Committee, 38 judicial and administrative tribunal decisions, 93 K key management personnel, 129-130 L land and water management, 156 land capability, 3, 40, 151-152 land combat vehicles, 25

land vehicle modernisation, 48 leadership development, 4, 55, 98, 99, 101 legal expenses, 77 legal services, 54, 81 legislation, 12-13 lesbian, gay, bisexual, transgender and intersex

people, 102, 107 Local Industry Capability Plan, 51 M M2 Pathfinder Satellite, 96 Major Projects Report, 42, 86 mapping, 36 Marine Rotational Force—Darwin, 35 Maritime Border Command, 28, 31 maritime capability, 3, 19, 151 maritime surveillance and security, 29, 31, 34 media enquiries, 55 medical assistance and supplies, 24, 32, 34, 61 medical testing, COVID-19, 32, 39, 62 mental health initiatives and services, 57, 100,

134-135, 136-137 Middle East peacekeeping operations, 24-25 military equipment, 44 military exercises, 34 military justice system, 90 military observers, Lebanon, Syria and Israel, 30 Military Police, 41, 90, 102 Military Police Reform Program 2018-2020, 102 Military Superannuation and Benefits Scheme, 59 Minister for Defence, 13, 15, 63 Minister for Defence Industry, 13, 15, 63 Minister for Defence Personnel, 12-13, 15 Minister for International Development and

the Pacific, 13, 15 Minister for Veterans’ Affairs, 13, 15 ministerial and cabinet submissions, 52 ministerial responsibilities, 13 misconduct, inquiry into allegations of, 90 mobility support, ADF members, 26 More, Together: The New Defence Science and

Technology Strategy 2030, 39, 49 Moriarty, Greg (Secretary), 2-4, 15, 83 Multinational Force and Observers, 29 munitions and small arms research, 25 N National Action Plan on Women, Peace

and Security, 104 National Commissioner for Defence and Veteran Suicide Prevention, 90 National Naval Shipbuilding Enterprise, 37, 43, 145 National PFAS Investigation and Management

Program, 160-162 National Reconciliation Week, 106 National Security Science and Technology Strategy, 48

291 INDEX

NATO Resolute Support Mission—Afghanistan, 29 natural disasters and emergencies, 2, 3, 18-20, 31 see also bushfires, 2019-2020; COVID-19 pandemic

Naval Shipbuilding College, 43, 101 Naval Shipbuilding Plan, 2017, 3, 37, 43 Navy and Army Indigenous Development Programs, 105

Navy Women’s Development Program 2019-2021, 103 net assets, 66 Network Stability Taskforce, 149 New Horizon cultural program, 55, 102 New Starters Program, 57 Next Generation Navy cultural program, 55, 101 Next Generation Technologies Fund, 25, 37, 39 North West Regional Hospital, Tasmania, 32, 61-62 notifiable incidents, 57, 139 O oceanographic measurement, 39 Office of the Information Commissioner, 94 Ombudsman reports, 93 omissions and errors, 279 One Defence Leadership Behaviours, 4, 55, 99 1800 Defence contact centre, 19 online information, supplementary, 280 operating result, 66 Operation ACCORDION (Middle East region), 28 Operation ARGOS (North-East Asia), 29 Operation ASLAN (South Sudan), 29 Operation AUGURY (Philippines), 24, 28 Operation BANNISTER (worldwide), 29 Operation BUSHFIRE ASSIST 2019-20, 18-20,

24-25, 31, 37, 40, 48, 99 Operation CHARTER (Cyprus), 29 Operation COVID-19 ASSIST, 24, 25, 32, 37, 40, 48,

60-64, 98 Operation FORTITUDE (Lebanon/Syria), 29 Operation GATEWAY (North Indian Ocean / South

China Sea), 29 Operation HIGHROAD (Afghanistan), 29 Operation LINESMAN (Republic of Korea), 29 Operation MANITOU (Middle East region /

maritime area), 29 Operation MAZURKA (Egypt), 29 Operation OKRA (Middle East region and

Iraq/Syria), 30 Operation ORENDA (Mali), 30 Operation PALADIN (Israel/Lebanon/Syria), 30 Operation RENDER SAFE (Solomon Islands), 30, 48 Operation RESOLUTE (border protection), 30, 48 Operation SOLANIA (South-West Pacific), 30 Operation SOUTHERN DISCOVERY (Antarctica), 30 Operation STEADFAST (Iraq), 30 operational briefs, 28

ordnance, exploded and unexploded, 51 organisational capability reviews, 94 organisational structure, 15 Osborne South shipyard, South Australia, 37, 43 out-of-school-hours care centres, 58, 133 outcomes, 14, 22 PBS programs contributing to, 25, 26 overseas engagement see international engagement;

regional engagement P Pacific Islands, assistance in, 30 Pacific Maritime Security Program, 34 Pacific Step-Up, 12, 24, 34 pandemic modelling, 24, 48, 63 parliamentary committees, 86, 91-92 parliamentary questions on notice, 52 Partner Employment Assistance Program, 58, 99, 132 partnerships and collaboration, 12, 24-25, 48, 63, 78,

100, 115 bushfire assistance, 20 international, 51 science and technology, 49 Pathway to Change: Evolving Defence

Culture 2017-2022, 4, 55, 98-99, 101-102, 140 patrol vessels, 3, 37, 43, 145, 151, 154 peacekeeping operations, 24-25, 29, 34 per- and poly-fluroalkyl substances (PFAS)

contamination, 160-162 performance criteria and targets, 14, 22 performance management, 22-23, 85 performance pay, 131 performance reporting, 22-23, 50 linkages, 27 personal protective equipment, 19, 24, 32, 48 personnel exchanges, 34 piracy, 29 Plan Galileo, 145 Plan Jericho, 74 pollution prevention program, 158 Portfolio Additional Estimates Statements, 22-23, 53 Portfolio Budget Statements, 14, 22-23, 53, 85 portfolio structure, 13 post-traumatic stress disorder treatment, 135 preparedness, 25-26, 37, 40, 89 effect of COVID-19 on, 25, 40, 62, 85 Price, the Hon Melissa MP, 13, 15 procurement, 150 programs, 14 Project RESTORE, 135 Project Suakin, 109 Projects of Concern, 42, 153 Prolonged Exposure treatment, 135 protected cloud environment, 50, 54 Public Governance, Performance and Accountability

292 DEFENCE ANNUAL REPORT 2019-20

Act 2013, 12, 22, 84 Public Service Act 1999, 12 purchasing, 150 purpose, 12, 22 Q quarantine compliance assistance, 24, 32, 61, 98 R RAAF Base Amberley, telescopic docking

system at, 82 radar, 3, 25, 96 radiation legislation, compliance with, 41 Reconciliation Action Plan 2019-2022, 101, 105, 106 recruitment, 98, 100, 108, 123-126 Indigenous, 98, 100, 105 women, 98, 100, 102-103 redeployments to Services Australia, 64, 98 reform, Defence, 3-4, 12, 50, 54, 80-81 Regional Contamination Investment Program

2017-2020, 51 regional engagement, 12, 24-25, 34-35 remediation programs, 158 remuneration and benefits, 84-85, 127-131, 265-272 repatriation of Australian citizens during COVID-19,

32, 61, 98 reporting framework, 22-23, 50 linkages, 27 Republic of Fiji Military Forces, 29 research, 25, 39, 48-49, 63, 151-152 Reserve Service protection, 121 Reserves, 24, 64, 100, 109, 113, 116-121 statistics, 111, 262-265 see also compulsory call out, Reserve Brigades Reynolds, Senator the Hon Linda, 13, 15 Rheinmetall NIOA Munitions Plan Queensland, 3 risk management, 85 risk review, 33 Robotic and Autonomous Systems Implementation

and Coordination Office, 163 Royal Australian Air Force Veterans’ Residences Act 1953, 13 Royal Commission into National Natural Disaster

Arrangements, 32 Royal Edinburgh Military Tattoo, Sydney, 24-25 S SARAH (Supply Assistance Robot — Autonomous

Hardware), 74 satellites, 96 science and technology activities, 37, 39, 48-49,

151-152 Science, Technology and Research (STaR) Shots, 39 science, technology, engineering and mathematics

(STEM), 98, 100, 102-103, 123-126 Secretary, 13, 15, 83 review 2019-20, 2-4

security vetting services, 54, 81 Senate Estimates hearings, 52 senior enterprise committees, 83-85 Senior Executive Service employees, 118 senior leadership, 15-16 sensor and effector technologies, 39 Service Categories, 109-110, 112 Service Delivery Framework, 50 service integration, 3 Services Australia redeployments, 64, 98 Services Trust Funds Act 1947, 13 sexual misconduct prevention and

response, 99, 142-144 shared service model, 55 Shoalwater Bay Training Area expansion, 51 signal processing, 25 skills requirements and development, 56, 100, 101 small and medium businesses, 33, 35, 43, 150 Smart Buyer framework, 86 SMART programs, 58 SmartSat Cooperative Research Centre, 96 South Pacific virtual musical project, 24-25 Sovereign Industrial Capability Grants and

Priorities, 25, 33, 35 space capabilities, investment in, 96, 152 Space Surveillance Telescope, 96 Special Operations Capability Enhancements and

Continuous Development Program, 151 star-ranked officers, statistics on, 116-117 state and territory governments, support

for, 24, 31-32, 60-61 statutory redress of grievance scheme, 90 STEM Cadetships Program, 126 STEM Outreach and Engagement Plan, 49 Straits of Hormuz, freedom of navigation in, 25 strategic planning and review, 12, 25-26, 33, 50, 56,

80-81

Strategic Policy Review, 25 Strategic Risk Reviews, 33 Submarine Combat Control System, 48 submarines, 25, 39, 43, 48 submissions to Government, 28 Super Hornet cockpit ejector seat, 48 supply chains, 12 surplus, 16 surveillance and intelligence collection, 25 surveys, 26, 55, 59 sustainment products, 3, 44-47 T tactical payments scheme, 78 Team Defence Australia, 26, 39 telescopic docking facility, 82

293 INDEX

Temporary Employment Register, 124 terrorism and violent extremism, 28, 34 Total Workforce Model, 56, 100 Total Workforce System, 98, 100, 109-110 training, 26, 34, 41, 43, 99, 100, 101, 107, 124 transition support for ADF members, 26, 58, 99,

109, 133, 135 U unacceptable behaviour, 140-142 unit availability days, 45-47 United Nations Disengagement Observer Force, 29 United Nations Multidimensional Integrated

Stabilization Mission, Mali, 30 United Nations operations, support for, 25, 29 United Nations sanctions, enforcement of, 25, 29, 34 United Nations Truce Supervision Organization, 30 United States, cooperation with, 48 unmanned aerial systems, 163 V ventilator re-purposing, 24, 32, 48, 62 virus survivability research, 24, 48, 63 W waste management, 156 water consumption, 159 water purification supplies, 19, 31 Western Sydney Airport environmental offsets, 157 white paper see Defence White Paper, 2016 women in Defence, 98, 100, 102-104, 125 Women in STEM, 125 women, peace and security, 34, 104 work health and safety, 57, 99, 136-139 audits, 138

workforce, 16, 17, 50, 108-114 flexible work arrangements, 109 funded strength, 17, 108, 111 impacts of COVID-19, 36, 62, 98, 99, 101, 133 Indigenous participation, 98, 100, 105, 107,

109, 264 key initiatives and achievements, 100 recruitment, 98, 100, 108, 123-126 reforms, 3-4, 12, 50, 54, 80-81 remuneration and benefits, 127-131, 265-271 Services Australia redeployments, 64 statistics, 109-114, 116-121, 249-272 summary, 98 supports for, 58 women, participation rate, 103-104 work from home arrangements, 60 see also Australian Defence Force staffing;

Australian Public Service employees workshops, 74

294 DEFENCE ANNUAL REPORT 2019-20

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