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JOINT STANDING COMMITTEE ON FOREIGN AFFAIRS, DEFENCE AND TRADE
10/07/2008
Department of Defence annual report 2006-07

CHAIR —On behalf of the committee I welcome the witnesses, who are giving evidence on recruitment and retention, personnel shortages issues and related matters. Although the subcommittee does not require you to give evidence on oath, I advise you that these proceedings and hearings are legal proceedings of the parliament and therefore have the same standing as proceedings of the respective houses of the parliament. Are there any opening remarks either of you would like to make?

Mr Minns —We have been made aware of two specific issues you would like us to cover, so we are ready to address those. I will perhaps also make the point that people strategies going to recruitment and retention in Defence at the moment are in a period of reframing under a new strategic approach. There has been a lot of good progress made in the last two years, but efforts are continuing to improve how we approach the issues concerning people both in the Public Service and in the Defence Force that impact their willingness to stay in the organisation. We are doing that work through the process of a companion review on people for the white paper and that will be an extensive strategic and operational review of how we meet the people requirements of the organisation, how we run the governance for the HR system—the people system—and how we ensure that our business processes in the area to deliver services are effective, have been reviewed and are being improved to generate the capacity to reinvest in people issues in Defence.

CHAIR —Earlier today we were talking about hardening the Army and the like. Reference was made that it was reaching the point with some of those things where it is going to be a bit more difficult to get some of the specialist personnel required, and there are some other high-profile examples, including specialist areas in Navy and also some in Air Force. What strategies are we engaged in to minimise separation rates and to recruit, particularly in those specialist areas? Submarines are often mentioned and they were mentioned earlier today when we were talking about the number of days available on Collins submarines in the year in question. That is a continuing problem since that year as well. What are the strategies that are being adopted?

Major Gen. Slater —At the moment across the ADF we have 36 critical categories of trades or professions that we are concerned about. That breaks up into 22 in the Navy, 13 in the Army and only one in the Air Force at the moment. Eleven of those are at this stage looking as though they are worsening, four are improving and 21 we do not see any immediate change in. Each of the three services has specific recovery strategies for each of those trades that we are concerned about at the moment, and the strategies generally fall into short-term and longer term initiatives to fix them. Within the short-term fixes there are such things as retention bonuses—dollars have been offered to people to stay rather than leave. We have increased specific recruiting targets in some of those trades where we were short. That is not a simple fix—that is for sure. There is some organisational restructuring going on within some of the trade categories within each of the services. They are the short-term fixes for trying to stem the flow of people out of the force while we get the longer term remedies in place.

Some of the longer term recovery strategies are again about money and making sure that we have the right salary structure and paying the right quanta of salary to these people to ensure that they are prepared to stay when the market forces are trying to pull them out in the future. We are restructuring some of the trades and the professions where we have these concerns to make them more sustainable in the longer term. For example, we have some trades where the base for the feeder skills is too narrow for the number of qualified tradesmen that we actually need, so we have to get the shape of that career progression in the trade going like this rather than, at present, like that.

As part of the total package—the employment offer that we make to people in the future—we are trying to improve other areas. It is more than just the base salary. There are the personal benefits, such as housing and accommodation and superannuation. These are areas that we are working to improve over the next few years as part of the longer recovery strategies across the critical trades.

On top of that, there are the family benefits. We are always trying to improve those benefits that we offer members’ families. We have a saying: ‘Recruit the member and retain the member’s family.’ Possible initiatives in the future are medical and dental health support for families and an improved new defence assistance housing loan that is attractive to families so as to encourage members to stay in. We are working on the reduction of policy barriers in our longer term strategies so that it is easier for an individual who may be serving in a particular trade in one service when they have had enough of working in that particular service. Rather than the easiest option being to leave the ADF altogether, maybe we can offer them a second stream within another service doing similar trade work.

Mr Minns —I would mention a few strategies in the recruitment space. We have gone through a process of reform of the Defence Force Recruiting Organisation and the process of building a new model. The aim of the model is to see whether we can get more of the military personnel in that organisation out and engaging with potential candidates, with the back-office work of the recruitment activity being done by our supporting partner organisation. In that mix we have created specialist groups of military personnel to focus on recruitment in the critical trades. We are about to introduce a scholarship framework which is designed to foster students in high school focusing on the sorts of subjects that will enable them to be considered for selection to critical trades when they finish year 12. We have a specialist provider working with us, effectively in a search capacity, to find people who could be recruited to those critical trade roles within defence. They are three specific initiatives that we currently have operating in the recruitment space.

We have also been requested by the CDF in the last month to review what I would call the pathways for entry into critical trades across the three services. General Slater has talked about some of those issues, but not all of the trades that are critical for us are recruited directly from the external labour market. Some of them are probably better recruited from inside defence—from the internal labour market. We are developing some pathways that make it clear to people what those career opportunities are and what process steps are to be considered for them. To have that operating through the career management process is what that activity is about. We are still, if you like, investigating further opportunities to achieve recovery in the critical trades.

CHAIR —How will the scholarship system that you mentioned operate? I take it that is a school level scholarship?

Mr Minns —I might have to find that information and forward it to you. From each of the three recruitment initiatives, we are seeking to attract 200 applicants, or 200 responses for consideration for application, to those critical trades. My memory of the scholarship framework is that we are looking to offer in the order of 1,500, but that is something I would prefer to get the facts on.

CHAIR —Is that a bonded scholarship or a return of service obligation arrangement?

Mr Minns —No. It is not a huge amount of money for the individual, but it is what we are describing as a process of establishment engagement and a relationship with potential candidates and, if you like, keeping that process alive through their high school years.

CHAIR —It is not intended to induce people to do studies they might not otherwise do, nor to require them, in return for the scholarship, to enter a period of service; it is more just a relationship building activity?

Mr Minns —Relationship building but also with an understanding that these trades require these kinds of entry standards, in an educational sense. So, if you are looking to do a specialised role in the submariner world, there are some studies that you should be pursuing in years 11 and 12. It is making them aware of that. It will be a competitive process where people bid to be considered for those scholarships. It is a more than just creating a relationship; it is part of our strategy more generally to work with careers advisers in schools to develop active advocates for an ADF career.

Mr ROBERT —General Slater, I refer you to page 137 of the annual report. I am sure that you have memorised it.

Major Gen. Slater —I have.

Mr ROBERT —Between June 2001 and June 2003 across all three services and, indeed, across the ADF, the separation rate dropped substantially. Across the ADF it dropped by four per cent and across Air Force alone it dropped by six per cent. Then, of course, from June 2003 to June 2005, it went back up again by two or three per cent and it has slowly started to work its way down. Between June 2001 and June 2003, why did separation drop by four per cent or five per cent and in the next two years, from June 2003 to June 2005, why did it rise by two per cent or three per cent?

Major Gen. Slater —I would be foolish if I were to try to give you an answer to that question. The amount of analysis that would be required would take us some time to do and I do not have that at my fingertips.

Mr ROBERT —I am sure Defence would have done the analysis. A separation rate of five per cent over two years is substantial. I am sure your office would have done something. It would be useful if your office could provide that to the committee. It would be interesting to know why over two years there was a substantial drop in the separation rate, which is outstanding, and that in the following two years it increased again.

Major Gen. Slater —We will be able to access that analysis and suggest some reasons that would have contributed to those changes, but we would not try to give definitives.

Mr ROBERT —That is fair enough. Going on to your lead statement about the difference that a range of initiatives have made, do you have any quantified evidence about the likes of the changed salaries, the new home loan evidence, the retention bonuses, the gap year, the new superannuation and so on? Is there any quantified data as to the impact those changes are now having on the reduction in separation?

Mr Minns —As at 1 May and 1 June, the separation rate had fallen to 9.9 per cent.

Mr ROBERT —Is this for the ADF?

Mr Minns —Yes. That compares very favourably with many of the competitors that we face in the external labour market. The rate in the mining sector is probably double that. The rate for professional services organisations and the service industry generally is more likely to be in the high teens and the low twenties.

Our issue is that, because we do not recruit laterally very much at all, it is still preferable for us if we can get 10 per cent down to nine per cent. We see gaps appearing in our labour market over the years if we take too much of a hit in turnover in a given year. Our objective would be to see whether we can take 9.9 per cent down further. But perhaps Defence is an organisation that will always experience turnover in the range of at least eight per cent perhaps because of the age of the people and the nature of the service commitment.

Mr ROBERT —Treasury’s view is that unemployment will rise by about 130,000 this financial year. Is there a general trend that, when unemployment rises, it is easier for Defence to recruit? Is that a reasonable statement, or does that no longer hold true?

Mr Minns —There is a slight statistical correlation, but it is not a very strong one. One of the pieces of work that we are commissioning at present, as part of a review of the HR function, is to look at our quite effective research capability within Defence and target it at this kind of retention causality analysis. We do that work, but we do not necessarily have it refined enough to be able to answer your first question—‘Explain for me that shift in separation or retention over a two-year period.’ That is a strategic objective that is now with my team to see if we can make our research effort much more targeted to the drivers of a stay-or-go decision for a given cohort within the workforce.

Getting down to or less than 10 per cent is our best performance for around a decade. We know at some level, through the reports from the services, that it is a combination of strategies and solutions. It is also the effect of things like the Defence Home Ownership Assistance Scheme that operate to cause people to stay in. It is possible that, as a result of the scheme coming in, some people who have stayed to qualify for that arrangement would consider moving on. So we could see again some higher drift in the turnover rate, but we do not think it will be a large spike.

Mr ROBERT —Do you have a view on the current operational tempo and its impact on retention, be it Defence personnel staying because there is a ‘real’ job—I use that word loosely—or, for some of my intelligence colleagues, ‘This is my seventh tour and I have had a bit of a gutful and I am doing something else’?

Major Gen. Slater —For every person who will give you the first response that you have just given as an example, the alternative is given by someone else.

Mr ROBERT —That is fair. Just on that same line, Defence is moving towards eight-month rotations to relieve some of the burden of the rotational schedule. In 1993 with the Cambodian commitment, which was 12 months, officer colleagues of mine experienced something like an 80 per cent separation rate of marriages upon return, which is incredibly high. We have never done a 12-month rotation on bulk since that time. What work is being done looking at the impact on families, on social services and on home norms with increasing to eight-month deployment for our people?

Major Gen. Slater —Prior to now, research that has been done within Army indicates that the optimum period for people who are currently serving and their families is somewhere between the six- and eight-month mark. If our service population changes, the optimum period may also change; but at the moment we know it is between the six- and eight-month mark.

We have been very quick to engage families, a lot quicker than we have probably been in the past. There is a strategic review of the Defence Community Organisation that supports the chain of command in providing the necessary support for the families when members are away. As a result of that review, which is now in its final stages, I would hope that we can make sure that we are structured to provide whatever additional support our families may need for these longer deployment periods. There are a number of individual conditions of service-type benefits that may need to be introduced, and we are doing work in preparation for that as well.

Mr ROBERT —The quid pro quo for families normally is, ‘I am happy for you to go and serve for six or eight months, but when you come back I actually want you at home for 12 months.’ How is the military going, because they obviously need to balance things such as promotional courses, training exercises and so on during home time?

Major Gen. Slater —The eight months at this stage is Army; we are not talking about right across the ADF. When you look at the nature of operations that Army is involved in and, therefore, the types of units that are deploying and redeploying and redeploying, the eight months will enable us to better schedule and quarantine the period after a deployment. I am choosing my words carefully here because there will inevitably be someone who this does not work for.

Mr ROBERT —There are always exceptions.

Major Gen. Slater —However, for the majority of people, after having done an eight-month rotation, their unit training cycle and deployment cycle will mean that they should have at least two years back in Australia before being required to go again as a formal group from that unit. That is a total of two years. In the following 16 months they will be able to do the time at home, more routine in-barracks training, promotion courses, et cetera, which is difficult to schedule at the moment with the higher rotation tempo.

CHAIR —Can you go through the nuts and bolts of the two years back? I think you were saying it is eight months overseas and two years back?

Major Gen. Slater —It comes back to identifying specific units and types of units that are having to do the repeat tours. We have currently sufficient units matched up against our known operational commitments over the next few years to say that there will almost be a two-year cycle and during that two years, eight months—

CHAIR —A two-year cycle and not two years back?

Major Gen. Slater —Yes, a two-year cycle total, which is why you get that 16 months at home.

CHAIR —Yes. What value do return of service obligation arrangements have? There was a time when they were very in vogue as a way of fixing problems in a hurry, but where do we apply return of service obligations these days?

Major Gen. Slater —Most professional or trade-type training that we give our people and some overseas training incur a return of service obligation, which generally is one year for every year of training plus one at the end.

Senator FORSHAW —I would like a bit of an update on what is happening with reservists. We deployed a company of reservists to the Solomon Islands. Are there any reservists still in the Solomons?

Major Gen. Slater —Yes, there are.

Senator FORSHAW —How many? Is it still that company?

Major Gen. Slater —I am not sure if you have been there to visit.

Senator FORSHAW —I have not, no.

Major Gen. Slater —There is a company of reservists there.

Senator FORSHAW —How are they rotated?

Major Gen. Slater —I cannot give you the details of how they work that rotation.

Senator FORSHAW —Can you let me know?

Major Gen. Slater —I can certainly find out.

Senator FORSHAW —This could have been covered at estimates but I was tied up with other things at that time with another committee, but what sort of program is now in place to try to increase the number of reservists? Is that part of the overall drive to increase the numbers in the force generally?

Mr Minns —The process of working on the companion review on people for the white paper is canvassing all that we need to think about in terms of the integrated workforce. We are looking at options to do with the reserve force, how do they complement the work of the permanent ADF, and at the model itself. Is there ongoing utility in the reserves being seen the way they are compared to part-time membership of the ADF? All of those issues are in play and are being considered at present. Our focus is to see if we can come up with a complementary force that works in the overall strategic context for the ADF.

Major Gen. Slater —The number of reserves has increased by almost 1,300 in the last 12 months to May this year.

Senator FORSHAW —We will obviously wait and see what comes through the white paper process.

CHAIR —I have a question about cadets. The annual report makes reference to cadets and as is often the case talks about the percentage of recruits who were former cadets. That is fine, but has anyone ever done any research on the effect of cadet participation in influencing the decision to join, rather than the comfortable analysis of how many recruits were cadets? I put the proposition that those who are keen to join the cadets probably had an interest in having a career in the military or at least trying it out, and if we are spending $36 million a year on the cadets what do we know about how that influences their decision?

Mr Minns —I am not familiar in the five months that I have been here—and the General may have a broader context—that we know through direct research the decision-influence effect of membership. We do that style of research. We just have not done it for that group.

CHAIR —For example, do we ask cadets when they are joining, ‘Do you have an interest in a career in the military?’ Do they get asked that question on entry and exit?

Mr Minns —They may well. The issue would be that it is a very diverse and distributed organisation, so we are not capturing that. It is not coming back as standard data even if it is being asked.

CHAIR —Would that seem to be a relevant question to ask if we are spending $36 million as a Defence outlay? There are all sorts of reasons that could be advanced as to why this is a good thing for many young people to do, and if Family Services wants to pay Defence to perform that work then that is admirable. But, given it is coming out of the Defence budget, I assume it is a Defence outcome. My simple question is: has anyone looked at what that Defence outcome is? The annual report does not tell me, but that is not peculiar to this annual report. To put your mind at ease, I have been seeking this information for about 18 years. If the answer exists, successive senior officers have decided not to disclose it or to get it. I have to say the proposition I advanced before seems to me to be a not unreasonable one. That is, those people who at 15 years in a school say, ‘I think I would like to join the cadets’, probably have in the back of their mind, ‘I wouldn’t mind trying out the Defence Force as a job.’ In other words, when we spend $36 million, what are we doing with the $36 million?

Mr Minns —The whole question about cadets, its objective, its governance model and the effectiveness of the cadets as a feeder group for the ADF is in the frame. Parliamentary Secretary Kelly has commissioned or is in the process of commissioning with the CDF a review of the cadet organisation to ask those questions.

One of the observations that I have made in the first quarter that I was here is that cadets is an enormous organisation with a joint community focus, yet it is a hard thing for Defence to fully understand and engage with because it is such a distributed structure. One of the key aims of the review that is coming is to look at the governance model. So there has been a decision to have that review. Some of the conversations that we have triggered with the Chief of Services Committee has gone to the question of do we understand enough of how we are using cadets in a strategic and effective way. The level of cadet background in our officer corps is around 35 per cent.

Major Gen. Slater —Closer to 40 per cent

Mr Minns —It is closer to 40 per cent who have that background.

Mr ROBERT —That is huge.

CHAIR —That is like the old school tie.

Major Gen. Slater —Yes, which led to the other.

CHAIR —I was going to say it is a bit like the old school tie. I think it is good because I went through it, and I have heard that from plenty of officers.

Mr ROBERT —I think it is good because I went through it.

CHAIR —I have heard that from plenty of officers. It does not tell me that if you never went through it you would not have joined the Defence Force in the first place. I have a simple proposition: if we are spending $36 million out of the Defence budget I would like to see a Defence outcome.

Mr Minns —There is an outcome in that it is supporting that level of recruitment to the officer corps.

CHAIR —What level of recruitment? How is the level of recruitment different because we spent the $36 million?

Mr Minns —If you look at the propensity for any member of the community to consider a career in the Defence Force, it is exceptionally small.

CHAIR —What percentage of school students elect to join the cadets? It is exceptionally small.

Mr Minns —Yes. There is an issue about whether we are spending money on people who might have done this anyway. It is actually a question you can ask in the context of the gap year as well, although it does look like with the gap year that we are not seeing cannibalisation of the market. We are seeing people who are trying before they buy through a gap year experience. But the questions that you are raising are the ones that occurred to me, together with the governance issue about how well Defence oversights what is a fairly large and very distributed organisation, and that is why there is going to be a review.

Mr ROBERT —My question is on the gap year and the chair’s question with respect to whether we measure cadets and cadet input and return on investment for our money. When someone joins the cadets do we measure their level of interest in the Defence Force by asking questions like, ‘Would you have joined anyway?’ It would appear that that degree of analysis has not been done. Is that a fair statement?

Mr Minns —That is my sense of it.

Major Gen. Slater —Yes.

Mr ROBERT —I will leave the chair to deal with what should be done with cadets. When we move to the gap year, which perhaps is a little easier to measure because men and women are choosing to put on a uniform in the professional military and do a gap year, have we gone down a path of measuring before they start their gap year, midway and at the end to get a feel for whether the gap year is indeed working?

Mr Minns —I am not sure that we asked a question when they started on whether they were intending to join anyway. In some respects, if we ask them at that point whether they think they might join at the end, their answer will be that they do not know and that is why they are there on a gap year. What we have discovered, though, is that in the order of 50 people from the cohort of 700 have already sought to convert to the permanent ADF. We have had a separation number of about 66 at this stage, and that is a much lower proportion of separation through a training process than we get through the normal intake for the ADF. To see that number of people already committing to a decision to join the permanent force is encouraging.

It needs to be remembered, too, that the gap year was not necessarily about a feeder group to permanent membership of the ADF. In fact, if all 700 put their hand up and said they would like to come in, to some extent it could give us an issue, because some of them would wish to enter in the officer class and the officer process is a competitive selection model that was not the model for gap year. The gap year provided an opportunity to meet a particular standard, and it is first in, first served. We are in the process midyear of assessing gap year outcomes, assessing our view about it, and we have started with those people a research project. The later work has embraced the gap year population as well.

Mr ROBERT —You said that the gap year was not about targeted recruitment. That was not its purpose.

Mr Minns —No. It was designed to give people an experience of life in the ADF, perhaps with the idea that they might do the gap year, proceed on to study or university, and look to return to the ADF at the end of that process—‘gap year’ meaning something you do for a year before you commit to your career objective.

Mr ROBERT —It was designed with recruitment in mind?

Mr Minns —Yes.

Major Gen. Slater —Longer term recruitment rather than short term.

Mr ROBERT —The ADF is not in the business of providing an experience. There are theme parks in my electorate that do that very well. So, it was designed with a long-term recruitment strategy in mind?

Mr Minns —Yes, but my point was that it was not necessarily converting them all at the end of their gap year.

CHAIR —There is a matter that struck me in reading the ASPI budget review that deals with personnel that I would like to read to you, because I was somewhat surprised to read it. It states:

It is sobering to compare the number of middle and senior managers in Defence from 1998-99, just after the Defence Reform Program, to the latest available figures. Civilian senior executive numbers have grown by 59 per cent and star rank military officer numbers have increased by 57 per cent. Most startling has been the increase at Dep Sec level, from four to 11, after the DRP suggested a reduction to three.

As a dep sec you might have a view about that?

Mr Minns —Especially as a recent dep sec.

CHAIR —I appreciate the ASPI document was talking about percentages and we can all have fun with percentages rather than raw figures, but even allowing for some tinkering with that, what is it that is happening in Defence personnel that results in increases in star ranked officers and equivalent senior execs and a dramatic expansion of the dep secs against what was supposedly the stated position of government?

Mr Minns —If we go back to the DRP, it recommended that we had four SES band 3 positions: Deputy Secretary, Strategy and Intelligence; Chief Defence Acquisition; Chief Defence Scientist; and Deputy Secretary, Budget and Management. That was what DRP recommended. The actions after the Defence Reform Program in 1997 did see four roles created. The Deputy Secretary, Budget and Management role was called Deputy Secretary, Corporate. Chief Defence Scientist was as recommended. There was a Deputy Secretary, Acquisition and a Strategy and Intelligence role.

A couple of things happened in the period of early 2000. A CFO role was created, and from my impression after five months that is not an unreasonable idea in an organisation of this size with the budget that it has. Elevating the role to a more senior level and presence on the executive team would be the norm in the corporate sector and many other government trading enterprises. I am sorry, the Intelligence and Strategy position was split into a Deputy Secretary, Strategy position and mostly driven by the increased overseas activity around deployments—Timor, Iraq and Afghanistan—so that adds another position. The next three increases are all about the Defence Materiel Organisation. The Defence Materiel Organisation operates with some significant delegations around employment in its own right, with the consultation between the CEO of DMO and the secretary of the department. Three dep sec roles were created in 2007—a General Manager, Corporate, a General Manager, Systems and a General Manager, Programs. I am probably not well placed to discuss the context for those decisions. They would have been taken by Dr Gumley and the secretary of the department.

The next three additions are as a result of the Defence management review conducted in 2007, where the DMR recommended three new band 3 roles—a policy and coordination deputy secretary, a strategic HR role, which I now fill; and a chief information officer role. There was also a temporary dep sec role for the white paper established with a limited tenure in January this year. That explains the expansion. It is an organisation with DMO included of 21,000 employees that represents a public service leadership group of about 11 people. That group plus the seven band 3 members of the ADF mean that we have a leadership team looking after 70,000-plus permanent employees. From the context where I have worked in other government, I have worked on an 11-member executive team and an 8,500 employee organisation. I think that with Defence’s strategic challenges and its operational requirements to run the organisation it is not unreasonable to have a CIO, to have a director of HR, to have a focus on governance, and those particular roles created within DMO go to the Kinnaird review and the reform agenda that Dr Gumley has been running. So, it is growth. As a person who had no contact with Defence in 1997, I think the idea that there was a secretary and four dep secretaries that were running the organisation was probably underdone.

CHAIR —As someone who was not a huge fan of the Defence Reform Program at the time it came out, I could be persuaded to agree with you on that point. But there are some other examples that are given. The middle manager level, colonel/lieutenant colonel, has grown by 30 per cent, and civilian middle managers have grown by 59 per cent. I do not agree with everything that is in the ASPI document, but it just seems to paint a picture of pretty dramatic growth in the number of people in management roles at a time when we obviously have issues with recruitment and retention in getting the numbers to expand the Defence Force. There are higher numbers of staff and we do not seem to have any problems expanding the management levels.

Major Gen. Slater —The period that we are talking about is also that period where we have had a high operational rate overseas. To conduct those operations you are looking at a significant increase in the workload and tasking of the lieutenant colonel/colonel bracket. As we have sent people particularly to the Middle East and to Timor we have had to backfill them in their appointments and their roles back here in Australia to keep the ADF moving in a sustainable way. Training and maintaining the force back here and preparing the forces to go is heavily reliant on people at that rank level, so there would have been a sizeable element of the increase in those particular rank levels of ADF officers that you just cited as a direct result of the conduct of operations.

CHAIR —I appreciate that. There is one other point in this document that I would be interested in your comment on in terms of personnel. At 21 June 2007 there were 843 ADF personnel on non-operational overseas postings. It does not identify where they were, but that struck me as a very large number of defence personnel on non-operational postings. Can you tell us what might make up that 843?

Major Gen. Slater —I would highlight first of all that there are two main areas where they are deployed. The first country is the United States, where we have 398. These figures are as at 1 July this year. There are 398 in the United States and 114 in the United Kingdom.

CHAIR —Can you tell us what they are doing and what sorts of ranks we are talking about?

Major Gen. Slater —Rank-wise they would be senior non-commissioned officers, warrant officers and officers. The officers would be generally in the rank bracket from captain through to lieutenant colonel, although there are some individuals above lieutenant colonel, such as the heads of the defence staff in countries such as Indonesia, the United Kingdom and the United States, where they are a much higher rank. I can break the 800-odd into a number of functional areas and just give you the numbers, which might help you to get a better understanding. Those people in training and instruction in overseas schools total 267. Logistics officers doing in-line logistic functions or involved with our procurement of overseas equipment totals 167.

CHAIR —If they were doing logistics functions wouldn’t they be on operational duty overseas?

Major Gen. Slater —Not necessarily. You could have an officer who was posted into, let us say, an exchange position in a US military unit in continental USA where he is employed as a logistician. That would not be an operational job. It is classed as an exchange job. He may well have a reciprocal US officer posted to an Australian unit here in Australia, and it is the experience they gain in working in each other’s systems and the skills that they learn over generally a two-year period that are of value to both armies. we have 98 people doing defence international policy related work.

CHAIR —What is defence international policy?

Major Gen. Slater —That will be a range of jobs that may be in Australian embassies or high commissions around the world doing defence related work.

CHAIR —I am not sure about that. There are defence attaches and defence staff attached to our posts.

Major Gen. Slater —They are included in this group.

CHAIR —I do not think there are 98 of them.

Major Gen. Slater —There are both uniformed and civilian people doing that work as part of our overseas defence staff.

CHAIR —So, I am clear, I would like to know what the 98 are. I want to know what the words ‘defence international policy’ mean. If those words mean staff attached to Australian posts overseas, embassies and high commissions, then that is an answer. If it means them plus others, then I would like to know who the others are.

Major Gen. Slater —To my knowledge, it is those who are in our embassies and high commissions overseas, defence staff both military and civilian. The next group is defence liaison staff, totalling 94—for example, an officer posted as, say, the CDF’s liaison officer representative to the Pentagon. These are individuals who have been posted to key and significant headquarters or units that we are working with on a regular basis around the world to facilitate the exchange of information between who they are representing back here in Australia and the organisation they have been attached to. Again, it could be civilian or military.

CHAIR —That is the current list more or less?

Major Gen. Slater —There are more.

CHAIR —Keep going.

Major Gen. Slater —Defence cooperation has 84 people. For example, we have a team of officers, warrant officers and senior NCOs in Timor who are working in a cooperative sense, a training sense and an advisory capacity with the Timorese Defence Force. We have 53 people in Butterworth, Malaysia.

CHAIR —Is that classified as non-operational?

Major Gen. Slater —It is. I suspect that it depends on whose definition or what definition of ‘operational’ you want to use. In the figures that are referred to in the reports you have there, as we understand it—and this is the break-up we have got of the 800-odd—you may classify a whole number of these as operational tasks under a different definition. These are certainly people who are out there working in a pure defence role. Just to complete the list, I can give you two more.

CHAIR —Yes, please. Keep going.

Major Gen. Slater —We have 44 people involved in defence security. I cannot tell you where they all are because I do not know, but again I imagine many of them would be attached to our embassies and high commissions. And, finally, there are 35 people involved in research and development.

CHAIR —Are these people overseas?

Major Gen. Slater —Yes.

CHAIR —That answers my question. I appreciate that. Is that the full list? Have you got more to come?

Major Gen. Slater —No. That is the full list by function. If you want to sit here for many more hours I can give you a break-up by service in country, detailed by rank level by service.

CHAIR —We need to save time, but I am actually interested to know the answer because it intrigues me.

Major Gen. Slater —I will mail it to you.

CHAIR —If you would like to provide it to the secretariat, we would appreciate it. Are there any other questions?

Senator MARK BISHOP —I seek some guidance, Chair. We had a lengthy discussion earlier on recruitment and retention issues. It was in the context of trades across the three services. After I left, did we expand it out to non-trades areas or did we go on to other things? I do not want to reinvent the wheel.

CHAIR —No, we did not really go any further.

Senator MARK BISHOP —Past trades?

CHAIR —No.

Senator MARK BISHOP —I noted there was a press release from the minister the other day saying that something like $350 million had been allocated to some sort of firm to do recruitment and retention work over the next four or five years, from memory. We had a briefing about a month ago from the three service chiefs and my take on the briefing in terms of both recruitment and retention was that Army had more bodies than they could do with and that their retention strategies were working so effectively they were going to have some logjams into the future. My comments exclude trades areas. Army was very pleased with itself. Air Force was pleased with itself, but not as much as Army. And Navy was still a black hole across the board. That was my take on what the three service chiefs said to us. All the discussions earlier were about trade shortages, and in the final analysis I can tell you it is an issue of price. If you fix the price you will fix your trade shortages. That being the case—you do not have to accept this, but this is my view—do we have significant problems apart from that which I have outlined in terms of recruitment and retention still into the three services excluding trades and technical areas?

Mr Minns —The language we are using at the moment as we work through the white paper process of future direction is that we have probably stemmed the tide in terms of exits from the ADF, so the downward curve has flattened out. We have to make recovery in those critical trades in the areas that we have suffered in.

Senator MARK BISHOP —I accept the points that you have repeatedly made to me about trades and technical areas. I am talking about all other areas.

Mr Minns —If you follow that kind of logic, we have stopped a process of losing too many. We have got a recovery requirement and we will have to meet whatever the guidance of the white paper is based on the strategic needs of Defence for our future ADF size. Given the nature of our service model and the fact that 52 per cent of male members leave before 10 years and about 68 per cent of females leave before 10 years, we are always in the market for 7,000 or 8,000 people every year. It is an interesting labour market model, because you do not do very much lateral recruitment above the officer intake level and the general intake level. If we have a particular year when we suffer loss in a generational group, we will pay for that for 20 years because we have a shortage in that category or rank category. The challenge that we face in a recruitment sense is always a fairly intense one, because finding somewhere between 7,000 and 9,000 recruits in a year is a tall order.

Senator MARK BISHOP —Excluding trades and technical areas, when we had the three service chiefs, General Leahy was jumping out of his skin, he was dancing around the room: he had that many bodies both in recruitment and retention and he could not believe it. The same principles apply with Air Force, but to a lesser extent and, as I said, Navy has a black hole. That being the case, the impression I have had is that recruitment and retention issues, excluding trades and technical areas, is a continuing and major problem in Navy, but not an issue across the board.

Mr Minns —What I would say, though, is that it is only not a problem in Army at the moment, and it is true that attracting infantrymen to the Army has proved easier than for other categories. It is only because we are putting an enormous effort into the recruitment activity. In the last two or three years we have reformed the recruitment model; we have refined our brand campaign in the market to attract people. A lot of research and a lot of effort have gone into an alliance model of delivering a better recruiting outcome. Three or four years ago, as I understand it, we were underwater in a recruitment sense in Army and everywhere else. We were not getting enough.

Senator MARK BISHOP —This is basically a good news story. Apart from trades and technical areas and the black hole in Navy, you have basically fixed the problem.

Major Gen. Slater —Recruiting has always been, and I think always will be, a boom and bust cycle. What we have at the moment is some really strong success, particularly in Army. We have been successful to a lesser extent in Air Force and we still have some problems with Navy. We have a great product to sell. Through research we have been able to size up what it is that the market forces are pulling against us and we have been really competitive. The area that we are having difficulty with is Navy, because the Navy lifestyle at the moment is not that attractive to young people.

Senator MARK BISHOP —No. They do not like being away.

Major Gen. Slater —No. So we are working to overcome that, but we have a great product and a great formula for the other two services at the moment. What we have to do and what we are working to do is sustain the current success into the future and, if we continue doing exactly what we are doing now, in five years time we will be down in the trough again. We have to continue to read the market and adapt to it.

Senator MARK BISHOP —I am not going to pursue this now; I will pursue it at another time. There is an end point to this discussion and it is why we are spending $350 million on recruitment and retention across the board when we have got particular problems. But we are all keen to go home and I will pursue that at another place and at another time.

Mr Minns —I would like to make one point about the contract that was signed. We use an alliance model in recruitment, so it is Defence personnel, uniformed personnel, some APS members, together with an alliance partner. The current contract is with Manpower and the future contract is with Chandler Macleod. The point of moving to that model was to make sure that our uniformed personnel were actually doing the recruiting and attracting, and not the other work. Before that model was introduced we had something like 1,800 uniform personnel working in recruitment. We now have 230 very well deployed. So as the operational tempo issue has bitten and the ability of the services to provide a service based delivery model for recruitment has declined, the alliance partner model is a framework that has delivered results and we hope it will continue to in the future.

CHAIR —Thank you very much for your evidence. As you can see, people are in fact deserting us to catch planes. Again, I would like to thank you for coming to this public hearing of the Defence subcommittee and providing the evidence that you have. A Hansard transcript of your evidence will be made available to you and, should there be any matters you think require alteration, you should contact the subcommittee secretariat. At this point I declare closed this public hearing of the Defence subcommittee.

Subcommittee adjourned at 4.07 pm