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Foreign Affairs, Defence and Trade References Committee
Capability of Defence's physical science and engineering workforce

GRAY, Mr Alan, Private capacity

[11:50 am]

CHAIR: Welcome.

Mr Gray : I should point out, I suppose, that I retired from the Public Service nearly three years ago after some 40 years of service. Approximately 20 to 25 years of that time was spent dealing with science and innovation matters in various capacities.

CHAIR: Would you like to make a brief opening statement before we go to questions?

Mr Gray : Thank you. Chairman Gallacher, Deputy Chair Back and Secretary Sullivan, thank you for providing the opportunity to follow-up on our submission and answer any questions you may have in relation to the points made. My co-author, Dr Martin Callinan, is currently overseas. He offers his apologies that he cannot be here today. We have, however, prepared these opening remarks, which build on the submission we provided to you earlier. Earlier this year, we wrote a special report for the Australian Strategic Policy Institute which looked into Australia's defence science and innovation. When we heard that this inquiry was established, we were of the view that our report may have some currency in relation to your work. We trust that it may be of some assistance. We have provided copies to the secretary.

The key theme in our report is the impact of technology across the defence sphere. While Australia can point to the acquisition of state-of-the-art military platforms, behind the scenes, Australia's technological advantage is eroding. Some of this erosion is self-inflicted. To be frank, we have taken our eyes off the technology ball to the extent that today Australia is lagging vis-a-vis a number of our neighbours in the Asia-Pacific in building and investing in high-quality science, technology, engineering and mathematics research capacities and infrastructure. I think you probably heard some of that from the evidence that I have been listening to.

Technological change is also having a profound impact on the defence labour market. Recruitment freezes, staff cuts, packages plus rigid recruitment and retention structures will only exacerbate what is already a difficult situation for Defence. We suggest that too little attention is being paid to recruiting PSE staff in the future. While there is much anticipation within the community towards the release of the defence white paper, we would suggest that there is also an urgent need for Defence to bring out a PSE labour force blueprint which charts civil and ADF labour force challenges, needs and requirements over the next 10 to 15 years. We will certainly be scrutinising the white paper for such consideration. Aside from providing as much certainty as possible for the PSE community within Defence, however you define that, such a document would also be invaluable for our universities and technical institutions in helping them plan and develop programs which would meet the fewer recruitment needs of Defence and the national security community.

Defence is one of our largest recruiters in the country and, as such, is in a position to influence the sort of training and qualifications it needs moving toward. When one looks out some 10 to 15 years hence, there is a range of emerging science and technology fields that Defence will have an unavoidable requirement to recruit or contract against. Amongst these include information technology, including cybersecurity, data analytics and mining, IT integration, cloud computing; satellite and communications technology, including mobile and optical; autonomous systems, which bring together the technical disciplines in areas such as sensing, materiels, propulsion, mechanical engineering; as well as computing, communications, network and systems integration skills; and modelling and simulation. Having access to skilled practitioners who can use simulations to iron out bugs and optimise the performance of systems at the design phase will not only save costs but also help maximise the capability and flexibility of the systems and platforms quickly.

The fourth one is materiels science and engineering. Recent developments in this field have been multidisciplinary in nature and bring together materiel science, nanotechnology, biology, chemistry and physics. Next generation batteries and fuel cells, for example, require access to expertise if you are to understand these technologies both for their application and their maintenance.

Critical questions that need to be considered by the committee and, indeed, the white paper covering Defence Force requirements, we believe, include: is the current Defence PSE workforce adequately equipped and qualified to meet Defence's challenges and requirements in these new and emerging fields? What skills retraining is required to equip the current workforce to meet these future technological challenges? In what cases is it more efficient and cost effective to retain an in-house workforce in these new and emerging fields? In which cases is it better to contract out the skills and expertise required? What consideration is given to in-house capacity to meeting emerging and unknown future technological challenges? Current labour force arrangements within the portfolio, we believe, are too ad hoc and focussed on short-term service delivery and tactical requirements rather than set against long-term strategic objectives. We would also suggest that were a PSE labour force plan included in recent white papers, much of the pain and disruption of the recent downsizing activity within Defence might have been avoided or at least mitigated.

In our ASPI report, we call for Defence to establish a human resource model that encourages mobility amongst the defence research and broader Australian PSE community. The skilled scientists and researchers currently employed are not necessarily the scientists and researchers needed to address the disruptive technologies on the horizon. Consideration also needs to be given to enabling academics and other researchers from other government research agencies and universities to transition employment conditions of both service and superannuation arrangements so that they are not disadvantaged when working on Defence related projects. Security clearances and transfer arrangements for working on Defence projects entails unacceptable delays and impediments in this day and age. Of course, security needs to be maintained, but security measures must not be allowed to impede the employment of talent to tackle the national security challenges. We hope our ASPI special report and our submission to the inquiry is of some assistance. We stand ready to assist in any way we can. Many thanks.

CHAIR: Thank you. Senator Back, do you want to start off with a few questions?

Senator BACK: Well, yes, I do. I want to ask you to expand a bit further. I was very interested in the comment you made about the next stage of the digital revolution and its impact on Defence PSE personnel. It is probably a good one to ask you to comment on. The third of the four points you made most recently is about when it is best to retain or best to outsource. In that same digital revolution space is the adoption of 3D printing technology, which is revolutionising so many areas. I have not thought of it in the defence context. I certainly have in the medical and I have in a range of other areas. I think recently, for example, Monash University constructed a small-scale jet engine completely by 3D printing. It has now gone, I think, to Rolls Royce in the UK to be assessed. Could you share your concerns and where the opportunities lie in both of those—the digital revolution and 3D printing?

Mr Gray : Certainly. Thank you, Senator Back. From my perspective, it is inevitable that some of these new technologies are going to impact on our labour force and some of the traditional skills and expertise that we have built up over the last 50 or 100 years or so may not necessarily be in the future. These days, for example, I could be sitting in Tokyo, Paris or Berlin and I could drive a robot to do the necessary welding for the next generation submarines. I do not need to have people there. They will have far better tolerances than what our people could perhaps provide manually. So that change is inevitable. The point I was trying to make in the opening statement is that we need to be planning for that. Defence, quite frankly, should have been planning for that a decade ago, because some of these technologies were around then. They are developing at such a rapid rate now and will inevitably have an impact on our employment structures and our professional skills.

Senator BACK: Is it your suggestion, then, that we should be ahead of the eight ball in the defence space rather than be trailing well behind it in developing the skills and expertise? Do you see that there will be benefits for Defence itself to build up the skill sets in those spaces?

Mr Gray : Absolutely. At least they need to be able to get access to the skill sets if they happen to reside in the private sector or if they happen to reside in the universities. They need to be able to draw on those skills at a moment's notice. That relates to the point about security clearances and transfer arrangements. If people are coming into the organisation for a 12-month, two-year, three-year secondment to answer some of these questions and to provide expert advice, there needs to be mobility and flexibility in the recruitment structures to allow that to happen.

Senator BACK: I guess it is an extension of the question. If we are collaborating with America, Britain and other allies in this space, they would be interested in dealing only with Australian personnel who are security cleared and who they would recognise as being within our Defence family rather than being within the defence industry wider family. Is that right?

Mr Gray : You are certainly correct, Senator. I also note and draw your attention to what happens in the US. The US faced similar situations, and they draw heavily on the university sector for expertise. They have mobility within their security arrangements. People are precleared and hold those security clearances, and they are able to be drawn in on a needs basis to solve some of these difficult, curly problems or to provide expert advice.

Senator BACK: Based on your 40 years and 25 years specifically in this space, you have drawn our attention to the fact that in 1979, DSTO had 4,900 staff of whom approximately a quarter, or 1,100, were professional scientists or engineers. The annual State of the service report this year advised that the number of Defence, DMO and DSTO PhDs was 520.

Mr Gray : That is correct. That is what the public records are saying. I note, however, that the Defence submission to you holds some different figures. I am happy to bow.

Senator BACK: But they are not going to be substantially different, I presume. Am I correct?

Mr Gray : I would hope not.

Senator BACK: My question becomes this: were we radically oversupplied with personnel in 1979 and then saw a lack of need for that number? How have we accommodated that dramatic decline?

Mr Gray : I would answer your question this way. I think that the role of DSTO—and I focus very specifically on DSTO, or DSTG, as it is now called—was, I suggest, very different in the 1990s vis-a-vis now. We saw in the 1990s some terrific technologies emanating out of DSTO, such as Jindalee and the minesweeping capabilities. There is a range of them. Since the Kinnaird review in 2003, the mission for DSTO has changed. You are seeing far less of that new technology and the technology that will make a difference for the war fighter in the battlefield to win and prevail. They are not doing as much of that as they used to. They are still doing a bit, but they are now being drawn more and more into being expert advisers or consultants on particular matters. There is nothing wrong with that, but I would suggest that the mission has changed.

Senator BACK: Finally, has DSTO, or DSTG—whatever you want to call it—lost the diplomatic war in the hierarchy of Defence? I ask because in a previous life before parliament I was the CEO of a Western Australian company that provided services to the Singapore military, including an RFID based fuelling system that controlled their entire fuel from underground tanks into the fuel tanks of every vehicle in the Singapore armed forces. It also maintained all the software, obviously. The DSTA, as it is called in Singapore, had a very, very elevated status within their military hierarchy, if you like. Are you telling me that the DSTO, or DSTG, either never had or has lost that status in terms of its importance in the overall decision-making?

Mr Gray : When I was there, I was assistant secretary of external relations in industry within DSTO. I was there for eight years. DSTO was seen to be sort of second or third tier within the organisation. We put a lot of effort into building up DSTO's credentials and capabilities in terms of having us at the main table. I think we succeeded over some time. I have been away for three years now. It would be difficult for me to say whether they are still sitting at the top table, although I observe that the Chief Defence Scientist has been taken off the top structure committee that meets weekly. I also observe the name change of DSTO to DSTG will inevitably mean a loss of brand recognition. If you go around to the universities, if you go overseas to the DSTAs or to the US, you find that DSTO was a recognised, respected distinguished organisation. Folding it into a group within Defence has inevitably led to some loss of brand recognition. Frankly, someone ought to be asking the question whether anybody costed the loss of that brand recognition. I do not think they did.

Senator BACK: Parari was organised by DSTO, was it not? I remember we appeared here in Canberra once exhibiting some of our RFID technology at Parari and communicating with DSTO personnel. Thank you, Chairman. Thank you very much for this submission and evidence.

CHAIR: As you are giving the last bit of evidence, you are probably going to cop a couple of unfair questions. Obviously, we have people who have no lack of acumen or ability leading Defence and leading the major components of the DSTG and DMO, or whatever has replaced that. If we are hearing that there is a loss of capability to evaluate smart buys and smart sustainment and a lot of smart capability in developing new things which we do not even know about yet, what is their plan? Is there another vision there that we have not heard about yet, or are we degenerating into a loss of capability all around?

Mr Gray : Mr Chair, I mentioned earlier that we are all waiting keenly to hear what the new white paper sets out. I would hope that included in that document will be an articulation of what their plan is in terms of ensuring that our ADF have the edge to prevail on any battlefield. We are buying off the shelf. Our potential adversaries at a nation state level are buying off the shelf. They are buying the same equipment we are. At the end of the day, it will come down to training and it will come down to us having an edge hopefully in the technology area which will ensure that our people (a) stay safe and (b) prevail. I heard you mention that we are all taxpayers in this room. As a taxpayer, I would be very happy to see some of my money going off and ensuring that our ADF people have the best possible chance of prevailing on the battlefield in whatever scenario the white paper ends up digging up.

CHAIR: Is it simpler to say that successive governments have placed budgetary constraints on Defence and that in order to take those costs out of Defence, they have had to take people out of Defence. If that is done on a voluntary basis, then wherever people volunteer, they go. That is how you lose the capability. Is that correct?

Mr Gray : Well, I heard you ask the question to the previous group. In my day and age, what generally happened in these sort of scenarios was that each group was allocated 40, 50 or 100 people that it had to lose, be it by redundancies or just being shown the door. There does not seem to be an awful lot of thinking going on about what skills we will need in the next five, 10, 15 or 20 years. We have heard today skill losses in the F-35. We have not even taken delivery. They are not actually here yet. We are losing skills in submarines. The submarine skill base is very, very fragile. It was 10 or 15 years ago. The loss of the skills out of that area is very, very concerning. So there is not a lot of thought. That is where I think a forward thinking plan in terms of what PSE requirements Australia will need for the next 10 or 15 years is urgently required so that people can then map against it. It also helps the PSE community understand that, okay, there are pressure points here. We will not be needing so many skills down here. I have not seen any sort of plan like that. During my time in Defence, I did not see such a plan. I think that would be worthwhile doing.

CHAIR: You do not have to go too far around the defence community to find people who do not like the F-35s. We are losing the capability in-house, and we have the submarine program coming along with no ability to competently evaluate what we are going to get. It is mind-boggling.

Mr Gray : We in Australia need a national capability to understand at least the equipment and the platforms that we are buying. It makes no sense.

CHAIR: Well, there has certainly been plenty of food for thought this morning.

Senator BACK: There has indeed.

CHAIR: So from your experience as a long-time employee, I suppose, of Defence, has it always been this way? Was there a period when we did have a bit of structure and a better plan and a better investment in skills capability?

Mr Gray : I only served in Defence from 2006 through to 2012, so I can comment only on that period. Certainly during the period from 2006 through to about 2010 and 2011, I felt that with the various conflicts and the deployments that the ADF was on, we had a fair old handle on keeping a bit of a balance. I acknowledge that the budget situation is quite dire and that there is a need for cuts, but the cuts need to be done in a consistent fashion to ensure that the skills just do not walk out the door. Nor has sufficient thought been given to upskilling or training some of the younger people, the several generations behind me. There has been very little of that. So you have now—I think it was one of the comments made before—a hollowing out. That hollowing out will cause us a rerun, for example, of the Collins submarine when the new submarine comes on board. So it is very challenging.

CHAIR: But look at the mining industry. I was in a major miner's operation in Perth for a month or so. They had entire floors which used to be full of people. Now there are no people in there. They have driven efficiency to the nth degree. They have taken costs out because they are driven to by the marketplace. Is there anything wrong with Defence actually doing this? Where do you separate Defence out and say that you cannot cut to the bone?

Mr Gray : The example I think you cited is Rio Tinto. A lot of their trucks now drive themselves. But at the end of the day you still need expertise in country to sit behind whoever is driving the lever back in Perth to understand how that technology works and how we maintain that technology. The mining industry is no different from the defence industry. At the end of the day, the ADF will want an assurance that they have people either within the ADF or the civilian community who deeply understand how these systems work and, if they break down, how we fix them quick and how we maintain them and how we get that through-life support.

CHAIR: Some of the evidence we had this morning, though, is that Thales have 22,000 engineers worldwide. So why do we need our own?

Mr Gray : Well, what other conflict situations are we likely to be confronted with over the next 20 to 25 years? Can some of those skills be held back? I do not think we can take that risk. We need some sort of core capability here both in-house and that Defence can reach in the universities. The universities is an area that really has not been tapped in the past. There is a lot that Defence could be doing in that space to bring in some of that expertise, and similarly within industry. So from the taxpayer's perspective, from an individual's perspective, we need some core capability here that will give us some assurance that if these systems start to go down, we have the wherewithal to fix them ourselves.

CHAIR: Excellent. On that note, thank you very much for your contribution here today.

Senator BACK: Absolutely. It was very interesting.

CHAIR: We will now close this public hearing. I thank Hansard. On behalf of the committee, I thank all those witnesses who appeared here today.

Committee adjourned at 12.15