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ESTIMATES COMMITTEE B
03/09/1993
DEPARTMENT OF DEFENCE
Program 3--Army

Senator HILL --What is the internal assessment as to how the ready reserve project is going now that you are into the second year?

Lt-Gen. Baker --We are satisfied overall with the progress in the ready reserves. In particular, I think the quality of the young men being recruited into the ready reserve has been very pleasing.

Senator HILL --I heard somewhere that in the second year it was proving more difficult to get recruits of the same quality.

Lt-Gen. Baker --I think it is true to say that the level of the second year recruits is not quite of the same quality as the first year. Nonetheless, they are well above the quality of general enlistees and are still highly satisfactory. It is a fairly subjective judgment.

Senator HILL --Of course. What about the cost savings? Have you been working on whether the initially claimed savings are being achieved?

Lt-Gen. Baker --It is very difficult to compare apples and oranges in this case. We are satisfied that, for the same degree of operational readiness, the cost of the ready reserve scheme is much lower than the cost of the 6th Brigade scheme that it replaced. Clearly it is a five-year development program and we are still only in year 2 of that, so we would be working on cost estimates rather than final costs.

If I can give you an indication of the scale of costs in the ready reserve, the annual costs of 6th Brigade as a ready reserve formation will be about $75 million a year compared with $104 million a year for the 6th Brigade that it replaces. However, both brigades had the same operational readiness criteria applied to them.

Senator HILL --Is that approximately what was planned to be the saving? Has it proved more or less expensive than was anticipated now that you are right into it?

Lt-Gen. Baker --Again it is a judgment. One of the factors which impacted on this is that the wastage rate in the ready reserve has been very low. In general, the costs are standing up pretty well. But if the wastage rate changes those sorts of factors will change. It is very difficult to compare in equal terms.

Senator HILL --It is probably not surprising that wastage rates are low at this stage, is it not? The tests will be after a few more years.

Lt-Gen. Baker --If I can give you an example, of the 900 in the first intake, when they finished their full-time training and came back for their first period of part-time training, only two failed to turn up. One of them was dead and one was in gaol. That is an extraordinary result.

Senator HILL --There is some difficulty, I understand, in relation to providing higher ranks from the ready reserve.

Lt-Gen. Baker --The area of recruiting which is causing us some concern is for those senior NCOs and junior officers that you cannot expect to get out of the ready reserve. The scheme involves attracting ex-regular members or ex-general reserve members to serve in the ready reserve. That was not as successful as was hoped. Action is in hand to redress that shortfall in recruitment.

Senator HILL --What action is that?

Lt-Gen. Baker --We are looking at the conditions for that form of service. Instead of a five-year commitment, we might reduce the level of commitment to two years. We are giving added emphasis to people in the right categories who are leaving the regular force to try to attract them to join the ready reserves. Those are the sorts of initiatives that are being undertaken.

Senator HILL --Does that difficulty result in greater costs, in that you are needing to provide more higher ranks from the regular army than was anticipated?

Lt-Gen. Baker --If we fail to attract the number of reservists in those categories, it will in due course increase the manpower costs of the ready reserve, yes.

Senator HILL --But you say it is too early to make that assessment?

Lt-Gen. Baker --It is too early to make that final assessment.

Senator HILL --There was to be a review, was there not, of the ready reserve after a period of time?

Lt-Gen. Baker --Yes.

Senator HILL --When was that to commence?

Lt-Gen. Baker --The review of the ready reserve was to be after three years operation of the scheme.

Senator HILL --Will that be an internal review? Have you got to the stage of considering the nature of the review?

Lt-Gen. Baker --I am not aware that we have developed the terms of reference on how to do that. Further experience with the scheme will obviously affect the terms of reference for the review.

Senator Robert Ray --It is more likely to be external. We have not yet turned our minds to finding the appropriate individual to do it. It is still some 15 months away. We deliberately targeted the review at that stage. As Lieutenant-General Baker indicated, only two people did not turn up after the first year. We will only get a real feel for this when we have three sets of examples of retention rate--after they have been in the service for three years, two years and one year. We think that will be the most valuable time to do the review. It will cover the readiness level, skill retention, and those sorts of things.

Senator HILL --Yes. I want to ask a few things about the move to the north, too. That will probably come under this page as well.

CHAIRMAN --If the minister is happy with that.

Senator HILL --What is the current stage of the program as compared with what had been anticipated or planned?

Major-Gen. Carter --The move of a brigade to the north was foreshadowed in the 1987 white paper Defence of Australia, with 2 Cavalry Regiment providing the initial presence. Over the financial years 1991-92 and 1992-93 we have moved a total of 490 regular personnel. They largely consisted of 2nd Cavalry Regiment, but also some support that went with them. We are currently on target to meet the outcome.

Senator HILL --What does that mean--about half?

Major-Gen. Carter --We will see the relocation of 2,222 people to Darwin by the year 2001.

Senator HILL --What is the next lot to move?

Major-Gen. Carter --In financial year 1993-94 we will be moving a further 83 people. That will include a tank troop from 1st Armoured Regiment, and that will complete what we have, for planning purposes, referred to as the initial presence in the north.

Senator HILL --And the next step after that?

Major-Gen. Carter --There are a number of things that happen coincidentally. We have had to hire some services in the north to accommodate the move. We have had to hire a freight terminal, and we have to make provision for a logistic company to be established to accept the next move. The next major arrival will be 161 Reconnaissance Squadron, and that will occupy a position on RAAF base Darwin, moving in approximately December 1994.

Senator HILL --Approximately how many people will be involved in that?

Major-Gen. Carter --I will have to take the number on notice. It is around 100-plus families.

Senator HILL --What is the progress of the construction works?

Major-Gen. Carter --In the case of the reconnaissance squadron, it is moving onto RAAF base Darwin, and we have an arrangement there to occupy a particular set of hangarage. The matter of houses for families is in hand. It is not on the critical path for this move.

Senator HILL --I am sorry?

Major-Gen. Carter --This move can be accommodated within housing that has been provided.

CHAIRMAN --Good quality standard housing, too.

Major-Gen. Carter --Indeed.

Senator HILL --Apart from the barracks that have been completed up there at the moment, there is no planned further barrack construction at this time?

Major-Gen. Carter --No.

Senator HILL --When will the Waler barracks be completed?

Major-Gen. Carter --The Waler barracks were opened by the Governor-General on 17 April this year.

Senator HILL --But there is still further construction work taking place?

Major-Gen. Carter --Those barracks were on target and under budget.

Senator HILL --So that is completed?

Major-Gen. Carter --Yes.

CHAIRMAN --There is not much to be done, is there?

Major-Gen. Carter --No, the activity is more in the area of providing housing.

CHAIRMAN --Palmerston?

Major-Gen. Carter --It has been drawn to my attention that in terms of construction we must also address things like road works in the complete deal. There is an expenditure forecast for the financial year 1993-94 of $32.2 million.

Mr Corey --There is some construction associated with the move of 161 Reconnaissance Squadron--refurbishment of a hangar on the RAAF base to accommodate those people.

CHAIRMAN --That is at Tindal.

Mr Corey --No; this is at Darwin. There is also a contract about to be let for the earthworks associated with the next stage of the move to the north. That is part of APIN stage two, which is a project of something approaching $200 million in its final stage.

Senator HILL --Where are those earthworks?

Mr Corey --Adjacent to the 2 Cavalry Regiment barracks at Waler barracks at Palmerston.

Senator HILL --That will be for the construction of what?

Mr Corey --For the brigade headquarters, for their next major move to the north.

Senator HILL --What do you mean by the `next major move'?

Mr Corey --Exactly what Major-General Carter outlined to you earlier.

Senator HILL --He talked about the reconnaissance squadron.

Mr Corey --The reconnaissance squadron will go into RAAF base Darwin.

Senator HILL --Can you tell me what the next step will be?

Major-Gen. Carter --We will then move Headquarters 1st Brigade, the remainder of the armoured regiment, and a signal squadron, followed by, in due course, the battalion which is at Holsworthy, the Combat Engineer Regiment and the Medium Artillery Battery.

Senator HILL --And the construction work for that will cost about $200 million, and they are about to commence, are they?

Mr Corey --The earthworks are about to commence.

Senator HILL --So the $32 million is on the earthworks for the headquarters?

Mr Corey --And services. The preliminary works before we start actual vertical construction--roads, services, drainage, sewerage.

Senator HILL --So that is $32 million of a total expected cost of $200 million?

Mr Corey --That is right.

Senator HILL --That is $32 million to be expended in this year?

Mr Corey --It commences this year. I am not sure all the expenditure is in this year. In this financial year it is $32.242 million.

Senator HILL --In this financial year?

Mr Corey --Yes, 1993-94.

Senator HILL --So that I have it absolutely clear, in that is the refurbishment of one of the hangars?

Mr Corey --No. That is a separate contract. The refurbishment is something in the order of $6 million. I have not got the precise figure in front of me.

Senator HILL --That is being done in this financial year as well?

Mr Corey --It is, yes.

Senator HILL --And $32 million is to be spent in this financial year on earthworks and associated services in relation to the extension of the barracks?

Mr Corey --That is right.

Senator HILL --The headquarters and other facilities?

Mr Corey --That is right.

Senator HILL --Of a total $200 million to be spent over what period of time?

Mr Corey --Probably about the turn of the century is the final time. By 1998-99 the bulk of the facilities will be complete. Probably at the turn of the century it will be finalised.

Senator HILL --What have been your experiences in relation to the costs of maintaining the force in and around Darwin? Have they been higher than was anticipated?

Major-Gen. Carter --The additional operating costs in the north have been somewhere between $12,000 and $15,000 per person per year. That is because of married quarter furniture maintenance, district allowance and the remote locality leave travel allowance. When we aggregate those, we get approximately this figure.

Senator HILL --Is that what was anticipated?

Major-Gen. Carter --Yes.

Senator HILL --What about overall additional costs to you, logistical costs of presumably servicing that force from south and east in so many essential areas?

Major-Gen. Carter --It falls into two areas. We have found it necessary to relocate certain logistic capacity into the north anyway, and the people who perform that are then the subject of these allowances. In many respects we in the army have eased the logistic burden by a number of mechanisms that allow local procurement rather than warehousing and transport. I cannot explore the matter in greater detail than that for the moment.

Senator HILL --But presumably you have nevertheless made an assessment as to whether it is more expensive, apart from the $12,000 additional per person, to maintain that force up there than where they have been relocated from?

Major-Gen. Carter --Yes, we have.

Senator HILL --Is it more expensive?

Major-Gen. Carter --Yes.

Senator HILL --By how much?

Major-Gen. Carter --I am unable to put a figure on it. I am told that we are capturing the data now because it was not a steady state. The method by which support was being provided in old locations has itself changed, but we are capturing the data now with a view to refining this because of the projected interim presence, and then final presence, so we can more accurately cost it before it commences, and forecast for it.

Senator HILL --We will await that in due course. I want to ask about the levels of preparedness mainly because of the note that is provided on page 221. It refers to a failure to achieve the required level of preparedness due to a combination of factors, in particular resource constraints, manning imbalances, limited equipment holdings. What I am really asking is what this means and what the consequence of it is. Perhaps the resource constraints might be explained to me.

Major-Gen. Carter --We have a discipline in place which stems from the Chief of the Defence Force's operational preparedness directive which causes us to put elements of the force on different degrees of readiness. Having done that, it is necessary to assign, against their readiness criterion, the people and the equipment to meet the task. When there is a shortfall, in the first instance we identify it, as we have done here. In the second instance it is necessary to redress that and, as we progressively redress it, so these deficiencies will go away. This becomes the basis for identifying the priority for both funding and moving people. What you have in front of you is the steady state that was captured at the time this document was prepared.

Senator HILL --I do not quite understand that. Presumably resource constraints can be overcome either by the provision of greater resources or, alternatively, by changing the directive.

Major-Gen. Carter --That is exactly right.

Senator HILL --So how are you addressing that?

Major-Gen. Carter --It is a rather larger process. The directive has as its origin a number of contingency plans, a number of views of what the army element of the Defence Force might be called upon to do. That is quite a disciplined process and leads to military units expressed in terms of time that can elapse before they are required to do something. It is at that point that we have to make a combination of professional judgment, plus measurement of that which can be measured, and to say, `Yes, we can do that' or, `No, we can't and here is the deficiency'. To give you an example, when we sent the 1st Battalion to Somalia there were minor elements--minor only--that we cured to bring it to the requisite readiness by redistribution of an existing asset. It is one of the options open to us.

Senator TEAGUE --So this is affected by peacekeeping deployments?

Major-Gen. Carter --It can be. The steady state, though, is the state that is required without regard to that sort of thing. If we are brought down in notice below what the preparedness directive requires, we have to then put in whatever the resource is required to meet readiness. It might be more people; it might be redistribution of equipment; it might be--in the case of an infantry battalion--a greater expenditure on ammunition so individual weapons can be zeroed. There is a variety of things, but this represents the steady state and the target which we are seeking to achieve.

Senator HILL --What I am trying to work out is whether you can achieve higher levels within existing resources. Listening to you, I am not sure of the answer to that.

Major-Gen. Carter --It is a problem that comes directly to me because yesterday and today I have been seeking to look at the army's asset and how to distribute it. In the first instance it will be the existing resources available redistributed, and that includes the equipment, the people and the money. In doing that, there will come a time when lower priority units will be affected, and that will then become the management focus of what to do next.

Senator HILL --So you are saying that, within current resource constraints, the level of preparedness can be improved by better distribution of those resources.

Major-Gen. Carter --Yes.

Senator HILL --But you are unsure at the moment whether, with better distribution of resources, you would be able to achieve the levels of preparedness required by the directive.

Major-Gen. Carter --It is not a question of being unsure; it is a question of being able to define it. Where the asset exists and is in inventory, yes, redistribution will do it. Where the deficiency is a specialist item requiring procurement, for example, night vision capability, it is less clear but will become easier to define as we see what is available and match the funding availability to it. Some of these deficiencies are being redressed through minor capital procurements.

Senator HILL --So you are saying that this is a project that you are examining at the moment and, therefore, the extent to which you can achieve the required outcome by distribution, better planning et cetera, is still to be determined.

Major-Gen. Carter --No, it is an ongoing process. What you have in front of you was the situation at the date this document was presented. It is a constantly monitored situation and, whilst there are deficiencies across the board, this is the combat force. The land commander monitors this on a continuing basis and it is for my organisation to see, of the options open, what might be taken. Where minor capital procurement is the answer, then it becomes a series of projects matched in the normal project way.

Senator HILL --We should be able to know whether, in your professional judgment, you can achieve the levels of preparedness required of you within the resources that are provided. You are saying that at this stage you cannot really answer that question.

Major-Gen. Carter --That is correct.

Senator HILL --Because you are doing a study of the resources and how they might be better distributed.

Major-Gen. Carter --I am not seeking in any way to evade the question you are putting to me. I am trying to describe an ongoing process whereby the preparedness directive itself is subject to refinement. The on-flow from that preparedness directive is what you have in front of you. It is being monitored on a continuing and continuous basis. The task I have is to distribute the asset as best I am able and, where there is a deficiency that cannot be cured by that process, to initiate the project to acquire or whatever I need to do--whatever needs to be done. It is continuing. All you have is a snapshot. It is in hand; it is being identified. I cannot answer in the detail you are seeking of me the question you have put to me.

Senator HILL --Does `manning imbalances' mean a better distribution of manpower?

Major-Gen. Carter --It is to do with the distribution of manpower. It is related to the people departing the service voluntarily; the recruiting process. Plus, as we address the force structure review, we find that we have more people in certain specialties, for example, field engineering, than we have infantry combat soldiers. That is the sort of thing and, again, it is ongoing and it is being addressed.

Senator HILL --How are limited equipment holdings related to your failure to achieve the level of preparedness required?

Major-Gen. Carter --There are two sorts of equipment. When we redistribute equipment, one of the things that has to be taken care of is that you cannot redistribute away from low priority when it is below a certain threshold, otherwise that unit is no longer viable. It has to have something. It is in that transfer process that the phrase crops up. We do not have an inexhaustible supply of a variety of these things. The combination of what is in depot, what is in the hands of lower priority units and higher priority requires to be addressed.

Senator HILL --Let us say the directive is not changed. When will you know whether you can achieve the levels required with the resources which you are currently provided with?

Major-Gen. Carter --The test does not actually come that way, although I appreciate the nature of the question. The test comes when we have either to field--as Senator Teague drew attention to--a UN deployment or to conduct a major exercise. To date, we have not been found wanting in doing that, and that is the test. There are opportunity costs. There are things you do not do in order to achieve it, but that is a legitimate test and that is the answer I would prefer to give to you.

Senator HILL --Presumably you have based this chart on something, which I guess is deployment in peacekeeping or exercises.

Major-Gen. Carter --No. The army is structured against the defence of Australia requirements and out of that comes, in certain circumstances, contingency plans. Those contingency plans give, or are father to, the nature of the force that has to be held ready in different categories. This chart is based on today's capacity, or indeed the capacity the day the chart was printed, to match what those requirements are against the asset. It is a continuing redress process.

Senator HILL --I can accept that it is a continuing process and this is a snapshot. But this is the snapshot you have provided us with, which at the moment says that you are unable to meet the requirements of preparedness contained in the directive. You have said to me that, as a result of looking at this snapshot, you are looking at redistribution of assets, manpower imbalances, et cetera. I say to you: when will you then be able to advise us whether or not you will be able to achieve that level of preparedness with current resources? You are saying to me that you will never really be able to because it is an ongoing process.

Major-Gen. Carter --It is. I will try to give you a concrete for instance. We are currently short in our infantry battalions approximately 200 trained infantry riflemen. In order to redress that situation, the chief of personnel has been looking at where there are imbalances--and that is how I know we have a few too many field engineers--what we may need to do in order to recruit some more people, and the cash that is necessary to flow to that program in this financial year.

The task that comes to me--and this is what we have been doing in the last two days--is to try to find out of our operating costs the money necessary to achieve that outcome. If you were to ask me next Monday, I suspect that I would have an answer for you to say that that element is now in place to be cured but it will not be done until the recruiting is complete, the recruit training is complete, the initial employment training is complete and the people are in Townsville or wherever. That is the nature of the thing I am trying to get across to you.

Senator TEAGUE --Presumably, in forward planning with regard to preparedness, capital asset sales, commercialisation, defence centres and other rationalisations, the freeing up of resources within the budget is being transferred to meet resource constraints.

Lt-Gen. Baker --One of the fundamental objectives of all the rationalisation that is going on within the ADF is to transfer resources from the overheads and support function into the combat function so that the level of combat capability and readiness can be improved over time. We will not improve the level of readiness beyond our assessment of what is needed so there is a set judgment all the time. But that is our fundamental objective in all the rationalisation that is going on.

Senator TEAGUE --In the program document is there a similar matrix with regard to readiness for air force and navy?

Lt-Gen. Baker --I do not believe so.

Senator TEAGUE --Why is there one for army and not the other two?

Lt-Gen. Baker --Because Army chose to include that in its program performance statement. But there are similar objectives for navy and air force. Right across the ADF there are objectives.

Senator TEAGUE --The objectives are similar and there is an evaluation, but only army publishes this?

Lt-Gen. Baker --Only army has published it in this form.

Senator TEAGUE --What is the comparative set of facts for navy and air force?

Lt-Gen. Baker --Generally, we are satisfied with the present level of preparedness of the Defence Force, albeit there are several areas of pressure and some readjustments to be made in each of the programs to continue to achieve the readiness objectives set down.

Senator TEAGUE --That is reassuring, but is there a matrix as detailed as this for the other two services?

Senator Robert Ray --To put it a different way, it is at page 141 of the navy's PPS and at page 291 for air force, where it is put in a slightly different way. I agree that theirs are not in the exact same form.

Senator TEAGUE --As was elicited from questions on Wednesday, Paul Dibb re-emphasised Australia's substantial capabilities. I am impressed by the fact that we have several capital acquisitions and certain capabilities, not least in the air force, which are classified as substantial. In the broad evaluation that Dibb gave on Wednesday, do we have comparative assessments of our neighbours and allies in this region in terms of readiness and the kind of matrix we are looking at on page 221, and, with regard to the other services, at pages 145 and 290?

Lt-Gen. Baker --We have a good understanding of the capabilities of all nations in the region.

Senator TEAGUE --Are we unusual in publishing this kind of assessment of our preparedness? We are being pretty frank, are we not?

Lt-Gen. Baker --On the whole, our history of preparing white papers and budgetary information is much in excess of what we see produced by other nations in our region. However, there are some encouraging trends in our region where, as part of our discussions and developing relationship with them, regional nations are becoming much more open about what they are prepared to put in the public domain. We are actively pursuing activities of competence-building measured transparency in the region as a matter of policy.

Major-Gen. Carter --Mr Chairman, may I please give Senator Hill a detailed answer in response to a question he asked me?

CHAIRMAN --Yes.

Major-Gen. Carter --Senator Hill asked me the number of people moving north in 1994-95. I said there was about 100, which is true for 161 Reconnaissance Squadron, but there are also people from 2nd Cavalry and some from 7th Logistic Company, which brings us to a total of 209.