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Speech to ASPI Dinner by Secretary of the Department of Defence, Mr Dennis Richardson

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Department of Defence

13 November 2013

Secretary of the Department of Defence, Mr Dennis Richardson - Speech to ASPI Dinner, 12 November 2013

Have now been in the job as Secretary of the Department of Defence for just over one year. Tonight I want to talk about how I see my job and reform in the Department. One disclaimer, I am not a Defence theologian and the words I use should be understood in their plain English meaning.

I think the starting point for any discussion about Defence must be recognition that it remains a Federation, not a Unitary State. A central challenge is to continue the drive towards the latter, while respecting the history and traditions of the component parts which make up the total enterprise.

I think my own job can be broken down into five principal tasks:

• First, within the framework of the meaning of that wonderful word, diarchy, to work with the CDF to provide the leadership and direction to Defence to seek to ensure that it operates as a coherent whole in professionally meeting the requirements of Government.

• Second, working with the CDF, to ensure that the Government receives professional policy advice. In particular, on my part, to see that there is a highly effective civilian policy capability so that policy drives operations, not the other way around.

o And partly because of the understandable focus on operations over the past 10 to 15 years, the Defence civilian policy capability is not as strong as it should be. • Third, to seek to ensure that Defence APS staff are highly

professional so that the men and women of the ADF have everything they need to do the best job possible, especially in an operational environment. o This includes everything from acquisition and

sustainment in the Defence Material Organisation, to the creative capability which resides in the Defence Science and Technology Organisation, to Estate Management. • Fourth, to ensure that the highly regarded intelligence agencies

which reside in Defence maintain, and where possible enhance, their professionalism and capabilities. o I refer of course to the Australian Signals Directorate,

the Australian Geospatial Intelligence Organisation, and the Defence Intelligence Organisation. In addition, we also have the Australian Government Security Vetting Agency, which manages security clearances for much of the Commonwealth. • Fifth, to ensure that the administration and finances of Defence

are managed as efficiently and effectively as possible, so that the taxpayer gets value for money. And this is not a simple exercise in paper shuffling. It involves the management of one of the largest property holdings in Australia, including training areas located in three World Heritage Areas. It involves managing over 250 active projects, which includes more than 180 major projects with an average budget of $400m. It involves managing an annual operating budget of over $25 billion or, as calculated by Mark Thompson in this years’ ASPI Budget Brief, a total spend of $69,680,980 and 82 cents per day. It involves the administration of personnel matters for over 100,000 people, including around 56,000 in the permanent ADF, 25,000 in the reserves and around 20,600 in the APS.

Of course, the big numbers tell us that we have a big job but they do not tell us how well that job is done. Inevitably, the answer is mixed. Defence remains too much of a federation. Numerous reports by the Australian National Audit Office have highlighted an absence of personal accountability, and that remains a big challenge. Cultural issues have been highlighted by the CDF and Service Chiefs and that remains an issue for all of us. It is not the preserve of the uniform. ICT remains underinvested.

But it would be very wrong to see Defence as ‘broken’. Who would say that of the ADF itself? Who would say that of our intelligence agencies? The Kinnaird Review of 2003 and the Mortimer Review of 2008 significantly improved our acquisition processes. Perhaps even more importantly, but far less glamorous, is the improvement in our accounts. In 2003/4 the Department of Defence had a total of 75 findings by the ANAO; 27 category A findings and 48 category B findings. In 2012/13 there were zero category A findings and 8 category B findings. This is a genuinely impressive achievement owed to the hard work to my predecessors, Service Chiefs, Group Heads and the Chief Financial Officer, Phillip Prior.

While some reform continues across Defence it has, to a significant extent, run out of steam. In my view, this is due to two factors

• The understandable cynicism in the Department arising from the Strategic Reform Program launched in the context of the 2009

Defence White Paper. No sooner had this been announced and ‘sold’ within the Department when broader fiscal measures not only led to a moving of the goal posts but to their cutting down for use as firewood. • The, perhaps inevitable, retreat of a large organisation to a

comfortable status quo.

It is against this background that the Commission of Audit and the foreshadowed Review of the Department are to be welcomed. Combined with the White Paper to be prepared over the next 18 months we should see an energised and contemporary reform program built around realistic and achievable goals.

There is one other matter which I would like to touch on this evening, and that is the role of civilians in the total Defence enterprise. There is a bit of a tendency for some to see Defence civilians as constituting something called a ‘back-end’ supporting the ADF ‘front-end’.

Defence civilians do not need to be gratuitously told that the purpose of their work is to ensure that the men and women of the ADF are able to professionally protect and further the national interest as directed by Government. Indeed, over 20% of Defence civilians are former ADF members themselves and some others are partners of serving ADF members.

We have an integrated work force where many civilians report to uniformed personnel and many of the latter report to the former.

Try telling someone in Special Operations Command that a civilian in the Australian Signals Directorate is ‘back-end’ and, by implication, not particularly essential to the task in hand. Try telling a fighter pilot that civilian engineers and technicians are not essential to their operational capability. Try telling ADF personnel on operations that civilians responsible for their pay and allowances are less than essential.

Clearly, there should not be one more civilian in Defence than is absolutely necessary. This, no doubt, will be an important focus of the forthcoming Review, and that is a good thing. In this context, I note that the ratio of Defence APS to ADF personnel has not changed a lot over the years (currently 27.6% to 72.4%) and we need to examine whether we cannot do better.

Equally, we need to be conscious of the fact that, over the last 10 years, almost a thousand ADF positions have been deliberately civilianised as part of a reform effort to ensure that uniform personnel are not doing jobs which can be performed equally by civilians at a lower cost.

Also, it is worth noting that we automatically count in the Defence APS statistics those who work in the Australian Signals Directorate and the Australian Geospatial Organisation. Their counterparts are not so counted in the UK, in the US or in Canada.

Finally, on the general issue of civilians, I would note that since 30 June 2012 the number of Defence APS has reduced from 22,284 to 20,641 as at the end of September 2013. And the downward trend continues.

I would like to wrap up by returning to the subject of reform, which has been in process on and off for some four decades, starting with the Tange Report in 1973 which saw the merger of five Departments into one. When we look across the broad sweep of reform over the years, across numerous military and civilian leaders, Ministers and Governments we do see some clear trends.

• The centralisation of Military Command and creation of a Joint Operational Capability. • Outsourcing of non-operational capability wherever possible.

• A more integrated ADF/APS work force.

• The introduction of shared services in areas such as human resources, ICT, finance and non-equipment procurement. • Continual strengthening and scrutiny of the capability development and material acquisition processes. • Centralisation of management and command accountability in

the Offices of the Secretary and of the CDF.

In addition to these broad trends, some specific reforms have had institutional value and symbolism beyond their public acknowledgement. In this context, I have already mentioned our achievement on the accounts front. Of equal importance, especially in terms of it’s symbolism, has been the amalgamation of Mess facilities on bases, something which would have been deemed impossible 15-20 years ago. Indeed, some Mess facilities have been closed altogether, such as those at Russell. That reforms of this kind can and do occur may seem trivial in one sense but it highlights preparedness of Defence personnel to embrace reform even when it impacts negatively on long held traditions.

Of course, reform is not always easy and does not happen in a vacuum. Certainly, where vested interests are concerned, and they do exist in Defence as they do in all Government Agencies, political will and institutional leadership is essential. A clear sense of what works and what does not work is also vital. And consistency and perseverance is central.

The Commission of Audit, the forthcoming Review and the new White

Paper will no doubt lay down a pathway for further reform. That is a challenge to be embraced.

Thank you. Happy to take questions.