Australia — Stephen Smith on Afghanistan; Bushmasters; Defence Budget

Min­is­ter for Defence, Stephen Smith — inter­view with Lyn­dal Cur­tis, ABC 24
LYNDAL CURTIS: Stephen Smith, you’ve told Par­lia­ment you’re cau­tious­ly opti­mistic about the out­look in Afghanistan. Why?
STEPHEN SMITH: Well I’ve said before when I’ve report­ed to the house that I believe we were mak­ing progress and this is the first time I’ve returned from Afghanistan with a sense of opti­mism.
Now I’ve gov­erned that in two respects. It’s cau­tious opti­mism, first­ly and sec­ond­ly, we know the Tal­iban will fight back both to recov­er ground in Uruz­gan and else­where and also with high-pro­file sui­cide bomb attacks. But it’s quite clear now that we’ve made very con­sid­er­able progress in the last year, in the last fight­ing sea­son and con­sol­i­dat­ed that in the win­ter months. But-

LYNDAL CURTIS: So you think it will be hard­er for the Tal­iban, for the insur­gents, to try and wind back the gains you’ve made dur­ing the win­ter.

STEPHEN SMITH: We believe so, but we know that that will be tough and we do have to steel our­selves for casu­al­ties and fatal­i­ties and that’s not just in Uruz­gan where we are, but across Afghanistan itself. Par­tic­u­lar­ly, if you like, the Tal­iban heart­land Hel­mand and Kan­da­har which of course to the south of Uruz­gan and what occurs there has impli­ca­tions for us in Uruz­gan.

LYNDAL CURTIS: The end game in Afghanistan is to train up the Afghan army and secu­ri­ty forces to allow them to take care of their own secu­ri­ty. Are you opti­mistic about the progress in that sense?

STEPHEN SMITH: Yes, we believe we are very much on track. We’re train­ing the Kan­daks in the 4th Bat­tal­ion. We believe we will make our tar­get, if you like, of being able to hand over lead secu­ri­ty respon­si­bil­i­ty to the Afghan Nation­al Army and the Afghan police by the end of 2014.

We are not yet one of the provinces or dis­tricts that are being looked upon for tran­si­tion but that doesn’t trou­ble us in any­way. We believe we are on track and as we become more suc­cess­ful in the train­ing and men­tor­ing and respon­si­bil­i­ty goes to for exam­ple patrol bases, to the Afghan police or army, it frees up for oth­er tasks includ­ing more spe­cialised and niche train­ing like artillery, which we’re doing very suc­cess­ful­ly.

LYNDAL CURTIS: You’ve announced the pur­chase of extra Bush­mas­ter vehi­cles, but the deci­sion on a sep­a­rate vehi­cle, the Bush­mas­ter Ute, is still await­ing deci­sion. That was due in Decem­ber. When are we going to hear about that?

STEPHEN SMITH: Well two things, first­ly, this morn­ing as part of my min­is­te­r­i­al state­ment I’ve detailed a num­ber of what we call force pro­tec­tion mea­sures that announce that we will pur­chase an addi­tion­al 101 Bush­mas­ters. This has been a life­saver in Afghanistan; A very effec­tive pro­tec­tor of our troops as it trans­ports them around. And as you always do there are loss­es, there are attri­tions, so we’ve lost about 31 from attri­tion pur­pos­es, includ­ing from IEDs in Afghanistan, so we’re replac­ing those, but adding anoth­er 70 to the fleet to make sure that we’ve got suf­fi­cient for Afghanistan and oth­er pur­pos­es.

So far as what’s col­lo­qui­al­ly known as the Bush­mas­ter Ute, we’re in the mid­dle of effec­tive con­sid­er­a­tion of a cou­ple of ten­ders. We’re work­ing through that very care­ful­ly, the Defence Materiel Min­is­ter and I. As is the case with all of these projects, we won’t be rushed. We’ll make what we believe is the best deci­sion for the Com­mon­wealth, for our nation­al secu­ri­ty inter­est; So that one is down the track.

But the pur­chase of 101 Bush­mas­ters I think will be well received by our troops, but also well received by the man­u­fac­tur­er which of course is in Bendi­go.

LYNDAL CURTIS: You’ve also had an issue unre­lat­ed to Afghanistan with pro­cure­ment of amphibi­ous ships. We’re buy­ing one from the UK. How’s that pro­gress­ing?

STEPHEN SMITH: Well we’ve won the ten­der for the pur­chase of the Largs Bay a cou­ple of months ago, $100 mil­lion Aus­tralian. We’ve made two one-third pay­ments. We’ve done some sea tri­als. It’s all been very suc­cess­ful. We are very much on track for that to be in Aus­tralia by the end of this year to start its real work hope­ful­ly next year.

We’ve got some mod­i­fi­ca­tions that we’ll need to do essen­tial­ly tran­si­tion it to an Aus­tralian ship and we’ll work our way through that dili­gent­ly, but pick­ing up a heavy lift amphibi­ous ship which was five or six years old, with all the doc­u­men­ta­tion, puts us in a much bet­ter posi­tion than a few decades ago when we picked up the Manoo­ra and the Kan­im­bla both which were then into their sec­ond decade.

LYNDAL CURTIS: Your state­ment on Afghanistan, your announce­ment about the Bush­mas­ter vehi­cles comes after you’ve hand­ed the Gov­ern­ment, the Trea­sur­er, and the Finance Min­is­ter about $2.5 bil­lion of bud­get sav­ings from Defence. Is that mon­ey that should have stayed in Defence for it to gear up to be able to do the things it has to do?

STEPHEN SMITH: No, the Bud­get — it’s a very good out­come in my view for Defence and for the Gov­ern­ment because what we found in doing a very care­ful exam­i­na­tion of our for­ward esti­mates was that we had a large under­spend in the 2010–2011 finan­cial year. So we looked at the rea­sons for that.

We dis­cov­ered that on our, if you like, our oper­at­ing expens­es we were being much more suc­cess­ful in — the Strate­gic Reform Pro­gram — than we expect­ed in our ear­ly years and so we’ve been able to reduce the num­ber of civil­ian employ­ees, and reduce our esti­mates of cost into the future.

That’s about half of the 2.7 that we returned to the Bud­get. The oth­er half is essen­tial­ly the usu­al slip­page and adjust­ments that you find in a range of projects, some of which comes from a fail­ure or an inabil­i­ty of indus­try to pro­duce on the antic­i­pat­ed timetable. But none of the changes or adjust­ments that are made in the for­ward esti­mate years are fatal for any of those projects. And so it’s about half and half.

LYNDAL CURTIS: So it’s effec­tive­ly mon­ey you thought you were going to have to spend now, you don’t have to spend now but you will have to spend lat­er.

STEPHEN SMITH: That’s right. It will be spent in future years. So, that the timetable has a cou­ple of impor­tant points. None of the projects that we are refer­ring to here are what you regard as any of the big projects out of the white paper, all of which are, you know, to be con­struct­ed, some­where, from 2020 through to 2040 and so some peo­ple are erro­neous­ly sug­gest­ing that that has impli­ca­tions for the big bills in the white paper. It doesn’t. All of those are in their pre­lim­i­nary or plan­ning stages.

Sec­ond­ly, what we’ve dis­cov­ered now with the imple­men­ta­tion of some sig­nif­i­cant reforms — the Kin­naird reforms, the Mor­timer reforms, the Pap­pas reforms — we’re get­ting much bet­ter out­comes on our pro­cure­ment and capa­bil­i­ty projects which are sub­ject to that rigour than in the past — in terms of time slip­page it’s about 20 — 25 per cent. So as our reforms bite and apply to all projects, I’m expect­ing to see improve­ments.

Hav­ing said that we’ve got a long way to go and I will in the next cou­ple of months announce a fur­ther wave of reform to improve and sharp­en and focus our per­son­al and insti­tu­tion­al account­abil­i­ty in Defence gen­er­al­ly.

LYNDAL CURTIS: Will the Gov­ern­ment be look­ing again to Defence to save more mon­ey? Because with­out the sav­ings that you have found, the quan­tum of sav­ings the Trea­sur­er deliv­ered in the Bud­get would have been much small­er.

STEPHEN SMITH: Well the Sec­re­tary of the Depart­ment and I have agreed that we’ve got to take a very care­ful look at our esti­ma­tion process.

We’ve had an under­spend in the 10–11 year of $1.6 bil­lion and that’s after you take out $100 mil­lion for the Largs Bay and $200 mil­lion for a C-17, which we’ve bought for­ward. So that’s near­ly a $2 bil­lion under­spend.

There were some espe­cial fac­tors — an eight-week care­tak­er peri­od, the floods and the like. But it doesn’t explain such a large under­spend.

We’ve got to do a very care­ful exam­i­na­tion about whether we’re get­ting our esti­mates right for the future. What that caused us to do was to also analyse that the Strate­gic Reform Pro­gram was being more effec­tive which enabled us to con­tin­ue the Strate­gic Reform Pro­gram but return addi­tion­al pro­ceeds for the Bud­get.

The key impor­tant imper­a­tives so far as the finances of Defence are con­cerned; we have our white paper, 2009 Bud­get rules. We have our force 2030 capa­bil­i­ty projects. But we’ve got to do — achieve, to deliv­er that, we’ve got to achieve our Strate­gic Reform Pro­gram which is $20 bil­lion worth of sav­ings to be rein­vest­ed in Defence.

We’ve got to con­tin­ue that pro­gram and that will be very much a focus for the next finan­cial year and the next Bud­get, but we’ve got to con­tin­ue to dri­ve val­ue for mon­ey — val­ue for effort — and to be able to return the pro­ceeds of reform to Defence and then make sure that our capa­bil­i­ty is done in a man­ner which is much bet­ter than it’s tra­di­tion­al­ly and his­tor­i­cal­ly been done.

LYNDAL CURTIS: Stephen Smith, thank you very much for your time.

STEPHEN SMITH: Thank you. Thanks very much.

Press release
Min­is­te­r­i­al Sup­port and Pub­lic Affairs,
Depart­ment of Defence,
Can­ber­ra, Aus­tralia

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