Minister for Defence Stephen Smith: Address to the Department of Defence Senior Leadership Group

Hotel Realm, Can­ber­ra, 26 Novem­ber 2010
Thank you for that intro­duc­tion.
I’m very pleased to be here at your Senior Lead­er­ship Group Meet­ing.
Can I for­mal­ly thank the Sec­re­tary of the Depart­ment, Ian, and the Chief of Defence Force, Angus, as I did in Par­lia­ment yes­ter­day, for the work they have done to date for me as Min­is­ter.

As I have told many of you and I have said pub­licly, I want­ed to work in this port­fo­lio pre­cise­ly because of the all impor­tant work that we do in the nation­al secu­ri­ty space and at an impor­tant time strate­gi­cal­ly for Aus­tralia.

Can I also thank you, the Senior Lead­er­ship Group, for the work that you do in our nation­al inter­est, work­ing to pro­tect and enhance our nation­al secu­ri­ty inter­ests. It is very impor­tant that we talk about our pri­or­i­ties and the expec­ta­tions and respon­si­bil­i­ty on you as senior Defence lead­ers.

There are major chal­lenges asso­ci­at­ed with accept­ing lead­er­ship and respon­si­bil­i­ty in Defence: imple­ment­ing Gov­ern­ment pol­i­cy, con­duct­ing dif­fi­cult and dan­ger­ous oper­a­tions, man­ag­ing major reform and dif­fi­cult and com­plex capa­bil­i­ty projects.

Deal­ing with all of this will be required in the peri­od ahead, with­in the exter­nal para­me­ters under which we now oper­ate.

I have been Min­is­ter now for some 10 weeks, enough time to form some ini­tial con­clu­sions and I thought it was time­ly to give you, the Senior Lead­er­ship Group, a read out. I pro­pose to be frank.

Speak­ing to you today reflects my view that a team approach is very much required to meet our chal­lenges.

The same team approach with which my Min­is­te­r­i­al col­leagues and I approach our respon­si­bil­i­ties: the Min­is­ter for Defence Sci­ence and Per­son­nel War­ren Snow­don, the Min­is­ter for Defence Materiel Jason Clare and the Par­lia­men­tary Sec­re­tary for Defence David Feeney.

On the first sit­ting day of this Par­lia­ment, your Min­is­te­r­i­al and Par­lia­men­tary team met for­mal­ly with the Defence Com­mit­tee, some­thing we will con­tin­ue into the future.

Defence is a big and com­plex organ­i­sa­tion. It is crit­i­cal to the full range of our nation’s nation­al secu­ri­ty inter­ests.

It is an organ­i­sa­tion that is bare­ly matched in size and com­plex­i­ty in Aus­tralia.

You are, of course, famil­iar with the sta­tis­tics, but it is always worth­while remind­ing our­selves what we have respon­si­bil­i­ty for:

• We have 80,000 peo­ple in our per­ma­nent mil­i­tary and civil­ian work­force and some 25,000 Reserves

• We have a bud­get of near­ly $27 bil­lion this finan­cial year

• On cur­rent plan­ning, we will receive over $100 bil­lion over the 2010-11 to 2013–14 peri­od

• We own over 390 prop­er­ties, over three mil­lion hectares of land, 25,000 build­ings, 6000 oth­er struc­tur­al assets and 150,000 plant and equip­ment items

• We cur­rent­ly have over 200 major acqui­si­tion projects and pro­grams and more than 120 minor acqui­si­tion projects under­way, and

• More than 80 per­cent of our war-fight­ing assets are planned to be replaced or upgrad­ed over the next 15 years.

This size and com­plex­i­ty trans­lates into our Min­is­te­r­i­al port­fo­lios.

In the last ten weeks or so, I’m told I have received near­ly 550 sub­mis­sions. In 2010 to date, the Min­is­ter for Defence, John Faulkn­er and I, received 2,200 sub­mis­sions, not includ­ing sub­mis­sions to port­fo­lio Min­is­ters and copied to the Min­is­ter for Defence. In 1998–99, I am told the Min­is­ter of the day received 690 sub­mis­sions.

These sub­mis­sions that I receive cov­er a vast range of diverse issues from Navy’s cen­tral can­teen board Annu­al Report to Oper­a­tion SLIPPER.

Each of these sub­mis­sions has to be treat­ed as deserv­ing of full and prop­er con­sid­er­a­tion, which is what my Min­is­te­r­i­al col­leagues and I give them.

These sub­mis­sions must there­fore pro­vide Min­is­ters with all the infor­ma­tion and all the analy­sis need­ed to make sen­si­ble and informed deci­sions in our nation­al inter­est.

If sub­mis­sions do not pro­vide Min­is­ters in the first instance with qual­i­ty infor­ma­tion and assess­ment, then even more work must be done and more time lost before a Min­is­te­r­i­al deci­sion can be made.

Qual­i­ty and time­ly advice is impor­tant because togeth­er we face very con­sid­er­able chal­lenges.

The recent Par­lia­men­tary debate on Afghanistan and the recent suc­cess­ful NATO/ISAF sum­mit in Lis­bon have again crys­tallised Afghanistan as our sin­gle biggest oper­a­tional chal­lenge.

But it is not our only chal­lenge. It would be a fun­da­men­tal mis­take for us to pro­ceed on that basis.

Afghanistan and our oth­er oper­a­tional com­mit­ments, whether it’s East Tim­or, Solomon Islands, Sudan or Oper­a­tion RESOLUTE, can and do stretch us.

While a prop­er focus is on our oper­a­tions, crit­i­cal ini­tia­tives to pre­pare us for the future are imple­men­ta­tion of the Defence White Paper, Force 2030 and the Strate­gic Reform Pro­gram.

Imple­men­ta­tion will chal­lenge us fun­da­men­tal­ly, because imple­men­ta­tion of these ini­tia­tives is a key Gov­ern­ment mea­sure of Defence suc­cess or fail­ure.

And this is before we bear in mind that the Gov­ern­ment is com­mit­ted to return­ing the Bud­get to sur­plus through fis­cal respon­si­bil­i­ty mea­sures, such as hold­ing real growth in Gov­ern­ment spend­ing to two per­cent a year until the bud­get returns to sur­plus.

Our Defence Bud­get equates to 7.6 per­cent of Aus­tralian Gov­ern­ment out­lays. It is equiv­a­lent to 1.9 per­cent of Gross Domes­tic Prod­uct.

In addi­tion to this fund­ing, Defence also receives addi­tion­al fund­ing for oper­a­tions on a no win/no loss basis.

With the Government’s com­mit­ment to three per­cent real growth for Defence sit­ting above the Government’s expen­di­ture cap and with addi­tion­al sup­ple­men­ta­tion for oper­a­tions, Defence places sig­nif­i­cant pres­sure on the Government’s fis­cal strat­e­gy.

As a con­se­quence we have a respon­si­bil­i­ty to and we must ensure that the Defence dol­lar is wise­ly spent on pri­or­i­ty items, and that it is seen to be spent wise­ly. This par­tic­u­lar­ly applies to pro­cure­ment and capa­bil­i­ty.

For the first time in many years, per­haps for the first time in the mod­ern era, real para­me­ters have been imposed around us: by the White Paper, by the Strate­gic Reform Pro­gram and by our capped Bud­get. We need to under­stand this at every lev­el, not just Min­is­ters, the CDF, the Sec­re­tary or the CEO of Defence Materiel.

Togeth­er they also give us a great oppor­tu­ni­ty. More than ever, what we now need to ensure is that we have the inter­nal dis­ci­pline, the inter­nal rigour and the account­abil­i­ty to meet our objec­tives.

We are not alone in this. As you would have seen recent­ly, the Unit­ed States and the Unit­ed King­dom, two of our clos­est part­ners, face sim­i­lar issues and chal­lenges in their own way.

The chal­lenge for us is to be more effi­cient, more effec­tive and bet­ter at what we do. And we can only do that togeth­er.

There are his­tor­i­cal­ly a range of dif­fi­cult areas in Defence and prob­lems in pro­cure­ment is a major one.

We need to sig­nif­i­cant­ly improve the whole of Defence’s per­for­mance in pro­cure­ment and deliv­er­ing capa­bil­i­ty out­comes that the Nation­al Secu­ri­ty Com­mit­tee of the Cab­i­net has approved and agreed to fund at a par­tic­u­lar lev­el.

We can­not, for exam­ple, amend the scope of a project agreed to by the Cab­i­net with­out pri­or approval, nor can we fail to advise Gov­ern­ment in a time­ly way about project imple­men­ta­tion or project dif­fi­cul­ty. This applies in par­tic­u­lar where hard judge­ments have to be made about allo­ca­tion of funds.

The Min­is­ter for Defence Materiel and I have already added to the Project of Con­cern list.

Min­is­ter Clare and I will announce lat­er today that project AIR 5418, the acqui­si­tion of the Joint Air-to-Sur­face Stand­off Mis­sile (JASSM), has been added to the Projects of Con­cern list. This list­ing is not pri­mar­i­ly because of indus­try delays or cost increas­es. It is because of our poor man­age­ment, our fail­ure to keep Gov­ern­ment prop­er­ly and ful­ly informed about the Project and its dif­fi­cul­ties.

Hav­ing said that, risks to capa­bil­i­ty in that Project remain.

I have already asked that Defence review the effec­tive­ness of its man­age­ment of major projects, and Defence will use the JASSM project as a case study for improve­ments in this area. Over the last 10 weeks I’ve seen sug­ges­tions or ref­er­ence made to “One Defence”.

When deal­ing with the Diarchy, with the Sec­re­tary and the CDF, and the CEO of the DMO, of course I’m deal­ing with “One Defence”.

I’m not con­fi­dent, how­ev­er, that below the Diarchy I get a “One Defence” view. Rather I often sus­pect I get a view from a silo.

This can occur, for exam­ple, when Min­is­te­r­i­al sub­mis­sions have not been prop­er­ly con­sid­ered across the port­fo­lio. This is often exac­er­bat­ed by not being pre­sent­ed in a time­ly way or where the appro­pri­ate mean­ing­ful con­sul­ta­tion with exter­nal agen­cies has not occurred.

We need to oper­ate as “One Defence” inside “One Gov­ern­ment” with bet­ter account­abil­i­ty and bet­ter con­sul­ta­tion inter­nal­ly and exter­nal­ly. And I need to get a “One Defence” view no mat­ter where I tap into the senior lead­er­ship group.

In the pro­cure­ment area of course we’ve made changes in recent times. These have seen some improve­ment, through the enhanced first and sec­ond pass arrange­ments and the projects of con­cern process. But we need to do more. We need to instil much greater rigour and indi­vid­ual and insti­tu­tion­al account­abil­i­ty to our con­sid­er­a­tion and man­age­ment of major projects, pro­cure­ment and capa­bil­i­ties. I will have more to say about that in the New Year.

Some of what I have talked to you about today will require we change the way we work.

We need to avoid the same mis­takes, to learn our lessons and apply greater rigour, account­abil­i­ty and respon­si­bil­i­ty to sub­stan­tial­ly improve our per­for­mance for the future. We must all accept account­abil­i­ty for the work we do. Fail­ures in account­abil­i­ty arrange­ments dam­age Defence, weak­en Defence’s per­for­mance and make us less effi­cient and less effec­tive.

The Sec­re­tary, the CDF, the CEO of the DMO and I are very seized about the impor­tance of enhanc­ing our account­abil­i­ty arrange­ments. And that is going to be done for a sin­gle, sin­gu­lar rea­son. Our respon­si­bil­i­ties are great and our account­abil­i­ty and our judge­ment must match that.

Our respon­si­bil­i­ties go direct­ly to the heart of our nation­al secu­ri­ty inter­ests, to pro­tect and defend the nation­al secu­ri­ty inter­ests of the Com­mon­wealth. And account­abil­i­ty and judge­ment go hand in hand with that.

Next year Gov­ern­ment will con­sid­er the Black Review into Account­abil­i­ty to sharp­en our account­abil­i­ty regime.

In the last ten weeks or so I have begun to grasp the sheer size, com­plex­i­ty and impor­tance of our task in Defence.

I have trav­elled to Defence bases, vis­it­ed our forces in Afghanistan and held many meet­ings, includ­ing with some of you.

In the course of these activ­i­ties, I have been very impressed by the ded­i­ca­tion, pro­fes­sion­al­ism and skills that you and your col­leagues have demon­strat­ed.

Many of the things I have said to you today have also and already been said to me by peo­ple in this room. A num­ber have also made the point that a fea­ture of Defence is the strength of the indi­vid­ual peo­ple and the good work they do and I share that view. Our prob­lem is that our frame­works do not always allow us to trans­late this good indi­vid­ual work into the best pos­si­ble “One Defence” out­come for Aus­tralia.

That’s what we need to work on.

I believe very strong­ly that with our joint efforts, your lead­er­ship and the skills and ded­i­ca­tion of the Defence organ­i­sa­tion, that togeth­er we can meet these chal­lenges of the future.

Thank you.

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

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