Australian Greens' dissenting report

1.1The Australian Greens (the Greens) are concerned by the absence of a clear recommendation in the interim report addressing the need for transparency and accountability within the Department of Defence’s (Defence) involvement in the performance of Australia’s defence industry.

1.2Further, the Greens are also concerned about the lack of mention in the interim report of the threat that overreliance on a foreign military has on sovereignty capabilities. This is especially true when there are limits on the independent sovereign use of the military assets inherent in the platform.

1.3The terms of reference cover ‘design and implementation of programmes and initiatives that seek to improve the Australian defence industry’s capability and capacity’. Transparency, public interest and accountability are core to the Australian defence industry’s capability and capacity.

1.4The interim report makes a note of serious breaches in procurement as well as numerous other inquiries, reviews and reports that have noted insufficient transparency, accountability, oversight and clear public interest during the procurement process. This undermines defence capabilities and trust in Defence.

1.5Of particular note is the tender process of the Hunter Class Frigates from BAE Systems, which did not have relevant value-for-money assessments, and had serious irregularities throughout the First and Second pass processes along with numerous other issues. This is not a simple ‘misalignment in expectations of implementing’ Commonwealth Procurement Rules (CPR) as the interim report states. The issues raised by the Australian National Audit Office (ANAO) around this procurement process and the subsequent reporting constitute a serious and significant breach in CPR and defence capabilities occurring in one of Defence’s largest projects.

1.6Similarly, the most recent 2021–22 Major Projects Report from the ANAO noted the concerning challenge to transparency posed by Defence refusing to provide key information to the national auditor. With Auditor-General for Australia Grant Hehir noting:

The Defence Major Projects Report (MPR) for 2021–22 was presented to Parliament in February 2023. The audit opinion included an emphasis of matter, drawing attention to the decision of the Secretary of Defence to not publish certain information in the section of the report prepared by the department. The department had assessed that some of the details of project performance, individually or in aggregate, would or could be reasonably expected to cause damage to the security, defence or international relations of the Commonwealth without sanitisation of the data. As a consequence, ANAO analysis of schedule performance for the full suite of MPR projects could not be provided in the report.

The impact of such reductions in transparency and accountability to the Parliament, identified through auditing, will be a watch point in both the Defence context and across the public sector.[1]

1.7The refusal of Defence to provide key information to the ANAO is a flagrant breach of basic transparency principles and also undermines confidence in Australian defence capabilities and processes.

1.8It is also unclear how the procurement of nuclear submarines from the UnitedStates and various other projects based on “interoperability” with foreign militaries, impacts Australia’s sovereign capabilities. The interim report fails to mention the threat of overreliance on any one foreign country's military capabilities to sovereign control. In the absence of even a credible veneer of due process in the decision-making that led to the proposed AUKUS nuclear submarine procurement.

1.9As such, the following recommendations should be added:

1.10The Committee recommends further examination of, and reporting back to the Senate on, the following matters as a part of the Committee's continued work:

how to ensure value for money, transparency, accountability, public interest and oversight are mandatory in the procurement process; and

how ‘interoperability’ and interaction with foreign militaries undermine and threaten sovereign capabilities.

Senator David Shoebridge

Substitute Member

Australian Greens’ Senator for New South Wales

Footnotes

[1]Australian National Audit Office (ANAO), Annual report 2022–23, pp. 5–6.