Chapter 1


Chapter 1

Annual reports of departments

Department of Defence

1.1        The Defence Annual Report 2008–2009 was tabled in the Senate on 17 November 2009.

Military justice system

1.2        The committee noted in its 2009 report that one of the final recommendations to be implemented in response to the Senate committee's report into military justice, is the requirement 'to provide for periodic independent review of the military justice system by a suitably qualified eminent person or persons'.[1]

1.3        The resulting independent review team was led by former Chief Justice of NSW, Sir Laurence Street CK KCMG QC, and former Chief of the Air Force, Air Marshal Les Fisher AO (Ret'd). The report on the first review was handed to the Chief of the Defence Force on 23 January 2009.

The review team identified a number of areas where further improvements could be made to the reformed military justice system and made 49 recommendations to address these issues and ensure the system is better positioned for the future. The final report was publicly released in March 2009.

The Defence response and implementation plan for the report was considered by the Chiefs of Service Committee (COSC) on 26 March 2009. Of the 49 recommendations, 45 were agreed and a comprehensive plan for implementation of the recommendations over a three year period was approved. Progress will be reported to the COSC on a quarterly basis.[2]

Matters relating to the operations and performance of the department

Defence's financial statements

1.4        The committee is required to note any significant matters relating to the operations and performance of the bodies presenting their annual reports. The committee draws attention to the department's financial statements.

1.5        It is mandatory under section 57 of the Financial Management and Accountability Act 1997 for the annual report to include a copy of the audited financial statements and the Auditor–General's report thereon.

1.6        Over recent years, Defence's financial statements have shown significant deficiencies.[3] The committee notes that this financial year, Defence achieved unqualified financial statements. The Defence report states:

In addition to seeking deep reform, Defence worked hard to improve its transparency and accountability mechanisms this year. Defence achieved unqualified financial statements, and established a new Freedom of Information and Records Management Branch to ensure that we are well positioned to implement a pro-disclosure culture.[4]

1.7        The Australian National Audit Office (ANAO) performed financial statement audits on all agencies for the period 2008–2009. The audit report for the Department of Defence states:

An unqualified audit report was issues on 15 September 2009. This is the second consecutive year that an unqualified audit report has been issued for the department. This represents a significant achievement and is the culmination of continued and sustained effort over the past several years by Defence to address significant control deficiencies previously reported.

During the final phase of the 2008–2009 audit, the ANAO found that Defence had resolved two significant and 14 moderate risk issues previously identified. At the conclusion of the 2008–2009 audit, one significant and 23 moderate risk issues remained outstanding.[5]

1.8        The areas where significant or moderate risks remain outstanding, are:

  • Financial Management Framework
  • Logistics Management General Stores Inventory and Specialist Military Equipment
  • Asset Management (general and SME)
  • Financial Management Information System
  • Purchase to Pay systems and processes
  • Human Resource Management, and
  • Information Technology Governance.[6]

1.9        The committee looks forward to reviewing these results against next year's audit of financial statements. In particular, the committee is interested in seeing progress made with regard to the outstanding matter of management and oversight of service bureau arrangements between DMO and Defence.[7]

Strategic Reform Program

1.10      The committee notes that the roll out of the Strategic Reform Program, 2008–2009 was 'the start of significant, deep and holistic reform in every part of Defence'. The Secretary of Defence Dr Ian Watt, AO, and Chief of the Defence Force, Air Marshal Angus Houston AC, AFC, in their overview, stated:

The Strategic Reform Program is the most far reaching reform ever undertaken by Defence. It involves improvements to many areas of Defence, from the way we plan and develop strategy to the way we procure goods and services. The Strategic Reform Program is a long-term program, a decade long campaign, that will change Defence culture and deliver sustainable improvements in the way Defence conducts business. This program will be challenging, but we are confident that the men and women of Defence will be able to achieve this program of reform...

As a result of the Strategic Reform Program Defence will deliver gross savings from efficiencies and cost reductions over the coming decade of around $20 billion. This money will be reinvested to deliver Force 2030...

In implementing the Strategic Reform Program, we have drawn on the lessons from previous reform programs in Defence, including the need for strong internal and external governance. A key development in the area of transparency and accountability is regular progress reporting to Government, and the formation of the external Defence Strategic Reform Advisory Board.[8]

Summary

1.11      The committee finds Defence's 2008–2009 annual report to be both an informative and a well–produced account of the department's activities over the past year and that it meets all the requirements for departmental annual reports.

Department of Foreign Affairs

1.12      The Department of Foreign Affairs and Trade Annual Report 2008–2009 was tabled in the Senate on 28 October 2009.

1.13      In the Acting Secretary's review, Ms Gillian Bird stated that 'the international environment in 2008–2009 was testing':

The crisis in financial markets severely affected the global financial system and economy, threatening Australia's prosperity. This event gave rise to an important development in global architecture with the establishment of the G20 Leaders' Summit to coordinate the international response to the crisis. The Afghanistan conflict and the enduring threats of the nuclear weapons proliferation and terrorism were among the security challenges that Australia faced.[9]

1.14      The Acting Secretary stated that DFAT supported the Government's efforts to promote G20 outcomes and to strengthen regional security and prosperity through regional institutions such as the Asia-Pacific Economic Cooperation (APEC) and the East Asia Summit (EAS):

We helped focus APEC on the urgent need for a Doha Round outcome to support global economic recovery through further trade liberalisation. We worked successfully to secure a statement by EAS leaders in June 2009 backing the coordinated international response to the global economic crisis.[10]

1.15      The committee notes that the department 'worked intensively to support the Minister for Trade's commitment to achieving an ambitious outcome to the Doha Round negotiations':

...that would accelerate global economic recovery and improve market access for Australian agriculture, industrial products and services. We organised a Cairns Group Ministerial Meeting in Bali and a trade ministers' gathering in Paris in June 2009, both chaired by the Minister for Trade, at which he secured agreements from key WTO members to intensify engagement on the Doha Round.

...

The department continued to actively pursue Australia's trade interests through the WTO dispute settlement system. We led the whole-of-government task force to defend Australia's position in the dispute brought by New Zealand against Australia's quarantine measures regarding the importation of apples from New Zealand.[11]

1.16      The committee notes that the department is improving its records management systems with the implementation of a successful pilot program for a new electronic document and records management system. Ms Bird stated that the department continued to manage its resources efficiently and flexibly, achieving efficiencies and higher productivity through careful prioritising and regular review of budget allocations.[12]

Summary

1.17      The committee finds Foreign Affairs and Trade's annual report to be both an informative and a well–produced account of the department's activities over the past year and that it meets all the requirements for departmental annual reports.

Department of Veterans' Affairs

1.18      The Department of Veterans' Affairs Annual Report 2008–2009 was presented in the Senate on 28 October 2009.

1.19      The annual report for Department of Veterans' Affairs (DVA) also includes the annual reports of the Repatriation Commission, the Military Rehabilitation and Compensation Commission (MRCC), and the National Treatment Monitoring Committee (NTMC). The Secretary of the department is also the President of the Repatriation Commission and Chair of both the MRCC and the NTMC.[13]

1.20      In the President/Secretary's overview, Mr Ian Campbell, stated that 2008–2009 was both a demanding and rewarding year for the Repatriation Commission, the Military Rehabilitation and Compensation Commission and the Department of Veterans' Affairs:

DVA is well positioned to delivery government's agenda for the veterans community and keep aware of, and responsive to, emerging policy issues the veterans community is changing, however, so if the Department is to remain successful, it must also change and adopt a structure that provides flexibility and scalability, while being responsive to the continual changes in the veterans community.

Significantly, DVA will have responsibility for Second World War and Korean War veterans and widows for another 20 years, while veterans of the Vietnam War will still be with the Department in 40 years time. Moreover, there are many young soldiers, some of them women, returning from multiple deployments. Clearly, the Department must move with the times and face the challenges before it.[14]

1.21      Mr Campbell further explained that 'to encompass the changing veterans community, new forums have been established for veterans and members of the ex-service community to consult on government operations and decisions'. The Ex-service Organisation Round Table, is a new high level strategic forum, which will address issues of strategic importance to the ex-service and defence communities and advise on policy and service delivery issues. Along with the Prime Ministerial Advisory Council, the forum will ensure veterans will have input directly to the highest level of government.[15]

1.22      The committee notes that the Department has implemented a number of longer-term strategies to ensure it remains financially sustainable. Mr Campbell explained that:

These initiatives include: a five-year Strategic Financial Plan; a 10–year Capital Asset replacement Strategy that integrates asset planning with strategic business planning processes; an ongoing review of the Department's Internal Budget allocation process and its alignment with workload indicators; and the rollout of online financial management framework training across the department.[16]

1.23      The committee also notes that a number of reviews were commenced and completed throughout 2008–2009:

  • F–111 Deseal/reseal Senate committee inquiry. The report was tabled in Parliament on 25 June 2009 and made 18 recommendations to government.
  • The government accepted the recommendations of Professor David Dunt's independent Study into Suicide in the Ex-service Community and 49 of the 52 recommendations of the Review of Mental Health Care in the ADF and Transition Through Discharge.
  • The government's review of the recommendations of the 2003 Clarke Review of Veterans' Entitlements elicited more that 470 submissions.
  • In April 2009, the government commenced its review of the military compensation arrangements.[17]

1.24      In conclusion, the committee finds that the Department of Veterans' Affairs has submitted a comprehensive and well designed annual report that meets all the reporting requirements for a Commonwealth department.

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