Preliminary Pages

Foreword

This review of the Defence Annual Report 2007-2008 focuses on the activities, achievements and undertakings of the Australian Defence Force (ADF) and the Department of Defence during the period July 2007 to June 2008. During this period ADF personnel remained heavily engaged in a wide variety of operational deployments world-wide, with the withdrawal of troops from Iraq balanced by an increased commitment to Afghanistan marked by the tragic death of four ADF members and the wounding of a number of others.

During the 2007-2008 reporting period, in addition to the significant operational tempo, Defence also maintained a focus on reform following a number of recent reviews, inquiries and investigations, as well as the development of a new White Paper.

The review of the Defence Annual Report is an important task and an opportunity for the Defence Sub-Committee to inquire into a broad range of Defence issues as part of the process of accountability of Government agencies to Parliament. The Defence Sub-Committee takes this responsibility very seriously.

This year, the Defence Sub-Committee selected a broad range of issues for examination at public hearings held in Canberra on 16 April, 19 June, and 21 August 2009. This extended timeline for the hearings was required to accommodate commitments of relevant Department of Defence personnel.

The major topics included joint/air/land capability and procurement, personnel issues, energy and the environment, and several other issues of interest.

The Committee examined the High Frequency Modernisation Project noting that Defence will still need to demonstrate that the post-Kinnaird reforms are sufficient and have been well-implemented delivering projects on time, on budget, and with required levels of capability.

The Committee also examined the ADF’s air capability and procurement and noted the unprecedented changeover of platforms that Defence is managing across its air capability and elsewhere, including the Wedgetail Airborne Early Warning and Control platform, the Tiger Armed Reconnaissance Helicopter, and the Joint Strike Fighter (JSF). The Committee notes that the JSF acquisition will be the most expensive single acquisition in Defence’s history. As our sole or principal air fighting platform it will be, arguably, our most important defence acquisition.

In addition, maritime assets will comprise a large part of the Defence procurement program for the next decade or more. The failure of the Seasprite project – a ship based helicopter capability for the Royal Australian Navy – is a powerful indicator of the importance of improved acquisition procedures. The true cost of the project’s failure is not only to be counted in dollar terms; it is also to be counted in terms of lost capability where it may in fact be needed.

Recruiting and maintaining personnel continue to be significant challenges for the ADF. The Committee recognises that Defence has taken considerable effort to develop a sufficient and sustainable cohort of skilled personnel, capable of satisfying the increasingly technical requirements of modern defence forces. In particular, the Committee welcomes the move by Defence to adopt a more flexible pay structure so that it is better placed to attract, develop and retain skilled personnel. However, there is emerging evidence of weakening in the current pay system and the Committee has therefore recommended that Defence place a high priority on developing a more agile and responsive solution.

The Committee has also inquired into external constraints facing Defence such as climate change and the steps Defence had taken to prepare for oil depletion and oil shocks. The Committee recommended that:

n  Defence adopt a more assertive strategy with regard to oil shocks and alternative fuels, with the specific purpose of providing a capability to mitigate risk due to a dependence on oil-based fuels; and

n  new fuels developed to mitigate risk to Australia’s defence capability from oil shocks and oil scarcity be designed to reduce Defence’s carbon footprint, where possible, in balance with energy yields and other practical considerations.

The Committee would like to thank all of the individuals and organisations that participated in this Review of the Defence Annual Report 2007-2008. We would also like to express our ongoing appreciation to the men and women of the ADF for the outstanding work that they continue to do in Australia and around the world. Finally, the Committee would also like to thank their families for the support they provide and the sacrifices they endure, to enable our Service men and women to contribute to Australia’s security.

The Hon Arch Bevis MP

Chair Defence Sub-Committee

Membership of the Committee

Membership of the Defence Sub‑Committee

Committee Secretariat

Terms of reference

Pursuant to paragraph 1 (b) of its resolution of appointment, the Joint Standing Committee on Foreign Affairs, Defence and trade is empowered to consider and report on the annual reports of government agencies, in accordance with a schedule presented by the Speaker of the House of Representatives.[1]

The Speaker’s schedule lists annual reports from agencies within the Defence and Foreign Affairs portfolios as being available for review by the Committee.[2]

List of abbreviations

List of recommendations

1     Introduction

Recommendation 1

The Committee recommends that, in the absence of a clear strategic case for high-risk first-of-type acquisitions, military off-the-shelf purchases should be the default option for procurement projects.

This recommendation does not necessarily relate to any particular acquisitions currently under consideration but rather represents a broader statement of policy reflecting on issues relating to past acquisition programs.

Recommendation 2

The Committee recommends that the Department of Defence review its current procedures for rapid acquisition to ensure that it is meeting the ADF’s needs, particularly where they are linked directly to overseas operational commitments.

7     Defence personnel – Niche skills and pay

Recommendation 3

The Committee recommends that Defence places a high priority on developing a solution to the difficulties that it, and KPMG, has identified with the current pay systems.

8     Submarines

Recommendation 4

The Committee recommends that Defence ensure the provision of submarine escape training at HMAS Stirling be re-established.

Recommendation 5

The Committee recommends that the deployability issues governing the Australian Submarine Rescue Vehicle Remora be resolved without delay.

9     Constraints

Recommendation 6

The Committee recommends that Defence adopt a more assertive strategy with regard to oil shocks and alternative fuels, with the specific purpose of providing a capability to mitigate risk due to a dependence on oil-based fuels. Defence should provide such a capability, sufficient to maintain an identified core capability, within a timeframe of 10 years.

Recommendation 7

The Committee recommends that new fuels developed to mitigate risk to Australia’s defence capability from oil shocks and oil scarcity be designed to reduce Defence’s carbon footprint, where possible, in balance with energy yields and other practical considerations.