National Convention Centre
Canberra
18 November 2011
I regret very much that I am unable to be with you personally at your Senior Leadership Group Meeting.
In my absence and inability to speak to you personally, I have prepared a paper which will be circulated to you and placed on the Department’s website.
This is the second such paper I have presented to your Senior Leadership Group meeting and made public.
I start by formally thanking the Secretary of the Department, Duncan Lewis, and the Chief of the Defence Force, General David Hurley for the work they have done to date.
I also thank the Senior Leadership Group for the work you have done and continue to do to protect and defend our national security.
This year has seen significant change in the leadership of the Australian Defence Force (ADF) and the Department of Defence.
In June, the Prime Minister and I announced the new military leadership team: David Hurley as Chief of the Defence Force; Mark Binskin as Vice Chief of the Defence Force; Ray Griggs as Chief of Navy; David Morrison as Chief of Army; and Geoff Brown as Chief of Air Force.
The Government expressed its deep gratitude to the retiring Chief of the Defence Force, Air Chief Marshal Angus Houston, as it did to retiring Chief of Navy Russ Crane and retiring Chief of Army Ken Gillespie.
In July, Duncan Lewis replaced Ian Watt as the Secretary of the Department of Defence.
Ian’s departure was a loss for the Defence Organisation but we benefit from having a Secretary of the Department of the Prime Minister and Cabinet who understands the complexity of Defence issues.
Duncan, with his ADF background and as a former National Security Adviser, brings with him a wealth of experience and expertise to Defence.
I have worked with him around the National Security Committee of Cabinet for four years now.
In July, we also saw Dr Stephen Gumley, Chief Executive Officer of the Defence Materiel Organisation, retire. Dr Gumley led significant reforms to Defence procurement, including the implementation of the Kinnaird and Mortimer Reviews.
These changes have naturally seen a number of flow-on promotions and movements in the Defence Organisation.
It is very important that, as a new team, we talk about our priorities and the expectations and responsibility on you as senior Defence leaders.
Year in review
When I spoke to this group last November, I had been Minister for Defence for around 10 weeks.
I spoke frankly about the major challenges associated with leadership and responsibility in Defence: implementing Government policy; conducting difficult and dangerous operations; managing major reform; and managing risk in complex capability projects.
I have now been Minister for Defence for over a year.
It has been an extremely busy year for us all.
In that time the ADF has continued to conduct operations in Afghanistan, East Timor and the Solomon Islands, not to mention peacekeeping in the Sudan and substantial Humanitarian Assistance and Disaster Relief operations at home and abroad and its contribution to border security.
We have made ongoing progress in implementing the 2009 Defence White Paper and the Strategic Reform Program, as well as commencing a range of vital and enduring reforms covering personal and institutional accountability, acquisition, procurement and maintenance and sustainment and Defence culture.
You have also been busy supporting the Ministerial team: the Minister for Defence Science and Personnel, Warren Snowdon, the Minister for Defence Materiel, Jason Clare, and the Parliamentary Secretary for Defence, David Feeney.
As a measure of how busy we have been, I am told I have received 3,271 Ministerial briefs and responded to 783 Ministerial representations since I spoke to you last November – not including information copies of submissions provided to other members of the Parliamentary team.
Today is a time to reflect on our many achievements in the last year but more importantly the challenges we continue to face into the future.
Operations in 2011
Afghanistan and our other operational commitments, whether East Timor, Solomon Islands, UN Peacekeeping Operations or Operation RESOLUTE, remain our highest priority.
In 2011, we have seen our forces in Afghanistan make good progress in their mission to train the Afghan National Security Forces to take on lead responsibility for security in Uruzgan by 2014.
Together, Combined Team Uruzgan and Afghan forces have consolidated the gains we have made over the last twelve to eighteen months, extending the security footprint further across Uruzgan Province.
The Australian Mentoring Task Force continues to make progress in training and mentoring the 4th Brigade of the Afghan National Army so that it can take the lead for security in Uruzgan Province by 2014.
Australian Special Forces and their Afghan partners also continue to disrupt the insurgency in and around Uruzgan Province.
Sadly, in the last year we have also seen 11 combat deaths in Afghanistan.
In particular, the three shocking incidents in which four Australians were killed and 10 wounded by Afghan soldiers has struck at the core of our training and mentoring mission and the trust on which it is based.
In this context, the training, discipline and commitment by the ADF to their mission has been exemplary and an inspiration to us all.
These tragedies will not shake the Government’s commitment to our job in Afghanistan.
I pay tribute to the sacrifice of these troops, and the other 21 Australian soldiers we have lost and the 213 personnel wounded in Afghanistan, 48 this year.
In 2011, the ADF and Defence also responded with extraordinary skill and commitment to a range of natural disasters.
Over 2,000 Defence personnel dealt with floods in Queensland and Victoria. ADF helicopters and fixed wing aircraft flew more than 1,000 flying hours, transported more than 680 tonnes of stores and carried more than 1,400 passengers.
Members of the ADF conducted rescues, evacuations, recovery work, engineering and community support activities, often under extreme weather conditions.
In the aftermath of Cyclone Yasi in Queensland’s north, more than 1,500 ADF personnel were deployed to assist, as well as numerous amphibious, mine clearance and hydrographic vessels, helicopters and fixed wing aircraft.
Air Force aircraft also delivered much-needed equipment, stores and emergency services personnel to New Zealand in the wake of the terrible February earthquake in Christchurch and returned more than 100 Australian civilians to Australia.
In March, following the earthquake and tsunami in Japan, Air Force C-17s moved more than 450 tonnes of cargo, including 41 vehicles as part of Australia’s relief efforts in Japan.
Three of Air Force’s four C-17s helped move Japanese Self Defence Personnel in response to the disaster, the first ADF deployment to Japan since we left as a member of the British Commonwealth Occupation Force in 1952.
The success of the ADF and Defence in conducting and supporting these operations is testament to your commitment and dedication, and adherence to the notion that Australia and Australians want to be good international citizens.
New capabilities for the ADF in 2011
Delivering new equipment to the ADF to enable it to perform effectively has been another focus of the past twelve months.
Substantial progress has been made implementing the recommendations of the Force Protection Review, initiated by my predecessor Minister Faulkner.
The rigorous implementation of these recommendations is positive and needs to and will continue.
In the past twelve months we have introduced new combat body armour and the Multicam combat uniform into Afghanistan.
We have up-armoured the Bushmaster and ASLAV vehicles and armed our troops with new weapons.
The counter rocket, artillery and mortar system has now been rolled out to a number of patrol bases and Forward Operating Bases across Uruzgan Province.
In addition to this focus on equipment in Afghanistan, we have made a number of large capability acquisitions.
We have ordered an additional 101 Bushmasters, acquired a fifth C-17 Globemaster aircraft, commenced the acquisition of a sixth C-17 and agreed to acquire 24 new naval combat helicopters.
These are among the 23 projects the National Security Committee of Cabinet has given first or second pass approval this calendar year – worth over $5 billion – with some more to come before the end of the business year.
We have also completed the acquisition of 24 Super Hornets.
12 of the Super Hornets are wired with the potential to be converted into Growlers in the future. Growlers give the aircraft the ability to jam the electronics systems of enemy aircraft and land-based radars and communications systems.
Consideration of the potential acquisition of a Growler capability will continue in the year ahead.
In addition, we have made some significant steps in 2011 in resolving some substantial capability problems.
Resolving Problems
We started the year with a dramatic failure of our heavy amphibious lift capability.
We made the decision to decommission the HMAS Manoora and HMAS Kanimbla – while HMAS Tobruk has spent most of the year in maintenance being prepared for the coming cyclone season.
It is pleasing that HMAS Tobruk has now returned to 48 hours notice following a period of scheduled maintenance.
We have worked almost daily with Navy to ensure this capability is covered – through our arrangement with New Zealand for the deployment of the HMNZS Canterbury, should it be necessary, and through a series of commercial arrangements.
We also purchased the Largs Bay from the United Kingdom which will be commissioned as HMAS Choules in Fremantle in mid December.
Last year our biggest in-country defence project – the $8 billion Air Warfare Destroyer construction program – encountered difficulties in the engineering and construction of some of the first hull blocks.
Together with the AWD Alliance, we have worked closely with shipyards to take pressure off the project’s schedule.
And we have also seen significant progress remediating projects listed on the Projects of Concern list.
Three projects have been removed from the list with one cancelled and two remediated. I expect further projects will be removed from the list in the near future.
Reforms in 2011
We have also made good progress in 2011 on developing and implementing a range of important reforms.
An effectively functioning Defence organisation, including the ADF, is a critical part of protecting and defending Australia’s national security interests.
Too often in the past we have seen adverse outcomes where Defence has not operated effectively or efficiently, and where despite adverse outcomes, neither personal nor institutional accountability has come to the fore.
Our guiding principle must be to prevent such adverse outcomes before they emerge and solve them if they emerge: prevention, not post mortems.
As a consequence, it is vital that we continue the ongoing Defence reform program, including accountability, procurement and budget reforms.
Reform – accountability
When I spoke to the Senior Leadership Group last year, I spoke about the need to improve accountability within Defence.
Failures in accountability arrangements damage Defence, weaken Defence’s performance and make us less efficient and effective.
I said then that we needed to instill much greater rigour and individual and institutional accountability to our consideration and management of major projects, procurement and capabilities.
Accountability means ensuring people are trained and resourced to make quality decisions. It also means that responsibility is aligned with the authority to make decisions, not blame shifting.
It also means that the decision-maker needs to maintain oversight of delivery and implementation.
I have made the point before that when the National Security Committee of Cabinet makes a decision, it is the only proper authority for subsequent amendments to that decision.
Without this link between decision and delivery being maintained, there can be no accountability.
In August I released the “Review of the Defence Accountability Framework”, the Black Review, the first comprehensive review of personal and institutional accountability in Defence as a whole.
The Black Review confirmed significant problems with performance in many parts of Defence.
To address these problems, Defence has commenced implementing a range of accountability reforms to strengthen personal and institutional accountability, particularly in the areas of capability development and acquisition. These reforms include:
- · reforming Defence planning, decision-making processes and performance management;
- · substantially reducing the number of Committees in Defence;
- · increasing rigour, contestability and expertise within capability development; and
- · the establishment of two Associate Secretary positions to strengthen Defence’s capacity to implement the Black Review.
Implementation of the Black Review will improve Defence management and improve delivery of ADF capability.
Reform – procurement and capability
Another key area with reforms already underway is in the area of procurement and sustainment of capability.
There will always be risk in complex, costly procurements involving cutting edge technology.
To minimise that risk and to manage it effectively, we need to instill greater rigour and greater individual and institutional accountability to our consideration and management of major capability projects, both acquisition and sustainment.
In particular this applies to the early stages of projects – 80 per cent of problems with Defence capability projects emerge in the first 20 per cent of the project’s life.
We need early warning in order to be able to take effective preventative action – prevention not post mortem.
In 2011 we have accelerated the full implementation of all of the Kinnaird and Mortimer recommendations previously agreed by Government.
Defence has also commenced implementation of a range of further important reforms to capability development and procurement. These include:
- · Increasing the rigour of the Defence Capability Plan development process;
- · Injecting stronger contestability in capability decision making;
- · Implementing an Early Warning and Indicator system to prevent problems early in the life of a project;
- · Expanding the use of the Gate Review process; and
- · Adding more rigour to the Projects of Concern process.
We are also implementing further reforms as part of the Government’s response to the Rizzo Report into the Amphibious Fleet.
Mr Rizzo identified a systematic breakdown over a long period of time, including under-resourced naval engineering capabilities, inefficient industry contracts and inadequate risk management.
Actions underway to address these problems include the remediation of our naval engineering capability and an increase to the Amphibious and Afloat Support Systems Program Office of the Defence Materiel Organisation.
These are substantial and important reforms. They will shape the structure and operation of Defence capability development and procurement over the coming decade.
Reform – personnel
In 2011, we have also pursued important personnel reforms.
In September, Minister Snowdon and I announced that the Government had formally agreed to the removal of gender restrictions from ADF combat roles.
Women will now be able to work in any position in the ADF, including combat roles, provided they have the ability to meet all of the demands of the role.
This important reform demonstrates that Defence is committed to creating a work environment where all personnel are treated fairly and with respect.
Future challenges
In 2012 and beyond we will continue to face challenging tasks and the need for further reforms.
In meeting these challenges we will need to apply the principles of accountability and ‘one Defence’ which we have begun to apply to our work during 2011.
Challenges – Afghanistan
Afghanistan will remain our number one priority in the months and years ahead.
Australia’s fundamental goal is to prevent Afghanistan from again being used by terrorists to plan and train for attacks on innocent civilians, including Australians in our own region and beyond.
My visit to Afghanistan in October confirmed that the international community is on track to achieve nation-wide transition of security-led responsibility to the ANSF by the end of 2014.
But this is a challenging goal. It is a tough fight.
The Taliban will continue to test the transition process through more high profile attacks and assassination attempts.
And the incidents in which Australians have been killed by Afghan soldiers have tested our resolve.
All of Defence needs to continue to support our efforts in Afghanistan with the same commitment, dedication and excellence shown so far.
This includes providing enhanced protection for our personnel in Afghanistan, and support for those who have come home.
Our personnel on the front line are supported by every part of Defence, from capability development and Defence Materiel Organisation officials working to deliver new equipment, to logistics staff providing them with the support they need on a day to day basis, to the personnel in Joint Health Command looking after our wounded.
The care of wounded, injured and ill ADF personnel – and the support of their families – is a high priority for the Government.
Our servicemen and women deserve the highest quality medical care – regardless of whether they are on deployment, at home, or beyond their service.
In this work, Defence and the Department of Veterans’ Affairs must work seamlessly together to bring together support arrangements across these departments.
We must successfully implement the range of enhanced support measures we have commenced, including the Support for Wounded, Ill or Injured Program and the Simpson Assistance Program to support the needs of severely wounded, injured or ill individuals and their families.
This must be a truly ‘one Defence’ effort. Many of you know better than me the nature of the difficult task our personnel have. And all of you know that it is all of our responsibility to support them.
Challenges – Reforms
After operations, our highest priority must be continuing the process of Defence reform into 2012 and beyond.
This includes continuing the accountability and procurement reforms, addressing the outcomes of the range of reviews into aspects of Defence culture, implementing the Strategic Reform Program and the Force Posture Review.
Challenges – the Strategic Reform Program
In 2011 we continued to pursue the Strategic Reform Program (SRP) to ensure Defence can efficiently deliver national security capability for Government.
The SRP must deliver $20 billion of savings for reinvestment in Defence capability.
Defence achieved its $1 billion in planned SRP savings in 2010-11. We have now hit our SRP cost reduction targets for the last two years.
In May, I announced a second phase of SRP initiatives which will result in $1.2 billion in savings across the Forward Estimates through additional shared services and other efficiency measures.
But the early SRP savings have been, in effect, ‘low hanging fruit’ – easy cost cuttings and the easy savings.
Achieving SRP savings targets into the future will become tougher as we pursue real and sustained reform across Defence.
From 2012-13 onwards, Defence will need to find annual savings of $2 billion and above.
Delivering these reforms on time and within budget will be vital to the success of the SRP.
And we cannot afford to fail – any shortfall in meeting our SRP savings targets means less funding available for critical ADF capability.
Challenges – Defence Budget
Delivering on the SRP is essential, not only for Defence, but for Government.
The Government remains committed to returning the Budget to surplus in 2012-13. Defence has to expect that we will again be called on to make a contribution in this respect.
Our Defence Budget equates to 7.4 percent of Australian Government outlays. It is equivalent to around 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.
We have a budget of around $27 billion this financial year.
This funding 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.
We must prioritise our investments in capability, reduce administration costs to the most efficient levels and spend our funds wisely.
So we will continue the process of reforming the Defence Budget.
The Chief Finance Officer is currently undertaking a review that aims to improve Defence’s budget estimation process.
We will roll-out further shared services reform, rationalise Defence corporate overheads and increase budget accountability and control in a way that does not reduce support of operations or capability development.
Challenges – cultural reforms
Cultural reform also requires ongoing effort in the period ahead.
In April, in the wake of the so called ‘Skype Incident’, I announced that we would commence a far reaching cultural appraisal and ongoing change program for Defence.
This change program comprises a series of reviews into aspects of the culture of Defence and the ADF.
I have recently received the final reports of six of these reviews: the Broderick Review into treatment of women at ADFA; the review of the use of alcohol in the ADF; the review of the use of social media; the review of personal conduct of Australian Defence Force personnel; the review of the management of incidents and complaints; and the review of Defence Australian Public Service women’s leadership pathways.
The issues canvassed in these Reviews are complex.
The Secretary and the Chief of the Defence Force are developing a comprehensive response to the Reviews that is harmonised with the wider Defence reform agenda.
Some good work has already been done to date in these areas.
But serious challenges remain.
Implementation of the Government’s response to the reviews will be a critical step in ensuring that Defence culture is in line with modern community expectations.
You will all be involved in implementing the reforms.
Challenges – Force Posture Review
In 2012, Defence will also deliver the ADF Force Posture Review into whether the ADF is correctly geographically positioned to meet Australia’s modern and future strategic and security challenges.
When I announced this review, I said that a World War Two ‘Brisbane Line’ disposition of Navy, Army or Air Force assets south of a line drawn from Brisbane to Adelaide does not reflect the reality of where the ADF must operate, whether for military operations or humanitarian assistance and disaster relief, or other contingencies.
Implementation of the ADF Force Posture Review will be a major reform.
Implementation of the ADF Force Posture Review will be considered alongside joint work we are undertaking with the United States on implementation of the United States Global Force Posture Review.
This week we saw Prime Minister Gillard and President Obama announce two new force posture initiatives: the deployment of United States Marines to Northern Australia and closer cooperation between the Royal Australian Air Force and the United States Air Force.
Coming on the 60th anniversary of the ANZUS Alliance, these joint initiatives will significantly enhance defence cooperation between Australia and the United States.
These Global Force Posture Review initiatives will enhance the capabilities of both Australia and the United States by increasing opportunities for combined training, deepening interoperability, and enabling both countries to work together even more effectively to pursue common interests.
They will also better position both nations to join with other partners to respond in a timely and effective manner to a range of contingencies in the Asia-Pacific, including humanitarian assistance and disaster relief.
It is also an example of the strength of our Alliance with the United States.
Challenges – Submarines
An ongoing long-term challenge in 2012 will be addressing Collins Class Submarine availability.
The Collins Class is a vital part of Australia’s maritime national security capability.
But we have seen well publicised significant, entrenched and highly technically complex problems with the availability of the Collins Class.
As a consequence, the Government commissioned John Coles to conduct a review into the optimal commercial framework for the conduct of Collins Class sustainment.
Mr Coles will provide his interim report by December with a final report by March 2012.
The Coles Review will provide a clear sighted path to improve the sustainment and availability of the Collins Class Submarines.
The Coles Review and subsequent reforms in Collins Class sustainment are an essential part of tackling the significant challenge of submarine availability.
This will be important work in building confidence in our capacity to sustain our current fleet of submarines, so that we can turn with confidence to the acquisition program for our Future Submarine.
This is consistent with the necessity to work hard in the early days to get projects right, and learn from experience, and thereby avoid, reduce, and minimise project difficulties down the track.
This is especially important in the period ahead as we work through the early stages of the future submarine project.
Challenges – Military justice
Another priority challenge in 2012 is military justice reform.
In recent years we have seen a number of high profile problems emerge in this area.
In August 2009, the High Court of Australia found that the establishment of the Australian Military Court in 2007 was invalid.
As an initial response, the pre-2007 military justice system was reinstated to allow time for the development of options for a new military justice system which meets the requirements of Chapter III of the Constitution.
Some of you are working with the Attorney-General’s Department to finalise the details of a Military Court of Australia Bill.
This is an essential undertaking.
This new important legislation needs to establish a permanent, effective and constitutionally sound system of military justice for Australia’s defence forces.
The Government is currently considering the implications for the Bills of the Courts Martial proceedings in relation to the 12 February civilian casualty incident in Afghanistan.
This includes a comprehensive assessment of the outcomes of the legal processes around the charges brought by the Director of Military Prosecutions.
Other Military Justice issues will be raised in the context of the Inspector General of the ADF’s review of the management of incidents and complaints in Defence and the reports from Roger Gyles QC in relation to the HMAS Success Commission of Inquiry.
One of our key tasks in 2012 will be pulling together all of these issues to ensure that the ADF has an effective military justice system underpinning its work.
Challenges – Cyber security
An emerging priority, and challenge, is in the area of Cyber Security.
The cyber threat to Australia is real, evolving and a growing test to our national security establishment.
It comes from a wide range of sources, and from adversaries possessing a broad range of skills. Cyber attacks are becoming increasingly more sophisticated and targeted.
At the Australia-United States Ministerial Consultations on September 15, 2011, we agreed that in the event of a cyber attack that threatens the territorial integrity, political independence or security of either of our nations, Australia and the United States would consult together and determine appropriate options to address the threat.
This followed agreement with the United Kingdom at the Australia‑United Kingdom Ministerial Consultations in January 2011 for closer cooperation on cyber security.
We have also commenced closer trilateral cooperation on cyber security with the United States and the United Kingdom.
Cyber security is a new, rapidly evolving and complex challenge to national security.
In recognition of this challenge, in June, the Government announced it would develop Australia’s first Cyber White Paper.
Defence will play a leading role in implementing the Cyber White Paper and will be at the forefront of Australia’s Cyber Defence into the future.
Conclusion
In the last year I have travelled to Defence bases in Australia, visited our forces in Afghanistan and the Middle East, East Timor and the Solomons and held many meetings with a large number of you.
I continue to be impressed by the dedication, professionalism and skills that you and your colleagues have demonstrated.
In 2011 we have made some significant gains in how we go about conducting our business.
We have made progress in our key priorities of operations and reform.
But as more than one current or former senior Defence official has told me over the last 12 months, “Minister, never understate the capacity of Defence to both surprise and disappoint.”
We are not there yet.
Yes we have made some modest progress but we need to continue the pace of reform to ensure that the ADF and Defence are positioned to meet the challenges of the future.
I believe very strongly that with our joint efforts, your leadership, the skills and dedication of our people, and the institutional accountability of the Defence organisation, that we can do that.
Thank you.