Media Room: Defence Speech
 |
Defence |
| 07/05/2009 | MSPA 90507/09 |
 Printer friendly version
|
|
|
ROUND TABLE
DISSCUSION FOR THE FEDERAL GOVERNMENT’S DEFENCE WHITE PAPER Round Table, Thursday 7 May
2009 E&OE CHIEF OF THE DEFENCE FORCE,
AIR CHIEF MARSHAL ANGUS HOUSTON, SECRETARY OF DEFENCE, NICK WARNER: ANGUS
HOUSTON: Okay. Well first of all, good
morning and welcome to Defence headquarters. I'm delighted that we have this
opportunity to be with you this morning. All of you would have read a lot about
the white paper. You've probably seen the presentation the Prime Minister last
weekend, the presentation I made, and I don't intend to go back over all that
ground. I think probably the best thing is for you to question me about where
you want to go. Suffice it to say, though, that I'm
absolutely delighted with the white paper outcome. The decisions the Government
has made are absolutely on the money as far as I'm concerned and obviously we
had a substantial input into the whole white paper process and the outcome is
very, very pleasing . It positions us very well for an
uncertain future. We'll have a joint adaptable force that we'll be able to
swing from high-end operations, should they be necessary, into the sort of
operations that we've seen in the neighbourhood in recent times. The sort of
disaster relief, stability and security operations that have been a feature of
the environment in the South Pacific and So that's it. I'd like you to all
relax. I'll certainly be relaxed despite the fact that I've got this thing on
and we'll be prepared to take any questions that you want to raise at this
time. I'm happy to go outside of the scope
of the white paper, very happy to talk about NICK
WARNER: Okay, thank you. Look, I
thought I'd talk about the reform program and savings program, given that's
been something of a feature of the media reporting since Saturday,
understandably. There's been a lot of coverage but because there isn't a lot of
detail in here or what's in there maybe is difficult to boil down, I'll go into
more detail than Angus has just done. What I'll try to do is tell you what
the reform and savings program actually is and why we in Defence know that it's
going to succeed. There's no question that this is a
complex and far-reaching program of reform and savings that we're about to
embark on. We have set ourselves an ambitious agenda and certainly ambitious
savings targets. What we are heading into will change fundamentally the way
that Defence does business. It'll change fundamentally the way we prioritise
resources and it will change fundamentally the way we allocate resources. But here is a key point: these are
reforms, these are Defence's reforms, they are Defence's savings. We in Defence
have worked on this since before the white paper. I guess we've been working on it for
17 months or maybe 18 months, starting with the $10 billion worth of savings
program that the Minister asked us to identify quite some time ago, leading
through eight companion reviews that looked at very many parts of Defence's
business and also through the external audit run by George Pappas and
McKinsey's. Hundreds of people, maybe many
hundreds of people in Defence, have been involved in this process and the
Defence committee that brings together the senior military and civilian
leadership of Defence has probably met 70 or 80 times during the past year and
a half to talk about the white paper, to talk about the reform program and
savings. And some of those meetings have actually gone all day. Working
together we have determined what is broken in Defence and we have determined
how it needs to be fixed and we have determined the level of savings that are
needed, that are available. Half
of you have come a little bit late. And all
those recommendations that we have put forward to government have been agreed
by government. I don't want to leave the impression that this is going to be
easy because it's not going to be easy. It's going to be immensely challenging
for everyone in Defence, but Angus and I and the whole of the Defence committee
are committed and we are united and we are determined that this is going to
work. On
Tuesday Angus and I, service chiefs and the heads of all groups in Defence
talked to the senior leadership group, that is the 200 or 300 senior military
and civilian personnel leaders in Defence about the reform program, the savings
program, the white paper generally. There is not a murmur of dissent. I
said to that collective group of Defence leaders that they needed to sell this
message, they needed to get on board or get out. The speech - if you're
interested, if any of you are interested in this, - that I gave at that meeting
will be available to you as you leave. Let
me tell you why this'll work. There's been a lot of media commentary, a lot of
former Defence officials out there talking in recent days about why this is
going to fail; let me tell you why it's going to work. Firstly,
because it's been this collaborative approach. We have worked together to put
this together. That means that there is a buy-in, in Defence, for this reform
program. Defence owns this reform program and the savings program. It hasn't
been foisted on Defence, it hasn't been imposed on Defence, it is home-grown. Thirdly,
this is not a toe cutter exercise. The savings that we find will be reinvested
into higher priorities in Defence. And
fourthly, we thought carefully about planning, we thought carefully about
implementation and when you look at the documentation and when you look at the
Budget papers you'll see there is a phased approach to this. There is a
ramp-up. We have time to build the reform program, build the savings program
and time to get this right. Finally,
we have learned the lessons of the past. We have looked back at previous failed
Defence reform efforts and savings efforts and we've learned what went wrong.
We've learned the need for proper planning, for a very complete exhaustive
program of communication. Angus and I will certainly be very deeply involved in
that. We've
learned the need to bring Defence along, the collaboration I was talking about.
We've learned the need for oversights and, importantly, we've learned the need
for sharp definition of individual accountability. I'll
just tell you a little bit about the reform program. I won't go into it
completely because we don't have time, but I'll give you snapshot. There
are - there will be 15 reform streams. I'll list them if you like, but probably
best if I don't. Anyone who needs the whole list come to me later and I'll give
it to you at the end. Gross
savings from the reform program over the forward estimates over the next four
years will be $5 billion, and gross savings over the decade $20.6 billion. Of
that $20.6 billion about 15, something less than 15, comes from five key reform
areas, and I'll just go through those very quickly too, if it's of use. Shared
services - these are all of course in the white paper - shared services:
savings there will be about $1.4 billion over the decade. This will allow us to
streamline our core business processes, things like payroll, HR, financial
services. Workforce
reform: we'll save $1.9 billion over the decade. The key here is we'll be
building an integrated workforce. We will be - we will have the flexibility and
the ability to get the right mix of staff. I
talked about phased reform and ramp-ups, that's what we'll do with workforce
reform. We're looking at a three to six month evaluation period just to get our
ducks lined up and a program of reform that we'll build over the next five
years or more. Two key components of this are civilianisation of ADF's support
staff - we're talking about 1100 people there - and contractor conversations.
That is taking contractor work and positions and moving them into the public
service. Contractors
cost us about 15 to 40 per cent more than public servants. ADF members cost us
30 per cent more than public servants. What
this means is that some roles will change, some roles will be going. We will
redeploy staff where possible, where necessary. We'll re-train staff and the
one thing we will certainly do is be honest and forthright with our staff and
utterly consultative. At
the end of this 10 year process there'll be 3000 more ADF than there are now
and there'll be 300 more civilian staff than there are now. The
third area, the third key area, I'd like just to briefly touch on is
non-equipment procurement. This will produce savings over the decade of $4.4
billion. We now spend $5.2 billion per annum on non-equipment procurement
spread cross 23 different areas. Again, we will give ourselves time to phase
this in, to scope it. That process in this case will take three to nine months. What
we're aiming to do is do procurement in a smarter way. There'll be changes to
the way we travel, changes to the way we do travel allowance. We'll become more
commercially savvy with the negotiation of contracts and we will target over
this period, of - during periods of three to six months three to different -
three to five different categories until we've covered the whole 23 areas that
are required. Fourthly,
smart maintenance: again we will save here $4.4 billion in the decade. As some
of you will know we have over 100 weapons and fleets - weapon systems and
fleets to service. The focus here, I think clearly, will be on increased
productivity and in eliminating waste. Two
more areas before I finish. Inventory: some of you may have seen a speech I
gave at the Lowy Institute last year where I talked about 286,500 paper
handtowels and how these had been wasted. This is about the paper handtowels
and everything else that goes with them. If anyone wants a copy of the Lowy
speech there'll be one available later too. We
will save $700 million in the decade through this process of reform. What does
it mean? It means smarter buying and decreasing the size of our holdings. Not
rocket science but something Defence hasn't done well in the past. Finally,
ICT: getting our ICT systems right will be a pre - a key prerequisite to this
whole reform program. As I've said before, Angus has said before, they don't do
the job now that we need them to do. They need to be reformed. In being
reformed they will allow us to deliver this reform program and these savings.
The savings that we anticipate, that saving target that we have set ourselves
for ICT, is $1.9 billion in the decade. Many
examples I could give you; here are a couple. We will reduce the number of data
centres that Defence has. We have probably 200 or so at the moment. We'll
decrease that to less than 10. No organisation the size of this ought to have
anything like that number of data centres. We'll decrease the number of
computer applications we have. At the moment we have about 4000. That's
ridiculous. We'll cut that back to about 2000. Let
me end by just saying we don't underestimate, Angus and I or the Defence
leadership, how difficult and how challenging this program of reform and
savings is going to be. But we do have the right team, we do have the right
plan, we do have the full support of government and this reform program, this
savings program, unlike some in the past in Defence is going to succeed because
of that, but also because the future of the ADF and, indeed, the ADF of the
future, depends on this program being realised in the full. Thank
you. ANGUS
HOUSTON: Over to you. QUESTION: Can I just ask about the companion reviews,
particularly the Pappas review… NICK
WARNER: That wasn't a companion
review. Pappas was an external audit. QUESTION: The Pappas audit and the other companion
reviews, we were told that we were going to get those at the same time that the
[indistinct] was released and we haven't seen those. Is there a reason for
that? NICK
WARNER: In respect of the external
audit, that's an issue you'll have to put to the Government and I think the
Minister has had some things to say about in the recent past. The
companion reviews are working papers and I don't remember anyone saying they
would be released. It's not my intention to release them. QUESTION: There's been some suggestion that the
companion reviews were a lot more baulkish on the future role of NICK
WARNER: No, no. ANGUS
HOUSTON: No, they were - there was no
coverage of strategic issues in the companion reviews. The companion reviews
were looking at various aspects of our business and they've all been rolled
into the strategic reform program. So
anything worthwhile doing in terms of reform has been taken out of the
companion reviews and rolled into the strategic reform program. And
in terms of those if you like white paper issues, they were handled through
what I would call the white paper process. NICK
WARNER: If I could just add to that
- so, we decided early on that we needed to look in a forensic way at the way
Defence does its business, its ICT et cetera, so - and they were the companion
reviews. There were eight of those. Their work eventually melded into the work
of the external audit because, to a large extent, they were covering the same
ground. But
as Angus said, it covered, it did not cover strategic issues at all. QUESTION: So why do you think the external audit
should be released, not the companion reviews? NICK
WARNER: I didn't say that Ian, I'm
sorry. I said I think the Minister has commented on the external audit. QUESTION: So do you believe that should be released? NICK
WARNER: I think the government's
view is it will not be released. I think that's what the Minister has said. QUESTION: Do you agree with that? NICK
WARNER: Of course. QUESTION: So do you think that the - is there a reason
for that? I mean is there stuff in there that's too sensitive or too revealing
or what's your ... ANGUS
HOUSTON: There's one on preparedness and
operating costs. Now some of those aspects are obviously classified. Now those
are going to be - they are rolled over into the reform program and I am going
to retain responsibility and accountability for that program. There
is no need for that to go out into the public domain because frankly there are
issues there, very important judgments to be made about preparedness, operating
levels and so on which we would not want to share with any - just anybody. There
are classified aspects to those - to that work and indeed the same is true of
some of the other companion reviews. QUESTION: Can I ask you, methodology by which you
selected this quantum of saving, how did you arrive at that, was that Pappas or
was it you? What methodology did you use to arrive at for example 1.9 billion
in workplace reform? NICK
WARNER: It came out of the -
Patrick, I think you missed the early part of the briefing. It came out of this
whole process of companion reviews and external audit, and as I just said the
two sort of were married as we went along. So, a
great deal of very detailed work went into both those processes and we are
confident that the quantum for each reform stream, of which I said there were
15, of savings are achievable and indeed that we will achieve them. These are
not made up numbers; these have a lot of solid basis to them. QUESTION: Can I ask about the methodology of savings
then? There's two types of savings. If I stand still and do nothing and the
dollar goes up I can buy a cheaper imported car, so I've made a saving. That's
one type of saving. There's
another type of saving where you fundamentally change the way you go about
things and therefore things cost less to do. Do you have a breakdown in your
$20 billion worth of savings about the ones you're going to get because you
don't really do anything, you stand still, and the ones you're going to make
because you really do make fundamental change? NICK
WARNER: A great deal of very
detailed work has gone into this. There are volumes of paper which show how
we're going to get the savings. These are, as I said in the beginning, very fundamental
changes to the way Defence does its business. These are real savings. Q UESTION: [Indistinct] talking about complete
cultural change within Defence, and if these savings are achievable and
realistic as you say, what does that say about how Defence has been over the
last 20 years? NICK
WARNER: If you again read my Lowy
speech, I covered this ground. There are a lot of things that Defence does
extremely well: operations, intelligence, collection and analysis to name just
a few, but a lot of others, and there's many things that we do very badly. Some
of those are for historical reasons. Some
of them are to do just with the nature of defence organisations; that is we
share common problems and advantages with the Americans, the Brits, the
Canadians and New Zealanders, and some of it is because Defence has been spoilt
over the years. And some of the money that we have received from government
over the last decade or two we haven't spent as well or as efficiently as we
should have. Angus
and I are determined to ensure that this becomes an utterly effective and
efficient organisation. That's what this reform program's about. QUESTION: Did anyone take up your offer to get out? NICK
WARNER: No, I think they're all on
board. ANGUS
HOUSTON: Now, if I could just - if I
could just say in terms of everybody being on board, you know the military side
of the house is all joined up. We
are as one with our civilian colleagues. There's no push back anywhere and we
want to do these things. Fundamentally, the Government has given us a
challenge. If we
want to deliver this ADF of the future, we've got to find these savings and I
am absolutely totally committed to finding those savings and indeed so are the
service chiefs. Over
the next few weeks you'll get an opportunity to talk to them and you'll hear
the same message from each and every one of us. NICK
WARNER: Catherine(*)? QUESTION: In terms of job losses across ANGUS
HOUSTON: You go first and I'll come. NICK
WARNER: Yeah. I think you might
have missed this too, Catherine. Over the decade there'll be 300 more civilian
positions and 3000 more ADF positions than there are now. If you look at the
next three years, because there'll be churn - there'll be changes and up and
down, over the next three years there'll be an increase of 1100 APS positions,
not a decrease. I
can't go into the details today of where that's going to happen or when it's
going to happen, what the churn looks like, a lot of that detail will come out
later, a lot of it will come out through the Budget. QUESTION: But some people will obviously not be
[indistinct] trained I would imagine. There'll be - like, they won't all be
people [indistinct]. NICK
WARNER: Where we can't retrain or
redeploy people - maybe I should add - go first to say we will be honest and
consultative about this. We will
work with our workforce, we will work through the unions, we have a new DECA, a
new defence agreement being negotiated at the moment. We will bring our
workforce along with us and we will hope to retrain and redeploy everyone that
we can. But at the end of the day the workforce is growing, not decreasing. ANGUS
HOUSTON: And in terms of the next 10
years, an increase in ADF numbers of 3000, an increase in APS numbers of what,
300 over the decade. The
important thing is we're not talking about huge numbers of positions. These
positions will be targeted, they will be in support areas where we don't have
to have a uniformed person doing the job and that uniformed person will then go
out and do things that the military should be doing, and an APS member will
come in instead. We will reap a lot of savings from that process. QUESTION: Will there be much of a geographical shift? NICK
WARNER: Well, I don't think so
because the - fundamentally what we're doing, it's really reorganising the
workforce to get efficiencies out of the fact that an APS member is 30 per cent
cheaper than a military person, or a contractor. So,
what I'd anticipate is that jobs will still be there, it's just that we will
have a different character to our workforce to the workforce we have right now. QUESTION: [Inaudible question] What sort of savings
come from tackling the Defence estate in direct base [indistinct] houses
[indistinct]? NICK
WARNER: No decisions have been
taken about any specific base rationalisation. The $20.6 billion worth of
savings does not include any money yet from changes to the estate. You'll see
in the white paper - I'm sure you've seen that there are five key principles
that will underlie how bases… how we locate bases and look at bases in the
future, but they're not part of the savings program. QUESTION: What are the - what is the net savings
figure over 10 years? NICK
WARNER: The net savings figure is
about 18 or $19 billion. QUESTION: In terms of priority [indistinct]
capabilities, the list will remain classified, how is industry to know where to
focus their workforce planning and their R&D efforts? NICK
WARNER: Are you talking about the
defence capability detail? Fundamentally we have the Budget coming up next
week. There'll obviously be more detail at that stage and then beyond that, as
has been the practice in recent white papers, we will develop, further develop
the defence capability plan and that will be launched at the Now
over the next, through the forward estimates what we're going to see is
probably just under 200 decisions being required of the National Security
Committee of Cabinet in terms of projects that will go for first or second pass
approval through the capability process. What
we're looking at is defence industry having to ramp up from $4.5 billion of
activity a year to probably $5.7 billion a year. That's over the next four
years. So there's going to be an awful lot of work for our defence industry and
it will be a real challenge for them as well. QUESTION: Foreign exchange variations for purchases
like [indistinct] aren't actually mentioned specifically in the one and a half
pages at the end of the document, will the same arrangements the go... who will
you be indemnifying [indistinct]? NICK
WARNER: No change in that. QUESTION: Right. Secondly, I've got no doubt about
your ability to drive through with the DRP without having the sort of
McLachlan(*)... NICK
WARNER: Don't call it DRP, this is
an SRP. QUESTION: [Laughs] … sorry, without that sort of
effect. Are you absolutely confident you can avoid those sort of unforeseen
consequences that have occurred before, back in '96 with the new government and
we got down the sharp end of things suddenly when Timor was on we found we - there
was not enough backup. ANGUS
HOUSTON: I guess I was around during the
Defence Efficiency Review and then that was followed by the Defence Reform
Program. What I recall was that there was total commitment to a number of
savings which were related to cutting people power, establishment positions,
and the idea was some of those would be transferred into the sharp end, the
savings would be transferred into the sharp end and a lot of the support
positions would be cut away. Fundamentally
that was done without, in my view, full oversight in terms of governance and
also without a comprehensive plan. The big difference this time, as Nick will
tell you in detail if you wish, we're going to have a very complete governance
oversight of the whole reform process. There
will be an independent person heading up the highest level oversight committee
and we are going to have a comprehensive plan and we will have milestones and
we will have targets that we have to meet through the whole process. What
we're talking about is a proper implementation of a very complex and very
challenging program and we're totally committed to it and we've got all the
right tools in place. From
my point of view, last time we didn't have that approach. It was really left to
each individual group to find specific savings. There was no total whole of
organisation approach, no total whole of organisation plan. We have got that in
place now and if you want further detail on it, I'm sure Nick would be prepared
to provide it to you. NICK
WARNER: I think I might - just
before you go on, I'll just add to that. I
said in the beginning that we had learned the lessons of the past and what
happened with the DRP and the DER is perhaps the best example of what not to
do. A lot of the broken governance and assurance elements of Defence now, a lot
of the reasons why we do things, some things very badly, is because of that
process. As Angus said, it was slash and burn. It wasn't reform. It was just a
driven savings program. QUESTION: Thanks, and the third aspect that I'd like
to deal with it is we've obviously got a three per cent recurrent increase in
the budget, which is terrific, but that is in line with CPI, whereas military
wages as you would be well aware over the last decade I think they've increased
by an average of 4.75 per cent and the cost of equipment has added even,
increasing at an even greater extent. I've
got no doubt about the military's ability to cope with that but it seems to me
that it appears you'll need to do things differently, possibly with
[indistinct] service scheme again, possibly with just a different way of
dealing with... NICK
WARNER: Nick, we're going to have
to do a hell of a lot of things differently, firstly. Secondly, a lot of this
detail of course will come out through the Budget. Thirdly though, we are very
happy with the financial package, the budget package the Government has given
us that is detailed in that one and a half pages at the back of the white
paper. As
you say, we had three per cent real through to 2017-18. After that we get 2.2
per cent; 2.2 per cent is the right figure for that time period. It
has two resonances to it. But firstly, it's the figure that's contained in the
inter-governmental - into the Government inter-generational report. And
secondly, it turns out to be the true cost of the drivers - cost drivers within
Defence. And
of course the third key figure is 2.5 per cent as Defence's index. As you're
aware, we have, for the last decade been on something called the non-farm GDP
deflator. When
I arrived in Defence three years ago, that was riding around about CPI or
thereabouts and then last year, of course, we had this terrific windfall and
made oodles of money. And this year it's looking rather sad and sorry [laughs]. That's
now way to run a budget, certainly not a budget of $20 billion plus. What we
need is stability and the 2.5 per cent gives us that stability. The
2.5 per cent is essentially based on a historical and long-term look at where
the non-farm deflator will go. So if you go back to the 1990s and project it
through, 2.5 per cent. That
will ens… that will allow us to have much greater understanding of what our
budget parameters are and what - and therefore how we divide the budget. In
putting together the white paper, in putting to - forward the budget, in
looking forward the next 20 years, as I said, we have it balanced. So
the cost of ADF employment that you were referring to, it's all taken into
account. And in taking it into account, we have a balanced budget. QUESTION: Where did the 2.5 come from, though? Did it
come from Treasury or Pappas? NICK
WARNER: It came through the whole
process. ANGUS
HOUSTON: Just that issue on reserves that
you mentioned, of course there are a lot of initiatives in the white paper that
relate to reserves. And most of those will come to focus in the way we approach
the Adaptive Army. Fundamentally,
reserves need to become much more operationally focussed and need to be more
integrated into the Army as a whole. So we
need to get away from thinking about permanent and reserve and have the
reserves as part and parcel of some of our, if you like, regular formations. So it
might be, in one of the brigades, you have elements within that brigade that
are reserve and they perform that function for that brigade. QUESTION: So for example, with [indistinct] which at
the moment has one squadron that's [indistinct] reservist, given that there
would be a presumably a long lead time before we would actually have to deploy
armour, that might be an ideal unit to leave to move to great transition to a
greater reserve strength. ANGUS
HOUSTON: Yep. QUESTION: That would presumably also provide some cost
saving which you could use for our initiatives. ANGUS
HOUSTON: Well it's not so much - the
focus here is not so much on the cost savings. What we're looking at - there
will be cost savings associated with it, but it's all about getting much more
effective utilisation of a very valuable resource, our reserves. And
yes, we will be looking at high end capability which we probably won't need in
a QUESTION: So one final question on that, with the
submarines - submariner strength, obviously the - you know, our blue water Navy
is suddenly becoming blue water but also undersea Navy. This
will require a massive change of thought and virtually everyone I've spoken to
generally has said, well you can only man - adequately operationally man two of
the boats at the moment. How
you're possibly going to manage twelve? ANGUS
HOUSTON: Well first of all, we can man
three boats at the moment and one of the things that we're going to do and I
think you can see a very fresh approach from the Navy - new generation Navy, an
emphasis on a different organisation. Most
importantly, a different culture and I think that culture's absolutely right
for where the Navy needs to go and also very heavy emphasis on leadership. Take
that, together with the Moffatt report - and we didn't hide that, we put it out
on the table, chief of Navy engaged all of you in a session similar to this -
and we are really seized with a need to sort out those submarine problems. Now
Rowan Moffatt has given us a very good report, a very good series of
recommendations. We will implement that report and we will go forward. And
just to give you some sense of where we're going, I was with the Prime Minister
on Collins a couple of weeks ago. The morale in that crew was sky-high and they
had just had some recruits over from the most recent graduates at Cerberus. The
top 10 graduates from that recruit course were taken over to the west coast.
They were exposed to the submarine and six of the 10 have chosen to go with
submarines. Now
that's the sort of initiative, just demonstrates that there's a fresh approach
and we're here to solve those issues with the Navy. And I'm confident with that
and many of the other initiatives that are there, we're going to get a good
outcome. Fundamentally
one of the problems with the submarine service was too much mission focus and
not enough focus on getting the right balance between looking after the people
and doing the mission. I
would submit to you that with new generation Navy and Admiral Crane's
leadership and the implementation of the Moffatt report, we will resolve a lot
of these problems. And
I'm very confident that in the longer term, when we get the 12 boats, we'll be
very well postured to take those on board. NICK
WARNER: Sorry, I'll just add to
something I said to Neil before. My recollection is the 2.5 per cent came from
Defence. QUESTION: Can I just ask you - sorry, Rob You
sent one of your senior departmental officers to And
also can you just ask - can I just ask, are you concerned? I mean how much -
how concerned are you about the South-East Asian sort of arms race, the
submarine build up in Are
you worried about ANGUS
HOUSTON: Well first of all, the white
paper was not - you used the word threat, you used the word target. The white
paper was an assessment of our strategic outlook. It wasn't focussed on any one
country. The
reality of our strategic circumstances are that four of the five biggest
entities in the world reside in our part of the world: the And
as the white paper in 2000 indicated, the relationships between those nations
will set our strategic circumstances and indeed will set the strategic
circumstances of the area you just mentioned, So
fundamentally, when you look at the circumstances going forward over the next
20 years, we have made an assessment that the But
with this very dynamic rise of And
what we are doing with this document is producing a document that hedges
against the uncertainty that is involved with that. Hopefully
by using diplomacy, using engagement, we will have a bright and prosperous
future. At the end of the day it's our job to hedge against uncertainty and
that's really what this document is all about, as it says, at one very key part
of the document. QUESTION: But if ANGUS
HOUSTON: [Interrupts] And that was the
next thing. We
briefed the So
this was a process that was, I guess, first done back in 2000 and we used
exactly the same template and, I might add, it was well received anywhere. And,
I would add, it was well received, I believe, in Similarly,
if we disagree with them on things, we will tell them. That's the nature of a
mature relationship. NICK
WARNER: Sorry, I'll just add a
point if I could. There was an earlier reference to I
think Allan Behm referred to curate's egg the other day, and Mark may have
referred to a lame duck or two a little, a little while back. Seems
to be a bit of a developing avian theme coming through Defence reporting, so as
you're all sort of involved in this, I might add one more. Angus and I see
ourselves as wise owls [laughter] on We
don't see And
because of that, and Angus has made this point in the past, we visited together
China last year, had very senior level talks with Angus's counterpart - I don't
have one of those - and those talks, as Angus was saying, were very frank, very
robust and I think very useful. Later
last year I went back and did a little bit more of that. That's what we want
with QUESTION: Has ANGUS
HOUSTON: I - last night I was at the
United Arab Emirates celebration of their military anniversary and had a
considerable period of time talking to the Chinese Defence Attaché. He
raised no particular concerns of me and indeed was very positive about some of
the things we plan to do in the near future. So
you know, I think you've got to be careful here. Just because there's a strong
response doesn't mean that there's necessarily a huge problem. QUESTION: So the official response overall from ANGUS
And
certainly didn't get the feeling that there was a major problem. QUESTION: But you're not answering my question about
whether there has been an overall official response [indistinct]. ANGUS
HOUSTON: Well I, look, at this stage, at
this stage, we've briefed them and we haven't had any, any official response
other than, I'm telling you, I had a conversation with the Defence Attaché and
he, he was very balanced in his approach to the briefings that were conducted
in Beijing and very open with me about what's in the white paper. QUESTION: Mr Warner, before the release of the white
paper, Joel Fitzgibbon said he wanted it to address issues such as the SAS pay
bungle. Are
your changes to Shared Services payroll and ICT heading towards that same aim? NICK
WARNER: Yep. Absolutely. There were
a range of issues and problems that led to that debacle and this process of
reform will resolve them. QUESTION: So on the subject of ANGUS
HOUSTON: Yeah. QUESTION: I've been asked to check with you guys the
progress of the investigation into the Minister's - whether the Minister was
investigated or not. And
whether there is any additional concern because of these latest allegations
about [indistinct] Lui being a member of - having close links to ANGUS
HOUSTON: As I've said before, these are
very serious allegations. We have treated them as very serious allegations,
they have been, they are being thoroughly investigated, both by Defence and, as
you now, IGIS into the aspects of the allegations that referred to DSD. We
have found not a skerrick of evidence that there is any truth to these
allegations. It's interesting to me how the allegations have metamorphised over
time, but I won't say anything more about that. QUESTION: The allegation about how Mrs Lui being a
member of the Chinese Intelligence? ANGUS
HOUSTON: You know, we - I said very early
on - I think it may have been day one, that prior to those early media articles,
no Defence investigative authority was aware of Ms Lui. I stick by that
statement. QUESTION: Thanks very much. My name Nick's from Australian Defence Business Review. The
recent Arnhem Thunder exercise involved testing of the Wedgetail aircraft. I
was wondering if you could provide some feedback about its performance, the -
particularly the ANGUS
HOUSTON: Yeah - that exercise is still
ongoing in terms of the Wedgetail trials. We're still conducting trials with
the Wedgetail. I can't give you the final conclusive outcome, but we've been
very encouraged with the performance of the aircraft thus far. I'm very pleased
about that. Now,
I can't go into any specifics, but once we finish the programme of trials we
will come back to the media and give you a bit of a brief on the detail of the
outcome. QUESTION: Sorry, just a second question on a different
subject altogether. ANGUS
HOUSTON: Well, I'd come back to you on
that. But fundamentally we've got I think, the right balance between towed guns
and self-propelled guns, two batteries of self-propelled and four batteries of
towed. And the chief of army is very, very happy with that decision. QUESTION: Angus, I just wanted to ask how you see Greg
Tunny's resignation in terms of your confidence in ASC's ability to support the
submarine [indistinct] in the Pappas committee there was a general who was
actually a submarine expert. He was not dressed in Navy uniform, he was dressed
in a suit, and that gave him quite a good insight. But this left Greg in the
position that - having making comments about the Pappas committee in terms of
Defence, criticising the Pappas committee for its [indistinct] expertise, not
knowing at the time he was [indistinct] in that capacity. How do you feel those
- all that happening, in terms of your confidence about the ASC over the next
three to five years to deliver what you need? ANGUS
HOUSTON: Well, I think we need to work
very closely with ASC, and obviously that's going to be Steve Gumley. Steve
Gumley and the DMO need to be work very closely with ASC, so that we can
deliver the sustainment that's required to support our submarine operations.
And in the first instance that's where our focus is. But in the longer term obviously with C1000 we
need a very healthy, very effective ASC. And we need, I think, a very effective
defence industry response to that project, because it's going to be very large
and I think is probably going to be beyond the capacity of any one company. So
what I would see is that that particular project would involve probably the
whole of our defence industry, particularly the industry that concentrates in
the maritime environment. I wouldn't see it as just being ASC. QUESTION: CDF, the Pappas review was presented to us.
It presented publicly I think as an arm's length, independent review of
defence. How independent should we now take it that - if we see Defence, or at
least it seems, Defence counselling the Minister against its launch - how arm's
length is that? And wouldn't it be better in the spirit of openness about this
process, that even in a redacted form, Pappas was released. NICK
WARNER: Firstly, we're not
counselling defence. We're not counselling the Government. You need to direct
your question to the Government… QUESTION: Wasn't the CDF's… NICK
WARNER: I think it was never… QUESTION: … earlier answer effectively counsel that
there were elements of Pappas that you didn't want made public, or did I
misread that? ANGUS
HOUSTON: No, no, I didn't say that. NICK
WARNER: My understanding is it was
never the intention of the Government to make the external audit of Defence
management public. CONVENER: The companion reviews I think the CDF was
[indistinct]. ANGUS
HOUSTON: Yeah. I was talking about -
sorry you're right - I was talking about the companion reviews. QUESTION: So, would you be happy to see Pappas made
public, or do you think it should remain private? ANGUS
HOUSTON: I've got nothing to add to Nick.
I think it's a matter for the government. QUESTION: Can I just ask, there was appreciation from
the Chinese, they've expressed an appreciation, the Chinese - that you've
explained what ANGUS
HOUSTON: Well, I think this is one of
those issues that is addressed in the white paper. The white paper, I think,
says that, you know, there's a need for We
have certainly engaged them on frequent occasions and indicated that we think
that transparency is important. We think transparency by all nations in our
region enhances regional stability. Because if we can understand why each
nation's doing what it's doing in terms of its modernisation programme, we have
a lot less concern from all the various countries in the region. So in
a word, yeah, we would like to better understand why they are doing certain
things the way they're doing them. Now that's part of the way we engage them.
We talk to them about these things, and, you know, we are learning about what
they are doing through our program of engagement. QUESTION: CDF, excuse me if I missed this in the
beginning, but there's a new emerging defence circumstance, due to
circumstances obviously now in Can
we presume the Taliban has sort of slipped through straight into ANGUS
HOUSTON: There is a section in the white
paper that looks specifically at So we
are very focused on that. We think it's very important that not only do we
conduct our activities in One
of the things that we're seeking to do is assist the Pakistani defence force,
so that it becomes much better at counter-terrorism and counter-insurgency
operations, and as you are probably aware from some of the statements that both
Minister Fitzgibbon and Minister Smith have made, fundamentally we are
expanding our engagement program. And
later this month I look forward to hosting a visit by General Majid, who is the
Chairman of the Joint Chiefs in QUESTION: Given what's happened this week, and the
review just completed, is the ADF surprised at the changing [indistinct]? Are
you prepared for it? ANGUS
HOUSTON: Well, we watch all developments
in And
we're vitally interested in how the Pakistan Government responds to the
challenge that's been presented by those circumstances. QUESTION: But what do you think you could get out of
the meeting with the Pakistani general? ANGUS
HOUSTON: Well, I conducted a similar
meeting in May last year, and we gained - and I also had a call on General
Kiani and also the Defence Minister. And I guess I got much better insights
into some of the challenges that They
are focused on the issue. They do understand that the Taliban activities, the
militant activities, present a threat to the Pakistani state. And in terms of
our engagement with them, what we seek to do is engage them so that we can
assist them in basically improving their counter-insurgency capability and
improving their counter-terrorism capability. QUESTION: Does that mean providing troops or providing
that expertise, or how do you plan to [indistinct]? ANGUS
HOUSTON: Well, it's more - in terms of
how we do it, we have a number of Pakistani officers who come to QUESTION: Two questions, one [indistinct] returning to
the avian thing, how did you break your wing? [Laughter] And the other one more
serious for you, Mr Warner. It talks about, with the reform measures, that
senior leaders will be held accountable. Am I right in reading that employee
costs - are you factoring in an allowance for productivity targets, are we
talking bonuses for the reforms that people do achieve? NICK
WARNER: Do you want to go first
with your wing? ANGUS
HOUSTON: No, no, I'll save that for
later. You go first. NICK
WARNER: [Laughs] I think one of the
things that hasn't been done well enough in Defence in the past, including with
previous reform programs, is the allocation of accountability; who's
responsible for what. One
of these - one of the underlying premises of this reform program will be to get
that right, and we will have performance agreements which set out very clearly
who is responsible. I guess it comes back to get on board or get out. If I
fail to deliver the reform program, I won't be hanging around. But if people
who are accountable for various aspects of the reform program fail too, I'll be
holding them accountable. There
is a productivity dividend as you say built into this process. I don't have the
figure as to when it comes on boar… into play, but it is some years down the
track. That's
not about performance pay. That's about, as we get further down the process of
reform, we ought to be able to do our business more efficiently, and it's a 0.7
per cent efficiency dividend. QUESTION: Any plans to bring forward the retirement of
the Caribou or the F-111s, I guess in the interest of savings? ANGUS
HOUSTON: No. We've had a look at - we've
had a look at bringing forward the F-111, but we've decided that we'll let it
go as planned. QUESTION: Will we still be getting batch four? ANGUS
HOUSTON: And the Caribou decision has
fundamentally been made, so that's actually coming now to play anyway. So we'll
stick with the plan there as well. QUESTION: And nothing in the Navy, or no other assets
to be tied up? ANGUS
HOUSTON: No, not at this stage. QUESTION: Secretary, I'd just like to ask you about… ANGUS
HOUSTON: Other than the two - the two
mine - there's two mine hunters that are in, I suppose - in long-term sort of
storage. They will remain in long-term storage. QUESTION: I just wanted to ask you about your decision
that a contractor is 15 to 40 per cent more expensive than a public servant.
That's a great cost comparison, but there - industry would debate you on
productivity. I'd just say that public servants exist within a certain
industrial structure and that's all really fine, but generally it's less
[indistinct] when you get out in private industry. Contract [indistinct] will
work 24/7 for you, they'll give you a lot more flexibility than you'll get from
a public servant, just by the nature of their employment. How
confident are you that you bring all these [indistinct] back into public
service, you are going to have to retain the flexibility to make them perform
as you want, and the end of that is it really going to work out when you look
at productivity versus cost, that you're actually make those savings? NICK
WARNER: To get into the truly
arcane parts of Defence personnel, one of the reasons - one of the reasons we
have so many contractors - in fact 50 per cent more than - 57 per cent more
than we need - is because in the past Defence has set artificial - we call FTE
- so public service - caps on our workforce. And as a way of avoiding those caps,
areas within Defence have gone outside and got contractors. I don't believe
that those contractors, at 57 per cent, are more efficient. QUESTION: Can I just ask about the ... QUESTION: Sorry, Chris. NICK
WARNER: Yep. QUESTION: About the force preparedness review? NICK
WARNER: Yep. QUESTION: Did that find any ways to say money and
specifically on things like the way you train, or use of oil [indistinct]? ANGUS
HOUSTON: Yes, one of the things - one of
the reform streams is the preparedness and operational costs stream. I will be
heading that up and - myself - and what we'll be looking at are preparedness
levels and activity levels. Simply put, how much activity do you need to do to
attain a certain level of preparedness? Now,
you've seen with our recent operational activities it takes us a lot of time, a
lot of resource to raise an Army element say, or an Air Force element to a
level of operational capability so that they can be deployed into the
operational theatre. What
we'll be looking at it some of the - I suppose the higher end activities and
trying to define just what level of preparedness do we need to be at and
probably more importantly, how much do we need to do to maintain that level.
And it might be that we can save flying hours, steaming hours and so on. One
of the important things we need to look at is simulation. If you can use
simulation effectively you can save an awful lot of dollars in the various
activities that you do. Because
simply put, for example, a modern ship simulator or a bridge simulator or a
modern jet fighter simulator it's just like the real thing. And you can do
everything you need to do in a simulator. You don't necessarily have to go and
do it out in the machine. Now,
we've got to be careful here because, you know, one of the attractions of a
career in the Defence Force is the fact that you actually go out and do those
things on a regular basis. But I think if we get the right balance we'll be in
good shape. QUESTION: What's the value of that stream. I'm sorry ... NICK
WARNER: Next. Go on. ANGUS
HOUSTON: Have you got the value of it? I
think it is more - I think it is more - we're not sure how much we'll get out
of that stream. But it's - it's obviously an area that if we look at it closely
and we embrace simulation technology and we take a realistic approach to some
of the issues that are on the table we might be able to save quite a bit.
Because if you can avoid - sorry. QUESTION: [Inaudible question] NICK
WARNER: Just a second, sorry,
Patrick, we've got a queue, you're third. QUESTION: I'll be third. NICK
WARNER: Okay, Neil, first. QUESTION: I've got a question, and can I preface it by
saying thank you for admitting the Defence Reform Program was a disaster,
because we've have been maintaining that for some years and the department has
been ignoring it. Getting
back to the CDF's question to Nick - that answered Nick's question before. And
Nick's question was based on a bit of an incorrect premise. The armoured
regiment has no reserve tank squadron and hasn't for many years, purely because
the reservists couldn't keep up with the levels of technical skill required to
operate the level, let alone the [indistinct]. So if the theory is - if it's a
high end warfare skill that isn't required in the inner arc, so therefore if
you put it in the reserve, how broadly is that going to be applied across the
board? For
instance, fighter squadrons ... ANGUS
HOUSTON: Sure. QUESTION: … which are a high end capability that we
only use in the one in a one hundred year war? But given the level of technical
complexity to operate a tank and a fighter, there are obvious limits to how
much you can push into the reserve. Are we really going to look at this or are
we just going to repeat the failed experiment of the tank squadron in One
Armoured, where only one crew commander in a three year period managed to
qualify as a crew commander? ANGUS
HOUSTON: No. We are going to look at this
very seriously. And one o… I think one of the important things that we need to
do is make the reserve more relevant and that means getting them more
operationally focused and that means integrating them more into the - into the
whole ADF and we are going to do that. Now,
in terms of - you talk about fighter pilots. A lot of our fighter pilots go off
and fly with - in other activities. They go from being a fighter pilot to
flying with Qantas or Virgin or another airline, or indeed somebody else. Now,
one of the things that we will look at is, you know, how can we retain that
very high level of skill and expertise for the long-term so that when we do
have a requirement we can probably bring that person back into the system? QUESTION: I suppose what I'm saying though, is this
greater use of reservists tends to get looked at through an Army's lens all the
time because the most reservists are in the Army. ANGUS
HOUSTON: Yep. QUESTION: Am I correct in assuming that it is going to
be across all three services but particularly in those high end warfare parts
of the Army and the Air Force that you arguably don't need to maintain in the
regular forces? Are we going to incorporate the lessons of say the Ready
Reserves Scheme, where it was meant to cost 50 per cent of what a regular cost
and ended up costing 75 per cent? And are we really going to absorb these old
lessons, or just repeat all the failed experiments with the reserve of the last
15 years? ANGUS
HOUSTON: We are going to look at this in
a very holistic way. But let me just say that if you have a look at the Navy
right now, Navy at the moment is probably - I think it 1900 and something short
in the trained force. One
of the things that's really been very good for us is the fact that we've been
able to get 500 Navy reservists and put them into frontline slots. Frontline
slots on submarines, frontline slots on major surface combatants and on
operational deployments. It works - it works very well. QUESTION: Except, no one is arguing with the
integration of reservists into units. We've done that quite successfully for
some years. ANGUS
HOUSTON: Sure. QUESTION: But the white paper talks about taking
capabilities and putting them in the majority, or holding them in the reserve. ANGUS
HOUSTON: That's right, yes. QUESTION: And yet every time we've tried that since
WWII it's failed. What - what makes you think it is going to work this time and
if it is the case, why is it only going to be applied to the Army or is it
going to be applied particularly to the Air Force elements which you only need
for the one in a hundred year war? ANGUS
HOUSTON: We're going to have a look at it
across the board but we are going to start in the Army because the need -
the need is in the Army in the first instance. And I think you've probably seen
over the last three years much better utilisation of our reservists on
operations. We have seen sub-units go off to operations in the In
terms of the Air Force we are going to have a look at it. Now,
I've been involved in the past in some of those Air Force iterations. I don't
think that we approached it in a systemic way. It was - and perhaps there
wasn't the enthusiasm there that exists now. It is
up to us to find a way to get effective use of reserves into the Air Force. And
if you have a look at the models
that we could leverage off an apply in an Australian context and we'll have a
look at those. QUESTION: What - what happens though if it's a complex
skill that can't be maintained by the reservists? ANGUS
HOUSTON: Well I - I think that, you know,
I don't accept your premise for a start off. I think that if you - if you
look at what's required we can adjust the training so that we can achieve that.
So,
we'll see how it goes. It is one of the challenges that we've got on the - on
the table and we'll look at it closely. QUESTION: Yes. Gentlemen, in the - when the Super
Hornet bridging capability was announced, the Minister announced a whole
program cost of $6.3 million I think it was at the time. We probably accepted
that as - because it was a bridging capability and it had a finite life to it.
But yesterday, when the cooperative agreement announcement was made on the P8
Poseidon with the US Navy, it's quoting a cost of $5 billion for just the
aircraft, I believe, which was in the white paper. Firstly
can you tell us what that $5 billion will buy us? And secondly going forward is
this something we can expect to see, not just the acquisition phase of a
program cost being announced, but perhaps some of the life of the program and
follow on upgrades of the program being announced as part of the program cost
as well? ANGUS
HOUSTON: We - we are at a very early
stage in terms of the P8 Poseidon program and the costs at this stage, I'm not
quite sure what that covers. But I can tell you that the capital cost of a
Poseidon is going to be extremely expensive. We're
talking about a very expensive weapons system here. So if you like, I'll
undertake to come back to you on, you know, what the $5 billion includes. QUESTION: Thank you, sir. ANGUS
HOUSTON: I am not prepared for that
question at this stage. NICK
WARNER: Patrick. QUESTION: Can you, just on the final savings of 20 to
25 billion ... NICK
WARNER: Twenty point six. QUESTION: Am I right in assuming that that figure,
that ballpark figure came out of the Pappas report? NICK
WARNER: No, it ... QUESTION: You couldn't find that quantum of savings
for [indistinct]. NICK
WARNER: Just say that last bit
again. QUESTION: Well, the department could actually find
that quantum of gross savings - that is the figure of around 20 billion, my
understanding came from Pappas, is that correct? NICK
WARNER: No, the figure of $20.6
billion comes out of the companion reviews and Pappas and other processes
within Defence. It's a combination of work over, as I say, 17 or more months
looking at every facet of our business. It's not all from the external audit. CONVENER: We just time for two more questions. QUESTION: Firstly there is no mention of tanks in the
white paper. Does this mean that there is no replacement? ANGUS
HOUSTON: Well we just got these tanks.
[Laughter] No, no, no. No, no. In terms of the tanks, we just recently took
delivery of these tanks and fundamentally at this point, over the next 20 years
we don't see a need to replace them. They will be capable for the whole 20
years. QUESTION: And just, sorry, just very lastly. The white
paper has prioritised cyber warfare. But the language it uses suggests that it
is all about incident management rather than developing an offensive
capability. I'm
just wondering if you can comment at all about the type of professional
investment that will be undertaken within the new cyber - new cyber centre. ANGUS
HOUSTON: I think a lot of aspects of the
cyber warfare capability will be in the classified space. All I will say is
that we are very serious about the cyber threat that we face out there and we
are going to take necessary steps to confront that threat that is out there. I
can't get into the detail of what we are going to do at this stage. NICK
WARNER: I will just add briefly to
that and then we will take the last question. Cyber,
if you've been through the white paper and looked at what the Government has
announced it's about increased awareness, improved response capability and the
CSOC - the Cyber Security Operations Centre which will provide greater
co-ordination, not within Defence, but across government. Yes? QUESTION: With our savings targets, how soon before
you expect to see evidence of them? And is there a plan B if you find you are
not meeting them? NICK
WARNER: Last year, we had a savings
program, I can't, off the top of my head, remember what - what we found, what
we saved… ANGUS
HOUSTON: Substantial. NICK
WARNER: but it was something like
half a billion dollars. So we are in the business of finding efficiencies. As I
said, earlier, there is a ramp-up. There will be savings within the first year.
I can't tell you what those are today. I think they're probably contained in
the Budget. The
short answer to your question is, it's started already and there will be
immediate results. We don't need a plan B, this is going to work. ANGUS
HOUSTON: And just to finish off the wing. NICK
WARNER: It's a good story. Oh
sorry. [Laughs] ANGUS
HOUSTON: I - I slipped, I was wearing
high-tech cycling shoes which essentially have a very cleaty front, because
they fit into the cleats on a bicycle and the back is all aerodynamic and very
slick. I was
in a hurry to get out to catch the last rays of daylight and wasn't
concentrating on what I was doing and I slipped and I - I fell very heavily. I
thought at the time that I'd really injured my knee so I sort of got up, shook
myself, yeah, I'll be all right, jumped on the bike, did 30 kilometres and
towards the end of the 30 kilometres I was starting to feel quite a bit of pain
in my wrist. And what I'd done is I'd broken this little bone in the wrist and
I'm stuck with this thing for a little while. And
I'm told that it will take less time to heal if I put it in a sling. NICK
WARNER: You see there are some
things that the diarchy don't share. [Laughter] ANGUS
HOUSTON: Thank you. Media contact: Defence Media Liaison: 02 6265 3343 or 0408 498 664 Media contact: Defence Media Liaison: 02 6265 3343 or 0408 498 664 |
|
Issued
by Ministerial Support and Public Affairs, Department of Defence,
Canberra, ACT [ back to top ] |
|