Another budget hand back?

Kym Bergmann / Canberra

Only three months into the financial year and already there is some muttering within Defence of another looming hand back of unspent funds – although the problem can always be mitigated by measures such as the purchase of a sixth C-17 announced on September 23 and the decision to lease another support ship nine days earlier. The reasons for such pessimism – shared by industry – are not hard to find. There are around 130 projects listed in the Defence Capability Plan, yet the Department is able to commit to making a decision during 2011 / 12 on seven of them.

That is not a misprint: only seven projects are in the category of a firm decision this financial year – everything else is listed in the out years, or given a lot of wriggle room with windows from 2011 / 12 to 12/13 or even 13/14. The apparent sure bets for a decision in the next eight months are: JP66; JP2008 (partial); JP 2044 (partial); JP 2047 (partial); JP 3027; LAND 17 (partial); and LAND 121 (partial – decision announced on August 30). To these can be added the upgrade of SM-2 missiles; participation in an international ESSM study; and watercraft for the LHDs. While there is scope in the documentation for more decisions to be taken in the short term, the prevailing Departmental and Ministerial philosophies appear to be “don’t do today what you can put off until tomorrow.”

The situation is the same – or worse – for projects awaiting First Pass approval. A growing sense of frustration is being felt by some in the Department as well as many on the outside and a recent manifestation is the call by retired Major General Jim Molan for massive changes, including greater Ministerial responsibility (see separate article).

An inevitable consequence of the procurement process grinding to a halt is that the ADF will be starved of equipment. This in turn will lead to even greater ad hoc purchases of kit to fill gaps as they emerge. Local industry will suffer. Voters will start to wonder ever more loudly why the Department continues to receive money that it cannot – or in some cases will not – spend. It is hard to see how successive reviews hope to improve the situation by adding in ever more process, most recently two Associate Secretaries, courtesy of Dr Rufus Black. When will the penny finally drop that there is often an inverse correlation between the number of entities engaged in a task and the efficiency with which it can be carried out? Rather than try to harness a thousand mice, use one horse.

Some conspiracy theorists suggest this is all part of a Government plot to save money and return the budget to surplus in 2012 / 13 – though the level of Tarzan-style Ministerial chest beating on that topic has subsided in the last few weeks as the international economic outlook remains uncertain. However, the old maxim probably applies: if you have to choose between a conspiracy and a bungle, it’s a bungle every time – even though Defence returning unspent funds again would suit a number of agendas.

Finally, mention should be made of an event in Canberra that is an illustration of the wide and growing gap between the Department and the outside world, especially industry. Rockwell Collins is an important international defence technology company, which is well established in Australia and has plans for significant local expansion. They organized a seminar on September 19 & 20 and had on hand subject matter experts from around the world. Demonstrations of technology were part of the event and some of the systems on show are used in active operations, including in Afghanistan. Rockwell Collins are significant players in providing military and commercial networked solutions and their US pedigree certainly does them no harm in this country.

In the view of APDR, attendance by Defence personnel was disappointingly poor – though Rockwell Collins were generous enough to say that they were satisfied and that they were after quality rather than quantity. Nevertheless, the number of Defence staff at any one seminar was never more than 20 and often less than that. It seems that significant numbers of people preferred to remain in the comfort their offices less than five kilometers away and surf the internet or prepare for committee meetings rather than make the effort – and show the courtesy – of attending an event that had the objective of sharing valuable information.

This matters for several reasons. If Defence will not engage with industry then companies will have no choice but to make decisions on where to spend their research & development funds based on their own guesswork. That risks a gap emerging between what Defence requires and what industry is developing. And by attending, people might actually have learned something to their benefit.

This indifference of Defence to what is going on in the outside world is becoming more common and unless a shift in attitude takes place companies will stop making the effort to engage. Everyone will be the poorer for that – especially the ADF.




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