Yesterday I appeared in front of the Joint Parliamentary Committee on Public Accounts and Audit. It’s not my usual haunt, but they were holding a public hearing into the Australian National Audit Office’s Audit Report No. 6 (2013-14) Capability Development Reform, which they correctly guessed I had an interest in.
Appearing in front of Parliamentary committees is always interesting. And it’s not a bad cure for cynicism caused by the sound bite focused 24/7 news cycle reporting of politics. Invariably, the committees are interested in understanding complex issues, and there’s rarely evidence of partisan point scoring.
Here’s what I told them. You’ll be able to read the exchange that followed in Hansard in a little while. (Complete with all of my misspeaking and false starts to sentences etc.—it’s not always edifying reading for the speaker!)
I’d like to thank you for the opportunity to make a short opening statement. By way of background, I have been professionally involved in defence capability development for nearly two decades now. That has included providing scientific input into force development considerations, managing a sizeable major project, and the management and planning of a portfolio of projects within intelligence. Since leaving the Department, I have been a frequent contributor to the public debate on defence policy, planning and acquisitions.
But I should start with two caveats. First, it’s now almost eight years since I was an employee of the Department of Defence, and longer since I was involved in the central processes of capability development that are the subject of this Committee’s deliberations. While I attempt to stay as current as possible, there are bound to be points of detail I’m behind the curve on. Secondly, the Minister announced last week that I would be on his advisory panel for the development of the next defence white paper. That process has not begun yet, so anything I say today in no way reflects the views of the Minister or of the department of defence.
When the ANAO report into capability development was released late last year, my colleague Mark Thomson and I wrote a critique of it for our corporate blog. I’d like to table that work in two parts. For the public record, I’d add that I received some comments and a very helpful briefing from the Capability Development Group between the publication of those two parts. They felt that the first part reflected an insufficient appreciation of the efforts made to reform defence capability planning in recent years. The second part, I hope, reflects the discussion we had.
Let me say that the criticisms I’m about to make shouldn’t be taken as a reflection of either the professionalism or the hard work of the CDG. Rather, I think they have been grappling with some difficult issues, and making some decent headway towards a more rigorous and internally transparent process. I say ‘internally’ there quite deliberately. From the outside it’s often difficult to discern the details of the process or to infer the train of logic underpinning decisions from the observed outcomes.
Because of that, I think the most productive way for me to proceed today is to largely ignore the internal machinations of the CDG and to look instead at their inputs and outputs. I think there are substantive issues at both ends of the process.
We can safely conclude that something is badly askew in the capability development process based on an assessment of the current Defence Capability Plan and the Defence budget. Mark Thomson has described the latter as an ‘unsustainable mess’—a turn of phrase not used lightly—and I refer you to his budget briefs of the last few years where you’ll find a great deal of evidence to support that claim.
My role at ASPI is to look at force structure planning, and I take a strong interest in the DCP and its capability and budgetary implications. And there’s a huge problem on the horizon. Simply put—there’s nowhere near enough money in the Defence budget, even if promised increases in funding manage to fight their way through the competing government priorities.
By any reasonable calculation, the DCP is heavily oversubscribed. I can’t recall a time in which there were so many very large projects. The DCP doesn’t have just one elephant in the room, it has a herd of them. The future submarine, future frigate, F-35 joint strike fighter, armoured vehicles for the Army and maritime patrol aircraft projects total, by my estimation, over $100 billion for the acquisition phase. To put that in perspective, the current annual acquisition budget is around $5 billion.
In other words, the ‘mega fauna projects’ would consume two decades worth of the current funding on their own—leaving little or no room for all of the other projects that are necessary to keep the ADF effective. This can’t work.
When Mark Thomson and I did our own costings of force structures we got a very different answer to the costings—such as they were—in the 2009 defence white paper. I’m happy to talk some more about that.
As I see it, the capability development process is effective, more or less, at de-risking individual projects, but isn’t adequately managing the portfolio of inputs. I suspect that there are problems with the inputs to the process—another point we might usefully discuss. Simply put, the best process in the world can’t produce sensible answers from the wrong starting point.
Andrew Davies is senior analyst for defence capability at ASPI and executive editor of The Strategist. Image courtesy of Flickr user benh LIEU SONG.