Why industry leaders, not bureaucrats, can fix Defence
How trusting it is of Defence Minister Richard Marles to receive a scathing report about the parlous state of our Defence bureaucracy and then turn it over to that same bureaucracy to heal itself. How important it is, too, for Australia’s security that he reconsiders and changes course.
This is because recent history with reforming Defence tells us the course Marles is on will fail. At least the problem is clear. According to the government’s recent Defence Strategic Review, Australia’s security environment continues to deteriorate and our military needs to be a more powerful deterrent force.
But the public version of the review by Stephen Smith and Angus Houston overflows with analysis of various Defence processes and functions it finds are “not fit for purpose”.
These include Defence’s entire end-to-end approach to delivering Australia’s military capability, which is where around one-third of the $52bn annual budget goes.
The review’s conclusions make it clear the Defence organisation of 2023 is even more broken than the one examined by the previous big defence review, the 2015 First Principles Review, just eight years ago.
According to the DSR, the Defence Force itself is “not fully fit for purpose”. The navy fleet needs its own review. Various multibillion-dollar projects have been cancelled or are under review. Investment programs focus on project management risk, not the strategic risks Defence is there to address.
Defence’s approach to its workforce, including recruitment and retention of ADF members, has been failing.
It has failed to implement previous directions to enhance bases, ports and barracks across northern Australia, to address fuel storage and supply issues and to create a domestic missile production enterprise. This shouldn’t be true, because back in 2014 we were told the FPR’s purpose was “to ensure Defence was fit for purpose, able to respond to future challenges and was able to deliver the government’s strategy with the minimum resources necessary”.
It was needed because “waste, inefficiency and rework are palpable. Defence is suffering from a proliferation of structures, processes and systems with unclear accountabilities. These in turn cause institutionalised waste, delayed decisions, flawed execution, duplication, a change-resistant bureaucracy, over-escalation of issues for decision and low engagement levels among employees”.
After that review was delivered, the then departmental secretary and chief of the Defence Force were tasked by the minister to implement its 75 recommendations. To do this the secretary chaired an implementation committee that met weekly, assisted by an external oversight board.
News about the fundamental changes and improvements was all good, at least as reported by Defence to its minister and by that minister in her statement to parliament in June 2017.
After the two-year implementation period, Marise Payne told parliament 63 of the 75 recommendations had been implemented, with the reforms creating “a leaner, stronger, more efficient Defence organisation”.
She told us this had not happened by chance and thanked the then secretary, Dennis Richardson, and CDF Mark Binskin. because “their unwavering and steadfast leadership has been essential in delivering these reforms”. But success was clearly overstated and celebration premature given this year’s DSR and its dire diagnoses of the same processes and problems the FPR had apparently fixed.
After reading the public version of the DSR it’s hard to label the earlier review and its implementation anything but failures. The private version Smith and Houston handed to the Prime Minister must put this conclusion beyond doubt.
And that’s where the surprise is. With this very recent history, it is hard to understand how Anthony Albanese and Marles could take the same approach to the changes demanded by the DSR their predecessors took to reforming Defence after the FPR. But this is what is happening. Marles has tasked the Defence organisation to implement the DSR and to fix all those things about itself that Smith and Houston say are broken.
And, in another echo of the FPR experience, the secretary and CDF will be assisted in their work by a small external group. This time, though, the group includes the secretary (Richardson), who was personally accountable for delivering the FPR reforms, a former foreign affairs deputy secretary (Richard Maude) and a former secretary of Finance (Rosemary Huxtable) – not people with business or industrial experience.
We can have no expectations that this will work, but we can also rely on a time lag between now and when this next failure becomes obvious. That’s because reviews take time to digest, as do actions to address and report on their recommendations.
But if the government’s judgment that the next three years may be a defining period for the security of Australia and our region is right, time is not something we have in abundance. So, Marles needs to take stock and change course.
The Albanese government should learn from the Coalition’s past mistakes and not repeat them.
Our times require fast delivery of tangible things: functional ships, missile and munitions manufacturing plants, upgraded bases and supply systems, electronic systems and novel weapons such as the drones and counter-drone systems being used so widely and effectively in Ukraine.
The last time Australia faced these circumstances was before the Second World War, and then we turned to the industrialists – people who run, make, build and deliver things – to turn out the aircraft, weapons, munitions and ships we needed. And we ensured bureaucracy either got out of their way or worked to enable their success.
The Americans took the same approach, turning the nation’s defence industry into the “arsenal of democracy”.
That approach is needed again now, even if it means working around our broken Defence organisation, while it learns from this alternative path to improving our military power and our security.
Michael Shoebridge is director of Strategic Analysis Australia.
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