December 17, 2019

ANDREW GREENE, HOST: Some fairly extraordinary numbers that we see in this Australian National Audit Office report. It’s examined Defence’s major projects and has found that there are some serious cost overruns and delays on 26 projects that it specifically looked at. And some of the big costs have come from increased numbers of Joint Strike Fighter aircraft but also delays and blowouts in other projects such as the MRH90 helicopters. And the cumulative delay, if you add them all up, the delays and slippages in projects, pulls up a remarkable figure of 57 years of delays. And that’s delays that Australian Defence Force personnel will experience as they wait for this new equipment to come online. Joining us to discuss this report is Labor’s spokesperson and Assistant Shadow Defence Minister Pat Conroy, who joins us from Newcastle. Pat, thank you for your time. First of all, you’ve suggested that the Defence Minister needs to be stepping in and addressing these delays and cost overruns. What do you think that would achieve?

PAT CONROY, SHADOW MINISTER ASSISTING FOR DEFENCE: We need active ministerial oversight over these projects and the way that Defence is delivering them. We’ve had a revolving door of Defence Ministers and Ministers for Defence Industry which means that there isn’t enough oversight, enough political oversight, which is driving these delays. If Defence doesn’t get the signal that their political masters are interested, we’re going to see further drift, which means that our ADF personnel aren’t getting the equipment they need when they need it.

GREENE: If we look at a number of the projects that the Auditor General has examined these are large projects that have gone for many years – decades in some cases – spanning both sides of politics; you can’t really point the finger at either side of politics when you look at these delays, can you?

CONROY: Well, what we have seen is a deterioration in performance as we’ve adopted project strategies that de-risk them. Say, for example, we’re purchasing fewer and fewer developmental platforms and we’re getting more of what’s called Military Off-The-Shelf (MOTS). Which in theory means lower risks because we’re buying something that someone else is already using. But instead we’re actually seeing more delays from some of these projects that are nominally off-the-shelf. So, we’re seeing poor decision-making by the ministers and oversight failing. To give you an example, the policy under the last government and in fact this government until 2017 was to have ministerial summits with Defence at least every six months to look at the projects of concern and the projects of interest. That was a way of providing political firepower to get these problems fixed. This government in its six-and-a-half years in power has only had three summits so it’s a government that is not interested in working with Defence to make sure these projects are being delivered on time and on budget.

GREENE: Short of holding summits though what would Labor do in government to put a tighter rein on Defence – a bigger stick say – to get these projects back on track?

CONROY: First off, we would rebuild the relationship with Defence. One of the problems as I have said is that we keep having a revolving door of ministers – that impacts on the relationship with Defence. Secondly, a big of longevity in the portfolios is very useful. And thirdly, clear lines of responsibility between which of the ministers are actually in control of these areas. For example, post the election, it was went something like four or five months before Defence and the broader public knew which minister had responsibility for which part of Defence. Those are easy fixes that will really improve performance. So, I think it is very important that we don’t let the government escape responsibility by just saying, well it’s Defence, it’s very complicated, when there are clear ways to improve performance.

GREENE: But the Coalition has to its credit introduced a number of things like the First Principles Review, which is reflected in this National Audit Office report. Can’t we see already some evidence that they are trying to get some of these very longstanding projects back on track?

CONROY: Not really, because if you look at it, as projects come off the Major Projects Report, others, that are decisions made by this government, are added and they’re experiencing delays. To give you one example, the replenishment vessels for the Navy – one of this government’s first decisions was to get them built in Spain rather than have them built in Australia, which cost 1,000 shipbuilding jobs in the Hunter – those are supposed to be simple off-the-shelf acquisitions. They’re now running seven months late. And this report notes significant capability concerns about that project. That’s a recent decision in the last five or six years. Another example is the battlefield airlifter for the Air Force that is now running two years late. That was a simple Military Off-The-Shelf acquisition from the United States and Italy. So, we can’t let the government off the hook by saying they’ve signed up to the First Principles Review when they haven’t shown the active leadership that is really necessary to work with Defence and work with defence industry.

GREENE: If I can stay on that topic of local industry, we have seen criticism that some Australian businesses are missing out on being in the supply chain for major projects. Again, what could Labor do to ensure that these projects, this industry involvement, was mandated if you were in office?

CONROY: The key thing is to work with industry and the Department of Defence to actually make sure that all the commitments given are enforced?

GREENE: So no penalty?

CONROY: Penalties are part of enforcing contracts. So at the moment there are plenty of what’s called Australian Industry Capability obligations within these contracts, where a prime contractor says we’ll give this work to an Australian company. But unless you actually enforce it, unless you actually change the culture of these contracts and the way Defence interacts with industry, you won’t get those contracts being awarded to Australian companies. And we’ve seen ridiculous examples of where the Navy is procuring its rigid inflatable boats from overseas when there are plenty of Australian suppliers including some in the Prime Minister’s own electorate. We could do that work, but weren’t given a proper opportunity to bid for that work. So, it’s about having a Defence Minister and Defence team that is working daily with the Defence bureaucracy and the Generals to make sure that we change the culture.

GREENE: Pat Conroy, does Labor have confidence in that current bureaucracy and Defence leadership?

CONROY: I have great confidence in the Defence leadership. They’re very good people. They’re doing their best under challenging circumstances. But they often need support politically; they need ministers focused on doing this job. Because what happens if this doesn’t happen? We’ve got 57 years of delay to projects. That means that ADF personnel are not getting the equipment they need; that means they are being forced to use outdated weapons, planes and ships. And it also means we are paying higher maintenance costs for those older pieces of equipment. I think Defence leadership is doing some very good work; they can always improve, and Labor had something to say about that at the last election. But ultimately the buck has to stop with the Minister. The Minister is responsible under the Westminster convention and she is asleep at the wheel.

GREENE: Pat Conroy, if we could finally turn to the Projects of Concern, which was an initiative begun under Labor, I think the Minister was Greg Combet at the time. Is this a scheme that needs more transparency? Would you like to see the full results of the Projects of Concern made publicly available?

CONROY: I think there has to be much greater transparency. The level of secrecy that has occurred since 2013 is quite frankly a disgrace. The information that is not being released is unjustified mostly. There are some cases where national security and classifications are important. But we’ve seen a real decrease in the level of information being given to the public and that undermines confidence in Defence. The Projects of Concern process, which started under Greg Combet and Labor, was shining a spotlight on problem projects, exposing defence industry and parts of Defence to that spotlight, to encourage them very forcefully to improve their performance. And that had real results. But if we get more levels of secrecy, which is occurring right now, if we get ministers not interested in being part of the process through ministerial summits, we just see backsliding. And the 57 years of delay that we’ve now got is a price of that secrecy and a price of that lack of focus on the Projects of Concern process.