Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

I seek leave to speak for up to 20 minutes.

Leave granted.

For almost my entire time in the Senate but more particularly as a result of my long-term interest in defence matters, I have been concerned with the matter of accountability within the Department of Defence and the ADF. It persists with a constant procession of media reports, particularly about financial waste. Last week we had another report concerning a large number of payments for services allegedly never provided. Again, in the weekend press we saw another report on the financial practices of both DMO and defence.

We all thought this had been remedied in more recent years. If these allegations are correct, it seems that the cosy relationship with industry remains. It seems prepayments for the purpose of concealing underspends and protecting forward estimates remain within the defence culture. If it is true, the taxpayers of Australia and the government are being treated as mugs. Frankly, I am appalled but also disappointed.

Before that we also saw the stories of overpayment of allowances, not to mention the long saga of procurement mishaps with helicopters, ships, aircraft and land transport—the whole shooting match. These are not trivial matters. They symbolise a longstanding malaise within defence about sound administration and accountability. It also makes good copy for the media. Taxpayers quite rightly resent their taxes being misused or squandered. That is why we here in this place always react, particularly at Senate estimates, and try to get the answers and explanations. We, as part of the parliament, vote to support appropriations. We are duty-bound therefore to ensure that it is spent as was intended. That is how accountability in a democracy should work.

However, there are two aspects to accountability. First, there is transparency and accountability for appropriated money, as I have mentioned. Second, however, there is also accountability and transparency of decision making in determining what the money is to be spent on: the first is the bread-and-butter of government; the second is arguably more important but much overlooked. The recent debacle over the purchase of Seasprite helicopters is a perfect example. So we ask ourselves, ‘How could this happen?’ Further, ‘What could be done to be mitigate the process which does produce such catastrophes?’

From my perspective as a senator and Chair of the Foreign Affairs, Defence and Trade Legislation Committee, it is a matter of great concern that the parliament’s attention to these matters is sporadic and ad hoc. It is often too narrowly focused and lacks continuity. However, it must be said that defence is the most regularly scrutinised agency of the Commonwealth. Most of that scrutiny is focused on financial management failures—that is, the symptom of failures and not the causes. It is not sufficiently focused on the policy matters, which, by their nature, extend far beyond the political lives of any elected member of senator.

At present, we have a wealth of accountability measures. At the departmental level, there are highly regulated budget and financial management processes. These include detailed audits against allocations not just of cash management but also of the processes. We receive portfolio budget statements prior to each of the three estimates hearings per year. We receive regular reports on the progress of the top 30 projects. We receive annual reports with financial statements signed off by management and by the auditors. Indeed, in these committees—and I mention the Joint Committee of Public Accounts and Audit in particular—we are actively engaged with the Australian National Audit Office and the Defence Materiel Organisation on the reporting and accountability framework for major projects. We are indebted to that committee and to the ANAO for their persistence. We are also indebted to the DMO for its engagement in what is a very difficult exercise in achieving higher levels of transparency for current expenditure. The recent report by ANAO on major projects is illustrative of current progress.

I do accept that there is a limit on the disclosure of information—not everything can be released. Having said that, it does not mean that descriptors like ‘national security’ or ‘commercial-in-confidence’ are acceptable reasons for nondisclosure of relevant information. We do not need extensive technical, capability or scientific information; we do need to be alerted early in annual reports and in the PBS to the existence of significant problems. This, however, only relates to the major projects list; it does not cover general financial management and practices and it does not cover the capability development process—this remains opaque, to say the least.

Putting aside the singular attention of the public accounts and audit committee work, I think it is fair to say that the remaining parliamentary scrutiny of defence is patchy, to say the least. A range of parliamentary committees, at least six, look at different aspects of the defence portfolio. The only external review or scrutiny of defence is that of the ANAO. ANAO’s charter is limited and a lot of its work is necessarily limited. Whilst parliamentary committees, especially the FADT committee and the public accounts and audit committee, are effective in obtaining compliance with specific requests, they are limited in their scope, commensurate with their capacity.

I have no doubt that defence gets a little testy about the onerous nature of some of this oversight, not because of the disciplines and demands of the oversight per se but because it is haphazard, sometimes ad hoc and inconsistent in its focus. No doubt defence also resents the criticism from outside experts such as the various think tanks, which are too often disregarded as background static. Without wanting to downplay the virtues of the estimates process, it is still imperfect. For example, in FADT we have a clear structure where policy and operational matters are examined at a high level. Where those senators are genuinely interested and prepared, this is an effective process—but in itself, of course, this is also ad hoc. The estimates process is only as effective as senators, especially those in opposition, want to make it.

However, should it be more comprehensive, more regular, better organised and more focused? Or should it be left to chance and the threat it poses through its potential to get very serious from time to time? Noting the track record of the parliament in achieving better levels of accountability, especially on financial management, there remains the issue of policy scrutiny. I suggest we have proven through the military justice inquiry that this can be a very important role for the parliament in some policy areas which are ongoing. Typically these issues such as military justice are above politics. Often these issues defy political engagement because, by their nature, they concern matters of important and consequential public policy.

In fact, there is a limit to which government can always be accountable for organisations such as defence. Why is this? Simply because the issues are often longstanding, ingrained in the very culture and protected by the ongoing mystique of military activity or culture. Whether we like it or not, this is one of the unmentionables of politics and defence. The discontinuity of politics and government simply does not provide the time available for deep and permanent reform. Like military justice, these issues entail ongoing, non-political administrative processes which, if not attended to, can cause harm or poor outcomes. Indeed, I suggest that even the government of the day values such independent scrutiny. Why is this? Because of the public nature of its accountability, which can achieve what ministers often cannot. Again, the military justice inquiry is an excellent example. The wool can be pulled over eyes in departmental briefings, but it cannot be when the subject is open to full, ongoing, public scrutiny. Ministers are happy to have accountability sought by someone else and then use the outcome as a stick for reform, fully open to public scrutiny.

As we have noticed, many of these issues are not political by nature; they are essentially issues which successive governments have endorsed by their own practice. With that in mind, I suggest that defence procurement is one such issue. I do not mean the processes of procurement; I mean the ready availability of information from which procurement policy in itself is derived. Every newly elected government inherits the decisions of its predecessor—as well as a lot of its administration. The latter can be fixed in time; the former cannot because it is locked in. Any decision to remove that lock-in, as with the Seasprites, can be catastrophic financially.

However, if there is to be blame for this outcome, it must be in the process which allowed it to occur. Frankly, that process is seriously flawed. It is not the fault of any one government. It is endemic in our system of government, where elected governments are to some extent captive to the advice they receive. They are also by their nature restricted to the budgetary and political cycles. We suffer the risks of short-term decisions with very long term consequences. This is a most difficult decision-making process. In fact, it is almost impossible. Failure or suboptimum outcomes are inevitable, and I think that typifies the defence procurement conundrum. The existence of independent think tanks does help to pry open the oyster, even publicly funded groups such as the Australian Strategic Policy Institute. But this in itself, of course, is a comment on the system.

One might wonder why governments tend to fund private organisations to ask the questions and to provide the scrutiny and the information which governments themselves are incapable of providing. The answer is obvious. At the heart of it is the lack of information both within government and publicly on the basis of which debates can be conducted and decisions reached that enjoy public support, if not consensus. After all, over the next 30 years this will entail expenditure of up to $300 billion of taxpayers’ money. Yet if the present circumstances prevail decisions will continue to be made whereby these budgets will be locked in for as many as 10 successive governments. The Rudd government is locked in by decisions made by the Howard government, and so the cycle continues. Each of those decisions can only be as good as the information upon which they are based. To overturn them requires a virtual revolution. How can you criticise a prior decision to purchase a particular item when the basis for that decision is at best obscure or shrouded in the mists over time? Alternatives simply may not exist in the short term.

A further problem does exist. Our government has recently reformed procurement decision-making processes and introduced more checks and independence of scrutiny than has applied for many, many years. However, this improved process is still potentially hostage to secrecy and traditional internal defence behaviours. This shortcoming applies to the internal defence strategy group, the capability development group, the DMO and the DSTO right through to the National Security Committee of Cabinet and the cabinet itself. If this process is to be credible, it must allow free and unfettered access to an optimum amount of information; otherwise, the system is captive to the myopic views of any one individual group and the public interest can therefore be easily frustrated.

Nor should the process be captive to the corporate mindset of any one of the three services, whose attitudes are reportedly self-centred, regardless of the integrated needs of the whole. For those interested in the background to this comment, I recommend an article by Mr Andrew Davies of ASPI. In his article dated 22 January 2010 he reveals some of the internal dynamics of defence in capability decision-making. I also refer those interested to the article by Paul Dibb and Geoffrey Barker published in the Australian of 27 February 2010 which also makes some acerbic comments on the historic tension between military and civilian attitudes with respect to capability planning and procurement.

Put simply, if that allegedly selfish and combative culture is to be translated into the new post-Mortimer process, we have real cause for concern. Indeed, this goes to the heart of the Mortimer reforms because this tension, derived from institutional silos, compromises the quality of advice to governments and thereby creates political ownership, which I suggest is inappropriate in circumstances such as these and which the government is grappling with in an attempt to better avoid the problem in the future. These changes are therefore important but can easily lapse as governments and ministers come and go.

The bottom line then is: what do we do about it? It is clear that something needs to be done to open up the provision of information. The public debate needs to be far better informed and the public needs to be engaged. National security is not a convenient blanket excuse for nondisclosure. I can illustrate this plea for better information by a personal anecdote. When I was opposition spokesman for defence procurement and personnel, I tried with the help of the Parliamentary Library to track every major capital project from start to finish. This involved a massive spreadsheet full of detail gleaned from the public record but which was full of gaps. In short, I failed, simply because of the shifting sand—name changes, projects falling in and out of the financial limit, rescheduling, exchange rate changes, real costs being altered, variations, projects being suspended or cancelled et cetera. In spite of all my efforts, the information was simply not there. I note that the Australian Defence Business Review have now completed the task, and I congratulate them. In fact, I am told that it is also an informative document for defence. However, it really should not have come to this.

On the subject of accountability, I think it is obvious that the only means by which the accountability of defence is being achieved is by way of the parliamentary committee system, the ANAO and, of course, the media, for which defence is always in season. While I acknowledge the needs of the parliament more broadly, I believe that a more concentrated focus would be effective. Therefore, without wanting to impinge on the rights of the House of Representatives, I suggest that in the interests of budget accountability the JCPAA remains glaringly appropriate. It grows in knowledge and corporate understanding all the time. It does a fine job. For all other matters, including capability development, the Senate, as the natural house of review, would be an appropriate home for continuing more complete scrutiny of defence. I further suggest that defence be the exclusive subject of a committee separate from foreign affairs and trade, thus providing both more breadth and the continuity available through the nature of the Senate.

I think many of us in the parliament regard defence as a major matter of public policy which is above politics. I think there is a real role for the parliament, just as there is on other longstanding public policy issues, which should not be allowed to become politicised, excepting of course ongoing governance and management.

In summary, my strong view is that the current means by which the accountability of defence is managed is unsatisfactory and that, unless more information is forthcoming, more contestability is introduced and more accountability is provided, policy formulation on capability planning and specification is destined to repeat the failings of the past. There has to be a better way.