Defence Annual Report 2000-01The Defence Annual Report 2000-01 addresses the Department of Defence and the Australian Defence Force (ADF), which are collectively referred to as ‘Defence’,

DEFENCE ANNUAL REPORT

2000-01

ii

COVER PHOTOGRAPHS

Front cover: Henri Farman ‘pusher’ reconnaissance aircraft, circa 1915 Group of Australian Light Horsemen, circa World War I

Portraits: Captain R. H. Muirhead Collins, CMG, (RN) (from top to bottom) First Permanent Head, Department of Defence, 1901-1910

Lieutenant General Sir Henry Wells, KBE, CB, DSO First Chairman, Chiefs of Staff Committee, 1958-59 (the first ‘Chief’ of the Defence Force)

Rear Admiral Sir William Creswell, KCMG, KBE, (RAN) First Chief of Naval Staff, 1911-19

Colonel W. T. Bridges First Chief of the General Staff, 1909

Air Vice Marshal R. Williams, CB, CBE, DSO First Chief of the Air Force, 1921-39

Back cover: Gunnery Practice, HMAS Sydney, circa 1913 Interior of Pay Office, Victoria Barracks Melbourne, 1917

CONTACT OFFICER

The production of this document was coordinated by the Statutory Reporting and Accountability Section of Organisational Improvement Division, Department of Defence.

The contact officer to whom comments and inquiries about this report may be addressed is: Director Statutory Reporting and Accountability R1-2-D010 Department of Defence CANBERRA ACT 2600

Telephone: (02) 6265 6277 Facsimile: (02) 6265 6246 E-mail: [email protected]

DEFENCE WEBSITE HOME PAGE: http://www.defence.gov.au

DEFENCE ANNUAL REPORTS: http://www.defence.gov.au/budget/

Commonwealth of Australia 2001

ISSN 1323 5036 ISBN 0 642 29553 0

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Manager, Legislative Services, AusInfo, GPO Box 1920, Canberra ACT 2601 or by email to [email protected].

http://www.defence.gov.au

http://www.defence.gov.au/budget/

iii

28 October 2001

The Hon Peter Reith Minister for Defence

Dear Minister

We are pleased to present the annual report of the Department of Defence for the year ended 30 June 2001 which has been prepared in accordance with subsection 63(2) of the Public Service Act 1999.

Subsection 63(1) of the Act requires that our report to you be tabled in the Parliament.

The report summarises the performance of Defence for 2000-01, as well as containing other mandatory information required by legislation.

Yours sincerely

Allan Hawke CA Barrie Secretary Admiral, RAN Department of Defence Chief of the Defence Force

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CONTENTS

Contact Details ........................................................................................................... ii

Letter of Transmittal.................................................................................................. iii

User Guide.................................................................................................................. vii

Matters Arising from the 1999-2000 Annual Report............................................. ix

CHAPTER ONE – OVERVIEW

Review by the Secretary and the Chief of the Defence Force .............................. 3

Year in Review: Report Against Key Priorities .................................................... 11

Financial Performance .............................................................................................. 33

Accountability Arrangements.................................................................................. 41

Corporate Governance................................................................................... 41

− Organisational Changes........................................................................ 41

− Senior Executive Changes..................................................................... 43

− Senior Executive Remuneration........................................................... 43

− Senior Executive Study of Parliamentary Process............................. 44

− Senior Committees................................................................................. 44

− Internal Audit Arrangements............................................................... 50

− Whole-of-Defence Evaluations............................................................. 52

External Scrutiny ............................................................................................ 55

− Parliamentary Committees ................................................................... 55

− Auditor-General’s Reports.................................................................... 60

− Defence Force Ombudsman ................................................................. 63

− Decisions of Courts and Tribunals ...................................................... 64

Report on the Operation of the Defence Service Charter for 2000-01 ................ 65

CHAPTER TWO – RESULTS FOR GOVERNMENT AS DEFENCE’S CUSTOMER

Output One Defence Operations .......................................................................... 73

− Australian Defence Force Operations ................................................. 81

− Australian Defence Force Exercises..................................................... 85

v

Output Two Navy Capabilities.............................................................................97

Output Three Army Capabilities............................................................................107

Output Four Air Force Capabilities......................................................................117

Output Five Policy Advice ...................................................................................124

− Defence Cooperation .............................................................................135

CHAPTER THREE – RESULTS FOR GOVERNMENT AS DEFENCE’S OWNER

2000-01 Financial Statements ...................................................................................151

Major Capital Equipment .........................................................................................217

Capital Facilities.........................................................................................................226

Capital Facilities Expenditure by Electorate ..........................................................232

Asset Management ....................................................................................................236

Enterprise Risk Management ...................................................................................238

Discretionary Grants .................................................................................................239

Purchaser-Provider Arrangements with the Defence Housing Authority........245

Internal Customer-Supplier Arrangements ...........................................................246

Protective Security in Defence .................................................................................248

Public Affairs and Corporate Communication......................................................249

Ecologically Sustainable Development and Environmental Performance ........251

Freedom of Information............................................................................................254

CHAPTER FOUR – ENABLING BUSINESS PROCESS

Defence Reform Program .........................................................................................269

Commercial Support Program.................................................................................277

Defence Materiel Reform ..........................................................................................280

Defence Science and Technology.............................................................................286

External Consultants .................................................................................................292

Advertising and Market Research...........................................................................299

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CHAPTER FIVE – PEOPLE MATTER

People .......................................................................................................................... 307

Recruitment and Retention Initiatives .................................................................... 315

Workplace Relations.................................................................................................. 319

Workplace Equity and Diversity ............................................................................. 320

Non-operational Training......................................................................................... 325

Occupational Health and Safety .............................................................................. 327

Annual Report on the Administration and Operation of the Defence Force (Home Loans Assistance) Act 1990 ...................................................... 331

Glossary ...................................................................................................................... 335

Acronyms and Abbreviations .................................................................................. 339

Index ............................................................................................................................ 342

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USER GUIDE

The format and content of this annual report reflect the requirements developed by the Department of the Prime Minister and Cabinet and approved by the Joint Committee of Public Accounts and Audit in June 2001 under subsection 63(2) of the Public Service Act 1999.

The Defence Annual Report 2000-01 addresses the Department of Defence and the Australian Defence Force (ADF), which are collectively referred to as ‘Defence’, while the Department of Veterans’ Affairs and the Defence Housing Authority, which are parts of the Defence portfolio, have separate annual reports.

The primary purpose of annual reports of departments is accountability, in particular to the Parliament. Annual reports serve to inform the Parliament (through the responsible Minister), other stakeholders, educational and research institutions, the media and the general public about the performance of departments.

Annual reports and portfolio budget statements are the principal formal accountability mechanisms between government, departments and the Parliament. Portfolio budget statements set out performance targets for departmental outputs and contributions to desired Government outcomes when funds are appropriated, and annual reports describe achievement against those targets.

The structure of this annual report reflects the development of an integrated performance framework using the Defence Matters balanced scorecard. The scorecard focuses on four perspectives:

This year’s report has been designed as a linking document between Defence’s performance in 2000-01 and the reporting and accountability framework described in the Portfolio Budget Statements 2001-02.

Results

through

People

Government as

Customer

Government as

Owner

Enabling Business Process

People Matter

viii

The report is divided into five chapters. With the exception of the first chapter (Overview), each of the subsequent chapters reflects a perspective of the Defence Matters balanced scorecard.

Chapter One contains a review of the year by the Secretary of the Department of Defence and the Chief of the Defence Force, a report of performance against key priorities for 2000-01, a summary of financial performance for the year, as well as accountability arrangements. It also includes an organisational chart that shows the formal structure of Defence in the reporting period.

Chapter Two reports on the results to the Government as Defence’s customer. This chapter contains information on output delivery and prices, including explanations for significant variations from budget estimates. Information covering ADF operations, ADF exercises and a summary of Defence cooperation activities is also provided.

Chapter Three reports on the results to the Government as Defence’s owner. The bulk of this chapter comprises the financial statements, required under section 49 of the Financial Management and Accountability Act 1997, which were independently audited by the Australian National Audit Office. Details of Defence’s major capital equipment and facilities projects are provided as well as information on a number of owner-support responsibilities and activities.

Chapter Four contains information relating to Defence’s enabling business processes. This chapter includes information on Defence Science and Technology; improvement initiatives, including the Defence Reform Program, the Commercial Support Program and Defence materiel reform; service delivery and customer-supplier arrangements; information on consultants engaged by Defence; and details of advertising and market research organisations used by Defence.

Chapter Five focuses on people management and information required pursuant to specific statutory provisions relating to the annual reports of all Commonwealth departments.

Finally, the report includes a glossary, a list of acronyms and abbreviations, and an index.

STYLE CONVENTIONS

In general, figures provided in the tables in this report are rounded to the nearest $1,000, although there are some tables in which the figures are rounded to the nearest $100,000 where appropriate. Figures referred to in the text are usually to the nearest million dollars for ease of reading. The rounding convention used is that rounding downwards occurs if the end digit is less than five, and rounding upwards occurs if the end digit is five or more. Totals are the sums of unrounded figures.

ix

MATTERS ARISING FROM THE DEFENCE ANNUAL REPORT 1999-2000

Executive Remuneration

Following the publication of last year's annual report, the data for executive remuneration have been improved, notably in relation to more accurate calculation of fringe benefits tax on housing assistance, accrual-based salaries and superannuation. The data presented on page 57 of the Defence Annual Report 1999-2000 for some executives have been updated as shown below. Improved data are also included at Note 52 in the Financial Statements section of this report.

SELECTED SENIOR OFFICERS – REMUNERATION FOR PERIOD IN OFFICE(1)

Secretary Dr Allan Hawke from 12 October 1999 $230,000 - $239,999

($210,000 - $219,999)

Chief of the Defence Force Admiral Chris Barrie AO $330,000 - $339,999

Vice Chief of the Defence Force Air Marshal Doug Riding AM DFC to 5 June 2000 $220,000 - $229,000

($240,000 - $249,999)

Lieutenant General Des Mueller AO from 5 June 2000 $20,000 - $29,999

Chief of Navy Vice Admiral David Shackleton AO $270,000 - $279,999

($260,000 - $269,999)

Chief of Army Lieutenant General Frank Hickling AO $240,000 - $249,999

($270,000 - $279,999)

Chief of Air Force Air Marshal Errol McCormack AO $260,000 - $269,999

($280,000 - $289,999)

Under Secretary Mr Mick Roche from 10 November 1999 $130,000 - $139,999

Note 1. Figures in parentheses are those shown in the 1999-2000 annual report.

x

Foreign Exchange Risk Management

The 1999-2000 annual report inadvertently included a statement that the ANAO performance audit on Commonwealth risk management practices had misrepresented Defence’s foreign exchange risk management practices. Instead, the Annual Report should have stated that the misrepresentations were in some media reports of the audit, rather than in the audit report itself.

The Secretary, Dr Allan Hawke, wrote to the Auditor-General to apologise for the apparent criticism of the Audit Office and the statement was corrected in evidence to the Senate Legislation Committee on Foreign Affairs, Defence and Trade on 23 November 2000.

CHAPTER 1

OVERVIEW

3

REVIEW BY THE SECRETARY AND CHIEF OF THE DEFENCE FORCE

OVERVIEW In 2000-01, Defence experienced a level of operational activity without precedent in peacetime, including the East Timor deployment and support to the Sydney Olympic and Paralympic Games. The Olympics represented Australia’s biggest ever security operation, with over 4,000 ADF regulars and reservists involved. All operational commitments were met, in spite of the ongoing challenges of recruiting and retaining sufficient personnel to meet all skills needs and some equipment deficiencies.

The year also spanned a period of significant policy development by the Government: an unprecedented public consultation process about the way ahead for Defence; the publication of a new strategic direction in the subsequent White Paper, Defence 2000 – Our Future Defence Force (the White Paper); and a Defence Capability Plan that detailed specific investment priorities backed by a ten-year funding commitment.

For its part, Defence had to demonstrate that it had the management framework and drive necessary to deliver on the strategic objectives and tasks set by Government. With this in mind, the year began with the launch of our organisational renewal agenda, which focused on strengthening organisational capability in three ways: • building alignment with Government direction; • building accountability for performance; and • building trust within and towards the senior leadership of Defence through

the creation of a shared values base.

These three renewal themes were aimed at making Defence a results-focused, values-based organisation – in line with Government's broader public sector reform agenda – and shaped much of the senior level effort in 2000-01.

The renewal agenda built on the savings made through the Defence Reform Program (DRP), which was finalised on 30 June 2000. From its start in 1997, the reform program yielded a significant redistribution of resources to combat capability. As at 30 June 2001, a total of $1,657m had been redirected to current and future capability from cumulative reform program savings of $2,010m (the remainder, $353m, being spent on transition costs, mostly involving market-testing activities).

For many people inside Defence, the DRP wrought fundamental change to entrenched ways of doing business – new approaches that laid the way for a

Overview

4

deeper and longer-term program of cultural change, involving a review of organisational settings commencing with our mission, vision and values.

In 2000-01, we worked closely with Defence's senior leaders (star rank and Senior Executive Service officers) to define Defence’s enduring purpose in a way that would ensure its continuing relevance in the 21st century. The Minister for Defence, the Hon. Peter Reith, obtained Government approval during the 2001-02 Budget process for this outcome: “to defend Australia and its national interests”.

The previous statement of the outcome “The prevention or defeat of armed force against Australia or its interests“ served Defence well during the 20th century.

Our renewed statement of purpose reflects the fact that, while defending Australia remains the primary priority for the Australian Defence Force (ADF), there is more for Defence to do in furthering Australia’s national interests in the 21st century. It recognises that we face a range of threats inimical to our security beyond the remote possibility of armed attack – it covers things like cyber warfare, terrorism and other forms of attack. And it embraces the good work we do in Australia’s interests on things like national emergencies, illegal fishing, people smuggling, humanitarian assistance, medical evacuations and peacekeeping.

To complement our new mission, we also developed a statement of our view of Defence now and into the mid-term future, which we captured in a three-part vision:

A force for good ∙ a force to be reckoned with ∙ a force to win

'A force for good' comprises all elements of Defence: the Navy, the Army, the Air Force and our fourth service, the civilians of the Australian Public Service. Our vision is of a Defence organisation that thinks beyond jointness and embraces a culture of real integration.

Our first attempt at spelling out a vision for Defence was about ‘joint warfighting’. While it is true that Australia is among the best in the world at bringing together the three military services into a single force (and in coalition with forces from other nations), we felt that this formulation did not do justice to what is special about how Australians get things done.

The concept of ‘a force’ (in other words, a single, integrated force) embraces all those who contribute to making Defence such a highly respected national institution. This includes the important contribution of our reserve forces, industry and embedded contractors.

We believe that this statement captures the way in which Defence relies so heavily, as a relatively small fighting force defending a tenth of the earth’s surface, on deterrence. It also captures the sheer drive to be the best – to set the standard – that makes our soldiers, sailors, airmen and women and civilians so effective in achieving our purpose.

Review by the Secretary and the Chief of the Defence Force

5

RENEWAL IN DEFENCE

ALIGNMENT WITH GOVERNMENT DIRECTION

Alignment with government direction was the most pressing imperative at the start of 2000-01, a year in which the Government was committed to producing a White Paper that put in place new strategic settings.

Defence began the year with steps to establish a new, integrated performance framework - a framework that, over time, will position Defence to link capability and resource information, using a balanced scorecard adaptation based on the recognition that the Government expects two types of Defence 'results': • In its 'customer' role, it expects delivery of the Defence outputs within the

price specified in the Minister's Portfolio Budget Statements. • In its 'owner' role, it expects sound stewardship of financial and other

resources, and of people, in order to ensure long-term sustainable delivery of the Defence outputs.

In other words, delivering capability is not in and of itself sufficient. Improved stewardship was critical to fixing the financial management problems we faced – problems which were undermining Defence’s credibility with the Government. The need for alignment towards these two types of results sought by the Government was emphasised through a new organisational structure that clearly distinguished between three different roles inside Defence: • Output Executives – who are responsible for the majority of direct effort

within Defence to allow us to deliver the outputs expected by the Government.

• Owner-Support Executives – who are responsible for independently providing advice and assurance to us in relation to goods and services required within Defence and in relation to organisational performance and sustainability over the longer term.

• Enabling Executives – who are responsible for providing services, including the majority of assets, to the Services and other Groups to assist them in meeting their responsibilities to us.

The concept of striking a balance between results for the Government in its customer role and the longer-term stewardship role embodied by ownership concerns was a new one to Defence, and we are using a balanced scorecard approach as a tool to start communicating this aspect of our internal business strategy.

Overview

6

It was an important concept to communicate because the Government signalled its intent, via the White Paper, to balance the two most powerful imperatives on government – national security and fiscal responsibility.1

Here the Government was implicitly recognising that, at a time of rising costs for public services like health and social security, the Australian people had a right to expect their elected leaders to balance Defence spending and other competing demands on the public purse.

The challenge for Defence, therefore, was to provide the Government with the information needed to make decisions that effectively balance current and future capability – with the latter costed in whole-of-capability, whole-of-life terms.

This was a significant management challenge. Defence, in some respects, had been insulated (because of its size and the nature of its business) from much of the public sector reform that has seen Commonwealth agencies link their resource allocations increasingly transparently to the Government’s policy directions.

In tabling the White Paper in the Parliament on 6 December 2000, the Prime Minister said:

“Over the past few years, the Government has given high priority to reforming the Defence organisation and we have regarded this as an essential precondition for serious consideration of our long-term defence and funding needs.

“Important reforms have begun. Management practice has improved, waste and inefficiency cut, and responsibility and accountability tightened.”

The White Paper provides the strategy and the money. It’s our job now to deliver – to execute and implement that White Paper – and Defence’s track record suggests that that will not be an easy task.

So, 2000-01 was the year when we emphasised to the people who report directly to us that Defence had to face up to the very significant task of updating its performance framework in order to link, in a more transparent fashion, whole-of-Defence resourcing decisions to output performance.

In this context, the Defence Matters balanced scorecard – with its focus on financial and non-financial performance – was developed as a management tool to drive the business strategy. It enabled us to launch, at the beginning of 2001-02, a Defence Plan based on our first attempt at a whole-of-Defence 'strategy map'. The ‘map’ is a simple means of relating the factors that drive success to a number of ‘strategic themes’ which should be advanced at every opportunity.

1 Defence 2000 – Our Future Defence Force p V11


7

In essence: • the strategy map communicates ‘what matters and why’ to people at all

levels, and is a means of providing assurance of Defence’s ability to deliver, in a sustainable way, the results directed by the Government; while

• the Defence Matters scorecard tracks progress towards objectives on the strategy map and provides the focus for performance evaluation.

The Defence Committee, comprising ourselves, our three-star military officers, the Under Secretary and deputy secretaries identified Defence’s strategic themes as: • Developing the capability to fight and win today and tomorrow. • Creating the climate where people can do their best. • Promoting quality advice and decision-making. • Getting best value from the Defence dollar. • Strengthening international relationships for Australia’s security. • Making best use of science and technology and Australian industry.

In its mature state, the Defence Matters scorecard will provide a comprehensive measurement and reporting tool in relation to Defence’s capacity to achieve the five strategic objectives outlined in the White Paper, namely: • Ensure the defence of Australia and its direct approaches. • Foster the security of our immediate neighbourhood. • Promote stability and cooperation in South East Asia. • Support strategic stability in the wider Asia Pacific region. • Support global security.

ACCOUNTABILITY FOR PERFORMANCE

Accountability for performance is being strengthened through the charters we issue to the people who report directly to us. These charters have links to a new Ministerial Directive to us that distinguishes 'ends' and 'means', thereby facilitating delegation of authority for achieving specified results within the bounds of explicitly stated 'unacceptable means'. This 'ends/means' approach is also the basis for a new governance framework addressing the operation of the senior-level committees.

Preparations began in 2000-01 for implementation of Defence's 'customer-supplier agreements' between output and enabling executives. For the first time, the output executives were provided with the price of their respective outputs and were directed by us to strike internal business relationships as purchasers of goods and services from the enabling Groups.

The charters state the results to be achieved by individuals, in general terms. The customer-supplier agreements specify the levels of performance to be achieved, at a price.

Overview

8

In combination, these elements – a results-focused balanced scorecard, a new organisational structure featuring clearer internal business relationships, and a new business cycle that links reviews of the strategic environment and the preparation of budget allocations – comprise Defence's new business model.

Further implementation of the model will take place during 2001-02, at the end of which we anticipate that the alignment and accountability phases of the renewal agenda will largely have been completed. A major challenge will be to ensure that decision makers can be held properly to account – a difficult task in the absence of good quality management information.

Although Defence’s financial reporting for 2000-01 was arguably better than it has ever been, production of demonstrably materially-accurate financial statements for the fiscal year required inordinate effort and complex treatment of recorded data. Our considerable difficulties in this regard related largely to accounting for military assets.

A first step towards integration of Defence's management information systems was taken during 2000-01, when the three key management systems (finance, personnel and inventory management) were for the first time aligned around a coherent chart of accounts. But the fact remains that it will still be some time before we have quality information on which to base decision making and the level of confidence we require in our logistics, personnel and financial data. Together, these aspects represent our biggest management risk – it’s essential we fix them to underpin our organisational renewal agenda. (These challenges are also faced by our defence allies.)

Two other issues require mention under this heading.

The first is the military stand-down, which occurred on 5 February 2001 – a clear indication of the Chief of the Defence Force’s and the Service Chiefs’ commitment to stamp out unacceptable behaviour in the ADF. The two-hour awareness program, attended by all military personnel, was aimed at rebuilding the confidence of our uniformed colleagues in the military justice system. It demonstrated to the Australian public the resolve of the ADF leadership to provide a safe and fair workplace for all ADF personnel.

Further indication of Defence’s commitment to the principles of equity and diversity flowed from the investigation of reports of harassment and bullying in the 3rd Battalion, Royal Australian Regiment. The Chief of Army instigated and promulgated the Army’s Plan for a Fair Go which involves a multi-faceted approach aimed at eliminating unacceptable behaviour as well as encouraging diversity within the Army.

The second issue concerns Defence’s occupational health and safety policy, which rests on the foundation that the safety of people in the workplace is a core responsibility of commanders and executives. Improvement in safety performance and the development of a safety culture, particularly in the ADF, are a major priority. The cost and consequences of poor performance in this area


9

continue to be unacceptable to both Defence and the community. We have increased our leadership focus on safety accordingly. Reform is directed at supporting the capacity of commanders and executives to create safe work environments. Specific improvement strategies have focused on the development of safety standards and supporting information and reporting systems, as well as improvement in the level and coverage of safety training.

SENIOR LEADERSHIP

Senior leadership was strengthened during 2000-01 through development activities aimed at meeting the Government's White Paper imperative of transforming Defence from 'a bureaucratic culture' to a 'leadership culture'. The White Paper noted that ‘improving leadership will remain one of Defence’s highest priorities’, and said:

‘The day-to-day behaviour of senior leaders, both civilian and military, can either support or undermine attempts to make Defence a more rewarding place to work. The ADF has consistently demonstrated the quality of its leadership in military operations, particularly at the tactical level. However, new leadership challenges have emerged. These include a mixed military, civilian and commercial workforce and a greater emphasis on ensuring Defence resources are used efficiently, as well as effectively.’2

Here, the Government called on Defence to tackle an issue that large, knowledge-based organisations around the world are wrestling with. Our twice-yearly gatherings of senior leaders foster cross-functional communication and a shared sense of purpose.

During the initial period of work with our top tier of senior leaders, they identified a shared set of ‘unbreakable rules’ and senior leadership values: • Unbreakable rules: never mislead, never abuse power, never leak

information, and never condone poor performance. • Senior leadership values: professionalism, loyalty, innovation, courage,

integrity, and teamwork.

These represent the ‘ground rules’ for our senior leadership - the way in which we expect people to behave if they are at, or aspire to, star rank and senior executive service levels in Defence. They do not, of course, replace the values of the Navy, Army, Air Force or Australian Public Service.

We have also introduced a new joint military-civilian ‘Capstone Leadership Program’ to induct new entrants into the senior leadership. The program revolves around our ‘Results through People’ leadership philosophy, particularly the people leadership model which was produced collectively by Defence's senior leadership and features a 360-degree feedback instrument.

2 Defence 2000 – Our Future Defence Force (the White Paper), page 63.

Overview

10

The April 2001 staff attitude survey highlighted indicative evidence of a turnaround in the way our people view the organisation when compared with the survey conducted in August 1999. The results relating to commitment, trust, pride and job satisfaction were very pleasing.

The survey also provides a very clear indication of the areas requiring further attention by the Services and Groups. For example, there are still concerns about the quality of senior leadership. Communication – the vital precursor to trust-based working relationships – remains a key issue. Pay and conditions of service, family issues, locational stability and change also need attention.

The survey results reveal that people are increasingly feeling the pinch on resourcing, their overall workload and working hours. ADF staffing levels are being addressed, but these findings underline the importance of deciding what to stop doing – to cut our work cloth to suit our resource wallet – in a strategic way that doesn’t compromise capability.

The April 2001 staff attitude survey results do also indicate, however, consolidation of the improvements, and affirm the strategies adopted to drive the changes we are seeking.

Defence’s internal approach to implementing the Government’s strategic direction rests on our leadership philosophy – Results through People. Results – because that is what the Government pays us to deliver. People – because results are achieved through people, and because we believe that getting the people side of things right is the best way to ensure sustainable delivery of results.

During 2000-01, we started building the high-performance management vehicle needed to drive Defence out of an essentially 1970s budgeting and management era and into the 21st century.

Ensuring that the new performance framework is underpinned by a leadership culture has been the focus of our leadership development endeavours during the year. Leaders are responsible for creating the climate for high performance. Our 'Results through People' approach will extend beyond the senior leadership of Defence to embrace leaders at all levels during 2001-02.

11

YEAR IN REVIEW: REPORT AGAINST KEY PRIORITIES

This section of the annual report describes the level of achievement attained in relation to the key priorities listed at pages 5 to 9 of the Portfolio Additional Estimates Statements 2000-01. They have been re-arranged to align with the Defence Matters balanced scorecard perspectives.

GOVERNMENT AS CUSTOMER – DELIVERING OUTPUTS TO THE GOVERNMENT

Maintain the level of operations required by the Government, particularly in East Timor and Bougainville and by providing security and general support for the Sydney Olympic and Paralympic Games.

Achieved

A high level of operational activity was maintained successfully and all operational requirements set by the Government were met. Operations continued in East Timor, maintaining a commitment of about 1,500 ADF personnel, and in Bougainville, with the number of ADF personnel reducing from about 240 early in 2000-01 to about 180 personnel by June 2001 (in conjunction with civilian Peace Monitoring Group personnel). Security and general support was provided to the Sydney Olympic and Paralympic Games, involving some 4,000 ADF personnel.

Continue to monitor closely the strategic outlook and provide advice on the implications for Australia of significant developments, including by establishing the Australian Strategic Policy Institute.

Substantially Achieved

Australia’s strategic outlook was monitored closely during 2000-01. A year-long review into the present and future Defence needs of Australia was completed in November 2000 to inform the White Paper. That review examined in detail Australia’s strategic outlook, and the White Paper addressed in detail Australia's strategic environment, its national defence and strategic interests, and important strategic relationships. In addition, regular joint reviews of current strategic circumstances, objectives and options have been undertaken as part of the Quarterly Strategic Review process. This process provides advice to the Government on the evolving security situation, potential for employment of the ADF, and the options available to the Government for military responses.

Australia’s Military Strategy is undergoing a major rewrite, to reflect Government strategic guidance as outlined in the White Paper. Australia’s Military Strategy is

Overview

12

a classified document which summarises those national objectives that the Government may wish to achieve through the use of Defence capabilities. It provides military strategic objectives and military response options as a basis for Defence planning.

A number of important milestones were achieved in the establishment of the Australian Strategic Policy Institute in 2000-01. The Government agreed to establish the institute as a company limited by guarantee, managed by a governing council. By the end of 2000-01, the Government had considered the appointment of council members [the appointments were announced in early July 2001]. The institute commenced operations at the time of its first board meeting, which took place in August 2001.

Prepare the Defence White Paper.

Achieved

The White Paper was completed on schedule and launched by the Government in December 2000. The nine-week public consultation process that preceded it was highly successful, engaging a wide cross-section of the community, and assisting in the development of the White Paper. There was also a parallel process to obtain the views of people within Defence. Comprehensive post-White Paper briefings were provided to Australia’s international defence partners, regional countries, and major domestic stakeholders. The White Paper received a high level of bi-partisan support and public endorsement.

Support the Government’s consideration of future Defence funding in the context of the White Paper.

Achieved

The White Paper addresses Australia’s defence requirements with a defined set of capability enhancements. In providing Defence with a plan for the development of Australia’s armed forces over the next decade, the Government provided the most specific long-term Defence funding commitment in over 25 years. In addition, the White Paper provided the foundation for the development and consideration during the year of Defence’s Budget estimates for 2001-02 and the following years.

Improve support to Ministers, the Parliamentary Secretary and the Government by focusing on the quality of advice and responsiveness of the organisation.


Several initiatives were taken in 2000-01 to improve the quality of advice and support. Key improvements are: • A quarterly report to the Minister for Defence was initiated on progress in

implementing the White Paper; this complemented existing regular reports on implementation of the Government’s defence policy platforms.

Year in Review: Report Against Key Priorities

13

• An evaluation matrix was introduced to enable the Ministers and the Parliamentary Secretary to comment on the quality and timeliness of advice provided to them. Broad summary data have been available since May 2001, and more detailed information will be included in 2001-02 in the Defence Matters Scorecard for consideration by the Defence Committee.

• Information sessions on the requirements of the Ministers and the Parliamentary Secretary for quality advice were conducted for Canberra-based Senior Executive Service/star-ranked officers in April-May 2001.

GOVERNMENT AS OWNER – RESOURCING DEFENCE

Pursue an affordable force structure, consistent with the White Paper through:

Preparing for decisions on major capital equipment platforms, including combat aircraft and the surface combatant force.

Achieved

During 2000-01, Defence supported the development of the Defence Capability Plan 2001-10 that provides a detailed costed plan for the Government’s ten-year program for investment in major capital equipment. The projects in the plan have been incorporated into a balanced and affordable major capital investment program. The Defence Capability and Investment Committee and its subordinate committees subsequently prepared a package of 55 major capital equipment proposals worth around $8.5 billion for Government consideration in the 2001-02 Budget. Of these, 45 were submitted for approval in the Budget and 10 were foreshadowed for approval later in 2001-02. Eight facilities projects were also submitted and approved.

Adopting a whole-of-capability/whole-of-life perspective in developing ADF capabilities.


The Defence Capability Plan established a comprehensive ten-year program for developing ADF capabilities. It was developed on the basis of whole-of-capability considerations, and costed on a whole-of-life basis. The Defence Capability and Investment Committee has adopted this perspective in reviewing individual proposals from the plan, prior to seeking final Government approval. A new Defence Instruction, Defence Capability Life Cycle Management, which has been drafted and will be released in final form by the end of 2001, details the processes and the requirements encompassed in whole-of-capability/whole-of-life capability development.

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Integrating ADF workforce planning into whole-of-capability considerations.

Partially Achieved

Defence is redeveloping the Defence Workforce Plan in order to link capability, personnel and funding more effectively. This plan will detail the personnel resources to provide the Government with the required capability, outline the strategies to provide Defence with its workforce, and foreshadow an ongoing review of the personnel requirement to produce capability outputs within budget.

Ensuring that the Reserves can be used effectively.


In April 2001, the Defence Legislation Amendment (Enhancement of the Reserves and Modernisation) Act 2001 and the Defence Reserve Service (Protection) Act 2001 came into effect. This legislation allows the Defence Force to access a greater range of capability to fulfil its operational commitments.

The Amendment Act enables the Government to call out the Reserves for a wide range of operations, including combat, defence emergency, peacekeeping, civil and humanitarian aid, and disaster relief. It also provides the authority for Service Chiefs to restructure their Reserve components so that Reservists can be utilised across all levels of readiness. To this end, new categories of Reserve service and associated conditions of service packages will be introduced by March 2002.

The Protection Act provides protection measures for Reservists, their dependants and employers of Reserve members.

Improving preparedness planning and integrating it into the budget process.

Partially Achieved

A preparedness task force was established in June 2000, which aimed to refine the preparedness management system by 31 December 2000. The task force made a number of recommendations for refining the existing system and making stronger linkages between preparedness levels and resource allocation. The Chiefs of Staff Committee has endorsed the majority of the recommendations. A key improvement is the incorporation of Directed Levels of Capability in organisational agreements between the Secretary/Chief of the Defence Force and the Output Executives. These agreements define the level of preparedness that is required and allocate resources to sub-output level against these requirements. Initial agreements have been developed for 2001-02. They provide a key plank of the output budgetary framework, and Output Executives report monthly to the Defence Committee on achievement against these agreements.


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Addressing the sustainability of combat capability.

Partially Achieved

Another result of the preparedness task force deliberations is that an ADF preparedness planning guide will be developed. The guide will contain information and data on a range of preparedness planning issues, such as the likely levels of activity and consumption rates in various operational circumstances. The planning guide will be the primary source for endorsed sustainability planning of combat capability.

Developing a strategy to deal with the funding pressures in the medium and longer term, which includes the rising per capita cost of personnel and increasing equipment costs.

Achieved

As a result of a joint review by the Department of Defence and the Department of Finance and Administration (completed in August 2000), the Government directed Defence to submit a financial and management plan as part of its budget submission each year. Preparation of the first plan (covering the 2001-11 period) coincided with preparation of the White Paper, and consequently the first plan focused primarily on the White Paper and its implementation. The plan was a major step forward in integrating Defence’s financial and non-financial performance planning and the development of strategic initiatives. The plan formed the basis of Defence’s 2001-02 budget and forward estimates. The plan ensures the integration of major investment decisions with targeted operating performance and financial constraints.

Ensuring effective reinvestment of efficiency savings into ADF capability.


Defence Reform Program redirection of $810m was focused firmly upon the maintenance of the ADF full-time strength at no lower than 50,000, new capital investment, capability-related logistics, and net personnel and operating costs for new capabilities.

Continuing research into Revolution in Military Affairs-related technologies to help the ADF exploit information superiority and to enhance command support and intelligence, including by establishing a Military Systems Experimentation Branch to conduct research into key experimental processes necessary to exploit the Revolution in Military Affairs.

Achieved

DSTO continued to pursue a wide-ranging program of research into Revolution in Military Affairs-related technologies, focused on how they may be exploited to achieve information superiority and enhance command support and intelligence. The Military Systems Experimentation Branch was established to explore and

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develop innovative joint warfighting concepts and capabilities, within a collaborative Defence experimentation framework. The exploitation and impact of Revolution in Military Affairs-related technologies on joint military operations will be a key element of this experimentation.

Strengthen corporate governance by:

Preparing an overarching corporate plan derived from Government policy – to be released in tandem with the White Paper – and a business plan for each functional unit derived from and clearly linked to the corporate plan.

Partially achieved

Following the presentation to the Government of a comprehensive management and financial plan, the 2001-11 Defence Plan was prepared. It provides an overarching foundation for Defence management and financial decision making and for further improvement in Defence’s strategic planning framework. The Defence Plan, released in July 2001, contains a whole-of-Defence picture, or ‘strategy map’, of how the Government’s direction, given in the White Paper, will be implemented.

Introducing clearer purchaser/provider relationships to ensure efficient delivery of internal services.


An internal customer-supplier model has been developed for implementation across Defence from 2001-02.

The model will provide an improved framework for establishing expected and achievable performance levels, promote accountability and performance review across the organisation, and aid future decision making within Defence.

Ensuring the effective management and reporting of financial resources and plans to meet agreed Defence output performance levels; and

Improving performance reporting and evaluation, using a balanced scorecard.


Defence has implemented a more active and informed approach to executive review and decision making. Each month, the Defence Committee considers the Defence Matters scorecard as the basis for evaluating Defence’s organisational performance and emerging issues.

The steps taken during 2000-01 will provide a sound basis for continued improvement in Defence decision making and development of required initiatives. Further major improvements in integrating Defence’s performance planning and review as a strategy-focused organisation are a priority. Defence Matters will become the performance reporting view of the new Defence Plan,


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including the strategy map, and will be populated with the measures, targets and initiatives that will drive the required Defence performance.

Adopting best practice in asset management.

Partially Achieved

In February 2001, the Defence Committee adopted revised asset management arrangements consistent with the best practice principles developed by the Australian National Audit Office.

The Chief Finance Officer is charged with responsibility for the Defence asset and liability policy framework and the integration of asset planning and management decisions into Defence’s corporate processes. The Defence Capability and Investment Committee is to play a larger role in informing the management of key assets, and a revised accountability structure for asset management and accounting responsibilities is being implemented.

For further information, refer to the Asset Management section in Chapter Three.

Refining corporate management information, financial and non-financial, so that leaders are better able to take critical decisions; and

Embedding accrual management to support effective decision making and to enable Defence to provide informed advice to the Government.

Partially Achieved

Considerable effort has been been applied to improving the integrity and timeliness of data maintained in Defence’s reporting systems. To this end, congruent charts of accounts have been implemented in the key accounting systems, and Executives are required to sign off in relation to data for which they are responsible.

In relation to Defence’s three key corporate management information systems, there is now an embedded accrual interface between the Personnel Management Key Solution (PMKeyS) and the Resource and Output Management Accounting Network (ROMAN) systems, and work is under way to develop a similar interface between the Standard Defence Supply System (SDSS) and ROMAN in 2001-02.

Notwithstanding this progress, the inordinate effort required to produce the 2000-01 financial statements has highlighted the urgent need to dramatically improve Defence’s management information systems, particularly in respect of accounting for military assets.

Ensuring that appropriate security and audit arrangements are in place for the protection of Defence information and assets.

Defence has recently completed a review of its security arrangements, with the Secretary announcing the formation, from 1 July 2001, of a Defence Security

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Authority. The focus of the Defence Security Authority will be on the security policy, standards, training, evaluation and monitoring, and the investigation of serious security incidents. The Defence Security Authority comes under the leadership of the Deputy Secretary Intelligence and Security. From 2001-02, it will draw on an increased level of resourcing to better enable Defence to provide Government with a high level of security assurance.

Providing clearer responsibilities and better alignment between outputs and organisational structures with an appropriate accountability and responsibility chain; and

Introducing a comprehensive performance framework to ensure that what people do is firmly linked to organisational goals.


A new organisational structure was implemented on 1 July 2000 to recognise the primary focus and roles of the single Services and Groups. Charters were also implemented between Secretary/Chief of the Defence Force and the head of each of the Services and Groups to establish clear responsibilities and organisational alignment. For further information, see the Corporate Governance section later in this chapter.

This approach provides a sound basis for cascading business planning throughout Defence, down to the individual. Personal ‘Plans on a Page’ under Defence’s existing civilian performance framework, along with the military equivalents, will eventually be prepared in such a way as to link clearly with Defence’s overall objectives.

Under Defence’s existing certified agreement for civilian employees, individual ‘Plans on a Page’ are formally recognised in performance review and salary progression.

Undertaking a review of the Defence Science and Technology Organisation’s priority setting processes and framework to improve the allocation of resources to meet customers’ needs.

Achieved

As part of the Defence Science and Technology Organisation’s organisational renewal program, a number of initiatives were implemented to improve the priority setting processes and management framework for the allocation of resources to meet customers’ needs. These included implementation of a new, more customer-focused, planning and management framework; refinement of the client program structure to align with Defence outputs through the creation of six client Force Research Areas; and new funding and review arrangements to provide greater transparency and alignment of research activities.


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Improve communications, including through producing an overarching communication strategy for Defence, covering both internal and external communications.


The Public Affairs and Corporate Communication Division has produced a comprehensive communication strategy – the Defence Organisational Communication Strategy. This strategy provides Defence with the potential for enhancing community awareness of Government defence policy and activities; improved interaction between Defence, the Government and other major stakeholders; and better organisational performance through enhanced internal communication. The strategy commenced in April 2001, shortly after its endorsement by the Secretary and the Chief of the Defence Force. It is a four-year strategy requiring incremental implementation.

Continue the rationalisation and consolidation of Defence estate, including through:

The disposal of Defence properties that are surplus to requirements and the transfer of properties to the Sydney Harbour Federation Trust.

Partially Achieved

The rationalisation of the Defence estate is continuing in line with strategic planning for the estate to meet Defence capability requirements and to ensure the most effective use of Commonwealth property assets. Sixteen surplus properties or portions of properties were sold during 2000-01. A number of properties were not sold as planned because of delays associated with re-zonings or other activities in preparing properties for sale.

While the legislation for the Sydney Harbour Federation Trust was passed in February 2001, the Trust will not be formally established until September 2001. Accordingly, Cockatoo Island, Middle Head, North Head and Woolwich will now transfer to the Trust in the first half of 2001-02. The Georges Heights property is still required for Defence purposes until August 2002.

Continue the development and implementation of a standardised Defence-wide approach to environmental management, consistent with Commonwealth environmental legislation, including by reducing Defence’s annual energy consumption by at least 200 terajoules by June 30 2001, in accordance with the Government’s greenhouse emissions strategy.

Partially Achieved

During 2000-01, Defence established an energy efficiency program. Under this, corrective works are being rolled out, with completion expected by the end of June 2002. These works will realise a 25 per cent reduction in Defence’s energy consumption by the end of June 2003, a target agreed with the Department of

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Industry, Science and Resources and the Australian Greenhouse Office. An accelerated implementation of energy reduction works during 2001-02 has been programmed to realise the target.

Implement arrangements in Defence for the goods and services tax.

Achieved

The implementation of arrangements for the goods and services tax in Defence was achieved on time and in accordance with the requirements specified by the Department of Finance and Administration. Defence achieved compliance through adapting its corporate financial management system; changing business processes; managing contractual obligations, cash flow and funding commitments; and delivering a comprehensive communication and education program.

Defence commenced a post-implementation review in July 2001. The review will assist Defence to further improve its management of the new tax system.

INTERNAL BUSINESS PROCESSES

Implement a comprehensive acquisition and logistic support reform program through:

Developing a more streamlined acquisition decision-making process.

Partially Achieved

A new Defence capability life-cycle management model has been developed that: • takes a whole-of-life approach to capability development, acquisition and

support; • provides for up-front risk reduction in the capability development process

before committing to procurement; and • provides for a ‘two-pass’ Government approval process in which the first

pass seeks Government involvement in defining capability options, followed by Government approval in the second pass to procure a preferred option based on a sound business case.

Adopting best commercial business practices in acquisition and improve project management.

Partially Achieved

Commercial business practices have been adopted through: • introducing a new tendering and contracting template that reflects

commercial realities and reduces the cost of tendering; • using industry standards in preference to military standards wherever

possible and adopting function and performance specifications;


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• consulting industry in the development of tender requirements and maximising the potential for innovation by reducing unnecessarily prescriptive specifications;

• the previous contract performance of companies being assessed through a Company Score Card system, which now features strongly as a source selection factor;

• further reducing the cost of tendering through earlier short listing in tender evaluation and reducing the time from source selection to contract award;

• forming new project governance boards that apply the principles of private sector company boards in the review of major projects;

• adopting a corporate governance framework in which the senior executives of the Defence Materiel Organisation take a whole-of-enterprise business approach rather than the previous functional management approach to executive management; and

• piloting alliance contracting and private financing initiatives.

A standard project management method has been introduced to facilitate more consistent approaches to the management of acquisition projects – approximately 50 per cent of all major acquisition projects currently use this method. The method is being improved to inject the benefits of contemporary best practice.

Managing the acquisition of a new patrol vessel, to replace the Fremantle class, as a pilot for streamlined acquisition.


The acquisition strategy has been well developed reflecting a new tendering process that is streamlined, industry-focused, and results-, rather than process-, driven. This includes: • early involvement of industry in commenting on draft requirement

documents; • a two-stage tendering process, that aims to minimise industry’s tendering

costs; • stating requirements in functional and performance terms, thus allowing

innovative solutions reflecting commercial expertise in the delivery of not only the capital equipment but also a full through-life support package under a single contract; and

• encouraging industry to put forward private financing proposals capturing all the advantages that this approach may provide.

A draft request for tender was issued to industry for comment prior to formal release in September 2001.

This approach is already demonstrating the value of industry and Defence working together, and the industry response has been positive.

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Fixing the problem equipment projects

Partially Achieved

Regular reporting to the Defence Committee on the top 20 projects and other projects with significant issues has been implemented. A culture of frank reporting and early highlighting of issues for senior management attention is being fostered. A reform that has been achieved is the introduction of a more rigorous approach to major capital equipment project reviews that adopts the principles of private sector company boards. New project governance board arrangements provide for regular independent, objective and expert review of commercial, financial, technical, contractual and legal aspects of projects and contracts.

This regime is being extended to a broader range of the Defence Materiel Organisation’s projects.

Continuing to rationalise and integrate the provision of materiel support to the ADF, particularly the integration of acquisition and through-life support functions and processes.

Partially Achieved

The Defence Materiel Organisation has focused its logistic support enhancements in two key areas: improved support to operations and deployed forces and increased efficiency in logistic support. The Joint Logistics Command has been created with a clear mandate to coordinate and provide logistic support to the Commander Australian Theatre. Joint Logistics Command has responsibility to manage the supply chain for support to operations; this has been implemented for support to East Timor, Bougainville and other operations.

The Defence Materiel Organisation continues to pursue commercial best practice in increasing efficiency in logistic support through outsourcing. The ADF explosive ordnance project has now moved to contract signature with Australian Defence Industries, and the Defence Integrated Distribution System project has recently received guidance from the Government to allow it to proceed to re-tender. Internally, the Defence Materiel Organisation is moving to assign all its warehouses under the command and control of Joint Logistics Command; this will provide the framework for better integration of the supply chain to support the ADF.

Work continues on improving the alignment of logistic processes with logistic systems. This not only focuses on management of the Defence inventory but also covers Defence’s corporate financial accounting requirements.


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Enhancing the delivery of logistic support and improving inventory management, including further reduction in the size of the inventory.

Partially Achieved

A system is in place to identify and manage the sale and disposal of obsolete or surplus inventory. The provision for inventory obsolescence has been reduced from $693m as at 1 July 2000 to $491m at 30 June 2001.

Significant enhancements to the Standard Defence Supply System were implemented through an upgrade project. This project is designed to improve end-to-end supply chain management, asset and consignment visibility, inventory management capability and warehousing practices, and enable e-business and financial and performance management and reporting.

Continue to build on defence industry strategic policy initiatives in areas such as a better-targeted industry program and strategic relationships with industry by:

Pursuing a strategy to engage Australia's national defence support base.

Achieved

Defence continued its engagement with industry in the critical areas of air, land and sea transport with the aim of improving ADF preparedness. Strategic-level partnering charters were signed with both Qantas and Ansett. Deeds have been signed with port authorities in Darwin and Townsville to facilitate Defence priority access to key port infrastructure during contingencies. Negotiations continued with the South Australian Government to finalise Defence access arrangements for the soon-to-be-privatised ports of South Australia.

Defence maintained its engagement with the National Transport Secretariat. A significant result has been an instrument (issued by the Minister for Transport and Regional Services in October 2000) recognising Defence’s unique road transport requirements and exempting the ADF from specified provisions of uniform road transport legislation.

Defence continues to engage with state and territory governments to ensure that Defence interests are taken into account at an early stage in infrastructure planning cycles. A key result for 2000-01 has been the inclusion of a Defence objective in the Queensland state infrastructure plan.

Extending the use of Australian Industry Involvement targets to ensure that contractors consider local industry and use it more effectively and to provide broader opportunities for innovative industry solutions.

Achieved

The Australian Industry Involvement program was expanded to provide greater focus on the involvement of Australian industry and overseas-based companies

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in research and development and exports. Through the Strategic Materiel Acquisition Request for Tender 2000 tendering process, all Defence projects have the potential to identify in their requirements the nature and level of industry activity expected.

Implementing the provision of integrated travel services under a new contract with Qantas.


Development of the integrated travel service, utilising e-business technology, was substantially completed during 2000-01, with rollout expected to commence by December 2001. The aim of this new service is to enable Defence personnel to organise their domestic travel requirements from their desktop, leading to a reduction in administrative costs and time.

Vigorously pursue efficiency measures, with continuous improvement as an important agent for long-term organisational and cultural change within Defence, including by:

Continuing, with the assistance of industry, the market testing program and implementing the results of completed market-testing activities, including clerical and administrative services and publishing services.

Achieved

During 2000-01, twelve market-testing activity decisions were announced. Completed market tests, including clerical and administrative support, were implemented. In addition, fourteen activities were under active consideration for progression during 2001-02.

Continuing the rationalisation of the provision of facilities maintenance by implementing comprehensive contracts with industry throughout Australia.

Achieved

There are currently seventeen comprehensive maintenance contracts in place and one to be let. These have replaced over 300 individual contracts. The tender process for the remaining contract, in the Central Northern NSW Region (including Williamtown and Singleton), has commenced and is scheduled to be completed by July 2002.


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Implementing, in August 2000, the decision to establish a Defence Service Centre in Cooma NSW. The service centre will utilise the latest technology to provide a free national inquiry service to Defence personnel and their families on a range of personnel and administrative matters.


The Defence Service Centre was opened in Cooma in December 2000 and provides a free national inquiry service to Defence civilian employees on a range of personnel and administrative matters. The centre also provides the first point of contact for members of the general public inquiring about a career in the ADF. The centre performs basic ADF recruiting screening by ensuring individuals meet basic requirements, forwarding information packages on how to enlist and, after 10 working days, initiating a follow-up call.

Managing a contract with the Defence Housing Authority to provide housing and relocation services to the ADF.

Achieved

A contract was established with the Defence Housing Authority in August 2000 to provide housing and relocation services. The authority was also contracted to administer Defence’s removal services, with effect from 1 July 2001.

Continuing cooperation with the Department of Veterans’ Affairs to improve services and support to serving and ex-Service personnel and to reduce the costs of services currently being provided by both it and Defence. Work in 2000-01 will focus on establishing a transition management service in Veterans’ Affairs for ADF members who are discharging, as well as improving records and medals management for discharged ADF members.


The Links Project Review Board, which is co-chaired at Deputy Secretary level, continued to pursue cooperative ventures between the Department of Defence and the Department of Veterans’ Affairs. A transition management service was established within Veterans’ Affairs to ensure that members discharged from the ADF on invalidity grounds are provided with additional services to assist them in assimilating back into the civilian community. Work is under way to transfer ex-Service health and personnel records management to Veterans’ Affairs. The Links Project Review Board has agreed that the management of medals of ex-serving personnel should remain in Defence.

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Achieve an improved Defence operational and business information environment by:

Improving Defence information technology and communications.

Achieved

Defence is improving its information technology and telecommunications environment through development of a reliable but flexible enterprise approach. Substantial improvement wide area communications, e-mail reliability and intranet connectivity on the Defence restricted network was achieved in 2000-01 through the installation of a national network of more capable e-mail computing equipment, the redesign of the logical e-mail network, and upgrades to communications and intranet infrastructure Australia-wide.

Improving the security, resilience and robustness of Defence information systems.

Achieved

Defence commenced implementation of new technologies and processes in 2000-01 to enhance its ability to safeguard data from unauthorised access and protect systems from computer virus and hacker attacks. These measures included the establishment of a Defence systems security incident response team, tasked with detecting intrusions on computer networks and responding to them to safeguard the integrity of systems and information. While numerous attempts were made, no successful unauthorised intrusions into the Defence network were detected in the reporting period.

Continuing the consolidation and rationalisation of Defence's disparate command support and administrative information technology networks.

Achieved

Connectivity between all users within each of the restricted and within the secret levels has now been achieved. Some 60 per cent of restricted users and 25 per cent of secret users have been migrated to a standard desktop. ‘Global roaming’ has been achieved for the majority of restricted users.

Negotiate enterprise agreements with major information technology suppliers to maximise value for money by taking advantage of market size.

Achieved

Defence established enterprise software agreements within Aprisma, Compuware, IBM, Microsoft, Trend Micro, Lotus, Tivoli and Veritas during 2000-01, and discussions with other vendors commenced regarding additional agreements. This enterprise-wide approach to software purchasing has allowed Defence to maximise its purchasing power, as well as ensuring that its software


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purchases do not conflict with the Defence information technology operating environment or systems architecture.

Continuing the planning and implementation of enterprise systems to support the re-engineering of Defence’s business processes including:

Phases two and three of the Personnel Management Key Solution project (PMKeyS).

Partially Achieved

The bulk of the development and testing work for phase 2 (ADF Human Resources) and phase 3 (ADF Payroll) of the project was completed. Refinement of existing functionality and some additional functionality required by the ADF delayed planned implementation dates. Implementation of the ADF human resources component of the project is now planned for late 2001. This will be followed by implementation of the ADF payroll in the first half of 2002.

Phase two of the Resource and Output Management Accounting Network (ROMAN) project.


ROMAN has now been rolled out to all Australian sites as well as Washington and London. A ‘store and forward’ facility for use by ships at sea and other deployed units is currently under development to complete the implementation. Configuration of ROMAN has been confirmed as compliant with original specifications and ROMAN documentation has been reviewed for completeness and accuracy.

A review of procurement and payment transactions which are supported by ROMAN is under way to determine where re-engineering should be initiated to achieve more efficient processing.

The Standard Defence Supply System (SDSS).

Partially Achieved

Defence has funded and commenced a significant upgrade of the Standard Defence Supply System. The upgrade will provide a new version of the software, and implementation of an improved standardised supply chain. This version will allow for accrual reporting data generation, improve controls and item tracking and modernise accounting practices. The management of the project has been contracted to PricewaterhouseCoopers and design work is complete. Rollout is planned to commence mid-2002 and to be completed by early 2003.

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The Document Records Management System.

Partially Achieved

Rollout of the system continued in 2000-01 on a ‘user pays’ basis, with Defence groups funding the cost of implementation from their respective operating budgets. Implementation was completed for Russell Offices and Navy Systems Command, and commenced for Army Land Headquarters. Smaller implementations were undertaken at the Navy Fleet Information System Support Office and the Anzac System Maintenance Office.

A new health information management system for ADF personnel.

Partially Achieved

The contract for the provision of software was signed in October 2000. The rollout of the system, called HealthkeyS, has been delayed as a result of delays in the rollout of the ADF elements of the PMKeyS personnel system, to which it is linked. Completion of all currently approved phases is still expected on schedule in 2004-05.

PEOPLE MATTER

Encourage the right people with the right skills and the right attitude in the right jobs at the right time, including through:

Ensuring that Defence is seen as an employer of choice.

Partially Achieved

Defence is conducting research to identify the key elements that contribute to an organisation being seen as an employer of choice. A Defence personnel environment scan has identified key trends in Australian society. The scan identified areas for future research to support personnel policies, for both military and civilian personnel, out to 2020. Concurrently, community attitudes survey work is being progressed, including an emphasis on developing the appropriate `brand’ for Defence to maximise competitiveness in the job market. Defence completed youth tracking research to identify the more specific barriers and ‘pull’ factors of current employment conditions and approaches to attracting Australian youth to a military career.

This research has led to changes in external promotion of Defence through the marketing process. Some policy changes have also been made, such as the return-of-service obligations for some ADF trades, to foster greater market competitiveness.

Some improvement against recruitment targets has been achieved, but further targeted research and benchmarking is required to ensure that the best policies are in place to ensure that the ADF is seen as an employer of choice.


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Defence continued to implement the ADF Enterprise Productivity Arrangement: 1999-2002 with trials of new consultative processes. In addition, an external review of all ADF remuneration policies, headed by Major General Barry Nunn (Retd), commenced in January 2001 and concluded on 31 August 2001. The results of this far-reaching review will inform Defence on specific future ADF pay proposals and processes. The Defence response to the Nunn review will be presented to the Government for consideration by the end of March 2002.

Defence is also preparing for the next Defence Employees’ Certified Agreement. Defence has adopted an innovative approach, linking employee working arrangements with the organisational renewal agenda. This approach emphasises that workplace relations is a continuous process and not merely an episodic event linked only to agreement making.

Introducing strategies to address current recruitment and retention difficulties.

Partially Achieved

Defence is addressing recruitment and retention issues by pursuing a range of personnel initiatives across Defence. The Defence People Committee (formerly know as the Defence People Council) was established in February 2001 to ensure that a more focused and holistic approach is taken to people issues within Defence (see Accountability Arrangements later in this chapter for more details). Moreover, Defence has achieved improved recruiting results in encouraging the right people with the right skills to join the ADF. During 2000-01, 20 per cent more people were recruited than for the previous year. Details are shown in the Australian Defence Force Enlistment tables in Chapter Five of this report.

Continuing a study into posting turbulence in the ADF.

Achieved

The Posting Turbulence Review has been completed, with the recommendations providing the basis of the Defence People Plan. The findings of the study are being incorporated into personnel planning and into strategies addressing current recruitment and retention difficulties.

Improve Defence’s ability to change and meet varying demands through a culture of continuous improvement, including through:

Enabling people to take greater responsibility for the work that they do and for their careers.


The Defence Employees’ Certified Agreement 2000-01 introduced new individual performance arrangements via a ’Plan on a Page‘ to help people understand how their work contributes to the overall Defence effort. The agreement continued the devolution of certain personnel decision-making powers to managers in the workplace, thus enabling greater control over their work. A new agreement is

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currently being negotiated. For the ADF, the three Services continued to develop initiatives tailored to their needs and those of individual personnel.

Focusing on people and performance, with a strong commitment to learning and development.


Several key initiatives were achieved in 2000-01. The Australian Defence College, comprising the Centre for Defence and Strategic Studies, the Australian Defence Force Academy and the Australian Command and Staff College, was established to provide a centre of excellence for the delivery of joint and integrated (military and civilian) education. The Australian Command and Staff Course commenced, bringing together for the first time middle-level officers of the three Services, Defence civilians and foreign military officers in purpose-built facilities in Canberra. In addition, Defence developed a framework of career development and learning opportunities, the cornerstone of which is the public services training package.

Continuing the program afforded by the new Public Service Act 1999 to streamline and simplify personnel policies and practices to promote efficiencies, remove duplication and empower Defence’s managers to operate in a culture based on values principles and performance.


Civilian personnel policies and associated procedures, which were updated when the Act came into effect, did not require any major amendments during 2000-01. Feedback from line areas and developments elsewhere are regularly assessed, and policies and procedures will continue to be fine-tuned where necessary.

Implementing, by January 2001, strategies to improve relevance and access to learning and competency recognition processes aligned to the public services training package, in accordance with the Government’s national training framework, with a focus on building core skills in generic APS management and leadership.

Partially Achieved

Defence developed, in partnership with a consortium of universities, learning materials against a range of key skills areas of the public services training package. Defence implemented the `Capstone’ program for Senior Executive Service Band 1 and one-star officers focusing on leadership and governance arrangements.


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Implementing a framework for identifying and streamlining the development of high-performing executive-level staff as the feeder group to the senior executive level.

Partially Achieved

Defence participed in the Public Service and Merit Protection Commission’s Career Development Assessment Centre and will increase its sponsorship in 2001-02. In addition, Defence intends to conduct a study to identify the development needs of executive-level staff as a high priority in 2001-02.

Consolidating and further developing the Defence Science and Technology Organisation’s integrated approach to staff development, encompassing induction, research management, the Graduate Certificate in Scientific Leadership and the Executive Leadership Development Program.

Achieved

The Defence Science and Technology Organisation integrated its Leadership and Management Framework in order to assist staff in identifying and attaining their learning and development needs throughout their careers. The Defence Science and Technology Organisation developed and initiated a comprehensive recruitment communication plan aimed at attracting and recruiting the best graduates through formal marketing and networking.

Continuing the rationalisation of Defence schools, courses and related processes to enhance skills and knowledge development and to achieve savings in personnel, support and infrastructure costs.

Partially Achieved

Joint projects are under way into the rationalisation of training facilities for communications and information systems, explosive ordnance, Service police and security, chaplains, and health training. Other projects are focusing on areas where both military and civilian staff are involved, such as logistics and clerical and administrative functions.

Commencing the first Australian Command and Staff Course in January 2001, to replace the three single-Service staff colleges and the civilian Defence Management Diploma Program. The course is designed to improve the performance of joint command and staff functions in operational headquarters and elsewhere.

Achieved

The start of the first Australian Command and Staff Course at the Australian Defence College in January 2001 was the culmination of the project to bring together the three Service Staff College courses and the civilian Defence Management Diploma Program.

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Provide a range of conditions and support services to personnel deployed in East Timor, and to their next of kin.

Achieved

Defence continued to provide a range of conditions of service tailored to meet the needs of personnel serving in East Timor and their families. The nature of service, levels of threat or disability and associated financial conditions of service were reviewed. The National Welfare Coordination Centre was established to develop and maintain a database of personal contacts of deploying ADF members, to provide a 24-hour point of contact for welfare issues that might develop in the area of operations or in Australia, and to provide information about the deployment to family members. The centre worked closely with the Defence Community Organisation service delivery network in providing a comprehensive range of services to support ADF families. Enhancements included a new approach to the notification of casualties, provision of pre-deployment briefings on family issues and regular information updates, sponsorship of self-help support groups, and post-deployment follow up for families.

33

FINANCIAL PERFORMANCE

OVERVIEW The White Paper was the dominant financial highlight of the year for Defence.

The White Paper was reflected in the Budget announced in May 2001, providing the most specific long-term funding commitment for Defence in over 25 years. The Government has funded, or committed to fund, Australia’s future defence requirements through a defined set of military enhancements.

Organisational reform and the development and implementation of the White Paper characterised much of Defence’s activities during the year. A number of Defence’s existing projects and activities were reviewed as part of the White Paper’s development, and some were put on hold pending confirmation of the Government’s future direction and commitment.

Total resourcing for Defence in 2000-01 was $18,986m. This comprised funding from the Government for outputs of $17,114m, own-source revenue of $409m3, an equity injection of $94m and capital receipts of $87m, as well as $1,283m administered by Defence on behalf of the Government. The following table summarises the sources of total funding for Defence.

Table 1.1: Defence Resourcing Summary - 2000-01 1999-2000 2000-01

Result Budget Revised Result Variation Estimate Estimate

$’000 $’000 $’000 $’000 $’000 15,812,526 Revenue from Government

for Outputs 16,104,670 17,113,920 17,113,920 -

373,134 Add Other Revenues (1) 311,313 360,191 408,710 48,519 16,185,660 Total Revenue for Outputs 16,415,983 17,474,111 17,522,630 48,519 1,235,154 Add Total Administered

Revenues from Government 1,760,364 2,205,130 1,282,937 -922,193

17,420,814 Total Defence Revenue 18,176,347 19,679,241 18,805,567 -873,674 Add Capital Funding:

687,170 Equity Injection 752,918 93,522 93,522 - 132,906 Capital Receipts 872,077 836,108 87,142 -748,966

18,240,890 Total Defence Funding 19,801,342 20,608,871 18,986,231 -1,622,640 Note 1. To provide a better reflection of resourcing provided to Defence’s activities in 2000-01,

this calculation excludes revenues recognising adjustments to the value of existing non-financial assets. Gains from sales of assets have been excluded from Other Revenues as this amount is included in Capital Receipts.

3 See note to Table 1.1.

Overview

34

Overall, the Government will inject additional funding of $27.6 billion (2001-02 Budget prices) to the Defence budget over the decade from 2001-02 (an additional $507m was announced in the budget for White Paper-related enhancements in 2001-02). This is equivalent to an increase of, on average, more than three per cent per annum in real terms over that period.

The Government has also agreed to Defence’s retaining, from 2004-05, $415m per annum currently used in generating and maintaining the existing force levels raised for the deployment to East Timor. This will ensure that Defence can fully establish and maintain the Government’s commitment to an Army with six full-time battalions.

Together with the White Paper initiatives, this represents a commitment to an increase in Defence funding, over the decade from July 2001, of more than $32.4 billion. This amount is not based on an arbitrary funding formula but rather it represents the funds associated with specific capability commitments.

The following graph illustrates the movement in Defence’s funding from the Government since 1998-99, including projections over the next decade. (For comparative reasons, the cost of the annual capital use charge, which has been budgeted for on a ‘no-win, no-loss’ basis has been excluded from total appropriation levels.)

Graph 1.1: Total Defence Funding - Actual and Projected (excluding estimated capital use charge)

Summary of Departmental 2000-01 Operating Performance

The operating surplus for 2000-01 was $6,399m. This represented a $1,082m increase from 1999-2000 and a $1,395m increase on the revised budget for the year (as published in the Portfolio Additional Estimates Statements 1999-2000). The majority of the operating surplus has been returned to the Government through a capital use charge of $4,982m. The remainder of the operating surplus is

��

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1999

-2000

2000

-01

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-06

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-07

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-08

2008

-09

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-11

$ bi

llion

�� White Paper Increase

Exchange Rate Update

Force Generation�� Previous Defence funding

from Government

Financial Performance

35

largely the net result of adjustments (including as a result of accounting policy changes) to existing non-financial asset values (with no implications for cash resources).

A significant number of asset accounting and technical factors emerged during the year due to improved management information. A downwards revision of the asset recognition threshold resulted in the recognition of $512m. A further $1,103m of previously expensed items was brought back to account as assets – both additions to the asset base are recognised in the operating statement as revenue. Excluding the effect of these asset adjustments, the net expenses for the year for Defence’s significant ‘manageable’ operating items (employee, supplier, and depreciation expenses offset by revenues from the sale of goods and services) were $11,315m, compared to the Government’s published budget of $11,883m for these items and last year’s result of $10,383m.

The audited financial statements for the year ended 30 June 2001 are provided in Chapter Three of this document. The following graph illustrates Defence’s financial performance for the year.

Graph 1.2: Operating Performance – 2000-01

Total operating revenue of $19,138m increased by $2,698m over the previous year’s results and by $1,631m over the revised budget for 2000-01. The significant revenue items contributing to this amount included the Government’s appropriation of $17,114m for delivery of outputs, as well as own-source revenues comprising $243m of sales of goods and services and $34m of interest and dividends. The technical requirement to recognise revenue of $1,615m for adjustments to the value of existing non-financial assets was the main reason for the increase above both expectations for 2000-01 and the previous year’s result. This had no effect on Defence’s cash position.

The Government’s payment to Defence for delivery of its outputs is based currently on that portion of Defence’s overall departmental funding required to offset its budgeted net expenses (net of own-source revenues) and the expected

-10 -5 0 5 10 15 20$ billion

Price of Outputs

Sale of goods and services

Other Revenues

Employees Expenses

Suppliers Expenses

Depreciation & Amortisation

Other Expenses

OPERATING RESULT

Overview

36

payment for the capital use charge. Given this method of proportioning Defence’s appropriations, the comparison of the Government’s funding over time is more useful after including the Government’s capital injection appropriation (ie the remainder of Defence’s departmental funding requirement) and excluding the capital use charge (which has been budgeted for on a no-win, no-loss basis). This approach shows that Defence received some $325m more in funding from the Government than in the previous year ($12,225m in 2000-01 compared to $11,900m in 1999-2000).

A significant pressure for 2000-01 was an increase in the costs of Defence personnel. Expenses were $282m higher than expected and $420m above the previous year’s result. This was due primarily to improved management information leading to more accurate accounting for outstanding leave entitlements and workers’ compensation risks. There was also a $56m increase in fringe benefits tax over 1999-2000. Details on personnel matters can be found in Chapter Five of this document.

Defence’s expenses for supplies during 2000-01 were equivalent to the previous year, but were significantly ($918m) below the expected level. (Although Defence’s cash outlays for supplies were in fact equivalent to its budget estimate, they included some $700m for goods and services tax outlays not originally included in the budget - which was recovered as input-credits, except for approximately $100m recovered in 2001-02 due to the one-off impact of the time lag in refunding the goods and services tax.)

The lower-than-expected supplier expenses were driven predominantly by approximately $300m of inventory purchases during the year which were not consumed (inventory expenditure is not recorded as accrual suppliers expenses until the inventory is consumed), as well as constraints in cash resources available for further operating spending. These constraints included the one-off timing impact in recovering the goods and services tax (-$100m), Defence’s absorption of an $80m reduction in cash sales receipts and diversion of $600m more than expected to fund capital investment.

The trend in the major components of Defence’s (cash) spending each year, in the past and projected for the future, is illustrated below.

Graph 1.3: Major Categories of Defence Spending (Actual and Projected)

0

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Suppliers Expenditure

Capital Expenditure


37

The Government’s capital use charge on Defence was $4,982m for 2000-01. This represents a 12 per cent return to the Government on its investment in Defence (as represented by Defence’s closing net assets balance). The required rate of return has been reduced to 11 per cent for 2001-02. The price of Defence’s outputs has been reduced accordingly.

Cost of Defence’s Outputs

The cost of Defence’s five outputs during 2000-01 is summarised below. Further details relating to the outputs can be found in Chapter Two of this document.

Table 1.2: Cost of Defence’s Outputs 1999-2000 Output 2000-01


$m $m $m $m $m

1,102 1. Defence Operations 1,387 1,333 1,353 20 4,421 2. Navy Capabilities 4,789 5,246 5,216 -30 4,576 3. Army Capabilities 5,260 5,058 4,758 -300 4,551 4. Air Force Capabilities 4,335 5,130 5,676 546

564 5. Policy Advice 679 741 719 -22 15,215 Total 16,450 17,507 17,721 214

Cost of ADF Operations in East Timor

Funding for Australia’s continuing deployment of troops to East Timor during 2000-01 was provided within Defence’s single appropriation for delivery of its outputs to the Government. (A special appropriation was enacted during 1999-2000, the first year of the deployment, but funding has now been incorporated within Defence’s general appropriations as more certainty has emerged in relation to the scope and costs of Australia’s involvement.)

Spending over 2000-01 ($799m) was lower than forecast due to continuing favourable conditions and refinement of cost estimates. As the Government funds Defence on a ‘no-win, no-loss’ basis for East Timor costs, $150m of the appropriated funding was returned during the course of the year (this reduction in requirements against the authorised appropriation was, in effect, offset by funding brought forward from the following year to meet accelerated capital investment in 2000-01).

The following table outlines costs of the major components associated with the East Timor deployment.

Overview

38

Table 1.3: Appropriations for ADF Operations in East Timor 1999-2000 Output 2000-01


$’000 $'000 $'000 $'000 $'000 429,717 Deployment 446,995 446,955 335,947 -111,008 97,994 Force Generation 474,571 474,571 339,024 -135,547 9,409 Capital Use Charge 27,371 27,371 16,610 -10,761

537,120 Price of ADF Operations 948,937 948,897 691,581 -257,316 70,428 New Capital Investment - - 123,572 123,572

607,548 Total Resourcing of ADF Operations

948,937 948,897 798,533 150,353

SUMMARY OF 2000-01 CAPITAL INVESTMENT AND SALES

An increase in capital spending, combined with lower than expected receipts from capital sales, resulted in net capital expenditure for the year of $3,326m (new investments less sales of assets). This was $1,070m higher than expected.

The following table summarises Defence’s investment activities during the year, in terms of both new acquisitions and sales, and also shows how the new investment was financed.

Table 1.4: Defence Capital Budget - 2000-01

1999-2000 2000-01 Result Budget Revised Result Variation

Estimate Estimate $’000 $'000 $'000 $'000 $'000

CAPITAL INVESTMENT - Purchase of Land and

Buildings - - 341,388 341,338

3,608,534 Purchase of Specialist Military Equipment

2,940,738 2,701,694 2,702,214 520

305,378 Purchase of Property, Plant and Equipment

386,298 390,552 369,569 -20,983

3,913,912 Total Capital Investment 3,327,036 3,092,246 3,413,171 320,875 FINANCING OF CAPITAL INVESTMENTS

132,906 Retained Capital Receipts 391,877 355,908 87,142 -268,766 3,093,836 Self Funding 2,182,241 2,642,816 3,232,507 589,691

687,170 Equity Injection 752,918 93,522 93,522 - 3,913,912 Total Financing for Capital

Payments 3,327,036 3,092,246 3,413,171 320,925

CAPITAL RECEIPTS 132,906 Proceeds on Asset Disposal 820,400 811,925 87,142 -724,783

- Other Capital Receipts 51,677 24,183 - -24,183 - Less: Capital Withdrawal 480,200 480,200 - 480,200

132,906 Retained Capital Receipts 391,877 355,908 87,142 -268,766


39

Payments for new specialist military equipment ($2,702m) and other assets ($711m) were $1m and $320m higher than their respective budgets. Late in the financial year, the Government accelerated $190m of capital investment from the following year. Expected capital expenditure was also increased by the movement during the year of foreign currency exchange rates for the $A.

As well as providing a return to the Government ($480m budgeted for 2000-01), Defence’s budgeted asset sales program is a critical source ($356m budgeted) for financing its own investment in new capital equipment and other assets.

Proceeds from sales of Defence’s assets during 2000-01, mainly land and buildings, were $749m less than expected. This was offset partly by a full reduction ($480m) in the dividend paid to the Government in lieu of reduced assets sales (while $46m of this reduction was due to an accounting adjustment to account for asset sales made directly by the Department of Finance and Administration, the majority of the sales, and the associated requirement to make a return to the Government, have been deferred until 2001-02).

Effectively, there was a shortfall of $269m below the level expected for financing Defence’s own capital investment program for the year. $150m of this was from delays in selling Defence’s information technology assets as part of an expected outsourcing program.

Defence’s non-financial assets balances at the end of the year are illustrated as follows.

Graph 1.4: Defence’s Non-Financial Assets as at 30 June 2001

��

��

��

��

��

I n f r a s tr u c tu r e , o th e r p la n t a n d

e q u ip m e n t$ 4 , 4 8 8 m

I n v e n to r ie s$ 3 , 2 3 9 m

O th e r n o n f in a n c ia l a s s e ts

$ 7 3 6 m

S p e c ia l is t m il i ta r y e q u ip m e n t$ 3 0 , 9 9 5 m

L a n d & B u ild in g s$ 8 , 1 6 4 m

Overview

40

ADMINISTERED ITEMS

Administered items are revenues, expenses, assets and liabilities which are controlled by the Government and administered by Defence on the Government’s behalf. For Defence, these items are almost entirely related to ADF employee entitlements - their cost, outstanding liabilities and funding to meet them as they emerge.

In 2000-01, Defence recorded administered revenue of $1,994m. Aside from administered revenue from the Government ($1,283m), revenues were recognised for interest ($25m) and from other non-taxation sources ($686m). These other sources of non-taxation revenue included contributions for the Defence Forces Retirement and Death Benefits Scheme ($155m) and the Military Superannuation and Benefits Scheme ($403m), and $127m from foreign governments and the United Nations as reimbursements for East Timor costs.

Administered expenses for 2000-01 were $474m higher than expectations for personal benefits - actuarial advice resulted in a substantial increase in the provision for outstanding military superannuation. Including this adjustment, at the end of the financial year, the Government had an estimated liability of $26,006m in personal benefits to current and former ADF members, up from $24,605m the previous year.

41

ACCOUNTABILITY ARRANGEMENTS

CORPORATE GOVERNANCE

ORGANISATIONAL CHANGES

A new business model for Defence took effect from 1 July 2000. The business model, and consequent organisational restructuring, focused on the two key dimensions of Defence’s relationship with the Government: the Government as the purchaser of our outputs – Defence’s primary management focus is the delivery of outputs to Government, largely capabilities; and the Government as the owner of our business – stronger corporate governance arrangements have been introduced, including clearer accountabilities, to reinforce the focus on Defence’s ability to sustain its delivery of outputs and achieve budgeted financial results.

A new organisational structure was implemented to recognise the primary focus and role of the Services and Groups. The three different classifications for Groups supported accountabilities expected of the Executives: • Output Executives – who are responsible for the majority of direct effort

within Defence to allow the Secretary and the Chief of the Defence Force to deliver the external outputs expected by the Government;

• Owner-Support Executives – who are responsible for independently providing advice and assurance to the Secretary and the Chief of the Defence Force in relation to goods and services required within Defence and organisational performance and sustainability issues over the longer term; and

• Enabling Executives – who are responsible for providing services, including the majority of assets, to the Services and other Groups to assist them in meeting their own responsibilities to the Secretary and the Chief of the Defence Force.

Charters were also concluded between the Secretary and the Chief of the Defence Force and the head of each of Defence’s Services and Groups to establish clear responsibilities and accountability, as well as organisational alignment.

The changes in organisational structure are depicted in the chart on the following page. Further organisational changes that took effect on 1 July 2001 can be found in the Portfolio Budget Statements 2001-02 at pages 12 – 13.

Overview

42 As at 30 June 2001

COMMANDERAUSTRALIAN

THEATRE (1)

AVM R Treloar

MINISTER FOR DEFENCEThe Honourable Peter Reith MP

PARLIAMENTARY SECRETARY TOTHE MINISTER FOR DEFENCE

The Honourable Dr Brendan Nelson MP

MINISTER ASSISTINGTHE MINISTER FOR DEFENCE

The Honourable Bruce Scott MP

CHIEF OF THE DEFENCE FORCEAdmiral Chris Barrie

SECRETARYDr Allan Hawke

DEPUTY SECRETARYSTRATEGY

Dr R Brabin -Smith

ENABLING EXECUTIVES

OUTPUT EXECUTIVES

CHIEF DEFENCESCIENTIST

Dr I Chessell

OWNER SUPPORT EXECUTIVES

CHIEF OF NAVYADM D Shackleton

CHIEF OF ARMYLTGEN P Cosgrove

CHIEF OF AIR FORCEAM A Houston

CHIEF FINANCEOFFICER

Mr G Harper

VICE CHIEF OF THEDEFENCE FORCELTGEN D Mueller

CHAIR DEFENCEINTELLIGENCE BOARD

Mr S Carmody

HEAD DEFENCEPERSONNELEXECUTIVE

MAJGEN S Willis

INSPECTORGENERAL (2)

Mr C Neumann

DEPUTY SECRETARYCORPORATE SERVICES

Mr J Whalan

UNDER SECRETARYDEFENCE MATERIEL

Mr M Roche

HEAD PUBLIC AFFAIRSAND CORPORATECOMMUNICATION

Ms J McKenry

(1) Commander Australian Theatre is directlyresponsible to the Chief of the DefenceForce

(2) Deputy Secretary Corporate Servicesoversees the administration of theInspector General’s unit

Accountability Arrangements

43

SENIOR EXECUTIVE CHANGES

Mr Hugh White transferred from the position of Deputy Secretary Strategy in July 2000 to lead the Defence Review 2000 process, including the preparation of the Defence 2000 White Paper. Following the release of the White Paper, he assumed responsibility for the establishment of the Australian Strategic Policy Institute. Dr Richard Brabin-Smith moved to Deputy Secretary Strategy. Dr Ian Chessell was promoted to Chief Defence Scientist in October 2000.

Mr Greg Harper was promoted to the new position of Chief Finance Officer in November 2000, and Mr Jeff Whalan transferred from the Department of Family and Community Services in January 2001 to the position of Deputy Secretary Corporate Services. Mr Shane Carmody was promoted to the new position of Deputy Secretary Intelligence and Security in June 2001 and Mr Martin Brady retired as the Chairman of the Defence Intelligence Board in July 2001.

Air Marshal Errol McCormack, Chief of Air Force, retired in June 2001 and was replaced by Air Marshal Angus Houston, formerly Head Strategic Command.

SENIOR EXECUTIVE REMUNERATION

Senior executive officers’ remuneration in the table below includes salaries, employer superannuation contributions, long service leave accrued during the period of office and other benefits. Not all of the benefits included in the calculations can be cashed out and some are net of an employee contribution. The Secretary and Under Secretary are eligible for performance bonuses. Variances are due to a number of factors such as superannuation, housing, leave, cars and travel and their FBT impact.

Secretary Dr Allan Hawke $390,000 - $399,999

Chief of the Defence Force Admiral Chris Barrie AO $360,000 - $369,999

Vice Chief of the Defence Force Lieutenant General Des Mueller AO $350,000 - $359,000

Chief of Navy Vice Admiral David Shackleton AO $330,000 - $339,999

Chief of Army Lieutenant General Frank Hickling AO to 15 July 2000 $1,000 - $9,999 Lieutenant General Peter Cosgrove AC, MC From 16 July 2000 $380,000 - $389,999

Chief of Air Force Air Marshal Errol McCormack AO To 19 June 2001 $270,000 - $279,999 Air Marshal Angus Houston AM, AFC From 20 June 2001 $50,000 - $59,999

Under Secretary Mr Mick Roche $280,000 - $289,999

Overview

44

SENIOR EXECUTIVE STUDY OF PARLIAMENTARY PROCESS

Following a resolution of the Senate requiring that Senior Executive Service officers undertake study of the principles governing the operation of, and accountability to, the Parliament, Defence, along with all Commonwealth departments, was required by the Senate to report on compliance with the resolution. Defence’s report was tabled in November 1999 and is included in the Senate Committee of Privileges 89th Report tabled in April 2000. Defence provided a status report to the Senate Committee of Privileges in November 2000.

Defence is committed to ensuring that Senior Executive Service and star ranking officers attend parliamentary principles/process training. Defence contracted the Department of the Senate to provide this training, during 2000-01, through its seminar—Parliament, Privilege and Accountability. To date, 175 out of 223 current Senior Executive Service and military-equivalent officers, or 78 per cent, have attended formal parliamentary principles/process training. (This figure does not include officers acting at Senior Executive Service or military-equivalent levels, or officers who left Defence during 2000-01.)

SENIOR COMMITTEES

'Corporate governance', a term used globally to identify processes by which organisations are directed, controlled and held to account, is of primary importance to the Secretary and the Chief of the Defence Force, with their attention focused on achieving a more explicit values-based, results-focused approach consistent with the Government’s public sector reform agenda. The senior Defence committees are one of the key elements of Defence’s governance framework. Other elements are individual accountability arrangements for the senior leadership, the administrative policies and procedures that support decision making at all levels of the organisation, and leadership initiatives that foster a values-based culture.

There are six senior Defence committees:

Note 1. Formerly known as the Defence People Council.

MINISTER Minister's DefenceImprovement Committee

Chief of The Defence Force Secretary

Chiefs of Staff Committee Defence Committee

Defence People Committee(1)Defence Capability andInvestment Committee

Defence Audit Committee


45

Minister’s Defence Improvement Committee

Membership comprises the Minister for Defence (chair), Secretary, Chief of the Defence Force, and two independent external members – Mr Graeme McGregor and Dr John White - appointed by the previous Minister for Defence, the Honourable John Moore.

The establishment of the Defence Improvement Committee was announced in June 2000. The committee is a vehicle for overseeing Defence’s program of continuous improvement through enhanced management and accountability. Its role is to provide strategic top-down direction for the development of the Defence Plan; to help the Minister monitor progress on key Defence reform initiatives; and to provide assurance that the Government receives value for money from the dollars spent on Defence.

The Defence Improvement Committee met once (October) in 2000-01. Attendance was as follows:

Name and Position Meetings Attended

The Hon John Moore, MP (Minister for Defence) 1 Dr Allan Hawke (Secretary) 1 Admiral Chris Barrie (Chief of the Defence Force) 1 Mr Graeme McGregor (external member) 1 Dr John White (external member) 1

Following the announcement of the White Paper, which enunciates a clear capability plan and funding strategy for the next ten years, the current Minister has not seen a need for the committee to meet. Regular reporting on progress with implementation of the White Paper and day-to-day contact with Defence officials have given him sufficient assurance that Defence is committed to continuing improvement in management, in reform of the acquisition process and in the achievement of White Paper objectives.

Defence Committee

Membership comprises the Secretary (chair), Chief of the Defence Force, Under Secretary Defence Materiel, Vice Chief of the Defence Force, Chief of Navy, Chief of Army, Chief of Air Force, Deputy Secretary Strategy, Deputy Secretary Corporate Services, Chief Finance Officer, Chief Defence Scientist and Deputy Secretary Intelligence and Security (formerly Chair Defence Intelligence Board).

The Defence Committee’s role is to make decisions that assist in achieving the results specified in the Ministerial Directive to the Secretary and the Chief of the Defence Force. These embrace successful joint conduct of military operations, the Chief of the Defence Force retaining sole command authority; provision of capability to enable our armed forces to defend Australia and its national interests; timely and responsive defence advice; proper stewardship of people and of financial and other resources; and a Defence Plan for the approval of the Minister which incorporates the above.

Overview

46

The Defence Committee gives direction and assesses performance in delivering those results, with a focus on the longer term.

The Defence Committee met 10 times (August, September, October, November, December, February, March, April, May and June) in 2000-01. Attendance was as follows:


Dr Allan Hawke (Secretary) 10 Admiral Chris Barrie (Chief of the Defence Force) 9/1(1) Mr Michael Roche (Under Secretary Defence Materiel) 9/1(1) Lieutenant General Des Mueller (Vice Chief of the Defence Force) 10 Vice Admiral David Shackleton (Chief of Navy) 9/1(1) Lieutenant General Peter Cosgrove (Chief of Army) 6/4(1) Air Marshal Errol McCormack (Chief of Air Force) (until 19 June 2001) 9 Air Marshal Angus Houston (Chief of Air Force) (from 19 June 2001) 1 Dr Richard Brabin-Smith (Deputy Secretary Strategy) 10 Mr. Rod Corey (Acting Deputy Secretary Corporate Services) (until 29 January 2001) 2 Mr Jeff Whalan (Deputy Secretary Corporate Services) (from 29 January 2001) 5 Mr Greg Harper (Chief Finance Officer) 10 Dr Roger Lough (Acting Chief Defence Scientist) (until 6 October 2000) 2 Dr Ian Chessell (Chief Defence Scientist) (from 6 October 2000) 7 Mr Martin Brady (Chair Defence Intelligence Board) 8/1(1)

Note 1. Substitute attended in place of member.

Chiefs of Staff Committee

Membership comprises the Chief of the Defence Force (chair), Vice Chief of the Defence Force, Chief of Navy, Chief of Army and Chief of Air Force. The Secretary is a permanently invited member.

The Chiefs of Staff Committee provides military advice to the Chief of the Defence Force to assist him in discharging his command responsibilities and providing military advice to the Government.

The Chiefs of Staff Committee met 12 times (July, August, September, October, November, December, February, March (twice), April, May and June) in 2000-01. Attendance was as follows:


Admiral Chris Barrie (Chief of the Defence Force) 12 Dr Allan Hawke (Secretary) 11 Lieutenant General Des Mueller (Vice Chief of the Defence Force) 11/1(1) Vice Admiral David Shackleton (Chief of Navy) 7/5(1) Lieutenant General Peter Cosgrove (Chief of Army) 8/4(1) Air Marshal Errol McCormack (Chief of Air Force) (until 19 June 2001) 10/1(1) Air Marshal Angus Houston (Chief of Air Force) (from 19 June 2001) 1



47

Defence Capability and Investment Committee

Membership comprises the Vice Chief of the Defence Force (chair), Deputy Secretary Strategy (deputy chair), Under Secretary Defence Materiel, Chief Finance Officer, Chief Defence Scientist, Deputy Chief of Navy, Deputy Chief of Army, Deputy Chief of Air Force, Head Capability Systems, Chief Knowledge Officer, Head Defence Personnel Executive and First Assistant Secretary Capability, Investment and Resources (secretary). The Deputy Chiefs assumed membership of the committee from the Chiefs in November 2000.

Within limits established by the Secretary and Chief of the Defence Force, the role of the Defence Capability and Investment Committee is to endorse, for Government consideration, affordable options for current and future capability that will contribute to the Defence outcome in a cost-effective way, taking into account risk.

The primary responsibility of the committee is to ensure that capability and investment proposals: • are consistent with government strategic policy and priorities; • fit into the Defence Capability Plan as contained in the White Paper; • take a whole-of-life/whole-of-capability perspective; • meet interoperability requirements; • provide an acceptable return on capital and recurrent expenditure; • avoid unacceptable strategic, technical or financial risks; • consider trade-offs between capability, cost and schedule; • are supported by appropriate performance measures; and • are subject to independent scrutiny.

The Defence Capability and Investment Committee met 15 times (July (twice), August, September, October (twice), December (twice), January (twice), February (twice), April, May and June) in 2000-01. Attendance was as follows:

Overview

48


Lieutenant General Des Mueller (Vice Chief of the Defence Force) 15 Dr Richard Brabin-Smith (Deputy Secretary Strategy) 14/1(1) Mr Michael Roche (Under Secretary Defence Materiel) 9/6(1) Mr Greg Harper (Chief Finance Officer) 14/1(1) Dr Roger Lough (Acting Chief Defence Scientist) (until 6 October 2000) 5 Dr Ian Chessell (Chief Defence Scientist) (from 6 October 2000) 8/2(1) Vice Admiral David Shackleton (Chief of Navy) 3/3(1) Rear Admiral Brian Adams (Deputy Chief of Navy) 8/1(1) Lieutenant General Frank Hickling (Chief of Army) (until 16 July 2000) 1 Lieutenant General Peter Cosgrove (Chief of Army) (from 17 July 2000) 4/1(1) Major General Peter Leahy (Deputy Chief of Army) 5/4(1) Air Marshal Errol McCormack (Chief of Air Force) 3/3(1) Air Vice Marshal Alan Titheridge (Deputy Chief of Air Force) (until 18 June 2001) 7/1(1) Air Vice Marshal Chris Spence (Deputy Chief of Air Force) (from 18 June 2001) 1 Rear Admiral Chris Ritchie (Head Capability Systems) 15 Air Vice Marshal Peter Nicholson (Chief Knowledge Officer) 8/7(1) Major General Simon Willis (Head Defence Personnel Executive) 9/6(1) Dr Ralph Neumann (First Assistant Secretary Capability, Investment and Resources) 15


Defence People Committee

Membership comprises the Deputy Secretary Corporate Services (chair), Vice Chief of the Defence Force, Deputy Chief of Navy, Deputy Chief of Army, Deputy Chief of Air Force, Head Defence Personnel Executive, Deputy Head Defence Personnel Executive and Ms Noela L' Estrange, an independent external member of the committee.

The establishment of the Defence People Committee (formerly known as the Defence People Council) was announced in February 2001. The purpose of the committee is to provide a strategic focus on, and to be an advocate for, the important place of people in supporting Defence capability. The committee supports the Defence Committee by ensuring that Defence takes a more strategic approach to people issues in the implementation of the Defence Plan. The committee is also responsible for ensuring that there are clear linkages between the range of planning and people initiatives across Defence before consideration of specific proposals by the Defence Committee.

The Defence People Committee met four times (March, April, May and June) in 2000-01. Attendance was as follows:


49


Mr. Jeff Whalan (Deputy Secretary Corporate Services) 4 Lieutenant General Des Mueller (Vice Chief of the Defence Force) 4 Rear Admiral Brian Adams (Deputy Chief of Navy) 3/1(1) Major General Peter Leahy (Deputy Chief of Army) 3/1(1) Air Vice Marshal Alan Titheridge (Deputy Chief of Air Force) 3/1(1) Major General Simon Willis (Head Defence Personnel Executive) 3 Ms Myra Rowling (Deputy Head Defence Personnel Executive) 4 Ms Noela L' Estrange (external member) (from May 2001) 2



Membership comprises Mr Paul McGrath (chair) and Mr Will Laurie (deputy chair), both independent external members of the committee, along with Mr Rod Corey, Major General Peter Dunn and Mr Frank Lewincamp. The Chief Finance Officer and Inspector-General attend as advisers. The Auditor-General, or representative, attends as an observer. Defence members of the committee attend meetings in their capacities as senior officers of Defence, not as representatives of their substantive positions and, as such, substitutes are not permitted.

The Defence Audit Committee is responsible to the Secretary for identifying good practice and opportunities to improve the performance and management of Defence activities arising from the oversight of audits, evaluations, and other committee activities. Its roles are to: • review the preparation and audit of the Defence financial statements and

provision of advice to the Chief Executive on the adequacy of these statements;

• approve Defence annual and strategic internal audit plans; • review all internal and external audit reports, including reports of the

Parliamentary Joint Committee of Public Accounts and Audit, with specific attention to those including matters of concern;

• provide advice to the Chief Executive on action to be taken on matters raised in internal audit, Auditor-General and Parliamentary Joint Committee of Public Accounts and Audit reports concerning Defence, and advice concerning how all identified matters of concern are being addressed;

• monitor risk management policies and practices; • monitor the establishment of a Defence fraud control plan and oversee its

implementation; • monitor the conduct of ethics awareness activities within Defence;

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• review the direction of Defence internal evaluation programs and activity, including approval of formal evaluation topics, the oversight of the conduct of evaluations, and the review of recommendations arising from evaluations and subsequent implementation;

• provide advice to the Secretary and other relevant authorities on risk management, identify good practice and opportunities to improve the performance and management of Defence activities arising from the oversight of audits, evaluations, and other committee activities; and

• have a standing arrangement requiring members and advisers to raise issues of significant concern for appropriate scrutiny.

The Defence Audit Committee met eight times (August, September, October, December, February, March, April and May) in 2000-01. Attendance was as follows:

Name Meetings Attended

Mr Paul McGrath 8 Mr Will Laurie 8 Mr Rod Corey 7 Major General Peter Dunn 7 Mr Frank Lewincamp 5

INTERNAL AUDIT ARRANGEMENTS


The Defence Audit Committee addressed the following subjects at its meetings during 2000-01: • Consideration of the final draft 1999-2000 Defence Financial Statements. • Consideration of the ANAO Closing Audit Report of the 1999-2000 Defence

Financial Statements. • Risk management of the financial reporting process. • Handling matters of concern – formal consideration of agreed policy

statement. • Progress report on the implementation of Defence Fraud Control Plan No.3. • Progress report on the Audit Recommendations Management System. • Progress report on the implementation of Parliamentary Joint Committee of

Public Accounts and Audit recommendations. • Management Audit Branch Annual Report 1999-2000. • Progress with development of a management action plan to address each of

the recommendations in the ANAO Closing Audit Report of the 1999-2000 Defence Financial Statements.

• Group risk assessments for 2000-01.


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• Progress report on the risk management of the financial reporting process in association with the Defence Management Systems Improvement Project.

• Report on reconciliation and alignment of Defence Appropriations and Budget.

• Audit strategy for the ANAO's 2000-01 financial statements audit. • Consideration of Management Audit Branch Report on Post-Implementation

Review of Personnel Management Key Solution Project-Phase 1. • Proposed strategy for Defence Fraud Control Plan No. 4. • Progress report on outstanding fraud control plans. • Mine Warfare Command Support System (matters of concern raised in the

Inspector-General’s audit). • Draft Medium Term Audit Strategy 2001-04. • Draft Audit Work Program 2001-02. • Management of liquidated damages in the Defence Materiel Organisation.

Ethics Awareness Program

Defence has a strong commitment to maintaining an ethical culture and has a well-developed program of ethics awareness. During the year, a new training video titled Fringe Benefits was produced for Defence by the Australian Broadcasting Commission. This video, which won the prize for best vocational training video at the Australian Teachers of Media Awards, illustrates the unintended consequences of accepting gifts and benefits and demonstrates how easy it is to make successive decisions that may prejudice future action.

During the year, a copy of the training video Brutus Award was sent to each civilian and service officer at the 1 star and equivalent level in Defence. The Brutus Award video depicts a fictitious Army unit and the actions of a young captain, who brings his commanding officer's apparent abuse of travel allowance to the attention of a superior officer. The captain is then subjected to harassment from senior unit officers, including the commanding officer. Defence’s policies and procedures for resolution of the problems depicted in the video are then pursued using a variety of teaching and learning strategies.

Fraud control and ethics awareness presentations continued to be provided in 2000-01. In all, around 90 separate presentations were held during the year across Defence.

Fraud Control

The requirement for Defence, along with other Commonwealth agencies, to have a fraud control plan is prescribed in the Financial Management and Accountability Act 1997, and also in the Fraud Control Policy of the Commonwealth, published in 1994.

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Currently, Defence has an established fraud control plan, Defence Fraud Control Plan No. 3, which resulted from a Defence-wide fraud risk analysis undertaken in 1996 and validated in 1998.

In May, the Defence Audit Committee endorsed a strategy for undertaking a new fraud risk assessment in Defence and for the development of the next iteration of the fraud control plan. Fraud risk assessments have already been carried out by the Groups in Defence, and these assessments are being used to update existing fraud control plans to form Defence Fraud Control Plan No. 4.

During 1999-2000, there were 588 fraud investigations registered within Defence and 503 investigations were completed. Approximately one third of completed investigations led to criminal, disciplinary or administrative action. In two thirds of cases, it was determined either that the allegation was not substantiated or that no offender could be detected.

The determined fraud loss for completed cases was some $1.06m, of which $340,000 was recovered. Over the last seven financial years, detected fraud has averaged an estimated $2.1m per year within a range of $1.1m to $3.1m per annum.

WHOLE-OF-DEFENCE EVALUATIONS

Evaluation Strategy

The Defence Portfolio Evaluation Strategy is promulgated as a Defence Instruction (General). In accordance with that strategy, the Defence Committee authorised a schedule of whole-of-Defence evaluations covering 2000-01 and 2001-02. In 2000-01, the principal evaluation topics included Strategic Management of Defence Contracting, Australian Public Service Career Management in Defence, The Management of Equity in Defence, Enterprise Resource Planning in Defence and Defence Progress in Pursuing the National Support Agenda.

Topics foreshadowed for 2002 in the 2001-02 Portfolio Budgets Statements were Responsibilities for Doctrinal Development and Resource Allocations for Capital Facilities Projects. As facilities projects were subject to considerable ANAO review during 2000-01, further evaluation at this stage is not seen as being as useful as the evaluation of other topics which have not had the same recent coverage by the ANAO. Evaluation topics now foreshadowed for 2002 are Responsibilities for Doctrinal Development, Corporate Governance of the Defence Information Environment, and Implementation of the Customer-Supplier Model.

Schedule of Whole-of-Defence Evaluations for 2000-01

The following evaluation activities were completed in 2000-01:

Risk Management in Defence. The Secretary and the Chief of the Defence Force formally endorsed this evaluation report in July 2000, and its recommendations as reported in the Defence Annual Report 1999-2000 were agreed.


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Strategic Management of Defence Contracting. This evaluation report was presented to the Secretary, the Chief of the Defence Force and all Defence Group Heads in March 2001. The report found that: • Groups generally maintained reasonable oversight of the contracting activity

within their respective areas of control; • there appeared to be little coordinated oversight of contracting activity

across Defence; and • while most interviewees favoured some corporate oversight, they did not

want a structural solution (ie another organisational level); rather, they believed that existing policy, processes and practices needed to be improved.

Australian Public Service Career Management in Defence. This evaluation report was forwarded to the Secretary and the Chief of the Defence Force in April 2001. The report found that: • APS employees in Defence should be responsible for their own careers

within an overall framework where supervisors at all levels exercise their leadership and management responsibilities while making best use of extant structures, tools and available facilities; and

• all parties should be committed to genuine and enduring individual, team and organisational growth.

In addition to the approved schedule, a review of the Management and Administration of Major Capital Equipment Projects was undertaken, with the final report delivered to the Secretary and the Chief of the Defence Force in April 2001, and forwarded to senior key stakeholders in June 2001. This report identified lessons learned in the areas of risk, accountability and control, contract administration, whole-of-life-support and project management. The report concluded that recent acquisition reforms have the potential to improve projects as evidenced overseas, although there are risks associated with under-funding, initial optimism, business risk, management oversight of contractor performance and organisational culture.

The following evaluation activities were commenced in 2001 and are scheduled for completion by December 2001:

Enterprise Resource Planning in Defence. The objectives, as approved by the steering committee that has responsibility for this evaluation, are to: • define, in terms of management information, what Defence requires from its

enterprise resource planning systems, including any requirements that Defence wants but cannot do currently;

• determine the adequacy of the Defence information management strategy to provide a framework for the improvement of management information and further implementation of enterprise resource planning systems; and

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• determine the capacity of the current systems to provide management information to satisfy Defence’s decision making, performance analysis and reporting requirements.

Broadly, the aim of this evaluation is to examine what Defence needs in terms of management information (through its enterprise resource planning systems) so that it can fulfil its reporting, decision making and performance analysis requirements into the future. In examining this, the evaluation hopes to identify any impediments that are preventing Defence from accessing, using and disseminating accurate management information. Based on an external literature search, research of internal Defence documents, interviews with Defence personnel (at strategic and operational levels) and with personnel from other government and private organisations, a report with recommendations for improvement will be concluded by the end of December 2001.

The Management of Equity in Defence. This evaluation commenced in May 2001 and is scheduled for completion by mid-December 2001. The terms of reference were approved by the steering committee that has responsibility for overseeing this evaluation. The evaluation aims to: • outline current legislative and policy approaches to equity and diversity in

Defence; • examine current approaches to equity and diversity in Defence and

determine: − the extent to which they contribute to the effectiveness of the ADF; − the extent to which equity and diversity responsibilities are being met

by the Services, Groups, commanders and managers; and − the strengths and weaknesses of each approach; and

• recommend ways in which current policies, processes and management practices could be improved.

This evaluation is progressing to plan. A draft report is scheduled to be completed at the end of November 2001.

Progress in Pursuing the National Support Approach. The evaluation topic ‘Progress in Pursuing the National Support Agenda’ was subsequently changed to ‘Progress in Pursuing the National Support Approach.’ The evaluation commenced in May 2001 and is scheduled for completion by mid-December 2001. The objectives are to: • describe the policies, structures and networks that exist to advance national

support; • describe progress in pursuing the national support approach against desired

results; • identify any problems and benefits in the way Defence has progressed

national support; and


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• propose recommendations on ways to improve the national support approach, which will include, where practicable, a comparison with overseas experience.

The evaluation is progressing to plan. The first of three steering committee meetings has been held. Some thirty formal interviews have been undertaken to date as part of the data collection phase. An initial draft report is planned for the end of October 2001.

EXTERNAL SCRUTINY

PARLIAMENTARY COMMITTEES

Defence interacted with a number of parliamentary committees over the course of the year. This segment reports on the status of inquiries or other action by parliamentary committees in relation to Defence in 2000-01.

Information on parliamentary reports, inquiries and hearings can be accessed through the Australian Parliament House website at: www.aph.gov.au.

Joint Statutory Committees

Public Accounts and Audit

Report No. 380, February 2001 – Review of Auditor-General’s Reports, 1999-2000, Third Quarter

This Report included consideration of ANAO report No 26, 1999-2000, Army Individual Readiness Notice. Defence provided a submission on the audit and Defence officers gave evidence at a public hearing on 6 October 2000.

Review of ANAO Report No. 8, 2000-01 – Amphibious Transport Ship Project and ANAO Report No. 11, 2000-01 – Knowledge Equipment Acquisition Projects in Defence

Defence provided submissions on both audits and Defence officers gave evidence at two separate hearings on 2 March 2001.

Review of ANAO Report No. 22, 2000-01 – Fraud Control in Defence and ANAO Report No. 26, 2000-01 – Defence Estate Facilities Operations

Defence provided submissions on both of the audits, with Defence officers giving evidence at two public hearings on 2 May 2001.

Inquiry into the Adequacy of the Auditor-General Act 1997

Defence officers gave evidence at a public hearing on 15 May 2001.

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Review of the Accrual Budget Documentation

Defence officers gave evidence at a round-table hearing at Parliament House on 22 June 2001.

Public Works

RAAF Edinburgh Redevelopment Stage 1

This project provides new facilities in the technical area at RAAF Edinburgh. The proposed works include new administrative, workshop and warehousing facilities, as well as an upgrade of engineering services and an aircraft shelter facility. The project was considered by the committee at a public hearing held in August 2000 and approved by the Parliament in November 2000. A second stage is proposed for the redevelopment, which is planned to commence in 2004-05.

Joint Standing Committees

Foreign Affairs, Defence and Trade

Inquiry into Military Justice Procedures

The Government response was tabled in April 2001.

Inquiry into the Level of Funding Required for the Australian Defence Force

The Government response was tabled in March 2001.

Inquiry into the Suitability of the Australian Army for Peacetime, Peacekeeping and War

The report of the inquiry, From Phantom to Force: Towards a More Efficient and Effective Army, was tabled in September 2000. At that time, the committee made it clear that the report was an interim report and that the committee would seek the community’s views on the content and recommendations. The committee’s subsequent report, A Model for a New Army: Community Comments on the ‘From Phantom to Force’ Parliament Report into the Army, was tabled in September 2001.

Inquiry into Enterprising Australia – Planning, Preparing and Profiting from Trade and Investment

The Defence submission to the inquiry was submitted on 8 March 2001 and Defence witnesses appeared before the committee on 2 April 2001. Further information was provided to the committee on 24 April 2001.

Inquiry into Aspects of the Defence Annual Report for 1998-99 and for 1999-2000

In August 2000, the Joint Committee on Foreign Affairs, Defence and Trade resolved that its Defence Sub-Committee examine the annual report of Defence


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for 1998-99 and, when tabled, 1999-2000. The Defence Sub-Committee was to look, in particular, at four aspects of the annual report: • The conduct of military justice and the alleged events in 3RAR. • Equipment fleet management and life-cycle costing of equipment. • Personnel issues, including mutual obligation agreements upon both the

unemployed and Army recruiting, changes to service conditions and superannuation.

• The use of military exercises as a means of assessing military outputs.

Defence provided information to the committee in September and December 2000. Defence witnesses appeared before the inquiry in October 2000 and March 2001. The report, Rough Justice? An Investigation into Allegations of Brutality in the Army’s Parachute Battalion, was tabled in April 2001. The Government response had not been tabled at 30 June 2001.

Inquiry into Australia’s Relations with the United Nations in the Post-Cold War Environment

Defence witnesses appeared before the committee on 22 March 2001.

Visit of the Defence Sub-Committee of the Joint Standing Committee on Foreign Affairs, Defence and Trade to Defence Establishments in Northern Australia 26-29 July 1999

The Government response was tabled in October 2000.

Treaties

Report 29: Singapore’s Use of Shoalwater Bay, Development Cooperation with Papua New Guinea and Protection of New Varieties of Plants

The Government response was tabled on 5 October 2000.

Senate Standing Committees

Foreign Affairs, Defence and Trade (References)

Inquiry into the Sale of ADI Ltd

The Government response was tabled in October 2000.

Inquiry into Disposal of Defence Properties

In September 2000, the Senate referred the following matters to the committee for inquiry and report: • The importance and value of the Western Australian Army Museum and the

Fremantle Artillery Barracks.

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• Whether the Fremantle Artillery Barracks is the most appropriate and suitable location for the museum.

• The reason for the disposal of the Fremantle Artillery Barracks. • The disposal of the Fremantle Artillery Barracks and the probity of the

disposal process. • How Defence decides whether the property is surplus to requirements and

the management or disposal of surplus property. • Sale and lease-back of Defence property. • Any other matters related to the above-mentioned issues.

The Defence submission to the inquiry was submitted in October 2000. Defence witnesses appeared at the inquiry in October and November 2000. Members of the committee inspected the Artillery Barracks and the Army Museum in October 2000. An interim report, Artillery Barracks Fremantle, was tabled in January 2001. The final report was tabled on 27 September 2001.

Inquiry into Recruitment and Retention of Australian Defence Force Personnel

In April 2001, the Senate referred to the committee for inquiry and report whether the current recruitment and retention strategies of the ADF are effective in meeting Defence’s personnel requirements (including Reserves). The committee was to examine and report on the following issues: • Whether the current recruitment system is meeting, and will continue to

meet, the needs of the ADF. • The impact of the Defence Reform Program on retention levels and

recruiting. • The impact of changes to ADF conditions of service, pay and allowances on

retention and recruitment of personnel. • Current levels and categories of specialist personnel in the ADF compared to

the organisation’s requirements. • The impact of current career management practices on retention of

personnel. • Any other issues, relevant to the terms of reference but not referred to above,

which arise in the course of the inquiry.

The Defence submission to the inquiry was submitted in May 2001. Defence witnesses appeared before the committee in June 2001.

Foreign Affairs Defence and Trade (Legislation)

The Defence Annual Report 1999-2000 was tabled in the Senate in October 2000. In its report, Scrutiny of Annual Reports No 1 of 2001, released in March 2001, the committee found that Defence’s report fulfilled all the requirements of departmental annual reports.


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Defence appeared before the committee on three occasions during the reporting period.

The budget estimates 2000-01 supplementary hearing was conducted in November 2000 and responses to 52 questions on notice arising from that hearing were provided to the committee. The additional estimates hearing was conducted in February 2001 with Defence responding to 66 questions on notice arising from that hearing.

The budget estimates 2001-02 hearing was conducted over three days in June 2001 – with the Secretary and the Chief of the Defence Force appearing on the first day. Defence responded to 111 questions on notice following that hearing.

Legal and Constitutional Legislation

Inquiry into the Freedom of Information (Open Government) Bill 2000

The Defence submission to the inquiry was submitted in March 2001.

Senate Select Committee

Superannuation and Financial Services

The Defence submission to the inquiry was submitted in February 2001, with Defence witnesses appearing at the February 2001 inquiry.

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AUDITOR-GENERAL’S REPORTS

Nine Auditor-General’s reports relating specifically to Defence were tabled during the year. The findings and recommendations of each report have been referred to the relevant area within Defence for implementation.

Australian National Audit Office reports and general information on its operations can be accessed through its website at: www.anao.gov.au.

Audit Report No. 3, 31 July 2000 – Environmental Management of Commonwealth Land – Follow-up Audit

This audit was a follow-up to ANAO Audit Report No. 31, 1995-96, Environmental Management of Commonwealth Land: Site Contamination and Pollution Prevention. The objectives of the follow-up audit were to determine the extent to which Defence has implemented the agreed recommendations contained in the original audit (relating to its environmental management and the management of unexploded ordnance on non-Commonwealth land) and the effectiveness of the implemented recommendations in improving the environmental management of Commonwealth land.

The ANAO made five recommendations, with which Defence agreed. Defence has implemented all recommendations.

Audit Report No. 8, 7 September 2000 – Amphibious Transport Ship Project

The audit reviewed the amphibious transport ship project, involving the acquisition and modification of two second-hand United States Navy ships. The objective of the audit was to assess the efficiency and effectiveness of Defence's management of the project, focusing on the capability development process, costs and schedule issues, contract issues, the management of project risks and project review processes.

The ANAO made five recommendations, with which Defence agreed, one with qualifications. Implementation of four of these recommendations is complete and implementation of the remaining recommendation is in progress.

Audit Report No. 11, 15 September 2000 – Knowledge System Equipment Acquisition Projects in Defence

The audit reviewed Defence's higher-level management of its knowledge system equipment acquisition projects. The focus of the audit was on the opportunities for Defence to adopt a more coherent and integrated approach to knowledge systems management prospectively rather than on emphasising current system compatibility issues.

The ANAO made seven recommendations, with which Defence agreed, one with qualifications. Implementation of one recommendation is complete. Implementation of the remaining six recommendations is in progress.


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Audit Report No. 22, 14 December 2000 – Fraud Control in Defence

The objective of this audit was to establish whether Defence had developed sound fraud control arrangements that were consistent with better practice and fulfilled its responsibilities for the protection of public property, revenue, expenditure, and rights and privileges from fraudulent exploitation. The audit was one of a series of audits of fraud control arrangements in Commonwealth agencies.

The ANAO made six recommendations. Defence agreed with five of the recommendations and disagreed with one. Implementation of the agreed recommendations is in progress.

Audit Report No. 26, 22 December 2000 – Defence Estate Facilities Operations

The objective of the audit was to assess the efficiency and effectiveness of selected Defence facilities operations, including tendering and contracting, with a view to adding value with practical recommendations for enhancing operations.

The ANAO made six recommendations, with which Defence agreed, one in principle. Implementation of three recommendations is complete. Implementation of the remaining three is in progress.

Audit Report No. 32, 6 April 2001 – Defence Cooperation Program

The audit reviewed Defence’s management of the Defence Cooperation Program, through which Australia interacts with and provides assistance to security forces in South East Asia and the South Pacific. The primary aim of the program is to support Australia's defence relationships. Activities conducted through the program include training, study visits, personnel exchanges and combined exercises with elements of the various regional armed forces. The objectives of the audit were to consider how Defence assessed performance in meeting Defence Cooperation objectives, to review Defence's development of those objectives and to identify areas for improvement in managing Defence Cooperation resources.

The ANAO made seven recommendations, with which Defence agreed, one with qualifications. Implementation of the recommendations is in progress.

Audit Report No 33, 7 May 2001 – Australian Defence Force Reserves

The objective of the audit was to identify possible areas for improvement in the ADF’s management of its Reserve forces. The audit focused on major aspects of the Reserves including roles and tasks, force structure, capability, training, individual readiness, equipment, facilities, recruitment, retention, conditions of service and administration. The audit covered the Australian Naval Reserve, the Australian Army Reserve and the Royal Australian Air Force Reserve. However, due to its size and cost, the Army Reserve was a major focus of the audit activity.

The ANAO made thirteen recommendations covering all three Services’ Reserve forces. Defence agreed with, and is implementing, all recommendations.

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Audit Report No. 41, 29 May 2001 – Causes and Consequences of Personnel Postings in the Australian Defence Force

The audit arose from a Defence Efficiency Review (1997) recommendation that Defence could make savings on the large volume of postings it made every year. The audit examined the posting process and sought to provide assurance that Defence had identified and examined salient postings issues and was addressing them effectively.

The ANAO made four recommendations, with which Defence agreed. Implementation of one recommendation is complete. Implementation of the remaining three recommendations is in progress.

Audit Report No. 51, 15 June 2001 – Australian Defence Force Health Services Follow-up Audit

This audit followed up a 1997 performance audit report on ADF health services (Audit Report No. 34, 1996-97, Australian Defence Force Health Services), which focused on the delivery of non-operational health services to entitled members. The objective of the follow-up audit was to assess Defence's implementation of recommendations made in the original audit report and their effectiveness in improving ADF health services. No new recommendations were made.

Defence also participated in or contributed to the following cross-portfolio Auditor-General’s reports:

Audit Report No. 9, 6 September 2000 – Implementation of Whole-of-Government Information Technology and Infrastructure Consolidation and Outsourcing Initiative

Audit Report No. 14, 26 October 2000 – Benchmarking the Internal Audit Function

Audit Report No. 15, 9 November 2000 – Agencies' Performance Monitoring of Commonwealth Government Business Enterprises

Audit Report No. 19, 4 December 2000 – Management of Public Sector Travel Arrangements - Follow-up Audit

Audit Report No. 23, 15 December 2000 – Audits of the Financial Statements of Commonwealth Entities for the Period Ended 30 June 2000

Audit Report No. 38, 24 May 2001 – The Use of Confidentiality Provisions in Commonwealth Contracts


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DEFENCE FORCE OMBUDSMAN

There were no formal reports to the Chief of the Defence Force pursuant to section 15 of the Ombudsman Act 1976, nor were any reports raised under sections 16, 17 or 19 of the Act relating to the operations of the ADF during the period under review.

The Ombudsman again raised concerns about delays in receiving a reply to initial inquiries and the consequences of those delays. Consequently, the Secretary directed the Complaint Resolution Agency to provide him and the Chief of the Defence Force with monthly reports on the status of all outstanding Ombudsman inquiries.

In May 2000, the Head of the Defence Personnel Executive commissioned a review of the redress of grievance process in response to criticism from within Defence and external bodies, including the Ombudsman. A representative of the Ombudsman’s office was a member of the review team. The review team submitted its report in August 2000 to the Chief of the Defence Force and the Service Chiefs and was accepted in principle. In October 2000, a working group was convened to implement the review team’s recommendations and to ensure that changes were effectively communicated to ADF members. The working group has submitted a report to the Chief of the Defence Force and the Service Chiefs, identifying the necessary amendments to legislation and policy that will be required to implement the proposed changes and seeking approval to proceed with that work. A revised defence instruction, DI(G) PERS 34-1 Redress of Grievance – Tri-Service Procedures, which incorporates procedural and policy changes that were recommended by the review team, and that do not require legislative amendment, was issued in August 2001.

The Ombudsman has shown a strong interest in the redress of grievance review as redress delays result in complaints to his office. The Ombudsman has made suggestions that are under consideration by the working group.

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DECISIONS OF COURTS AND TRIBUNALS

During the year, there were no decisions of a court or tribunal in relation to matters handled by the Defence Legal Service which resulted in a significant change to current law.

Litigation continued in relation to common-law actions for negligence by former crew members of the former HMAS Melbourne. Generally, the plaintiffs are claiming post traumatic stress disorder arising out of the collision of former HMA Ships Voyager and Melbourne and claims are statute-barred under statute of limitations legislation. Hearings of claims for like injuries arising from an accident aboard the former HMAS Stalwart have also commenced.

The Federal Court of Australia, in determining a claim for damages for age-based discrimination by a former Navy member, has found that unlawful discrimination includes indirect discrimination for the purposes of the Human Rights and Equal Opportunity Act 1986.

All matters noted above are being resolved on a case-by-case basis.

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REPORT ON THE OPERATION OF THE DEFENCE SERVICE CHARTER FOR

2000-01 The Defence Service Charter was introduced on 1 August 1998. Since that time, Defence has provided input to an annual whole-of-government report compiled by the Department of Finance and Administration.

The Government has decided to cease whole-of-government reporting on charters from, and including, 2000-01. Agencies will continue reporting their service delivery achievements through their annual reports.

Defence reports annually to the Minister for Defence on the extent to which Defence is meeting the performance standards relating to the charter. The following report is a full reprint of the report to the Minister for Defence.

Background

The Defence Service Charter was developed as part of a whole-of-government initiative to provide better service to the public across Commonwealth departments and agencies.

The Defence Service Charter is a short plain-language document that sets out the quality of service customers can expect to receive from Defence. The term ‘customer’ in the context of the charter refers to the people whom the department is seeking to serve, bearing in mind that Defence is not a traditional ‘service provider’ with a well-defined customer base. The charter also outlines avenues for taking up complaints, the means of commenting on the charter, and the way the charter is kept up to date.

The Defence Service Charter assists Defence in focusing on identifying the needs of its customers, the level of service it is committed to provide, and what it will do if it does not meet that goal. By monitoring compliance with the charter and reviewing its requirements regularly, Defence will keep the charter current and challenging, so as to ensure that the quality of service provided is of the highest standard possible.

Performance Standards

The key performance standards in the Defence Service Charter are that: • dealings with customers will be handled in a professional manner with

courtesy and cooperation; • privacy and confidentiality will be observed; • responses to any questions or complaints will be open and accurate;

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• all telephone inquiries will be answered promptly during normal business hours;

• officers will identify themselves to customers on the telephone by name or section;

• officers will listen to what customers have to say and strive to use language which is clear to customers;

• if Defence cannot answer a query immediately, officers will take customer contact details and ensure that a response is provided within two working days;

• if a customer writes to Defence, a response will be sent, in writing, within 15 working days and will contain a contact name and telephone number; and

• if Defence does not meet these standards, officers will explain what has happened and try to rectify the situation. Defence will not hesitate to apologise if it is wrong.

Performance Monitoring

Groups within Defence have systems in place to track complaints and compliments. Policy and procedures have been put in place in relation to the type and extent of information collected. • Monitoring and reporting, under Australian Standard 4269 on Complaints

Handling, is targeted at external complaints/compliments (ie from members of the public) rather than at internal complaints. Complaints are reported only if they relate to services provided (ie the process), not to decisions made.

• Written complaints referred to first assistant secretary (two-star) and equivalents or above are recorded.

• Where a complaint is resolved either by the desk officer or within the regional office without recourse to senior levels, no information is recorded for service charter purposes.

• Information on feedback and compliments is collected from a variety of sources (surveys, conferences, orally to regional offices or bases, contact with customers or the general public) and is collected by individual Groups.

A review of the Defence Service Charter will commence in late 2001 with a view to revalidating performance standards, reinvigorating staff awareness and assessing the effectiveness of monitoring systems.

Performance in 2000-01

Awareness Of Charter

The Defence Service Charter has been distributed throughout Defence, is available electronically on the internal and external Defence websites, and is included in induction training of new staff. Copies of the charter have also been

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distributed throughout Canberra and the regions and displayed in prominent places at bases and public information, recruiting and acquisition offices.

Several Groups implemented initiatives in 2000-01 to increase staff awareness of the Defence Service Charter. In particular: • The Navy has placed a link on its web page to the Defence Service Charter

that gives all Navy personnel more visible access to the charter. • Within the Defence Materiel Organisation, all new employees attend an

induction course that includes information on the Defence Service Charter.

Customer Feedback And Complaints

The avenues open to customers to complain or to provide feedback, together with contact details, are stated in the charter in a step-by-step format. They include phoning or writing to the Defence contacts listed in the charter, the particular area concerned, the supervisor of the area, or through the Minister for Defence or their local Member of Parliament or Senator. In addition, customers can contact the Commonwealth Defence Force Ombudsman.

More effective monitoring and reporting mechanisms implemented at the Group level have resulted, among other things, in more complaints being registered in 2000-01 than in previous years.

Table 1.5: Complaints Made To Defence 1998-99 – 2000-01 1998-99 1999-2000 2000-01 Number of complaints 375 307 745

The total number of complaints received represents only a small proportion of total inquiries made. For example, 208 complaints were received by the Defence Force Recruiting Organisation out of a total of 122,000 inquiries and 24,000 applications for enlistment. The honours and awards unit implemented a complaints management system in 2000-01 and recorded 247 complaints, which represents only 3 per cent of total inquiries. All of these complaints were dealt with in accordance with specified resolution procedures.

The average time taken to resolve complaints varied across Defence, but most complaints were able to be resolved within the stated performance standard of 15 working days. Groups report that the most common complaints were related to recruitment issues, issues relating to the distribution of honours and awards, and general aircraft noise from a number of locations.

The most common compliments Groups received were for the overall level of Defence assistance to the civil community, especially in relation to ADF personnel attendance and displays at public events, the prompt handling of requests for information, professionalism in service delivery, and customer service within Careers References Centres.

The satisfaction rate for 2000-01, which is a measure of Defence’s complaint handling procedures, remained at approximately 90%.

Overview

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A number of improvements to service delivery have been implemented as a result of customer feedback. There has been a significant improvement across the organisation in providing timely responses to departmental and ministerial correspondence. Individual Groups report the following specific improvements having been made: • The Defence Science and Technology Organisation has nominated one staff

member to handle all complaints received in an effort to provide a more coordinated approach to complaints handling.

• Public Affairs and Corporate Communication and the Inspector General’s Division have made a point of contact available to the public through the Defence internet site.

• Within the Defence Personnel Executive, Business Process and Management Information Branch has promulgated a separate charter for the Defence Service Centre.

• Within the Navy, more stringent administrative procedures have been put in place to capture compliment and complaint data for Defence Service Charter reporting. A concise and accurate audit trail has been put in place.

Responsiveness to Ministers and Parliamentary Secretary

Defence continued to improve its performance in preparing material to enable the Ministers and the Parliamentary Secretary to reply to correspondence. This is a reflection of the high priority being given to improving Defence’s responsiveness to its Ministers.

Defence has introduced initiatives designed to streamline processes and to improve performance. For example, in consultation with the Ministers’ offices, an evaluation matrix has been added to all ministerial submissions and correspondence. This enables quick and clear feedback to Defence on the quality, timeliness, degree of consultation, policy innovation and presentation of the material. Collection of matrix data will allow analysis of Defence’s performance against these criteria.

Other initiatives included: • presenting information sessions to staff to provide an overview of Defence’s

responsibilities to the Ministers, Parliamentary Secretary, Cabinet and Parliament and how these should be fulfilled. A number of sessions tailored specifically for the Senior Executive Service and star ranking officers were also conducted;

• providing monthly three-day externally-contracted ministerial correspondence writing courses, primarily for staff who deal regularly with ministerial or parliamentary matters; and

• providing regular ad hoc briefing sessions, upon request, to small groups across Defence.

Defence Service Charter

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Table 1.6: Percentage of departmental response times against standard requirement of 15 days. 1997-98 1998-99 1999-2000 2000-01

Number of Letters Received 8,867 8,428 9,421 9,657 Average % of Responses that met 15-Day Standard Requirement

54% 50% 75% 86%

Payment of Accounts

Another customer service measure is that of payment of accounts. Defence’s account payment benchmark is 95 per cent of all accounts to be paid within the nominated trading terms, which is generally 30 days from receipt of a correctly rendered invoice and receipt of the goods or services.

Defence’s performance in 2000-01, with only 78.4 per cent of accounts paid by the due date, has fallen to an unacceptable level (99.4 per cent of accounts were paid by 30 days after the due date compared against 99 per cent for the same period in 1999-2000). While a management information system upgrade, mentioned in last year’s report, has ensured that accounts are paid automatically once invoices are entered, significant problems are being encountered with data integrity – especially miscoding and timeliness issues.

This is due to a range of training, staff turnover and change management issues which are being addressed currently. A full review of accounts processing is under way to improve, among other things, due-date processing. The review is expected to run until June 2002, with improvements being implemented progressively during the review process.

Table 1.7: Percentage Of Accounts Paid By Due Date Financial Year Number of

Accounts Paid Accounts Paid by

Due Date % of Accounts Paid

by Due Date 2000-01 1999-2000 1998-99 1997-98 1996-97 1995-96

1,068,434 1,126,057 1,142,887 994,547 1,164,865 1,262,037

837,360 924,579 979,914 923,032

1,081,368 1,067,125

78.4 82.1 85.7 92.8 92.8 84.6

White Paper Community Consultation Program

In 2000-01, the Government conducted a fundamental review of defence policy and, as part of the review, ran an extensive consultation process to take into account the views of the Australian community. The Hon Andrew Peacock led the public consultation program, which ran over a nine-week period from 6 July to 7 September 2000. The program included 28 public meetings, which over 2,000 people attended, as well as meetings with state and local governments, interest groups, business and industry associations in capital cities and numerous regional centres. Throughout the process, a website provided online

Overview

70

��

��

��

��

Other4%

Defence Associations

5%

Industry7%Private

Citizens69% Ex-Service

Personnel15%

access to the discussion paper and other information, as well as telephone, facsimile and email contact details for comments and submissions.

Table 1.8: Community Consultation Program Contact Data Public Contact Number

Website hits 179,745 Website visits(1) 105,865 Discussion Paper downloads 6,453 Email messages 5,316 Submissions 1,157 Calls and voice-mail 3,674 Discussion paper distributed (hardcopy) 17,935 Note 1. A website visit is a series of consecutive requests from a user to an Internet site.

Many Australians welcomed the opportunity to be able to participate in the community consultation process. This was reflected in the enthusiasm and interest displayed by people at the meetings and, most importantly, in the large number of written submissions received from members of the public.

Demographics of Written Submission Contributors

CHAPTER 2

RESULTS FOR GOVERNMENT AS

DEFENCE’S CUSTOMER

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OUTPUT ONE: DEFENCE OPERATIONS

OVERVIEW The performance targets for Output One have generally been achieved. The conduct of numerous overseas operations during 2000-01 was a complex undertaking, with the ADF involved in significant operations across a wide geographic area. The major regional operations in East Timor, Papua New Guinea (Bougainville) and the Solomon Islands were conducted concurrently, along with the ADF contribution to the Sydney Olympics and the Paralympics. The ADF was able to provide timely and effective contributions to operations through an embedded command, control, communications and intelligence system.

Exercise Tandem Thrust, a combined and joint exercise with the United States, which continued development and testing of high-level interoperability with our major ally, was undertaken successfully.

National support activities have included assistance to other government agencies through surveillance operations, search and rescue tasks, emergency assistance in remote communities and participation in Centenary of Federation activities.

CAPABILITY PERFORMANCE INFORMATION

PERFORMANCE TARGETS

Command of Operations

Involves the development and maintenance of an ADF capability to provide effective command of military campaigns, operations and other activities for: • defeating attacks against Australia; • defence of regional interests; • defence of global interests; • protection of national interests; and • other national support tasks.

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Customer Perspective

Performance Targets Performance Quality: • Shortfalls against Australian Theatre

Operational Preparedness Directive are within acceptable bounds.

• Shortfalls against exercise preparedness objectives are within acceptable bounds.

• Operations commanded meet strategic objectives.

• Shortfalls / issues identified in post-operation reports.

• Achieved. The ‘on occurrence preparedness report’

database has been developed to monitor preparedness shortfalls.

• Achieved.

• Achieved. • Achieved. There are no significant outstanding

post-operational report issues. Quantity: • Extent to which available resources

satisfy operational and exercise activity.

• Number of completed operations and

exercises. • Number of current operations and

exercises.

• No significant shortfalls were identified in

operations. Existing resources are generally sufficient for the conduct of exercises and training commitments.

• Completed operations – 8. Completed exercises – 49.

• Current operations – 22. Current exercises – 1. Planned exercises – 67 scheduled over 2001-02.

ADF Military Operations

Involves forces assigned by Service Chiefs that can meet operational preparedness directives.

The nature of ADF military operations is such that it is not possible to anticipate or predict the likelihood or scope of the ADF’s involvement in military contingencies. The success of a military operation is measured against the satisfaction of the commander’s intent and the attainment of the designated end-state.

Performance Targets Performance Quality: • ADF forces assigned to Australian

Theatre for contingency operations are effectively, deployed, sustained, and redeployed.

• Agreed military objectives are satisfied.

• Achieved.

• Achieved.

Quantity: • Number of operations conducted as

required by Government.

• Substantially Achieved. Operation Maxwell (ADF

support to the enforcement of Australian sovereignty in the Heard Island – Macdonald Island Exclusive Economic Zone) was cancelled due to equipment problems, which were remediated in Operation Shinbone (ADF support to the Australian Fisheries Management Authority).

Output One: Defence Operations

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Military Geospatial Information

Entails the provision of hydrographic, topographic, aeronautical, meteorological and oceanographic information through an ongoing collection, production and dissemination program to support: • operational users and ADF operational requirements; • training or other users to support ADF preparedness; and • national users to satisfy Hydrographer RAN responsibilities as national

hydrographer.

Performance Targets Performance Quality: • Able to satisfy operational

requirements with digital and paper products.

• Provide coverage required: - to required standard and

specification; - to satisfy AS9002 quality

accreditation where appropriate; and

- in the format required. • Able to provide an effective response

to short notice requirements in support of operations and exercises.

• Achieved. Paper and digital products were

supplied as required to meet operations.

• Achieved. Required coverage was supplied in accordance with identified specifications, quality standards and format. The Defence Imagery and Geospatial Organisation’s Bendigo facility maintained the AS-ISO 9002 standard.

• Achieved. An effective response was provided for

all requirements in support of operations and exercises.

• Able to provide geospatial data and products in support of military response options/Chief of the Defence Force’s Preparedness Directive requirements.

• Able to satisfy requirements within the time required, in respect of both forecast production and short notice requirements.

• Achieved. Preparedness was maintained in the supply of spatial data and products in support of military response options and the Chief of the Defence Force’s Preparedness Directive.

• Achieved by the Bendigo facility. • Partially Achieved by hydrographic,

oceanographic and meteorological components. Due to the small number of short notice requirements in 2000-01, the majority of forecast production was completed with minimal impact. However, due to limited personnel resources, the Australian Hydrographic Office was unable to take on any short-notice requirements without suffering some slippage in forecast production.

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Performance Targets Performance Quantity: • Achieve planned production targets.

• Partially Achieved. 58 charts of various types were

produced out of a planned total of 61. The main deficiency was in the production of new charts, but production of some types of new editions exceeded planned quotas. The shortfall in new chart production was due primarily to a shortage of qualified senior editing staff and to commitments to the development of a digital hydrographic database. At the organisation’s Bendigo facility, output was affected by the unavailability of essential equipment, software and some source information required for planned offshore products.

• Achieve targets for acquisition of hydrographic and topographic data and products to meet short notice requirements.

• Achieved by the Bendigo facility. All short notice requirements were met; short notice tasks were centred on East Timor requirements.

• Partially Achieved by hydrographic, oceanographic and meteorological components, which undertook successfully two short-notice tasks and one programmed tasking requiring short notice and flexible provision of data. These short-notice requirements, together with ongoing system trial commitments for HMAS Leeuwin and Melville, resulted in the deferment of five routine surveys out of 20 planned for the period.

International Activities and Regional Engagement

Contributes to the Government’s ability to achieve Australia’s strategic objectives and enable effective shaping of Australia’s strategic environment by providing international defence policy guidance and direction to Defence to enhance the ADF’s ability to conduct successful operations and respond to regional crises as they occur.

Performance Targets Performance Quality: • Provide quality policy advice and

support to Government and the ADF, in an effective and timely manner, to enable the successful conduct of operations and exercises, including responses to regional crises as they occur.

• Achieved. Appropriate advice was provided

through Strategic Command Division and Strategic and International Policy Division.


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• Conduct a program of defence exercises and related training activities that provides opportunities to: - Develop and enhance ADF

capabilities in interoperability; and

- Allow the ADF to interact with regional armed forces in ways that promote stability and regional security.

• Achieved. Detailed exercise information is

available in the ADF exercise section. • Achieved. Detailed exercise information is available

in the ADF exercise section.

Quantity: • As required by Defence and

government representatives.

• Achieved.

National Support Tasks

Entails the provision of ADF emergency and non-emergency assistance to the Government and the Australian community in non-combat related roles. The nature of national support tasks is such that it is not possible to anticipate or predict the likelihood or scope of the ADF’s involvement in national support tasking. Only the ADF contribution to civil surveillance is tasked routinely in response to Government direction. In other cases, ADF involvement is as a result of calls for assistance from the applicable civil authority. This assistance is coordinated by Headquarters Australian Theatre or through Emergency Management Australia.

Emergency Management Australia has completed the implementation of all recommendations made in the ANAO performance audit of Commonwealth Emergency Management Arrangements (Audit Report No. 41, 28 April 2000). The recommendations related to improvements to national emergency management capability and communication/coordination arrangements. The ANAO’s recommendations will also be addressed in the Council of Australian Governments-directed review of disaster relief, mitigation and contingency planning, announced in June 2001.

During the year, Emergency Management Australia: • planned and coordinated national response arrangements for the return to

earth of the Mir Space Station in March 2001; • conducted the inaugural Australian Safer Communities Awards to recognise

excellence in emergency management over 1998-99 and 1999-2000; and • distributed additional special-purpose funding to states and territories to

enhance national emergency management capability across organisations and communities.

The following table relates to tasks coordinated by Headquarters Australian Theatre or through Emergency Management Australia.

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Performance Targets Performance • Maintain forces identified in the

Australian Theatre Operational Preparedness Directive (OPD) at the levels of preparedness specified for Defence Assistance to Civil Authorities (formerly Defence Aid to the Civil Power).

• Achieved.

Quality: • Progress achieved by the Army

against the Army/Aboriginal and Torres Strait Islander Commission community assistance project.

• Maintain forces identified in the OPD at the levels of preparedness specified for civil search and rescue.

• Search and rescue tasks are completed successfully.

• Maintain forces identified in the OPD at the levels of preparedness specified for Defence support to civil surveillance.

• Achieved. The project met its objectives in 2000-01.

Assistance was centred on Bathurst and Melville Islands.

• Achieved.

• Achieved. Searches were launched in a timely and

efficient manner. • Achieved.

Quantity: • Number of :

- Emergency management tasks undertaken.

- Directed assistance to civil

authorities tasks successfully completed.

- Defence assistance to the civil community tasks accepted and completed by the ADF in accordance with agreed terms and standards.

- 16 Defence Assistance to the Civil Community(1) (DACC) Cat 1 and 9 DACC Cat 2 tasks were completed.

- No Defence Assistance to Civil Authorities tasks were undertaken.

- 2 DACC Cat 3, 93 DACC Cat 4, 223 DACC Cat 5, and 12 DACC Cat 6 tasks were completed.

- Search and rescue tasks undertaken involving ADF assistance.

- Other significant surveillance and/or response tasks conducted.

- 13 search and rescue tasks were undertaken involving ADF assistance.

- Nil other than operations.


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Performance Targets Performance • As required to meet specified

Army/Aboriginal and Torres Strait Islander Commission community assistance project milestones.

• 250 hours of aerial surveillance provided by P-3C aircraft.

• 1,800 ship-days of surface patrol and response provided by patrol boats.

• The 2000-01 program, centred on Melville and Bathurst Islands in the Northern Territory, was completed successfully.

• Achieved – 256 hours were provided by P-3C aircraft.

• Substantially Achieved – 1688 ship-days were provided by patrol boats. A number of patrol boat days were lost due to unscheduled maintenance (in particular relating to hull defects) and short-notice changes in priority diversion from civil surveillance to support other activities.

Note 1. Defence assistance to the civil community comprises six categories:

Counter Disaster and Emergency Assistance Category 1. Emergency assistance for a specific task provided by a local commander or administrator, from within his or her own resources, in localised emergency situations when immediate action is necessary to save human life, alleviate suffering, prevent extensive loss of animal life or prevent widespread loss or damage to property. Category 2. Emergency assistance in a more extensive or continuing disaster where action is necessary to save human life or alleviate suffering, prevent extensive loss of animal life or prevent loss or damage to property, and when state or territory resources are inadequate. Category 3. Assistance associated with a civil emergency or disaster recovery, which is not directly related to the saving of life or property. Non-Emergency Assistance Category 4. Non-emergency assistance provided to other government departments or authorities, to the states or territories, local government or other authorities or organisations, commercial enterprises, non-profit organisations, or individuals or bodies in the general community. Category 5. Non-emergency assistance of a minor nature, excluding flying tasks, provided to local organisations and which is within the capacity of a local commander or administrator's resources and authority. Category 6. Support to civil authorities in the performance of non-emergency law enforcement related tasks where there is no likelihood that Defence personnel will be required to use force.

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COST OF OUTPUT Table 2.1: Cost of Output One - Defence Operations

Departmental Expenses 2000-01 Budget

Estimate

2000-01 Revised Estimate

2000-01 Actual

Variation

$m $m $m $m Expenses

Employees - Military 455.5 393.6 455.8 62.2 Employees - Civilian 80.1 100.0 100.6 0.6

Sub-Total Employees 535.6 493.6 556.4 62.8 Suppliers - Non-Inventory 463.5 476.2 288.3 -187.9 Suppliers - Inventory Consumption 70.5 69.6 116.6 47.1

Sub-Total Suppliers 534.0 545.7 405.0 -140.8 Depreciation and Amortisation 86.1 78.2 71.4 -6.7 Write-Down of Assets 0.0 0.5 2.8 2.3 Other Expenses - including Interest and Grants 6.5 2.0 3.4 1.4 Expensed Assets Under Construction 11.1 23.0 115.0 92.0 Loss on sale of Assets 0.0 0.0 0.1 0.1

Total Expenses 1173.3 1143.0 1154.1 11.1 Capital Use Charge 214.0 190.1 198.4 8.4

Total Cost of Output One 1387.3 1333.0 1352.5 19.5

EXPLANATION

Financial variations for Output One have arisen as a consequence of ADF involvement in a number of operations and exercises throughout the year. Given the nature of military operations and exercises it has not been possible to anticipate or predict with any certainty the likelihood or scope of the ADF’s involvement and hence the associated financial commitment.


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AUSTRALIAN DEFENCE FORCE OPERATIONS Table 2.2: ADF Major Operations

Operation Objective and Current Status Belisi II April 1998 – Continuing Forces ADF Other Countries New Zealand, Fiji, Vanuatu

Objective: To support the regional Peace Monitoring Group in monitoring and reporting on the maintenance of the cease-fire on Bougainville by contributing specialist medical, logistic, communications and transport capabilities. The Peace Monitoring Group is now being drawn down as the peace process matures. Current Status: The ADF contribution is assisting in progress of the peace process.

Tanager(1) February 2000 – Continuing Forces ADF

Objective: To contribute to the United Nations Transitional Administration in East Timor Security Force, in order to assist in the achievement of United Nations resolution 1272/99, by contributing equipment and approximately 1,500 ADF personnel during 2000-01. This operation is ongoing. Current Status: Completion of the electoral process is expected to lead to reassessment of the ADF contribution early in 2002.

Trek 2000 – Continuing Forces ADF

Objective: To promote stability in the Solomon Islands by supporting the International Peace Monitoring Team that is deployed in support of the Cease-Fire Agreement. During 2000-01, the Defence contribution consisted of one major fleet unit and embarked rotary-wing aircraft, with a small number of shore-based personnel. Current Status: A continued ADF contribution is assisting in maintaining stability.

Note 1. Operation Tanager was erroneously reported in the Portfolio Additional Estimates

Statements 2000-01 as commencing in 1999.

Table 2.3: ADF National Support Operations Operation Objective and Current Status

Gold 1998 – Completed Forces ADF

Objective: To provide military support to the Sydney 2000 Olympic and Paralympic Games by contributing 5,622 ADF personnel over the period (force size was approximately 4000), facilities and equipment. This operation has now ceased. Current Status: Successful ADF support was widely acknowledged.

Centenary 2000 – Continuing Forces ADF

Objective: To provide support to and participate in the Centenary of Federation celebrations. Current Status: The program of activities is continuing.

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Operation Objective and Current Status Guardian 2001 – Continuing Forces ADF

Objective: To provide support to the Commonwealth Heads of Government Meeting that will be held in Brisbane over the period 6-9 October 2001. This operation remains ongoing. It is anticipated that the Defence contribution will consist of approximately 1,600 personnel in addition to facilities and equipment. Current Status: Due to the postponement of the Commonwealth Heads of Government Meeting, Operation Guardian ceased in October 2001.

Table 2.4: ADF Non-Regional Operations Operation Objective and Current Status

Paladin(1) 1956 –Continuing Forces Army

Objective: To contribute to the United Nations Truce Supervisory Organisation in the Middle East. This force of unarmed military observers supervise, observe and report on the various cease-fire arrangements, truces and peace treaties that have been negotiated between Israel and neighbouring Arab nations since 1948. During 2000-01, the Defence contribution consisted of 12 ADF personnel. Current Status: This operation is under review.

Mazurka 1992 – Continuing Forces ADF

Objective: To provide personnel to the Multinational Force and Observers to monitor the security arrangements in the Sinai. During 2000-01, the Defence contribution consisted of 27 ADF personnel. Current Status: This operation is under review.

Coracle 1994 – Continuing Forces Army

Objective: To support the United Nations Accelerated Demining Program in Mozambique by contributing two ADF engineering personnel to provide training to de-mining staff. Current Status: This operation is under review.

Osier March 1997 – Continuing Forces Army

Objective: Army personnel deployed as part of the Stabilisation Force, in Bosnia-Herzegovina and Croatia, and the Kosovo Force. In both cases, personnel serve as individuals attached to United Kingdom forces. During 2000-01, Defence contributed 10 ADF personnel. Current Status: This operation is under review.

Pollard 1998 – Dormant Forces ADF

Objective: To contribute to United States-led operations against Iraq. Current Status: This operation was made dormant in 1999 and is expected to cease in the near future.

Pomelo 2001 – Continuing Forces ADF

Objective: To contribute effectively to United Nations peacekeeping efforts in Africa as part of the United Nations Mission in Ethiopia/Eritrea. During 2000-01, Defence contributed two ADF personnel. Current Status: This operation is under review.


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Operation Objective and Current Status Husky 2001 – Continuing Forces ADF

Objective: To contribute effectively to the training of the Sierra Leone Army. During 2000-01, Defence contributed two ADF personnel. Current Status: This operation is under review.

Damask 1991 – Periodic and continuing Forces ADF

Objective: To contribute to the enforcement of sanctions against Iraq in accordance with applicable United Nations Security Council resolutions. In 2000-01, the Defence contribution consisted of workup training for one major fleet unit with embarked rotary-wing aircraft. Current Status: This operation is continuing.

Note 1. Operation Paladin was erroneously reported in the Portfolio Budget Statements 2001-02 as

commencing in 1995.

Table 2.5: ADF Surveillance and Regional Operations Operation Objective and Current Status

Beachcomber Dormant Forces ADF

Objective: To collect beach information in Australia for operational planning. Current Status: The operation was dormant during 2000-01 and is expected to recommence once naval assets become available.

Mencari Dormant Forces ADF

Objective: To patrol the Timor Gap Zone of Cooperation. Current Status: This operation is dormant pending cease order.

Estes 1980 – Continuing Forces ADF

Objective: To conduct surface patrols in Bass Strait. Current Status: ADF surface patrols continue.

Gateway 1981 – Continuing Forces ADF

Objective: To contribute to the Northern Indian Ocean and South China Sea patrols. Current Status: This operation is ongoing and cyclical and ADF contributions continue.

Mistral 1998 – Continuing Forces ADF

Objective: To support Australian sovereign rights and fisheries law enforcement in the Southern Ocean by contributing to Southern Ocean fisheries patrols. Current Status: This operation is ongoing and cyclical and ADF contributions continue.

Solania 1988 – Continuing Forces ADF

Objective: To contribute to South West Pacific patrols. Current Status: This operation is ongoing and cyclical and ADF contributions continue.

Burbage 1995 – Continuing Forces ADF

Objective: To contribute to Indian Ocean patrols. Current Status: This operation is ongoing and cyclical and ADF contributions continue.

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Operation Objective and Current Status Osteal 1995 – Continuing Forces ADF

Objective: To contribute to Coral Sea patrols. Current Status: This operation is ongoing and cyclical and ADF contributions continue.

Mellin 1995 – Continuing Forces ADF

Objective: To contribute to Torres Strait and Timor Gap patrols. Current Status: This operation is ongoing and cyclical and ADF contributions continue.

Prowler 1996 – Continuing Forces ADF

Objective: The collection of military geographic information in northern Australia. Current Status: ADF military geographic information collection continues.

Cranberry 1997 – Continuing Forces ADF

Objective: To conduct surveillance in northern Australia. Current Status: The ADF continues to contribute to the civil surveillance program and to conduct military surveillance in northern Australia.

Concord 1999 – Continuing Forces ADF

Objective: To provide effective logistic support for Australian operations in East Timor. Current Status: Logistic support continues.

Plumbob 2000 – Completed Forces ADF

Objective: To evacuate Australian nationals from the Solomon Islands. Current Status: The Defence contribution included RAN and RAAF transport assets and Defence augmentation to the Australian mission in Honiara. This operation has ceased.

Orbit/Dorsal 2000 – Completed Forces ADF

Objective: To contribute to the Solomon Islands peace process by supporting peace talks in both the Solomon Islands and Townsville. Current Status: These operations have ceased.

Maxwell 2000 – Ceased Forces ADF

Objective: To enforce Australian sovereignty in the Heard Island – Macdonald Island Exclusive Economic Zone. Current Status: The operation was ceased due to equipment failure.

Highway 2000 – Ceased Forces ADF

Objective: To assist in the repatriation of Papua New Guinea Defence Force personnel and families. Current Status: This operation has ceased.

Highway II 2001 – Not conducted Forces ADF

Objective: ADF support to the repatriation of Papua New Guinea Defence Force personnel. Current Status: This operation was not conducted.


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Operation Objective and Current Status Abseil 2001 – Ceased Forces ADF

Objective: To support the peace process in Bougainville. This operation was the ADF contribution to supporting Papua New Guinea Government and Bougainville delegates that participated in talks conducted at RAAF Townsville as part of the ongoing peace process in Bougainville. Current Status: This operation has ceased.

Teebone 2001 – Completed Forces ADF

Objective: To assist the Australian Fisheries Management Authority to recover the foreign fishing vessel South Tomi and its crew in order to effect a prosecution within Australia. Current Status: The operation was completed successfully with apprehension of the vessel and crew. The ADF contributed a boarding party and a security element, and was assisted by the South African Defence Force.

Shinbone 2001 – Not conducted Forces ADF

Objective: This operation was the planned ADF support to the Australian Fisheries Management Authority in the Heard Island – Macdonald Island Exclusive Economic Zone. Current Status: The operation was not conducted, but the equipment issue identified in Operation Maxwell (a similar operation) was remediated.

AUSTRALIAN DEFENCE FORCE EXERCISES Table 2.6: Joint Exercises involving at least two of the Navy, Army and Air Force

Exercise Forces Performance

Objective: To practise deployable joint force headquarters staff and formation headquarters staff in the methods, procedures and conduct of planning, operations, offensive support and targeting, information operations and intelligence in a command post exercise.

Vital Prospect July 2000

Navy, Army, Air Force

Result: Achieved. Successfully integrated staff within the joint headquarters environment. Objective: A field training exercise to validate the parachute company group’s capability to meet preparedness requirements.

Arnhem 1/00 July 2000

Army, Air Force

Result: Achieved. Readiness was confirmed.

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Exercise Forces Performance Objective: To practise state and territory authorities in crisis management procedures involving callout procedures and coordination arrangements for ADF counter-terrorist units utilising helicopters.

Dusk Series 00 (Includes Pegasus Dusk, Oprex Dusk, Flash Dusk) November 2000

Army, Air Force

Result: Achieved. Counter-terrorist callout procedures for an ADF response were effectively tested. Objective: A field training exercise to validate the parachute battalion group’s capability to meet preparedness requirements.

Swift Canopy 00 November 2000

Army, Air Force

Result: Partially achieved due to reduced aircraft availability; however, readiness levels were confirmed and preparedness requirements validated. Objective: To practise ADF counter-terrorist units in maritime special recovery techniques involving ships at anchor.

Day Anchor January 2001

Navy, Army

Result: Achieved. Special recovery techniques were successfully practised. Objective: To practise Headquarters Northern Command in the planning and conduct of operations in northern Australia, in a command post exercise.

Northern Trilogy February 2001

Army, HQNORCOM

Result: Cancelled. Exercise not required in view of current commitment to operations in northern Australia. Objective: To practise amphibious boarding techniques for a 3 Brigade battalion group (2RAR), involving embarkation in Townsville and amphibious lodgement at Cowley Beach training area, prior to Brigade combined arms training.

Sea Eagle March 2001

Navy, Army

Result: Cancelled. The exercise objectives were met in Exercise Tandem Thrust. Objective: To develop submarine insertion, extraction and rendezvous techniques with Special Forces using rubber boats and multi-swimmer release techniques.

Platypus Moon March 2001 (rescheduled to July 2001)


Result: Achieved. Familiarisation training and other techniques were refined. Objective: To exercise Special Forces in parachute and airborne insertion and extraction techniques, and RAAF C130 aircrew in special operations.

Emu Moon East March 2001

Army, Air Force

Result: Achieved. The exercise provided a useful forum to increase joint capabilities. Objective: To practise deployable joint force headquarters staff and formation headquarters staff in procedures in a command post exercise.

Silicon Safari March 2001


Result: Cancelled and replaced by Exercise Vital Prospect.


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Exercise Forces Performance Objective: To practise deployable joint force headquarters staff and formation headquarters staff in the methods, procedures and conduct of planning operations, offensive support and targeting, information operations and intelligence operations, as a combined staff in a command post exercise.

Vital Prospect April 2001


Result: Achieved. Successfully integrated staffs into a combined task force headquarters. Objective: To exercise Special Forces in parachute and airborne insertion and extraction techniques, and RAAF C130 aircrew in special operations.

Emu Moon West April 2001

Army, Air Force

Result: Achieved. Objective: To confirm currency of Special Forces parachute insertion methods.

Pegasus Moon May 2001

Army, Air Force

Result: Cancelled. Exercise objectives were met in the Emu Moon Exercises.

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Table 2.7: Combined Exercises Involving the ADF and the Defence Forces of Other Countries

Exercise Forces Objective

Objective: To enhance the interoperability and proficiency of maritime and air forces to operate in coalition arrangements centred on realistic short-warning littoral operations.

Rimpac 00(1) May-July 2000

Australia Navy, Air Force Other Countries United States (US), Canada, South Korea, Chile, Japan

Result: Achieved. Was assessed to have provided a challenging training environment with excellent results. Objective: A combined Five Power Defence Arrangements maritime and air defence exercise, to conduct combined/joint operations in a multi-threat, limited conflict scenario.

Churinga/Flying Fish June-July 2000

Australia Navy, Air Force(2) Other Countries Malaysia, New Zealand (NZ), United Kingdom (UK), Singapore

Result: Substantially achieved. Objectives were met although testing of capability for afloat support was limited.

Objective: To further develop interoperability between the Australian Army and the US Marine Corps, in combined operations.

Gold Eagle 00(3) June-July 2000

Australia Army Other Countries US Result: Achieved. Mutual understanding was

enhanced and opportunities for increased interoperability identified. Objective: To further enhance interoperability between the Australian Army and the US Army by conducting a field training exercise.

Pacific Bond 00(3) June-July 2000

Australia Army Other Countries US Result: Achieved. Interoperability was further

developed with the US. Objective: To improve interoperability by conducting an annual maritime surveillance exercise with the PNG Defence Force and RAN patrol boat elements.

Paradise 00 July 2000

Australia Navy, Air Force Other Countries Papua New Guinea (PNG) Result: Not achieved. Cancelled due to

non-availability of PNG Defence Force. Objective: To enhance patrol boat and maritime patrol aircraft interoperability with the Royal Brunei Navy in a combined maritime training exercise.

Penguin 00 July 2000

Australia Navy, Air Force Other Countries Brunei Result: Achieved. Continued the effective

relationship with the Royal Brunei Navy. Inclusion of Mine Hunter Coastal vessels provided an opportunity to demonstrate that additional capability. Objective: To practise combined operations requiring interoperability at a tactical level with elements of the Malaysian Army.

Haringaroo 00-1 July 2000, May 2001, June 2001

Australia Army Other Countries Malaysia Result: Substantially achieved. Exercise shortened

due to environmental conditions.


89

Exercise Forces Objective Objective: To practise anti-submarine warfare with joint and independent maritime patrol aircraft cooperation, and to practise and develop combined RAN/US Navy submarine operations.

Lungfish 00 July-August 2000

Australia Navy, Air Force Other Countries US, Canada

Result: Achieved. The exercise provided consolidated training and developed overall maritime interoperability with both nuclear and conventional submarines that is seldom available in the Australian region. Objective: To further develop interoperability between the Australian Army Reserve and the US Army Reserve by undertaking a field training exercise.

Pacific Reserve 00-2 July-August 2000

Australia Army Other Countries US

Result: Achieved. Interoperability and increased understanding were achieved. Objective: To validate operational and tactical air defence procedures in a large-scale air defence exercise and to exercise aircrews in large force employment missions.

Pitch Black 2000(3) July-August 2000

Australia Air Force, Army Other countries US, UK, Singapore Result: Achieved. RAAF aircrew and air defence

controllers derived highly beneficial training in the planning and conduct of combined large force air defence operations. Interoperability and increased understanding were achieved. Objective: To broaden the military experience and knowledge of selected personnel and promote cooperation between the two countries.

Singas Exchange July 2000-March 2001

Australia Army Other Countries Singapore Result: Achieved. Familiarisation training in the

capabilities and equipment not available in Australia was valuable, and a working knowledge of operational, logistic and administrative procedures was gained. Objective: To conduct advanced warfare and maritime skills training and develop interoperability through training in a joint/combined maritime environment with multiple units.

Fleet Concentration Period August 2000

Australia Navy, Air Force Other countries NZ

Result: Achieved. Training enhanced interoperability with the RAN, RNZN, RAAF and RNZAF. Combined maritime operations with the RAN and RNZN were successfully exercised and capabilities were further developed.

90


Exercise Forces Objective Objective: To strengthen the relationship and improve the interoperability of the ADF and the Republic of Singapore Forces in combined maritime procedures and tactics.

Singaroo August 2000, April 2001

Australia Navy, Air Force Other Countries Singapore

Result: Achieved. The exercise demonstrated a strengthened relationship and enhanced mutual understanding between the participants. Objective: To enhance the relationship between the RAN and the Royal Thai Navy in order to develop a sufficient level of interoperability for the conduct of joint/combined operations.

Austhai September 2000

Australia Navy, Air Force Other Countries Thailand

Result: Achieved. The level of skills that support a basic level of interoperability improved and the exercise provided a good forum for mutual understanding. Objective: To enhance the relationship between the RAN and the Philippines Navy through the conduct of a maritime surveillance and exclusive economic zone activity based exercise.

Lumbas September 2000

Australia Navy, Air Force Other Countries Philippines

Result: Achieved. All objectives were achieved in a basic level exercise and the results were considerably higher than the previous LUMBAS in 1998. Objective: To confirm capability for the conduct of anti-submarine warfare and training with a US Navy submarine.

Extendex Series(4) June–July 2000

Australia Air Force Other Countries US Result: Achieved. Valuable anti-submarine warfare

training was gained, and interoperability with the US Navy was enhanced. Objective: To improve operational effectiveness and interoperability with other regional defence forces.

Ocean Protector 01(3.) February 2001

Australia Navy Other Countries NZ, France

Result: Achieved. The integration of French forces into the ANZAC force was effective and a high level of interoperability between the three nations’ maritime forces was achieved. Objective: To practise land strike, weapons effect planning and tactical reconnaissance with the Royal New Zealand Air Force.

Gunrunner(3.) March 2001

Australia Air Force Other Countries NZ Result: Achieved. The training was extremely well

received by the Royal New Zealand Air Force squadrons. Objective: To practise anti-submarine warfare tactics and procedures with the NZ, UK and Canadian Air Forces.

Fincastle March 2001

Australia Air Force Other Countries Canada, UK, NZ Result: Achieved. Tactics and procedures were

successfully practised against a conventional submarine.


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Exercise Forces Objective Objective: To progressively develop Royal Thai Navy maritime air surveillance capability and, at the same time, combined Royal Thai Navy-RAAF surveillance procedures.

TAA NOK IN SII October 2000 April 2001

Australia Air Force Other Countries Thailand

Result: Achieved. Thai maritime air surveillance capability was enhanced and a high level of interaction between the Air Force and the Royal Thai Navy personnel was achieved. Objective: Combined maritime warfare exercise with US Pacific Fleet forces, with an anti-submarine focus. RAAF maritime patrol aircraft forces participated to test preparedness levels.

Computex Series(5) October-November 2000

Australia Air Force Other Countries US

Result: Achieved. Interoperability with the US Navy was enhanced and the exercise confirmed preparedness levels. Objective: This exercise is a goodwill activity with the Japanese Maritime Self-Defence Force during which basic procedural maritime exercises are conducted.

Goodwillex October 2000

Australia Navy, Air Force Other Countries Japan

Result: Achieved. The activity provided a rare opportunity to enhance bilateral relationships and establish personal friendships with the Japanese Maritime Self-Defence Force personnel. Objective: To practise deployment and develop interoperability at a tactical level with elements of the UK Special Forces.

Night Fox October 2000

Australia Army Other Countries UK Result: Achieved. Interoperability was enhanced and

cross training encouraged mutual understanding. Objective: To enhance regional relations by the provision of observers in Singapore Armed Forces unilateral training at Shoalwater Bay training area.

Matilda October-November 2000

Australia Army Other Countries Singapore Result: Achieved.

Objective: To enhance regional relations by hosting UK Ghurkha unilateral training at high range training area.

Pacific Kukri October-December 2000

Australia Army Other Countries UK Result: Achieved.

Objective: To participate in the annual French Armed Forces–New Caledonia joint exercise to improve interoperability in evacuation operations.

Croix Du Sud November 2000

Australia Navy Other Countries France Result: Achieved. Effective as a basis for continued

international engagement with possible advantages for future ADF integration. Objective: To increase mariner and war fighting skills of the Patrol Boat Force Element Group, while contributing to international relations.

Minor War Vessel Fleet Concentration Period(3) November 2000

Australia Navy Other Countries France Result: Achieved, despite losing patrol boats to civil

surveillance commitments.

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Exercise Forces Objective Objective: To enhance interoperability between Australian and US personnel through a mine counter-measures vessels training exercise.

Shortscope 00 November 2000

Australia Navy Other Countries US Result: Not achieved. This activity was

reprogrammed to occur in November 2001. Objective: To exercise the armies of the Five Power Defence Arrangements in combined operations by conducting a brigade to unit-level command post exercise.

Suman Warrior November 2000

Australia Army Other Countries Malaysia, UK, NZ, Singapore Result: Achieved. Interoperability was developed

and knowledge of each other’s procedures, organisations, equipment and capabilities was enhanced. Better relationships and mutual understanding amongst the Five Power Defence Arrangement countries were fostered. Objective: To practise deployment and to develop interoperability at a tactical level with elements of the Brunei Special Forces.

Night Leopard November 2000

Australia Army Other Countries Brunei Result: Achieved. The mutual exchange of ideas and

developments in special operations techniques and equipment during the exercise, facilitated a development of understanding and some interoperability with the Brunei Special Forces. Objective: To develop overall interoperability through training in a joint maritime environment with multiple units.

ASWEX December 2000

Australia Navy, Air Force Other Countries NZ Result: Achieved. Comprehensive post-exercise

analysis confirmed achievement of improved skill levels. Objective: To exercise the planning of combined operations through participation in crisis action planning simulation.

Tempest Express December 2000

Australia Air Force, Navy Other Countries US(6) Result: Achieved. Joint and combined

interoperability were enhanced and the appropriate level of standardisation with US forces was achieved. Objective: To practise anti-submarine-warfare and anti-surface-warfare skills with the US Navy and enhance interoperability.

JTFEX/FLEETEX (7) January-February 2001

Australia Air Force Other Countries US, Canada Result: Achieved. Deployability and interoperability

with the US Navy was thoroughly exercised and enhanced.


93

Exercise Forces Objective Objective: To further develop interoperability between Australian, NZ and French naval/maritime air units.

Tasmanex 2001 March 2001

Australia Navy, Air Force Other Countries NZ, France(8) Result: Partially achieved. Good integration between

Australian, NZ and French naval and air units was achieved but there were limited opportunities to exercise submarine and afloat support capabilities. Objective: Combined maritime warfare exercise with US Pacific Fleet forces, with an anti-submarine focus. RAAF maritime patrol aircraft forces participated to test preparedness levels.

Computex Series February-March 2001

Australia Air Force Other countries US

Result: Interoperability with the US Navy was enhanced and the exercise confirmed preparedness levels. Objective: To practise combined operations with the Australian and Singaporean Armies to foster knowledge, understanding, cooperation and interoperability.

Flaming Arrow February-March 2001

Australia Army Other Countries Singapore

Result: Achieved. The exercise enhanced knowledge and understanding with a successful live-fire battalion attack. Objective: To broaden the military experience and knowledge of selected personnel and promote cooperation between the two countries.

Anzac Series February-April 2001

Australia Army Other Countries NZ Result: Achieved. A working knowledge of

operational, logistic and administrative procedures was gained. Objective: To conduct a field training and amphibious exercise to enhance interoperability with the US Marine Corps.

Gold Eagle March 2001

Australia Army Other Countries US Result: Achieved. Familiarisation and knowledge of

the US Marine Corps were facilitated through this exercise. Objective: Conduct work-up training and operation readiness evaluation for two RAN submarines safely and realistically, in conjunction with a visit by a French Navy submarine.

Opalex(3) March 2001

Australia Navy, Air Force Other Countries France

Result: Achieved. Confirmed RAN units’ capability levels. Objective: To develop PNG military skills to facilitate interoperability at the tactical level.

Wantok Warrior March 2001

Australia Army Other Countries PNG

Result: Not achieved. Cancelled due to non-availability of the PNG Defence Force. Objective: To practise a field training exercise, enhancing interoperability with the NZ Army.

Tasman Exchange March 2001

Australia Army Other Countries NZ

Result: Achieved. Familiarisation and interoperability were enhanced during this exercise.

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Exercise Forces Objective Objective: To conduct brigade-level amphibious operations in a mined environment and develop tri-lateral standard operating procedures for very shallow water mine counter measures.

Kernel Blitz 01(3) March-April 2001

Australia Navy Other Countries US, UK

Result: Achieved. The exercise also highlighted shortfalls in current RAN equipment utilised for very shallow water mine counter measures. Objective: To practise deployment and develop interoperability at a tactical level with elements of the NZ Special Forces.

Night Kiwi March-May 2001

Australia Army Other Countries NZ Result: Not achieved due to manpower and asset

constraints/limitations. Objective: To practise and develop operational procedures and tactics with Five Power Defence Arrangements’ units in a joint/combined maritime and air defence exercise.

IADS ADEX 01-2 April-May 2001

Australia Navy, Air Force Other Countries Malaysia, Singapore, NZ, UK

Result: Partially achieved. In a complex maritime air defence environment, problems in areas of communications planning, frequency management and timely passage of information have been identified for future correction. Air defence objectives were achieved. Objective: To participate in a US command post exercise designed to practise staff in methods, procedures and conduct of planning, operations, offensive support and targeting, information operations and intelligence.

Tempo Brave April 2001


Result: Not achieved. Exercise was cancelled. Objective: To practise participating forces in naval control and protection of shipping techniques and develop operational procedures in a combined maritime exercise.

Bell Buoy 01(3) April-May 2001

Australia Navy Other Countries US, UK, Canada, Republic of Korea, Chile

Result: Achieved. Exercise reinforced knowledge and skills in an international environment and provided exposure to the broad range of theory and practise overseas. Objective: To test and evaluate RAN, RAAF, US Navy and Royal Singapore Navy interoperability in diving and explosive ordnance disposal operations.

Tricrab 01 April-May 2001

Australia Navy, Air Force Other Countries US, Singapore Result: Achieved. A high level of interoperability in

tactical level activities. Objective: To develop and maintain interoperability between the Australian Special Forces and the US Special Forces.

Flash Action April-May 2001

Australia Army Other Countries US Result: Achieved. Stronger relations with the US

Special Forces were developed.


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Exercise Forces Objective Objective: To develop and maintain interoperability between Australian Special Forces and US Special Forces conducting combined special recovery US operations.

Day Cougar April-June 2001


Result: Not achieved. Rescheduled to September 2001. Objective: To exercise participants in a short warning, power projection operation as a command post exercise and a field training exercise. Specific objectives included opposed passage of fleet units, mine counter measures, amphibious landing and live firing activities.

Tandem Thrust 01 May 2001

Australia Navy, Army, Air Force Other Countries US, Canada

Result: Achieved. Specific goals for each phase of Exercise Tandem Thrust were identified and evaluated.

Objective: To conduct trilateral training with the Royal Singaporean Air Force and US Air Force fighter aircraft.

Tri-Sling(3) May 2001

Australian Air Force Other Countries US, Singapore Result: Achieved. Training was successfully

conducted.

Objective: To conduct training to develop Malaysian Special Forces counter-hijack capability.

Dawn Tiger May 2001

Australia Army Other Countries Malaysia

Result: Not Achieved. Exercise was cancelled.

Objective: To participate in a long-range deployment of aircraft to participate in a multi-national large-force employment training exercise.

Maple Flag(3) June 2001

Australia Air Force Other Countries US, Canada Result: Achieved. The exercise provided an excellent

opportunity to assess the performance of Australian aircraft in a multi-national (coalition) exercise. Objective: To develop and evaluate interoperability in mine hunting, mine sweeping and diving operations under a multi-lateral mine countermeasures tasking authority.

Regional MCMX June 2001

Australia Navy Other Countries Singapore, US, Malaysia Result: Achieved. Primarily an engagement activity

and the first of this type. Objective: To practise deployment and develop interoperability at a tactical level with elements of the Thai Special Forces.

Night Panther 01 June 2001

Australia Army Other Countries Thailand Result: Achieved. Closer defence relations and

personal contacts were developed and knowledge and familiarity with the Royal Thai Army was extended.

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Exercise Forces Objective Objective: To broaden the military experience and knowledge of selected personnel and promote cooperation between the two countries.

Long Look June-September 2001

Australia Army Other Countries UK Result: Commenced and is currently successful.

Notes 1. This exercise was erroneously reported as ‘Rimpac 01’ in the 2000-01 Portfolio Budget

Statements (PBS), and was not amended in the 2000-01 Portfolio Additional Estimates Statements (PAES). ‘Rimpac 00’ is the correct title.

2. Army was erroneously added as a participating force in the PAES. Army did not participate in this exercise.

3. This exercise was not reported in either the PBS or the PAES. 4. This exercise was erroneously reported as occurring from July 2000-June 2001 in the PBS. 5. This exercise was erroneously reported as occurring during September-October 2000,

November-December 2000, and February-March 2001 in the PBS. 6. The US was erroneously replaced with NZ in the PAES. The US was the only

international participant in this exercise. 7. This exercise was erroneously reported as occurring from February-March 2001 in the

PBS. 8. France was erroneously omitted as a participating international force in the PBS.

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OUTPUT TWO: NAVY CAPABILITIES

OVERVIEW Defence contributed to the achievement of the Government’s desired outcome through the provision of capabilities for maritime operations. Navy capabilities are: surface combatant operations; naval aviation operations; patrol boat operations; submarine operations; afloat support operations; mine warfare operations; and amphibious lift operations.

The past year has seen the Navy achieve many significant goals, substantially achieving the preparedness and operational requirements placed upon it. Two Collins-class submarines (HMA Submarines Dechaineux and Sheean) were provisionally accepted into service and a robust plan is in place to address class deficiencies. Additionally, one Anzac-class ship (HMAS Warramunga), one Landing Platform Amphibious (HMAS Kanimbla) and two Huon-class minehunter coastal vessels (HMA Ships Norman and Gascoyne) were delivered during this year – a significant overall achievement.

Operations saw the Navy involved in East Timor, the Persian Gulf, the Solomon Islands, and the Heard and Macdonald Islands areas. There was a high level of Navy operations in support of other government agencies to deal with unlawful boat arrivals, illegal fishing and drug importation. The Navy also provided effective support for the Sydney Olympic and Paralympic games and met all requirements for these events.

These major achievements were balanced by some shortfalls. Three Super Seasprite helicopters for the Anzac-class ships were not delivered due to aircraft software development problems. Personnel shortfalls across the majority of Navy categories have reduced the Navy’s ability to fully achieve some performance targets, particularly in naval aviation, patrol boat operations and the mine warfare force. The net loss of personnel, although undesirable, was much lower than for 1999-2000, suggesting that personnel management initiatives are delivering results. The continuing decline in personnel numbers was arrested during the year with recruiting strategies yielding improved results, but recovery to target strength will take some years.

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PERFORMANCE TARGETS

Major Surface Combatant Force

Entails the provision of the major surface combatant force at levels of capability to: • assert sea control; • conduct surveillance; • conduct maritime patrol and response operations; • collect intelligence; • conduct counter-insurgency operations; • protect shipping, offshore territories and assets; and • conduct operations other than war in support of Government.

Performance Targets Performance Quality: • Achieve levels of preparedness

directed by CDF for military response options with a warning time of less than 12 months.

• Achieve a level of training that maintains core skills and professional standards across all warfare areas.

• Achieved. 100% preparedness levels in accordance

with CDF/Commander Australian Theatre (COMAST ) preparedness directives were achieved.

• Substantially Achieved. In conjunction with the

Fleet Activity Schedule training opportunities, the major surface combatant force participated in the following exercises - ASWEX 00, Ocean Protector 01, Rimpac 00, Flying Fish 00, Singaroo 00, Austhai 00, Goodwill 00, Tasmanex 01, Opalex, IADS Adex and Tandem Thrust 01. Limitations exist for anti-air warfare proficiency core skills due to unreliability of the FFG missile launcher and limitations with the Kalkara targets, fast jet availability and problems encountered with onboard systems in recording analysis.

Quantity: • 6 FFG–1,762 MLOC days(1)(2)(3)

• 6 FFG – 1,599 MLOC days. HMA Ships Adelaide,

Melbourne and Sydney underwent extended refit periods, requiring operational readiness evaluations to regain MLOC status.

• 1 DDG–365 MLOC days. • 1 DDG - 292 MLOC days. MLOC target was not achieved due to unscheduled maintenance, defects and lead times to repair.

• 2 FFH–730 MLOC days. • 2 FFH - 552 MLOC days. HMA Ships Anzac and Arunta underwent extended refit periods, limiting the MLOC level achieved.

Output Two: Navy Capabilities

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Notes 1. Time at Minimum Level of Capability (MLOC) is the unit of performance measurement for

individual warfare capabilities, ie the capability to conduct anti-surface operations, anti-submarine operations, anti-air operations and the capability to conduct maritime support operations. As the range and depth of capability varies between classes of ship due to their design, MLOC results are aggregated to provide performance information at the Force Element Group level. Breakdowns of MLOC performance information below this level are classified.

2. The MLOC assessment process for Navy capabilities includes objective assessments of equipment, equipment condition, personnel, collective training and readiness notice to achieve the operational level of capability required in accordance with operational readiness directives. Ship days at MLOC is an aggregate measure which encompasses numerous lower-level quantity and quality measures. The performance target is the theoretical maximum for all ships to be at MLOC when not conducting deep depot-level maintenance or conducting workup to MLOC.

100


Naval Aviation Force

To provide the organic aviation capabilities required to: • support the assertion of sea control and the conduct of surveillance; • conduct maritime patrol and response operations; • collect intelligence; • conduct counter-insurgency operations; • protect shipping, offshore territories and assets; and • conduct military support operations.





with CDF/COMAST preparedness directives were achieved.

• Achieved. In conjunction with the Fleet Activity Schedule and aviation squadron training opportunities, the naval aviation force participated in exercises ASWEX 00, Ocean Protector 01, Rimpac 00, Flying Fish, Tandem Thrust 01 and Goodwill 00. All objectives were achieved.

Quantity: • 5 Bell 206B

- 234 flying hours (revised estimate).

• 0 Bell 206B. All five aircraft were transferred to the

Army in October 2000 (listed as ‘Kiowa’ in the Army’s performance information tables). 234 hours were achieved.

• 12 AS350BA Squirrel, including six aircraft transferred from the Army in October 2000. - 3,000 flying hours (revised

estimate).

• 11 AS350BA Squirrel. One aircraft was provisionally written off, awaiting an economic repair assessment. 2,592 hours achieved. The shortfall occurred due to a larger than expected induction process with the aircraft which were transferred from Army, and intake of fewer students than originally planned.

• 7 SK50/50A Sea King - 2,000 flying hours (revised

estimate).

• 7 SK50/50A Sea King. 1,803 hours achieved. Actual tasking during Operation Gold and Exercise Tandem Thrust 01 was less than planned.

• 16 S-70B-2 Seahawk.

- 4,450 flying hours (revised

estimate).

• 16 S-70B-2 Seahawk. Two of the sixteen aircraft remain in attrition/reserve; these will be brought into the pool by December 2001. 3,261 hours achieved. Personnel shortages, particularly aircrew, resulted in only 66 per cent staffing of all ships’ flights. In addition, there were insufficient instructors and trainees to conduct the required amount of training.


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Performance Targets Performance • 3 Super Seasprite SH-2G(A)

- - 400 flying hours (revised estimate).

• 0 Super Seasprite SH-2G(A). The Anzac ship helicopter project experienced schedule slippage due to integrated software development problems. The revised delivery schedule will be advised by the contractor later in 2001. 0 hours were achieved due to non-delivery.

• 18 Kalkara • 16 Kalkara. Kalkara is an unmanned aerial target system with an expected attrition rate of two per year. As reported in the Portfolio Additional Estimates Statements 2000-01, two were destroyed during operational activities thereby reducing availability from 20 to 18. A further two were lost due to incidents in September 2000 and April 2001.

- 39 launches (revised estimate). 21 launches were achieved. Fewer launches occurred due to technical problems associated with acceptance into naval service. There was also a two-month suspension of flying while awaiting results of the April 2001 accident investigation.

• Support for the Sydney Olympics and Paralympics of up to 3 SK50 Sea Kings and up to 2 S-70B-2 Seahawks.

• Achieved. 816 and 817 squadrons were tasked; staffing requirements and outcomes were fully met.

Patrol Boat Force

Entails the provision of the patrol boat force at levels of capability to conduct: • peacetime surveillance; • maritime patrol and response operations within coastal waters; and • operations other than war in support of the Government.



• Partially Achieved. Shortages of key personnel

were experienced during the last quarter of the period.


• Achieved. In conjunction with the Fleet Activity Schedule training opportunities, the patrol boat force participated in the following exercises: Penguin 00, Lumbas 00, Minor War Vessel Fleet Concentration Period, and Croix Du Sud. Limited personnel resources threaten to degrade these standards.

102


Quantity: • 15 Patrol Boats – 4,334 MLOC days

• 15 Patrol Boats – 4,469 MLOC days. The patrol boat

force conducted 243 foreign fishing vessel boardings and 76 apprehensions, and 54 suspected illegal entry vessel apprehensions.

• Provide 1,800 patrol boat days for surveillance of the Australian Fishing Zone and provide at least 33 ship visits for patrol of the Bass Strait oil rigs. May be achieved by RAN vessels other than patrol boats.

• 1,688 patrol boat days and in excess of 33 ship visits were achieved for patrol of the Bass Strait oil rigs as part of Operation Estes. A number of patrol boat days were lost due to unscheduled maintenance (in particular relating to hull defects) and short notice changes in priority from civil surveillance to supporting other activities.

Submarine Force

Entails the provision of the submarine force at levels of capability to conduct: • covert surveillance and reconnaissance; • offensive operations against warships, submarines and merchant shipping;

and • mining and support to special operations.



• Partially Achieved. Performance was affected by

training, equipment and sustainability deficiencies and the current limited capability of the force. One submarine was unable to meet MLOC requirements for a period of 16 days.


• Substantially Achieved. Within current hardware and software system constraints associated with the limited capability of the force, and in conjunction with the Fleet Activity Schedule training opportunities, significant submarine interaction and training was achieved in exercises Singaroo 00, Tandem Thrust 01 and Fincastle. HMAS Waller withdrew from Tasmanex 01, due to defect maintenance.

Quantity: • 3 Collins – 450 MLOC days

• 1 Oberon – 90 days notice for operations (until end of 2000)

• 3 Collins – 435 MLOC days. The submarine force

fell only marginally short of its target. Programming variance, corrective maintenance and combat system augmentation upgrades affected the MLOC achievement figures.

• 1 Oberon – 90 days notice for operations.


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Afloat Support Force

Entails the provision of the afloat support force at levels of capability required to provide:

• under-way replenishment of fuel, water, stores and ammunition; and

• strategic bulk fuel transport.



• Substantially Achieved. On one occasion

preparedness levels were unable to be met due to HMAS Westralia undergoing refit early. This resulted in increased notice for sea levels not being met which had minimal impact.


• Substantially Achieved. In conjunction with the Fleet Activity Schedule training opportunities, the afloat support force participated in exercises Ocean Protector 01, Rimpac 00, Flying Fish 00, Goodwill 00 and Tandem Thrust 01. HMAS Westralia was withdrawn from Flying Fish 00 and HMAS Success was withdrawn from Tasmanex 01 due to defect maintenance.

Quantity: • 1 AOR – 345 MLOC days

• 1 AO – 270 MLOC days.

• 1 AOR – 337 MLOC days. After re-programming of

HMAS Success’s refit, a potential three-week loss of MLOC following cracks to a fuel injector pump was reduced to eight days.

• 1 AO – 263 MLOC days. HMAS Westralia commenced refit early, reducing its ability to achieve the target.

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Mine Warfare Force

Entails the provision of the mine countermeasures force at levels of capability to conduct:

• mine clearance from beaches, shallow and deep water; and

• route-survey and lead-through operations.




• Partially Achieved. Reduced underwater explosive

ordnance disposal capability relating to equipment issues affected the clearance diving team’s preparedness level

• Substantially Achieved. In conjunction with the Fleet Activity Schedule training opportunities (and delays in the Mine Hunter Coastal work-up program), the mine warfare force participated in exercises Ocean Protector 01, Penguin 00, Minor War Vessel FCP, Tasmanex 01, Kernel Blitz 01, Tricrab 01, Western Pacific MCMX and DIVEX 01.

Quantity: • 2 MHC – 630 MLOC days

• 2 MHI – 60 MLOC days

• 2 Clearance Diving Teams – 630 MLOC days – provided security support to the Olympics and Paralympics

• 2 MHC – 543 MLOC days. Staffing levels and

programming difficulties in conducting work-up and operational readiness evaluation largely contributed to the reduced achievement.

• 2 MHI – 0 MLOC days. Mine Hunter Inshore vessels failed to reach planned MLOC because of materiel defects throughout 2000-01. Both vessels were decommissioned in August 2001.

• 2 Clearance Diving Teams – 630 MLOC days – provided 95 personnel to Operation Gold, with no safety incidents.


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Amphibious Lift Force

Entails the provision of the amphibious lift force at levels of capability to:

• conduct amphibious operations;

• support land operations from sea;

• provide strategic, operational, tactical and administrative sea transport; and

• provide support to beach intelligence gathering.





with CDF/COMAST preparedness directives were achieved. The amphibious lift force participated in Operations Trek, Belisi and Tanager.

• Achieved. In conjunction with the Fleet Activity Schedule training opportunities, the amphibious lift force participated in exercises Ocean Protector 01, Croix Du Sud and Kernel Blitz 01. All objectives were achieved.

Quantity: • 1 LSH – 260 MLOC days

• 2 LPA – 445 MLOC days • 6 LCH – 1735 MLOC days

• 1 LSH – 256 MLOC days. HMAS Tobruk

commenced refit early. • 2 LPA – 424 MLOC days. HMAS Kanimbla delivery

was delayed, and the ship also experienced problems with its main propulsion diesel engines.

• 6 LCH – 1,678 MLOC days. MLOC days were lost due to a combination of delays in life-of-type extension progression and problems experienced with the main propulsion diesel engines. All Landing Craft Heavy vessels are programmed to undergo life-of-type extension, which is scheduled for completion in late 2002. Three vessels underwent life-of-type extension during 2000-01.

• 1 AKR – 320 MLOC days • 1 AKR – 315 MLOC days. Minor shortfalls occurred due to the fast catamaran HMAS Jervis Bay having to undergo essential maintenance. The lease on HMAS Jervis Bay expired in May 2001.

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COST OF OUTPUT Table 2.8: Cost of Output Two - Navy Capabilities


Estimate


2000-01 Actual

Variation


Employees - Military 878.7 921.8 1021.8 100.0 Employees - Civilian 239.4 254.1 223.1 -31.0

Sub-Total Employees 1118.1 1175.8 1244.8 69.0 Suppliers - Non-Inventory 894.7 986.1 827.7 -158.4 Suppliers - Inventory Consumption 269.0 179.1 135.4 -43.8

Sub-Total Suppliers 1163.7 1165.2 963.1 -202.1 Depreciation and Amortisation 738.3 708.6 755.9 47.3 Write-Down of Assets 0.0 83.2 160.2 76.9 Other Expenses - including Interest and Grants 13.4 48.9 42.5 -6.4 Expensed Assets Under Construction 26.9 81.0 33.8 -47.2 Loss on sale of Assets 0.0 0.0 0.9 0.9

Total Expenses 3060.4 3262.8 3201.2 -61.7 Capital Use Charge 1728.1 1982.7 2014.7 32.0

Total Cost of Output Two 4788.5 5245.5 5215.9 -29.6

Explanation

The actual cost for Navy capabilities was 0.6 per cent less than that estimated for 2000-01. Key performance issues related to the price variation are explained below. • There was a reduced need for suppliers (both non-inventory and inventory

consumption) due to the reduced availability of several platforms. • HMA Ships Dechaineux and Sheehan were budgeted to be provisionally

accepted in January and February 2001. These vessels were provisionally accepted in December 2000, making the associated in-service costs of these submarines slightly higher than planned.

107

OUTPUT THREE: ARMY CAPABILITIES

OVERVIEW Defence contributes to the achievement of the Government’s desired outcome through the Army’s provision of capabilities for land operations. These capabilities are special force operations, mechanised operations, light infantry operations, army aviation operations, combat support to land operations, motorised infantry operations and protective operations.

2000-01 saw a continuation of high levels of operational activity. The Army’s continued success in East Timor demonstrated the high standards of training, skills and capability inherent in the Army. The Army made substantial contributions to peacekeeping operations in the region and further afield, as well as to the Sydney Olympic and Paralympic Games.

The Army’s ability to achieve the full range of directed preparedness requirements was constrained by the ongoing commitment to East Timor, the ongoing support requirements of meeting other overseas commitments, such as those to Paua New Guinea (Op Belisi), and the limitations imposed by equipment shortfalls and personnel shortages in critical trades.

Supply and equipment issues are being addressed through initiatives such as the Army ammunition study and pursuing commercial off-the-shelf solutions to help address deficiencies within capabilities.

The Army’s personnel strength remains below target, with continued high separation rates. As with the other Services, there was a strong focus on recruitment and retention within the Army during the year to sustain its capabilities and workforce at a realistic cost.

The Army’s personnel strength has been affected by pressures arising from increased operational commitments over a long period, continued high work rates to sustain these and other preparedness tasks, and high training rates to meet higher recruiting targets caused by higher separations.

Recruitment and retention initiatives both across Defence and within the Army are in progress to address the deficiencies. Some initiatives, such as regional recruitment, have already made an improvement. Other key initiatives to address the shortage of personnel include the Stay Army website which is a tool to encourage soldiers to transfer to another trade rather than to discharge, and a trial of a reduced initial period of service. The latter offers a reduced employment contract (from four years to two years) and is aimed at attracting personnel to critical trades.

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The Government, through the White Paper, has transformed the role of the ADF Reserves from a focus on mobilisation and expansion to one which requires the Reserve to contribute to the support and sustainment of contemporary ADF operations. The Chief of Army is charged with developing a re-roled and re-tasked Army Reserve Force. Reserve units will be allocated their new roles and tasks and will be structured accordingly by December 2003. During the past year, the Reserves increasingly were provided with a more important and challenging role in direct support of deployed forces. Some 2,500 Reservists supported the recent Olympic Games. Army Reservists currently serve in operations in Bougainville, East Timor, Butterworth in Malaysia and in support of other ADF operations.

2000-01 saw the implementation of the regional training centre capability with the establishment of the Headquarters, Regional Training Centre located at Canungra. This headquarters commands the various regional training centres, which are multi-use, flexible learning centres employing advanced technologies to provide Regular and Reserve soldiers with access to a significant portion of the command’s training. In fulfilling this role, the centres make a solid contribution to bringing to fruition the ‘one Army’ concept, by enhancing opportunities for the Army’s part-time members to acquire the same competencies as their full-time counterparts.

A number of initiatives were implemented during the year for the Army’s Plan For A Fair Go. The plan aims to eliminate unacceptable behaviour, particularly bullying and harassment, as well as encourage equity and diversity generally within the Army. A hotline was established in March 2001 and is to remain operational until, at least, the end of December 2001.


PERFORMANCE TARGETS

Special Forces

This capability is focused on the Army Special Operations Group. These forces cover a range of special operations tasks, such as counter terrorism, strategic strike, special recovery, and long-range reconnaissance, beyond the range and capabilities of other ADF force elements.

The special forces capability is designed to: • exploit deception and surprise; and • employ techniques which are discreet, non-escalatory, avoid collateral

damage and which span the continuum of elite conventional to unconventional operations.

Output Three: Army Capabilities

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• Achieved. The special forces capability met all

preparedness directed tasks.

• Achieved. All training requirements were met.

Quantity: • Special Operations Group,

Comprising: Headquarters Special Operations; Special Air Service Regiment; 4 Battalion Royal Australian Regiment (Cdo); Commando Regiment; and 126 Commando Signals Squadron.

• Achieved. Personnel availability for units in this

sub-output were sufficient to meet preparedness levels.

Mechanised Operations

This capability is focused on 1 Brigade. It provides high levels of organic mobility and firepower capable of conducting peacekeeping, peace enforcement and combat operations.

The mechanised force is designed to: • exploit mobility, protection, inherent command, control, communications,

computing, intelligence, surveillance and reconnaissance, and firepower; and • achieve surprise, offensive action, concentration of force and rapidity of

execution, all of which arise from the employment of the combined arms team.



• Achieve a level of training that

maintains core skills and professional standards across all warfare areas

• Partially Achieved. Equipment shortfalls and

personnel deficiencies in critical trades and sustainability issues affected the achievement of preparedness levels for some directed military response options. Even so, a reduced yet credible level of capability was available.

• Partially Achieved. Personnel deficiencies, such as critical trade deficiencies, affected the achievement of some collective training requirements.

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Performance Targets Performance Quantity: • 1 Brigade, comprising:

a headquarters; a mechanised infantry battalion; a reconnaissance regiment; an armoured regiment; and combat and logistic support units.

• Partially Achieved. Personnel availability for units

in this sub- output were at sub optimal levels, however a reduced yet credible level of preparedness was achieved.

Light Infantry Operations

This capability is focused on 3 Brigade and the Parachute Battalion Group. It provides an air transportable capability to conduct a range of military support and combat operations. The light infantry force is designed to: • exploit strategic, operational and tactical mobility; • exploit flexibility, adaptability and utility across the full spectrum of conflict;

and • achieve surprise, rapidity of execution and the capacity to seize and hold

ground.




• Substantially Achieved: The light infantry

capability was capable of meeting the military response option tasks as directed by the CDF. Levels of preparedness as directed by the CDF were achieved within the limitations imposed by the commitment to East Timor, and its impact upon this capability.

• Achieved. Training requirements were met.

Quantity: • 3 Brigade, comprising: a headquarters; 2 infantry battalions; armoured mobility for 2 infantry companies; and combat and logistic support units.

• The Parachute Battalion Group, Comprising: a parachute infantry battalion combat support units

• Substantially Achieved. Personnel availability for

units in the sub-output were sufficient to meet preparedness levels within the limitations imposed by the commitment to East Timor.

Army Aviation Operations

This capability is focused on the Aviation Support Group and 1 and 5 Aviation Regiments. It provides integral air mobility, medium lift, reconnaissance,


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surveillance and aerial fire support to military support, combat and special operations.

It provides the organic aviation capabilities required to conduct: • surveillance and armed reconnaissance; • tactical airlift; • command and control support; and • combat service support.




• Substantially Achieved: The aviation

operations capability was capable of achieving all directed military response options. Due to limitations imposed by the commitment to East Timor, a high level of operational activity and its impact upon this capability, some directed military response options required sustainability issues to be addressed.

• Substantially Achieved. Concurrent activities, such as those in East Timor and Bougainville, affected the achievement of all training requirements.

Quantity: • 36 Black Hawk - 7,784 flying hours (revised estimate).

• 36 Black Hawk. 8,315 hours achieved. Achievement was greater than forecast due to higher than predicted usage on Operation Gold. Exercise Tandem Thrust provided a valuable opportunity to regain competence in some degraded skills.

• 43 Kiowa.

- 12,701 flying hours (revised estimate)

• 42 Kiowa (5 of the 43 aircraft were transferred from Navy and one aircraft was damaged in an accident and was not repairable).

11,380 hours achieved. The major area of under-utilisation was within Training Command. The low number of graduates from the ADF Basic Flying Training School and the ADF Helicopter School meant training rates were lower than normal. In addition, within 1 Aviation Regiment, squadrons were carrying low pilot numbers. The high level of operational activity led to a further reduction in pilot availability due to service leave entitlements associated with operational deployment.

• 6 Chinook. - 1,270 flying hours (revised

estimate).

• 6 Chinook. 872 hours achieved. The rate of effort was less than forecast because of compounding factors such as servicability problems, a lower than forecast rate of effort on exercises, and pilot staffing.

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Performance Targets Performance • 25 Iroquois. - 7,796 flying hours (revised

estimate).

• 25 Iroquois. 6,320 hours achieved. The rate of effort was not achieved because of high student failure rates at the aviation schools, reduced operational tasking for operation Belisi II, and operational rotations.

• 17 Squirrel.

- 2,520 flying hours (revised estimate).

• 11 Squirrel (6 aircraft transferred to the Navy in October 2000). These aircraft are awaiting disposal as a result of the ADF rotary wing flying training rationalisation study.

1,464 hours achieved. The low number of graduates from the ADF Basic Flying Training School and the ADF Helicopter School provided a reduced number of graduates who were available to fly.

• 3 King Air. - 2,000 flying hours (revised

estimate). • 2 Twin Otter.


• 3 King Air. 1,928 hours achieved.

• 2 Twin Otter. 1,159 hours achieved.

Support to Land Operations

Support to land operations incorporates ground-based air defence, combat support operations, and operational logistic support to land forces.

Ground-based air defence is focused on 16 Air Defence Regiment. It is an integral component of the ADF air defence system, and provides short-range point air defence for manoeuvre formations and area defence within low and medium threat scenarios. Elements of this capability are held at high readiness to support the Ready Deployment Force.

Ground-based air defence is characterised by flexible and rapid establishment of defended airspace in conjunction with other land and joint elements.

Combat support operations enhance the conduct of operations through important surveillance and specialist support, particularly in construction engineering, topographical support, electronic warfare, regional force surveillance units and intelligence support. Small elements of the capability are held at high readiness to support the Ready Deployment Force.

Operational logistic support to land forces is based on the Logistic Support Force and provides supply, transport, repair, health and other functions to military support and combat operations.


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Ground-Based Air Defence • Partially Achieved. Equipment and sustainability

issues and personnel deficiencies in critical trades affected this capability’s achievement of all of the directed military response options. A reduced yet credible level of capability was available.

Combat Support Operations • Substantially Achieved. Levels of preparedness as

directed by the CDF were achieved within the limitations imposed by the commitment in East Timor. Limitations due to equipment issues and personnel deficiencies in critical trades impacted on some military response options.

Operational Logistic Support • Substantially Achieved. This component was

capable of achieving all directed military response options. Due to limitations imposed by the commitment in East Timor, a high level of operational activity and personnel shortages, some directed military response options required sustainability issues to be addressed.

• The ongoing requirement to sustain operations in East Timor and provide support to major exercises, as well as personnel shortages in critical trades, placed strain on the ability of the Logistical Support Force to achieve directed levels of preparedness.


• Substantially Achieved. Concurrent operations and personnel deficiencies, such as critical trade deficiencies, affected the achievement of all training requirements.

Quantity: • Logistic Support Force and its

integral logistic support units • Direct command units of Land

Command

• 16 Air Defence Regiment

• Substantially Achieved. Personnel availability for

units in this sub-output were sufficient to provide a reduced, yet credible level of preparedness.

• Partially Achieved. Personnel availability for this

unit were not sufficient to provide a credible level of preparedness. 16 Air Defence Regiment is now a separate sub- output within the Army.

Motorised Infantry Operations

Motorised infantry operations are based on 7 Brigade, an integrated formation of full-time and part-time personnel. It provides complementary and supplementary reinforcement to the Ready Deployment Force and, when

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mobilised, a rotation force for the full range of warfighting and military response options tasks. It is capable of conducting motorised operations for defeating attacks against Australia. 7 Brigade is the best equipped of the Army’s Reserve formations.

Motorised infantry operations are designed to: • exploit mobility, protection, tactical sustainability, endurance,

reconnaissance and surveillance; • exploit flexibility, adaptability and utility using inherent command, control,

communications, computing, intelligence, surveillance and reconnaissance systems; and

• achieve surprise, rapidity of concentration and execution.



• Partially Achieved: The motorised infantry

operations capability was not capable of achieving all directed military response options due to equipment shortfalls, personnel deficiencies in critical trades and sustainability issues. A reduced yet credible level of capability was available.


• Partially Achieved. Operational commitments limited the ability of this capability to achieve the training requirements.

Quantity: • 7 Brigade, comprising:

a headquarters; 3 motorised battalions a regular motorised infantry battalion two reserve motorised infantry battalions 1 reconnaissance battalion; and combat and logistic support units.

Regular Units • Substantially Achieved. Regular units comprising

of full-time personnel achieved the required staffing levels, providing a credible level of preparedness.

Reserve Units • Partially Achieved. The Reserve units achieved

lower than expected recruiting targets which affected the staffing of this capability.

Protective Operations

Protective operations are provided predominantly by the Reserve component of the Army. Operations are focused on providing surge and sustainment forces to the Ready Deployment Force.

Protective operations also assist the Australian community during civil emergencies.

Protective operation forces are designed to possess the capacity for subtlety, initiative and discrimination at the lower end of the spectrum of conflict.


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• Achieved. While the Army Reserve had no

assigned preparedness notice in 2000-01, individuals and sub-units were available for reinforcement and rotation. Those Army Reserve units which had preparedness requirements of less than 360 days, such as medical support units and commando units, have been attributed directly to other Army capabilities.

• Partially Achieved. Factors such as personnel numbers within the Army Reserve and the priority of effort towards operations affected the achievement of training within this capability.

Quantity: • 4, 5, 8, 9, 11 and 13 Brigades, each

comprising of: a headquarters; two or three infantry battalions; an armoured reconnaissance unit; and combat and logistic support units.

• Partially Achieved. Personnel availability for units

in the sub-output were at sub optimal level. Personnel from this sub-output provided a reinforcement and rotation platform within the Land component of the Army.

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COST OF OUTPUT Table 2.9: Cost of Output Three – Army Capabilities


Estimate


2000-01 Actual

Variation

$m $m $m $m

Expenses Employees – Military 1738.6 1734.9 1822.2 87.3 Employees – Civilian 247.5 254.1 269.1 15.0

Sub-Total Employees 1986.1 1989.0 2091.3 102.3 Suppliers – Non-Inventory 1196.8 1135.2 802.5 -332.7 Suppliers – Inventory Consumption 344.9 379.2 186.2 -193.0

Sub-Total Suppliers 1541.7 1514.4 988.6 -525.8 Depreciation and Amortisation 494.8 507.1 483.9 -23.2 Write-Down of Assets 0.0 65.3 186.3 121.0 Other Expenses – including Interest and Grants 35.7 15.0 15.5 0.5 Expensed Assets Under Construction 53.8 43.5 36.2 -7.2 Loss on Sale of Assets 0.0 0.0 8.2 8.2


Total Cost of Output Three 5260.0 5057.9 4757.6 -300.2

Explanation

The employees expense result reflects principally expenses relating to an increased provision for military compensation arising from an actuarial review. Other variations are primarily a result of an over-estimate of inventory consumption and a range of technical accounting adjustments relating to assets.

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OUTPUT FOUR: AIR FORCE CAPABILITIES

OVERVIEW The Air Force provided combat forces that contributed to the ADF’s capacity to defeat attacks against Australia, defend regional and global interests, shape the strategic environment and protect national interests. These capabilities encompass air strike and reconnaissance, tactical fighter operations, strategic surveillance, maritime patrol aircraft operations, airlift, and combat support of air operations.

The Air Force has undergone an unprecedented period of sustained operational activity coupled with high separation rates and recruitment and retention problems which have placed significant strain on Air Force personnel. As a consequence, recruitment and retention of Air Force personnel was a priority in 2000-01 with a range of initiatives developed aimed at retention of personnel in key areas such as engineering, air traffic control and aircrew. Recruitment and retention issues will continue to be a priority. Over the coming year, the Air Force will also focus on occupational health and safety issues, in particular those flowing from the current Board of Inquiry into the F-111 fuel tank deseal/reseal program.

The Air Force substantially completed a redevelopment of its capability-based management framework which is aimed at providing a means to direct, monitor and assess Air Force capability, especially preparedness. This included the development of tools to support a holistic assessment of Air Force capabilities by sub-output, capability element (force structure and preparedness) and capability functions (personnel, logistics, development, testing and evaluation). The new framework will provide clear links to military strategic objectives and response options and will also support the determination of Directed Level of Capability.

Personnel and logistic shortfalls, combined with reduced aircraft availability for a number of key platforms, adversely affected the sustainability of Air Force operations and resulted in a significant under-achievement of allocated flying hours during the year. The capability management framework detailed above was developed to allow prioritisation of Air Force resources, ensuring that remediation action was appropriately targeted.

A number of key Air Force platforms are experiencing a range of ageing aircraft issues, including fatigue, corrosion and spares availability. These issues resulted in an increased maintenance effort, reduced aircraft availability and increased costs during 2000-01. The recent decision to withdraw the B707 fleet from service progressively over the next two years, including the requirement for an interim

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air-to-air refuelling capability, is indicative of the magnitude of the decisions that the Air Force faces in coming years.

The Air Force has aligned its capability management framework to the White Paper initiatives and updated Air Force capability plans and subordinate weapons system plans. Achieving the White Paper initiatives will be critical in alleviating many of the Air Force’s concerns and in maintaining the Air Force’s capability edge over the coming decade.

Despite all of these difficulties, Air Force personnel maintained a positive attitude and, through their dedication and professionalism, achieved excellent results in both operational deployments and exercises during the year. The Air Force’s flying safety culture and record showed positive trends and was again a testament to the calibre of its people.


PERFORMANCE TARGETS

Capability for Air Strike / Reconnaissance

Involves the provision of F-111 aircraft, crews and weapon systems at the level of capability required to perform land strike, maritime strike, offensive air support, counter air, and air reconnaissance.



• Partially Achieved. Commitments to ongoing

operations have been maintained although some demanding preparedness targets could not be met. Operational shortfalls have been caused by significantly reduced aircraft availability due to market testing, fuel tank deseal/reseal issues, ageing aircraft problems, and enhancement and modification projects. These pressures have been exacerbated by aircrew, engineer, and technical personnel shortfalls.


• Partially Achieved. Operational shortfalls, particularly reduced aircraft availability, have affected the ability to maintain core skills across all operational roles.

Quantity: • 17 F-111C (excludes attrition aircraft)


• 4 RF-111C • 14 F-111G

• 17 F-111C (excludes attrition aircraft)

- 2,757 hours achieved. The rate of effort was affected by the same factors noted above.

• 4 RF-111C • 12 F-111G (Two aircraft have been reallocated as

breakdown spares, in line with the logistics support concept).

Output Four: Air Force Capabilities

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Capability for Tactical Fighter

Involves the provision of F/A-18 Hornet aircraft, crews and weapon systems at the level of capability required to perform counter air, offensive air support, maritime strike, and air reconnaissance.




• Achieved. Commitments to ongoing operations

have been maintained and preparedness targets met. Fast-jet pilot and equipment shortages have limited the ability to sustain and conduct concurrent operations.

• Partially Achieved. Training levels to maintain core skills and professional standards were achieved. Ongoing delays in the delivery of the lead-in-fighter have limited fast-jet aircrew training throughput in the short term.

Quantity: • 71 F/A-18.


• 27 Macchi (to be withdrawn

progressively commencing early 2001) - 3,500 flying hours (revised estimate).

• 71 F/A-18.

12,331 hours achieved. The rate of effort was reduced due to aircraft availability and fast-jet pilot shortages. All Macchi aircraft have been withdrawn from service. Disposal action will occur during 2001-02. 3,039 hours achieved. Withdrawal from operational service resulted in the shortfall.

• 8 Hawk (8 of 33 expected to be delivered by 30 June 2001).

• 30 Hawk aircraft have been delivered. The three remaining aircraft will be delivered during 2001-02. Full functionality is 18 months behind schedule although all aircraft are operational in at least one of their roles.


- 1,878 hours achieved. The rate of effort was reduced due to project delays.

• 4 PC9 (forward air control role only) - 23,326 flying hours (revised estimate).

• 4 PC9 (forward air control role only). 17,540 hours achieved. The rate of effort was reduced due to maintenance issues, a lower than expected intake at both 2 Flying Training Squadron and the Central Flying School, and high failure rates on recent courses.

Capability for Strategic Surveillance

Involves the provision of sensors and battle management elements as support for wide-area aerospace surveillance, air defence, airspace control, and battlespace management.

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• Achieve a level of training that maintains core skills and professional standards across all warfare areas


operations have been maintained although some of the more demanding preparedness targets could not be met. Shortfalls occurred due to delays in the upgrade of deployable command and control facilities and technical staff shortages.

• Partially Achieved, due to the lack of suitable training opportunities and the limited simulation capability. The Virtual Air Environment will help address these shortfalls.

Quantity: • 11 air traffic control radars

• 3 tactical air defence radars • JORN over-the-horizon radar at

Laverton (WA) and Longreach (Qld) • Jindalee Radar Facility (NT)

• 9 air traffic control radars (two Australian Defence

Air Traffic System radars are yet to be commissioned)

• 3 tactical air defence radars • JORN over-the-horizon radar at Laverton (WA)

and Longreach (Qld) • Jindalee Radar Facility (NT)

Capability for Maritime Patrol

Involves the provision of P-3C aircraft, crews and weapon systems at the level of capability required to conduct maritime surveillance and reconnaissance, anti-submarine and anti-surface warfare, maritime strike, and search and survivor supply activities.




• Achieved. Commitments to ongoing operations

have been maintained and preparedness targets met. Delays to the AP-3C upgrade project have resulted in reduced aircraft availability and lowered training and experience in some roles.

• Substantially Achieved. Training levels to maintain core skills and professional standards were achieved. Transition to the AP-3C has resulted in a lowering of experience levels in some roles.

Quantity: • 19 P-3C Orion


• 3 TAP-3 Orion

• 19 P-3C Orion

8,216 hours achieved. The rate of effort was reduced due to reductions in operational tasking and reduced aircraft availability due to delays to the AP-3C upgrade program.

• 3 TAP-3 Orion


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Capability for Air Lift

Entails the provision of air lift aircraft, crews and weapon systems at the level of capability required to provide air logistics support, airborne operations, aeromedical evacuation, special operations, search and survivor assistance, VIP flights, air-to-air refueling, navigator training, and surveillance operations.





operations have been maintained, although some of the more demanding preparedness targets have not been met. Delays in the introduction of the C-130J and low C-130H and Caribou aircraft availability have reduced airlift capacity and capability in some roles.

• Partially Achieved. Operational shortfalls, in particular reduced aircraft availability, have impacted on the ability to maintain core skills across all operational roles.

Quantity: • 14 Caribou


• 14 Caribou.

4,174 hours achieved. The rate of effort was less than forecast because of reduced availability due to ageing aircraft issues and delays in contracted scheduled maintenance. Contingency operations also reduced training opportunities.

• 24 C-130 (following the C-130E to C-130J replacement) - 14,000 flying hours (revised

estimate).

• 24 C-130. 10,054 hours achieved. The reduction in rate of effort was due to delays with the introduction into service of the C-130J, which was exacerbated by both aircrew and technical personnel shortages. Additionally, low C-130H availability due to modification projects and contracted scheduled maintenance delays further reduced the rate of effort.

• 5 B707. - 2,136 flying hours (revised

estimate).

• 4 B707 (one aircraft has been withdrawn from service and written off). 1,955 hours achieved. The rate of effort was less than forecast because of reduced aircraft availability, ageing aircraft issues and experienced aircrew shortages.

• 5 Falcon. - 3,975 flying hours (revised

estimate).

• 5 Falcon. 3,222 hours achieved. The rate of effort is driven primarily by VIP commitments.

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Performance Targets Performance • 6 HS748.


• 4 B200 (leased)

• 6 HS748. 2,490 hours achieved. The rate of effort was less than forecast because of reduced navigator training, which was exacerbated by navigator instructor shortages.

• 4 B200 (leased and used on an ‘as required’ basis)

Capability for Combat Support of Air Operations

Involves the provision of combat support for air operations at the level of capability required to support main operating bases and forward operating bases within Australia or overseas.





operations have been maintained, although some of the more demanding preparedness targets could not be met. Personnel and equipment shortfalls will limit the ability to meet both concurrent and sustained operations in the medium term.

• Partially Achieved. Some training commitments have not been met due to workforce availability issues, limited exercise opportunities and the developing state of the capability.

Quantity: • 2 Combat Support Wings • 1 Expeditionary Combat Support

Wing • 1 Combat Reserve Wing • 1 Air Field Defence Wing

• Partially Achieved. Personnel shortfalls are being

addressed.


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COST OF OUTPUT Table 2.10: Cost of Output Four - Air Force Capabilities


Estimate


2000-01 Actual

Variation


Employees – Military 896.9 914.4 877.8 -36.6 Employees – Civilian 176.8 206.5 216.1 9.6

Sub-Total Employees 1073.7 1120.9 1093.9 -27.0 Suppliers - Non-Inventory 791.7 891.3 1034.6 143.3 Suppliers – Inventory Consumption 308.1 235.3 198.5 -36.8

Sub-Total Suppliers 1099.8 1126.6 1233.1 106.5 Depreciation and Amortisation 595.4 856.9 864.1 7.2 Write-Down of Assets 0.0 77.9 332.3 254.4 Other Expenses - including Interest and Grants 13.5 13.0 8.3 -4.7 Expensed Assets Under Construction 65.9 61.4 356.1 294.7 Loss on Sale of Assets 0.0 0.0 1.1 1.1

Total Expenses 2848.4 3256.7 3889.0 632.3 Capital Use Charge 1486.9 1873.1 1787.2 -85.9

Total Cost of Output Four 4335.3 5129.8 5676.2 546.4

Explanation

A combination of workforce shortages, project slippages, and aging aircraft and maintenance problems resulted in lower than planned flying hours. This, together with an over-estimate of inventory consumption, contributed to lower than planned costs in some categories. This was more than offset by a range of technical accounting adjustments relating to assets.

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OUTPUT FIVE: POLICY ADVICE

OVERVIEW

STRATEGIC POLICY AND DIRECTION

The Government’s Defence White Paper was launched in December 2000 following an extensive public discussion process1. Throughout its development, Defence provided the Government with advice on the strategic environment and on the capability priorities, enunciated in the Defence Capability Plan, to meet the strategic objectives set by the Government.

Advice on international defence policy contributed to the achievement of Australia’s strategic objectives to foster regional stability. This included (most notably) the establishment of the East Timor Defence Force, success in re-engaging with India and maintaining dialogue with Indonesia. Advice to foster stability in the South Pacific region was also provided. This included the continued allocation of resources to assist Papua New Guinea in the reform of the Papua New Guinea Defence Force, responding to the coup crisis in Fiji and assisting the Solomon Islands peace process. Additional advice was provided on the employment of ADF forces in Bougainville and the Solomon Islands.

Work to improve the Defence preparedness management system has begun to align preparedness priorities with the Government’s strategic objectives and to inform ADF sustainability planning. Useful progress was made on validating the ADF’s force structure through options testing. This seeks to link strategic objectives and specific guidance on the range and balance of capabilities to be acquired for the ADF. This work has informed deliberations on the requirement for capabilities such as air-to-air refuelling and future helicopter requirements.

The national support agenda was developed to provide direction in enhancing the interactions between Defence and the broader community. This included establishing relationships with federal and state government agencies, industry and providers of civil infrastructure in support of military strategic and operational planning and capability life-cycle management.

Good progress was made in fostering public debate on defence policy issues and improving the pool of policy advice available to the Government through the White Paper public discussion process, and in the development of the Australian Strategic Policy Institute. The operating model and corporate structure for the institute was developed and approved by the Government and it will be operational in late 2001.

1 See the Report on the operation of the Defence Service Charter in Chapter One of this report.

Output Five: Policy Advice

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Strategic Intelligence

Strategic intelligence was delivered by the Defence Intelligence Group which provides intelligence to inform Defence and Government policy and planning and the conduct of operations. The Group develops and maintains a defence intelligence capability for use in times of crisis and conflict. It also provides a national communications and information security capability and services.

The White Paper noted that good intelligence remains critical to Australia’s strategic posture in a complex and fluid international environment. The Defence Intelligence Group produced quality intelligence products to support ADF operations, to assist decision makers and advisers, and to provide integrated support for the development of ADF capabilities. Particular emphasis was placed on support for ADF operations in areas such as East Timor, the Solomon Islands and Bougainville. Extensive intelligence support was provided for the Olympic and Paralympic Games and development of the White Paper. Through close engagement with its customers, the Group received positive feedback on the relevance, timeliness and accuracy of its products.

The White Paper commented that new technologies offered the potential for intelligence to provide a war-winning edge to forces in the field, as well as giving decision makers a better understanding of the complex crises they need to manage. However, it noted that new technologies could also erode intelligence capabilities and recommended substantial and sustained investment in enhanced intelligence capabilities. The Group commenced detailed planning for the implementation of capability enhancements approved in the White Paper and the associated Defence Capability Plan, including improved capabilities: • to comprehensively monitor several crises concurrently and to provide

effective operational support to deployed forces; and • for intelligence collection, processing and dissemination.

The Group also worked to strengthen its relationship with Australia’s key ally, the United States, as well as its relationships with other key partners and regional countries.


PERFORMANCE TARGETS


Strategic Intelligence provides intelligence assessment and reporting, intelligence capability and support for the conduct of military operations

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Performance Quality:

Intelligence information will be accurate, relevant, timely, responsive, insightful and useful, and will be delivered cost effectively and efficiently.

Achieved. A wide range of intelligence products and services were provided to Defence and other customers.

The Defence intelligence capability will have appropriately developed people, infrastructure, systems, and processes to meet customer requirements, and be able to meet ADF and government needs in times of crisis or conflict.

Achieved. The Defence intelligence capability was sufficient to meet customer requirements.

Level of support for East Timor and other ADF overseas deployments.

Achieved. Support to ADF operations and deployments was supplied as required.

Quantity:

As required by customers.

Achieved.

Strategic Policy and Direction

Strategic Policy Group provides policy advice to the Government, and policy guidance and direction to Defence, on defence capabilities and strategic priorities to guide the development and use of Australia’s armed forces.


Services provided: • position the Government for the successful achievement of Australia’s

strategic objectives; • represent unity of effort across Government and a common understanding of

Australia’s strategic objectives; • represent unity of effort across Defence and a common understanding of

Australia’s strategic objectives; and • display qualities of anticipation and initiative, enabling effective shaping of

Australia’s strategic security environment.


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Substantially Achieved. The White Paper outlined potential security threats to Australia and the nature of the forces appropriate to meet those threats. By providing strategic objectives for the focus of Australia’s armed forces on the defence of Australia and its national interests, and a plan for how they will be met, the White Paper positions the Government for the achievement of Australia’s strategic objectives. These are: • ensuring the defence of Australia and its direct approaches, • fostering the security of our immediate neighbourhood, • promoting of stability and cooperation in South East Asia, • supporting for strategic stability in the wider Asia Pacific region, and • supporting for global security.

Defence contributed most significantly to the shaping of Australia’s strategic security environment in its operations in East Timor, Bougainville and the Solomon Islands. In East Timor, the Australian contribution to the United Nations peacekeeping operation has helped create the necessary conditions for national elections and independence. On Bougainville, Defence support for the peace process, including the Peace Monitoring Group, has advanced the prospect of a resolution of the crisis. Similarly, in the Solomon Islands, Defence has assisted the peace process through provision of support to the International Peace Monitoring Team.

Ongoing bilateral defence relationships with regional states, and support for such regional institutions as the Five Power Defence Arrangements and the ASEAN Regional Forum, have supported stability and cooperation in South East Asia. Alliance relationships with the United States and New Zealand, broader bilateral defence relationships with such countries as China, Japan and Korea, support for United Nations objectives and activities, and contributions to such issues as international negotiations to prevent the spread of weapons of mass destruction, all have supported stability in the Asia Pacific region and globally.

The White Paper development process established unity of effort across government agencies and contributed to a common understanding of Australia’s strategic objectives. Its development involved extensive high-level consideration and direction by the National Security Committee of Cabinet, supported by the Secretaries Committee on National Security and managed through intensive consultation and concurrence by key agencies in the White Paper Consultative Group. The White Paper also achieved a consistent and uniform appreciation of strategic objectives across Defence through detailed internal consultation and, subsequently, through the application of the guidance set out in the paper to subordinate defence plans and priority setting.

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Responses to crises are rapid and effective.

Substantially Achieved. Defence provided the Government with prompt advice on the internal security crises in Papua New Guinea and Fiji. In both cases, the fundamental defence relationship was maintained despite the strains imposed by developments in each country.

Australia maintained its support for the PNG Government’s commitment to PNG Defence Force reform in the face of mutinous behaviour by elements of that force. In Fiji, Australia retained its links with the Republic of Fiji Military Forces despite strains arising from civil unrest and divisions within the force.

Policy advice is relevant, responsive and of a high quality.

Achieved. The development of the White Paper was the most significant example in the past year of relevant, responsive and high-quality advice provided by Defence to the Government. Advice provided with regard to East Timor, Bougainville and the Solomon Islands has also met these criteria, as did advice on the broad range of less prominent issues addressed by Defence. These included such issues as defence relations with India and Indonesia, ADF support for UN operations in Africa and the Middle East, and the many bilateral defence relationships Australia maintains with other nations.

Management and governance is improved and resources are used more effectively and efficiently as the result of performance evaluation, audit, ethics awareness, fraud prevention, investigation and reporting.

Achieved. Details can be found in the Accountability Arrangements section in Chapter One of this report.

Appropriate security arrangements are in place for the protection of Defence personnel, information and assets.

Partially Achieved. At the start of the financial year, Defence had continuing problems with allegations of unauthorised disclosure of information. The Secretary and the Chief of the Defence Force introduced a comprehensive security briefing program for all Senior Executive Service and star ranking officers which paid particular attention to improving the protection of sensitive information.

International Defence Policy

High-quality policy advice on international defence relationships contributes to the Government’s ability to achieve Australia’s strategic objectives and enables effective shaping of Australia’s strategic security environment. This is done by building and enhancing defence relationships with regional, allied and other countries through a comprehensive program of high-level dialogue and


129

cooperative activity. As well as participating in the development of a whole-of-government approach to security and strategic issues.


Provide quality advice and support to the Government and to Defence in an effective and timely manner, to enable the successful achievement of Australia’s strategic objectives.

Achieved. Defence dialogue with the United States during the past year provided the forum for Australia to monitor developments in US defence policy during the period of transition between the Clinton and Bush administrations. It allowed Australia to assess the impact of likely changes to US policy and present Australian views on issues of mutual interest and concern. In particular, Australian Defence officials outlined to their US counterparts Australia’s strategic outlook and objectives as set out in the White Paper. Discussions were held on US plans to introduce a missile defence system. Australian officials were actively engaged in advising on the evolution of US Pacific Command’s Asia Pacific Regional Initiative, which advanced Australia’s policy objectives of sustained and effective US engagement with the Asia Pacific region.

Developments in New Zealand’s defence policy and their implications for Australia’s defence relationship with that country have received attention. Discussions between the Australian and New Zealand defence ministers in April 2001, and the meeting in May 2001 of the Australia-New Zealand Defence Coordination Group, provided opportunities for substantive high-level discussions on issues of strategic policy and capability development. Among the range of issues covered were both countries’ defence white papers, future directions for defence, and interoperability.

The establishment of the East Timor Defence Force stands out as an international defence policy success over the past year. Timely policy advice was instrumental in the Government’s decision for Australia to take the leading role in the establishment of the East Timor Defence Force and in building the infrastructure for its support.

Submissions to Ministers – many developed jointly with the Departments of Foreign Affairs and Trade and Prime Minister and Cabinet – on strategic and international defence policy in 2000-01 helped shape Government policy on a wide range of issues. Key results are presented in the paragraphs that follow. The Government funded an assistance package for the PNG Defence Force and assistance to the Eminent Persons Group report on reform of that force. Australia has made clear its continuing commitment to help the Government of PNG in this area.

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The Government committed ADF resources to support the peace process in the Solomon Islands in two ways. Firstly, through facilitating the Townsville Peace Agreement and, secondly, through contributing to the deployment of and provision of support to, the International Peace Monitoring Team which has been set up under the agreement. Defence support remains critical to the difficult task of helping the Solomon Islands Government implement the peace agreement. The Government agreed to provide additional funding for the pacific patrol boat project to ensure its continued viability over the next fifteen years. Defence advised the Government on a range of extra-regional issues, including responding positively to requests for modest ADF peacekeeping contributions to Ethiopia/Eritrea, Sierra Leone and the Middle East, while declining other requests. The advice reflected recognition of the strains imposed on the ADF by the requirement to meet the demands of existing regional commitments. The development of Defence’s policy on peace operations has allowed Defence to give timely and appropriate advice to the Government in framing its response to the United Nations’ proposed peace operations reforms (known as the Brahimi Report).

Conduct a comprehensive program of high-level dialogue, reciprocal visits by officials and cooperative defence activity with regional, allied and other defence organisations that contribute to the achievement of transparency in strategic perceptions, and enable the development of shared strategic interests.

Achieved. The defence relationship with the United States was marked in 2000-01 by the visit to Australia in July 2000 of the US Secretary of Defense, William Cohen, during which Secretary Cohen and Minister Moore signed a Statement of Principles on Enhanced Cooperation. Minister Reith undertook a reciprocal visit to the US in April/May 2001. Activities to celebrate the 50th anniversary of the signing of the Anzus treaty were also arranged, including the visit to Sydney of the aircraft carrier USS Kittyhawk. Australia continued defence dialogue with Indonesia, despite an element of residual concern over East Timor. Defence relations were restored with India, involving the return of the Defence Adviser to New Delhi, senior-level talks and reciprocal attendance of military officers at courses in both countries. A comprehensive program of talks and visits was maintained with China, Japan and Korea which contributed to the development of shared strategic interests with Australia. Highlights included a visit to China by the Minister for Defence in March 2001, and a visit to Australia in April 2001 by the Vice Chairman of China’s Central Military Commission (China’s most senior military officer). Activities designed to achieve transparency and develop shared strategic interests with regional countries are detailed below. • Enhanced dialogue and high-level reciprocal visits took place with Vietnam,

Thailand, the Philippines, Malaysia and Korea. • Extensive briefings were conducted on the White Paper.


131

• Assistance was provided to complete the Cambodian Defence White Paper. • New combined special forces exercises in Thailand were undertaken. • Combined simulation exercises were conducted in Singapore. • The management of training activities of the Republic of Singapore Armed

Forces at Shoalwater Bay and elsewhere in Australia continued. A regional high-level defence seminar on globalisation, held in the Hunter Valley, was attended by regional 3-star officers from Japan, China, Korea, and members of ASEAN. In the South Pacific, defence cooperation talks were held with a broad range of island states, covering issues of mutual security interest and practical Australian assistance in addressing the island states’ primary security concerns, particularly in the area of maritime surveillance. These talks, and cooperative defence activities with New Zealand covering a wide range of issues, contributed to the achievement of transparency in strategic perceptions and shared strategic interests. Security discussions and politico-military talks were also held with Russia, Germany and France. Senior defence officials from India, South Africa, Turkey and Britain visited Australia during the year, while the Chief of the Defence Force visited South Africa, Israel, Turkey and France. Cooperative defence activity between the ADF and other forces included participation in the US-led Multinational Interception Force in the Middle East, with significant interoperability benefits for the ADF, and participation in Exercise Long Look with United Kingdom and New Zealand forces.

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Conduct a program of educational and training activities and exchanges that allows the ADF to develop defence relationships with foreign defence counterparts, and provides opportunities to develop and enhance ADF capability, including interoperability with allies.

Achieved. Defence maintained a comprehensive program of military education and training activities to underpin Australia’s defence relationships with foreign countries. Specific educational and training activities are shown below. • Extensive training and education was provided to military officers from

ASEAN, including postgraduate study, attendance at ADF courses and colleges, and English language training for officers in Vietnam, Brunei and Laos to allow effective participation in ADF courses.

• Mobile training teams visited the Philippines, to provide training in acquisitions, outsourcing reform, defence intelligence, research and analysis, and Vietnam, to provide training in the International Law of the Sea and watermanship skills.

• Specialist assistance, advice and in-country training was provided by about 70 ADF advisers for the security forces of Pacific Island states, and Pacific Island countries participated in a broad range of training opportunities and exchanges in Australia. See the Defence Cooperation section below for more details.

• A personnel exchange program with New Zealand and a comprehensive variety of annual military exercises and exchanges continued.

• Reciprocal educational and training exchanges were conducted with China and Japan, with Chinese and Japanese officers attending the Defence and Strategic Studies course in 2000 and 2001, and a Korean officer attending in 2001. Australian officers attended courses at Chinese and Japanese defence institutions.

• An ADF language study group visited China in August 2000, and students at the Australian Defence College undertook a study visit to China in September 2000.

• Students from the Australian Staff and Command College visited Indonesia in March 2001.

• A program of staff college exchanges was re-introduced in 2000-01 between India and Australia, with two Indian officers attending the Australian Defence College and one Australian officer studying at the Indian National Defence College.

• Students from the United Arab Emirates, Kuwait, Qatar and Oman attended the Australian Defence College in 2001.


133

Manage the expenditure of the Defence Cooperation program in accordance with legislative and departmental requirements, and in a way that maximises Defence’s contribution to effective shaping of Australia’s strategic security environment.

Partially Achieved. In April 2001, the Auditor General tabled Performance Audit No. 32 on the Defence Cooperation Program. The report identified the high value that participating countries placed on their involvement in the program and some important benefits that accrued to Australia. However, the report also identified areas where management of the program could be improved. These included planning and objective setting, public reporting, and financial and project management. Strategic and International Policy Division identified appropriate follow-up action to address the ANAO’s recommendations and improve management of the cooperation program.

While significant activity remains for 2001-02, some progress was achieved by Strategy and International Policy Division in 2000-01. The Division, in conjunction with other Defence Groups, adopted an improved for targeting international engagement in support of the Government's White Paper. The strategic objectives in the White Paper formed the basis for a more specific set of

subsidiary objectives to guide international engagement. These subsidiary objectives are the six Defence international engagement objectives outlined in the Defence International Engagement Strategic Plan which was approved by the Defence Committee. The plan will inform specific program and activity objectives to be contained in the Defence International Engagement Plan which will be developed for endorsement by the Defence Committee in 2001-02.

Quantity:

Briefings, speeches and submissions are provided as appropriate.

As required by the Ministers, Cabinet and other customers.

There were 2,361 submissions and 72 speeches provided to the Ministers and the Parliamentary Secretary. 9,657 items of Ministerial correspondence were handled and draft responses provided as appropriate. Defence also provided the Minister with 39 submissions for Cabinet consideration. In addition, 134 draft responses to parliamentary questions were provided (90 for the House of Representatives and 44 for the Senate).

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COST OF OUTPUT Table 2.11: Cost of Output Five - Policy Advice


Estimate


2000-01 Actual

Variation


Employees - Military 192.4 180.7 259.2 78.5 Employees - Civilian 136.4 142.8 139.8 -3.1

Sub-Total Employees 328.8 323.6 398.9 75.3 Suppliers - Non-Inventory 193.4 237.8 192.4 -45.4 Suppliers - Inventory Consumption 0.7 50.7 0.0 -50.7

Sub-Total Suppliers 194.1 288.5 192.4 -96.1 Depreciation and Amortisation 81.9 86.6 59.6 -27.0 Write-Down of Assets 0.0 0.0 1.8 1.8 Other Expenses - including Interest and Grants 4.1 1.5 2.5 1.0 Expensed Assets Under Construction 0.8 6.3 29.5 23.2 Loss on Sale of Assets 0.0 0.0 0.1 0.1


Total Cost of Output Five 678.9 740.9 719.2 -21.7

Explanation

The actual cost for the Policy Advice output was 2.9% less than the revised estimate for 2000-01. The key performance issues related to the variation are explained below. • There was a revision in the price of fuel purchases under the terms of

agreement that the ADF has with the US. These fuel purchases are now shown under Output One.

• There has been an increase in the use of ADF military employees. The increase largely relates to Army and Air Force personnel employed under Output Five.


135

DEFENCE COOPERATION

OVERVIEW

Expenditure for the Defence Cooperation Program in 2000-01 was $60.64m. During the year, a number of events, both within the region and as a result of Australian Government initiatives, necessitated the reallocation of funds within the overall budget. Funding for activities in Vietnam, Papua New Guinea and East Timor increased, while cooperation activities with the Philippines, Thailand, Indonesia and the Solomon Islands reduced. These results are reported in the tables for individual countries, while the table below summarises Defence cooperation activity according to regions.

Table 2.10: Defence Cooperation Summary Table 2000-01

Budget Estimate

$’000


$’000

2000-01 Actual

$’000

Variation

$’000

Papua New Guinea 8,988 18,788 15,368 -3420 South Pacific Region 19,026 13,659 16,823 3164 South East Asia and other Indochina

26,279 23,846 24,711 865

Other Regional Activities 5,552 3,552 3,730 178 Facilities for Training in Australia 103 103 12 -91 Total 59,948 59,948 60,644 696

PAPUA NEW GUINEA

In late 2000, the Government agreed to a short-term assistance package of up to $10m to help stabilise the Papua New Guinea Defence Force. Final expenditure on the package, including support for the Commonwealth Eminent Persons Group’s review of the force, was substantially less than the revised estimate due to continuing instability in the PNG Defence Force.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 1,283 1,283 1,257 -26 Personnel 2,555 2,555 3,695 1,140 Projects 584 10,384 5,975 -4,409 Exercises 0 0 0 0 Training and Study Visits 4,566 4,566 4,441 -125 Total 8,988 18,788 15,368 -3,420

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SOUTH PACIFIC REGION

Vanuatu

Defence cooperation projects included Australian assistance to facilitate a second Vanuatu strategic review. This will continue in 2001-02.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 402 402 346 -56 Personnel 668 664 668 4 Projects 294 254 513 259 Exercises 100 100 100 0 Training and Study Visits 281 271 160 -111 Total 1,745 1,691 1,787 96

Solomon Islands

Since the coup in June 2000, Australia has maintained a defence relationship with the Royal Solomon Islands Police at a lower level than before the coup. While a Royal Australian Navy ship was provided off Honiara as a secure venue for dialogue between the parties to the peace process, and transport and logistical support was provided to facilitate dialogue and agreement between the parties at the Townsville Peace Talks in October 2000, these activities were not funded from the Defence Cooperation budget.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 465 205 157 -48 Personnel 832 432 132 -300 Projects 486 236 461 225 Exercises 105 55 0 -55 Training and Study Visits 266 11 10 -1 Total 2,154 939 760 -179

Tonga

Defence cooperation focused on maritime surveillance, the provision of ongoing maintenance and support for the Pacific patrol boat project and developing Tonga’s capabilities. A program for the upgrade of Tonga Defence Services’ facilities at Taliai Military Camp and Vilai Barracks continued. Australia also began assisting the development of a Tonga strategic review, which will continue in the second half of 2001-02.


137

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 137 137 128 -9 Personnel 454 454 454 0 Projects 315 265 215 -50 Exercises 120 120 96 -24 Training and Study Visits 402 402 509 107 Total 1,428 1,378 1,402 24

Samoa

Defence cooperation focused on Pacific patrol boat assistance, training and infrastructure support.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 122 122 160 38 Personnel 226 226 226 0 Projects 60 60 47 -13 Exercises 75 75 70 -5 Training and Study Visits 53 53 32 -21 Total 536 536 535 -1

Cook Islands

Defence cooperation included an upgrade of the wharf in Avatiu Harbour to support the Pacific patrol boat. The upgrade will be completed in October 2001.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 56 56 32 -24 Personnel 104 104 104 0 Projects 40 40 0 -40 Exercises 100 100 50 -50 Training and Study Visits 73 73 40 -33 Total 373 373 226 -147

Fiji

The defence relationship with Fiji remains at a lower level than it was before the coup, although continuing support for the Pacific patrol boat project was provided. Dialogue and cooperation between the ADF and Republic of Fiji

138


Military Forces progressed through continuing joint participation in peace operations in East Timor and Bougainville.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 353 253 270 17 Personnel 692 242 376 134 Projects 128 118 0 -118 Exercises 20 20 0 -20 Training and Study Visits 1,494 554 472 -82 Total 2,687 1,187 1,118 -69

Marshall Islands

Defence cooperation focused on maritime surveillance and the provision of ongoing maintenance and support for the Pacific patrol boat project.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 180 180 101 -79 Personnel 440 440 440 0 Projects 20 20 0 -20 Exercises 0 0 0 0 Training and Study Visits 11 11 13 2 Total 651 651 554 -97

Federated States of Micronesia

Defence cooperation focused on maritime surveillance and the provision of ongoing maintenance and support for the Pacific patrol boat project. The increase in study visits for the Federated States of Micronesia was due to additional training for the crew operating the three Pacific patrol boats.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 183 183 320 137 Personnel 335 335 335 0 Projects 20 20 19 -1 Exercises 0 0 0 0 Training and Study Visits 123 75 130 55 Total 661 613 804 191


139

Tuvalu


2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 100 100 102 2 Personnel 468 468 468 0 Projects 20 20 15 -5 Exercises 150 150 137 -13 Training and Study Visits 56 56 37 -19 Total 794 794 759 -35

Kiribati


2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 136 136 124 -12 Personnel 416 416 416 0 Projects 30 30 0 -30 Exercises 150 150 150 0 Training and Study Visits 81 81 58 -23 Total 813 813 748 -65

Palau

Defence cooperation focused on maritime surveillance and the provision of ongoing maintenance and support for the Pacific patrol boat project.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 204 204 159 -45 Personnel 414 414 414 0 Projects 20 20 46 26 Exercises 0 0 0 0 Training and Study Visits 28 28 37 9 Total 666 666 656 -10

140


Multilateral General Assistance

Key activities included half-life refits for Pacific patrol boats Kikau, from Fiji, and Teanoai, from Tuvalu. In the 2000-01 additional estimates, some South Pacific initiatives were deferred in order to divert resources to higher priority activities with Papua New Guinea. When it became apparent that not all of these resources would be expended, funds were returned to General Assistance to bring forward the expenditure of items that had been cut from the South Pacific budget.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 0 0 0 0 Personnel 0 0 0 0 Projects 3,639 1,639 5,355 3,716 Exercises 0 0 0 0 Training and Study Visits 2,879 2,379 2,117 -262 Total 6,518 4,018 7,472 3,454

SOUTH-EAST ASIA AND OTHER INDOCHINA

Singapore

A comprehensive program of activities was undertaken, including a tri-Service simulation seminar, combined operations modules and peacekeeping operations seminars.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 0 0 0 0 Personnel 0 0 0 0 Projects 0 0 0 0 Exercises 0 0 0 0 Training and Study Visits 307 307 296 -11

Total 307 307 296 -11

Philippines

Defence cooperation activities principally comprised training initiatives, seminars, workshops, courses and formal education. Mobile training teams undertook acquisitions, outsourcing reform, defence intelligence and research and analysis training. Political instability in the Philippines and a change of government contributed to an increased level of operational activity for the


141

Armed Forces of the Philippines and precluded some training and visits taking place.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 200 200 200 0 Personnel 100 100 59 -41 Projects 0 0 0 0 Exercises 0 0 0 0 Training and Study Visits 5,417 5,000 3,292 -1,708 Total 5,717 5,300 3,551 -1,749

Thailand

Defence cooperation consisted of an extensive training program, exercises, logistics, science and materiel cooperation and the development of the new Special Forces exercise Wyvern Sun.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 0 0 0 0 Personnel 240 240 227 -13 Projects 0 0 0 0 Exercises 260 260 38 -222 Training and Study Visits 4,819 4,819 4,610 -209 Total 5,319 5,319 4,875 -444

Malaysia

Defence cooperation included training and exercises, logistics, science and industry, and mobile training teams.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 700 700 518 -182 Personnel 1,751 1,701 622 -1,079 Projects 250 150 8 -142 Exercises 35 35 0 -35 Training and Study Visits 3,336 3,286 4,855 1,569 Total 6,072 5,872 6,003 131

Indonesia

Defence cooperation, although reduced in size and scope, continued with Indonesia. Cooperation activities included non-combat-related training, staff

142


college visits and exchanges, and senior-level consultations. The main cooperation project with the Indonesian armed forces was continued assistance in support of the Nomad aircraft.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 626 626 515 -111 Personnel 189 189 190 1 Projects 545 545 545 0 Exercises 502 299 1 -298 Training and Study Visits 5,432 2,135 2,104 -31 Total 7,294 3,794 3,355 -439

East Timor

The key cooperation activity in East Timor was the establishment of the East Timor Defence Force and the development of the force’s training facility at Metinaro, including fitting out the facility and provision of communication and personal equipment.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 0 250 0 -250 Personnel 0 1,000 0 -1,000 Projects 0 0 4,365 4,365 Exercises 0 0 0 0 Training and Study Visits 0 750 205 -545 Total 0 2,000 4,570 2,570

Other Indochina

Defence cooperation with Cambodia included English language training, military infrastructure development, attendance at regional and Australian Defence seminars as well as assistance with the development and implementation of Cambodia’s inaugural White Paper. Defence cooperation with Laos included English language training, attendance at Australian Defence seminars and White Paper assistance in the form of translating regional white papers.


143

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 0 0 0 0 Personnel 0 0 5 5 Projects 175 125 370 245 Exercises 0 0 0 0 Training and Study Visits 189 189 228 39 Total 364 314 603 289

Vietnam

Defence cooperation activities took the form of English language training, postgraduate scholarships, mobile training teams (international law of the sea and Army activities undertaken in rivers and estuaries), collaborative research on malaria, staff college attendance and participation at various regional and Defence seminars.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 190 190 16 -174 Personnel 100 100 15 -85 Projects 150 150 575 425 Exercises 0 0 0 0 Training and Study Visits 766 500 852 352 Total 1,206 940 1,458 518

OTHER REGIONAL ACTIVITIES

Key activities included centrally coordinated training programs and multilateral initiatives, including attendance by foreign officers at the Australian Defence College, the Defence Management Seminar, multilateral peacekeeping seminars and study visits.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$,000 Administration 0 0 0 0 Personnel 750 750 750 0 Projects 0 0 0 0 Exercises 0 0 0 0 Training and Study Visits 4,802 2,802 2,980 178 Total 5,552 3,552 3,730 178

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FACILITIES FOR TRAINING

Spending against this category was less than planned, as an intended refurbishment for married quarters for foreign students attending Defence courses in Victoria. As a consequence, training and study visits had to be curtailed.

2000-01 Budget

Estimate $’000


$’000

2000-01

$’000

Variation

$’000 Administration 0 0 0 0 Personnel 0 0 0 0 Projects 0 0 0 0 Exercises 0 0 0 0 Training and Study Visits 103 103 12 -91 Total 103 103 12 -91

PACIFIC PATROL BOAT PROJECT

Table 2.11: Pacific Patrol Boats By Country

Country Pacific patrol boats

Cook Islands 1 Fiji 3 Federated States of Micronesia 3 Kiribati 1 Marshall Islands 1 Palau 1 Papa New Guinea 4 Tonga 3 Tuvalu 1 Samoa 1 Solomon Islands 2 Vanuatu 1 Total 22

CHAPTER 3

RESULTS FOR GOVERNMENT AS

DEFENCE’S OWNER

147

148

149

2000-01 Financial Statements

151

2000-01 FINANCIAL STATEMENTS Department of Defence STATEMENT OF FINANCIAL PERFORMANCE for the year ended 30 June 2001

2000-01 1999-2000 Notes $'000 $'000

Revenues from ordinary activities Revenues from Government 3 17,131,922 15,814,424 Sale of goods and services 4 242,889 228,918 Interest and dividends 5 33,511 30,992 Net gain on sale of assets - 3,675 Net gain on foreign exchange 20,252 12,932 Reversals of previous asset write-downs 6 1,103,459 250,270 Assets recognised due to change in accounting policy

2.3 511,693 -

Other revenues 7 94,056 98,394 Total revenues from ordinary activities 19,137,781 16,439,604

Expenses from ordinary activities Employees 8 5,385,401 4,964,901 Suppliers 9 3,937,529 3,847,042 Subsidies, benefits and grants 10 35,710 3,872 Depreciation and amortisation 11 2,234,956 1,800,300 Write down of assets 12 1,098,870 478,173 Net loss on sale of assets 10,286 - Interest and other financing costs 13 55 27 Other expenses 14 3,010 28,315

Total expenses from ordinary activities 12,705,817 11,122,631

Borrowing cost expense 33,345 505

Net surplus from ordinary activities 6,398,619 5,316,468

Net surplus 6,398,619 5,316,468

Equity Interests

Net surplus attributable to the Commonwealth 6,398,619 5,316,468 Net credit to asset revaluation reserve 1,113,600 2,025,477 Other direct credits to equity - 1,276,088

Total revenues, expenses and valuation adjustments recognised directly in equity

1,113,600

3,301,565

Total changes in equity other than those resulting from transactions with owners

7,512,219 8,618,033

The above statement should be read in conjunction with the accompanying notes.

152

Owner Perspective

Department of Defence STATEMENT OF FINANCIAL POSITION as at 30 June 2001

2000-01 1999-2000 Notes $’000 $’000

Assets Financial assets

Cash 15 58,303 137,913 Receivables 16 544,596 363,446

Total financial assets 602,900 501,359

Non financial assets Land and buildings 17 8,163,863 7,605,459 Specialist military equipment 17 30,995,173 29,196,801 Infrastructure, other plant and equipment 17 4,488,205 3,815,427 Software and other intangibles 17 161,457 90,263 Inventories 18 3,238,786 2,933,463 Other non financial assets 19 574,963 679,036

Total non financial assets 47,622,446 44,320,449

Total assets 48,225,346 44,821,807

Liabilities Interest bearing liabilities

Finance leases 20 391,685 556 Other interest bearing liabilities 21 213 455

Total interest bearing liabilities 391,898 1,011

Provisions Capital Use Charge 22 - 51,357 Employees 23 2,732,908 2,459,591

Total Provisions 2,732,908 2,510,947

Payables Suppliers 24 758,326 502,375 Other payables 25 72,159 108,060

Total Payables 830,485 610,435

Total liabilities 3,955,292 3,122,394

Net assets 44,270,054 41,699,413

Equity Capital injection 780,692 687,170 Withdrawal of capital 2.23 (45,616) - Asset revaluation reserve 5,230,391 4,116,791 Accumulated surpluses 38,304,586 36,895,453

Total parent entity equity 44,270,054 41,699,414

Total equity 26 44,270,054 41,699,414

Current liabilities 1,824,132 1,473,296 Non current liabilities 2,131,160 1,649,098

Current assets 1,426,640 1,681,472 Non current assets 46,798,705 43,140,335

The above statement should be read in conjunction with the accompanying notes.


153

Department of Defence STATEMENT OF CASH FLOWS for the year ended 30 June 2001

2000-01 1999-2000 Notes $’000 $’000

OPERATING ACTIVITIES Cash received

Appropriations for outputs 17,113,920 15,670,115 Sales of goods and services 197,147 259,116 Interest and dividends 34,690 29,730 Net GST refunds 2.24 598,015 - Other revenue 107,793 14,855

Total cash received 18,051,565 15,973,816 Cash used

Employees (5,112,084) (4,927,534) Suppliers (4,657,532) (3,304,547) Subsidies, benefits and grants (35,710) (3,872) Borrowing costs (33,345) - Interest and other financing costs (55) (28) Other goods and services (3,010) (26,549)

Total cash used (9,841,736) (8,262,530)

Net cash from operating activities 27 8,209,828 7,711,286 INVESTING ACTIVITIES

Cash received Proceeds from the sale of land and buildings 46,991 102,658 Proceeds from the sale of specialist military equipment

39,926 30,248

Proceeds from the sale of other plant and equipment 225 - Total cash received 87,142 132,906 Cash used

Purchase of land and buildings (341,388) - Purchase of specialist military equipment (2,702,214) (3,608,534) Purchase of other property, plant and equipment (369,569) (305,378)

Total cash used (3,413,171) (3,913,912)

Net cash used by investing activities (3,326,029) (3,781,006) FINANCING ACTIVITIES

Cash received Equity injection 93,522 687,170

Total cash received 93,522 687,170 Cash used

Repayment of borrowings (10,167) (12,005) Capital use paid (5,055,287) (4,548,598)

Total cash used (5,065,454) (4,560,603)

Net cash used by financing activities (4,971,932) (3,873,433)

Net (decrease)/increase in cash held (88,132) 56,847 Cash at the beginning of the reporting period 137,913 86,857 Derecognition of Woomera opening balance - (10,588) Write down of cash (9) - Effect of exchange rate movements on cash at beginning of reporting period

8,532 4,796

Cash at the end of the reporting period 15 58,303 137,913 The above statement should be read in conjunction with the accompanying notes.

154

Owner Perspective

Department of Defence SCHEDULE OF COMMITMENTS as at 30 June 2001

2000-01 1999-2000 Notes $'000 $'000

BY TYPE Capital commitments

Land and buildings 201,148 287,789 Specialist military equipment 6,886,777 5,521,534 Other capital commitments - 378,530

Total capital commitments 7,087,925 6,187,853

Other commitments Operating leases 572,754 94,624 Other non capital commitments 1,036,524 1,073,576

Total other commitments 1,609,278 1,168,201

Total commitments 2.6 8,697,203 7,356,054

BY MATURITY All commitments

One year or less 1,792,286 2,569,756 From one to five years 5,838,498 4,370,186 Over five years 1,066,420 416,111

Total commitments 8,697,203 7,356,054

Operating lease commitments One year or less 62,273 26,183 From one to five years 199,614 24,449 Over five years 310,866 43,992

Total operating leases 572,754 94,624

Commitments do not incorporate the effects of GST.

There were no Administered commitments as at 30 June.

The above schedule should be read in conjunction with the accompanying notes.


155

Department of Defence SCHEDULE OF CONTINGENCIES as at 30 June 2001

2000-01 1999-2000 Notes $'000 $'000

QUANTIFIABLE CONTINGENCIES Contingent losses

Claims for damages/costs 81,893 103,037 Redundancies 25,334 55,119 Military compensation 27,200 27,200

Total contingent losses 134,427 185,356

Contingent gains Claims for damages/costs 38,256 -

Total contingent gains 38,256 -

Net quantifiable contingencies 96,170 185,356

156

Owner Perspective

Department of Defence SCHEDULE OF CONTINGENCIES as at 30 June 2001 UNQUANTIFIABLE CONTINGENCIES

One hundred and thirty eight claims for damages have been made by former members of the crew (of approximately 954) of the former HMAS Melbourne arising out of the former HMAS Voyager/Melbourne collision of 10 February 1964. It is unclear whether any further claims for damages will be made by any of the remaining former members of crew of the HMAS Melbourne.

A number of claims for damages by dependants of deceased former members of the crew of the Voyager have also been foreshadowed in respect of the Voyager/ Melbourne collision of 10 February 1964 but are not currently the subject of any legal proceedings. It remains unclear how many further dependancy claims might be made in the future. Those additional but currently unidentified dependancy claims are unquantifiable at this time.

One claim for damages has been made by a former member of the crew (complement of about 1300) of the Melbourne arising out of the Melbourne/USS Frank E Evans collision of 3 June 1969. It remains unclear to what extent further claims might be made in respect of that collision.

During 2000-01, the RAAF established a Board of Inquiry (BOI) into the desealing and resealing of F-111 fuel tanks at Amberley, in particular focusing on health issues. The BOI met with a number of witnesses and participants of the activities and prepared a report, details of which have been released into the public arena. To complement the BOI report, the Department of Veterans' Affairs has commenced a comprehensive health study. Participation in the health study is voluntary and is expected to take two years to complete. The health study may result in claims for compensation.

In April 2001, the Federal Court of Australia dismissed an action brought by Kockums to seek an injunction to prevent the Commonwealth of Australia (represented by the Department of Defence) delivering a submarine propeller to the United States for modification. In broad terms, Kockums argued that the proposed action by the Commonwealth of Australia (through the Department of Defence) would infringe the intellectual property rights (copyright and confidential information) in the design of the propellers. Kockums has appealed the decision to the full Federal Court of Australia. The appeal is yet to be heard and accordingly cannot yet be quantified. Comcover has been notified.

Remote contingencies are disclosed at Note 51. There were no Administered contingencies as at 30 June.


.


157

Department of Defence SCHEDULE OF ADMINISTERED REVENUES AND EXPENSES for the year ended 30 June 2001

2000-01 1999-2000 Notes $'000 $'000

Revenue from ordinary activities

Non taxation Revenues from Government 28 1,282,937 1,235,154 Interest and dividends 29 24,661 24,649 Other sources of non taxation revenue 30 686,106 666,941

Total non taxation revenues 1,993,704 1,926,744

Total revenues from ordinary activities 1,993,704 1,926,744 Expenses from ordinary activities

Personal benefits 31 2,679,369 2,633,250 Subsidies 32 6,555 4,625 Write down of assets 33 - 2,470 Other expenses 34 - 1,766

Total expenses from ordinary activities 2,685,924 2,642,112 Net contribution to Whole of Government result

(692,221) (715,368)

Cash transfers to the Official Public Account (610,482) (578,767) Net decrease in administered net assets (1,302,703) (1,294,135) The above schedule should be read in conjunction with the accompanying notes.

158

Owner Perspective

Department of Defence SCHEDULE OF ADMINISTERED ASSETS AND LIABILITIES as at 30 June 2001 2000-01 1999-2000 Notes $'000 $'000 Assets

Financial assets Cash 35 170 207 Receivables 36 174,669 84,323 Investments 37 1,546,261 1,785,029

Total financial assets 1,721,100 1,869,559

Total Assets 1,721,100 1,869,559 Liabilities

Provisions Personal benefits 38 26,005,599 24,605,042

Total provisions 26,005,599 24,605,042

Payables Suppliers and other payables 39 18,259 25,804

Total payables 18,259 25,804

Total liabilities 26,023,859 24,630,846

Net liabilities (24,302,759) (22,761,287)

Equity

Reserves 1,546,261 1,785,029 Accumulated results (25,849,020) (24,546,316)

Total equity 40 (24,302,759) (22,761,287)

Current liabilities 1,308,837 1,259,094 Non current liabilities 24,715,022 23,371,752

Current assets 174,839 84,530 Non current assets 1,546,261 1,785,029 The above schedule should be read in conjunction with the accompanying notes


159

Department of Defence ADMINISTERED CASH FLOWS for the year ended 30 June 2001

2000-01 1999-2000 Notes $'000 $'000

OPERATING ACTIVITIES

Cash received Appropriations 1,282,937 1,235,154 Superannuation contributions 557,111 584,208 Interest and dividends 24,661 24,649 Other 37,327 10

Total cash received 1,902,035 1,844,020

Cash used Personal benefits (1,278,811) (1,260,692) Suppliers - - Subsidies (12,779) (4,354) Cash to the Official Public Account (610,482) (578,767)

Total cash used (1,902,072) (1,843,814)

Net cash (used by)/from operating activities 41 (37) 207

Net (decrease)/increase in cash held (37) 207 Cash at the beginning of the reporting period 207 -

Cash at the end of the reporting period 35 170 207


160

Owner Perspective

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2001 Notes Objective of Defence and Significant Accounting Policies 1 Objective of Defence 2 Summary of Significant Accounting Policies

Departmental - Revenues and Expenses 3 Revenues from Government 4 Sale of Goods and Services 5 Interest and Dividends 6 Reversals of Previous Asset Write downs 7 Other Revenues 8 Employee Expenses 9 Suppliers Expense 10 Subsidies, Benefits and Grants 11 Depreciation and Amortisation 12 Write Down of Assets 13 Interest and Other Financing Costs 14 Other Expenses

Departmental - Assets, Liabilities and Equity 15 Cash 16 Receivables 17 Analysis of Property, Plant, Equipment and Intangibles 18 Inventories 19 Other Non Financial Assets 20 Finance Lease Liabilities 21 Other Interest Bearing Liabilities 22 Capital Use Charge Payable 23 Employee Provisions 24 Supplier Payables 25 Other Payables 26 Analysis of Equity 27 Cash Flow Reconciliation

Administered - Revenues and Expenses 28 Administered Revenues from Government 29 Administered Interest and Dividends 30 Administered Other Sources of Non Taxation Revenue 31 Administered Personal Benefits 32 Administered Subsidies, Benefits and Grants 33 Administered WriteDown of Assets 34 Administered Other Expenses


161

Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2001 Notes Administered - Assets, Liabilities and Equity 35 Administered Cash 36 Administered Receivables 37 Administered Investments 38 Administered Personal Benefits Payable 39 Administered Other Payables 40 Administered Analysis of Equity 41 Administered Cash Flow Reconciliation

Other Key Disclosures 42 Reporting Against Outcomes 43 Reporting by Major Activity 44 Appropriations 45 Financial Instruments 46 Auditor's Remuneration 47 Act of Grace Payments 48 Defective Administration Payments 49 Waivers 50 Future Commitments 51 Remote Contingencies 52 Executive Remuneration 53 Special Public Money

162

Owner Perspective

Notes to and forming part of the financial statements

Note 1 Objective of Defence

The objective and the outcome of Defence are one and the same.

Defence contributed to a single outcome: The prevention or defeat of the use of armed force against Australia and its interests.

Defence activities are identified in the financial statements as Defence Operations, Navy Capabilities, Army Capabilities, Air Force Capabilities, Policy Advice, Enabling Services and Owner Support Services (refer to Note 43). The first five of these activities are Defence’s outputs for budget purposes. In the body of the Annual Report, the last two activities are allocated across the five outputs.

Note 2 Summary of Significant Accounting Policies

2.1 Basis of Accounting

The financial statements for the Department of Defence are required by section 49 of the Financial Management and Accountability Act 1997 and constitute a general purpose financial report. The financial statements have been prepared in accordance with: • Schedule 1 of the Financial Management and Accountability (Financial

Statements 2000-01) Orders made by the Minister for Finance and Administration;

• Australian Accounting Standards, Accounting Interpretations and other authoritative pronouncements issued by Australian Accounting Standards Boards; and

• Consensus Views of the Urgent Issues Group,

and having regard to: • Statements of Accounting Concepts; and • Explanatory Notes to Commonwealth Accounting Policies and Guidance

Notes issued by the Secretary of the Department of Finance and Administration.

The financial statements have been prepared on an accrual basis and are in accordance with historic cost conventions, except for certain assets which, as noted, are at valuation. Except where stated, no allowance is made for the effect of changing prices on the operating results or financial position.

Assets and liabilities are recognised in the Defence financial statements when, and only when, it is probable that the future economic benefits will flow and the amounts of the assets and liabilities can be reliably measured. Assets and liabilities arising under agreements equally proportionately unperformed are not recognised unless required by an accounting standard. Liabilities that are unrecognised are reflected in the Schedule of Commitments and the Schedule of Contingencies.


163


Revenues and expenses are recognised in the Defence financial statements when, and only when, the flow or consumption or loss of economic benefits has occurred and can be reliably measured.

The continued existence of the Department in its present form is dependent on Government policy and on continuing appropriations by Parliament for the Department’s administration and programs.

2.2 Departmental and Administered Items

Departmental items are assets, liabilities, revenues and expenses which are controlled by Defence, including military items associated with the Australian Defence Force. Administered items are assets, liabilities, revenues and expenses, which are controlled by the Government but managed by Defence on behalf of the Government.

Administered items are distinguished from Departmental items in the financial statements by shading and borders. Note 2.1 also applies to Administered items.

2.3 Changes in Accounting Policy

The threshold for capitalisation of individual assets was lowered from $25,000 to $10,000, and the threshold for groups of assets below the individual threshold was lowered from $500,000 to $50,000. The significant effect of this change was to increase the value recorded in the asset class Specialist Military Equipment by $511.693m. This increase is recognised as revenue in the Statement of Financial Performance. Note 2.12 reflects this change.

It is not practicable to determine the amount of this adjustment that relates to the opening balance of this asset class, and so adjusted comparative information for the financial year 1999-2000 and prior years has not been provided.

2.4 Rounding

Amounts reported in the financial statements have been rounded to the nearest $1,000 except for the following, which have been rounded to the nearest dollar: • Act of Grace Payments and Waivers; • Remuneration of Executives; • Remuneration of Auditors; and • Special Public Money.

Totals are the sum of unrounded amounts.

2.5 Foreign Currency

Transactions denominated in a foreign currency are converted at the exchange rate at the date of the transaction. Foreign currency receivables and payables are translated at the exchange rates as at balance date.

164

Owner Perspective


2.6 Commitments

In the Schedule of Commitments, Capital Commitments are obligations arising under agreements equally proportionately unperformed for capital expenditure contracted for as at 30 June 2001. Defence also reports in Note 50 details on ‘Future Commitments’. The period between approval for a capital project to proceed and the awarding of contracts is the period of ‘Future Commitment’.

2.7 Revenue

Departmental appropriations Appropriations to Defence for its Departmental outputs are recognised as revenue to the extent they have been received into the Department’s Bank account or are entitled to be received by the Department at year end. Appropriations of equity injection are recognised in equity rather than as revenue. Administered appropriations Administered appropriations include certain annual and special appropriations, which are recognised as administered revenue when the related expense is incurred. Other revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to Defence and the revenue can be reliably measured. • Sale of goods – revenue from the sale of goods is recognised upon delivery of

the goods to customers. • Rendering of services – revenue from the provision of services is recognised

where a right to be compensated has been ascertained and can be reliably measured, based on the stage of completion of contracts or other agreements. The stage of completion is determined according to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

• Interest – revenue is recognised taking into account the interest rates applicable to each financial asset.

• Dividends - revenue is recognised when the right to receive the dividend has been established.

• Net gain on sale of assets – revenue from disposal of assets is recognised when control of the asset has passed to the buyer, resulting in either a net gain or loss on disposal.

• Net foreign exchange gains – foreign exchange gains and losses are recognised on the day that cash is received, or 30 June, as the difference between the exchange rate on the day the revenue was recognised and the day the cash is received, or 30 June.

• Revaluation increments - revenue is recognised when revaluation decrements previously expensed in relation to an asset class are recovered through the revaluation process. Any increments greater than previous decrements are reflected in the Asset Revaluation Reserve.


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Notes to and forming part of the financial statements Resources received free of charge

Services received free of charge are recognised in the Statement of Financial Performance as revenue when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

2.8 Employee Entitlements

Liabilities to employees comprise salaries, allowances, annual leave, long service leave, superannuation, redundancies and military workers’ compensation.

Leave

The liability in respect of annual leave for civilian staff reflects the total annual leave entitlements of all civilian employees at 30 June 2001, and is recognised at the nominal amount.

The liability in respect of annual leave for Australian Defence Force (ADF) personnel reflects an estimate of the total value of annual leave entitlements as at 30 June 2001. The liability is recognised as the best estimate required to settle the obligation as at the reporting date.

The provisions for long service leave in respect of all personnel have been measured with regard to the probability that long service leave will either be taken or have to be paid. They also take into account employee attrition rates and certified pay increases for ADF personnel. The determination of the current component is based on actual leave taken in the 2000-01 financial year. The non-current provision is measured as the estimated present value of other future cash outflows to be made.

Superannuation on-costs have been added to the provisions for annual leave and long service leave, in respect of both ADF and civilian employees.

No provision has been made for sick leave entitlements, as sick leave is non-vesting and the average sick leave in future years is estimated to be less than the annual entitlement.

Redundancies

The provisions for redundancies for both ADF and civilian personnel arise from obligations flowing through redundancy programs and ongoing market testing of various Defence activities under the Commercial Support Program. The calculation does not include savings from normal attrition where staff are not replaced. Contingent redundancies have been included in the Schedule of Contingencies and are generally contingent upon the results of market testing.

166

Owner Perspective


Military workers’ compensation

The provision for ADF workers’ compensation reflects the actuarial assessment of the liability for outstanding claims for injuries incurred up to the reporting date.

The Australian Government Actuary provides annual updates of the provision. The Actuary has pointed out that, by its nature, there is significant volatility in the assessment arising from, for example, changing claims experience over time.

Employee workplace agreements

As a result of workplace agreements in place for non-executive Defence employees, a number of pay increases for both civilian and ADF personnel are due to be paid in ensuing years. Military personnel are due to receive further increases of 2% on 8 November 2001 and 1.5% on 9 May 2002. The Certified Agreement for civilian personnel was being renegotiated at the time of this report.

2.9 Cash

For the purposes of the Statement of Cash Flows, cash includes cash at bank and deposits held at call with a bank or financial institution.

2.10 Financial Instruments

Accounting policies for financial instruments are detailed in Note 45.

2.11 Bad and Doubtful Debts

A provision is maintained for doubtful debts. The provision is calculated as a percentage of accounts receivable based on an analysis of the expected realisation of outstanding debts and write-off experience from prior years. Bad debts are written off as they are identified.

2.12 Property, Plant and Equipment

Asset recognition threshold

Purchases of property, plant and equipment are recognised initially at cost where they meet the capitalisation threshold. A revised capitalisation threshold of $10,000 for individual assets has been adopted for all classes of property, plant and equipment for the 2000-01 financial year. The prior threshold was $25,000. Items below the new threshold may be recognised as group assets if, as a group, they are valued over $50,000. The previous threshold for grouping of assets was $500,000.


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Revaluations

All classes of property, plant and equipment not under construction with values greater than established revaluation thresholds are progressively revalued in accordance with the ‘deprival’ method of valuation over a three-year revaluation cycle, so that values are no greater than three years old. The current progressive revaluation cycle began on 1 July 1999 and will end on 30 June 2002.

The ‘deprival’ method differentiates between assets the service potential of which would be replaced if lost and assets that are surplus to requirements or that would not be replaced. For those that would be replaced, land is valued at its current market buying price, and other assets are valued at depreciated replacement cost. Surplus assets are measured at their net realisable value.

Any total net revaluation increment or decrement in relation to an asset class is reflected in the Asset Revaluation Reserve. Exceptions, where the change is reflected in the Departmental Statement of Financial Performance, occur when an increment reverses a previous decrement that was expensed or the Reserve has no amount relating to an asset class against which a decrement can be charged.

Assets within each class acquired after the valuation of the asset type in the current revaluation cycle are reported at cost for the duration of the cycle unless significant changes in the value of the asset have occurred, in which case the asset will be subject to revaluation.

Assets under construction (AUC) are not revalued but are accounted for at cost and are separately identified as ‘Under Construction’ in Note 17. Flowing from a comprehensive review of capitalised project expenditure, significant adjustments have occurred by way of write down in 2000-01. In addition to review of expenditures from the point of rollout into service, AUC expenditures are now also considered on a life-to-date basis. Note 12 reflects this.

The Department has implemented its progressive revaluations as outlined below.

Land, buildings and infrastructure

The selection of assets to be revalued in a particular reporting period is made according to revaluation plans that are based on location and whether the asset has been identified for disposal. Independent valuers revalue land, buildings and infrastructure assets.

168

Owner Perspective


The following valuers from the Australian Valuation Office undertook revaluations of land, buildings and infrastructure carried out in 2000-01:

Graeme Addicott FAPI, John Armatys AAPI, Michael Becker FAPI, Merv Booth AAPI, Peter Box FAPI, Bill Carlile AAPI, Jim Chappell AAPI, Ian Collingwood, AAPI, Tim Collins AAPI, David Conigrave AAPI, John Cooper AAPI, Simon Daly AAPI, Sonya Donnelly AAPI, Michael Dyson AAPI, Geoffrey Eddington AAPI, John Flynn AAPI, Chris Fratzia AAPI, Stephen Gage AAPI, Tony Galvin AAPI, Stephen Greenhalgh AAPI, Phil Harris AAPI, Stephen Hickelthein AAPI, Edward Kinch AAPI, Brenda Lee AAPI, Paul Lee AAPI, Anthony Leszcynski AAPI, Russell Lewis AAPI, Fred Marrone FAPI, Philip McKenzie AAPI, David Millie FAPI, Robert Mullins FAPI, Dennis Parkes AAPI, John Picard AAPI, John Ploski AAPI, Jim Power AAPI, Robert Rixon AAPI, Robert Russo AAPI, Hubert Savory AAPI, John Saxelby AAPI, David Smith FAPI, Lou Szegedi AAPI, Steven Thredgold AAPI, Gary Townsend AAPI, Mel Trevethick AAPI, Philip Veale AAPI, and Graham Weaver AAPI.

Specialist military equipment The selection of specialist military equipment assets to be revalued in a particular reporting period is made according to revaluation plans that are based on force element groups. Defence personnel, including personnel with knowledge of capital procurement activities and personnel with specialist knowledge of Defence strategic and capability requirements in general and for the equipment being valued, carry out these valuations.

Write downs of specialist military equipment for 2000-01 are assessed on a monthly basis, compared to an annual basis the prior year. This has reduced the scope for ‘netting’ of asset movements. More reliable information used in 2000-01 resulting from this change in asset accounting processes is reflected in Note 12. Recoverable amount test Financial Management and Accountability (Financial Statements 2000-01) Orders requires the application of the recoverable amount test to Departmental assets in accordance with AAS 10 Accounting for the Revaluation of Non-Current Assets. This would require Defence to write down the value of assets if anticipated net cash flows were insufficient to support holding and operating those assets. Since revenue received by Defence is largely from appropriations for the price of outputs, and these are not associated with individual assets or groups of assets, the test was applied to all Departmental assets as one group. Other sources of revenue, and the assets associated with them, are insignificant. Expected net cash flows used in the test were not discounted to their present value.


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Cash flows from Government are based on the rolling Defence Financial and Management Plan agreed with Government and the Department of Finance and Administration. In the absence of indications to the contrary, levels of funding reflected in the current plan were assumed, for the purpose of the test, to continue or not to fall faster than operating costs for the relevant period. This period may approach thirty years in relation to some Defence assets.

It is likely that future operating costs, taking account of achievable cost reductions, will be covered by future funding for operations. That funding would include an amount based on depreciation expense for existing assets. Note 2.1 refers to the dependence of Defence on future support from the Government and the Parliament. Under these circumstances, it was not necessary for Defence to write down the value of any of its assets because of application of the recoverable amount test.

Depreciation and amortisation

Items of property, plant and equipment are written down to their estimated residual values over their estimated useful lives to Defence using in all cases the ‘straight-line’ method of depreciation from the time they are first held ready for use. Leasehold improvements are amortised on a straight-line basis over the lesser of the estimated useful life of the improvements and the unexpired period of the lease.

Depreciation and amortisation rates and methods are reviewed at each balance date and necessary adjustments are recognised in the current, or future reporting periods, as appropriate. Residual values are re-estimated for a change in prices only when assets are revalued.

Depreciation and amortisation rates applying to each class of depreciable asset are based on the following useful lives:

Class 2000-01 1999-2000 Buildings 5 to 100 years 5 to 100 years Infrastructure 5 to 100 years 5 to 100 years Specialist military equipment 2 to 54 years 2 to 54 years Other plant and equipment 2 to 30 years 2 to 30 years Equipment under finance lease Lease term Lease term

The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed in Note 11.

170

Owner Perspective


Restoration costs

Decontamination costs associated with properties listed for disposal are taken into account in the valuation of the property. This valuation adjustment is determined on the basis of remediation surveys and technical assessments. The cost of decontamination work carried out is then capitalised. Typically adjustment to valuations is made for properties that have not been listed for disposal.

Asset disposals

The gain or loss on disposal of property, plant and equipment is determined as the difference between the carrying amount of the asset at the time of disposal and the proceeds of disposal.

2.13 Intangibles

Intangible assets of Defence include software (purchased, enhanced and internally developed), patents, licences, computer models, copyright and other intellectual property.

Defence carries reliably measured intangible assets at cost or replacement value where original costs are unknown.

Acquired intellectual property may form part of the acquisition of particular tangible assets and in such cases is reflected in the value reported for property, plant and equipment in the Departmental Statement of Financial Position.

Defence has not recognised in the Departmental Statement of Financial Position intangible assets that cannot be measured reliably. These assets include some major internally developed software and certain items of intellectual property of a Defence-specific nature.

2.14 Inventory

All inventory held by Defence is held not for sale. As historic cost information is not available in all instances, inventory is brought to account at average cost, replacement cost or at last purchase cost. Costs are assigned to inventory issued into use on the same basis.

Provision for inventory obsolescence

Inventory is considered obsolete or obsolescent based upon current inventory levels and expected usage of such assets in light of expected equipment platform phaseouts.


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2.15 Leases

Finance leases are those which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership. Operating leases are those where the risks and benefits are not substantially transferred to the lessee. Assets held under finance leases are brought to account at the present value of minimum lease payments at lease inception, and a liability is recognised for the same amount. Leased assets are amortised over the period of the lease, and lease payments are allocated between reduction of the principal and interest expense. Operating lease payments are treated as expenses when incurred.

Lease incentives taking the form of ‘free’ leasehold improvements and rent-free periods are recognised as liabilities in accordance with Urgent Issues Group Abstract 3, Lessee Accounting for Lease Incentives under a Non-Cancellable Operating Lease. These liabilities are reduced by allocating lease payments between rental expense and reduction of the liability.

During the 2000-01 financial year, Defence entered into a number of finance leases in relation to married quarters for ADF personnel. These are reflected in Notes 17 and 20.

2.16 Investments

Investments held on behalf of the Commonwealth are included as Administered assets and are brought to account as the value of the Commonwealth’s share as at 30 June 1997 of the net assets of the entity, except where there has been a return from equity to the owner (the Government). This is a requirement of the Financial Management and Accountability (Financial Statements 2000-01) Orders.

2.17 Taxation

Defence’s activities are exempt from all forms of taxation except fringe benefits tax and the goods and services tax. Defence is able to recover all goods and services tax payments from the Australian Taxation Office.

2.18 Capital Use Charge

A Capital Use Charge of 12 per cent was imposed by the Commonwealth Government on net Departmental assets. The charge is adjusted to take account of asset gifts and revaluation increments during the financial year.

In determining the price of outputs, the expected capital use charge is taken into account. The corresponding payment to the Commonwealth Government may be greater or less than the notional funding for this item in the price of outputs.

172

Owner Perspective


2.19 Insurance

Since 1 July 2000, Defence has had insurance to cover its legal liabilities and is currently negotiating with Comcover to insure assets. Premiums for civilian workers’ compensation are paid to Comcare which assumes liability in respect of payments made under the Safety, Rehabilitation and Compensation Act 1988. The benefit costs for military compensation are met by Defence on an emerging cost basis.

2.20 Superannuation

The Defence Force Retirement and Death Benefits (DFRDB) Scheme, the Defence Forces Retirement Benefits (DFRB) Scheme and the Military Superannuation and Benefits Scheme (MSBS) are defined benefit superannuation plans for ADF members. ADF employer superannuation contributions, pension payments, member contributions and the provision for unfunded superannuation are reflected in the Administered schedules. The military superannuation provision has been adjusted upward by $1,400m for 30 June 2001 based upon advice received from the Australian Government Actuary.

Civilian employees of the Department contribute to the Commonwealth Superannuation Scheme (CSS) or Public Sector Superannuation Scheme (PSS). No liability is shown for civilian superannuation in the Departmental Statement of Financial Position as the liability is reported by the Department of Finance and Administration, with the administration being conducted by Comsuper.

Provisions are also included to cover the unfunded superannuation liability, together with annual leave and long service leave liabilities, for certain University of New South Wales staff employed at the Australian Defence Force Academy.

2.21 Comparative Figures

Comparative figures, other than Executive Remuneration (Note 52), have not required adjustment, since there are no relevant changes in presentation in these financial statements. Where appropriate, comparative amounts have also been reclassified to ensure consistency with current year disclosures. See also Note 2.3.

2.22 Grant to Australian Industry Development Corporation

As a result of a government decision, Defence paid an amount of $34.062m to the Australian Industry Development Corporation. This was then used to purchase the residual share of the Australian Submarine Corporation. The Department of Finance and Administration determined that this payment was in the nature of a grant and required disclosure to that effect.


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If, at some future date, the government decides to sell all or part of the Australian Submarine Corporation and if the sale value exceeds $34.062m, Defence may be repaid all or part of this amount. Due to the high degree of uncertainty in relation to this future return of money, Defence has not recognised it as either a receivable or a contingent receivable.

2.23 Withdrawal of Capital

As a result of government decisions in regard to the ownership of office accommodation, the Defence Plaza buildings in Sydney and Melbourne were sold. The Department of Finance and Administration took over the responsibility for the sale of these properties and received the proceeds from sale. As the assets were transferred between departments for no consideration, the net book value of the properties is treated as a withdrawal of equity. This withdrawal amount of $124.589m was partially offset by the recognition of a receivable of $78.973m in accordance with a decision of government.

2.24 Disclosure of Goods and Services Tax on Cash Flow Statements

UIG Abstract 31, Accounting for Goods and Services Tax (GST), requires that cash flows be grossed up for GST and that the net GST paid or received be disclosed. GST relating to investing activities is disclosed under operating activities.

2.25 Transitional Provisions

Australian Accounting Standard AAS 29 Financial Reporting by Government Departments contains transitional provisions. The provisions required that where, before 30 June 2000, pre-existing but previously unidentified assets or liabilities were recognised for the first time, or corrections were made to amounts previously recognised as assets or liabilities, the corresponding adjustment had to be applied directly to accumulated results. Those transitional provisions were applied in 1999-00, but are no longer operative.

2.26 Events Occurring after Balance Date

There have been no events occurring after balance date which have had a significant effect on the matters reported in these statements.

174

Owner Perspective


2000-01 1999-2000 $'000 $'000

Note 3 Revenues from Government

General Appropriation for outputs 17,113,920 15,205,060 Resources received free of charge 18,002 1,898

Total general appropriations 17,131,922 15,206,957

East Timor deployment - 607,467

Total revenues from Government 17,131,922 15,814,424

Note 4 Sale of Goods and Services

Housing rentals 102,322 105,045 Revenues from foreign Governments 41,226 30,628 Rations and quarters 32,923 29,140 Rental of Defence property 8,648 6,283 Sale of surplus inventory 836 6,612 Other goods and services 56,935 51,211

Total sale of goods and services 242,889 228,918

Note 5 Interest and Dividends

Term deposits 27,375 25,803 Other accounts 6,135 5,189

Total interest and dividends 33,511 30,992

Note 6 Reversals of Previous Asset Write down Fixed assets previously expensed 879,970 250,270 Inventory previously expensed 223,489 - Total reversals of previous asset write down 1,103,459 250,270

Note 7 Other Revenues

Sale of other Defence assets 49,659 66,889 Sale of land and buildings 18,263 959 Woomera revenue on consolidation 9,976 6,993 Other minor revenues 16,157 23,553 Total other revenues 94,056 98,394


175

Notes to and forming part of the financial statements 2000-01 1999-2000 $'000 $'000

Note 8 Employee Expenses

Civilian Salaries and wages 787,580 693,486 Superannuation 116,325 112,943 Redundancies 20,080 17,883 Medical and dental 946 896 924,931 825,208

Military Salaries and wages 2,445,525 2,353,519 Salaries and allowances paid overseas 13,152 191,417 Other allowances 370,821 281,773 Superannuation 568,135 528,394 Housing 327,529 288,213 Workers compensation 276,940 71,420 Medical and dental 80,500 69,520 Redundancies 15,774 6,364 4,098,376 3,790,621

Generic Fringe benefits tax 258,431 202,614 Comcare premiums 10,855 11,877 Other employee expenses 92,808 134,582 362,094 349,072

Total employee expenses 5,385,401 4,964,901

Note 9 Suppliers Expense

Repair and overhaul 809,264 690,732 Inventory consumption 574,282 618,195 General goods and services 529,314 419,641 Facilities operations 297,058 378,353 Purchases not capitalised under asset

policy thresholds 265,832 160,328 Communications and information

technology 194,601 126,043 Consultants and professional services 182,070 189,597 Operating leases 175,881 181,205 General travel 161,516 156,540 Training 119,404 131,270 Removal costs 116,704 116,868 Utilities 112,308 91,825

176

Owner Perspective


General consumables 93,288 296,936 Research and development 90,350 66,445 Overseas travel 61,680 48,190 Advertising 44,755 35,748 Freight and storage 40,641 42,899 Property disposals 33,016 52,635 Security services 16,418 21,314 Woomera consolidation 9,672 13,666 Assistance to States/Territories 9,475 8,611 Total suppliers expense 3,937,529 3,847,042

Note 10 Subsidies, Benefits and Grants

Grant to AIDC for purchase of ASC (see Note 2.22)

34,062 -

Grant to the Defence Family Support Program

1,013 3,072

Research and other grants 560 713 Grants to the Royal United Services

Institute 75 87

Total subsidies, benefits and grants 35,710 3,872

Note 11 Depreciation and Amortisation

Specialist military equipment 1,627,896 1,252,720 Buildings 284,785 255,002 Infrastructure, other plant and equipment 277,163 280,157 Assets under finance lease 27,038 4,193 Software 15,004 5,934 Intangibles 3,071 2,295 Total depreciation and amortisation 2,234,956 1,800,300

Note 12 Write Down of Assets

Financial assets Cash 9 54 Loan to ADI - 93,000 Bad and doubtful debts 160 547 Total financial assets 169 93,601


177


Non financial assets Specialist military equipment 603,750 45,863 Land and buildings 35,564 21,472 Other infrastructure, plant and equipment 3,750 45,870 Intangibles 1,694 - Inventories Write down of inventories 110,052 175,623 Net inventory obsolescence write

down/(write back) (71,453) (103,889)

Total non financial assets 683,356 184,940

Major project activities expensed on review 374,823 67,677

Assets under construction not capitalised on delivery into use due to policy threshold (see Note 2.3)

40,520 131,955

Total write down of assets 1,098,870 478,173

Refer to the Departmental accounting valuation policies on Property, Plant and Equipment, relating to Assets Under Construction and Specialist Military Equipment – Note 2.12

Note 13 Interest and Other Financing Costs

Bank charges 55 27 Total Interest and other financing costs 55 27

Note 14 Other Expenses

ADF compensation 1,470 1,014 Demolition of Defence properties 1,132 21,814 Act of Grace and Defective Administration 407 137 Other miscellaneous expenses 1 5,350 Total other expenses 3,010 28,315

Note 15 Cash

Cash at bank – at call 57,132 97,524 Cash on hand 1,171 5,389 Term deposits - 35,000 Total cash 58,303 137,913

178

Owner Perspective


Note 16 Receivables

Current receivables Goods and services 117,213 60,539 Goods and services tax on purchases 82,203 - Sale of defence properties 78,973 - Receivables from sale of capital assets 36,541 82,563 Capital use charge receivable 21,542 - Advances and loans 249 266 Interest 83 1,262 Other receivables 24,729 27,761 Total current receivables 361,532 172,391

Non current receivables Receivables from sale of capital assets 105,425 125,002 Advance - Foreign Military Sales base level

funding 78,880 67,159

Goods and services 760 751 Total non current receivables 185,065 192,913

Total receivables 546,596 365,304 Less: Provision for doubtful debts: (2,000) (1,858) Total net receivables 544,596 363,446

Current receivables are aged as follows: Not overdue 330,824 158,863 Overdue by: less than 30 days 14,352 2,427 30 to 60 days 1,267 1,341 60 to 90 days 538 2,575 more than 90 days 14,550 7,184 Total current receivables 361,532 172,391


Note 17 Analysis of Property, Plant, Equipment and Intangibles This table includes

amounts disclosed in the other tables within Note 17

Land Buildings Total Land and

Buildings

Specialist Military

Equipment (SME)

Infrastructure, Other Plant and Equipment (owned and leased)

Total SME, Infrastructure,

Plant and Equipment

Computer Software

Intangibles Total Computer

Software and Intangibles

Total

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Gross value at 1 July 2000 2,165,921 8,221,080 10,387,001 45,440,522 5,988,352 51,428,874 89,037 42,384 131,421 61,947,296 Gross value - adjustments - - - (13,229) 13,229 - - - - - Gross value - adjusted balance 1 July 2000 2,165,921 8,221,080 10,387,001 45,427,293 6,001,581 51,428,874 89,037 42,384 131,421 61,947,296 Additions - new assets 11,165 289,125 300,290 2,690,138 425,424 3,115,562 7,121 83,844 90,964 3,506,816 Additions - acquisition by finance lease - - - - 401,297 401,297 - - 401,297 Assets transferred in/(out) (12,466) (56,655) (69,121) 469,772 40,736 510,508 - - - 441,388 Revaluation increment 83,066 312,236 395,302 421,681 103,129 524,810 - - - 920,112 Change in accounting policy - - - 1,180,529 114,313 1,294,843 - - - 1,294,843 Disposals (15,008) (17,995) (33,004) (1,697) (520) (2,216) - - (35,220) Write Offs - (57,304) (57,304) (2,482,544) (6,154) (2,488,699) - (4,381) (4,381) (2,550,384) Reclassifications 1,110 48,293 49,404 1,187,379 51,076 1,238,455 - - - 1,287,858 Other movements (71,320) (8,161) (79,481) 36,804 (80,536) (43,732) - - - (123,213) Total gross value at 30 June 2001 2,162,468 8,730,619 10,893,087 48,929,355 7,050,346 55,979,701 96,158 121,847 218,005 67,090,793

179


Note 17 Analysis of Property, Plant, Equipment and Intangibles (continued) This table includes amounts disclosed in the other tables

within Note 17

Land Buildings Total Land and

Buildings

Specialist Military

Equipment (SME)

Infrastructure, Other Plant and Equipment (owned and leased)

Total SME, Infrastructure,

Plant and Equipment

Computer Software

Intangibles Total Computer

Software and Intangibles

Total

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Accumulated depreciation at 1 July 2000 103,611 2,677,931 2,781,542 16,230,492 2,186,154 18,416,645 17,370 23,789 41,159 21,239,347 Accumulated depreciation – adjustments - - - - - - - - - - Adjusted accumulated depreciation 1 July 2000 103,611 2,677,931 2,781,542 16,230,492 2,186,154 18,416,645 17,370 23,789 41,159 21,239,347 Disposals - (3,085) (3,085) - (306) (306) - - - (3,391) Depreciation/Amortisation charge - 284,785 284,785 1,627,896 304,201 1,932,096 15,004 3,071 18,075 2,234,956 Revaluation increment/(decrement) - (183,648) (183,648) 153,348 (163,188) (9,840) - - - (193,488) Change in accounting policy - - - 708,421 74,729 783,150 - - - 783,150 Assets transferred in/(out) - (31,467) (31,467) - 20,074 20,074 - - - (11,393) Reclassifications - 6,450 6,450 593,539 7,022 600,561 - - - 607,011 Write offs - (21,740) (21,740) (1,463,451) (2,405) (1,465,855) - (2,687) (2,687) (1,490,282) Other movements (103,611) - (103,611) 83,938 135,860 219,798 (2,677) 2,677 - 116,187 Accumulated depreciation at 30 June 2001 - 2,729,225 2,729,225 17,934,182 2,562,141 20,496,323 29,697 26,850 56,547 23,282,095 Net value at 30 June 2001 2,162,468 6,001,394 8,163,863 30,995,173 4,488,205 35,483,378 66,461 94,996 161,457 43,808,698

180


Note 17 Analysis of Property, Plant, Equipment and Intangibles (continued)

PROPERTY, PLANT AND EQUIPMENT

AT COST Land Buildings Total land

and buildings

Specialist military

equipment (SME)

Other plant and

equipment

Infrastructure Total SME, infrastructure,

plant and equipment

Total

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

As at 30 June 2001 Gross value - under construction 3,468 466,326 469,795 9,433,763 72,082 44,900 9,550,745 10,020,539 Gross value - in use 7,953 124,833 132,786 33,385,866 1,103,830 81,829 34,571,526 34,704,312 Accumulated depreciation - (7,651) (7,651) (14,621,633) (536,132) (6,657) (15,164,422) (15,172,073) Total net value - at cost 11,421 583,508 594,930 28,197,996 639,780 120,072 28,957,848 29,552,778

As at 30 June 2000 Gross value - under construction - 177,200 177,200 11,439,685 3,094 69,778 11,512,557 11,689,757 Gross value - in use 23,743 202,271 226,014 3,113,128 1,254,993 95,951 4,464,072 4,690,086 Accumulated depreciation - (11,506) (11,506) (1,211,002) (515,055) (4,547) (1,730,604) (1,742,110) Total net value - at cost 23,743 367,965 391,708 13,341,811 743,032 161,182 14,246,025 14,637,733

181



PROPERTY, PLANT AND EQUIPMENT UNDER FINANCE LEASE AT COST

Property, plant and equipment

$'000 As at 30 June 2001 Gross value 402,270 Accumulated amortisation (27,422) Total net value 374,848 As at 30 June 2000 Gross value 974 Accumulated amortisation (384) Total net value 590

182



PROPERTY, PLANT AND EQUIPMENT

AT REPLACEMENT VALUE Buildings -

Independent valuation

Specialist Military Equipment (SME) - Officers valuation

Other Plant and Equipment -

Officers valuation

Infrastructure - Independent

valuation

Total SME, Infrastructure, Plant

and Equipment

Total

$'000 $'000 $'000 $'000 $'000 $'000 As at 30 June 2001 Gross value - previous revaluation 2,772,020 6,109,726 56,283 1,453,970 7,619,979 10,391,999

Accumulated depreciation (1,139,689) (3,312,549) (24,333) (684,331) (4,021,213) (5,160,902) Net value - previous revaluation 1,632,331 2,797,177 31,950 769,639 3,598,766 5,231,097 Gross value - current cycle 5,146,873 - 605,686 3,161,888 3,767,574 8,914,447

Accumulated depreciation (1,527,778) - (330,597) (914,317) (1,244,914) (2,772,692) Net value - current cycle 3,619,095 - 275,089 2,247,571 2,522,660 6,141,755 Total net value 5,251,426 2,797,177 307,039 3,017,210 6,121,426 11,372,852 As at 30 June 2000 Gross value - previous revaluation 5,094,322 12,499,900 67,013 2,564,399 15,131,312 20,225,634

Accumulated depreciation (1,869,405) (7,340,714) (28,042) (1,012,479) (8,381,235) (10,250,640) Net value - previous revaluation 3,224,917 5,159,186 38,971 1,551,920 6,750,077 9,974,994 Gross value - current cycle 2,500,039 18,374,580 10 1,887,771 20,262,361 22,762,400

Accumulated depreciation (742,677) (7,678,776) - (605,640) (8,284,416) (9,027,093) Net value - current cycle 1,757,362 10,695,804 10 1,282,131 11,977,945 13,735,307 Total net value 4,982,279 15,854,990 38,981 2,834,051 18,728,022 23,710,301

183



PROPERTY, PLANT AND EQUIPMENT AT MARKET VALUE SELLING PRICE

Land - Independent

valuation

Buildings - Independent

valuation

Total land and buildings - Independent

valuation

Infrastructure - Independent

valuation

Total

$'000 $'000 $'000 $'000 $'000 As at 30 June 2001 Gross value - previous revaluation 687,912 195,830 883,742 50,187 933,929 Accumulated depreciation - (45,273) (45,273) (25,539) (70,812) Net value - previous revaluation 687,912 150,557 838,469 24,648 863,117 Gross value - current cycle 1,534,455 24,738 1,559,193 8,333 1,567,526 Accumulated depreciation - (8,835) (8,835) (3,725) (12,560) Net value - current cycle 1,534,455 15,903 1,550,358 4,608 1,554,966 Provision for land decontamination (71,320) - (71,320) - (71,320) Total net value 2,151,047 166,460 2,317,507 29,256 2,346,763 As at 30 June 2000 Gross value - previous revaluation 1,186,507 221,815 1,408,322 50,104 1,458,426 Accumulated depreciation - (44,645) (44,645) (16,642) (61,287) Net value - previous revaluation 1,186,507 177,170 1,363,677 33,462 1,397,139 Gross value - current cycle 955,671 25,432 981,103 8,468 989,571 Accumulated depreciation - (9,699) (9,699) (3,749) (13,448) Net value - current cycle 955,671 15,733 971,404 4,719 976,123 Provision for land decontamination (103,611) - (103,611) - (103,611) Total net value 2,038,567 192,903 2,231,470 38,181 2,269,651

The revaluations of Land, Buildings and Infrastructure during the current cycle were carried out in accordance with the progressive revaluation policy stated in Note 2 and were all independently undertaken by the Australian Valuation Office. The revaluations of Specialist Military Equipment during the current cycle were carried out in accordance with the progressive revaluation policy stated in Note 2 and were all undertaken by departmental officers. These officers are recognised experts in their field of operations and are supported by a range of logistics personnel who provide specific advice and support.

184



INTANGIBLES Software

packages with modifications

Patents, copyrights, licences, etc

Total

$'000 $'000 $'000 As at 30 June 2001

Gross value - under construction - - - In use - at cost 89,241 18,001 107,242 In use - at replacement value 6,917 103,845 110,762 Accumulated amortisation (29,697) (26,850) (56,547)

Total net value - at cost 66,461 94,996 161,457 As at 30 June 2000

Gross value - under construction - - - In use - at cost 82,120 5,370 87,490 In use - at replacement value 6,917 37,014 43,931 Accumulated amortisation (17,370) (23,789) (41,159)

Total net value - at cost 71,667 18,595 90,262

185

186

Owner Perspective


Note 18 Inventories

Current 442,709 694,144 Non current 3,286,673 2,931,887 3,729,381 3,626,031 Less: Provision for obsolescence (490,596) (692,568) Total net inventory 3,238,786 2,933,463

Note 19 Other Non Financial Assets

Capital prepayments 425,737 621,105 Non capital prepayments 149,226 57,931 Total other non financial assets 574,963 679,036

Note 20 Finance Lease Liabilities

Finance leases Current finance leases 9,994 286 Non current finance leases 381,690 270 Total finance leases 391,685 556

Finance lease commitments are due for

payment as follows:

Not later than one year 9,994 331 Later than one year and not later than five

years 39,609 322

Later than five years 342,152 - 391,755 653 Less: Future finance charges (71) (98) Total finance leases 391,685 556

During the financial year the Department entered into a finance lease arrangement with the Defence Housing Authority for the supply of housing.

Note 21 Other Interest Bearing Liabilities

Lease incentive obligations 213 455 Total other interest bearing liabilities 213 455


187


Note 22 Capital Use Charge Payable

Opening Capital Use Charge Payable 51,357 - Plus: Current year Capital Use Charge 4,982,388 4,599,955 Less: Capital Use Charge paid 5,055,287 4,548,598 Add: Capital Use Charge receivable (see

Note 16) 21,542 -

Closing Capital Use Charge Payable(1) - 51,357 1Amounts are payable into the Official Public Account.

188

Owner Perspective


Note 23 Employee Provisions

Civilian Accrued salaries – current 19,901 19,438 Annual leave – current 128,319 115,642 Long service leave – civilian Current long service leave 17,112 17,752 Non current long service leave 160,742 169,706 Total long service leave 177,854 187,458 Superannuation- current 3,285 2,804 Redundancies- current 3,956 1,947 Total 333,315 327,288

Military Accrued salaries – current 75,915 65,529 Annual leave – current 394,715 374,703 Long service leave Current long service leave 81,823 61,002 Non current long service leave 503,874 538,688 Total long service leave 585,697 599,690

Military compensation Current military compensation 143,000 124,000 Non current military compensation 1,053,000 907,000 Total military compensation 1,196,000 1,031,000

Superannuation- current 14,036 12,747 Redundancies- current 3,046 7,373 Total 2,269,409 2,091,043

Generic Employee taxation payables – current 88,873 30,264 Other employee provisions – current 41,312 10,996 Total 130,185 41,260

Total employee provisions 2,732,908 2,459,591

Note 24 Supplier Payables

Non capital trade creditors 558,355 195,454 Capital trade creditors 157,725 245,189 Operating lease creditors - 662 Other creditors 42,247 61,070 Total supplier payables 758,326 502,375


189


Note 25 Other Payables

Federation fund money – revenue received in advance 59,953 64,653

Other payables 12,206 43,407 Total other payables 72,159 108,060


Note 26 Analysis of Equity Accumulated Results Asset Revaluation Reserve Capital Total Equity 2000-01 1999-2000 2000-01 1999-2000 2000-01 1999-2000 2000-01 1999-2000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Equity balance - 30 June 2000 36,895,453 34,904,682 4,116,791 2,089,484 687,170 - 41,699,414 36,994,166 Opening equity adjustments1 - 1,274,258 - 1,830 - - - 1,276,088

Adjusted opening equity - 1 July 2000 36,895,453 36,178,940 4,116,791 2,091,314 687,170 - 41,699,414 38,270,254

Net surplus/(deficit) 6,398,619 5,316,468 6,398,619 5,316,468 Dividends provided for/(paid) (7,097) - (7,097) - Capital Use Charge provided for/(paid) (4,982,388) (4,599,955) (4,982,388) (4,599,955) Asset revaluations Net revaluation - non financial assets

Net revaluation increase/(decrease) - land 83,066 67,898 83,066 67,898 Net revaluation increase/(decrease) - buildings 495,884 96,060 495,884 96,060

Net revaluation increase/(decrease) - specialist military equipment

268,333 1,817,717 268,333 1,817,717

Net revaluation increase/(decrease) - infrastructure, other plant and equipment

266,317 43,803 266,317 43,803

Total asset revaluations 1,113,600 2,025,477 1,113,600 2,025,477

Withdrawal of capital (45,616) - (45,616) - Capital injection 93,522 687,170 93,522 687,170 Equity at 30 June 2001 38,304,586 36,895,453 5,230,391 4,116,791 735,076 687,170 44,270,054 41,699,414

190


Note 26 Analysis of Equity (continued)

2000-01 1999-2000 $'000 $'000 1Adjustments to opening equity

Assets recognised under AAS29 transitional provisions - 1,278,278 Derecognition of Woomera opening balance - (10,588) Transfer of STS Young Endeavour from the Administered Entity (net book value) - 6,568 Transfer of STS Young Endeavour from the Administered Entity (revaluation reserve) - 1,830

Total adjustments to opening equity - 1,276,088

191

192

Owner Perspective


Note 27 Cash Flow Reconciliation Reconciliation of operating surplus to net

cash from operating activities

Net operating surplus before capital use

provided for or paid 6,398,619 5,316,468

Operating items not providing cash Net (gain) on foreign exchange (20,252) (12,932) Recognition of assets previously expensed (1,103,459) - Change in accounting policy (511,693) - (Increase) in property, plant and

equipment - (8,167)

(Increase) in non capital receivables (134,675) (38,838) (Increase) in net inventories (245,022) (19,170) (Increase)/Decrease in non capital

prepayments (91,294) 24,352

(Decrease)/Increase in other provisions (43,240) 41,506 (Decrease) in advance of appropriations - (179,354) Total operating items not providing cash (2,149,635) (192,604)

Operating items not using cash Net loss/(gain) on sale of assets 10,286 (3,675) Depreciation and amortisation 2,234,956 1,800,300 Write down of assets 1,098,870 736,695 Finance lease charges - 505 Increase in employee provisions 273,317 35,169 Increase in supplier provisions 343,415 18,428 Total operating items not using cash 3,960,844 2,587,423

Net cash from operating activities 8,209,828 7,711,286


193


Note 28 Administered Revenues from Government

Special appropriations 1,282,937 1,235,154 Total administered revenues from

Government 1,282,937 1,235,154

Note 29 Administered Interest and Dividends

Administered Interest and Dividends Administered dividends Defence Housing Authority 24,000 21,984

Administered interest Interest on Foreign Military Sales

advance 661 2,665

Total administered interest and dividends 24,661 24,649

Note 30 Administered Other Sources of Non Taxation Revenue

MSBS contributions (See Note 2.20) 402,800 332,111 DFRDB contributions (See Note 2.20)

Revenue from the Departmental entity 154,623

- 252,807

1,766 Foreign governments and the United

Nations reimbursements for East Timor 127,361 79,520 Australian Defence Force Academy

superannuation (movement in the provision)

1,322 737

Total administered other sources of non-taxation revenue 686,106 666,941

Note 31 Administered Personal Benefits DFRDB/DFRB (see Note 2.20) 2,490,771 1,408,528 MSBS (see Note 2.20) 166,586 1,205,858 Retention benefits 22,013 18,865 Total administered personal benefits 2,679,369 2,633,250

Note 32 Administered Subsidies, Benefits and Grants Defence Home Owner Subsidy 6,555 4,625 Total administered subsidies, benefits and

grants 6,555 4,625

194

Owner Perspective


Note 33 Administered Write-Downs of Assets

Write down of accrued interest on loan to ADI

- 2,470

Total administered write-downs of assets - 2,470

Note 34 Administered Other Expenses Expense – payment to Official Public

Account - 1,766

Total administered other expenses - 1,766

Note 35 Administered Cash Cash at bank 170 207 Total administered cash 170 207

Note 36 Administered Receivables Receivables from foreign governments and the

United Nations for East Timor reimbursements

171,311

79,511 Receivable from the Departmental entity - 1,766 Military superannuation 3,358 3,047 Total administered receivables 174,669 84,323

Note 37 Administered Investments Holdings Commonwealth Authorities Defence Housing Authority 1,546,261 1,785,029 Total administered investments 1,546,261 1,785,029 The Commonwealth holds a 100% interest in the Defence Housing Authority.

The principal activity of Defence Housing Authority is:

To provide total housing services that meet Defence operational and client needs.

Note 38 Administered Personal Benefits Payable

Military superannuation provision (see Note 2.20)

26,000,000 24,600,000

DFRDB/DFRB liability (see Note 2.20) 5,268 4,755 MSBS liability (see Note 2.20) 332 287 Total personal benefits payable 26,005,599 24,605,042


195


Note 39 Administered Other Payables 2000-01 1999-2000 $'000 $'000 Australian Defence Force Academy 22,369 23,691 Payable to the Official Public Account 1,766 1,766 Intercompany transfers (5,947) 1,327 Other payables 72 (979) Total administered other payables 18,259 25,804


Note 40 Administered Analysis of Equity

Accumulated Results Revaluation Reserve Administered Investments Reserve

Total Equity

2000-01 1999-2000 2000-01 1999-2000 2000-01 1999-2000 2000-01 1999-2000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Equity balance - 30 June 2000 (24,546,316) (23,245,613) - 1,830 1,785,029 2,103,544 (22,761,287) (21,140,239) Opening equity adjustment(1) - (6,568) - (1,830) - (6) - (8,404) Adjusted opening equity – 1 July 2000 (24,546,316) (23,252,182) - - 1,785,029 2,103,538 (22,761,287) (21,148,643)

Contribution to Whole of Government result

(692,221) (715,368) (692,221) (715,368)

Amount to Official Public Account

(610,482) (578,767) (610,482) (578,767)

Transfer to/(from) reserves - - - - (238,768) (318,509) (238,768) (318,509)

Equity at 30 June 2001 (25,849,020) (24,546,316) - - 1,546,261 1,785,029 (24,302,759) (22,761,287)

$'000 $'000

(1)Adjustments to opening equity

Derecognition of Defence Technologies of Australia - (6)

Transfer of STS Young Endeavour to the Departmental Entity (net book value) - (6,568)

Transfer of STS Young Endeavour to the Departmental (revaluation reserve) - (1,830)

Total adjustments to the opening equity - (8,404)

196


197


Note 41 Administered Cash Flow Reconciliation 2000-01 1999-2000 $'000 $'000 Reconciliation of ‘net change in administered assets’ to net cash used by

operating activities

Net contribution to whole of government (692,221) (715,368)

Cash to the Official Public Account (610,482) (578,767) Net decrease in administered net assets (1,302,703) (1,294,135)

Items not providing cash (Decrease)/Increase in other

provisions (1,322) 1,298 Increase in non capital receivables (90,346) (81,985) Decrease in supplier provisions (6,223) - Total items not providing cash (97,891) (80,687)

Items not using cash Write down of assets - 2,470 Increase in personal benefits payable 1,400,558 1,372,558 Total items not using cash 1,400,558 1,375,028

Net cash (used by)/from administered operating activities (37) 207


Note 42 Reporting Against Outcomes

As per Note 1, Defence had one outcome: The prevention or defeat of the use of armed force against Australia and its interests

Budget Actual 2000-01 1999-00 2000-01 1999-00 $'000 $'000 $'000 $'000

Personal benefit payments and subsidies 2,205,130 1,655,936 2,685,924 2,637,876 Other administered expenses - 2,976 - 3,498 Net cost of outputs 12,109,976 10,489,623 10,733,303 10,492,700 Net cost to Budget result 14,315,106 12,148,535 13,419,228 13,134,074 Total assets deployed as at 30 June 44,122,718 42,898,549 49,946,446 46,691,366

The net cost to Government shown above includes intra-government costs as detailed below. These will be eliminated at the Whole of Government level in calculating the actual expense to Government

2000-01 1999-00 $'000 $'000

Related party transactions Services provided by Comcover 15,893 - Auditor-General 1,750 1,535 National Archives of Australia 360 363 Total related party transactions 18,002 1,898

198


Note 43 Reporting by Major Activity Defence undertook three (3) primary activities. These are: a. delivery of five (5) agreed outputs to government (Output Activities); b. delivery of services, including provision of the majority of assets, to support Groups in undertaking activities (Enabling Services); and c. provision of independent advice and other services to the Secretary and the Chief of the Defence Force as representatives of the government (Owner Services).

In the remainder of the Annual Report, the Enabling Services are attributed across the five (5) agreed outputs. Output Activities Output Activities Support Activities Defence Total Defence Operations Navy Capabilities Army Capabilities Air Force Capabilities Policy Advice Enabling Services Owner Services 2000-2001 1999-2000 2000-2001 1999-2000 2000-2001 1999-2000 2000-2001 1999-2000 2000-2001 1999-2000 2000-2001 1999-2000 2000-2001 1999-2000 2000-2001 1999-2000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Revenues from ordinary activities

Revenues from Government 43

-

637

61

691

118

556

55 129

-

12,605

105

17,117,261

15,814,085

17,131,922

15,814,424

Sale of goods and services 28

28

12,770

15,572

9,453

11,948

15,168 18,848 361

894

199,063

205,627

6,046

43,847

242,889

296,766

Interest and dividends -

-

31

46

1

6

-

-

-

-

8

39

33,471

30,902

33,511

30,992

Net gain on sale of assets -

-

-

1,161

-

345

-

-

-

-

-

2,170

-

(1)

-

3,675

Net gain on foreign exchange -

-

-

-

1

-

5

-

-

-

-

1,230 20,246

11,741

20,253

12,971

Reversals of previous asset write-downs 1,779 - 236,627 81,623 110,657 39,953 131,730 128,694 37 - 622,560 (3,837) 69 3,837 1,103,459 250,270 Change in accounting policy -

-

250,783

-

52,913

-

162,024

-

-

-

45,549

-

425

-

511,693

-

Other revenues 39 35,237 (479,832) (606,910) (331,156) (137,715) (447,638) (731,858) (18) 454 1,342,766 1,919,689 9,894 (448,352) 94,056 30,546 Inter Group transfers (39) (35,237) 482,927 607,146 331,116 137,715 447,631 732,019 - (454) (1,265,070) (1,908,960) 3,434 467,771 - - Total revenues from ordinary activities 1,849 28 503,943 98,700 173,677 52,370 309,477 147,759 509 894 957,481 216,063 17,190,846 15,923,829 19,137,782 16,439,644

199


Note 43 Reporting by Major Activity (continued)

Output Activities Output Activities Support Activities Defence Total Defence

Operations Navy Capabilities Army Capabilities Air Force

Capabilities Policy Advice Enabling Services Owner Services

2000-2001

1999-2000

2000-2001 1999-2000 2000-2001 1999-2000 2000-2001 1999-2000 2000-2001 1999-2000 2000-2001 1999-2000 2000-2001 1999-2000 2000-2001 1999-2000

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Expenses from ordinary activities Employees 39,299 29,375 921,381 735,193 1,795,178 1,381,422 815,366 704,777 59,756 36,597 1,456,824 1,488,532 297,598 589,006 5,385,401 4,964,902 Suppliers 27,389 10,986 372,400 351,796 395,538 358,813 652,548 381,056 59,426 54,035 2,476,890 2,126,495 (46,661) 563,862 3,937,529 3,847,042 Subsidies, benefits and grants

-

-

-

-

100

48

-

-

-

-

34,597

752

1,013

3,072

35,710

3,872

Depreciation and amortisation

1,031

-

632,438

543,040

249,802

194,190

671,087

467,964

135

-

671,030

592,075

9,432

3,031

2,234,956

1,800,300

Write down of assets -

-

117,436

4,249

167,071

48,962

289,903

12,110

-

-

670,950

410,181

(146,490)

2,671

1,098,870

478,173

Net loss on sale of assets

-

-

-

-

30

-

333

-

34

-

9,890

-

-

-

10,286

-

Net loss on foreign exchange

-

-

-

-

-

1

-

16

-

23

-

-

-

-

-

39

Interest and other financing costs - - 11 33 1 4 9 - 1 - 33,372 494 5 - 33,400 532 Other expenses 11 2 3 - 311 2,206 3 - 5 4 582 24,902 2,096 1,202 3,010 28,315 Total expenses from ordinary activities 67,731 40,363 2,043,668 1,634,310 2,608,030 1,985,647 2,429,249 1,565,923 119,356 90,658 5,354,136 4,643,431 116,993 1,162,844 12,739,163 11,123,176

200


Note 44 Appropriations Annual Appropriation Acts and Limited (by amount) Special Appropriations

Particulars Administered Departmental Total Outputs Capital 2000-01 1999-2000 2000-01 1999-2000 2000-01 1999-2000 2000-01 1999-2000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Current appropriation - - 17,113,920 15,812,526 93,522 687,170 17,207,442 16,499,696 Balance brought forward - - 137,562 - - - 137,562 - Refunds credited (FMA s30) - - - - - - - - Credits permitted by annotation (FMA s30A & s31) - - 1,141,869 374,910 - - 1,141,869 374,910 Amounts lapsed under determination - - - - - - - - Available for payments - - 18,393,350 16,187,437 93,522 687,170 18,486,872 16,874,607 Payments made - - 18,313,305 16,049,875 93,522 687,170 18,406,827 16,737,045 Balance carried forward - - 80,045 137,562 - - 80,045 137,562

Special Appropriations (unlimited)

Departmental Administered Outputs Capital

Total

2000-01 1999-2000 2000-01 1999-2000 2000-01 1999-2000 2000-01 1999-2000

Particulars

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Budget estimate 2,205,130 1,949,673 - - - - 2,205,130 1,949,673 Payments made 1,902,072 1,843,814 - - - - 1,902,072 1,843,814 Refunds credited (FMA s30) - - - - - - - -

201

Notes to and forming part of the financial statements Note 45 Financial Instruments

(a) Terms, Conditions and Accounting Policies The Department's accounting policies, including the terms and conditions of each class of financial asset, financial liability and equity instrument, both recognised and unrecognised as at 30 June 2001, are as follows: Financial instrument Notes Accounting Policies and Methods (including recognition

criteria and measurement basis) Nature of underlying instrument (including significant terms and conditions affecting the amount, timing and certainty of cash flows)

Financial Assets Financial assets are recognised when control over future economic benefits is established and the amount of the benefit can be reliably measured.

Cash 15 Cash includes cash on hand and at bank, measured in nominal dollars. Cash held in foreign currencies is converted to AUD at the exchange rates applying at 30 June.

The Department invests funds with the Reserve Bank at call and on term deposit. Daily interest is earned on Departmental bank balances held in the Reserve Bank using rates provided by the Department of Finance and Administration. At call daily interest rates ranged from 2% pa – 3.5% pa and term deposit interest rates ranged from 4.85% pa – 6.54% pa. Interest is paid at month end.

Receivables for goods and services and other receivables

16 Receivables are carried at nominal amounts less a provision for doubtful debts. The provision is a percentage of outstanding non-Government receivables based on analysis of the recoverability of outstanding debts and write-off experience from prior years. Bad debts are written off as they are identified.

Receivables are with entities predominantly external to the Commonwealth. Credit terms are 30 days (1999-00: 30 days).

Receivables - Foreign Military Sales Base Level Funding

16 The balance of the US Federal Reserve Bank account is held at nominal amounts in USD and converted to AUD at 30 June.

Under the foreign military sales program, a prescribed amount is required to be maintained in the US Federal Reserve Bank account. This currently stands at $US40m.

Receivables - sale of capital assets

16 Receivables for the sale of capital assets are carried at nominal amounts. Receivables held in foreign currencies are converted to AUD at the exchange rate applying at 30 June.

Terms and conditions are contractually determined at the time of sale. These conditions vary depending on a range of issues that are negotiated at the time of sale.

202


Note 45 Financial Instruments

(a) Terms, Conditions and Accounting Policies (continued)

Financial instrument

Notes Accounting Policies and Methods (including recognition criteria and measurement basis)

Nature of underlying instrument (including significant terms and conditions affecting the amount, timing and certainty of cash flows)

Financial Liabilities

Financial liabilities are recognised when a present obligation to another party is entered into and the amount of the liability can be reliably measured.

Finance lease liabilities

20 Liabilities are recognised at the present value of the minimum lease payments at the beginning of the lease. The discount rates used are estimates of the interest rates implicit in the leases.

As at 30 June 2001, the Department had finance leases with an average lease term of 15 years (1999-00: 8.9 years). The interest implicit in the leases averaged 7.48% for 2000-2001 (1999-2000: 9.92%).

Suppliers and other payables

24 Creditors and accruals are recognised at their nominal amounts, being the amounts at which the liabilities will be settled. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

Settlement is usually made within 30 days.

Unrecognised Financial Liabilities

Indemnities/ Guarantees

51 All indemnities/guarantees are considered remote and are reported in a separate note to the financial statements unless they have been specifically identified otherwise.

Indemnities issued cover potential losses for which the Commonwealth may otherwise be liable at law although the initial loss would accrue to the other party, or potential losses or damages for which the Commonwealth would not be liable without the indemnity.

203



(a) Terms, Conditions and Accounting Policies

Administered Financial

instrument Notes Accounting Policies and Methods (including recognition

criteria and measurement basis) Nature of underlying instrument (including significant terms & conditions affecting the amount, timing and certainty of cash flows)

Financial Financial assets are recognised when control over future economic benefits is established and the amount of the benefit can be reliably measured.

Cash 35 Cash includes reserved money held in the Official Public Account.

The balance of the administered cash account is non-interest bearing.

Receivables 36 Receivables are carried at nominal amounts less a provision for doubtful debts. The provision is a percentage of outstanding non-Government receivables based on analysis of the recoverability of outstanding debts and write-off experience from prior years. Bad debts are written off as they are identified.

Receivables are with entities predominantly external to the Commonwealth. Credit terms are 30 days (1999-00: 30 days).

204



(b)Interest Rate Risk The Department's exposure to interest rate risks and the effective interest rate of financial assets and liabilities are as follows:

Fixed interest rate Non-interest bearing

Total Weighted average

effective annual interest rate


Notes Floating interest rate

1 year or less 1 to 2 years 2 to 5 years Greater than 5 years

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001

1999-2000

Financial Assets Cash at bank 15 594,280 97,524 - 35,000 - - - - - - (537,148) - 57,132 132,524 1.21% 5.32% Cash on hand 15 1,171 5,389 1,171 5,389 N/A N/A Goods and services receivables

16

302,209 88,721 302,209 88,721 N/A N/A Appropriation Receivable

16 - - 21,542 - 21,542 - N/A N/A

Receivables from sale of capital assets

16

100,141 148,251 41,825 59,314 141,966 207,566 N/A N/A FMS Base Level Funding

16 78,880 67,159 78,880 67,159 N/A N/A

Total Financial Assets

694,421 245,775 - 35,000 - - - - - - (91,522) 220,583 602,900 501,359

205



(b)Interest Rate Risk (continued)

Fixed interest rate Non-interest bearing

Total Weighted average effective annual

interest rate


Notes Floating interest rate


2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001

1999-2000

Financial Liabilities Finance lease 20 - - 9,954 286 9,915 113 29,664 157 342,152 - - - 391,685 556 7.48% 9.92% Suppliers 24 758,326 502,375 758,326 502,375 N/A N/A Other payables

25 72,159 108,060 72,159 108,060 N/A N/A

Total Financial Liabilities

- - 9,954 286 9,915 113 29,664 157 342,152 - 830,486 610,435 1,222,171 610,991

206



(b) Administered Interest Rate Risk

Financial

instrument Notes Floating

interest rate Fixed interest rate Non-interest

bearing Total Weighted

average effective

annual interest rate


2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001 $'000

1999-2000 $'000

2000-2001

1999-2000

Financial Assets

Cash at bank 35 170 207 170 207 N/A N/A Administered receivables

36 174,669 84,323 174,669 84,323 N/A N/A

Total Financial Assets

- - - - - - - - - - 174,839 84,530 174,839 84,530

207

208

Owner Perspective



(c) Net Fair Values of Financial Assets and Liabilities

The aggregate net fair values of financial assets and financial liabilities as at 30 June are as follows:

2000-01 1999-2000 Note Total

carrying amount

Aggregate Net fair

value

Total carrying amount

Aggregate Net fair value

$'000 $'000 $'000 $'000 Departmental

Financial Assets Cash 15 58,303 58,303 137,913 137,913 Receivables - interest 16 83 83 1,262 1,262 Receivables - goods and services 16 323,667 323,667 87,459 87,459 Receivables - sale of capital assets 16 141,966 141,966 207,565 207,565 Receivables - FMS Base Level Funding

16 78,880 78,880 67,159 67,159

Total financial assets 602,900 602,900 501,358 501,358

Financial Liabilities Finance lease liabilities 20 391,685 391,685 556 556 Suppliers 24 758,326 758,326 502,375 502,375 Other payables 25 72,159 72,159 108,060 108,060

Total financial liabilities 1,222,171 1,222,171 610,991 610,991

2000-01 1999-2000

Item Note Total carrying amount

Aggregate net fair value

Total carrying amount

Aggregate net fair value

$'000 $'000 $'000 $'000

Administered

Financial Assets Cash 35 170 170 207 207 Receivables - goods and services 36 171,311 171,311 81,276 81,276 Accrued revenue 36 3,358 3,358 3,047 3,047

Total financial assets 174,839 174,839 84,530 84,530


209



(c) Net Fair Values of Financial Assets and Liabilities

The following methods and assumptions are used to determine the net fair value of financial assets and liabilities.

Recognised Financial Instruments

Financial Assets

Cash: the carrying amount approximates fair value because of its short term to maturity. Receivables - goods and services: the carrying amount approximates fair value. Receivables - sale of capital assets: the carrying amount approximates fair value. Receivables - Foreign Military Sales Base Level Funding: the carrying amount approximates fair value.

Financial Liabilities

Finance lease liabilities: the net fair value of finance leases is based on discounted cash flow analysis using current incremental borrowing rates for similar types of borrowing arrangements. Trade creditors and accruals: the carrying amount approximates fair value.

Unrecognised Financial Instruments

Indemnities: the carrying amount approximates net fair value due to the contingent nature of many of these unrecognised liabilities.

(d) Credit Risk Exposure

The Department's maximum exposure to credit risk at reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the Statement of Financial Position. The Department has no significant exposures to any concentrations of credit risk.

(e) Foreign Exchange Risk

Foreign currency transactions are recorded at the rate of exchange at the date of the transaction. Foreign currency receivables, payables and provisions are translated at exchange rates current at the balance date. Exchange gains and losses are brought to account in determining the surplus or deficit for the year. These exchange gains and losses are not speculative and no hedging is undertaken. The Department is exposed to foreign currency exchange rate risk through primary financial assets and liabilities. The following table summarises by currency, in Australian dollars, the foreign exchange risk in respect of recognised financial assets and financial liabilities.

210

Owner Perspective



(e) Foreign Exchange Risk (continued)

The following table summarises by currency, in Australian dollars, the foreign exchange risk in respect of recognised financial assets and financial liabilities.

2001 United States Dollars

New Zealand Dollars

Other Total

$'000 $'000 $'000 $'000

Financial Assets Cash 86,790 - 244 87,034 Receivables 80,939 53,344 - 134,283 167,729 53,344 244 221,317

Financial Liabilities - - - - Departmental currency risk is minimised through budget supplementation for any adverse movements in exchange rates on financial assets and financial liabilities held in foreign currencies.


211


Note 46 Auditor's Remuneration

An estimate of the fair value of services provided free of charge by the Auditor-General for auditing the Defence financial statements is as follows:

2000-01 1999-2000 $ $

1,750,000 1,535,000

Note 47 Act of Grace Payments

The number of payments made during the 2000-01 financial year pursuant to authorisation given under subsection 33(1) of the Financial Management and Accountability Act 1997 was 4 (1999-2000: 3), with the aggregate value being $169,636 (1999-2000: $63,662).

Note 48 Defective Administration Payments

The number of payments made during the 2000-01 financial year under the Defective Administration Scheme was 22 (1999-2000: 22), with the aggregate value being $237,282 (1999-2000: $73,474).

Note 49 Waivers

The number of waivers provided during the 2000-01 financial year pursuant to authorisation give under subsection 34(1) of the Financial Management and Accountability Act 1997 or any other legislation was 6 (1999-2000: 1), with the aggregate value being $19,293 (1999-2000: $45,470,000).

Note 50 Future Commitments

Defence has a procurement process relating to major projects. Once a project has been approved to proceed, tenders are called, evaluated and contracts awarded. The period between approval for the project to proceed and the award of contracts is the period of 'future commitment'. Once a contract has been awarded, a 'future commitment' becomes a 'capital commitment' and is reported in the Schedule of Commitments. The amounts involved in 'future commitments' are phased over financial years in the same way as the 'Schedule of Commitments'.

2000-01 1999-2000 $'000 $'000

One year or less 1,311,994 1,641,409 From one to five years 4,490,828 6,789,762 Over five years 3,710,462 5,062,181

Total future commitments 9,513,283 13,493,352

212

Owner Perspective


Note 51 Remote Contingencies

Defence carries an extensive range of guarantees, indemnities and undertakings, normally of a short-term nature, relating to business, exercise activities and other arrangements involving contracts, agreements and other Defence activities. Indemnities issued cover potential losses or damages for which the Commonwealth would not be liable without the indemnity. Contingencies relating to such guarantees, indemnities and undertakings issued by Defence are considered to be too remote to be included in the Schedule of Contingencies. Of these, there are 26 instances (29 in 1999-00) that are either unquantifiable or uncapped, and 50 instances (67 in 1999-2000) of quantifiable contingencies to the value of $495m ($4.286b in 1999-2000). There are many indemnities that are incorporated into major acquisition projects. These uncapped indemnities are potentially large but unquantifiable. In addition, there are 89 instances of remote or unquantifiable contingent losses arising from outstanding claims against the Defence. Of these, 42 are considered remote, with an assessed liability of $9.310m.


213


Note 52 Executive Remuneration 2000-01 1999-2000 2000-01 1999-2000

Remuneration Band Number of Executives Receiving

Separations/ Redundancies(1)

Number of Executives Receiving

Separations/ Redundancies(1)

Number of Executives

Number of Executives

$100,000 to $109,999 - - 7 3 $110,000 to $119,999 1 - 10 30 $120,000 to $129,999 3 2 11 23 $130,000 to $139,999 - 1 18 20 $140,000 to $149,999 2 - 24 30 $150,000 to $159,999 1 - 21 21 $160,000 to $169,999 2 - 22 13 $170,000 to $179,999 1 1 22 12 $180,000 to $189,999 1 3 17 15 $190,000 to $199,999 1 3 19 9 $200,000 to $209,999 - 1 11 5 $210,000 to $219,999 1 1 7 2 $220,000 to $229,999 1 2 5 4 $230,000 to $239,999 3 2 3 3 $240,000 to $249,999 3 - 5 2 $250,000 to $259,999 4 1 5 1 $260,000 to $269,999 2 - 3 1 $270,000 to $279,999 1 - 2 2 $280,000 to $289,999 - - 3 2 $290,000 to $299,999 - - 2 - $330,000 to $339,999 - - 1 1 $350,000 to $359,999 - - 1 - $360,000 to $369,999 - - 1 - $390,000 to $399,999 - - 2 -

Total number of officers 27 17 222 199

(1) The number of executives disclosed under the separations/redundancies column are a subset of the executives disclosed in the two right hand columns.

$ $ Aggregate remuneration provided during the year to the Executives shown above

39,562,356 31,252,845

Aggregate separation and redundancy amounts provided during the year to the Executives shown above

2,820,795 1,955,644

Comparative data for 1999-2000 have been amended for subsequent changes made to information used in the preparation of the 1999-2000 financial statements. The changes resulted in a net decrease of $112,836 in aggregate remuneration and a net decrease of $311,552 in aggregate separation and redundancy amounts.

214

Owner Perspective


Note 53 Special Public Money

2000-01 1999-2000 $ $

Defence - Projects for other governments and international bodies

Legal Authority: Financial Management and Accountability Act 1997; s20 Purpose: Payment for all costs in connection with specified activities on behalf of other governments and international bodies.

Cash balance as at 1 July 87,827,472 44,582,461 Less: adjustment of opening balance 1,765,614 -

Restated cash balance at 1 July 86,061,858 44,582,461 Plus: Receipts 80,061,234 96,861,273 Less: Expenditure 63,867,138 53,616,262

Cash balance as at 30 June 102,255,954 87,827,472

Defence - Services for non-departmental bodies

Legal Authority: Financial Management and Accountability Act 1997; s20 Purpose: Payment for all costs in connection with specified activities on behalf of non-departmental bodies.

Cash balance as at 1 July 1,899,595 2,508,486 Plus: Receipts 2,151,350 4,010,168 Less: Expenditure 3,198,107 4,619,059

Cash balance as at 30 June 852,839 1,899,595

Defence - Endowments

Legal Authority: Financial Management and Accountability Act 1997 s20 Purpose: For application in accordance with the conditions of each endowment. Balance as at 1 July 252,433 239,083

Plus: Receipts 308,174 24,516 Less: Expenditure 8,732 11,165

Balance as at 30 June 551,875 252,433

Cash balance as at 1 July 58,270 58,363 Plus: Cash inflows 419,632 32,516 Less: Cash outflows 120,326 32,610

Cash balance as at 30 June 357,576 58,270

Investment balance as at 1 July 194,164 180,719 Plus: Purchase of investments 111,594 21,445 Less: Realisation of investments 111,459 8,000

Investment balance as at 30 June 194,299 194,164


215


Note 53 Special Public Money (continued)

2000-01 1999-2000 $ $

Fedorczenko Legacy Fund

Legal Authority: Financial Management and Accountability Act 1997 s20 Purpose: Residue of the estate of the late Petro Fedorczenko which is to be used for the defence of Australia.

Balance as at 1 July 158,594 150,942 Plus: Receipts 1,709 8,578 Less: Expenditure 10,491 926




Investment balance as at 1 July 154,145 145,567

Plus: Purchase of investments 139,595 8,578 Less: Realisation of investments 154,145 -


Other Trust Money

Legal Authority: Financial Management and Accountability Act 1997 s20 Purpose: For receipt of money temporarily held in trust.

Cash balance as at 1 July 3,468,838 5,322,893 Plus: Receipts 536,811 68,149,373 Less: Expenditure 1,606,387 70,003,428

Cash balance as at 30 June 2,399,262 3,468,838

Young Endeavour Youth Scheme Operating Fund

Legal Authority: Financial Management and Accountability Act 1997 s20 Purpose: For the receipt and payment of money in connection with the operations and activities of the STS Young Endeavour, as specified by the Young Endeavour Youth Program Board of Management or by the Commonwealth.

Balance as at 1 July 209,401 473,015 Plus: Receipts 811,413 603,320 Less: Expenditure 88,030 866,934


216

Owner Perspective


Note 53 Special Public Money (continued)

Young Endeavour Youth Scheme Operating Fund (continued)

2000-01 1999-2000 $ $



Investment balance as at 1 July 2,996 2,996 Plus: Purchase of investments - - Less: Realisation of investments - -


217

MAJOR CAPITAL EQUIPMENT The following table and descriptions provide details on progress and expenditure for each of the most significant major equipment projects in 2000-01.

Table 3.1: Significant Projects by Forecast 2000-01 Expenditure

Approved Project Cost

Cumulative Expenditure

to 30 June 2001(1)

2000-01 Budget

Estimate


Dec 00 Prices Dec 99 Prices Dec 00 Prices

2000-01 Actual(1)

$m $m $m $m $m

Maritime Anzac Ship Project(2) 5,250 4,229 376 318 246 FFG Progressive Upgrade – Implementation

1,339 447 204 193 211

Collins-Class Submarine Augmentation 225 135 15 156 90 New Submarine Project 5,094 4,953 61 88 68 Minehunter Coastal Acquisition 1,237 1,029 91 87 62 Evolved SeaSparrow Missile 318 235 51 86 104 Land Ninox Night-Fighting Equipment 175 160 18 38 32 Aerospace Lead-In Fighter Capability 1,013 885 199 205 172 Anzac Ship Helicopter 969 696 115 149 141 P3C Update 880 598 137 145 29 Air-To-Air Weapons Capability(3) 464 221 100 92 73 F/A-18 Hornet Upgrade Ph 1 275 170 91 70 48 Interim Electronic Warfare Self Protection for F-111

142 83 43 67 57

Chinook Helicopters 79 79 28 37 38 Strategic Airlift Capability 1,070 894 38 28 5 Electronic Systems HF Modernisation 571 192 82 88 94 Military Satellite Communication – Military Satellite Payload

350 282 104 73 192

Jindalee Operational Radar Network 1,223 945 96 64 93 Tactical Air Defence Radar Systems 195 87 45 49 7 Australian Defence Air Traffic System 220 150 33 29 8

Notes 1. Cumulative expenditure to 30 June 2001 has been taken from Defence’s resource and

output management network which was introduced in October 2000 for project accounting. Some clean up of project balances was undertaken with this implementation.

2. The figures for the Anzac Ship Project represent the costs for eight Australia ships. They do not include the two ships for New Zealand that were included in the costs shown in the Defence Annual Report 1999-2000.

3. Now incorporates third phase.

218

Owner PerspectiveOwner Perspective

Anzac Ship Project

Partially Achieved as Forecast

HMAS Warramunga (Ship 05) was delivered in February 2001, and commissioned in March 2001. Nuship Parramatta (Ship 07) was launched in June 2000 and is currently being outfitted. Nuship Ballarat (Ship 08) was planned for launch in mid-2001, but will now be launched in mid-2002. The delay is due mainly to a change in production philosophy by the contractor where a greater percentage of the work is completed prior to launch. The underwater and surface warfighting upgrade project (approved separately to the Anzac Ship construction project) will enhance the Anzac Ship surface and sub-surface warfare capabilities. The initial strategy of a sole source contract was unsatisfactory and a revised acquisition strategy using an alliance arrangement has been developed to incorporate these capabilities in the ships. The Anzac Ship alliance is a contractual arrangement between the Commonwealth, Tenix Defence Systems and Saab Systems to deliver change to the Anzac Class under a team approach. It is a five year agreement which is expected to commence operation in the second half of 2001.

FFG Progressive Upgrade - Implementation

Partially Achieved

This project seeks to regain the original relative capability of the six RAN FFGs to ensure that they remain effective and supportable to the end of their life. ADI Pty Ltd plans to conduct the upgrade at its Garden Island facility, commencing upgrade of the first ship (HMAS Sydney) in mid-2002 and completing upgrade of the last ship in mid-2006. The combat system design is currently behind schedule but a plan has been developed to adopt a progressive upgrade approach which will allow the core upgrade work to commence almost on schedule in 2002.

Collins Class Submarine Augmentation

Achieved

The two ‘fast track’ submarines HMAS Dechaineux (Submarine 04) and HMAS Sheean (Submarine 05) were provisionally accepted in December 2000, as forecast, and were commissioned into naval service in February 2001. The planned scope of work essentially was completed to schedule, with minor outstanding tasks completed during routine maintenance periods early in 2001. Noise improvements and planned improvements to operational capability were achieved as forecast and, having completed its task, the submarine management capability team was disbanded in January 2001.

The variation between actual expenditure and the revised estimate was due mainly to changes in the planned completion of the combat system augmentation, in-service support and hull modification elements of the project.

Major Capital Equipment

219

For the combat system augmentation, the initial plan was to expend the majority of funds conducting the ‘fast track’ augmentation work prior to delivery of the submarines to the Navy in early 2001. Once under way, the program was further refined to develop the augmented combat system over a longer period of time, thereby moving expenditure from 2000-01 to 2001-02 and beyond. The in-service support component was also redefined, with expenditure now planned over several years. Some hull modifications, initially planned for 2000-01, were postponed due to the conduct of ranges trials. Hull and propeller modifications are now expected to be tested on HMAS Collins in early 2002.

New Submarine Project

Partially Achieved

Five of the planned six submarines have been delivered and provisionally accepted, and are now operating under the control of the Maritime Commander Australia. The sixth submarine (Nuship Rankin) is 98 per cent complete and is expected to be launched in November 2001 and formally delivered in the second half of 2002. The forecast delivery by the end of 2001 will not be achieved due to the Australian Submarine Corporation’s resources being diverted to the priority task of augmentation of the two ‘fast track’ submarines (HMAS Dechaineux and HMAS Sheean) and the additional work required to upgrade Nuship Rankin to the same level of platform improvements.

The variation between actual expenditure and the revised estimate was due mainly to the increase in the near-term expenditure associated with the new submarine project component of the ‘fast track’ submarines. This includes the electronic support measures and towed array procurements as well as the ‘fast track’ platform component funded by this project. A further requirement was to fund an increase in escalation costs due to the application of revised Australian Bureau of Statistics indices.

Mine Hunter Coastal Acquisition

Achieved

HMAS Norman (Ship 03) was delivered to the RAN in July 2000. HMAS Gascoyne (Ship 04) was delivered in April 2001 and commissioned into the RAN in June 2001. Nuship Diamantina (Ship 5) was launched in December 2000 and is expected to be delivered in early 2002. Nuship Yarra (Ship 06) is under construction and is expected to be launched in January 2002. Actual expenditure was less than estimated due to the reprogramming of modifications. This reprogramming had little impact on the overall schedule.

Evolved SeaSparrow Missile

Partially Achieved

The missile will be introduced on the Anzac class ships and will also be installed on the FFGs during the class upgrade program. Missile deliveries were planned

220


to commence in the first half of 2001 and HMAS Warramunga (Ship 05) was scheduled to conduct missile firings during post-delivery trials in mid-2001. These two milestones have been delayed due to the failure of the missile during an ordnance safety test in the United States. The full extent of the delay is not known at this time but will be at least six months. The upgrade of the Anzac Ship support centre at Williamstown and HMAS Watson tactical training facility are expected to be delivered in third quarter 2001.

Actual expenditure exceeded estimated expenditure due to significant exchange rate variations that occurred throughout the financial year. There was also an increase in the cost for the base production run of the Evolved SeaSparrow missile.

Ninox Night-Fighting Equipment


Project Ninox will provide the ADF with night-fighting equipment, perimeter surveillance equipment, ground surveillance radars, thermal surveillance systems and unattended ground sensors. The night-fighting equipment element involves the procurement of night vision goggles, night weapon sights, night aiming devices and infra-red markers. Deliveries are scheduled to be completed in 2002.

The East Timor remediation procurement of additional night-fighting equipment was incorporated into the prime contract, by way of contract amendment. Most of the expenditure against the main night-fighting equipment contract should be completed in 2001-02.

Lead-In Fighter Capability

Partially Achieved

This project involves acquiring a replacement aircraft for the Macchi MB-326H. The replacement aircraft will be used in lead-in fighter and ADF support roles. The RAAF commenced flying Hawk 127 aircraft in October 2000. 30 aircraft were delivered in 2000-01, with the remaining two aircraft and the fatigue test article to be delivered by October 2001, a delay of three months to the contracted delivery schedule. The delivered aircraft do not have the contracted operational capability, such as the full range of weapons carriage and ADF support capabilities. Full capability will be delivered under a future phased program and is expected to be completed by the end of 2003. Delays to date have affected the conduct of aircrew training, and lower than expected availability rates are the focus of ongoing effort by the Defence Materiel Organisation and the contractor.


221

Anzac Ship Helicopter

Not Achieved

The project has been delayed by two years. Further delays are expected, with the contractor yet to confirm a schedule for delivery of the full capability. This project involves acquiring 11 maritime surveillance helicopters (Super Seasprites) to provide an enhanced capability to the ADF for surface surveillance, anti-surface warfare, contact investigation and maritime utility tasks. The helicopters will operate primarily from the Anzac ships. Deliveries of aircraft spares, documentation and ground support and test equipment is underway. The in-service support centre and 805 Squadron have been commissioned. However there have been significant delays with the development and integration of the mission system and a major sub-contractor is to be replaced. A revised project schedule delivery date will be available when arrangements with a replacement sub-contractor are in place.

P-3C Update

Not Achieved

This project will update the P-3C Orion fleet to help ensure continued operational effectiveness through to the planned withdrawal date of 2015. Delivery and acceptance of the first six AP-3C prototype aircraft was not achieved primarily because of continuing system integration problems, particularly deficiencies in performance and stability of the data management system software. The underspend in 2000-01 is directly attributable to the delay in the first delivery. While significant progress towards delivery was achieved during the second half of 2000-01, system performance did not meet Commonwealth delivery requirements. Resolution of the critical system anomalies continues. Delivery of the prototype is expected in October 2001, with acceptance planned for the second quarter of 2002.

Acceptance of aircraft 02 to 05 is expected to follow immediately after acceptance of the prototype, while acceptance of the systems engineering laboratory is expected in early 2002 and the operational mission simulator later in 2002.

Induction into the modification program of aircraft 06, which has been delayed pending resolution of prototype delivery issues, is expected in October 2001.

Air-to-Air Weapons Capability


The project involves the acquisition of a new beyond-visual-range missile and a new within-visual-range missile. A number of operational missiles for beyond-visual-range were delivered in 2000-01, with introduction into service planned for completion by the end of 2001. The initial delivery of

222


within-visual-range missiles will occur in early 2002, a delay of six months, with completion of missile deliveries planned for late 2002.

F/A-18 Hornet Upgrade

Partially Achieved

First phase modifications, which included a new mission computer and software, were validated on two prototype aircraft and accepted on schedule in September 2000. First phase production commenced in November 2000 and 22 aircraft were modified in 2000-01 against a contracted quantity of 39. The contractor has allocated significant additional management and workforce resources to the project and the production schedule has been revised to reflect realistic aircraft in-work times. First phase production is now expected to be completed by June 2002, a delay of six months.

Phase 2.1 will upgrade the aircraft radar and the software operational flight program. Prototype installations will commence on two aircraft in August 2001, and fleet-wide modification will commence immediately following the end of the first phase of the project in June 2002. Phase 2.2 modifications involve a major upgrade to the cockpit avionics systems and significant improvements in the pilot’s situational awareness. The initial equipment fit currently is being procured by Foreign Military Sales action. Contract signature for the integration design work is expected by the end of 2001.

Interim Electronic Warfare Self Protection for F-111


Acquisition contracts proceeded substantially as forecast but with some non-critical slippage of milestones to 2001-02. These delays were caused by the technology involved in the systems creating a higher than anticipated workload for contractor and Commonwealth staff during acceptance testing.

Completion of aircraft integration design and modification of prototype aircraft was delayed due to a number of unexpected integration issues and heavy commitment of F-111 support resources. This delay has flowed on to production of fleet modifications. The delays will not affect the approved in-service date as the delays have been measured against an accelerated equipment acquisition strategy schedule. Full capability is expected to be achieved well before the approved in-service date.

Chinook Helicopters

Achieved

This project involves the provision of an additional two CH-47D Chinook helicopters to expand the fleet to a total of six aircraft. The two aircraft were delivered in March 2001 and both aircraft are now operational.


223

Strategic Airlift Capability

Partially Achieved

This project involves acquisition of 12 C-130J-30 aircraft to replace the C-130E fleet operated by 37 Squadron. All 12 aircraft were conditionally accepted by mid-2000 as forecast. 37 Squadron is operating eleven of the aircraft in strategic line haul, search and survivor assistance and limited aero-medical evacuation roles. A provisional restriction has been imposed on the carriage of class 1 explosive ordnance while unexpected cargo compartment vibration characteristics are investigated further. The twelfth aircraft remains with the contractor in the United States for development and testing of the final upgrade configuration. Final upgrade of the 11 aircraft at 37 Squadron is planned to occur at RAAF Richmond from October to December 2001. A role expansion program to clear the aircraft for full strategic and tactical operations is due for completion by the end of 2002.

High-Frequency Modernisation

Partially Achieved

This project was instigated to replace naval high-frequency stations at Canberra, Darwin, Exmouth, Sydney, Cairns and Perth, and Air Force high-frequency stations at Sydney, Townsville, Darwin and Perth. The new network will provide enhanced communications capabilities and will upgrade and provide compatible high-frequency equipment in selected ADF mobile platforms. The detailed design review for the core system was completed in late 2000. Practical completion of the new network node buildings was achieved and assembly of the large transmitting ‘rosette’ antenna arrays was completed. Fit out of the main network management facility will finish by the end of July 2001. Furnishing of the inter-node communications links to the contractor is well advanced and in accordance with the contractor’s revised schedule. Completion of the core network is scheduled for late 2002.

Military Satellite Communication - Military Satellite Payload

Partially Achieved

Contracts for the provision of an ADF satellite communications capability, as part of a shared military-commercial satellite, were signed with Cable and Wireless Optus in October 1999. The program has suffered a 6 month slip in schedule. The satellite is now due for launch in the third quarter of 2002 and is expected to enter service by the end of 2002. Acceptance testing of the two anchor station antennas installed at HMAS Harman in the ACT is now due for completion in December 2001. The Defence mobile communications network is in the final stages of acceptance, with 95 per cent of the supplies already delivered to users. The capability is being used within Australia as well as in East Timor and Bougainville. The theatre broadcast system technology demonstrator has been used in both the land and maritime environments and was deployed

224


during Exercise Tandem Thrust and for the Sydney Olympics. Installation of ultra-high-frequency satellite communications systems on the P-3C aircraft is continuing. A contract for the fitment of satellite communications systems into C-130H aircraft is expected to be in place by the end of 2001, with installation commencing in 2002.

Jindalee Operational Radar Network

Achieved

This project will deliver two over-the-horizon radars, one near Longreach, Queensland, and the other near Laverton, Western Australia, to provide a capacity for long-range, wide-area surveillance of Australia’s northern approaches. Each radar will be operated from the networks coordination centre at RAAF Edinburgh in South Australia.

All site facilities work has been completed and activity is now centred on integration and optimisation of both hardware and software. Evaluation and acceptance testing has commenced and will continue well into 2002. RAAF operator training on the network commenced in early 2001 at the contractor’s premises. The overall level of technical risk for the project continues to be reduced gradually but consistently. Schedule risk has increased because of integration complexities, with the contractor’s projections indicating operational release will occur in mid-2002 and final acceptance towards the end of 2002.

The possibility of connecting the Longreach radar sites to the Queensland power grid is being evaluated.

Tactical Air Defence Radar Systems

Partially Achieved

This project involves the acquisition of four tactically-mobile air defence radar systems to replace the three existing systems. It will also provide a transport capability for the new systems and satellite communications between the new systems and the fixed air defence sites. Although subsystem fabrication was largely completed and associated acceptance testing was commenced during 2000-01, both activities experienced significant delays due to the emergence of unexpected technical problems. Testing will continue during 2001-02, followed by system integration and system acceptance testing in late 2001-02. Operational evaluation is planned to commence in early 2002-03, with the systems scheduled for delivery throughout 2002-03. Overall, the program has experienced a 16-month slip in schedule.

Australian Defence Air Traffic System

Partially Achieved

This project involves replacing air traffic control equipment located at Defence sites throughout Australia. The replacement will provide modern military air


225

traffic control services that accommodate current and predicted changes in airspace classifications. The new system is interoperable with both the Defence airspace surveillance systems and the Airservices Australia civil air traffic control system. Both the prime and major sub-contractor have suffered resourcing problems on this project. In addition, disputes over technical performance of the equipment offered to the Commonwealth have delayed contractual progress. These resourcing and contractual issues prevented the project from fully achieving its 2000-01 goals, with only five of the eight air traffic control segments planned for commissioning during the year being accomplished.

FORMER TOP TWENTY PROJECTS The following text provides details on former top twenty projects that are not in the 2000-01 top twenty table.

2000-01 Portfolio Budget Statements M113 Upgrade Not Achieved

The project was subjected to a major review as part of the White Paper process and, as such, did not achieve the results forecast for 2000-01.

The Government approved an increase in expenditure on an enhanced M113 upgrade project. The project will now upgrade approximately 350 of the Army's M113 family of vehicles to the M113AS3 standard to allow them to continue to provide effective service through to 2020 and beyond. The upgrade will involve additional features such as the stretching of some variants to increase capacity and load carrying. In view of the wider scope of the newly-defined project, a definition study is at present under way with Tenix. This is expected to lead to a contract for acquisition being signed toward the end of 2001-02.

Bushranger Project

Not Achieved

The third phase of Project Bushranger is planned to increase the mobility of selected Army infantry battalions and RAAF airfield defence guard units by equipping them with protected wheeled infantry mobility vehicles. A total of 341 vehicles, in six variants, are planned to be acquired from ADI’s engineering and vehicles division at Bendigo.

Significant activities planned for 2000-01 included evaluation of three prototype vehicles, manufacture of the initial production vehicle for the first variant, commencement of series production of vehicles, placement of a through-life support contract, and initial procurement of support equipment.

The project is currently some 18 months behind schedule and the first prototype is not considered sufficiently reliable to allow production to proceed at this time. Two further prototypes are undergoing trials. The Commonwealth and ADI Pty Ltd are working together to progress the contract by implementing measures to improve vehicle performance, especially reliability, so that production can proceed. Negotiations are expected to be finalised by December 2001.

226

Owner Perspective

CAPITAL FACILITIES SIGNIFICANT MAJOR FACILITIES

The following table and descriptions provide details on progress and expenditure for each of the most significant major facilities projects in 2000-01.

Table 3.2: Significant Current Facilities Projects PROGRAM OF WORKS

(State, Federal electorate and locality) Approved

Project Cost $'000

Cumulative Expenditure to

30 June 2001 $’000

2000-01 Budget

Estimate $’000


$’000

2000-01 Actual

$’000

QUEENSLAND Blair RAAF Amberley – Redevelopment 77,400 54,616 40,000 46,754 39,069 Brisbane Enoggera – Catering Rationalisation 11,600 71 40 0 11 Herbert Lavarack Barracks Redevelopment Stage 2(1) 144,308 130,479 75,550 75,200 104,689 RAAF Townsville Redevelopment Stage 1(2) 70,100 19,359 20,000 18,000 18,433 Leichhardt Cairns - Facilities for 51 Far North Queensland Regiment

22,517 22,015 50 533 452

NEW SOUTH WALES Eden/Monaro Twofold Bay - Navy Ammunitioning Facility 40,000 1,975 16,100 1,175 250 Gilmore HMAS Albatross – Redevelopment of Naval Aviation Base

110,000 66,134 24,082 21,460 19,307

Paterson RAAF Williamtown – New South Wales Eastern Region Operations Centre

18,000 16,782 1,878 1,338 1,377

VICTORIA Maribyrnong Albion Explosives Factory Decontamination 28,635 26,066 3,461 5,200 4,386

Melbourne Ports Fishermans Bend – DSTO Relocation of Research Laboratories

56,200 2,287 4,000 4,000 2,110

SOUTH AUSTRALIA Bonython RAAF Edinburgh Redevelopment Stage 1(3) 39,887 718 3,050 878 718 WESTERN AUSTRALIA Brand HMAS Stirling Development Stage 3 19,000 17,936 39 95 790 NORTHERN TERRITORY Northern Territory Darwin – Joint Army Deployment Facility Development

268,300 227,373 14,132 18,142 13,920

Northern Australian Naval Infrastructure Development

12,400 11,583 9,532 10,800 11,188

RAAF Darwin – Development of Operational Facilities 59,458 54,798 3,654 5,767 3,135

Capital Facilities

227

PROGRAM OF WORKS (State, Federal electorate and locality)

Approved Project

Cost $'000


30 June 2001 $’000

2000-01 Budget

Estimate $’000


$’000

2000-01 Actual

$’000

RAAF Darwin – Redevelopment of Base 11,670 5,706 8,850 5,955 5,444 Timber Creek – Bradshaw Station Field Training Area Infrastructure Works (4)

53,666 2,952 7,661 500 175

Delamere Air Weapons Range Development 12,300 0 300 300 0 AUSTRALIAN CAPITAL TERRITORY Canberra Collocated Staff College 28,000 25,236 20,400 21,247 19,683 Fraser Campbell Park Offices – Refurbishment(5) 33,500 33,500 7,458 6,524 10,024 Location to be Advised RAAF College Development 36,038 0 50 0 0

Notes 1. The increase in approved project expenditure (+$5m) increases the number of living-in

rooms being provided, from 956 to 1004 rooms. 2. The approved project expenditure decrease (-$8.9m) is due to the deferment of the light

tactical aircraft project. 3. The increase in approved project expenditure (+$2.2m) reflects out-turn prices. 4. The approved project cost is $53.666m. This project was shown in the 2000-01 Portfolio

Budget Statements in a rounded form of $54.0m. 5. The facilities component of the project increased to $33.5m (+$3.5m) to provide required

extra working accommodation. There was no increase in the overall project cost since overall approved cost of the Campbell Park refurbishment was $50m. This comprised $30m for refurbishment of building facilities and $20m for the information technology upgrade. $3.5m was subsequently transferred from information technology funding to facilities refurbishment to cover additional work resulting from relocation of additional staff to Campbell Park.

Enoggera – Rationalisation of Catering Service: Continuing

Not Achieved

This project will redress inefficiencies at Gallipoli Barracks, Enoggera, through a rationalisation of the existing messing facilities and an upgrade of selected living-in accommodation. The project was targeted for submission to the Public Works Committee in mid-2000, but because of changing activities and requirements in 7th Brigade which were due largely to the East Timor commitment, presentation to the committee has been rescheduled for 2002-03.

Lavarack Barracks Redevelopment Stage 2: Continuing

Achieved

This project will provide various facilities and infrastructure, primarily new single-soldier living-in accommodation, to ensure the long-term viability of Lavarack Barracks as the major base of the ADF Rapid Deployment Force. The project is ahead of schedule due to good weather conditions and the benefits of a precast erection methodology. Completion of the Stage 2 works is expected by mid-2002.

228


RAAF Townsville Redevelopment Stage 1: Continuing


This project will provide new facilities, including loading aprons and aircraft support infrastructure, to support the operational role of the base. The negotiation of an indigenous land use agreement, to enable perpetual lease of the site for the operational facilities, has delayed some aspects of the construction program. Negotiations for the agreement were successfully concluded in May 2001 and the registration process should be finalised in October 2001. The project is due to be completed in late 2002.

Cairns - Facilities for 51 Far North Queensland Regiment: Completed

Achieved

This project provided new and upgraded facilities for the regiment at a number of sites. The project has been completed on time and within budget.

RAAF Amberley Redevelopment: Continuing

Substantially Achieved This project is designed to overcome immediate deficiencies in the existing facilities at the base and to provide improved aircraft maintenance, operation, support and training facilities. Construction is expected to be completed on schedule by mid-2002.

Twofold Bay - Navy Ammunition Facility: Continuing

Partially Achieved This project will provide a naval ammunition facility at Eden, New South Wales, to replace the former facility at Newington on the Sydney Olympics site. Point Wilson in Victoria is being used as an interim facility. There has been some delay in negotiating an indigenous land use agreement for the project. Defence is confident that the agreement will be finalised during the second half of 2001 to enable construction to commence in late 2001/early 2002 for completion by mid-2003.

HMAS Albatross - Redevelopment of Naval Aviation Base: Continuing

Substantially Achieved This project will update various facilities, including aircraft support, storage and maintenance facilities, the air traffic control tower, explosive ordnance storage and loading facilities, and training facilities. There has been some delay with elements of the project, with Stage 1 due to be completed in September 2001. Design for Stage 2 is on schedule.

Capital Facilities

229

RAAF Williamtown - New South Wales Eastern Region Operations Centre: Continuing

Achieved

This project provided new facilities to accommodate air defence operations and training. The project was completed within budget, with only demolition of old facilities and minor works to be undertaken. Remaining works will occur when necessary equipment purchases have been concluded.

Albion Explosives Factory Decontamination: Continuing

Achieved This project will decontaminate and remediate the former Albion Explosives Factory site. Work commenced in March 1999 and is almost complete, with an independent environmental auditor’s report due in the first half of 2000-01. Progressive transfer of the site to the Urban Land Corporation for development and public sale commenced in May 1999 and is scheduled for completion by August 2009.

Fishermans Bend - Defence Science and Technology Organisation Relocation of Research Laboratories: Continuing

Partially Achieved

This project relocates functions from Maribyrnong to Fishermans Bend, including the integration of common functions and the construction of enhanced facilities, thereby permitting disposal of the Maribyrnong site. The project was approved by Parliament in June 2000. The design process is proceeding, with construction expected to commence in early 2002 and be completed in May 2003.

RAAF Edinburgh Redevelopment Stage 1: Continuing

Achieved

This project provides new facilities in the technical area at the base. The proposed works include new administrative, workshop and warehousing facilities as well as an upgrade of engineering services and an aircraft shelter facility. The project was referred to the Public Works Committee in June 2000 and approved in November 2000. The redevelopment will be carried out in two stages. The first construction stage is scheduled to commence in 2002, with completion programmed for June 2003. The second stage is planned to commence in 2004-05.

230


HMAS Stirling Development Stage 3: Completed

Achieved

This was the final stage in the development of HMAS Stirling and provided new facilities as well as extensions to existing facilities to meet requirements from the Government’s two-ocean navy policy. The project was completed under budget.

Joint Army Deployment Facility Development: Continuing

Achieved

This project provides facilities in support of the Army’s programmed relocation of the 1st Brigade to Darwin. The first stage of this project, approved by the Government in 1992, was completed within budget in 1999. The second stage, approved in 1995, has been increased in scope and will be completed in December 2001. While the scope of the project has changed, it will be completed within the original budget.

Northern Australia Naval Infrastructure Development: Continuing

Achieved

This project will provide a new 146-metre wharf, three additional dry-land berths for patrol vessels, an increased fuel holding capacity and other upgraded facilities. The new wharf was completed in June 2001 and the project will be completed in full in September 2001.

RAAF Darwin - Development of Operational Facilities: Continuing


This project provides enhanced operational works at the base, including aircraft loading aprons, a fuel farm, an operations/technical facility and a base command post. The project has been delayed by commissioning difficulties with the air traffic control system, which is now operational. Final works packages are now being contracted. Completion of the project is planned for June 2002.

RAAF Darwin Redevelopment: Continuing

Achieved

This project provides for upgrade of selected domestic facilities at the base. It is being delivered in three discrete packages to minimise inconvenience to the base. To date, works are substantially complete for aircraft apron support facilities, RAAF police, ground defence facilities and air movements. Design is now about to commence on an upgrade to the medical centre and the upgrade to the fire fighting water supply. Construction is expected to be completed in December 2002.

Capital Facilities

231

Timber Creek - Bradshaw Station Field Training Area Infrastructure Works: Continuing

Partially Achieved

This project provides the necessary infrastructure to allow the use of the Bradshaw property as a field training area for the 1st Brigade. Significant delays have been experienced and the project is now some three years behind its original program. A native title claim and an aboriginal land rights claim affect the project. In-principle agreement has been reached on an indigenous land use agreement and tendering is planned to commence shortly. Completion is currently planned for December 2003.

Delamere Air Weapons Range Development: Project Cancelled

Not Achieved

This project was to provide infrastructure at Delamere Range and RAAF Tindal to support the new air training equipment. As a result of the prioritisation of capabilities in the White Paper, the air combat training system project was cancelled.

Collocated Staff College: Completed

Achieved

This project was to collocate the existing Service staff colleges with the Australian Defence College at Weston Creek, in the ACT. Parliament approved the project in December 1999 and construction occurred on a tight schedule, with completion on time and under budget for the initial course to commence in January 2001.

Campbell Park Offices - Refurbishment: Completed

Achieved

This project provided new fit-out and selected services to upgrade sub-standard facilities at Campbell Park Offices. The project was completed in May 2001 within budget and on schedule.

RAAF College Development: Delayed

Not Achieved

This project will collocate initial officer training, currently at Point Cook in Victoria, and other-rank recruit training, currently at Edinburgh in South Australia, to achieve economies in training and administration and replace sub-standard facilities. The project has been delayed until the preferred location for the college is determined.

232

Owner Perspective

CAPITAL FACILITIES EXPENDITURE BY ELECTORATE

The following table provides details of estimated expenditure on works in progress and new works for 2000–01, by state, federal electorate and location. All major works (expenditure $6.0m or greater) and medium works (expenditure $0.250m to $5.999m) are approved at an out-turn expenditure estimate, inclusive of fee for service and contingency.

Table 3.3: All Major and Medium Capital Facilities Expenditure by Electorate

Program of works (State, Federal Electorate and Locality)

Approved Project

Cost $'000


30 June 2001 $’000

2000-01 Budget

Estimate $’000


$’000

2000-01 Actual

$’000

QUEENSLAND Blair - Major Works RAAF Amberley – redevelopment of base 77,400 54,616 40,000 46,754 39,069 Blair - Medium Works RAAF Amberley – missile facilities(1) 2,571 2,326 2,119 1,601 1,752 Brisbane - Major Works Enoggera Barracks – catering rationalisation 11,600 71 40 0 11 Brisbane - Medium Works Enoggera Barracks – 1 Topographic Survey Squadron(2) 3,800 3,718 561 0 575 Capricornia - Medium Works Shoalwater Bay – access improvements 2,950 2,947 3 0 0 Rockhampton – multi-user depot 5,900 5,786 2,295 3,897 4,234 Rockhampton – deployment facility 2,780 2,601 2,183 2,643 2,494 Dickson – Medium Works North Brisbane – army multi-user depot 3,700 2,616 1,400 2,500 2,576 Herbert – Major Works Townsville - Lavarack Barracks redevelopment stage 2(3) 144,308 130,479 75,550 75,200 104,689 RAAF Townsville – redevelopment stage 1(4) 70,100 19,359 20,000 18,000 18,433 Herbert – Medium works RAAF Townsville – drainage works 4,672 4,519 2,100 4,583 4,430 Townsville - Mount Stuart-grenade range 400 0 400 200 0 Leichhardt – Major Works Cairns – Facilities for 51 Far North Queensland Regiment 22,517 22,015 50 533 452 Leichhardt – Medium Works HMAS Cairns – hydrographic ships facility 5,800 5,575 3,799 3,799 3,975 Maranoa – Medium Works Wallangarra – storage facilities 5,700 0 2,700 0 0 TOTAL QUEENSLAND 364,198 256,628 153,200 159,710 182,690 NEW SOUTH WALES Eden-Monaro – Major Works Two Fold Bay – naval ammunitioning facilities 40,000 1,975 16,100 1,175 250 Gilmore - Major Works HMAS Albatross – redevelopment of base 110,000 66,134 24,082 21,460 19,307

Capital Facilities Expenditure by Electorate

233


Approved Project

Cost $'000


30 June 2001 $’000

2000-01 Budget

Estimate $’000


$’000

2000-01 Actual

$’000

Gilmore - Medium Works HMAS Albatross – Naval Aviation Logistics Management (NALMS) facility

5,800 5,459 4,460 5,756 5,415

Hughes - Medium Works Holsworthy Barracks – Project Javelin facilities 3,950 3,534 476 539 360 Macquarie – Medium Works RAAF Richmond – fuel farm upgrade 3,000 0 1,000 0 0 North Sydney – Medium works HMAS Waterhen – wharf power infrastructure 400 0 400 0 0 Patterson - Major Works RAAF Williamtown - operations centre 18,000 16,782 1,878 1,338 1,377 Patterson – Medium Work RAAF Williamtown – building extension 400 0 400 0 0 Reid - Medium Works Lidcombe – Air Training Corps facility(5) 505 505 300 0 224 Riverina - Medium Works Kapooka – zeroing range 2,200 1,934 1,500 1,622 1,356 Kapooka - common instruction training facilities 5,900 4,974 1,200 1,660 1,451 Sydney - Medium Works Garden Island – advance works for submarine basing 5,200 5,125 35 15 3 Garden Island – public access works 6,000 5,940 2,298 4,740 4,680 TOTAL NEW SOUTH WALES 201,355 112,362 54,129 38,305 34,423

VICTORIA Bendigo - Medium Works Bendigo – army multi-user depot 5,050 39 3,000 1,688 39 Jagajaga - Medium Works Watsonia – redevelopment of army facilities 5,800 5,732 10 20 18 Lalor - Medium Works Laverton – facilities for ADF School of Languages 5,123 4,915 32 0 57 Maribyrnong – Major Works Albion – decontamination works 28,635 26,066 3,461 5,200 4,386 Melbourne – Medium Works SE Melbourne – army multi-user depot 4,600 0 2,900 1,540 0 Melbourne Ports – Major Works Fishermans Bend – DSTO relocation of research laboratories 56,200 2,287 4,000 4,000 2,110 TOTAL VICTORIA 105,408 39,039 13,403 12,448 6,610

SOUTH AUSTRALIA Bonython - Major Works RAAF Edinburgh – redevelopment stage 1(6) 39,887 718 3,050 878 718 Bonython - Medium Works RAAF Edinburgh - life support section 630 604 26 0 0 RAAF Edinburgh – advanced flight simulator facility 3,330 3,081 291 119 82 Salisbury – consolidation of divisional stores 580 540 465 504 474 Salisbury - extend communication building 5,420 5,264 193 1,605 1,622 Salisbury – refurbish Land Operations Division facilities(7) 5,370 259 2,000 1,800 189 Wakefield - Medium Works Port Wakefield – ammunition breakdown facility 4,000 0 1,500 0 0 TOTAL SOUTH AUSTRALIA 59,217 10,466 7,525 4,906 3,085

234



Approved Project

Cost $'000


30 June 2001 $’000

2000-01 Budget

Estimate $’000


$’000

2000-01 Actual

$’000

WESTERN AUSTRALIA Brand - Major Works HMAS Stirling – base development stage 3 19,000 17,936 39 95 790 Curtin - Medium Works Swanbourne –fast rope and rappelling facility 3,000 907 50 50 2 Swanbourne – 4 Signal Troop facilities 4,000 0 1,000 0 0 Kalgoorlie - Major Works Carnarvon – GRes depot 1 2,000 1,697 1,900 1,977 1,674 Pearce - Medium Works RAAF Pearce – install aircraft arrestor system 1,700 1,304 900 991 595 RAAF Pearce - facilities for lead-in fighter(8) 6,936 5,542 4,100 4,106 5,185 TOTAL WESTERN AUSTRALIA 36,636 27,386 7,989 7,219 8,246 NORTHERN TERRITORY Darwin - Major Works Robertson Barracks Darwin - Joint Army Deployment Facility Development 268,300 227,373 14,132 18,142 13,920 Larrakeyah Barracks - North Australia naval infrastructure stage 1 12,400 11,583 9,532 10,800 11,188 Timber Creek - Bradshaw Station Field Training Area Infrastructure Works (9) 53,666 2,952 7,661 500 175 RAAF Darwin – development of operational facilities 59,458 54,798 3,654 5,767 3,135 RAAF Darwin – redevelopment of base 11,670 5,706 8,850 5,955 5,444 Darwin - Medium Works Leanyer Air Weapons - range decontamination 4,000 600 626 1,032 69 Robertson Barracks – emergency response facilities 4,000 0 1,000 1,000 0 RAAF Darwin - 114 Mobile Control and Reporting Unit facilities 5,830 5,817 200 316 303 RAAF Darwin - upgrade of electrical reticulation 3,600 87 2,800 1,814 0 Bathurst Island - facilities upgrade 2,000 2 2,000 650 2 Harts Range - upgrade power station 3,500 3,466 467 115 759 RAAF Tindal - Major Works RAAF Tindal – avionics/oxygen workshop and extended technical support surface finishing facilities 8,255 8,017 350 462 465 Delamere – air weapons range development 12,300 0 300 300 0 RAAF Tindal – Medium Works RAAF Tindal – approach control facility 1,800 1,013 1,300 1,790 1,013 RAAF Tindal – Northern Region Operations Centre redevelopment 1,250 180 150 0 0 TOTAL NORTHERN TERRITORY 452,029 321,594 53,022 48,643 36,473

Capital Facilities Expenditure by Electorate

235

AUSTRALIAN CAPITAL TERRITORY Canberra – Major Works Weston – Collocated Staff College 28,000 25,236 20,400 21,247 19,683 Fraser - Major Works Campbell Park Offices – refurbishment(10) 33,500 33,500 7,458 6,524 10,024 Fraser - Medium Works Campbell Park Offices – asbestos removal and fire sprinklers 2,756 2,756 1,368 689 689 HMAS Creswell – redevelopment of waterfront(11) 4,950 4,903 3,372 4,378 4,559 Jervis Bay – remediation of Mary Creek 1,100 19 177 650 3 TOTAL AUSTRALIAN CAPITAL TERRITORY 70,306 66,414 32,775 33,488 34,958 OTHER – Major Works Location to be advised - RAAF college development 36,038 0 50 0 0 OTHER - Medium Works RAAF Butterworth – fuel farm upgrade 1,600 0 1,600 1,600 0 RAAF Butterworth – building upgrades 1,500 0 1,500 44 0 Various Locations – Works – Ninox Phase 1B 4,885 1,321 2,200 1,030 421 Various Locations – air traffic control systems 3,258 2,596 199 654 207 Various Locations – regional training and mobilisation facilities (12) 4,713 4,690 2,117 2,478 2,891 TOTAL OTHER 51,994 8,607 7,666 5,806 3,519

TOTAL NEW BUILDINGS & WORKS 1,341,143 833,496 329,709 310,525 301,004

Notes 1. Increase in approved project expenditure (+$0.4m) due to higher-than-anticipated tender

prices. 2. Increase to approved project expenditure (+$.2m) reflects out-turn cost. 3. Increase in approved project expenditure (+$5m) increases the number of living-in rooms

being provided, from 956 to 1004 rooms. 4. The approved project expenditure decrease (-$8.9m) is due to the deferment of the light

tactical aircraft project. 5. Increase in approved project expenditure (+$0.105m) reflects out-turn cost. 6. Increase in approved project expenditure (+$2.2m) reflects out-turn cost. 7. Increase in approved project expenditure (+$1.5m) due to higher-than-anticipated tender

prices. 8. Total estimated project expenditure increased (+$1.5m) to accommodate higher than

anticipated tender prices and unforeseen works. 9. The approved project cost is $53.666m. This project was shown in the 2000-01 Portfolio

Budget Statements in a rounded form of $54.0m. 10. The facilities component of the project increased to $33.5m (+$3.5m) to provide required

extra working accommodation. There was no increase in the overall project cost since overall approved cost of the Campbell Park refurbishment was $50m. This comprised $30m for refurbishment of building facilities and $20m for the information technology upgrade. $3.5m was subsequently transferred from information technology funding to facilities refurbishment to cover additional work resulting from relocation of additional staff to Campbell Park.

11. Increase in approved project expenditure (+$0.17m) reflects out-turn cost. 12. Increase in approved project expenditure (+ $0.123m) reflects changes to technical

solution within the approved scope.

236

Owner Perspective

ASSET MANAGEMENT Defence manages some $48 billion in total assets, of which the largest share is about $31 billion in specialist military equipment. Other assets under Defence’s management include land and buildings, infrastructure, plant and equipment, inventories and intangibles.

Following Defence Committee endorsement in February 2001, Defence began implementation of an improved asset management and reporting framework. The framework seeks to: • integrate asset planning, management and disposal decisions into corporate

planning processes, including the Defence Plan; • ensure that asset planning decisions are based on evaluation of alternatives,

including life-cycle costs, benefits and risks of ownership; • assign responsibility for asset management policy development; • increase the involvement of senior Defence committees in balance sheet

management of key assets; and • assign accountability, giving lead responsibility for accounting and reporting

of assets to appropriate senior executives.

The Chief Finance Officer will consult with all Defence executives in implementing the new framework and transferring responsibility for accounting and reporting particular classes of assets to designated central areas. This will include the development of policy for asset management, which will address planning, acquisition, operation and disposal of assets within Defence.

The new framework is intended to be largely integrated into Defence’s financial planning and reporting by 30 June 2002.

2000-01 ACHIEVEMENTS As well as commencing implementation of the framework, Defence took steps to address a number of specific asset management issues during the year.

Defence has reduced its asset capitalisation threshold for individual asset items from $25,000 to $10,000 to ensure that the quantity of assets recorded in Defence’s financial statements is materially correct. Together with a program of asset grouping for specialist military equipment, this has led to an increase of $512m in the value of assets reported in the financial statements. The residual of assets not capitalised as at 30 June 2001 is considered immaterial.

Work on improving Defence’s logistic management systems continued. The functionality of the Standard Defence Supply System was enhanced through an inventory accounting project, and further improvements will be delivered as part of the systems upgrade in 2001-02. This will lead to better management of repairable items and other assets within Defence.

Asset Management

237

The Defence Capability and Investment Committee has taken a greater role in the management of Defence’s key assets. This will lead to improved control and efficiency in the management of key assets through a clearer focus on issues ranging from accountability for whole-of-life asset management to consolidation of asset management policy across Defence.

Commercial Support Program initiatives involving asset management in 2000-01 included the signing of a contract that outsourced Defence Science and Technology Organisation facilities and property management operations in Melbourne. This activity was contracted to SSL Asset Services in September 2000.

238

Owner Perspective

ENTERPRISE RISK MANAGEMENT The Defence Enterprise Risk Management Policy was introduced during 2000-01. The policy establishes senior management’s commitment to risk management and gives force to a framework for conducting risk management programs at all levels of the organisation.

Other achievements during 2000-01 include: • presentations on risk management to members of the Defence Leadership

Group (comprising Senior Executive Service and star-ranked officers); • establishment of accountability arrangements for managing risk; • provision of guidance on the new enterprise risk management framework to

senior executives; and • the conclusion of negotiations with Comcover and subsequent establishment

of insurance policies covering Defence’s insurable business risks.

A strategic risk management plan will be introduced during 2001-02 and Groups will complete formal risk assessments in preparation for reporting key risks in the next Defence Plan.

239

DISCRETIONARY GRANTS Table 3.4: Grants Awarded in 2000-01

Grant Program 2000-01 Budget

Estimate $’000

2000-01 Actual

$’000

Variation

$’000 Army Military History Research Grants Scheme 50 50 - Defence Family Support Funding Program 1,250 938 -312 Royal United Services Institute of Australia 75 75 - Total 1,375 1,063 -312

ARMY MILITARY HISTORY RESEARCH GRANTS SCHEME The scheme supports and encourages research into the role and involvement of the Army in the development of the nation. Recipients of grants are shown on the table below.

Table 3.5: Army History Research Grants Scheme Grantees 2000-01 Grantee Grant

Amount ($)

Title of Research

Dr David Coombes 6,950 Soldier and Architect: A Biography of Lieutenant General Sir Talbot Hobbs

Mrs Jennifer Lawless and Mr Sedat Bulgu

6,000 ANZAC Prisoners of War in Turkey, WW1

Mr Allan Converse 5,000 Morale in the 50th British and 9th Australian Divisions, 1939-45

Mr Damien Fenton 5,000 A Study of SEATO as a Military Alliance Dr Peter Stanley 4,925 Alamein: The Australian Story Palmerston Local History Group

4,000 A History of the Australian Army presence in and around Palmerston, Northern Territory

Captain Ron Austin 3,900 LTGEN Sir Carl Jess: the Forgotten General Dr Frances de Groen 3,290 Forgotten: Australian Prisoners of War in Korea

1942-45 Dr Darryl Dymock 3,000 The Role of Army Education in the Australian Army,

1946-2000 Mr Keith Ayliffe 3,000 Tracks of the Dragon: A History of Australian

Locating Artillery Dr Jennifer Macleod 2,950 Gallipoli Reconsidered Dr Jim Mitchell 2,000 Fragments: A History of the Australian 2/2nd Pioneer

Battalion

240


DEFENCE FAMILY SUPPORT FUNDING PROGRAM This program provides funds to support projects and services initiated by Defence families. It is also available to existing groups in the community composed of, or benefiting, Defence families.

Table 3.6: Family Support Funding Program Expenditure 2000-01(1)

STATE ORGANISATION GRANT

($) OVERSEAS Butterworth Support Group 18,145 Port Moresby Australian Defence Family Club 7,500 Total Overseas 25,645

Allen Main Memorial Preschool 3,000 Burgmann Anglican School 300

AUSTRALIAN CAPITAL TERRITORY Campbell After School Activity Centre 1,660 Campbell Preschool 205 Campbell Primary School - Parents and Citizens Association 2,000 Canberra Service Wives Craft Group 2,500 Duntroon Community Centre 19,470 Gungahlin Defence Families Playgroup 3,200 Ngunnawal Primary School Parents and Citizens Organisation 1,000 North Canberra Christian Education Association Inc - Emmaus

Christian School 1,000

Palmerston District Preschool 1,000 St Thomas More's Parents and Friends Association 5,000 YWCA of Canberra 4,000 Total Australian Capital Territory 44,335

Anklebiters Playgroup 1,700 NEW SOUTH WALES Baby Bombers Playgroup 770 Banksia House Interest Group 2001 9,497 Defence Special Needs Support Group (Hills Area) 800 Defence Special Needs Support Group (Wagga Wagga) 374 Defence Special Needs Support Group (Williamtown) 1,000 Defence Youth Group 1,318 Family Welcome Service 1,800 Forest Hill Outside Of School Hours Care Inc 300 Forest Hill Public School 1,000 Glenbrook Family Support Group Inc 5,000 Henderson House Group 4,500 High Flyers Gym Club Incorporated 4,000 Holsworthy Children's Centre 500 Jervis Bay Preschool 545 Jervis Bay School 2,684 Kapooka Community Centre Management Committee Incorporated 22,740

Discretionary Grants

241


($) Kapooka Kindergarten Association Inc 11,639 Kapooka Toy Library 2,000 Kissing Point Cottage Inc 35,000 Little Diggers Playgroup 2,067 Little Learners Toy Library 1,900 Moorebank Public School Parents and Citizens Association 4,500 Myambat Families Consultative Group 1,600 Nowra High School 2,000 Nowra Hill Public School 3,000 Nowra Public School 558 Quakers Hill Support Group 5,500 RAAF Wagga Playgroup 2,400 RAAF Williamtown Playgroup 2,000 Service Wives Initiating Self Help 3,000 Shoalhaven Community Preschool Inc 648 Shoalhaven Defence Families Association Inc 10,000 Singleton Area Military Support Network Inc 9,000 Singleton Army Mobile Preschool and Occasional Childcare 4,000 St Georges Basin Public School 350 Tea Ladies Catering 4,000 Tiny Time Incorporated 7,000 Tomaree Neighbourhood Centre 1,000 Toy Library 1,700 Vincentia High School 500 Wagga Wagga Defence Newsletter 14,500 Wagga Women's Health Centre Inc 249 Williamtown Craft Group 850 Total New South Wales 189,489 NORTHERN TERRITORY

1 CER Regimental Trust Fund – 1 CER Social Lites Playground Committee

12,000

Casuarina Street Preschool Association 3,500 Creative Craft Club 960 Defence Special Needs Support Group (Darwin) 900 Good Beginnings 600 Katherine East Child Care Centre 2,000 Katherine East Community Committee Inc 1,800 Larrakeyah Neighbourhood House Inc 14,800 Network Tindal 2,455 North Australia Area Family Support Committee Inc 25,000 RAAF Darwin Preschool 1,300 RAAF Darwin Playgroup 1,700 Robertson Barracks Family Centre 6,800 Robertson Barracks Gym Care 2,000 St Mary’s Primary School Darwin 2,000

242



($) The Good Neighbours Scheme 11,000 Tindal Christmas Treat 1,200 Tindal Playgroup 2,200 Tindal PreSchool Parent Association 1,900 Top Ender Tri Services Newsletter Inc 28,000 Total Northern Territory 122,115 QUEENSLAND 1 RAR Sergeants' Mess 5,000 5 Aviation Regiment Family And Friends Support Group 8,000 Blue Skies Preschool and Kindergarten Inc 605 Canungra Community Kindergarten 8,500 Canungra Community Playgroup 1,300 Canungra State Preschool 600 Defence Community Recreation Centre (Leichhardt) 65,368 Defence Special Needs Support Group (Brisbane) 700 Defence Special Needs Support Group (Townsville) 600 Enoggera Childcare and Kindergarten Association 9,500 Family Community Centre 14,450 Immaculate Heart School (Blair) 165 Ipswich Family Care Committee Inc 560 Ipswich Sibling Network 800 Katunga Playgroup 3,500 Kids Corner Canungra Inc 8,500 Kokoda Barracks Community Organisation 2,500 Kokoda Barracks Toy Library 1,000 Pine Rivers Family Association Inc 9,675 Pine Rivers Welfare Association Inc 4,000 SOS Playgroup 4,000 The Vincent Neighbourhood House Group Inc 24,926 Toowoomba Defence Families Support Association Inc 3,200 Tri-Service Defence Family Support Association Inc 12,000 Vincent Neighbourhood House Craft Group 1,800 Walloon State School 453 Total Queensland 191,702

Defence Special Needs Support Group (Woodside) 1,000 SOUTH AUSTRALIA Edinburgh Community Centre 15,000 Edinburgh Craft Group 1,000 RAAF Edinburgh Playgroup 4,000 SA Connection Newsletter 10,000 Woodside Defence Families Association 21,033 Total South Australia 52,033 TASMANIA Family Support Funding Program Tasmania Committee Inc 15,000 VICTORIA 1st Puckapunyal Scout Group 500 Albury Wodonga Defence Families Group 5,300

Discretionary Grants

243


($) Bandiana Neighbourhood House Inc 3,300 Bandiana Primary School Council 8,000 Baranduda Community Committee 205 Central Gippsland Health Service 6,000 Crib Point Preschool 2,000 Defence Special Needs Support Group (Melbourne North East) 1,000 Defence Special Needs Support Group (Melbourne West) 1,500 Defence Special Needs Support Group (Mornington) 900 Defence Special Needs Support Group (National) 31,000 Defence Special Needs Support Group (Puckapunyal) 750 East Sale Family Group Inc 2,500 East Sale Kindergarten 2,850 Friends of HMAS Cerberus Library 2,000 Life Education Centre - Mornington Peninsula Inc 750 Little Mac's Playgroup 1,400 Mactier Community Centre Inc 3,200 Mactier Craft and Secret Stitches 1,800 Marjorie Hall Kindergarten 4,659 Mountain View Tri Service Family Group 805 Murphy's Cottage Emergency House 800 NECANA Association 1,200 Point Cook Kindergarten Incorporated 1,925 Point Cook Primary School 7,400 Puckapunyal and District Neighbourhood Centre Inc 24,500 Puckapunyal Primary School 18,000 RAAF East Sale Sergeant's Mess Ladies Auxiliary 5,000 RAAF East Sale Children's Christmas Treat 2,000 RAAF East Sale Playgroup 1,800 RAAF Point Cook Thrift Shop Committee Inc 1,100 RAN Family and Friends Association Inc 15,643 Sale Neighbourhood House Inc 250 Sale Scout Group 500 Seymour Playgroup Inc 253 St Joseph's Primary School Crib Point 1,800 St Mark's Sunday School 500 Viewbank Primary School Out of School Hours Care 4,800 Werribee Defence Community House 13,800 Western Area Group Support Toy Library 1,700 William's Out of School Hours Program 4,500 Willy Wagtails Rostered Playgroup Inc 4,500 Wippa Snappas Playgroup 1,800 Wodonga High School Chaplaincy Committee of the Council for

Christian Education in Schools 2,800

Total Victoria 196,990

244



($) Army Families (WA) Inc 18,000 WESTERN

AUSTRALIA Charthouse Primary School Parents and Citizens Association (Inc) 4,400 Combined Ships Contact Group 2,900 Defence Special Needs Support Group (Perth) 900 Defence Special Needs Support Group (Stirling) 300 East Waikiki Primary School 4,000 Karrakatta Community House Inc 17,500 Northwest Cape Families Support Group 17,000 Octopus' Garden Support Association Incorporated 19,432 Pearce Community Social Group Inc 2,000 Pearce Toy Library Inc 800 Rockingham Women's Health And Information Centre 5,000 Special Air Service Regiment Auxillary Inc 4,000 Swanbourne Pre Primary 500 Swanbourne Primary School Parents and Citizens Association 4,000 Total Western Australia 100,732 GRAND TOTAL 938,041

Note 1. Amounts are exclusive of GST.

ROYAL UNITED SERVICES INSTITUTE OF AUSTRALIA This grant provides assistance to the institute in publishing its journal and in sponsoring lectures and seminars on strategic and national defence issues. The grant also provides continuing support for the institute’s national secretariat to position the institute to become more financially independent over the next four years.

245

PURCHASER/PROVIDER ARRANGEMENTS WITH DEFENCE

HOUSING AUTHORITY In August 2000, Defence entered into an agreement with the Defence Housing Authority which formalised existing arrangements for the provision of housing to ADF members that had been in place since the authority’s creation in 1987. The agreement documents arrangements between Defence (as purchaser) and the Defence Housing Authority (as provider) to satisfy the operational and business requirements for Defence housing, accommodation and related services. The agreement ensures the cost-effective maintenance of a suitable and adequate quality of service for Defence, while at the same time putting the Defence Housing Authority operations on a commercial basis that will satisfy shareholder requirements. The agreement will contain and then reduce the budgetary impact of Defence’s rent bill over time through a program of continuous improvement, consistent with Defence requirements and standards.

The agreement also provides for the transfer of additional functions to the Defence Housing Authority on the basis of mutual consent. Under this provision, Defence and the Authority currently are finalising a relocations agreement which will formalise the functional administration transferred to the authority in July 2000. The agreement documents arrangements put in place for administration by the authority of housing allocations, reoccupation (cleaning and maintenance on vacation of property), itinerary management and removals. This is consistent with the Defence objective of providing an end-to-end relocation service to entitled personnel, minimising as far as possible the disruption to members and their families associated with compulsory relocation.

246

Owner Perspective

INTERNAL CUSTOMER-SUPPLIER ARRANGEMENTS

An internal customer-supplier model was developed during the year as a key plank of integrated performance management arrangements to be implemented across Defence from 2001-02. Its objective is to better inform Defence’s Groups in supporting the Secretary and the Chief of the Defence Force in delivering the outputs and financial performance expected of Defence by the Government.

Chart 3.1: Internal Customer Service and Organisational Performance(1)

Note 1. This chart represents internal customer-supplier arrangements as at 1 July 2001 (see

page 99 of the Defence Portfolio Budget Statements 2001-02).

The customer-supplier model is focused on accountability for customer-driven performance levels and the earning of resourcing for service delivery. All funding for Groups (ie internal resource allocations) will be earned through the delivery of expected services and investments to the Secretary and Chief of the Defence Force or to other Groups within Defence. The model reflects Defence’s organisational group structure: • Output Executives, including Service Chiefs, are responsible for the majority

of direct effort within Defence to allow the Secretary and the Chief of the Defence Force to deliver the outputs expected by the Government;

SEC/CDF

Commander Australian Theatre

Chief of Army

Chief of Navy

Chief of Air Force

Deputy Secretary Intelligenceand Security

Deputy Secretary Strategy

Vice Chief of the Defence Force

Head Public Affairs and CorporateCommunication

Head Defence Personnel Executive

Chief Finance Officer

Chief Defence Scientist

OUTPUT EXECUTIVES OWNER-SUPPORT EXECUTIVES

Inspector General

ENABLING EXECUTIVES

Under Secretary DefenceMateriel

Deputy Secretary CorporateServices

CustomerService

OrganisationalPerformance

KEY

Internal Customer-Supplier Arrangements

247

• Owner-Support Executives are responsible for providing independent advice and assurance to, and on behalf of, the Secretary and the Chief of the Defence Force in relation to output and other organisational performance issues; and

• Enabling Executives are responsible for providing services, including the provision of the majority of assets, to other Groups within Defence to assist them in delivering Defence’s outputs.

Consistent with the above roles, Groups’ responsibilities under the customer-supplier model will be incorporated into a comprehensive set of organisational performance agreements to reflect the different expectations of each Group by the Secretary and the Chief of the Defence Force.

Customer service will focus on the provision of goods and services to an internal customer in the year in question and at an agreed price. The organisational performance agreements will also incorporate ‘ownership’ aspects of each Group, focusing on strategies and issues associated with organisational performance (including the ability to deliver expected customer services - now and into the foreseeable future).

An essential component of the customer-supplier model will be the incorporation of military capability requirements in the organisational performance agreements between the Secretary and the Chief of the Defence Force and the Service Chiefs.

The model will: • provide an improved framework for establishing and aligning expected and

achievable performance levels; • focus on measuring customer service by output measures, rather than by

inputs used in delivering services; • promote accountability and performance review across Defence; and • aid future decision making within Defence. Each Group’s organisational performance agreement with the Secretary and the Chief of the Defence Force will present a scorecard of performance measures, targets and new initiatives and will provide a foundation for monthly monitoring and review at a whole-of-Defence level.

248

Owner Perspective

PROTECTIVE SECURITY IN DEFENCE Defence Security Branch, the regional security offices, security staff in the Defence Signals Directorate, Defence Intelligence Organisation and Defence Imagery and Geospatial Organisation and the Service security authorities continued to provide security advice in the areas of personnel, industrial, technical and physical security. This advice focused on enhancing Defence’s security culture to enable it to better meet government security standards.

As part of ongoing security awareness, the Secretary instituted a briefing program for all star-ranked and Senior Executive Service officers, which was delivered over a six-month period. The briefings paid particular attention to the issue of unauthorised disclosure of official information.

Limited numbers of positive vetting case officers, and an increased requirement for top secret positively-vetted clearances, increased the backlog of cases and hampered effective regular review of existing clearances. Continuing growth in information system-related demands similarly affected the capacity to provide technical security support.

In September 2000, the Government endorsed a new range of security standards. These were published in November in a revised Commonwealth protective security manual which included, for the first time, mandatory standards.

In October 2000, Mr Tony Blunn completed his report into the propriety and proper conduct of the investigation of alleged breaches of security by the late Mr Mervyn Jenkins. The report made a number of recommendations about practices and procedures, including the conduct of security investigations. Defence is implementing the agreed recommendations.

Later in the year, the Inspector General of Intelligence and Security, Mr Bill Blick, completed his second of three reports relating to the Wispelaere espionage case. Mr Tony Blunn completed a review of Defence security arrangements. Mr Blunn’s report recommended a range of improvements, including substantial increases in resources in the positive vetting and technical security areas, and improved governance and structural arrangements.

Following Mr Blunn’s review, the Secretary announced in June 2001 the formation of a Defence Security Authority from July 2001. The focus of the authority will be on security policy, standards, training, evaluation and monitoring, and the investigation of serious security incidents. The authority comes under the leadership of the Deputy Secretary Intelligence and Security. From 2001-02, it will draw on an increased level of resourcing to enable Defence to provide Government with a higher level of security assurance.

International security–related activities included continuing close liaison with US, UK, Canadian and New Zealand counterparts – all of whom were dealing with a range of similar defence security management issues.

249

PUBLIC AFFAIRS AND CORPORATE COMMUNICATION

A NEW DIRECTION IN PUBLIC AFFAIRS Defence set a new direction in communication planning and management with the formation of the Public Affairs and Corporate Communication Division on 1 July 2000. The division has a charter to develop a strategy-based, whole-of-Defence public affairs and corporate communication capability.

In its first year of operation, the division established long-term and short-term objectives for public affairs and corporate communication in Defence.

LONG-TERM OBJECTIVES A high priority was given to forming the infrastructure needed for improved communication support in future years. The major focus for the year was the development and release of a Defence-wide communication strategy. The strategy covers the period 2001-04 and was developed in consultation with major stakeholders. The strategy has three major goals: • Awareness of the Government’s defence policy is raised and community

understanding and confidence in Defence is increased. • Communication with the Government and other stakeholders is improved. • Internal communication is made more effective to help people do their jobs.

Each goal has a set of objectives against which Defence will measure achievement over the next three to four years, commencing in 2001-02. A major plank of the strategy is an accompanying research program.

OBJECTIVES FOR 2000-01 In addition to the development of the Defence-wide communication strategy, the division’s key communication objectives for the year were to achieve high levels of customer and client service and confidence, improve business processes, develop a corporate brand and review Defence’s military public affairs and response capability.

Service was improved through the provision of better service to Ministers and the introduction of a client-service function that provides nationwide strategic-to-operational-level communication and public affairs advice to senior commanders and managers. This function will be developed further next year through the establishment of agreed client service plans and monthly reporting against those plans. In the interim, confidence is being built gradually as products and services are delivered to standard while demand for communication skills and expertise continues to grow.

250


Improved business processes have supported all areas of communication delivery. A major initiative for the division’s first year of operation was to develop and document better processes for the management of issues and crises such that all parties involved are now provided with reliable and timely information. Efficiencies were gained through the central management and collocation of the Services’ newspapers. Website management and presentation was improved to comply with whole-of-government standards and to enhance corporate identity.

In the past, the corporate identity for Defence as a whole lacked focus and unity, suggesting a less-than-cohesive organisation. A new Defence identity, that will coexist with Navy, Army and Air Force identities, was needed to provide Defence with a means to communicate what Defence stands for. Work progressed over the year to develop a new corporate ‘brand’ that will be introduced progressively in 2001-02.

Defence’s military public affairs capability was assessed against experiences in East Timor. From this, a proposal was developed to provide strategic-level planning and operational support which would improve the information flow from operational areas to the Australian public.

ONGOING PERFORMANCE Defence continued to provide a professional public affairs service, while engaging the community on a broad range of activities and issues, including coverage of events, open days, displays and a popular exhibitions’ program.

Service delivery included intensive levels of support to operations, especially in East Timor and Bougainville, and to major events such as the Sydney Olympics. Other major events included the launches of the White Paper and the Government’s Reserve legislation. Defence’s celebration of the Centenary of Federation program saw public affairs support to a number of major events including the Avalon air show, ‘100 years of the Army’ celebrations, the ‘Federation Outback Fly-In’ and numerous minor events across the nation.

The division developed approximately 100 communication strategies covering issues ranging from unacceptable behaviour to Defence involvement in Australia’s Centenary of Federation. The division worked to ensure that crises and issues management was efficient and effective. Defence placed particular emphasis on active engagement with the media through responsive briefings and balanced information.

Upgrading the organisational communication skills of professional and general staff was given an impetus over the year. Communication education programs were conducted for all levels of command and management staff, with 13 courses being attended by 265 staff. In partnership with Charles Sturt University, a diploma-level course in public affairs was developed. Targeted primarily at military public affairs staff, two courses involving 21 staff were conducted during the year.

251

ECOLOGICALLY SUSTAINABLE DEVELOPMENT AND

ENVIRONMENTAL PERFORMANCE Under section 516A of the Environment Protection and Biodiversity Act 1999, ecologically sustainable development and environmental matters must be included in annual reports from 2000-01 onwards. The five questions posed below correspond to requirements contained in section 516A of the Act. Specific paragraph references from the section are included against each question.

How have Defence’s actions during the year been in accord with the principles of ecologically sustainable development? [516A(6)(a)]

Defence, as a large public landholder in Australia, is progressively factoring the principles of ecologically sustainable development into its activities, including selection, maintenance and operation of equipment and facilities and the conduct of military training. The continuing rehabilitation of the degraded grazing land at Shoalwater Bay Training Area in tandem with the conduct of major exercises suggests that military activities can be conducted sustainably. Energy and pollution reduction measures are being pursued and environmental impact assessment of Defence activities is now routine. The development and implementation of environmental management plans (197 are now in place), along with the substantial expenditure allocated to environmental management works, contributes to minimising any environmental risks associated with Defence activities.

Have any outcomes specified in the Defence appropriations for 2000-01 specifically contributed to ecologically sustainable development? [516A(6)(b)]

While not directly specified, there are significant funds set aside in most areas of Defence for consideration and management of environmental issues, including the incorporation of ecologically sustainable development principles in construction and disposals projects and the management of training areas (whether leased, owned or occupied by Defence). Examples in 2000-01 include: the construction of a new training facility at HMAS Albatross which incorporates a number of design features, including maximising the use of natural light, to increase energy efficiency; and a joint cooperative research and monitoring program with Land and Water Australia in the management of vegetation and biodiversity at Townsville Field Training Area.

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What has been the effect of Defence’s actions on the environment? [516A(6)(c)]

Defence recognises that many of its activities do have the potential to pose risks to the environment. However, in seeking to be a leader in environmental stewardship, Defence aims to minimise any environmental impacts arising from the conduct of its activities and, if necessary, undertake environmental remediation even where damage has arisen from distant historical use. For example, Defence considered the ecological sustainability of the Shoalwater Bay Training Area from the very earliest planning sessions for Exercise Tandem Thrust 01, which was ultimately conducted without unsustainable environmental impacts. The approach taken with Tandem Thrust 01 has established a benchmark for environmental consideration of all major Australian military exercises in future.

What measures have we taken to minimise our impact on the environment? [516A(6)(d)]

Actions in this area included the implementation of an accelerated environmental management program for Defence sites; investment in research projects; commitment to consultative arrangements with key stakeholders (for example, our relationship with the Great Barrier Reef Marine Park Authority through the auspices of executive and working-level committees); wider dissemination of relevant environmental information within Defence; progress in the implementation of an energy efficiency program; and commitment to the Greenhouse Challenge. In addition to these measures, Defence established the 2000-03 Defence Environmental Panel in August 2000 to deliver a range of specialist environmental consultancy services throughout the Defence.

What are the mechanisms for review and improving Defence’s environmental performance? [516A(6)(e)]

During 2000-01, Defence undertook significant work to ameliorate its ability to review and improve its performance. Regular meetings of the policy coordinating bodies, the Defence environment and energy forum and its supporting working group, continued throughout the year. In addition, considerable progress was made in implementing Defence environmental management and information systems (which are based broadly on the international ISO 14001 standard). Defence’s environment policy and strategic directions were reviewed and stakeholder input has been sought. Defence instructions regarding incident reporting and environmental assessment have been reviewed and redrafted, with implementation expected in 2001-02. Environmental training and communications strategies have been developed and discussions have commenced with regard to implementation.

Ecologically Sustainable Development and Environmental Performance

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ADMINISTRATION OF THE COMMONWEALTH POLICY ON THE

MANAGEMENT OF LAND AFFECTED BY UNEXPLODED ORDNANCE

Defence is promoting the engagement of commercial unexploded ordnance search and clearance organisations to assist in managing the unexploded ordnance program, undertake investigative surveys and report on unexploded ordnance contamination in selected areas. In May 2001, Defence initiated the establishment of a Defence unexploded ordnance panel of contractors and consultants.

Eight sites were assessed and formally reported during 2000-01. There are now 1,196 unexploded ordnance sites recorded on the Defence unexploded ordnance register. The vast majority of these sites are not under Defence control. Of the 1,169 sites, Defence has provisionally identified 389 as being ‘significant’ (ie, requiring detailed assessment and, where found to be warranted, remediation prior to any change in land-use that is likely to result in increased exposure by persons to unexploded ordnance hazard). Included in this group are ranges currently used by the ADF. The table below shows the break up of sites by states and territories: -

Table 3.7: Unexploded Ordnance Sites by State

State/Territory Total sites recorded Significant sites Queensland 401 97 Western Australia 235 89 Northern Territory 81 49 South Australia 77 48 New South Wales 203 37 Victoria 102 36 Tasmania 65 29 Australian Capital Territory 5 4

In Queensland, Defence has been conducting a project to complete unexploded ordnance site assessment reports on suspected unexploded ordnance contaminated sites. In August 2000, Defence and the Queensland Environmental Protection Agency signed a Memorandum of Understanding on the management of unexploded ordnance in Queensland. In New South Wales, initial site assessments have been completed and a number of reports have been passed to the Environmental Protection Agency. In the Northern Territory, Defence has provided extensive advice to the AustralAsia Railway Corporation on assessment and, where required, remediation of World War II operational sites that are likely to be traversed by the Alice Springs to Darwin railway. In Western Australia, an information-sharing agreement has been established with the Fire and Emergency Services Authority of Western Australia Unexploded Ordnance Service that will see a constructive exchange of unexploded ordnance-related data.

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Owner Perspective

FREEDOM OF INFORMATION Section 8 of the Freedom of Information Act 1982 (the FOI Act) requires each Commonwealth agency to publish information in its annual report about the way it is organised, its functions, decision making and other powers it has that affect the public, arrangements for public participation in the work of the agency, and the categories of documents that are held by the agency and how the public can obtain access to them.

Information about the structure of the Defence organisation can be found in the ‘Corporate Governance’ section in Chapter One of this report. The remainder of the information required to be published in the annual report is set out below.

In addition to the procedures of the FOI Act, other less formal avenues exist for accessing information from Defence. Details of information available from Defence as well as how to access it are included in this section. Contact points for inquiries are located in all states and territories.

FREEDOM OF INFORMATION PROCEDURES AND CONTACT POINTS A request for access to documents under the FOI Act must be made in writing and provide sufficient information to enable Defence to identify them. The request must be accompanied by a $30 application fee (unless the fee is not required or it has been remitted by the department) and should include a telephone number and a return address by which the applicant can be contacted. Requests may be sent by post or delivered to an officer of the department at the address of the central office (in Canberra – see below) or any regional office of the department specified in a current telephone directory. The following address is preferable:

Freedom of Information Directorate The Defence Legal Service – Canberra R8-1-013 Department of Defence CANBERRA ACT 2600

Advice about making a request under the FOI Act may be obtained by telephoning the directorate on (02) 6265 3683 or (02) 6265 1305 or by facsimile on (02) 6265 1270. Applicants seeking access to documents may be liable to pay charges at rates prescribed by the Freedom of Information (Fees and Charges) Regulations.

Freedom of Information

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AUTHORISED FREEDOM OF INFORMATION DECISION MAKERS The authority to disclose documents or to refuse requests for access to documents is held widely throughout Defence at director level (Executive Level 2 and Colonel or equivalent rank) and above.

Authority to make decisions of other kinds under the freedom of information legislation, eg the power to impose charges on applicants, has also been granted to appropriate officers. Details can be obtained from the Freedom of Information directorate (see above).

DECISION-MAKING AND OTHER POWERS AFFECTING MEMBERS OF THE PUBLIC Many of the powers invested in the specific positions described in this section may be delegated formally to subordinate officers.

COMMANDER AUSTRALIAN THEATRE

May make decisions relating to the planning and conduct of campaigns, operations and other activities to achieve national objectives within Australia and overseas; may make decisions regarding the planning and conduct of combined and joint training activities and major exercises at the operational and tactical levels; and oversees the provision of Defence assistance to the civil community at the operational level.

CHIEF OF NAVY

May declare, by notice in the Commonwealth of Australia Gazette, an area in or adjacent to Australia to be a firing area; may make orders and give instructions in relation to canteens and clubs for members of the Navy; and may grant to a person a licence to trade in a naval establishment.

MARITIME COMMANDER AUSTRALIA

May make decisions relating to public access to naval ships and military (Navy) areas; may provide assistance to civilian authorities in disaster relief or rescue situations; may make public comment in relation to visiting naval forces or ships; convenes courts martial which may involve the summoning of civilian witnesses; and provides Defence assistance to the civil community when not managed by the commanding officer of the area.

COMMANDER AUSTRALIAN NAVY SYSTEMS COMMAND

May make decisions relating to public access to naval establishments and military (Navy) areas; may provide assistance to civilian authorities in disaster

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relief or rescue situations; may make public comment in relation to visiting naval forces or ships; convenes courts martial which may involve the summoning of civilian witnesses; and provides Defence assistance to the civil community when not managed by the commanding officer of the area.

DIRECTOR GENERAL NAVY PERSONNEL AND TRAINING

May authorise the release of serving and former members’ military history.

CHIEF OF ARMY

May prescribe conditions for entry to the Army; place the names of officers and former officers on the retired list, grant them military title and authorise the wearing of uniforms and insignia by such persons; determine who shall be employed, reside or stay in any military establishment; approve the possession, sale, supply and consumption of intoxicating liquor at a gathering of members of the Army and their guests; and order the sale or destruction of unclaimed property held in ADF establishments or stores.

LAND COMMANDER AUSTRALIA

May make decisions relating to public access to military (Army) areas; select private, state or Commonwealth property for training exercises; provide Defence assistance to the civil community as directed by the Commander Australian Theatre or Strategic Command; may release Army personnel information; may approve local hire or lease of Army property; and may impose constraints on Army personnel which impinge on public enterprise.

COMMANDER TRAINING COMMAND

May authorise the provision of Defence assistance to the civil community by any of the schools, colleges or training establishments and release information from the records of any member and ex-member who has undergone training by the Command.

CHIEF OF AIR FORCE

Exercises powers granted to him by the Air Force Regulations to approve, reject, initiate and determine conditions governing the appointment, re-enlistment, re-engagement, promotion, rank level, retirement, discharge and resignation of members of the Royal Australian Air Force; transfers officers to other arms of the Defence Force; places officers and former officers on the retired list and determines their rank on that list; reviews grievances submitted by serving members of the Air Force in respect of matters relating to their service; determines appointments in respect of the Australian Air Force Cadets; undertakes security clearance reviews in respect of Air Force members; approves Defence assistance to the civil community; authorises the use of words protected under the Defence (Prohibited Words and Letters) Regulations; approves the


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wearing, manufacture or supply of protected RAAF emblems, crests and flags; and approves the sale, supply and consumption of intoxicating liquor at gatherings of members of the Air Force and their guests.

AIR COMMANDER AUSTRALIA

Provides Defence assistance to the civil community and may summon civilian witnesses to attend Air Force courts martial.

DEFENCE PERSONNEL EXECUTIVE

Powers that may affect members of the public include delegations held by the Defence Force Psychology Organisation to allow the release of information from individual psychological records.

The Director-General Career Management Policy may authorise the release of serving and former members’ honours and awards history.

The Defence Health Service formulates policy and strategies and provides an integrated health service for the ADF. The Director-General Defence Health Service may authorise the release of serving and former members’ medical and dental records.

UNDER SECRETARY DEFENCE MATERIEL

Has the authority to determine methods of procurement and approve contracts for major capital equipment and through-life support requirements.

HEADS OF MARITIME, LAND, AEROSPACE AND ELECTRONIC SYSTEMS, AND HEAD AEROSPACE SURVEILLANCE SYSTEMS

Have the authority to issue invitations to register interest and requests for tender; evaluate tenders and recommend source selection for major and minor capital equipment. In specific cases, have the authority to determine the method of procurement and approve major and minor capital equipment contracts.

HEAD INDUSTRY

Has the authority to issue approvals to export certain defence equipment and goods with dual civil and military applications; and to accept tenders and quotation recommendations for the purchase of supplies and services.

COMMANDER JOINT LOGISTICS

Has the authority to issue invitations to register interest and requests for tender; evaluate tenders and recommend source selection for minor capital equipment; has authority to approve Defence assistance to the civil community; and may summon civilian witnesses to attend disciplinary tribunals.

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HEAD SERVICE DELIVERY

Has the authority to provide Defence assistance to the civil community; control public access to military areas; approve the loan, hire or purchase of Defence stores and equipment and, in defined cases, to determine the method of procurement; issue invitations to register interest and requests for tender; evaluate tenders and recommend or approve sourcing; issue period contracts; and grant remission of fees and impose charges payable under the freedom of information legislation.

In accordance with an arrangement made between Defence and the National Archives of Australia pursuant to section 35 of the Archives Act 1983, the Director Classified Historical Records Review provides advice to the Director-General National Archives of Australia specifying which matter, if any, contained in classified Defence historical records is considered to be exempt under sections 33(a) and (b) of the Archives Act. Such advice is generated in the course of the department's continuing program of clearing classified historical records for public release or in response to requests from members of the public for access to such records (pursuant to section 35 and 40, respectively, of the Archives Act).

HEAD INFRASTRUCTURE

Has the authority to determine the method of procurement; issue invitations to register interest and requests for tender; evaluate tenders; recommend source selection; and approve contracts for capital facilities, property transactions, facilities operations and the purchase of services.

Head Infrastructure has the delegated authority for implementation of Defence (Areas Control) Regulations which are made under the Defence Act 1903 and give legal basis for restrictions to be placed by the Department of Defence on the height of buildings and other structures, and introduced objects, such as trees, in the vicinity of Defence airfields and related facilities.

Australian Noise Exposure Forecasts are produced for all Defence airfields as necessary. Based on Australian Standards, forecasts for each airfield are provided to local governments as a planning tool which can result in the local government imposing restrictions on the surrounding land usage.

HEAD INFORMATION SYSTEMS

Has the authority to determine the method of procurement; issue invitations to register interest and requests for tender; evaluate tenders; recommend source selection; approve contracts; and approve gifts of equipment for protocol purposes.

CHIEF FINANCE OFFICER

May determine an official’s liability for losses of, or damage to, Commonwealth property due to negligence, misconduct or failure to exercise strict care; may


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provide instructions to legal providers on the Defence Legal Panel on the settlement of claims against the Commonwealth; may accept, execute and surrender leases and agreements for tenancies, whether for occupation, building or otherwise; may declare surplus land, buildings, or land and buildings for disposal; may write off irrecoverable revenue; may allow an amount payable to the Commonwealth to be paid in instalments; may approve exemptions and variations to the application of interest on debt repayments; may open and maintain official bank accounts; may enter into agreements with any bank for the receipt, custody, payment or transmission of public money; may request a local bank to provide an encashment facility; may issue drawing rights to official bank accounts; may determine the rates of charge for the use of Defence stores and services; may waive the direct cost recovery for supplies and services provided by Defence; and may waive the full-cost recovery for loans of personnel, equipment and facilities.

HEAD PUBLIC AFFAIRS AND CORPORATE COMMUNICATION

All communication campaigns and activities within defence are centrally coordinated and managed by the Public Affairs and Corporate Communication Group. The group is responsible for clearing all media releases and talking points attached to ministerial submissions.

Head Public Affairs and Corporate Communication has the authority to issue invitations to register interest and requests for tender; evaluate tenders; and recommend source selection in relation to contracts for the provision of public affairs and corporate communication services for Defence.

ARRANGEMENTS FOR OUTSIDE PARTICIPATION Members of the public may be invited to become members of the Defence bodies shown below.

AUSTRALIAN DEFENCE HUMAN RESEARCH ETHICS COMMITTEE

This committee’s mission is to promote and encourage ethical health research in the military context, with responsibility for the review and monitoring of all human research in Defence. The committee is structured in accordance with the National Health Medical Research Council national statement on ethical conduct in research involving human participants, and comprises at the minimum the following: • A chairperson. • At least one member who is a lay man and one member who is a lay woman,

who have no affiliation with Defence and are not currently involved in medical scientific or legal work.

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• At least one member with knowledge of, and current experience in, the areas of research that are regularly considered by the committee.

• At least one member with knowledge of, and current experience in, the professional care, counselling or treatment of people.

• At least one member who is a minister of religion or a person who performs a similar role in a community, such as an aboriginal elder.

• At least one member who is a lawyer.

CITIZENS IN SUPPORT OF RESERVE FORCES (TRUST) FUND

The group was established through a trust deed approved by the Minister for Defence. In recent times, the work of the trust has been almost exclusively to provide financial support for the Prince of Wales Award. There are four external trustees.

DEFENCE HEALTH CONSULTATIVE GROUP

The role of the group is to establish, at senior level, formal liaison between Defence and appropriate civilian authorities and to provide advice on major professional health matters having relevance to Defence. The group comprises the Surgeon General ADF, Director General Defence Health Service and representatives from other departments and professional bodies, including the Australian Medical and Dental Associations and the Royal College of Nursing Australia.

DEFENCE RESERVES SUPPORT COUNCIL

The committee aims to promote the benefits of Reserve service to the community. As well as spreading the word informally about Reserve service, the committee sponsors a number of specific activities to encourage business support.

JOINT CONSULTATIVE COMMITTEE

The committee was established under the Department of Defence (Commonwealth of Australia) West Malaysia Employees Agreement 1970 to negotiate and discuss matters relating to rates of pay and conditions of employment for locally-engaged civilians working at the RAAF support unit, Butterworth. The committee involves representatives of departmental employees who may be union representatives.

NATIONAL CONSULTATIVE GROUP OF SERVICE FAMILIES

The group was established in 1987 with the purpose of improving the quality of life for Service families by providing them with a forum for expressing their views, for reporting and making recommendations to the Chief of the Defence Force, and for influencing policy that affects them.


261

NATIONAL WORKPLACE RELATIONS COMMITTEE

The committee was established under the Defence Employees Certified Agreement 2000-01 to deal with a wide range of employment matters affecting Defence civilian employees. It involves representatives of departmental employees who may be union representatives.

SHOALWATER BAY TRAINING AREA ENVIRONMENTAL ADVISORY

COMMITTEE

The committee provides advice on environmental matters relating to the Shoalwater Bay Training Area and includes representatives from Defence and local community and business organisations.

WOOMERA CONSULTATIVE COMMITTEE

The committee advises Defence on matters relating to the management of Woomera and includes representatives from Defence and the Woomera Board, which comprises appointed and elected residents of Woomera.

CATEGORIES OF DOCUMENTS MAINTAINED

DOCUMENTS AVAILABLE AS PART OF A PUBLIC REGISTER AND

SUBJECT TO A FEE OR OTHER CHARGE • Oceanographic data (copies of original survey documents, and hydrographic

and oceanographic data held by the Navy on computer file).

DOCUMENTS AVAILABLE FOR PURCHASE BY THE PUBLIC • Annual flying safety calendar; aeronautical maps and charts; supplements

and planning documents; aerial photographs. • Defence cataloguing handbooks and information. • Defence annual report, the Defence portfolio budget and additional

estimates statements (on sale through the Australian Government Information Shops).

• Draft and final environmental impact statements (held by Corporate Services and Infrastructure Group).

• Commercial Support Program Manual. • Journals and magazines published by Service colleges and schools. • Procurement manuals and guidelines produced by the Defence Materiel

Organisation (available for purchase in hard copy or free through the Defence Materiel Organisation website: http://www.dao.defence.gov.au).

• Service newspapers are available by annual subscription. The quarterly Army magazine can be purchased at newsagents and news outlets.

http://www.dao.defence.gov.au

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• Tide tables (Australian national tide tables and navigational charts and publications are available for purchase either through appointed chart agents or direct from the Hydrographic Office in Wollongong by mail order. The address can be found at the end of this section).

DOCUMENTS FREE OF CHARGE TO THE PUBLIC UPON REQUEST

Defence holds a wide range of such material including, for instance, information on or in the nature of: • academic calendars and prospectuses (for the Service colleges); • the Defence Force Journal; • information about the Defence Force Retirement and Death Benefits Scheme

and the Military Superannuation and Benefits Scheme; • Defence Science and Technology Organisation information and activities

brochures and booklets, research news and industry brief newsletters, selected technical reports, technical and research press releases, videos on projects and lectures given to professional and public institutions;

• flying and ground safety (the Air Force makes magazines on these subjects available to some professional organisations);

• a range of pamphlets and booklets, produced by Emergency Management Australia for distribution through state and territory emergency services, on natural and man-made disasters and civil defence as well as training manuals, films and cassettes. Both Emergency Management Australia's headquarters and the Australian Emergency Management Institute maintain film and cassette libraries for use by schools and colleges. Particulars of courses, notes for trainers, course handouts and proceedings of seminars are also available from the institute;

• notices to mariners (the Navy issues such notices, which contain hydrographic advice to correct navigational charts and documents and detailed information of exercises and firings);

• a range of booklets and brochures from the Defence Community Organisation;

• recruitment pamphlets, brochures and video media, the career explorer computer software program on ADF career options, and an internet home page on ADF career options;

• organisational material (functional statements, organisation charts and duty statements);

• procurement policy and procedural guides, contract templates and Defence industry statements;

• general Defence and recruiting material (pamphlets, brochures, and posters), which is freely available on request or available at Defence exhibitions, launches and open days;

• transcripts of public seminars conducted by Defence;


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• speeches by the Ministers and the Parliamentary Secretary; • technical material (including technical details of obsolete and selected

current equipment, unclassified technical reports and Defence (Australia) Standards);

• personnel documentation and records including medical and psychological records; and

• pamphlets and brochures on graduate programs in Defence for civilians and the civilian graduate careers page on the internet.

ELECTRONIC DOCUMENTS

Defence’s internet home page can be found at http://www.defence.gov.au/. The site contains material of defence interest to the general public, including separate sections for departmental media releases and speeches, statutory reports and Service-specific information. Some of the material described as available for purchase by, or as free of charge to, the public can be found on the site and can be downloaded. Photos of a defence nature are also freely available from the image gallery on the site.

Defence press releases are available by e-mail from the EDIME press release service by subscription. To subscribe, follow the links from the Media Centre link on the Defence home page.

OTHER DOCUMENTS

Defence maintains records in various forms and locations relating to the functions of the organisation. Records are retained for varying periods, depending on their administrative and historical value, and are disposed of in accordance with standards and practices approved by the National Archives of Australia. Some particular categories of documents held are: • arrangements with other Commonwealth agencies and with state and

territory governments and agencies; • accounting records; • Cabinet documents (including submissions and promulgations of decisions); • committee records; • conditions of service (including documents relating to compensation other

than for personal injury and financial conditions relating to overseas service); • contractual documents, requests for tender documents and industry study

reports; • departmental instructions, circulars and reference books; • industrial matters (including agenda and minutes of meetings of various

industrial committees and councils, and occupational health and safety committees and policy on industrial practices within the Department of Defence);

http://www.defence.gov.au/

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• guidelines held in electronic form by the Directorate of Classified Historical Records Review that are used in determining which matter, if any, contained in classified Defence historical records is exempt under paragraphs 33(1)(a) and (b) of the Archives Act 1983 from public access. New guidelines are created, or existing ones revised or abolished, progressively as the need arises;

• intelligence reports; • international agreements and arrangements held in a register of agreements; • personal documentation (for example, on recruitment and enlistment,

selection for promotion documents and those of a medical and psychological nature);

• press cuttings; • documents concerning quality assurance; • technical publications (relating to maintenance of ADF materiel and

drawings, specifications and standards relating to ships, aircraft and other equipment in use); and

• working papers (internal working papers are maintained throughout the organisation on a wide range of policy, technical and administrative subjects).

FACILITIES FOR ACCESSING DOCUMENTS The following areas within Defence maintain access points at which information about their activities is available:

AUSTRALIAN EMERGENCY MANAGEMENT INSTITUTE The Director Australian Emergency Management Institute MACEDON VIC 3440 Tel: (Information Officer) (03) 5421 5234

EMERGENCY MANAGEMENT AUSTRALIA Manager, International Decade for Natural Disaster Reduction Emergency Management Australia PO Box 1020 DICKSON ACT 2602 Tel: (02) 6266 5408

DEFENCE SCIENCE AND TECHNOLOGY ORGANISATION Manager, Defence Science Communications Defence Science and Technology Organisation Department of Defence CANBERRA ACT 2600


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Tel: (02) 6265 7914

PUBLIC AFFAIRS AND CORPORATE COMMUNICATION DIVISION Director General Communication and Public Affairs Department of Defence CANBERRA ACT 2600 Tel: (02) 6265 2999

DEFENCE PUBLISHING Director, Defence Publishing Service Department of Defence CANBERRA ACT 2600 Tel: (02) 6266 2056

HYDROGRAPHIC OFFICE Locked Bag 8801 WOLLONGONG NSW 2500

CHAPTER 4

ENABLING BUSINESS PROCESS

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DEFENCE REFORM PROGRAM

OVERVIEW

The Defence Reform Program commenced in April 1997 and was closed as at 30 June 2000. With a new planning environment to operate from 2001-02, reporting on the Defence Reform Program as if it had operated through 2000-01 provides continuity. While this is the last report on the Defence Reform Program per se, all incomplete initiatives will be carried forward. From 2001-02, matters relating to ADF remuneration will be administered separately, while other initiatives will be reported on within the improvement initiatives section.

The Defence Reform Program achieved much. All findings from the precursor Defence Efficiency Review have been acted on and work on most agreed recommendations has been completed. The status of the remaining recommendations is outlined in Table 4.1 overleaf.

The Defence Reform Program will be remembered primarily as a savings exercise, but it has also significantly changed Defence by eliminating many functional stovepipes, changing command and control structures and creating new functional organisations. Without the Defence Reform Program as a precursor, today’s renewal agenda would not have been possible.

An internal review has been completed, as has an ANAO audit1. The lessons to be learned from the implementation of the Defence Reform Program have been identified in the audit report and will be pursued.

1 The ANAO Audit Report No. 16, Defence Reform Program Management and Outcomes, was released in October 2001.

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Enabling Perspective

Table 4.1: Status of Incomplete Defence Efficiency Review Recommendations Recommendation Status

R10 The number of headquarters and personnel employed at the operational level of command should be reduced.

Action cannot be completed until the full establishment of Headquarters Australian Theatre.

R34 A system of internal rents should be introduced to change the culture that facilities are a ‘free good’. This will expose the full cost of ownership and encourage a more business-like approach to holding assets.

After further review, Defence changed the approach. Customer-Supplier Arrangements will be implemented across Defence from 2001-02.

R37 Defence, with the assistance of industry, should develop a more efficient storage and distribution system which can accommodate its operational requirements.

Market testing of the Defence Integrated Distribution System is to recommence with retendering.

R38 A single Personnel Executive should be formed with the specific intent of achieving greater commonality, integration and efficiency in personnel administration and management amongst the three Services and the Department.

The Defence Personnel Executive has been formed. Policy action is complete. The task of streamlining and rationalising the single Service and civilian personnel structures is ongoing.

R40 The principle of payment for job type, rather than qualifications held, should be applied more widely and used to determine salaries for individual jobs, rather than the use of variable allowances.

The Nunn review of Australian Defence Force Remuneration was released in October 2001.

R41 All basic non-military training, where appropriate, should be merged across the three Services, contracted out to recognised civil institutions, and then topped-up on-the-job in military facilities.

Progressive rationalisation of common non-military training is under way. A decision as to contracting out is taken on each rationalisation project.

R42 The availability of the Australian Defence Force Academy to all members of the ADF and to Defence and other civilians to undertake mature-age, full-time and part-time studies should be more strongly encouraged.

The Zimmer report into educational arrangements at the Australian Defence Force Academy is to be reviewed by the Minister later in 2001.

R48 Medical services need to be pulled together and rationalised, taking account of community expectations and civil arrangements.

Market testing of health services continues, with initial results not due until late 2001.

RESOURCE EFFICIENCIES The implementation of Defence Reform Program initiatives remained essentially on target. Some slippage in the market testing of logistics initiatives was offset by a decrease in funding for logistics contracts. By 30 June 2001, the overall ongoing gains were $613m per annum compared with a revised estimate of $667m per annum (a shortfall of $54m or eight per cent). The variations are explained in the paragraphs that follow the tables.

Defence Reform Program

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Table 4.2: Defence Reform Program Cumulative Resources Available for Reinvestment by Major Category(1)

2000-01 Budget

Estimate


2000-01 Actual Variation

$m $m $m $m % Defence Reform Program Category

Defence Command and Management Arrangements

18.8 18.8 18.8 0.0 0.0

Intelligence 3.8 3.8 3.8 0.0 0.0 Capability Development 0.1 0.1 0.1 0.0 0.0 Acquisition and Industry 38.7 38.2 34.8 -3.4 -8.8 Science and Technology 5.5 5.5 5.5 0.0 0.0 Facilities and Long Term Force Disposition 11.8 11.8 11.8 0.0 0.0 Logistics 172.7 177.2 133.2 -44.0 -24.8 Personnel Planning 38.2 38.2 6.8 -31.4 -82.2 Education and Training 57.1 57.1 56.9 -0.2 -0.4 Administrative Support 486.9 489.5 490.2 0.7 0.1 Information Management 35.8 27.9 27.9 0.0 0.0 Defence Cooperation 0.0 0.0 0.0 0.0 0.0

Total 869.3 867.9 789.7 -78.3 -9.0 Other

Unallocated(2) 61.4 54.6 0.00 -54.6 -100.0 Superannuation 169.7 134.9 125.5 -9.3 -6.9 Fringe Benefits Tax 31.1 27.1 25.5 -1.6 -5.8

Total Gross Resources Available 1,131.5 1,084.5 940.7 -143.8 -13.3 Contracts Funded and Provision for Budget Year Contracts(3)

-418.7

-428.3

-334.4

93.9

21.9

Total Net Resources Available 712.8 656.2 606.3 -49.9 -7.6 One-Off Gains

Capital Facilities 35.0 7.0 0.5 -6.5 -92.9 Equipment and Stores 0.0 0.0 2.5 2.5 100.0 Defence Cooperation (one-off elements) 4.0 4.0 4.0 0.0 0.0

Total One-Off Gains 39.0 11.0 7.0 -4.0 -36.0 Total Resources Available for Reinvestment 751.8 667.2 613.3 -53.9 -8.1

Notes 1. Figures have been price updated to 2000-01 prices. Figures may not add due to

rounding. 2. The planned unallocated savings line was included erroneously in both the budget and

additional estimates statements. In previous years, the unallocated line represented the savings from initiatives that were expected to be identified during the budget year.

3. The estimate figures included funding previously allocated to contracts and a provision for contracts to be funded during 2000-01. Market testing slippage has affected the actual result.

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Table 4.3: Cumulative Defence Reform Program Military Personnel Reductions by Major Category(1)(2)

Defence Reform Program Category 2000-01 Budget

Estimate


2000-01 Actual

Variation

ADF ADF ADF ADF % Defence Command and Management Arrangements

189 189 189 0 0

Intelligence 27 27 27 0 0 Capability Development -1 -1 -1 0 0 Acquisition and Industry 278 278 213 -65 -23.4 Science and Technology 100 100 100 0 0 Facilities and Long Term Force Disposition 56 56 56 0 0 Logistics 3,258 2,517 1,691 -826 -32.8 Personnel Planning 942 942 942 0 0 Education and Training 909 909 905 -4 -0.4 Administrative Support 4,542 4,542 4,542 0 0 Information Management 340 340 340 0 0

Total 10,640 9,899 9,004 -895 -9.0 Notes 1. These savings represent cumulative ongoing ADF personnel numbers reduced or

redirected to priority combat positions as a result of rationalisation, streamlining or market-testing activities carried out as part of the Defence Reform Program.

2. These figures do not include the reinvestment of Defence Reform Program resources in ADF personnel (see Table 4.5).

Table 4.4: Cumulative Defence Reform Program Civilian Personnel Reductions by Major Category(1)(2)

Defence Reform Program Category 2000-01 Budget

Estimate


2000-01 Actual

Variation

APS APS APS APS % Defence Command and Management Arrangements

159 159 159 0 0

Intelligence 37 37 37 0 0 Acquisition and Industry 310 310 310 0 0 Science and Technology 1 1 1 0 0 Facilities and Long Term Force Disposition 91 91 91 0 0 Logistics 1,072 732 836 104 12.4 Personnel Planning 163 163 163 0 0 Education and Training 112 112 112 0 0 Administrative Support 1,969 1,969 1,969 0 0 Information Management 221 76 76 0 0 Total 4,135 3,650 3,754 104 2.9


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Notes 1. The figures in the tables represent the cumulative ongoing reductions of Australian

Public Service personnel numbers rather than the average strength. 2. These figures do not include the reinvestment of Defence Reform Program resources in

APS personnel (see Table 4.5).

LOGISTICS

The final stages of the market-testing program for the F-111 and C-130 avionics, F-111 weapons systems and F-111 engines initiatives have slipped. This has delayed the recognition of savings in operating costs, resulting in a decrease of 826 military personnel and $44m against the revised estimates. The increase in civilian personnel reductions against the revised estimate arose from restructuring activities.

PERSONNEL PLANNING

The figure of $31.4m of planned savings was wrongly inserted in both the budget and additional estimates statements. The 2000-01 budget and revised estimate should have been $6.8m.

CAPITAL FACILITIES

A $6.5m shortfall in savings required from the capital facilities program was due to delays in the sale of the Torrens Parade Ground in South Australia, Wacol in Queensland and Gan Gan in New South Wales.

EFFICIENCY GAINS

REINVESTMENT IN DEFENCE REFORM PROGRAM CATEGORIES

A total of $872m was reinvested in combat capabilities in 2000-01. The focus was firmly on the maintenance of the ADF full-time strength at no lower than 50,000 and on new capital investment and logistics. As at 30 June 2001, cumulative reinvestment in current and future capability ($1,657m) and in transition costs ($353m) was $2,010m.

The annual and cumulative reinvestment amounts exceeded Defence Reform Program savings. The approach of programming greater reinvestment than savings was adopted because of the uncertainty about lead times and achievable expenditure spreads, particularly in equipment and logistics items. Additional expenditure in a particular year was funded from within the overall Defence budget.

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Table 4.5: Reinvestment In Defence Reform Program Categories(1)

2000-01 Budget

Estimate


2000-01 Actual

Variation

$m $m $m $m % Total DRP Resources Available 751.8 667.2 613.3 -53.9 -8.1 Reinvestment Details

New Capital Investment 175.5 175.5 175.5 0.0 0.0 Provision for 50,000 ADF 347.1 318.1 318.1 -0.1 -0.0 Output 1: Defence Operations(2) 24.3 24.3 24.3 0.0 0.0 Output 2: Navy Capabilities(2) 126.8 126.8 126.2 -0.6 -0.4 Output 3: Army Capabilities(2) 68.9 68.9 68.8 -0.1 -0.1 Output 4: Air Force Capabilities(2) 92.5 92.5 90.2 -2.4 -2.6 Output 5: Policy Advice(2) 6.8 6.8 7.0 0.2 2.9 Defence Reform Program Transition Costs 52.9 52.9 62.4 9.5 15.2

Total Reinvestment in DRP Categories 894.8 865.8 872.4 6.6 0.8 Less Funded elsewhere from Defence Budget -143.0 -198.6 -259.1 -60.5 -23.4 Total Reinvestment from DRP Resources 751.8 667.2 613.3 -53.9 -8.1

Notes 1. These figures have been price updated to 2000-01 prices. Figures may not add due to

rounding. 2. The breakdown of output reinvestment by category is as follows:

2000-01 Budget

Estimate


2000-01 Actual Variation

$m $m $m $m % Amphibious Capabilities 14.4 14.4 14.4 0.0 0.0 Capability Related Logistics 172.4 172.4 172.4 0.0 0.0 New Capabilities (Net Personnel and Operating Costs)

112.4 112.4 109.8 -2.6 -2.3

Defence Science Capability 15.8 15.8 15.5 -0.3 -1.8 Pilot Training 4.2 4.2 4.2 0.0 0.0

NEW CAPITAL INVESTMENT

As the assignment of resources to individual projects would be arbitrary and artificial, the amount available for reinvestment was used to increase the level of funding available for new equipment. As at 30 June 2001, a cumulative total of $260m was invested in new capital equipment, including $176m in 2000-01. This investment has not been reported by output, but is reported as a single line in Table 4.5.


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PROVISION FOR 50,000 ADF

The Defence Reform Program proposed to reduce the ADF permanent force to 42,700 personnel (from a baseline of 56,600) through reductions and the market testing of Service positions. That figure was revised subsequently to 50,000. As at 30 June 2001, a cumulative total of $436m, including $318m in 2000-01, has been assigned to the provision for the 50,000 ADF. Increasing the number of personnel in the combat force from 24,300 to 31,700 (ie from 42 per cent to over 60 per cent of the permanent force) represents the largest reinvestment of reform savings. This investment has not reported by output, but is reported as a single line in Table 4.5. The ADF strength target was revised in the White Paper to 54,000 full-time personnel by 2010.

CAPABILITY-RELATED LOGISTICS

$172m was invested in additional logistic support in 2000-01, bringing the cumulative total to $563m. Funding in 2000-01 was provided to major surface combatant, naval aviation, submarine, amphibious lift, air lift and tactical fighter operations.

NEW CAPABILITIES – NET PERSONNEL AND OPERATING COSTS

A cumulative total of $256m, including $110m in 2000-01, has assisted in meeting the increased personnel and operating costs associated with bringing new capabilities into service. Expenditure has been directed to areas such as the Super Seasprite helicopters, Anzac frigates, Collins-class submarines and the hydrographic ship.

PILOT TRAINING

A cumulative total of $13.6m, including $4.2m in 2000-01, has been invested to enhance capabilities for air strike/reconnaissance and tactical fighter operations by addressing the fast-jet pilot shortfall. The investment seeks to increase the number of fast-jet suitable graduates from each pilots’ course from around 10 per year to between 20 and 25 per year.

TRANSITION COSTS

Transition costs of $62.4m were expended in 2000-01, bringing the cumulative total to $353m. The increase in expenditure was due to market-testing slippage.

ADMINISTRATIVE SAVINGS INITIATIVE

In the 1996-97 budget, Defence made a reduction in administrative expenditure totalling $125m per annum (subsequently increased to $136m per annum), which has been reallocated to a range of capability-related expenditure initiatives. The

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budget reallocation of $140.8m was increased to $150.4m, with a subsequent actual of $144.2m. Major expenditure activities comprised a range of combat capability enhancements, including the acquisition of the Black Hawk maintenance training aid, air-to-air weapons, two additional Chinook helicopters and the partial upgrade to the F-111G. The variation in expenditure was due to slippage in the establishment of a second major servicing line for the F-111 strike aircraft, lower than anticipated expenditure associated with the submarine ‘fast track’ letting of contracts and an underspend in the extension of the ADF home owner scheme to Reservists.

Table 4.6: Administrative Savings Initiative(1)

Variation Initiative Category 2000-01

Budget Estimate

$m


$m

2000-01 Actual

$m $m %

Programmed Savings 135.7 135.7 135.7 0.0 0 Programmed Reallocation:

Land Force Capabilities 31.4 39.8 42.0 2.2 5.2 Strike 7.9 8.8 4.9 -3.9 -44.3 Maritime and Air Defence 76.4 76.4 77.1 0.8 1.0 Command, Control, Communications, Intelligence

15.0 14.0 11.2 -2.8 -20.0

Personnel Initiatives 10.1 11.5 9.0 -2.5 -21.0 Other Government Initiatives 0.0 0.0 0.0 0.0 0.0

Total Reallocation(2) 140.8 150.4 144.2 -6.2 -4.0 Notes 1. Figures have been price updated to 2000-01 prices. Figures may not add due to

rounding. 2. These initiatives have projected gross expenditure levels in excess of the resource

reallocations. This approach has been adopted because of uncertainty about the lead times and achievable expenditure spreads, particularly in equipment and logistics items. Expenditure in a particular year has been matched to the funds available by provision of extra funds from within the overall Defence budget.

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COMMERCIAL SUPPORT PROGRAM

OVERVIEW

The Commercial Support Program is Defence’s primary mechanism for undertaking competitive tendering and contracting. The program, which began in 1991, aims to ensure that support services are provided to Defence in the most cost-effective manner by contracting out those services where it is operationally feasible, a viable market exists and industry can demonstrate better value for money.

Although the Defence Reform Program has closed, the associated market testing will be completed. The Commercial Support Program will continue as a change management tool under a program of continuous improvement but, in view of the extensive testing completed under the Defence Reform Program, the future rate of testing will be reduced. A progress summary, as at 30 June 2001 and based on information provided at the time of decision announcement, is shown below.

Table 4.7: Status of the Commercial Support Program as at 30 June 2001

CSP Evaluation Decisions Made 115 Commercial Contracts 77 (67%) In-House Options 31 (27%) Status Quo Retained 7 (6%)

Total Value of Commercial Contracts and In-house Options $4,535m Number of Positions Tested 14,249 Projected recurring annual savings to date $358m Mean projected annual savings 31%

RESULTS

See overleaf.

Table 4.8: Forecasts Achieved

501 Wing (RAAF Amberley) – F-111 Engines July 2000 October 2000 - Achieved October 2000 149.4 10 0.3 Army Engineering Agency Engineering Manufacturing Unit

July 2000

December 2000

Achieved November 2000

4.5 3 1.6

Clerical and Administrative Support – Sydney Combined

September 2000

September 2000

- Achieved September 2000

23.8 5 4.7

Clerical and Administrative Support – ACT/Southern NSW

July 2000

August 2000

- Achieved August 2000

47.4 5 6.5

501 Wing (RAAF Amberley) – F-111 Weapons Systems

August 2000

Achieved August 2000

471.2 10 2.6

Electronic Warfare Training Services August 2000 Achieved August 2000 60.8 10 -0.4 ADF Explosives Ordnance Storage Maintenance and Distribution Project

- - December 2000

Achieved November 2000

250.0 10 23

Army Engineering Agency – Laboratories - - December 2000 Achieved November 2000 20.0 5 1.8 501/503 Wing Avionics July 2000 Decision Announced July 2000 169.0 7 5.4 Re-testing of Facilities and Property Operations – DSTO Melbourne

July 2000 Decision Announced July 2000

2.0 3 0.1

Naval Materiel Requirements Data Management Scope being reviewed

Did not proceed as a market testing activity (only 9 positions identified)

n/a n/a n/a

Joint Logistics Unit – South Edinburgh Airfield Services

Scope reviewed

Activity Subsumed by other activities n/a n/a n/a

Mechanical Engineering Operational Maintenance Function

Scope reviewed

Activity Subsumed (or rationalised) with parts placed into service contracts

n/a n/a n/a

Army Engineering Agency Engineering Proof and Experimental(3)

Decision to leave as status quo announced November 2000

n/a n/a n/a

Notes 1. Contract value and duration provided at time of decision announcement. 2. Expected annual savings estimated at time of decision announcement. 3. Last referred to in 1999-2000 PAES (p23) as a test and evaluation function under Market Testing – Support Command activities.


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Commercial Support Program

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Table 4.9: Forecasts Not Achieved

Activity Name PBS 2000-01 (Table 1.14)

Expected Decision

PAES 2000-01

(Table 1.12) Decision

Announced

PAES 2000-01 (Table 1.13)

Revised Expected Decision

Comment

ADF Health Services in Victoria(1)

November 2000

- May 2001 Delayed due to the complexities involved in the tender evaluation. Announcement expected in September 2001.(2)

Woomera Support Services

October 2000

October 2000 - Delayed due to extended negotiations. Announcement expected in August 2001.(2)

Publishing and Printing Services

October 2000

- June 2001 Announcement expected in August 2001.(2)

Defence Integrated Distribution System

- - December 2000

Current process terminated. Replacement activity being planned.

Maintenance of T56 Engines

October 2000

- - Erroneously reported as a market testing activity (p 33 of 2000-01 Portfolio Budget Statements). The activity was a re-letting of an existing contract.

Notes 1. Formerly known as ‘Victorian Health Services’. 2. Decision announced.

Table 4.10: Market Testing Activities to be Progressed or Considered

Activity Name Routine Pathology Services (Originally identified in the PBS 1999-2000 Table 1.2) ADF Health Services in Northern Queensland ADF Health Services in Northern Territory ADF Health Services in Southern Queensland ADF Health Services in Sydney NSW Region ADF Health Services in Western Australia ADF Health Services in South Australia ADF Health Services in Tasmania Ground Electronic Maintenance Function Army Marine Platforms and Systems Submarine Escape Training Facility Defence IT Infrastructure Services Corporate Services (for Defence Personnel Executive) Garrison Support Hunter Valley Region

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DEFENCE MATERIEL REFORM

The Minister for Defence approved the establishment of the Defence Materiel Organisation on 22 June 2000, through the amalgamation of the Defence Acquisition Organisation, Support Command Australia and part of National Support Division. The rationale behind the amalgamation was to improve the delivery of equipment, systems and related goods and services to the ADF by integrating acquisition and through-life support activities into a whole-of-life capability management system. The Defence Materiel Organisation came into effect on 1 July 2000 and structural and organisational changes to the organisation were achieved by December 2000.

The reform strategy adopted by the Defence Materiel Organisation has been designed to:

• integrate the acquisition and support elements of its business and locate them appropriately with customers;

• reform its processes based on commercial approaches and best practice;

• adopt a more strategic approach to its relationship with industry;

• improve its relationship with stakeholders and customers; and

• create the climate where its people are valued and can do their best.

Integrated system program offices that have a whole-of-life focus have replaced the previous arrangement of separate acquisition project offices and support units. System program offices are generally located near their ADF customers - the force element groups. This will entail relocating civilian and military project management staff from Canberra to regional areas throughout Australia.

In recognition of the personal impact that relocations have on people and their families, a mobility management unit has been established to assist officers planning to relocate, and special arrangements have been put in place to assist with the financial and material aspects of relocation. Planning for, and the relocation of, the organisation’s acquisition and support elements is well advanced and staff commenced relocating in January 2001. Projections for the relocation of Defence Materiel Organisation positions from Canberra to regional areas and between regional areas are presented in the table that follows.

Defence Materiel Reform

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Table 4.11: Projections for Relocation of Project Management Staff

From To Number of Positions

By

Canberra Wollongong (New South Wales) 21 October 2001 Canberra East Sale (Victoria) 6 December 2001 Canberra Oakey (Queensland) 10 December 2001 Canberra Adelaide 10 January 2002 Canberra Amberley (Queensland) 51 January 2002 Canberra Melbourne 169 January 2002 Canberra Nowra (New South Wales) 44 January 2002 Canberra Perth 45 January 2002 Canberra Sydney 101 January 2002 Canberra Williamtown (New South Wales) 40 January 2002 Melbourne Perth 25 January 2002 Newcastle Sydney 14 January 2002 Cairns Darwin 7 January 2003 Canberra Darwin 6 January 2003 Canberra Edinburgh (South Australia) 88 December 2003 Melbourne Canberra 71 January 2003

By December 2001, some 1,700 military and civilian staff positions in the Defence Materiel Organisation will be located in Canberra. These positions represent less than 20 per cent of a total staffing of approximately 8,000.

REFORM PLAN

A reform plan has been developed to implement and deliver individual initiatives flowing from the Defence Materiel Organisation’s reform strategy, with performance achievements measured against a balanced scorecard. The notable reforms that have been achieved are discussed below.

Governance arrangements have been adopted at the executive level of the organisation to take a broad corporate business perspective rather than the previous functional-based approach. Greater attention is being paid to risk and risk management at all levels of the organisation.

The Government has agreed to a two-pass approval process for the acquisition of new capital equipment for the ADF. In the early stages of capability analysis, the Government will be provided with a range of new investment options to fill a capability gap. At this stage, first-pass approval is sought to develop specific options. In the second-pass process, the Government will be provided with the necessary level of detail to make an informed decision on acquisition and through-life support resource implications. Defence will undertake to deliver against the business case underpinning the approved option.

Consulting with industry in the preparation stage of tenders is now a regular feature of the bidding process for major procurements. This enables the identification of greater potential for industry innovation and value adding through the elimination of unnecessarily prescriptive requirements. Requirements are now expressed in function and performance terms.

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Cumbersome and time-consuming source selection committees have been replaced by revised management arrangements that devolve responsibility and accountability. The result of these changes has been to shortlist earlier in the tender evaluation process and to substantially reduce the time taken from source selection to the award of a contract, thereby reducing the cost to unsuccessful bidders of keeping bid teams together.

A more rigorous approach has been introduced to major capital equipment project reviews which adopt principles of private sector company boards. New project governance board arrangements are being put in place which provide for regular independent, objective and expert review of commercial, financial, technical, contractual and legal aspects of projects and contracts.

A company scorecard system has been implemented to make regular assessments of contract performance of major suppliers and to provide companies with feedback on their performance. A company’s previous performance now features as a significant factor in tendering and source selection. The assessment system will be extended shortly to include company assessments of the Defence Materiel Organisation’s performance.

Market testing of support functions continues to identify activities that can more effectively be undertaken by the commercial sector. In 2000-01, 12 market-testing activity decisions were made; of these, six activities were awarded to the commercial sector.

The Standard Defence Supply System upgrade project will improve end-to-end supply chain management, asset and consignment visibility, inventory management capability and warehousing practices, and enable e-business, financial, performance management and reporting. During 2000-01 the management of the project was contracted and initial design completed.

During 2000-01, there were also significant enhancements to the supply system to meet user needs and to address audit findings identified by both the ANAO and the Management Audit Branch.

REFORM OF TENDER PROCESS

Defence, through the Defence Materiel Organisation, has implemented major reforms of its tendering process for strategic acquisition in 2000-01. A new tendering and contracting template, Strategic Materiel Acquisition Request for Tender (SMART) 2000, has been developed for major projects. The template uses plain English drafting principles, reflects commercial realities and reduces the cost of tendering.

The SMART 2000 template was released in October 2000 for use by Defence in the procurement of strategic major capital equipment and systems. During the development of the SMART 2000 template, an extensive consultation process with industry, commercial advisers and Defence procurement staff was undertaken. The new template will:

• share risk more appropriately;


283

• adopt a more commercial approach to acquisition;

• streamline the tender process; and

• ensure that principles like value for money and accountability continue to be satisfied.

A companion SMART 2000 handbook was released in March 2001, containing guidance on the use and interpretation of the template. A SMART 2000 enhancement project was established in May to develop a generic statement of work for large software intensive projects.

Following the release of SMART 2000, contracting policy has begun a review of other contracting templates, in order to produce a new standard ‘complex’ procurement request for tender template for the acquisition of supplies.

ALLIANCE CONTRACTING

Alliance contracting represents a fundamental change to traditional contracting methods. Alliance contracting is an alternative contracting model in which the parties assume a degree of joint management responsibility for the acquisition of a capability. Alliance concepts comprise open book accounting, target cost identification, risk/reward payment structures, risk sharing and integrated project team structures. The focus of alliance contracts is on the ability of the parties to work in a close and cooperative alliance, rather than in the traditional ‘adversarial’ relationship. All alliance participants share both the risks and rewards, and a major outcome of an alliance is that costs are driven down through continuous improvement and innovation. The Commonwealth’s rewards are the achievement of goals in accordance with the project’s objective and business case. The contractor’s reward is the earning of profit.

The concept of alliance contracting represents a significant departure from the traditional Defence contracting approach and is potentially a dynamic procurement tool to assist in obtaining best value for money. The Defence Materiel Organisation is piloting alliance contracting in two projects – the light weight torpedo and Anzac ship projects. The contract for the first phase of the light weight torpedo project commenced in April 2000. The Anzac systems office is also piloting the use of the alliance-contracting strategy to implement and manage change in the Anzac-class ships.

PURCHASING The following provides an assessment of Defence’s performance against core purchasing policies and principles (including the participation of Australian and New Zealand enterprises and small/medium businesses).

PROCUREMENT POLICY AND TRAINING

The Defence Procurement Policy Manual consolidates policy guidance and information for use across all categories of Defence procurement. It describes the core policies and principles contained in the Commonwealth Procurement Guidelines

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and outlines how Defence will comply with these guidelines when conducting its procurement activities. The core policies and principles are:

• value for money; • open and effective competition; • ethics and fair dealing; • accountability and reporting; • national competitiveness and industry development; and • support for other Commonwealth policies.

A major review of the manual is being conducted to update its content and incorporate recent policy developments commenced in February 2001. The manual is scheduled for release in December 2001.

Defence runs a procurement training program, to ensure that staff involved in procurement activities are aware of the Commonwealth and Defence procurement guidelines and their responsibilities under them. In 2000-01, 1,030 Defence personnel undertook training in ‘simple’ procurement, while 1,525 modules of the ‘complex’ procurement program were completed. Simple procurements usually are for low-level, off-the-shelf items and for purchases made against Common Use Arrangements and/or Defence Standing Offers. Simple procurement is generally conducted under routine supervision in an environment where established routines, methods and procedures and small degrees of risk are involved. Complex procurement is generally carried out without supervision and under limited guidance within a broad framework of policy and best practice. As the procurement activity becomes more complex, both the degree of risk involved and the level of expertise and professional judgment required become greater.

CONTRACT REPORTING

To demonstrate openness in procurement, Defence, like other government agencies, reports all contracts valued at $2,000 and above in the Commonwealth Government Gazette. In 2000-01, approximately 50,000 Defence contracts were reported in the gazette. Exemptions from reporting can be obtained in writing from the Secretary of the Department of Defence under the Freedom of Information Act 1982.

Defence promulgates additional information on contracts valued at $100,000 and above on its ‘Buying Australian’ website [http://ba.dao.defence.gov.au/main.htm]. Contracts reported on the website must advise whether any off-shore purchases were made as part of the contract and the reasons for purchasing off-shore. In 2000-01, approximately 3,500 purchases were reported on the website. In addition to this, amendments are being made to the financial management system requiring procurement areas to report the anticipated Australian and New Zealand content of the contract at the time purchase orders are raised.

In 2000, an audit of the reasons for procuring from overseas was undertaken by Defence. Following the audit, off-shore purchases reporting has improved and now covers 80 per cent of the value of all procurements.

http://ba.dao.defence.gov.au/main.htm


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INTELLECTUAL PROPERTY

Over the past year, Defence has sought to improve the effective management of intellectual property. This has seen the development of several initiatives, the more notable of which are listed below.

• Intellectual property awareness programs are being run for procurement staff and industry.

• An intellectual property manual has been developed for Defence use.

• As part of the SMART 2000 tendering and contracting template, Defence now requires access to contractors’ intellectual property so that Defence and Australian industry can operate, maintain, repair, modify, develop and manufacture equipment elements as required.

Defence continues to make intellectual property, resulting from Defence research and development, available to industry through licensing arrangements. This contributes to the development of Australian industry and recognises that Defence cannot commercially exploit its own intellectual property.

AUSTRALIAN AND NEW ZEALAND INDUSTRY INITIATIVES

Defence has an Australian industry involvement program, aimed at enhancing Australian and New Zealand defence-related industries. All contracts worth more than $5m are required to have an industry involvement plan. Tenderers are required to approach the Industrial Supplies Office network, an independently managed non-profit organisation financially supported by State, Territory and Commonwealth governments, to identify opportunities for Australian and New Zealand industry.

For militarily significant acquisitions (usually capital equipment acquisitions), more stringent industry requirements apply under the Australian industry involvement program. These requirements are aimed at developing support for ADF capabilities.

As part of its policy of encouraging open and effective competition, and to promote the development of Australian and New Zealand industry capabilities, Defence has continued with the privatisation of its manufacturing interests. The Government is currently undertaking a process that will lead to the sale of its stake in the Australian Submarine Corporation.

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DEFENCE SCIENCE AND TECHNOLOGY

CONTRIBUTION TO DEFENCE OUTPUTS

The following section summarises the performance of the Defence Science and Technology Organisation for 2000-01. The summary is necessarily selective, as the fields covered by the organisation are diverse, many research programs take place over several years and some activities and details are classified.

OUTPUT 1 (DEFENCE OPERATIONS)

The research and development conducted during the year focused on investigating the impact of mainstream and emerging technologies on current and future capabilities and the nature of warfare. These technologies, and their impact, are often referred to as the ‘revolution in military affairs’. The key scientific developments in this sphere are information technologies, networks and micro devices. As a consequence, the organisation established a Military Systems Experimentation Branch in June 2001 to conduct research in order to explore and develop innovative joint warfighting concepts and capabilities, within a collaborative experimentation framework.

The Defence Science and Technology Organisation continued to provide support to the deployed forces in East Timor. This included the formation of a force operations research capability to provide real-time operational analysis support to the land force.

Support provided to Headquarters Australian Theatre’s operational planning included analytical tools and techniques for planning and evaluating a range of operations (including theatre evacuation, strike operations, targeting and logistics management) which have now been integrated into the headquarter’s planning processes.

Defence Science and Technology Organisation is assisting in development of the collocated Headquarters Australian Theatre that will be established in 2006.

Contribution to National Support Tasks

The organisation provided support for the chemical, biological and radiological anti-terrorist response capability for the Sydney Olympics. Approximately 20 staff were involved in providing a sophisticated analysis/detection capability for various threats during that time.

Defence Science and Technology

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OUTPUT 2 - NAVY CAPABILITIES

The organisation’s contribution included assisting the Navy to develop policy in order to provide a strategic focus and direction for the enhancement of its electronic warfare capability. In addition, the organisation used ‘virtual ship’ simulation to research how multiple above-water sensors could be used to combine data in developing an integrated approach to air defence and air warfare. As part of this integrated approach, the organisation participated in trials for the Nulka active missile decoy that addressed the interfacing, commissioning and operational tactics of that system.

Collins-class Submarine

The Defence Science and Technology Organisation provided research and advice in support of the Collins-class submarine. With regard to the combat system, the organisation carried out extensive research at its Combat Systems Research Centre, in collaboration with industry and tertiary institutions. The centre made extensive use of a ‘virtual submarine’ in supporting this project.

Work on the submarines’ propellers included fatigue testing, corrosion control, non-destructive inspection and materials science. This work has enabled the propellers to meet their full design life.

Mine Warfare

In support of mine warfare, the organisation used its ‘virtual minehunter coastal’ to develop decision aids and high-level operator aids to assist with ship effectiveness and safety. The organisation continued the development of an acoustic mine-imaging system designed to enhance the minehunter coastal capability by using ultrasonic technology to positively identify and allow for the disposal of submerged objects.

OUTPUT 3 - ARMY CAPABILITIES The Defence Science and Technology Organisation contributed support for the Army experimental framework. It provided experimental tools and methods for the development of future warfighting concepts and capabilities to conduct mechanised/motorised operations. It supported the ‘Headline 2000’ experiment, a major seminar wargame designed to assess the warfighting concept and structure for the mechanised component of the enhanced combat force. It investigated methodologies to optimise tactical command and control systems to inform the enhanced combat force and the Army of the future.

Special Forces

The Defence Science and Technology Organisation provided support to Special Forces operations in the areas of measures to reduce the probability of detection, enhancements to human performance, research into soldier-system integration

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and capability concept development for special operations for the Army of the future.

Land Projects

The organisation provided tender support for a number of key land projects; in particular, the armed reconnaissance helicopter project tender specification and the technical evaluation of the tender responses for the helicopter’s systems and sub-systems, and the soldier combat system project.

A structural load assessment for the Black Hawk helicopter was completed, with the results being used to validate stress prediction and airframe life-of-type models. The Defence Science and Technology Organisation also provided the lead in evaluating and providing advice on the evolution of the Battlefield Command Support System.

Research into a ‘synthetic studies environment’ was undertaken to support the development of joint land-air tactical warfighting concepts. This environment allowed locations around Australia to be connected by a network and to interact with each other during experiments. It was also used to investigate the introduction into service of the armed reconnaissance helicopter.

The organisation carried out research into reconnaissance and surveillance for the land force, particularly with regard to the complementary use of low-light-level and infra-red sensors with imaging radar. This resulted in a number of trials and analyses of systems performance, where many lessons were learnt in informing the major attributes to be sought in operational focal-area aerial surveillance, using tactical uninhabited aerial vehicles, and broad-area aerial surveillance systems.

Non- conventional approaches to warfare, and the recognition that advances in biotechnology could be exploited to develop even more potent biological threat agents, have prompted further research into seeking countermeasures to these possibilities. Development of a prototype device to detect biological warfare agents continued.

An area denial weapon system concept has been developed as an alternative to anti-personnel land mines. The technology demonstrator for this concept has been developed as a collaborative effort between the Defence Science and Technology Organisation, the United States Defense Advanced Research Project Agency and Australian and overseas industry.

OUTPUT 4 – AIR FORCE CAPABILITIES

A significant effort was expended during the year on research relating to through-life support of airframes and aero-engines. This research was aimed at reducing the cost of aircraft ownership while, at the same time, increasing operational effectiveness and improving safety. Research continued on the new aerospace combat capability project to define new force structures that are


289

capable of meeting the capability currently provided by the F/A-18 and F-111 in the areas of air defence and offensive strike. The organisation continued to provide advice and carry out operational analysis on the various contender platforms for the project, as well as supporting the introduction of advanced air-to-air missiles for the F/A-18 aircraft.

The Defence Science and Technology Organisation provided advice for the development of tender specifications and the evaluation of tenders for the air combat training system project and provided support in the areas of modelling and simulation, human factors, hardware and software, data requirements and validation. In addition, support continued for the airborne early warning and control project through the provision of advice on a wide range of technology areas to assist in monitoring the progress of the contractor and prepare for the test and evaluation phase and for introduction into service.

The organisation also supported the Global Hawk project agreement with the United States Air Force which resulted in the recent operational demonstration of the Global Hawk high-altitude endurance uninhabited aerial vehicle in Australia.

OUTPUT 5 – STRATEGIC POLICY

The Defence Science and Technology Organisation assisted with the development of decision aids and visualisation tools to allow force element groups to contribute to the military response options being examined for benefit and effectiveness. The organisation continued with a study to support the preparedness decision-making system, aimed at advising the Secretary and the Chief of the Defence Force on how to develop the support systems needed to manage the readiness of the ADF to conduct operations and the ability to sustain those operations efficiently and effectively.

Several studies were undertaken in support of Capability Systems Division to examine the ADF’s capacity to meet the current and future demands of strategic guidance. Studies were undertaken into capability enhancement options in support of ADF helicopter, airlift and air combat capabilities and air-to-air refuelling.

International Relationships and Activities

The Defence Science and Technology Organisation’s international collaboration in important technologies continued to expand. The Technical Cooperation Program with the United States, the United Kingdom, Canada and New Zealand remains the backbone of the organisation’s collaborative activities. Bilateral involvement with countries such as the United States, the United Kingdom and France increased during the year. There are currently 20 project arrangements and 33 data exchange arrangements in place with the United States. Cooperation with the United Kingdom is conducted on 46 different topics. There are three technical arrangements in place with France, with the prospect of several more.

290


Overall, the benefit to Defence from this collaboration is significant and estimated to be several times the worth of the input.

The organisation’s interaction with regional countries continued during the year. The focus was on helping regional countries to sustain and increase their abilities to defend themselves in cost-effective ways, on supporting regional countries’ operations with the ADF and on dialogue on issues of mutual interest.


The Defence Science and Technology Organisation undertook research into image analysis and exploitation tools. It also developed computer-based techniques and tools to support intelligence analysis and production, and the evaluation of intelligence processes.

IMPROVING THE ORGANISATION

As well as providing support to the Defence outputs, the Defence Science and Technology Organisation continued to develop its own organisational initiatives.

PEOPLE STRATEGIES

The organisation continued to focus on the development, consolidation and integration of its leadership and management framework. This framework is designed to assist staff in identifying and attaining their holistic learning and development needs throughout their careers, spanning staff induction and orientation, leadership, management and professional development. The framework is well regarded by staff and senior management, and has assisted the organisation in attaining many of its people development objectives

The organisation developed and initiated a comprehensive recruitment communication plan aimed at attracting and recruiting high-quality graduates through formal marketing and networking. Thirty graduate scientists were employed by the Defence Science and Technology Organisation in 2000-01. The organisation’s profile has been heightened considerably throughout Australian universities. Graduates now have a much better understanding of what the organisation does, and whom it is looking to employ. As a consequence, the calibre and competence of those graduates who now apply for positions has increased considerably.

In June 2001, the organisation introduced an internal occupational health and safety scorecard that measures the occupational health and safety performance of each of its research divisions.

INDUSTRY AND EXTERNAL INTERACTION

The Commonwealth Government launched Backing Australia’s Ability: An Innovation Action Plan for the Future in January 2001. This is a comprehensive and


291

integrated innovation plan worth $2.9 billion over five years. Considerable effort has been devoted to this initiative. Defence established a working group to identify opportunities offered under the initiative and to ensure that it gained maximum leverage from the initiative. The Defence Materiel Organisation and the Defence Science and Technology Organisation jointly coordinate this group, which also includes representatives from other areas of Defence.

Defence initiatives and involvement under the Backing Australia’s Ability initiative include:

• Providing comments on the World Class Centres of Excellence in an information and communications technology discussion paper circulated by the National Office of Information Economy;

• Providing comments on Defence’s preferred position regarding the expansion of the Cooperative Research Centres program;

• Initiating discussions with potential fund managers on a competitive pre-seed fund for universities and public sector research agencies;

• Monitoring the progress of the World Class Centre of Excellence in Biotechnology program; and

• Participating in the Australian Maritime College’s successful bid for a Hydrodynamic Research Centre under the major national research facility program.

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EXTERNAL CONSULTANTS

External consultants investigate assigned problems under limited direction or supervision and provide recommendations or options for improvement. External consultants assist Defence management in decision-making, but do not implement those decisions. Defence contracts consultants for one of the following reasons:

• The specialised skills or service required are not available in Defence.

• The specialised skills or service are not available in Defence in the time frame in which they are required.

• The technology is not available within Defence.

Value for money considerations, when contracting for a consultant, relate not only to cost, but to the experience and previously demonstrated capabilities of the consultant; the location of the consultant and the associated travelling costs; the capacity of the consultant’s locally-based resources to provide continuing services at levels likely to be required during the course of the engagement; and the consultant’s professional standing and reputation.

The table below summarises Defence use of consultants, on a Group basis, for 2000-01.

Table 4.12: Defence use of Consultants for 2000-01

Group Number of Consultants

Expenditure $

Headquarters Australian Theatre 2 27,889 Navy 10 290,728 Army 1 13,000 Air Force 0 0 Strategic Policy 3 110,668 Intelligence 0 0 Capability 7 210,451 Chief Finance Officer 1 33,619 Defence Science and Technology Organisation 2 72,068 Defence Personnel Executive 13 490,503 Public Affairs and Corporate Communication 2 60,652 Defence Materiel Organisation 18 4,152,823 Corporate Services and Infrastructure(1) 10 444,168 Total 69 5,906,569

Note 1. Corporate Services and Infrastructure Group data includes the Inspector General’s

Division data.

External Consultants

293

The significant decrease in Defence’s use of consultants in 2000-01 ($5.9m) compared with 1999-2000 ($22.6m) and previous financial years is due in part to a more rigorous data assurance process this financial year. The assurance process found widespread miscoding of transactions when selecting between consultants and professional service providers. (Professional service providers exercise professional/technical skills, under Defence supervision and guidance, in the delivery of a service. The contract, generally, does not require a significant contribution to management decision-making processes, and requires the professional service provider to perform a prescribed task as a result of management decisions.) This is an internal account code issue that will be addressed by the promulgation of clearer guidelines as well as an awareness-raising program across Defence in 2001-02.

The consultants and professional services category in suppliers expenses (see Note 9 in Notes to the Financial Statements) showed a small decrease in 2000-01 ($182m) compared to 1999-2000 ($190m).

BREAKDOWN OF DEFENCE USE OF CONSULTANTS IN 2000-01

The following list provides detail on all consultancy services utilised by Defence Groups during 2000-01.

KEY Symbols Justification *Consultancy was publicly advertised

1. Specialised skills or service required not available within Defence.

2. Specialised skills or service required not available within time frame.

3. Technology not available within Defence.

Commander Australian Theatre Consultant Name Purpose Total Amount

Paid $

Justification

SMS Consulting Group Ltd

Conduct a review of current Headquarters Australian Theatre business processes.

6,000 1

Rawlinsons (ACT) Pty Ltd

Provide project management advice on ADF personnel facilities project in East Timor.

21,889 2

Navy Consultant Name Purpose Total Amount

Paid $

Justification

Avecs Pacific Pty Ltd Conduct a review of the fleet activity schedule process to address the command of the fleet, operations planning and doctrine and conduct of operations.

19,242 1

Bureau Veritas Examine and advise on quality management within the Fleet Intermediate Maintenance Activities National Office.

1,000 1

Changedrivers Pty Ltd Provide options on conducting a strategic planning workshop.

8,500 1

294


Consultant Name Purpose Total Amount Paid

$

Justification

Changedrivers Pty Ltd Provide recommendations on activity mapping and business planning.

3,750 2

Greenbank Consultants

Conduct a review of Training Ship Young Endeavour strategic planning and key performance indicators.

3,500 1

Keystone Corporate Positioning

Assist and advise the Director General Navy Improvement and the Chief of Navy’s Senior Advisory Committee on the formation, design and development of a functional change management plan strategy.

105,000 1

Legerwood Consulting Pty Ltd

Investigate and specify existing information systems within a naval component and propose an information systems strategy.

27,900 3

National Project Consultants

Investigate options for the replanning of Maritime Headquarters to improve functionality of the force headquarters staff.

4,500 1

The Phillips Group Develop a plan to help improve the Navy’s reputation internally and externally.

113,336 1

The Riches Group Pty Ltd

Review the Navy human resources strategy and provide expert comment on the structure and content of the strategy to ensure that it meets industry standards.

4,000 1

Army Consultant Name Purpose Total Amount

Paid $

Justification

Mavor Pty Ltd Provide analysis on issues relating to various operations conducted by the ADF to assist Defence’s preparation for future operations.

13,000 1

Strategic Policy Consultant Name Purpose Total Amount

Paid $

Justification

Rogen Australia Ltd Conduct presentations for the patrol boat life extension program training team prior to its consultation with several Pacific Island governments about the Pacific patrol boat program.

4,108 1

Michael Jeffrey Consultancy

Member of the Commonwealth Eminent Persons Group which conducted a comprehensive review of the PNG Defence Force at the request of the PNG Government to inform its Defence reform process.

63,000 1

Uniquest Conduct a review of military postgraduate education.

43,560 1


295

Capability Consultant Name Purpose Total Amount

Paid $

Justification

Brown & Root Services Asia

Develop the operational concept document and documentation plan for the replacement patrol boat project.

8,400

Mr I Dudgeon Draft the National Information Operations policy.

16,500 2

Raytheon Australia Pty Ltd

Undertake a study to identify the current capability of Defence ranges to support test and evaluation of air assets, review future requirements and provide options (with indicative costings) for the provision of this capability.

21,773

Raytheon System Company Australia

Concept exploration and definition study for the ADF supersonic air target capability.

59,107 1


Conduct a study to determine Australia’s highest priority coalition logistics interoperability deficiencies, compare the Australian-identified deficiencies with US-identified deficiencies and recommend coalition priorities for remediation.

78,431 2

Sverdrup Technology Australia

Develop costed options to maximise the electronic countermeasures offered by the Elta EL/L-8222 jamming system.

11,351 2

Topley & Associates Pty Ltd

Conduct a strategic review of the Australian Services Cadet Scheme.

14,889 3

Chief Finance Officer Group Consultant Name Purpose Total Amount

Paid $

Justification

Cultural Imprint Provide advice and guidance to the Defence Committee on the Defence values and their application.

33,619 1

Defence Science and Technology Consultant Name Purpose Total Amount

Paid $

Justification

Pacific Challenge Conduct an industry study of American markets for information security technologies and provide advice on findings.

37,368 1

Professor Peter N. Joubert

Develop a research plan in the area of hydrodynamics and assist in the implementation of that plan.

34,700 1

296


Defence Personnel Executive Consultant Name Purpose Total Amount

Paid $

Justification

Benmarco Pty Ltd Conduct a scoping study seeking information from stakeholders to determine the subjects that should be included in the ADF Reserve command and staff course.

9,000 2

Cogent Business Solutions

Provide consultancy services for the Defence Force Recruiting Organisation including the analysis of the Manpower recruiting tender, preparation of a report and conducting a negotiation workshop.

28,685 1

Cogent Business Solutions

Provide consultancy services for Defence Force Recruiting Organisation including the evaluation of the Manpower recruiting performance, preparation of baseline costings and the development of a transition roll-out plan.

49,171 1

IISM Group Pty Ltd Provide advice on the extent of work required to implement the production support role and re-engineering process for PMKeyS.

19,300 3

James Cook University Conduct a scoping study to determine Defence’s medical capability in any civilian disaster.

30,000 1

Marshall Consulting Analysis of remuneration setting strategies and framework.

675 1

Mastech Asia Pacific* Analyse and design the PMKeyS professional development training package.

156,915 1

Mercadier Pty Ltd Research to identify critical personnel trends and how they affect Defence.

42,003 1

Pericon Pty Ltd Analysis of remuneration setting strategies and framework.

300 1

PS Consulting Provide options for closing the Civilprism system, including archiving options.

47,000 2

Re-Engineering Australia

Provide change management/business process support to the Defence Service Centre.

82,524 1


Provide Defence with options on the set-up of the military personnel administration cell.

12,430 1

Team HR (Australia) Pty Ltd

Conduct a scoping study on the Defence Training Information Management System computer system and provide options.

12,500 2

Public Affairs and Corporate Communication Consultant Name Purpose Total Amount

Paid $

Justification

Learning Curve Pty Ltd

Develop concepts for the Defence corporate brand and develop the final brand product.

30,000 1

New Focus Research Pty Ltd

Conduct focus group testing and research for the Defence corporate brand.

30,652 1


297

Defence Materiel Organisation Consultant Name Purpose Total Amount

Paid $

Justification

Ball Aerospace Australia

Conduct an independent verification and validation review of the airborne early warning and control project.

115,152 1

Bureau of Transport Economics

Conduct a rail study on support of ADF in peacetime and contingencies – the study focused on future policy, regulatory, commercial and the operational environment affecting rail transport.

20,909 1

Clayton Management Pty Ltd

Advise on the full integration of three existing organisations into the Defence Materiel Organisation.

89,795 1

Codarra Advance Systems Pty Ltd

Advise on definition systems architecture and transaction to the ADF Joint Command Support environment.

2,860 2

Qld Department of Minerals and Energy

Conduct F-111 sprayable fuel tank sealant research.

177,813 1

Eurotorp Conduct a lightweight torpedo project definition study.

1,624,000 1

Eurotorp Conduct a heavyweight torpedo target study. 116,411 Geoff McDonald & Associates Pty Ltd


90,269 1

Griffith University Conduct F-111 sprayable fuel tank sealant

research. 20,750 2

Gutteridge, Haskins & Davey Pty Ltd

Advise the maritime ranges project on environmental aspects in accordance with the Environment Protection and Biodiversity Conservation Act 1999.

17,400 1

Pricewaterhouse Coopers

Provide management advice on Navy minor project changes.

26,250 1

Pricewaterhouse Coopers

Review into the impact of the Defence Materiel Organisation restructure. Report on areas of concern and provide recommendations to address issues effectively and efficiently.

32,100 1

Sverdrup Technology Australia


215,235 1

TDA Systems Engineering

Conduct a study of ADF reliability, availability and maintainability and identify organisational options for meeting requirements.

92,798 2

TDA Systems Engineering

Advise on function and performance specification of the light armored vehicles.

75,302 1

The Phillips Group Advise on strategic communications and change management.

632,850 1

Thomson Marconi Sonar

Conduct lightweight torpedo project definition study.

696,000 1

Total Logistics Management

Conduct vehicle fleet management study. 106,929 2

298


Corporate Services and Infrastructure(1)

Consultant Name Purpose Total Amount Paid

$

Justification

Corporate Diagnostics Pty Ltd

Provide options on the Defence career management project.

1,050 1

True Q Pty Ltd Provide expert advice and guidance on the development of a balanced scorecard-based business planning and quality management system.

37,133 2

Allied Tech Group Pty Ltd

Conduct a feasibility study for proposed microwave link - Oakey/Cabarlah and Oakey/Toowoomba.

10,000 1

APA Management Services

Review the costs of various future options for living accommodation for members without dependants, develop business cases to compare options and recommend a way forward.

46,823 2

Jamieson Pty Ltd Make recommendations on how Defence might improve its returns from property sales.

56,754 1

Oxley Corporate Finance Ltd

Review Infrastructure Division’s business practices including benchmarking against other agencies, identify scope for efficiencies and further industry involvement.

191,254 1

Timbelle Pty Ltd Advise on the management and administration of Defence Information Systems information technology and telecommunications services.

30,505 1

URS Australia Pty Ltd Assess the feasibility of land in the Defence communication station Riverina node to identify land-use practices that will align with government initiatives and legislative compliance.

10,737 1

V.P Heffernan Pty Ltd Make recommendations on how Defence might improve its returns from property sales.

27,162 1

Changedrivers Pty Ltd Provide advice to management on product mapping and opportunities for improvement to identify the future role of base representatives in the Sydney Central and Sydney West regions.

32,750 2

Note 1. Corporate Services and Infrastructure Group data include the Inspector General’s

Division data.

299

ADVERTISING AND MARKET RESEARCH

Under section 311A of the Commonwealth Electoral Act 1918, the annual report is to include particulars of all amounts paid by, or on behalf of Defence during the financial year to:

• advertising agencies;

• market research organisations;

• polling organisations;

• direct mail organisations; and

• media advertising organisations.

Defence spent a total of $45.5m on advertising and market research in 2000-01, broken down as follows:

Table 4.13: Total advertising and market research expenditure by group

Group Expenditure in 2000-01 $

Headquarters Australian Theatre 3,042

Navy 157,017

Army 166,482

Air Force 97,025

Strategy 216,748

Security and Intelligence 361,705

Capability 4,356

Chief Finance Officer 21,285

Defence Science and Technology Organisation 463,691

Defence Personnel Executive 42,358,877

Public Affairs and Corporate Communication 225,415

Defence Materiel Organisation 253,918

Corporate Services and Infrastructure 1,135,786

Total 45,465,347

The following table shows total advertising and market research expenditure by type of agency.

300


Table 4.14: Total advertising and market research expenditure by type of agency

Type of Agency Amount $

Advertising agencies 0

Market research organisations 1,069,396

Polling organisations 0

Direct mail organisations 18,701

Media advertising organisation 44,377,250

Total 45,465,347

The following table lists all particulars of payments, on a Group basis, made to relevant individuals and organisations for advertising and market research.

Table 4.15: Particulars of payments by group for advertising and market research expenditure

Payee Amount ($)

Purpose

Headquarters Australian Theatre Media advertising organisations AIS Media 3,042 Recruitment – civilian Navy Media advertising organisations Mitchell and Partners Australia Pty Ltd 157,017 Recruitment – civilian Army Media advertising organisations Cumberland Newspaper Group 2,085 Recruitment – General Reserves Daily Telegraph 2,000 Recruitment – General Reserves Enever Signs 2,286 Recruitment – General Reserves Gippsland Audio Visual Consultancy 2,177 Army public relations Kingsbury Design 3,350 Recruitment – General Reserves Norforce News 3,636 Army public relations Para-Vogue Printing 7,365 Recruitment – General Reserves Queensland Corporate Communications 10,303 Recruitment – General Reserves Quest Newspaper Group 9,942 Recruitment – General Reserves R S & D M Hobden Pty Ltd 8,382 Recruitment – General Reserves Ron Howard Pty Ltd 2,316 Publishing of Unit magazine for 51 FNQ Regiment Sign A Rama 5,552 Recruitment – General Reserves Starcom Worldwide (Aust) Pty Ltd 87,824 Recruitment – General Reserves Telecasters Australia Ltd 1,500 Recruitment - General Reserves The Federal Capital Press of Australia Pty Ltd

3,636 Army public relations

The Herald Weekly Times 4,567 Recruitment - General Reserves The Queensland Times 3,045 Recruitment - General Reserves Triple M 2,516 Army public relations Valley Signworks 4,000 Recruitment- General Reserves Air Force Media advertising organisations 3AW Southern Cross Radio 13,112 General museum publicity 3AW Southern Cross Radio 2,000 Advertising Twilight Spectacular Academy Publishing 1,755 Museum school programs – Schools Today

Advertising and Market Research

301

Payee Amount

($) Purpose

AIS Media 2,699 Advertising – Avalon Air Show APN Business Magazines 2,640 General museum publicity Barton Marketing 2,997 General museum publicity Fairfax Community Newspapers 2,080 Museum school programs and International Year of

Volunteers Geelong Independent 3,102 Museum school programs Mirror Australian Telegraph 4,547 Promotional advertising – Air Command Band Starcom Worldwide (Aust) Pty Ltd 15,167 Advertising Avalon Air Show and 2001 RAAF

Heritage Awards Starcom Worldwide (Aust) Pty Ltd 46,926 Recruitment – civilian Strategy Market research organisations MediaScape 26,320 Analysis of media coverage of White Paper

development and Defence public consultation process

Professor Ian McAllister (Research School of Social Sciences, Australian National University)

57,574 Telephone polling on White Paper community consultation

Worthington Di Marzio 44,550 Focus groups on White Paper community consultation

Media advertising organisations AIS Media 16,729 Recruitment – civilian Starcom Worldwide (Aust) Pty Ltd 71,575 Recruitment – civilian Security and Intelligence Media advertising organisations Air Force News 260 Recruitment – advertising AIS Media 130,625 Recruitment – advertising Apprentice & Traineeship Co 561 Recruitment – advertising Geraldton Newspapers Ltd 185 Tender advertising Recruitment Management Company Pty 3,408 Recruitment activities Reed Business Information 2,400 Recruitment – advertising Royal Australian Navy News 429 Recruitment – advertising Starcom Worldwide (Aust) Pty Ltd 205,136 Recruitment – advertising Direct mail organisations Australia Post 196 Mailout to graduates Curtin University of Technology 336 Mailout to students Edith Cowan University 516 Mailout to students Griffith University 273 Careers Fair Griffith University 349 Recruitment – advertising Monash Unicomm 909 Graduate Recruitment Fair Murdoch University 186 Mailout to students Queensland University of Technology 520 Careers and Futures Fair Queensland University of Technology 1,020 Mailout to students RMIT University 1,127 Careers Expo RMIT University 1,222 Mailout to students Swinburne University of Technology 655 Employer Fair University of Adelaide 700 Careers Fair University of Adelaide 684 Mailout to students University of Canberra 2,190 Mailout to students University of Melbourne 1,898 Careers Fair University of Melbourne 1,846 Mailout to students University of Newcastle 527 Mailout to students

302


Payee Amount

($) Purpose

University of Queensland 327 Mailout to students University of South Australia 430 Mailout to students University of Southern Queensland 136 Careers Fair University of Southern Queensland 380 Mailout to students University of Tasmania 450 Careers Fair University of Tasmania 230 Mailout to students University of Western Australia 500 Graduate Expo University of Western Australia 50 Mailout to students University of Wollongong 644 Mailout to students University of Wollongong 400 Careers Fair Capability Media advertising organisations AIS Media 2,656 Promotion of Defence Reserves activities Northern Defence Magazine 600 Defence Support Reserves Council – advertising Northern Warrior Magazine 1,100 Defence Reserves Support Council – advertising Chief Finance Officer Media advertising organisations AIS Media 648 Tender to conduct training – advertising Army Amenities Fund 575 Recruitment – civilian Army Newspaper Unit 234 Recruitment – civilian Flight Publishing Pty Ltd 395 Publishing costs – advertising Royal Australian Navy News 598 Recruitment – civilian Starcom Worldwide (Aust) Pty Ltd 18,116 Recruitment – advertising Starcom Worldwide (Aust) Pty Ltd 719 Tender advertising Defence Science and Technology Organisation

Market research organisations Northeast Quadrant Consulting 12,000 Forum held for graduate recruitment Media advertising organisations ADBR 7,200 Advertisement to promote technology expertise AIS Media 311,675 Recruitment – civilian APN 3,990 Advertisement in Graduate Outlook Canprint 3,200 Advertisement to promote technology expertise Executive Media Pty Ltd 2,882 Advertisement to promote technology expertise Mirror 6,048 Advertisement to promote technology expertise Starcom Publishing Group 1,513 Promote exposure for capability and technology

demonstrators Starcom Publishing Group 100,618 Recruitment – civilian The Good Guides Group 7,425 Advertising in University Guides for Graduates Yaffa Publishing Group 7,140 Advertisement to promote technology expertise Defence Personnel Executive Market research organisations New Focus Pty Ltd 838,599 Research for recruiting Sociotech Management Consultants 2,500 Research for recruiting University of New England 20,000 Research for recruiting Media advertising organisations Adelaide 2000-AMSA Conference 4,545 Recruitment – tri-Service AIS Elliot Mathews 2,542 Recruitment – health practitioner AIS Media 353,810 Recruitment – ADFA AIS Media 59,049 Recruitment – civilian AIS Media 6,387 Recruitment – health practitioner Australia Formula One Superboat 7,273 Recruitment – tri-Service Baypond Productions Pty Ltd 202,267 Recruitment – tri-Service

Advertising and Market Research

303

Payee Amount

($) Purpose

BeSeen Promotions 12,632 PMKeyS promotional products Blenheim Design Partners 2,315 Recruitment – RAAF Queensland Department of Employment, Training and Industrial Relations

10,000 Recruitment – tri-Service

Emitch Pty Ltd 2,785 Recruitment – Army Reserve Emitch Pty Ltd 635,081 Recruitment – tri-Service Federal Capital Press 1,746 Conference Federal Capital Press 2,336 Recruitment – health practitioner Grey Advertising 15,448 Recruitment – ADFA Grey Advertising 3,603 Recruitment – Army Grey Advertising 36,537 Recruitment – RAAF Grey Advertising 2,369 Recruitment – Royal Military College Grey Advertising 266,825 Recruitment – tri-Service Mitchell and Partners 3,271,848 Recruitment – ADFA Mitchell and Partners 3,600,114 Recruitment – Army Mitchell and Partners 2,603,545 Recruitment – Army Reserve Mitchell and Partners 2,526,345 Recruitment – Navy Mitchell and Partners 5,337,304 Recruitment – RAAF Mitchell and Partners 2,701,586 Recruitment – Royal Military College Mitchell and Partners 14,180,688 Recruitment – tri-Service North Queensland Newspaper 2,631 Recruitment – health practitioner P3 Pty Ltd 3,755 Television research Ray Bartlett Racing 10,000 Recruitment – tri-Service Showcase Publications 3,475 Publishing the Defence Equity advice lines Starcom Worldwide (Aust) Pty Ltd 1,549 Advertise the services of the Family Information

Network for Defence Starcom Worldwide (Aust) Pty Ltd 165,599 Recruitment - civilian Starcom Worldwide (Aust) Pty Ltd 57,799 Recruitment – health practitioner Unicom Design 2,273 Recruitment – Navy Young & Rubicam Mattingly 1,620,238 Recruitment – ADFA Young & Rubicam Mattingly 101,966 Recruitment – Army Young & Rubicam Mattingly 49,382 Recruitment – Army Reserve Young & Rubicam Mattingly 428,439 Recruitment – Navy Young & Rubicam Mattingly 181,556 Recruitment – RAAF Young & Rubicam Mattingly 39,969 Recruitment – Royal Military College Young & Rubicam Mattingly 2,980,167 Recruitment – tri-Service Public Affairs and Corporate Communication

Market research organisations Elliott and Shanahan Research 17,500 Research the impact of Defence assets at the Avalon

Airshow Market Attitude Research Services 32,358 1999-2000 annual monitoring survey – research into

community attitudes towards Defence and defence issues

Mediascape Analytical & Research Services

17,995 Provide media issues tracking analysis of the Australian domestic and Defence agenda

Media advertising organisations 3AW Southern Cross Radio Pty Ltd 25,438 Advertising for Centenary of Federation AIS Media 6,074 Advertising for Queensland Defence exhibit ARN Broadcasting Pty Ltd 13,070 Advertising for Centenary of Federation Australian Broadcasting Corporation 30,959 Production fee for Centenary of Army Parade in

Adelaide

304


Payee Amount

($) Purpose

Bass Radio Pty Ltd 4,043 Publicity for HMA Ships Launceston and Dechaineux visit

Ellis Displays Pty Ltd 4,050 Supply and erect Navy Week promotional panels in South Australia

Great Southern Land Broadcasters 2,160 Publicity for HMAS Warramunga Visit Media Monitors Australia Pty Ltd 4,057 Media coverage of major Adelaide-based activities

including Clipsal 500, Global Hawk, Army Week and Navy Week

SA FM 2,128 Advertising open days Starcom Worldwide (Aust) Pty Ltd 65,583 Advertising open days Defence Materiel Organisation Media advertising organisations Starcom Worldwide (Aust) Pty Ltd 129,296 Recruitment advertising. Starcom Worldwide (Aust) Pty Ltd 77,135 Advertising of tenders and Defence briefs to

industry Starcom Worldwide (Aust) Pty Ltd 1,899 Defence export outlook seminar Starcom Worldwide (Aust) Pty Ltd 45,588 Defence and Industry Conference 2001 Corporate Services and Infrastructure Media advertising organisations Advertising Energy Pty Ltd 2,910 Requests for tender AIS Media 6,070 Advertising of regulations AIS Media 33,034 Range activity warnings and notices AIS Media 47,998 Recruitment – civilian AIS Media 27,056 Requests for tender Brisbane Courier Mail 1,940 Recruitment – civilian Commonwealth Government Gazette 5,520 Gazetting of regulations Mirror Australian Telegraph 2,237 Requests for tender Northern Services Courier 3,250 Notices of welfare activities and services Port Stephens Examiner 3,621 Night flying warnings and notices Public Service and Merit Protection Commission

256,618 Recruitment – civilian

SSL Asset Services 4,358 Requests for tender Starcom Worldwide (Aust) Pty Ltd 3,919 Closure of naval waters and notices Starcom Worldwide (Aust) Pty Ltd 47,791 Range warning activities and notices Starcom Worldwide (Aust) Pty Ltd 654,373 Recruitment – civilian Starcom Worldwide (Aust) Pty Ltd 27,084 Requests for tender The Australian 3,627 Recruitment – civilian The McIvor Times 2,784 Range activity warnings and notices The Telegraph 1,596 Range activity warnings and notices

CHAPTER 5

PEOPLE MATTER

307

PEOPLE

STAFFING OVERVIEW The permanent force average strength achieved for 2000-01 was 50,355, a variation of 640 below the revised estimate of 50,995.

Table 5.1: ADF Permanent Force Staffing Variation Permanent Force 2000-01

Budget Estimate


2000-01 Actual

% Personnel Numbers – Average Strength

Navy 12,717 12,373 12,396 23 0.2 Army 24,677 25,081 24,488 -593 -2.4 Air Force 13,535 13,541 13,471 -70 -0.5

Total Permanent Force 50,929 50,995 50,355 -640 -1.3 Note 1. Staffing numbers for permanent force are based on achieved average strengths and include

972 General Reservists undertaking full-time service. The Reserve Force budget and revised estimates figures for 2000-01 included 6,296 and 6,515 members respectively of the Army Inactive Reserve. The Reserve Force actual figures for 2000-01 represent General or Active Reservists who rendered paid service during the financial year. The average number of Reserves on full-time service in the permanent force during 2000-01 is excluded from these figures (see note 2). The actual numbers for 2000-01 were 19,835, a variation of 5,734 below the revised estimate of 25,569. The variation from the revised estimate is due mainly to the inclusion of inactive reserves in the estimates but not in the actual figures. When adjusted for these circumstances, the net result is an increase in participation of active reservists of 781 above the (adjusted) revised estimate. From the 2001-02 Portfolio Budget Statements onwards, Reserve Force estimates exclude inactive reserve numbers.

Table 5.2: ADF Reserve Staffing Variation Reserve Force 2000-01

Budget Estimate


2000-01 Actual

% Personnel Numbers – Paid Strength

Navy 1,803 1,803 2,101 298 16.5 Army 22,872 21,735 16,087 -5,648 -26 Air Force 2,031 2,031 1,647 -384 -18.9

Total Reserve Force 26,706 25,569 19,835 -5,734 -22.4 Notes 1. Actual Reserve figures represent numbers of General or Active Reserves who rendered paid

service during the financial year. 2. An average of 972 Reservists undertook full-time service with the ADF Permanent Force

during the financial year. These Reservists are included in the ADF Permanent Force staffing table and are not included in this table.

308

People Perspective

The civilian actual average strength for 2000-01, as shown in the table below, was 16,292, a variation of 101 below the revised estimate of 16,393. This reflects a lower than anticipated civilian recruiting achievement across Defence.

Table 5.3: Civilian Staffing Variation Civilian 2000-01

Budget Estimate


2000-01 Actual

% Personnel Numbers – Average Strength

Civilian 15,775 16,393 16,292 -101 -0.6 Total Civilian 15,775 16,393 16,292 -101 -0.6 Note 1. Staffing numbers for civilians are based on achieved average strengths.

Table 5.4: Breakdown of Personnel Numbers by Service and Rank 2000-01

Budget Estimate 2000-01

Revised Estimate 2000-01 Actual

Navy(1) 1 Star Officers and above 33 33 34 Senior Officers 340 352 380 Officers 2,550 2,363 2,336 Other Ranks 9,794 9,625 9,646 Reserves(2) 1,803 1,803 2,101

Total Navy 14,520 14,176 14,497 Army(1)

1 Star Officers and above 44 44 48 Senior Officers 546 563 548 Officers 4,534 4,581 4,446 Other Ranks 19,553 19,893 19,446 Reserves(2) 22,872 21,735 16,087

Total Army 47,549 40,301 40,575 Air Force(1)

1 Star Officers and above 36 36 38 Senior Officers 471 543 487 Officers 3,717 3,378 3,330 Other Ranks 9,311 9,584 9,616 Reserves(2) 2,031 2,031 1,647

Total Air Force 15,566 15,572 15,118 Civilians

Senior Executives 99 104 103 Senior Officers(3) 2,985 3,196 3,317 Others 12,671 13,093 12,872

Total Civilians 15,755 16,393 16,292 Notes 1. The 2000-01 average achieved strength of the Permanent Force by Service was: Navy 12,396;

Army 24,488; Air Force 13,471. These numbers include 972 Reservists undertaking full-time service: Navy 200; Army 593; Air Force 179.

2. The 2000-01 Actual Reserve strength represents Reservists who undertook paid service. The Army budget and revised estimates include 6,296 and 6,515 members respectively of the Inactive Army Reserve which are not included in the actual figures (see also Table 5.2: ADF Reserve Staffing).

3. Civilian Senior Officers are Executive Levels 1 and 2.

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STAFFING STATISTICS The actual strength and location of the permanent component of the ADF at 30 June 2001 was 49,763 as indicated in Table 5.4 overleaf. The ADF enlisted 5,010 men and 915 women for a total enlistment of 5,925 for the twelve months to 30 June 2001 as shown in Table 5.6. This was 978 or 20% more than for 1999-2000. Although this was an improvement, it represented only 79.5 per cent of the overall full-time target. Individual Service recruiting targets were not achieved and this, combined with ongoing separation rates, is creating workforce gaps. Presently, the Navy is the most affected.

Army and Air Force strengths reflected the drawdown by 1 July 2001 to post-Defence Reform Program force strengths and the transition towards the Government-funded strength increases (3,000 Army & 555 Air Force) for ongoing operations in East Timor.

There were 6,967 separations (Table 5.9) from the ADF for the twelve months to 30 June 2001. This was an increase of 500 compared with 1999-2000 and offset the improved recruiting in 2000-01.

The actual strength and location of the Reserve component of the ADF with training obligations was 20,334 at 30 June 2001. This is a decrease of 1,012 from actual strength figures with training obligations at 30 June 2000. There was an improvement in recruitment for 2000-01 that was offset by increased Reserve separation, with the Army experiencing the greatest net decrease.

At 30 June 2001, there were 17,006 Defence civilian employees. This is an increase of 711 compared with 30 June 2000. This movement largely reflects the impact of additional civilian employees for the Defence Service Centre and increased civilian recruiting targets across Defence.

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People Perspective

Table 5.5: Distribution by Employment Location of Australian Defence Force Permanent and Reserve Forces, and Civilian Employees, as at 30 June 2001(1)

NSW Vic Qld SA WA Tas NT ACT(2) O/S(3) Total Permanent Force(4)

Navy(5) 5,630 1,705 686 79 2,412 12 398 1,300 41 12,263 Army 5,228 3,116 9,110 534 835 87 3,118 2,254 78 24,360 Air Force 4,527 1,242 2,588 1,615 350 6 1,125 1,548 139 13,140 Sub-Total 15,385 6,063 12,384 2,228 3,597 105 4,641 5,102 258 49,763

Reserve Force(6) Navy 364 77 105 56 135 55 27 275 0 1,094 Army 4,973 3,266 4,122 1,387 1,775 744 597 350 13 17,227 Air Force 506 235 565 307 155 0 97 148 0 2,013 Sub-Total 5,843 3,578 4,792 1,750 2,065 799 721 773 13 20,334

Total 21,228 9,641 17,176 3,978 5,662 904 5,362 5,875 271 70,097 Civilians 3,479 3,660 1,296 1,828 498 96 337 5,724 88 17,006 GRAND TOTAL 24,707 13,301 18,472 5,806 6,160 1,000 5,699 11,599 359 87,103

Notes 1. Figures in this table show actual staff numbers as at 30 June 2001, not achieved average

strengths. 2. ACT includes personnel located at Jervis Bay, HMAS Harman, RAAF Fairbairn and other

Defence units within the legally defined boundaries of the Australian Capital Territory. 3. Permanent Force and Reserves overseas represent personnel posted for long-term duty. 4. Permanent Force figures include paid and unpaid members, but not Reserves on

full-time duty. 5. Personnel serving in ships are included against the state or territory in which the ship is

home-ported. 6. Figures are Reserves with training obligations and include Reserves on full-time duty.

Table 5.6: Distribution of Civilian Employees by Employment Location and Classification Group, as at 30 June 2001(1)

Occupational Group(2) NSW Vic Qld SA WA Tas NT ACT O/S(3) Total Secretary 1 1 SES,COD(4) 0 5 1 9 0 0 0 87 4 106 SO,SITO and Equivalents 273 638 53 646 36 5 11 1,679 72 3,413 APS,ITO and Equivalents 1,805 1,902 734 484 255 48 225 3,407 3 8,863 Trade/Physical 615 263 341 76 112 36 71 34 0 1,548 Professional 164 236 46 274 32 6 9 211 8 986 Technical 621 613 121 339 63 1 21 267 1 2,047 Miscellaneous 1 3 0 0 0 0 0 38 0 42 Total 3,479 3,660 1,296 1,828 498 96 337 5,724 88 17,006

Notes 1. Figures in the table show actual staff numbers as at 30 June 2001, not achieved average

strengths. 2. Senior Executive Service (SES); Chief of Division (COD); Senior Officer (SO) includes

Executive Levels 1 and 2; Senior Information Technology Officer (SITO); Australian Public Servant (APS) includes levels 1 to 6; Information Technology Officer (ITO).

3. Overseas figures represent employees posted for long-term and short-term duty as at 30 June 2001.

4. Includes four officers on short-term higher duties on 30 June 2001.

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Table 5.7: Australian Defence Force – Permanent Force Enlistments 1999-2000 And 2000-01(1)(2)(3)

Navy Army Air Force ADF Men Women Men Women Men Women Men Women

1999-2000 Trained Force

Officers 40 1 53 21 (4) (4) 93 22 Other Ranks 80 11 641 95 (4) (4) 721 106

Training Force Officers 72 25 174 49 135 28 381 102 Other Ranks 564 163 1,780 137 708 170 3,052 470

Total 756 200 2,648 302 843 198 4,247 700 2000-01

Trained Force Officers 39 3 41 20 (4) (4) 80 23 Other Ranks 69 11 338 65 (4) (4) 407 76

Training Force Officers 127 52 241 49 198 46 566 147 Other Ranks 811 344 2,275 157 871 168 3,957 669

Total 1,046 410 2,895 291 1,069 214 5,010 915 Notes 1. Figures in this table show actual numbers of members. 2. Enlistments exclude Reserves commencing periods of full-time duty. 3. Figures include inter-and intra-Service transfers processed by the Service Offices and,

therefore, do not correlate with the recruiting activity shown in Table 5.7. 4. All Air Force recruits are enlisted into the Training Force.

Table 5.8: Australian Defence Force – Permanent Force Recruiting Activity 1999-2000 and 2000-01

Navy Army Air Force ADF 1999-2000 Total Inquiries 19,116 45,754 35,031 108,126(1) Formal Applications 3,987 9,145 7,204 20,336 Applicants Enlisted 846 2,189 1,008 4,043 2000-01 Total Inquiries 21,011 56,921 38,514 122,070(2) Formal Applications 4,932 10,889 7,731 23,552 Applicants Enlisted 1,241 2,785 1,105 5,131

Note 1. This figure includes 8,225 full-time Tri-Service inquiries that relate to inquirers who were

undecided on which Service they wished to pursue. 2. This figure includes 5,624 full-time Tri-Service inquiries that relate to inquirers who were

undecided on which Service they wished to pursue.

Table 5.9: Australian Defence Force – Reserve Force Enlistments 1999-2000 and 2000-01

Navy Army Air Force ADF 1999-2000 29 1,566 104 1,699 2000-01 47 2,396 123 2,566

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People Perspective

Table 5.10: ADF – Permanent Force Separations 1999-2000 and 2000-01(1)(2)

Voluntary Involuntary(3) Age Retirement

Cadets and Trainees

Total

1999-2000 Navy Officers 199 13 1 61 274 Other Ranks 1,113 211 0 112 1,436 Army Officers 416 28 25 108 577 Other Ranks 1,783 547 35 192 2,557 Air Force Officers 299 16 19 57 391 Other Ranks 1,073 63 26 70 1,232 ADF Officers 914 57 45 226 1,242 Other Ranks 3,969 821 61 374 5,225 2000-01 Navy Officers 212 1 0 64 277 Other Ranks 1,045 153 0 157 1,355 Army Officers 409 42 23 104 578 Other Ranks 1,848 471 9 333 2,661 Air Force Officers 299 28 24 52 403 Other Ranks 1,503 73 19 98 1,693 ADF Officers 920 71 47 220 1,258 Other Ranks 4,396 697 28 588 5,709

Notes 1. Figures in this table show actual numbers of members. 2. Non-effective personnel (personnel on maternity leave or leave without pay) and Reserves

completing periods of full-time duty are not included. 3. Involuntary separations comprise mainly personnel who were medically unfit or

unsuitable for further training.

Table 5.11: Civilian Employees as at 30 June 2001 (1)(2)

Category Full-Time Part-Time Casual Total Permanent Male 10,604 42 1 10,647 Female 4,721 240 1 4,962 Temporary Male 714 18 7 739 Female 610 44 4 658 Total Male 11,318 60 8 11,386 Female 5331 284 5 5620 Total Civilian Personnel 16,649 344 13 17,006

Notes 1. Figures in this table show actual staff numbers as at 30 June 2001, not achieved average

strengths. 2. Figures exclude locally-engaged civilians overseas.

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Table 5.12: Senior Executive Service as at 30 June 2001(1)(2)

Total SES 2000-01 Gains 2000-01 Losses Men Women Total Men Women Total Men Women Total

Senior Executive Band 1 51 10 61 12 5 17 14 2 16 Senior Executive Band 2 17 3 20 1 0 1 3 0 3 Senior Executive Band 3 8 0 8 1 0 1 0 0 0 Chief of Division Grade 2 11 0 11 2 0 2 3 0 3 Chief of Division Grade 3 2 0 2 0 0 0 0 0 0 Total 89 13 102 16 5 21 20 2 22

Notes 1. Figures in this table show actual employee numbers. 2. Numbers reflect officers at their substantive level and officers on higher duties pending

permanent filling action.

Table 5.13: Star Rank Officers as at 30 June 2001(1)(2)(3)

Total Star Rank 2000-01 Promotions 2000-01 Separations Men Women Total Men Women Total Men Women Total

Four Star Navy 1 0 1 0 0 0 0 0 0

Three star Navy 1 0 1 0 0 0 0 0 0 Army 2 0 2 1 0 1 0 0 0 Air Force 1 0 1 1 0 1 1 0 1

Two Star Navy 7 0 7 1 0 1 3 0 3 Army 11 0 11 1 0 1 1 0 1 Air Force 10 0 10 3 0 3 2 0 2

One Star Navy 23 0 23 5 0 5 3 0 3 Army 36 0 36 8 0 8 4 0 4 Air Force 24 1 25 6 0 6 6 0 6

Total 116 1 117 26 0 26 20 0 20 Notes 1. Promotions include those officers promoted between levels. 2. Separations include only those officers who have separated from Defence. 3. Officers on acting on higher duties are not included.

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People Perspective

Table 5.14: ADF Permanent and Reserve Forces and Civilian Employees by Gender and Employment Category(1) As at 30 June 2000 As at 30 June 2001 Men % Women % Men % Women % Navy(2)

Trained Force Officers 1,853 14.8 326 2.6 1,935 15.8 408 3.3 Other Ranks 7,891 63.0 1,216 9.7 7,435 60.6 1,187 9.7

Training Force Officers 384 3.0 153 1.2 249 2.0 66 0.5 Other Ranks 567 4.6 137 1.1 744 6.1 239 1.9

Total 10,695 85.4 1,832 14.6 10,363 84.5 1,900 15.5 Army(2)


Training Force Officers 521 2.1 137 0.6 521 2.1 122 0.5 Other Ranks 1,377 5.7 110 0.5 1,749 7.2 122 0.5

Total 21,610 89.4 2,554 10.6 21,836 89.6 2,524 10.4 Air Force(2)


Training Force Officers 397 2.8 63 0.5 372 2.8 59 0.4 Other Ranks 611 4.3 63 0.5 704 5.4 63 0.5

Total 11,943 84.9 2,121 15.1 11,176 85.1 1,964 14.9 ADF Permanent(2)

Trained Force Officers 8,627 17.0 1,377 2.7 8,568 17.2 1,479 3.0 Other Ranks 31,764 62.6 4,467 8.8 30,468 61.2 4,238 8.5

Training Force Officers 1,302 2.6 353 0.7 1,142 2.3 247 0.5 Other Ranks 2,555 5.0 310 0.6 3,197 6.4 424 0.9

Total 44,248 87.2 6,507 12.8 43,375 87.2 6,388 12.8 ADF Reserves(3)

Navy 1,014 4.8 208 1.0 888 4.4 206 1.0 Army 14,774 69.2 3,129 14.6 14,266 70.1 2,961 14.6 Air Force 1,822 8.5 399 1.9 1,626 8.0 387 1.9

Total 17,610 82.5 3,736 17.5 16,780 82.5 3,554 17.5 Civilians(4)

Secretary 1 0 1 0 SES 95 0.6 11 0.1 89 0.5 13 0.1 Other Staff 10,951 67.2 5,237 32.1 11,296 66.4 5,607 33.0

Total 11,047 67.8 5,248 32.2 11,386 66.9 5,620 33.1 Notes 1. Figures in the table are actual staff numbers as at 30 June 2000 and 2001 respectively. 2. Permanent Force figures include paid and unpaid members, but not Reserves on full-time duty. 3. Figures are Reserves with training obligations and include Reserves on full-time duty. 4. Figures exclude locally-engaged civilians overseas.

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RECRUITMENT AND RETENTION INITIATIVES

The People Matter perspective relates to Defence’s ability to attract and retain people and to maximise their skills and knowledge in order to deliver Defence outputs. Defence focuses on five strategic people themes of attracting, recruiting, developing, retaining and transitioning its workforce.

Defence has contributed to recruitment and retention strategies by setting and reviewing the selection standards for new and existing skill sets. Additionally Defence has designed and is rolling out an automated selection testing and database management system, which will add considerable flexibility to testing and assessment procedures. Significant work is also occurring in order to streamline the recruiting process including market testing of outsourced solutions. Defence is introducing a range of initiatives that will help it become an employer of choice and assist in retaining a valued workforce.

For example, in the four months of its operation during 2000-01, the following family support initiatives were considered by the Defence People Committee, and approved by the Defence Committee, for attribution against $100m per annum set aside from 2001-02 for addressing people issues. • A Family Support Fund was established to provide immediate welfare relief

and support to ADF families in crisis when ADF members are absent on deployment or are away for extended periods from their normal place of residence.

• The existing Defence Employer Sponsored Child Care Program around Australia is to be enhanced by increasing services from: − 16 to 21 Long Day Care Centres; − 4 to 12 Defence Community Organisation-sponsored Vacation Care

Programs; − 4 to 12 Before and After School Care Programs; and − around 75 to 110 Family Day Care Places in registered private homes.

• A spouse induction program is to be introduced for all new ADF spouses to enhance their understanding of Service life and culture, and to help build pride in the Services.

• Funding will be provided for professional re-registration fees and short upgrade or pre-registration courses for spouses who move to a different state or territory and incur a cost as a result of their ADF partner’s posting.

Other proposals, shown below, being developed for consideration by November 2001, are aimed at the improvement of career management, spouse support, single members’ accommodation and housing assistance.

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People Perspective

• Additional career streams are to be developed. This is to provide members with the opportunity to specialise in areas such as human resources management and materiel acquisition to allow greater geographic stability in the middle and later years of their careers.

• The existing spouse employment assistance program is to be enhanced by providing further assistance in finding employment as well as assistance with study.

• The accommodation of single members is to be improved by the extension of rental assistance provisions, the refurbishment of current accommodation and the construction of new accommodation which is more in line with members’ expectations.

• Housing assistance will be reassessed to give ADF members and their families more choice with a revised, more equitable system which encourages home ownership.

Several Defence-wide initiatives were introduced during the year to enable people to take greater responsibility for their career development. The career transition and education assistance schemes were implemented. A policy was developed covering the professional development of staff to maintain a career management structure for senior executives. Policy guidance was developed for a new performance appraisal system for senior executives.

Defence implemented a series of career development workshops aimed at staff at both the junior and senior levels to assist them to identify professional and personal goals and to take active responsibility in achieving them. The workshops are linked to the implementation of the development agreement component of the ‘Plan on a Page’. Nationally, 41 career development workshops were conducted for civilian staff at junior (APS 1-5) and middle management (APS 6 - EL2) levels. Overall, 600 staff attended.

Defence’s framework of career development was enhanced by civilian attendance at the Australian Defence College Weston Creek, executive development programs, Public Service Merit Protection Commission programs (Senior Women In Management and Career Development Assessment Centre) and ongoing graduate and other key skills development programs.

In addition to the establishment of the Australian Defence College and the commencement of the Australian Command and Staff Course, a new course was introduced to develop the leadership skills of senior leaders. Ongoing projects focus on identifying and satisfying the learning needs of various Defence groups, including civilian and military clerical and administrative staff, and personnel employed in logistics, capability development and information management areas.

The three Services continued to develop tailor-made initiatives. The Navy people management plan provides a comprehensive and ongoing framework for the effective management of Navy people - Permanent Naval Forces, Australian

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Naval Reserve and civilians - who individually and collectively contribute to the achievement of the Navy’s objectives. The Navy plan sets the direction for the development of personnel policies and provides the guidelines for the allocation of workforce priorities that contribute best to force capability. Key Navy initiatives are shown below. • Work practices are being examined to ensure that the important ingredients

of enjoyment and job satisfaction are included. • More effective recognition and reward for the contributions, skills and

achievements of Navy’s workforce are being introduced. • The recognition of prior learning competencies is being actively progressed. • Opportunities are being provided for members to further their level of

education, particularly in areas that have Service applications. • Innovative staffing profiles and practices are being investigated to enable the

achievement of the Navy’s mission with maximum efficiency in a constrained staffing environment.

• Increased diversity and flexibility in career options are being pursued.

The Army pursued several initiatives in career development during 2000-01. There was increased interaction with the officer corps through a combination of initiatives. These included interview tours by the Career Adviser Group and other staff, briefings to key officer course attendees and a national presentation tour on the subject of career streaming. Additionally, the Directorate of Career Management - Army website was enhanced to facilitate greater interactivity, speed of response for information (through hyperlinks to career management information) and increased visibility of officer positions.

The Army concluded its officer professional effectiveness review in December 2000. The review’s key recommendations included the introduction of career streaming and the creation of a career review package, the latter designed to encourage individual officers to be involved more actively in their own career planning.

Career streaming will allow selected officers to specialise, from mid-career onwards, in one of four staff specialisations: military personnel, military strategy and policy, capability and acquisition, or resource and infrastructure management. It will be necessary for officers to meet a number of prerequisites and to have completed a career review prior to consideration for specialised employment and management.

The career review is a tool based on the military appreciation process (the Army’s operational decision and planning tool) which is designed to encourage officers to conduct a personal career analysis. This analysis leads to the development of an outline career plan which can be discussed with career managers. A pilot was conducted in early 2001. A modified package will be issued to a cohort of junior officers in the second half of 2001.

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People Perspective

The Stay Army website, which is focused on assisting soldiers’ careers, was built during 2000-01 and went ‘live’ in July 2001. The site is aimed at making it easier to access information about careers and trade transfers by anyone in the chain of command who needs it. It is a reference source for a range of information for both full-time and part-time soldiers. The site is intended to provide the soldier directly, or via the unit command and administrative framework, with the information needed to make an informed decision about a future in the Army.

In 2000-01, the Air Force made progress with a cultural awareness and shaping program. The Air Force senior leadership team (comprising all officers of Air Commodore rank and above), in consultation with Air Force personnel, redefined the Air Force values statement. The values statement will lead behavioural change at senior levels over the next two years and will also be the basis for the revision of organisational behaviour through the personnel management system review.

The Air Force’s personnel management system is being reassessed in order to re-balance control from the organisation to the individual, wherever possible. This reassessment is in its formative stages and is focusing on the development of a new personnel strategic framework. The framework will draw from Defence Personnel Executive-sponsored research, against which all current and prospective personnel policy changes can be reviewed. For example, the ‘airmen’ category career management system, now in its second year of implementation, and the engineer and pilot sustainability projects are the vanguard of change for the airmen force and officer corps. These developments are well advanced and are addressing both personal development and career management ‘control’ issues. The Air Force analysis of personnel research is also being applied to shift from routine personnel policy updates to identifying and developing the key personnel policies that will enable the Air Force personnel management system to better meet the needs of the workforce in 2010.

A comprehensive set of key ‘lead’ performance indicators was developed to address the five strategic personnel themes of attract, recruit, develop, retain and transition. Implementation of a reporting framework will enable trend data to be incorporated into the policy development framework so that the Air Force can be alerted to changes in the personnel environment and can anticipate shifting policy needs.

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WORKPLACE RELATIONS

CIVILIAN Defence continued to implement the Defence Employees Certified Agreement 2000-01. In preparing for the next agreement, Defence adopted an innovative approach, linking employee working arrangements with the organisational renewal agenda. In particular, extensive consultation with employees, managers and key personnel operatives commenced in order to ensure maximum involvement and ownership of outcomes. This approach emphasises that workplace relations is a continuous process and not merely an episodic event linked only to agreement making.

MILITARY Defence continued to implement the ADF Enterprise Productivity Arrangement: 1999-2002 with trials of new consultative processes. A number of discussion and position papers on proposed changes to conditions of service affecting military personnel have been released publicly for comment and suggestions. The current arrangement will continue to deliver regular pay and allowance increases until 11 November 2002.

An external review of all ADF remuneration policies headed by Major General Barry Nunn (Retd) commenced in January 2001 and concluded in August 2001. The Defence response to the Nunn review will be presented to the Government for consideration by the end of March 2002. The results of this far-reaching review will inform Defence on specific future ADF pay proposals and processes.

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People Perspective

WORKPLACE EQUITY AND DIVERSITY Defence is committed to policies and practices that allow all members to participate fully in achieving the primary role of defending Australia and its national interests. Defence’s personnel policies and practices are based on merit and on a philosophy of a ‘fair go’ for all staff. During 2000-01, Defence continued to report and manage incidents of unacceptable behaviour; maintained and enhanced an equity and diversity website; increased the number and diversity of trained equity advisers; and developed additional awareness training.

Defence has a commitment to equity and diversity in the workplace and in its management practices. Established in 1997, the Defence Equity Organisation is committed to fostering equity throughout Defence through the development and implementation of Defence-wide equity and diversity frameworks and support initiatives. The external and internal Defence websites promote equity and diversity and provide access to equity advice, training and publications.

Three free-call 1800 equity advice lines, a global 800 international advice line and a comprehensive network of 2,300 trained equity advisers provide support and advice on equity matters to individuals, managers and commanding officers. The increase in trained and active equity advisers from 1,700, as reported in the Defence Annual Report 1999-2000, to 2,300 this year demonstrates the strong commitment Defence has to ensuring the principles of equity and diversity are observed. The international advice line commenced operation in June 2001 and supports Defence staff located overseas.

During 2000, the Defence Equity Organisation sponsored the report, The Case for Cultural Diversity in Defence. The report, prepared by a ‘Senior Women in Management’ project team, was completed in October 2000. The report’s findings will assist Defence to address cultural diversity issues. Many of the recommendations made in the report have been incorporated into the new equity and diversity plan.

IMPLEMENTATION OF DEFENCE WORKPLACE EQUITY AND DIVERSITY PLAN The Defence Workplace Equity and Diversity Plan 1998-2001 helped to establish an environment in which equity and diversity were recognised and valued in day-to-day business in Defence. The plan provided an accountability framework and established visible performance measures. The plan expired on 30 June 2001 and has been replaced by the Defence Workplace Equity and Diversity Plan 2001-2003. This plan is available on the Defence website at www.defence.gov.au/equity.

The Workplace Equity and Diversity Annual Report 1999-2000, published in March 2001, and available on the Defence website, provides an account of how equity and diversity was implemented across Defence when assessed against the objectives set in the 1998-2001 plan. The report focused on performance by

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identifying initiatives implemented in the Groups and comparing them with requirements outlined in the plan.

The Workplace Equity and Diversity Plan 1998-2001 proved successful, bringing to Defence a heightened awareness and understanding of equity and diversity principles. However, responses to a survey indicated that there was a significant difference observed across the three Services in the proportions of personnel who had received any equity awareness training in the previous 12 months. More than three-quarters of Army personnel and two-thirds of Navy personnel had received training, while less than half the Air Force personnel surveyed indicated that they had received training. As a result of the survey, it was recommended that annual equity awareness training for Service personnel be enforced more strictly, and that consideration be given to varying the method of presenting equity training material and the contents of the training packages. The Services have been apprised of the need to ensure that personnel receive adequate and appropriate annual equity and diversity training. In addition, the Defence Equity Organisation has developed two introductory awareness courses that can be modified to suit particular personnel or environments.

The Workplace Equity and Diversity Annual Report 2000-01 will provide a detailed analysis of performance when it is published towards the end of 2001. The annual report will be available on the Defence website.

UNACCEPTABLE BEHAVIOUR During 2000-01, Defence maintained its strong stance on all personnel having a basic right to work in an environment free from harassment and discrimination and, at the same time, having an individual responsibility to treat others fairly. The Defence policy of zero tolerance of any form of harassment, discrimination, sexual offences and any other unacceptable behaviour remained clearly in focus.

Defence has a number of policy instructions covering anti-harassment and unacceptable behaviour and detailing the management of such behaviour and incident reporting procedures. A review of these policy instructions commenced in early 2001 and will be completed in December 2001. The review is being undertaken to ensure that the instructions continue to reflect trends in the management of unacceptable behaviour and that associated management processes are streamlined.

The Defence Equity Organisation maintains a database that records reports of unacceptable behaviour. The following table shows the number of reports of unacceptable behaviour received during 1998-99, 1999-2000 and 2000-01. The reported unacceptable behaviour statistics for the Australian Defence Force Academy for 2000-01 have been included in the figures of the parent Services. Research indicates that the increased reporting of unacceptable behaviour in 2000-01 results from heightened awareness of unacceptable behaviour regulations within Defence and more trust in senior management.

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People Perspective

Table 5.15: Reports of Unacceptable Behaviour Service 1998-99 1999-2000 2000-01

Navy 41 45 54 Army 56 85 128 Air Force 62 77 82 Academy 28 16 0 APS 10 16 10 Total 197 239 274

During 2000-01, the Defence Equity Advice Line fielded a total of 863 calls. The table below details the number of calls received during the last three years. The increase in the number of calls received each year indicates the success of the equity advice lines and the quality of advice provided, as well as the increasing confidence of personnel in making use of the facility.

Table 5.16: Defence Equity Advice Line Calls Service 1998-99 1999-2000 2000-01

Navy 96 114 141 Army 210 316 336 Air Force 72 183 173 APS 67 150 213 Total 445 763 863

Very few grievances have been received from personnel who were dissatisfied with selection and promotion processes for equity-based reasons, as indicated by the table below. The three grievances that were submitted during the past two years have been resolved.

Table 5.17: Selection and Promotion Equity Based Grievances Service 1999-2000 2000-01

Navy 1 0 Army 0 0 Air Force 1 0 APS 0 1 Total 2 1

EDUCATION AND TRAINING Implementation of a competency-based education framework and a broad and multi-faceted training strategy on equity and diversity commenced in 2000-01. The strategy provides training opportunities at all levels in Defence, varying in complexity commensurate with the workplace circumstance.

Equity adviser workshops and refresher courses delivered across Australia during the year by the Defence Equity Organisation and the Navy Equity and Diversity Unit at Maritime Headquarters have ensured the knowledge enhancement of the network of trained Defence equity advisers.

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Seven ‘Fair Go’ anti-discrimination training courses were conducted by the Defence Equity Organisation in 2000-01 for a total of 108 staff in the ADF career management agencies.

DISABILITY The Defence Disability Action Plan 1999-2003 is ensuring that APS staff with disabilities receive fair treatment, are not disadvantaged in any aspect of their employment with Defence, and that unlawful disability discrimination does not occur in the workplace as well as in the administration of policies and procedures. The disability action plan was developed and implemented by Defence in the knowledge that staff with disabilities have the same rights as all Australians and should have equal opportunities at all times. Defence’s resolve to execute the plan’s objectives was demonstrated by a number of disabilities-based building modification needs being met, ensuring that suitable car parking facilities were provided, and encouraging supervisors and managers of hearing-impaired staff to learn ‘sign’ language. Under the Technical Equipment for Disabled Commonwealth Employees Program, Defence expended $27,247 in providing equipment for staff with a disability during 2000-01.

In February 2001, the Defence disability staff network, an objective of the disability action plan, was launched in various state capitals. The establishment of the network will continue in 2001-02. The network provides a forum for raising, discussing and resolving issues, including removing barriers to enhance the workplace participation of staff with disabilities. It caters to the interests of staff with disabilities and serves as an additional resource within Defence to take care of the needs of staff with a long-term injury, chronic illness or disability. The network is not limited to staff with a disability; it also provides information and advice to carers, supervisors, managers and all departmental staff. The network seeks to create better understanding in Defence of the diverse needs of staff with disabilities.

INDIGENOUS AUSTRALIANS During the year, Defence continued to maintain a significant investment with indigenous Australians through involvement in a number of projects.

The ongoing Army/ATSIC Community Assistance Program participates in community housing and infrastructure projects in remote Aboriginal communities across the country. Two projects in the Northern Territory are continuing.

The ADF Aboriginal and Torres Strait Islander Employment Strategy Implementation Team continued to focus on the recruitment and career development of indigenous Australians and has achieved its goal of 1,205 serving members across the three Services approximately five years ahead of the target date (30 June 2006).

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People Perspective

The Defence Equity Organisation administers the national indigenous cadetship project and the indigenous study award to attract, recruit, develop and retain indigenous APS staff throughout Defence. During 2000-01, there were thirteen indigenous cadets, of whom three completed the cadetship and four ceased employment. There were two existing study award recipients. In addition, two indigenous graduate places were negotiated on each of Defence’s graduate intakes, with one indigenous graduate commencing during 2000-01.

WOMEN IN THE MILITARY Current Defence policy provides equality of opportunity consistent with operational effectiveness. Men and women compete equally for all employment, except for certain employment categories classed as involving combat duties. Since 1992, an average 87 per cent of Navy, Army and Air Force employment categories have been open to women. A restriction has been imposed on women within some employment areas for occupational health and safety reasons (for example, surface finishers and electroplaters within the Air Force), where use of embryo-toxic substances could endanger their health.

Physical competencies are being developed for the remaining employment categories not open to women – clearance divers, engineers, artillery, armour and infantry (including airfield defence guards). During 2000-01, work commenced on the development of the competencies for these employment categories. Analysis also began of the degree of representation necessary to ensure successful integration of women into previously all-male working environments. This work is due for completion in 2002. The results will serve to inform the Government should it wish to consider the employment of women in the combat arms.

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NON-OPERATIONAL TRAINING In 2000-01, Defence spent $89.1m on purchasing non-operational training and development activities. The introduction of Defence’s new financial management system, together with a revision of the chart of accounts, allows internal training data to be captured and reported more comprehensively than in previous years.

Non-operational training and development activities include, but are not limited to, the administration and delivery of training courses, including courses at the Australian Defence College, attendance at conferences, seminars and training courses, information technology training and occupational health and safety training. Attendance by both Service and civilian members at a university for an approved course of study and the provision of academic services by the University of New South Wales at the Australian Defence Force Academy are also included.

2000-01 saw the opening of the Australian Defence College and the commencement of the first Australian Command and Staff Course, which included middle-level officers of the three Services, Defence civilians and foreign military officers. Other highlights included the start of a new development course for APS executive-level officers, the implementation of the public services training package within Defence and the provision of training for the roll-out of the Resource and Output Management and Accounting Network across Defence. The Board of the Australian National Training Authority presented Defence with an award for Defence’s commitment to the integration of its training systems with the national training framework.

‘Results through People’ workshops addressed management issues relating to people and a performance culture. Initially targeting graduates, workshop attendance was extended to the Senior Executive Service and will roll out to executive-level staff in 2001-02. In 2000-01, 235 staff attended the workshops.

Defence continued to give high priority to the recruitment of graduates. In 2000-01, Defence employed 54 graduates under the general graduate scheme, and 84 graduates under the materiel graduate scheme. These figures are similar to those in 1999-2000.

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People Perspective

Table 5.18: Graduate Intake Figures Program 1998-99 1999-2000 2000-01

General Australian Public Service Scheme 50 56 54 Graduate Acquisition Trainees(1) 46 47 84(1)

Graduate Acquisition Trainee Engineers(1) 20 36 Trainee Administrative Service Officers(2) 29 Graduate Resource Officer(3) 19 Total 164 139 138

Notes 1. The Graduate Acquisition Trainee and Graduate Acquisition Trainee Engineer programs

were combined in 2000-01 to form the Materiel Graduate Scheme. 2. Defence recruited Trainee Administrative Service Officers in 1998-99, the last year of

intake. 3. The Graduate Resource Officer Scheme was undertaken in 1999 and was a one-off

program.

As a result of devolving responsibility for training to individual Groups, a consolidated record of attendance of personnel at external training courses is not available at present. The corporate personnel management system will include a professional development and training database that will record non-operational training statistics. Due to implementation slippages, the first statistics should be recorded on the system during 2001-02 and not 2000-01 as stated in last year’s annual report.

Non-operational training and development provided by the major internal training providers comprised the following student days and numbers.

Table 5.19: Non Operational Training Total Student

Days(1) Number of Students

People Development Agency 20,568 3,077 Project Management and Procurement Training 7,335 3,156 Resource Management Education and Training 7,257 6,084 Defence Safety Management Agency 1,600 800 Defence Materiel People Development (DMO) 12,580 3,273 Materiel Graduate Scheme(2) 1,680 84 Australian Defence College 197,804 1,706 Regional Education Training and Development Units 57,490 10,664 Total 306,314 28,844

Notes 1. Total Student Days = (Number Students) x (Number Training Days) 2. Formally the graduate acquisition trainees and graduate acquisition trainee engineers.

327

OCCUPATIONAL HEALTH AND SAFETY Since its inception in July 1999, the Defence Safety Management Agency has focused on developing, implementing and maintaining a Defence-wide safety management system. It will take several more years to move beyond legislative requirements to full implementation of a robust safety system. This requires the agency to continue close cooperation with all Defence Groups to understand the needs of Defence, apply appropriate technology to disseminate information and provide safety management tools.

Policy statements from the Chief of the Defence Force, the Secretary and, progressively, Group Heads have been an important driver for safety in Defence. With the implementation of occupational health and safety measures in the Defence Matters balanced scorecard, Defence is seeking to inculcate safety as an integral part of everyday management.

DEVELOPMENT OF A SAFETY SYSTEM Defence-wide initiatives, and those within Groups, have been focused on building a robust and effective safety system that is accessible, understandable and easy to use. The safety system is being designed with the users in mind and implemented over the next two to three years.

Defence continued to work on initiatives stated in 1999-2000. These included: • completely redrafting occupational health and safety policy guidelines into

SafetyMan, a new publication to be launched in 2001-02; • continuing and increasing expert advice through the help-line facility (calls

increased by 40 per cent in 2000-01); • developing two new specialist courses - radiation safety and occupation

noise and vibration safety - in conjunction with the University of NSW (Australian Defence Force Academy);

• continuing the development of the Defence Safety Management Australia website and tools for use by all in Defence; and

• supporting and responding to the Board of Inquiry into the F-111 ‘Deseal/Reseal’ issue. The Board completed its considerations and submitted a draft report to the Chief of Air Force in early July 2001.

Several new initiatives, which focused on service to clients, commenced in 2000-01: • A report was commissioned to look into the management reporting

requirements needed by senior executives, commanders and managers from the Defcare system. The report has been completed and is under consideration to enable appropriate management tools to be developed.

• A three-year project commenced to rationalise occupational health and safety training across Defence. The initial audit to identify the current status of

328

People Perspective

training and provide a gap analysis has been completed. The next step is to undertake a study to identify Defence safety competencies.

• A management of safety risks model and supporting guidance and training material was developed.

• An annual safety management conference was reactivated in November 2000. The conference is designed to bring together senior executives, regulators, safety practitioners, commanders and managers to learn about and discuss current safety issues in Defence.

• A review began into cadet safety and a full safety audit of the cadet scheme commenced. The review aims to implement appropriate safety measures for cadets.

GROUP INITIATIVES Within each Group in Defence, several important initiatives were undertaken in consultation with the Defence Safety Management Agency. The key initiatives are listed below. • The Navy Certification, Safety and Acceptance Agency was established in

March 2001 to integrate the technical requirements of regulation and certification with safety, test and evaluation, trials and acceptance.

• The inaugural Navy Safety Conference, with a theme of managing safety and risk into the future, was held from 23 to 24 May 2001.

• The Army Capability Management Committee accepted the Army safety management system developed by Defence Safety Management (Land).

• A Defence Personnel Executive safety management implementation plan was developed.

• The Public Affairs and Corporate Communication Group published an occupational health and safety procedures document and included the procedures in an induction program and in briefings to its entire staff.

• The Air Force Ground Safety Agency was established within the Defence Safety Management Agency in April 2001.

• The Defence Science and Technology Organisation established a project team to facilitate implementation of hazardous substances regulations, including the development of policy, risk assessment procedures and training.

• An audit and inspection program of Defence Science and Technology Organisation-owned pressure vessels and lifting devices was implemented. The program included the documentation of all vessels and devices and a periodic inspection program.

Occupational Health and Safety

329

NOTIFICATION AND REPORTING OF INCIDENTS In accordance with the Occupational Health and Safety (Commonwealth Employment) Act 1991, Defence is required to notify Comcare, within specified times, of specific accidents and incidents. In 2000-01, Defence Safety Management Agency received 6,966 incident reports. From these reports, Defence was required to advise Comcare of 2,960 incidents. A breakdown of these is provided in the table below. The large increase in incident reporting to Comcover is due to an improved incident reporting system.

Although incident reporting to Comcare has increased due to an improved reporting system, the number of incident reports overall has decreased. This has occurred as a result of organisational changes leaving personnel uncertain as to who should report and when, as well as changes to reporting forms. This is being addressed by the Defence Safety Management Agency in a communication campaign being undertaken during the 2001-2002 financial year with the aim of increasing reporting over the next two to three years to pre-DRP levels.

Table 5.20: Incident Reporting Reports 1999-2000 2000-01

Defence Safety Management Agency Incident reports 8,729 6,966

Comcare Dangerous Occurrences 237 18 Dangerous Occurrences with minor injuries - 1,465 Incidents resulting in incapacity 453 52 Incidents resulting in serious personal injury 1,665 1,425

INVESTIGATIONS CONDUCTED DURING REPORTING PERIOD BY COMCARE During 2000-01, Comcare conducted 10 planned investigations of the safety systems within Defence units or establishments as well as 48 reactive investigations as a result of incidents. Two whole-of-agency investigations were undertaken into Defence Estate management and the Royal Australian Air Force.

Table 5.21: Investigations by Comcare Reports 1999-2000 2000-01

Planned Investigations 19 10 Reactive Investigations 53 48 Whole of Agency Investigations 1 2 Total 73 60

330

People Perspective

NOTICES ISSUED BY COMCARE INVESTIGATORS There were six improvement notices issued by Comcare and three prohibition notices with direction to ‘remove an immediate threat’ to Defence employees. Of the six improvement notices, two have been resolved and four are being reviewed monthly in conjunction with Comcare and the affected areas. Of the three prohibition notices, one has been closed satisfactorily and two are being worked through with the affected areas to establish the most appropriate level of improvement to be implemented.

Table 5.22: Notices Issued by Comcare Reports 1999-2000 2000-01

Comcare Improvement Notices 6 6 Prohitition Notices 2 3

Total 8 9

331

ANNUAL REPORT ON THE ADMINISTRATION AND OPERATION OF

THE DEFENCE FORCE (HOME LOANS ASSISTANCE) ACT 1990

The Defence Home Owner Scheme is covered by the Defence Force (Home Loans Assistance) Act 1990. Section 39 of the Act requires that an annual report be prepared for the Minister for Defence on the administration and operation of the Act. The annual report for 2000-01 is set out below.

THE SCHEME Defence Home Owner is a Commonwealth scheme which provides a subsidy on the interest payable on a home loan for members of the ADF. The scheme is open to permanent ADF members who enlisted on or after 15 May 1985 and to those permanent ADF members who elected to revoke their entitlement under the Defence Service Homes Scheme in favour of a Defence Home Owner entitlement. Reserve personnel who provide part-time effective service are also eligible for assistance.

The Defence Housing Authority administers the scheme for Defence. The benefits are provided under an agreement between the National Australia Bank and the Commonwealth. Under the scheme, the Commonwealth assesses eligibility and entitlement and pays monthly interest subsidies on loans provided by the National Australia Bank. The National Australia Bank provides loans only to ADF members who are assessed as being eligible and are issued with a current entitlement certificate. Interest subsidy is paid on loans between $10,000 and $80,000. Couples who are both members of the ADF can apply for a combined subsidised loan of up to $160,000. The subsidy amount is calculated at 40 per cent of the average monthly interest to be paid over the life of a 25-year loan.

Providing a person has a period of entitlement, the subsidised loans can be used from one home to another during service as often as is required, and once within two years of the date of separation from the ADF.

SUBSIDY ENTITLEMENT Generally, the subsidy entitlement period is calculated on the number of completed years of effective full-time service after completion of a five-year qualifying period. The qualifying period for an active Reservist is eight continuous years of effective service.

For members who qualify by length of service, the maximum period for which the subsidy can be paid is 20 years. For members with operational or warlike service, the five-year qualifying period is waived and the maximum period of the subsidy may be extended from 20 to 25 years.

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People Perspective

There are special considerations for re-joining members, widows or widowers of deceased eligible persons and members discharged as a result of a compensable disability.

OBJECTIVES The objectives of the Defence Home Owner Scheme are to: • attract and retain ADF personnel; • encourage home ownership during service as a cost effective alternative to

rental assistance; and • assist in the reintegration of ADF personnel into the community on return to

civilian employment.

ATTRACT AND RETAIN ADF PERSONNEL

The scheme is one of a number of Defence initiatives designed to influence the attraction and retention rate of ADF personnel. The increase in loans assistance being used by members (including those returning from East Timor), combined with a constant percentage of personnel using the scheme for resettlement back into the civil community, suggests that this objective is being met. Of approved subsidy applications, 36 per cent are for those members returning from East Timor (up from 27 per cent last year).

ENCOURAGE FIRST HOME OWNERSHIP AS A COST EFFECTIVE ALTERNATIVE

TO ACCOMMODATION ASSISTANCE

The scheme is part of a package which includes the Home Purchase Assistance and Home Sale and Purchase Assistance schemes. The take-up rate during the year has increased, with applications for entitlement certificates up 40 per cent and applications for subsidy approvals up 50 per cent over last year’s figures.

ASSIST IN THE REINTEGRATION OF ADF PERSONNEL INTO THE

COMMUNITY ON RETURN TO CIVILIAN EMPLOYMENT

Of new subsidy applications, 24 per cent have been from members taking discharge from the ADF. This demonstrates that the scheme is meeting this objective for those personnel who satisfy the loan criteria.

After ten years of operation, indications are that the scheme is generally meeting its objectives. Over the past year, the take-up rate has increased, primarily due to those with service in East Timor.

PROCESSING ACTIVITY During 2000-01, there were 2,959 applications for entitlement certificates and 1,863 applications for a loan subsidy were processed. The total number of approved loans current as at 30 June 2001 was 5,051.

Defence Force (Home Loans Assistance) Act 1990

333

PERFORMANCE EVALUATION OF THE ADMINISTRATION OF THE SCHEME Defence continues to be satisfied with the administration of the scheme by the Defence Housing Authority. During the reporting period, there was one appeal lodged with the Administrative Appeals Tribunal against a decision made by the delegate. This was withdrawn following mediation.

The National Australia Bank has met its obligations to the Commonwealth under the Act and has generally provided support to the scheme. The National Australia Bank and the Defence Housing Authority have made considerable efforts to streamline the administration processes involved in accessing the subsidy.

Table 5.23: Applications – By Type of Assistance Assistance 1996-97 1997-98 1998-99 1999-2000 2000-01

Buy a home 1,094 1,157 1,011 709 1,332 Re-finance a loan 800 492 333 322 350 Enlarge a home 16 12 12 11 8 Build a home 223 250 193 150 139 Renovate a home 25 28 26 30 34 Total 2,158 1,939 1,575 1,222 1,863

Note 1. Prior to 1999-2000, the above figures were taken from the entitlement certificate applications.

From 1999-2000, the figures are taken from the subsidy applications.

Table 5.24: Comparison of Activities Activity 1996-97 1997-98 1998-99 1999-2000 2000-01

Applications for Entitlement Certificates Received 2,158 1,938 1,575 2,122 2,959 Entitlement Certificates Issued 1,928 1,809 1,474 2,006 2,829 Applications for Entitlement Certificates Declined/Withdrawn

177 155 106 116 130

Applications for Payment of Subsidy Received 1,328 1,415 941 1,222 1,863 Applications for Payment of Subsidy Approved 1,274 1,390 938 1,194 1,845 Applications for Payment of Subsidy Declined 26 17 13 3 18 Amount of Commonwealth Subsidy Paid $2.063m $2.970m $3.693m $4.405m $6.614m Number of Subsidy Payees as at 30 June 2001 2,280 3,132 3,519 3,970 5,051

Note 1. Entitlement certificates are valid for 12 months.

OPERATIONAL COSTS 2000-01 An annual management fee of $0.446m (including GST) was paid to the Defence Housing Authority by Defence. The authority was also paid a fee in respect of each application for entitlement certificate lodged. These fees totalled $0.203m (including GST).

The total cost of the scheme in 2000-01 was $7.263m, consisting of the subsidy ($6.614m), management fee ($0.446m) and entitlement certificate application fee ($0.203m).

335

GLOSSARY Accrual Accounting: the system of accounting in which items are brought to account as they are earned or incurred (and not necessarily as money is received or paid) and included in the financial statements for the accounting periods to which they are related.

Administered Items: are resources administered on behalf of the Commonwealth, including grants, subsidies and benefits.

Appropriation: is an authorisation by Parliament to spend money from the Consolidated Revenue Fund.

Assets: are future economic benefits controlled by Defence as a result of past transactions or other past events. Assets are initially recognised at the cost of acquisition. They are revalued periodically on the basis of their written-down current replacement cost.

Balanced Scorecard: an approach to performance measurement that translates an organisation’s strategic objectives into a useful set of performance measurements. It typically supplements the traditional financial measures with information on three additional perspectives of organisational performance: customer satisfaction, internal business processes, and innovation and learning. The Defence version is known as Defence Matters.

Capital Use Charge: represents the Government’s required return, or dividend, on its capital investment in departments. The objective of this charge is to better reflect the true costs of outputs and to encourage good asset management practices. The charge is imposed by multiplying the closing net assets (ie total assets minus total liabilities) by the Government-specified rate of 12 per cent based on the long-term bond rate (currently around 6 per cent per annum) plus a margin for risk (6 per cent). The required rate of return has been reduced to 11 per cent for 2001-02.

Chief of the Defence Force’s Preparedness Directive: see Preparedness Concepts and Planning.

Combined Exercise: an exercise involving one or more Services of the ADF with the forces of other countries.

Customer-Supplier Arrangement: an agreement between internal customers and suppliers for the supply of a service at an agreed quantity, standard and price.

Defence Assistance to the Civil Community: is a program which provides Defence resources, in exceptional circumstances, for the performance of emergency or non-emergency tasks which are the responsibility primarily of the civil community. While a high priority is given to civil emergencies and natural disasters where lives or property are at risk, other tasks include flyovers and displays at significant public events and various support tasks for local authorities and charitable organisations around Australia.

Defence Matters scorecard: see Balanced Scorecard.

Glossary

336

Defence Plan: Defence’s principal planning document, which both serves as an internal planning document and satisfies whole-of-government budget requirements. It provides a ‘whole of business’ focus with important links between the strategic resource and capability planning.

Departmental Items: are resources controlled directly by Defence including salaries, allowances, military equipment and associatedcosts.

Equity Injection: represents an additional contribution, over and above the price of outputs from the Government as customer, to Defence by the Government as owner.

Expenses: are consumptions or losses of future economic benefits, in the form of reductions in assets or increases in liabilities of Defence, other than those relating to distributions to the Commonwealth, that result in a decrease in equity during the reporting period.

Force Element: a component of a unit, a unit or an association of units having common prime objectives and activities.

Force Element Group: a grouping of force elements with an appropriate command and control structure for a specified role or roles.

Force Structure: see Preparedness Concepts and Planning.

Interoperability: the ability of systems, units or forces to provide services to, and accept services from, other systems, units or forces and to use the services so exchanged to enable them to operate effectively together.

Joint Exercise: an exercise involving two or more Services of the ADF.

Liabilities: are sacrifices of future economic benefits that Defence is obliged presently to make to other entities as a result of past transactions or other past events.

Military Capability: see Preparedness Concepts and Planning.

Outcome: is the results, impacts or consequences of actions by the Commonwealth for the Australian community.

Outputs: are the goods and services produced by Defence for the Government as customer.

Preparedness Concepts and Planning: Military capability is achieved by developing a force structure appropriately prepared for operations. Preparedness is of fundamental importance to Defence, which must be able to manage it effectively and communicate its status to the Government.

Directed Level of Capability (DLOC): is the funded level of capability maintained during a specified budget period. DLOC is formally agreed in organisational performance agreements between the Chief of the Defence Force/Secretary of the Department of Defence and each of Defence’s six Output Executives. DLOC captures the levels of capability to be maintained to meet preparedness, ongoing operations, and known national task requirements.

Glossary

337

Readiness: the readiness of forces to be committed to operations within a specified time is dependent on the availability and proficiency of personnel, equipment, facilities and consumables.

Sustainability: is measured in terms of the ability to provide personnel, equipment, facilities and consumables to enable a force to complete the needed period of operations.

Force Structure: relates to the type of force required - personnel, equipment, facilities and military doctrine - to achieve the level of capability necessary to conduct operations effectively. In the medium to long term, military capability will vary due to changes in force structure generated by the capability development process. In the short term, force structure is the more constant component of military capability and the level of capability available for operations is determined by Defence’s management of preparedness of the current force.

Changes to force structure usually impact on the preparedness of the associated forces. For example, the introduction of a new platform, retirement of an old platform or capability enhancement will have a direct impact on the resource, training and facility requirements of the forces involved.

Preparedness: is a measurement of how ready (readiness) and how sustainable (sustainability) the whole, or part, of the ADF is to undertake military operations.

Preparedness Planning: the preparedness planning process begins with a strategic appreciation involving an analysis of the national security objectives which are specified in Government guidance. These objectives are considered against current strategic circumstances and defence policy. In the light of this appreciation, military strategies are developed or refined to achieve the objectives. Military strategic objectives and military response options are then derived from the military strategies and are used to provide preparedness planning guidance.

The Chief of the Defence Force’s Preparedness Directive: this principal strategic-level directive contains strategic planning guidance, lists military response options and sets preparedness requirements. It informs all subordinate preparedness directives at the operational level, which set specified levels of preparedness and contain the capability standards against which force units measure and report.

The implementation of preparedness involves the allocation of resources to the current force to ensure that preparedness objectives can be met and managed properly. The evaluation and reporting of preparedness ensure that there is regular feedback in the process and that objectives and resource allocations are refined as necessary.

Readiness: see Preparedness Concepts and Planning.

Revenues: are inflows or other enhancements, or savings in outflows, of future economic benefits in the form of increases in assets or reductions in liabilities of Defence, other than

Glossary

338

those relating to contributions by the Commonwealth, that result in an increase in equity during the reporting period.

Risk Management: at the highest level, strategic risk management involves the identification and, as appropriate, mitigation of those risks that have the potential to affect adversely the achievement of agreed output performance at the agreed output price.

Sustainability: see Preparedness Concepts and Planning.

Theatre: is the area in which military operations/activities take place.

339

ACRONYMS AND ABBREVIATIONS A

ADF Australian Defence Force

AM Air Marshal

ANAO Australian National Audit Office

Anzus Australia, New Zealand, United States

APS Australian Public Service

AVM Air Vice Marshal

B

BOI Board of Inquiry

C

CDF Chief of the Defence Force

COD Chief of Division

COMAST Commander Australian Theatre

D

DACC Defence Assistance to the Civil Community

DLOC Directed Level of Capability

DMO Defence Materiel Organisation

DRP Defence Reform Program

DSTO Defence Science and Technology Organisation

F

FFG Guided Missile Frigate

FOI Freedom of Information

Acronyms and Abbreviations

340

G

GST Goods and Services Tax

H

HMAS Her Majesty’s Australian Ship

HQAST Headquarters Australian Theatre

I

ITO Information Technology Officer

J

JORN Jindalee Operational Radar Network

L

LTGEN Lieutenant General

M

MAJGEN Major General

MLOC Minimum Level of Capability

N

Nuship Ship yet to be commissioned

NZ New Zealand

O

OPD Operational Preparedness Directive

P

PAES Portfolio Additional Estimates Statements

Acronyms and Abbreviations

341

PBS Portfolio Budget Statements

PMKeyS Personnel Management Key Solution

PNG Papua New Guinea

R

RAAF Royal Australian Air Force

RAN Royal Australian Navy

RNZAF Royal New Zealand Air Force

RNZN Royal New Zealand Navy

ROMAN Resource and Output Management Accounting Network

S

SDSS Standard Defence Supply System

SES Senior Executive Service

SITO Senior Information Technology Officer

SMART Strategic Material Acquisition Request for Tender

SO Senior Officer

U

UK United Kingdom

UNTAET United Nations Transitional Administration in East Timor

US United States

USS United States Ship

V

VADM Vice Admiral

342

INDEX

A Accountability, 7, 17, 39, 53, 125,

162, 168, 171, 211, 214, 237, 246, 281, 283, 320

ADF operations, 37, 38, 104, 105, 122, 123,

Administered items, 40, 163 Air Force capabilities, 117 Airlift, 107, 114, 118, 217, 222, 289 Anzac ships, 221 Appropriations 35, 37, 38, 50, 153,

159, 161, 163, 164, 168, 174, 192, 193, 201, 251

Asset management, 16, 236, 237 Army capabilities, 107 Auditor-General's Report, 55, 59, 61 Australian Defence College, 30, 31,

129, 140, 231, 316, 325, 326 Australian Defence Force Academy, 30, 172, 193, 195, 270, 321, 325, 327 Australian National Audit Office,

16,59 Australian Strategic Policy Institute,

11, 12, 43, 124

B Bougainville, 11, 21, 73, 81, 84, 105,

108, 121, 122, 124, 125, 134

C Capability, 13, 45, 46, 73, 95, 116,

117, 118, 119, 121, 123, 273, 275, 316

Capital Use Charge, 34, 35, 36, 38, 80, 103, 113, 120, 131, 160, 171, 187, 190

Chiefs of Staff Committee, 14, 46

Collins-class submarine, 97, 217, 218, 275, 287 Commercial Support Program, 165,

237, 261, 277 Compensation, 36, 113, 155, 156,

165, 166, 172, 175, 177, 188, 263 Consultants, 175, 252, 292, 293, 294 Corporate Governance, 15, 17, 20,

41, 44, 52, 254 Customer-supplier arrangement, 246, 270

D Defence Audit Committee, 49, 50, 51 Defence Capability and Investment

Committee, 13, 16, 46, 47, 236 Defence Capability Plan, 3, 13, 47,

121, 122 Defence Committee, 6, 12, 14, 16, 21,

44, 45, 46, 48, 52, 130, 236, 295, 315 Defence Cooperation, 60, 61, 128,

129, 130, 132, 133, 134, 135, 136, 137, 138, 139, 140, 271

Defence Efficiency Review, 61, 269, 270

Defence Employees Certified Agreement, 260, 319 Defence Force Ombudsman, 62, 66 Defence Housing Authority, 25, 186,

193, 194, 245, 331, 332, 333 Defence industry, 23, 262 Defence Matters, 6, 7, 11, 12, 16, 327 Defence operations, 37, 73, 80, 88,

162, 200, 228, 274, 286 Defence outcome, 4 Defence outputs, 5, 18, 286, 290, 315 Defence People Committee, 29, 48,

315

Index

343

Defence Plan, 6, 11, 15, 16, 45, 48, 124, 236, 238

Defence planning, 16 Defence Reform Program, 3, 15, 58,

269, 270, 271, 272, 273, 274, 277, 309

Defence Service Centre, 25, 67, 296, 309

Defence Service Charter, 64, 65, 66, 67, 121

Defence White Paper, 3, 6, 7, 8, 10, 12, 13, 14, 16, 17, 33, 34, 47, 49, 51, 75, 109, 119, 121, 125, 126, 127, 129, 130, 131, 133, 135, 144, 225, 232, 252, 275, 301

Department of Finance and Administration, 19, 39, 64, 162, 169, 172, 173

Discretionary grants, 239

E East Timor, 3, 11, 22, 32, 37, 38, 40,

73, 76, 81, 84, 97, 107, 111, 113, 124, 125, 127, 128, 129, 130, 131, , 139, 174, 193, 194, 220, 223, 227, 250 286, 293, 309, 332

Emergency management, 77, 78 Equity, 8, 33, 52, 54, 108, 151, 152,

158, 160, 164, 171, 173, 322 Ethics, 49, 51, 129, 259, 284 Evaluations, 50, 51, 52 Evolved SeaSparrow Missile, 217,

219 Exercises, 57, 62, 74, 76, 80, 85-88, 96,

251, 252

F F/A-18 aircraft, 119, 217, 222, 289 F-111 aircraft, 117, 118, 156 222, Facilities

By Electorate, 232 Fiji, 81, 124, 129, 138, 141, 145

Financial statements Administered assets and

liabilities, 158 Administered Cash flows, 159

Administered revenues and expenses, 157 Cash flows, 153 Notes to and forming part of financial statements, 160-216

Schedule of commitments, 154

Schedule of contingencies, 155, 158

Five Power Defence Arrangements, 88, 92, 94, 128

Fraud, 50, 51, 52 Freedom of Information, 254, 259,

284

I Indonesia, 124, 129, 131, 133, 136,

142, 143 Industry, 7, 20, 21, 23, 25, 124, 173,

262, 271, 272, 285, 287, 288, 290, Intelligence, 15, 18, 73, 85, 87, 94, 98,

100, 109, 112, 114, 125, 127, 264, 271, 272, 276, 290, 292, 299,

Interoperability, 73, 77, 88, 89, 90, 91, 92, 93

Investment, 36, 37, 38, 39

J Jindalee Operational Radar

Network, 217, 224

K Key Priorities, 11-32

Index

344

L Lead-In Fighter, 217, 220 Logistics, 8, 22, 31, 118, 121, 257, 270

M Management Audit, 50, 282 Market testing, 270, Middle East, 82, 129, 131,

N National Support, 54, 55, 73, 77, 81,

286 Navy capabilities, 97, 106, 287 New Zealand, 81, 90, 128, 130, 132,

133, 210, 217, 248, 283, 284, 285, 289

Non-operational training, 325, 326,

O Occupational Health and Safety, 8,

117, 263, 290, 324, 327, 328, 329, 330

Operations, 11, 12, 81, 82, 83, 84, 97, 229, 250, 286,

Organisational changes,41, 46, 229, 280, 332

Organisational renewal, 3, 9, 18, 29, 319 Outputs, 18, 33, 35, 41, 42, 171, 246,

286, 290

P Papua New Guinea, 73, 84, 85, 88,

124, 129, 136 Personnel, 11, 14, 15, 24, 25, 28, 97,

100, 101, 107, 109, 110, 111, 113, 114, 115, 117, 118, 123, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 259, 273, 274, 275, 276, 279, 292, 296, 299, 302, 307, 308, 310, 314, 321, 331, 335

Personnel Management Key Solution, 17, 27, 51

Policy advice, 124, 127, 129, 130, 135 Preparedness, 74, 75, 78, 119, 120,

122, 124 Preparedness Directive, 74, 75, 78

R Ready Deployment Force, 112, 113,

114, Recruitment, 28, 29, 31, 58, 62, 67,

107, 117, 290, 309, 315, 323, 325 Reserve Bank, 202 Reserves, 14, 58, 62, 108, 260, 307,

308, 310, 311, 312, 314 Results through people, 9, 10, 325 Retention, 29, 58, 62, 193, 315, 332 Revolution in Military Affairs, 15,

16, 286 Risk management, 49, 50, 51, 52,

238, 281

S Safety, 8, 9, 104, 117, 118, 172, 220,

261, 262, 263, 287, 288, 290, 324, 325, 326, 327, 328

Search and rescue, 73,78 Senior Executive changes, 43

Senior Executive Remuneration, 43 Senior Executive Service, 4, 9, 13, 30,

44' 68, 129, 248, 310, 313, 325 Sinai, 82 South East Asia, 128, 136 Special Forces, 86, 87, 91, 92, 94, 95,

108, 109, 132, 142, 287 Strategic intelligence, 125 Submarine operations, 89, 97, 99 Superannuation, 40, 43, 58, 159, 165,

172, 175, 188, 193, 194, 262, 271 Sydney Harbour Federation Trust,

19

Index

345

U Unacceptable behaviour 8, 108, 250,

320, 321, 322 United Nations, 40, 57, 81, 82, 83,

128, 131, 193, 194 United States, 61, 73, 82, 88, 125, 128,

130, 131, 156, 210, 220, 223, 288, 289

W Women in the military, 324 Woomera, 153, 174, 176, 191, 261,

279

Documents

Defence Annual Report 2000-01The Defence Annual Report 2000-01 addresses the Department of Defence and the Australian Defence Force (ADF), which are collectively referred to as ‘Defence’,