Let’s assume for the moment that the polls are right, and we’re looking at a change in Government at the next election.
The bruvvers will have already started thinking about who will fill the various portfolios following the election, and Henry’s mail is that Defence is proving a tough match-up.
Smart blokes those bruvvers, it is going to be a tough one for whoever sits in the chair, Liberal or Labor. In fact, while Defence is always an important area for any Government, it will assume even more criticality over the next 10 years.
Today’s Oz discusses plans to run a masters degree in complex procurement as a response to both the increasing number and complexity of new defence programs, and issues with the capability level of public servants in the DMO.
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It is a huge problem, and one that was recognised by the Kinnaird review a couple of years ago. The head of DMO, Steve Gumley, has been on a difficult mission since assuming the role amid much controversy (shock horror – he’s paid more than the PM!) back in 2004. Henry’s view is he’s cheap at half the price if he can sort the place out.
There are few jobs in Australia where, even from a relatively young age, the role involves exposure to incredibly complex programs with the most cutting edge technology, billion dollar price tags, long timeframes and commercial agreements that cross multiple borders in the geopolitical spectrum.
The problem is that the increase in number and complexity of defence programs has come at a time of stagnant capability in the Defence Materiel Organisation and a global skill shortage, and DMO personnel as a group have fallen behind their private sector counterparts in terms of skills and capability.
Gumley is addressing this by putting his engineers through formal accreditation programs, and the Gummint’s efforts in this regard with the three services seem to be bearing fruit. The Defence Gap year, coupled with an increase in salary for serving personnel seems to have started moving things in the right direction for the uniforms.
Big problems still persist in the procurement area however. At last weeks Defence Industry conference in Adelaide, delegates were told that, in order to manage the demands of the new bits of kit Defence is bringing online (Super Hornet, Air Warfare Destroyer, Joint Strike Fighter, Wedgetail, Amphibious Ship, new helicopters, air-to-air refuelers and the list goes on), it was project that the DMO would need an additional 600 personnel, with Defence industry needing to put on something in the neighbourhood of 3400 extras.
These are not janitorial staff and casuals either. The positions will need to be filled highly specialised personnel, and it wont come cheap. Nor should they – the price for failure includes a very nasty cost multiplier, so the reward for getting it right should be handsome.
The two shipbuilding programs alone are worth $11 billion. This is too important not to get right, and Henry thinks the coalition is more or less on the right track with its strategy.
If the ALP get into office, their choice of Defence Minister will be every bit as important as Treasurer and Industrial Relations. As one famous exchange in US Senate estimates goes, a billion dollars here and a billion dollars there – pretty soon you are talking about real money. The flow-on impacts to the economy and of course, national security, are profound.
Henry’s view is that one way this could be given a serious kick along is to cut the DMO loose from the Defence Department and privatise it completely. This was in fact one of the recommendations of the Kinnaird review, but it seemed like too bold a move at the time, so DMO was made half pregnant and set up as a statutory body.
A fully privatised DMO would be free to attract the skills it needs from all around the world, with salaries tied to productivity and performance indicators like delivering projects on time and on budget. Imagine too, the political capital that could be gained by the party that made the change – Defence news is rarely good for a Minister.
A soldier gets killed or wounded, or there is a cost or schedule blow-out in DMO. Privatising DMO would be risky and not without some pain, but it just might work.
Steve Gumley is making a very good fist of a very, very difficult job in the current climate. Imagine what he could do if his hands were untied.
Read more at Henry Thornton