1.1
The Joint Committee of Public Accounts and Audit (JCPAA) resolved to conduct the following two inquiries on 27 June 2018:
Defence First Principles Review and Naval Construction - Mobilisation; and
Mental Health in the Australian Federal Police.
1.2
The JCPAA inquiry into Defence First Principles Review and Naval Construction was based on two Australian National Audit Office (ANAO) reports:
No. 34 (2017-18), Defence’s Implementation of the First Principles Review; and
No. 39 (2017-18), Naval Construction Programs – Mobilisation.
1.3
The JCPAA inquiry into Mental Health in the Australian Federal Police was based on ANAO Report No. 31 (2017-18), Managing Mental Health in the Australian Federal Police.
1.4
Auditor-General’s reports are automatically referred to the Committee in accordance with its statutory obligations to examine all reports of the Auditor-General that are tabled in Parliament.
Defence First Principles Review and Naval Construction
Defence’s Implementation of the First Principles Review
1.5
The First Principles Review was commissioned by the Minister for Defence in August 2014. The review was ‘designed to ensure Defence is fit for purpose and able to promptly respond to future challenges’.
1.6
The Auditor-General’s report on the implementation of the First Principles Review found that Defence had implemented a considerable number of the most important recommendations of the Review. The ANAO however noted that the implementation of other important recommendations had not been completed and remained work in progress.
1.7
The Auditor-General made one recommendation, ‘that Defence ensures its evaluation encompasses all of the recommendations of the First Principles Review and seeks to assess whether the intended outcomes of the Review have been achieved’. The recommendation was agreed to by Defence.
1.8
As discussed further in Chapter 2, the Committee noted the following issues:
Defence should maintain the momentum that has been generated to assist with completing the implementation of Review recommendations in relation to creating a strong strategic centre
Defence should ensure efficiencies arising from the review are measurable and quantified by implementing an effective evaluation framework
Ministerial engagement can continue to be improved
Further action is required to address workforce related issues and demonstrate intended outcomes regarding behaviour
Reform of Systems Program Offices is expected to take until 2023 to complete
Naval Construction Programs – Mobilisation
1.9
The Committee also reviewed ANAO report No. 39, covering the initial works of an $89 billion commitment to purchase new ships and submarines for the Royal Australian Navy, and to develop a permanent naval shipbuilding industry in Australia.
1.10
The Auditor-General’s report made one recommendation to Defence, that ‘Defence determine the affordability of the Naval Shipbuilding Plan and advise the Government of additional funding required to deliver the programs, or the internal Australian Defence Force trade-offs required’.
1.11
Defence disagreed with the recommendation, stating that Government takes an enterprise approach to Naval Construction Programs, considering each Naval Construction Program’s affordability on a case by case basis, and ‘offsets are recommended to Government if there is a shortfall’ realised.
1.12
As discussed further in Chapter 3, the Committee noted the following issues:
Defence is ‘meeting scheduled milestones’ for the early stages of the naval construction programs
Defence re-forecasts cost assumptions twice a year and shipbuilding provisions identified in the Integrated Investment Program are consolidated and provided to government
In the past Defence has underestimated sustainment costs, however Defence is confident that sustainment costs as currently forecast will be within budget
Defence is overdue in releasing a workforce plan that is expected to address workforce requirement issues surrounding size, skill levels and location of workers
Defence is establishing a Naval Shipbuilding College to address some of the workforce needs with the first phase costing $62 million
A number of mitigations have been put in place to reduce the level of risk associated with shipbuilding entirely within Australia, and bringing forward the production of two ship builds to help with continuity of the shipbuilding workforce
Mental Health in the Australian Federal Police
1.13
Chapter 4 of this report sets out the Committee’s conclusions, recommendations, and review of evidence in relation to the inquiry into Mental Health in the Australian Federal Police.
1.14
As the Australian Government’s primary policing agency responsible for the enforcement of Commonwealth laws and the protection of Australian interests from criminal activities, the Australian Federal Police (AFP) delivers a diverse range of functions and operates in a high risk environment for employee mental health.
1.15
The ANAO undertook a performance audit to examine the effectiveness of the AFP in managing employee mental health, and assessed the AFP’s high‑level management and coordination of activities explicitly supporting mental health. The selection of the audit by the ANAO reflected the increasing rates of psychological Comcare claims amongst AFP employees, and the risks and costs involved in AFP’s management of employee mental health. The ANAO audit report made six recommendations and the AFP agreed to all recommendations, stating that the AFP ‘recognised the need for enhanced mental health support’.
1.16
The Committee commends the AFP for the work undertaken to improve its management of employee mental health and acknowledges that the AFP began improvements prior to the ANAO audit. However, the Committee is concerned about the significance of the ANAO’s findings in relation to the AFP’s governance and risk management arrangements, monitoring and evaluation arrangements, and support services for employees.
1.17
The Committee recognises that the AFP has developed the Health and Wellbeing Strategy 2018‑2023 and that the AFP intends to address the concerns raised by the ANAO and other recent internal and external reviews.
1.18
Subsequently, the Committee has made four recommendations to improve transparency and accountability to Parliament on the AFP’s progress in implementing improvements. The Committee expects that the AFP will prioritise addressing the issues identified in both the ANAO audit and the Committee report.