Additional Comments - Senator Rex Patrick

Urgent Culture Change Required

Delays to the inquiry

COVID-19 has, as in many aspects of our lives, negatively impacted the progression of this inquiry. A number of site visits and hearings were delayed as direct result of the response to COVID-19, I'm hopeful that efforts to constrain the virus are successful and the Inquiry can proceed unfettered in the near future.
Unfortunately, that's not the end of the story. The inquiry has also suffered delays as a consequence of the culture of deliberate and inappropriate frustration of the Committee’s work, driven from the very top of the Defence organisation.

A troubled culture

Defence as an organisation, encapsulating the uniformed services and the department, is most comfortable when its activities are conducted under a veil of secrecy with very limited oversight or scrutiny. Many aspects of Defence's work and activities are appropriately security classified, but habitual secrecy goes far beyond the legitimate requirements of security.
Defence Industry is a term that encapsulates the businesses that provide the equipment and services that are unique to Defence, they are often quite specialised and in almost all cases details of their full capabilities are largely unknown outside their own or their customer's organisations.
This combination results in a sector that the majority of the population has a very limited understanding of, and if anything this makes the oversight role of the Parliament and agencies such as the Australian National Audit Office all the more important than is the case of other areas of Government spending.
The obfuscation that has occurred to date towards this inquiry has been covered quite extensively in Chapter 3 in the main report. However, what that chapter does not cover is the similar behaviour that's occurred through the course of normal Parliamentary business, including Question Time, Questions on Notice and the Estimates program.
This behaviour has created the overall impression that Defence is undertaking significant efforts to mislead and indeed hide 'stuff' from Parliament and the public, with the desire or belief that it will remain a secret or that if processes of scrutiny are so drawn out, that by the time there is any significant disclosure any information released will be of limited interest, relevance or too late to provide a basis for action.
The lack of accountability within Defence has also been raised in Chapter 3 and it's impossible not to conclude that this is a significant contributing factor, and one which in all likelihood is encouraging those that are engaging in the art of providing 'false and misleading' information, or withholding relevant information. These behaviours are unacceptable. They denigrate the erode Defence’s credibility and the reputation of the people within. This culture and habit of concealment and obfuscation poisons the relationship between Defence and the Parliament. It must change.

Persecution of truth tellers

An additional and highly concerning issue that has come to light through the Inquiry to date, that will likely never be able to fully reported on, is the 'fear and apprehension' that has been expressed by many members of Australia's defence industry if they participated in this inquiry. Their strongly held concern arises from a belief that if they outline their experiences, concerns and/or issues they will get the Department and/or prime contractors 'offside', which will result in the loss of work or any potential for securing work, in an environment whereby they are of the view that they are already being or at risk of being displaced by foreign suppliers.
This self-censorship has the effect of biasing the 'industry perspective' of the naval shipbuilding programs presented to the committee and denying the public the ability to maximise the benefit of the Inquiry.
What makes this situation so disappointing is that the picture outlined in 2016 by the Defence White Paper, the Integrated Investment Program and the Defence Industry Policy Statement, was very different. Those policies and frameworks set new expectations within Australia's Defence Industry. Understandable with statements such as:
Key to the successful delivery and sustainment of our enhanced defence capabilities will be a new level of collaboration with Australian defence industry;1
…the Government recognises that an internationally competitive Australian defence industry is a fundamental input to Defence capability;2and
Australia’s defence industry—our critical partner in success.3
Since then, beyond the favoured prime contractors, Australia's defence industry has been progressively and systematically betrayed by the Defence organisation that was supposed to be their partner.
It's highly doubtful that encouraging foreign businesses to enter the market and displace the local capabilities was the foundation vision behind the new industry relationship envisioned in those aforementioned documents. It most definitely would not have extended to contracting directly to a foreign competitor, which is something Defence has also done.
In what is probably the most overt example of the betrayal, in 2019 Defence bypassed the onshore Australian boat builders and signed into a contract for sea boats for the Arafura-class Offshore Patrol Vessels directly with a Finnish boat supplier.4
This could be described as a breach of the Commonwealth's Procurement Rules. It's clearly inconsistent with a policy to maximise Australian industry involvement. Equally bad was the message it sent to Australian industry, that being 'we don’t have your back'.
In the context of the shipbuilding programs, the focus of this inquiry, the 'actual' activities of Defence towards maximising the involvement of Australia's Defence Industry are demonstrable of an organisation that lacks any genuine commitment to collaborating with the local Defence industrial base. Defence has and is effectively outsourced the engagement, utilisation, development and ultimately direction of Australia’s defence industry to the prime contractors, all of which are 'foreign' owned and first and foremost answer to their foreign headquarters.
This has squarely put the direction of Australia's defence industry, a Fundamental Input to Capability as announced by the Government through the Defence White Paper, into the hands of foreign HQ's:
… the Government will recognise the vital role of an internationally competitive Australian defence industry as a Fundamental Input to Capability. The Fundamental Inputs to Capability are those essential inputs which together combine to achieve capability—reflecting that it requires more than simply purchasing equipment to achieve capability.5
That is an abrogation of Defence’s responsibility and could never have been the intent or vision.
All is not lost, yet, however meaningful change is required and unfortunately I doubt it can change in the current environment and structure. The organisational culture comes from the people and this starts at the top and that is the best place to start the change.


Officials at Defence ultimately owe their duty to the people of Australia through the Parliament. This is a fundamental feature of our responsible system of government. Failure to answer questions that go to matters within the scope of the inquiry raises questions as to the appropriateness of officials to hold public office.
The culture described in the main report and these additional comments is driven from the very top of the Defence organisation and that is where the blame must lie. It is also where the remedy must lie.
The Secretary of Defence, Mr Moriarty, has conspicuously failed in his role. He should stand aside and make way for a more experienced and stronger person who doesn't shirk responsibility through opaqueness and obfuscation, and who can reset the Defence-Parliamentary relationship.

Recommendation 1:

The Secretary of Defence should resign.

Senator Rex Patrick
Independent Senator for South Australia

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