This chapter will consider previous Defence reviews and parliamentary
consideration which has addressed or touched on the capability of Defence's PSE
workforce. In particular, it will summarise relevant aspects of the First
Principles Review (FPR) report and the recent Defence White Paper 2016.
Previous Defence reviews
Defence's PSE workforce capabilities have been part of a number of
previous Defence reviews of the acquisition, support and general management
practices of the Department, including Kinnaird (2003),
and Rizzo (2011).
For example, the Plan to Reform Support Ship Repair and Management Practices
in 2011 (Rizzo review) included a recommendation that [Defence Material Organisation
(DMO)] and Navy 'should develop an innovative and comprehensive through‐life career plan for
the recruitment, retention and development of their engineering talent'.
In 2012, the Senate Foreign Affairs, Defence and Trade References
Committee report, Procurement procedures for Defence capital projects, identified
a number of causes of acquisition project difficulties including shortfalls in
skilled labour. The committee considered:
The critical shortage of engineers and allied technical
skills is a matter that requires immediate and serious attention. While there
are many external forces undermining Defence's efforts to attract and retain
skilled engineers and technicians, the committee is of the view that it is
imperative for Defence to grow its engineering and allied skills base.
Otherwise, its in-house knowledge will struggle to identify thoroughly future
capability needs, to test and evaluate it against all other options, and advise
government fully, accurately and objectively.
In 2015, the Defence Sub-committee of the Joint Standing Committee on
Foreign Affairs, Defence and Trade report Principles and Practice –
Australian defence industry and exports explored the impact of procurement
policy and practice on the competence of the combined industry and Defence
engineering workforce and subsequent effect on Defence capability.
Recommendation 7 addressed the need for changes in workforce planning to be
closely coordinated with changes in procurement practice. It recommended:
[W]here an industry-related fundamental input to capability
has been identified, the Department of Defence prioritise Australian based
procurement contracts so that relevant industry and Defence staff can develop
competence in specific tasks via hands-on experience, or where this is not
possible, through making the placement of Australian staff in original
equipment manufacturers or foreign military engineering bodies a condition of
First Principles Review
In August 2014, the Minister for Defence established the First Principles
Review (FPR) to ensure that 'Defence is fit for purpose and is able to deliver
against its strategy with the minimum resources necessary'.
On 1 April 2015, the Minister released the FPR report Creating One
Defence. The Minister noted that the government had agreed, or
agreed-in-principle, to 75 of the 76 recommendations made by the FPR. In
particular, the FPR recommended the Defence Materiel Organisation be disbanded
and its core responsibilities transferred to a new Capability Acquisition and
Sustainment Group (CASG) within the Department. The Capability Development
Group would also be disbanded and its functions transferred to other areas.
This included the Australian Defence Test and Evaluation Office and the Project
Management Office moving to CASG.
The government did not agree to the recommendation relating to the
Defence Science and Technology Organisation (DSTO) becoming part of the new CASG
'at this time'.
However, the Minister noted that 'this recommendation will be further
considered as part of the annual updates on implementation progress'. The DSTO,
as part of the subsequent restructure, was renamed the Defence Science and
Technology Group (DSTG).
The FPR report advocated that Defence move to 'a leaner "smart
buyer" model that better leverages industry, is more commercially oriented
and delivers value for money'. The suggested definition of a 'smart buyer' was:
...one who retains an in-house staff who understands the
organization's mission, its requirements, and its customer needs, and who can
translate those needs and requirements into corporate direction. A smart buyer
also retains the requisite capabilities and technical knowledge to lead and
conduct teaming activities, accurately define the technical services needed,
recognize value during the acquisition of such technical services, and evaluate
the quality of services ultimately provided...
The FPR also recommended 'that the focus on public service reductions as
the primary efficiency mechanism for Defence cease'. It noted:
Downsizing is already occurring within Defence with full time
equivalent staff reducing from approximately 22,300 in mid-2012 to around
19,500 in October 2014. These reductions have largely been achieved through
natural attrition and a tightening of recruitment practices.
Whilst these arbitrary approaches are delivering results, the
review team believes a more targeted approach would produce more control over
the shape and skills of the workforce.
Defence White Paper 2016
On 4 April 2014, the Prime Minister and the Minister for Defence
announced that a new Defence White Paper would be produced (originally
scheduled to be released mid-2015). A number of the submissions to the Defence
White Paper process highlighted PSE workforce capability issues. These issues
were also picked up in the consultations undertaken by the External Panel of
Experts report. For example, one of the recommendations of the panel was that
the Defence White Paper 'ensure that appropriate priority is given to defence
science as a critical enabler of innovation and military capability'.
The Defence White Paper was eventually released on 25 February 2016. Under
the plans in the paper, the permanent ADF workforce would grow from around
58,000 to 62,400 over the next decade. It also provided for a future Defence
APS workforce of 'around 18,200 Full Time Staff Equivalent (FTE), down from
22,300 FTE in June 2012'. It stated:
Within this total workforce of around 18,200 FTE, enhancements
to intelligence, space and cyber security capabilities will involve 800 new APS
positions. Four hundred new positions will be created in information technology
support, simulation, support to Navy engineering and logistics, security, force
design and analysis, and strategic and international policy, including civilian
policy officers posted overseas.
These new APS positions in areas of high priority will be
offset by ongoing reductions elsewhere in the APS workforce, including through the
reform of service delivery areas of Defence's business, as part of the implementation
of the Government's First Principles Review.
The Defence Industry Policy Statement and the Integrated Investment
Program, both also released on 25 February 2016, reflected the Defence White
Paper's emphasis on innovation and technology as significant drivers of Defence
capability. Key initiatives included:
a Centre for Defence Industry Capability to provide a single
governance framework to consolidate a number of existing Defence industry
programs. This includes developing future delivery models for the Skilling
Australia's Defence Industry program and the Defence Engineering Internship program.
a Defence Innovation Hub to manage a portfolio of existing funded
investments in Defence innovation including the Defence Materials Technology
Centre (DMTC). The Defence Innovation Hub will have funding of around $640
million over the decade to FY 2025–26, inclusive of the $3 million per
year for the DMTC FY 2018–19;
a Next Generation Technologies Fund with $730 million over the
decade to FY 2025–26 to enable Defence to better position itself to respond to
strategic challenges, retain a technology 'edge' against adversaries and
provide game-changing Defence capabilities for the future. The DSTG will take
the lead in identifying, conducting and integrating research in next generation
technologies that are relevant to Australia's national security.
In relation to Defence workforce issues, the Integrated Investment
Program included the following:
The generation of sustainable workforce capacity in key skill
areas will require concerted effort well beyond the mid-2020s. There will
continue to be challenges in attracting, recruiting and retaining the right
people for the right jobs in an increasingly competitive market place. The strength
of Defence's leadership and its ability to adapt and embrace a more diverse and
inclusive culture will be critical to attracting and retaining the workforce it
needs for the future. Defence will employ a range of strategies to achieve the
skilled workforce required in the timeframe needed to deliver and support the
It is essential that Defence pursues enterprise solutions to
workforce challenges, including a more strategic approach to workforce
planning; enhanced information and communications technology systems will be critical
to this work. This approach will need to better enable Defence to sustain a
diverse range of specialist training and skills development, and will be further
articulated in the strategic workforce plan being developed as part of the
implementation of the First Principles Review.
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