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Annual Report 2013-14

Volume 1, Part 3 : Governance and Accountability

Chapter 9 - Corporate Governance


Senior management committees and their roles

Defence operates seven senior committees and one board, each playing an important role in the governance and management of the organisation. Each body has an advisory role, with the chair (or chairs) exercising executive authority.

Figure 9.1: Senior management committees and their roles
Figure 9.1 is an organisational diagram showing the senior management committees in Defence committees and their roles.

Specific roles of senior management committees

Defence Committee

The Defence Committee considers the most significant policy and management issues and drives whole-of-Defence performance through the enterprise management framework, including the corporate planning process. It meets monthly.

The committee is chaired by the Secretary and the CDF. Group heads and Service chiefs are standing members. Other participants are co-opted as required.

Secretary and Chief of the Defence Force Advisory Committee

The Secretary and Chief of the Defence Force Advisory Committee is the senior committee for the week-to-week management of Defence. It is the default committee for business that requires the attention of the Secretary and the CDF, providing direction and acting as a decision-making body.

The committee is chaired jointly by the Secretary and the CDF. Other participants are co-opted as required.

Defence Civilian Committee

The Defence Civilian Committee was established to focus on matters affecting the Defence APS workforce, especially development and training needs, gender and employment of Indigenous Australians and people with disability.

The committee is chaired by the Secretary. It consists of group heads, the Vice Chief of the Defence Force and two division heads and one branch head on a rotational basis.

Defence Capability Investment Committee

The Defence Capability Investment Committee ensures that resourcing, including capital investment and operating costs, is consistent with Defence’s strategic priorities and resourcing strategy. Its role includes examining the overall shape of capability and the balance of resource allocation within the Defence Capability Plan, force structure and disposition, through-life costs and whole-of-life affordability.

The committee is supported by the subordinate Defence Capability Committee, which looks at individual projects as well as preliminary programming of the major capital budget. As a general principle, the Defence Capability Investment Committee will only consider items that cannot be resolved by the lower-level committees.

The committee is chaired by the Secretary. It consists of the CDF, the Vice Chief of the Defence Force, the Chief Operating Officer, the Service chiefs, the Chief Capability Development Group, the Chief Executive Officer DMO and the Deputy Secretary Strategy.

Defence Audit and Risk Committee

The Defence Audit and Risk Committee is a central element of governance in Defence. It provides independent advice on governance within Defence to the Secretary and the CDF.

The committee’s roles and responsibilities are to review governance and assurance frameworks, including risk management, the internal controls framework, compliance, accountability and audit. A major element of its role is to assist Defence in building effective risk management practices and to advise the Secretary and the CDF on the appropriate limits to Defence’s risk exposure. The committee’s charter is being reviewed in light of the new Public Governance, Performance and Accountability Act 2013 , which took effect on 1 July 2014.

The committee’s membership comprises up to four senior private sector members (one is currently vacant), the Chief Operating Officer and the Vice Chief of the Defence Force. Collectively these members have significant experience in financial management, governance and risk management in both operational and non-operational contexts.

Chiefs of Service Committee

The Chiefs of Service Committee provides military advice to the CDF to assist in the command of the Defence Force and in providing military advice to the Government.

The committee is chaired by the CDF. It consists of the Secretary, the Vice Chief of the Defence Force, the Service chiefs, the Deputy Secretaries for Strategy and Defence People, the Commander Australian Defence College, the Chief of the Capability Development Group and the Chief of Joint Operations.

Strategic Command Group

The Strategic Command Group provides the CDF with situational awareness of ADF operations and coordination of ADF strategic response to critical incidents and allows a secure forum for the CDF to issue direction and guidance.

The committee is chaired by the CDF. It consists of the Secretary, the Vice Chief of the Defence Force, the Service chiefs, the Chief of Joint Operations and the Deputy Secretaries for Strategy and Intelligence and Security.

Gender Equity Advisory Board

The Gender Equity Advisory Board is a direction-setting and advisory body for driving and shaping the strategic direction of the Secretary’s and the CDF’s gender equality priorities within the broader Defence cultural reform agenda. The committee considers the most significant gender equality issues applicable to the Defence workforce, and monitors and evaluates whole-of-Defence performance in addressing these matters.

The committee comprises 10 members from the public and private sectors and is jointly chaired by the Secretary and the CDF.

Fraud and ethics

Defence has implemented an intelligence-led fraud control program focusing on responding to emerging high risks within Defence. Defence is using the information to target allowances and contract management to disrupt potential fraudulent activity. Staff have also been embedded in the Commonwealth Fraud and Anti-Corruption Centre to coordinate efforts to combat fraud and corruption.

The Ethics and Fraud Awareness program underpins Defence’s approach to fraud control. The program consists of a face-to-face or e-learning course as well as newsletters and an intranet site for information and advice. It is mandatory for staff to participate in the program at least every two years. In 2013–14, more than 69,000 Defence personnel completed the program.

In 2013–14, 288 fraud investigations were registered within Defence and 322 investigations were completed (some of those completed were registered in previous years). Approximately 25 per cent of completed investigations resulted in criminal, disciplinary or administrative action. Of these, around 44 per cent related to disciplinary action under the Defence Force Discipline Act 1982.

The determined fraud loss for completed investigations was $1.77 million in 2013–14, while monies recovered were just under $0.13 million. Table 9.1 shows detected fraud over the past five financial years, averaging approximately $1.13 million per year within a range of $0.8 million to $1.8 million.

Table 9.1: Determined fraud loss and recoveries, 2009–10 to 2013–14

 

2009–10 ($)

2010–11 ($)

2011–12 ($)

2012–13 ($)

2013–14 ($)

Loss

1,039,721

916,419

1,102,979

835,685

1,770,422

Recovery

359,393

422,691

493,210

393,902

133,457

Note

The determined loss and recoveries information is based on investigations closed in the relevant year.

Audit

Audit Branch provides assurance to the Secretary and the CDF that controls designed to manage Defence’s major risks are in place and are operating in an efficient and effective manner. Audit Branch also assists Defence senior managers in improving the business performance of their organisations.

During the year, Audit Branch provided internal audit services in accordance with the Audit Work Program that is endorsed by the Defence Audit and Risk Committee and approved by the Secretary and the CDF. The program is developed in consultation with all Group heads and Service chiefs. It is designed to address areas of high-level risk or activities where there are potential control deficiencies that could lead to significant financial loss or expose Defence to serious reputational damage.

Audit Branch also monitors and reports to the Defence Audit and Risk Committee, the Defence Committee and the minister on the status of the implementation of recommendations from Audit Branch and the Australian National Audit Office.

In 2013–14, Audit Branch issued a total of 22 audit reports. In addition, six Australian National Audit Office performance audits on Defence were completed, along with three cross-portfolio audits involving Defence, to which Audit Branch provided direct support. Audit Branch also facilitated Defence input into an Australian National Audit Office audit of another agency that contained a reference to Defence.

Defence Whistleblower Scheme/Public Interest Disclosure Scheme

On 15 January 2014, Defence implemented the Defence Public Interest Disclosure (PID) Scheme following the commencement of the Public Interest Disclosure Act 2013. The PID Scheme replaced the Defence Whistleblower Scheme, which had been successfully operating since July 2002. Any whistleblower complaints made before 15 January 2014 will continue to be investigated under the previous scheme until finalised.

The PID Scheme facilitates and encourages public officials to report suspected wrongdoing, supports and protects disclosers, and ensures that suspected wrongdoing is investigated appropriately. Defence continues to work closely with the Commonwealth Ombudsman for PID reporting purposes and to improve the implementation of the Public Interest Disclosure Act within Defence and more broadly within the Commonwealth public sector.

Table 9.2 shows the number of allegations made to the Defence Whistleblower Scheme over the past five financial years and the number of public interest disclosures allocated to Defence and other agencies since 15 January 2014.

Table 9.2: Reports made to the Defence Whistleblower Scheme and the Defence Public Interest Disclosure Scheme, 2009–10 to 2013–14

 

2009–10

2010–11

2011–12

2012–13

2013–14

Defence Whistleblower Scheme

255

242

270

253

181

PID Scheme[1]

181

Note

  1. The Defence PID Scheme began operating on 15 January 2014.

Status report on the Australian Government Security Vetting Agency review

The Defence Chief Audit Executive’s annual assessment in 2014 concluded that progress continues to be made since the first assessment in 2011 and that, at this time, the Australian Government Security Vetting Agency is compliant with government security vetting policy.

The annual assessment is one of 13 recommendations made by the Inspector-General of Intelligence and Security. The recommendations were the result of an inquiry requested by the then Prime Minister, following allegations of inappropriate vetting practices made by three former data entry contractors on the ABC Lateline program in 2011.

In 2013–14, the Chief Audit Executive assessed that 11 of the 13 recommendations had been fully completed, one is currently being implemented and one is in the development stage. Both recommendations that are yet to be completed are being actively managed, and progress towards their implementation is reported on a regular basis to senior management within the Australian Government Security Vetting Agency and the Defence Security Authority.

The Chief Audit Executive noted that the Australian Government Security Vetting Agency is continuing to implement a reform program to ensure compliance. Intelligence and Security Group senior management have allocated additional resources and are fully committed to the reform program.

Report of the Inspector-General of the Australian Defence Force

The position of Inspector-General of the Australian Defence Force (IGADF) is established under section 110B of the Defence Act 1903. The IGADF provides the Chief of the Defence Force with a mechanism for internal audit and review of the military justice system independent of the chain of command and an avenue by which failures in the system may be examined and remedied.

The operating tempo in the Office of IGADF remained relatively high in 2013–14 and was characterised by increases in the number of submissions received for investigation or inquiry and the number of military justice performance audits completed into the military justice arrangements of ADF units. Regulation 125 of the Defence (Inquiry) Regulations 1985 provides that the CDF must report on the operation of the regulations during the financial year. There were no reports of any systemic issues or serious deficiencies in the quality of an inquiry report or a legal review during the reporting period.

Report on operation of the regulations


Regulation 125 of the Defence (Inquiry) Regulations 1985 provides that the CDF must report on the operation of the regulations during the financial year. It should be noted that there were no amendments to the Defence (Inquiry) Regulations 1985 during the reporting period.

In order to monitor statutory inquiries across the ADF the Inspector General Australian Defence Force sponsors the ADF Administrative Inquiries Tracking System (ADFAITS) which is an ADF-wide management tool for the capture of information concerning administrative inquiries.

It is mandatory for ADF units to track statutory inquiries using ADFAITS. Paragraph 31 of CDF Directive 04/2010 Interim arrangementsquick assessments and administrative inquiries of 23 Apr 10 also requires appointing officers to report any systemic issues or serious deficiencies in the quality of an inquiry report or a legal review to the office of the Inspector General Australian Defence Force.

Although there were no reports of any systemic issues or serious deficiencies in the quality of an inquiry report or a legal review during the reporting period, in recent years the ADF inquiry system has been subject to a number of detailed reviews to identify areas for improvement. As a result a number of structural reforms designed to simplify the system to ensure that it operates in accordance with best practice and to enhance the overall quality of future inquiry reports are planned for implementation in the coming financial year.


During 2013–14, the IGADF received 60 inquiry submissions, an increase of approximately 10 per cent on the previous year. In recent years, the trend has been that submissions disclose issues of greater complexity than in previous years, and this continued in 2013–14. During the year, the IGADF resolved 42 submissions by way of inquiry, investigation and review.

The submissions received included 18 concerning service police professional standards matters. Of those, 10 became the subject of IGADF investigations and eight were referred back to service police for further action. Of the 10 matters investigated, three complaints were substantiated and seven matters were still being investigated at the end of June 2014.

The IGADF conducted 49 ADF military justice unit audits, or audits of about 10 per cent of all auditable ADF units. In three of those units, potential material deficiencies were identified. In all, a total of 714 recommendations and suggestions to improve military justice arrangements, practices and procedures were made during 2013–14. The overwhelming majority of the recommendations and suggestions related to minor compliance or procedural issues.

During the conduct of military justice unit audits, 2,552 ADF personnel participated in focus group discussions, raising to 24,641 the total number of focus group participants since the pilot program commenced in 2004. Focus group survey outcomes in 2013–14 indicate a stronger endorsement of, and confidence in, the military justice system and the chain of command to take action to resolve military justice problems. There is also strong evidence to indicate that incremental cultural change under Pathway to Change: Evolving Defence Culture occurred within the ADF during the year.

During 2013–14, the Office of IGADF conducted 50 face-to-face courses and seminars at locations around Australia, attended by 1,599 ADF members. Of those, the vast majority attended inquiry officer familiarisation training. A further 1,058 undertook the IGADF online inquiry officer familiarisation course on campus. Other practical training opportunities offered by the IGADF included seminars on administrative sanctions, complaint handling and conducting quick assessments.

The principal themes affecting the ADF military justice narrative in 2013–14 included the attention given to cultural issues addressed in Defence’s Pathway to Change policies, the work of the Human Rights Commission’s examination of gender issues throughout the ADF, and the continuing speculation as to the future arrangements for ADF investigation, inquiry, review and redress of grievance processes arising from the finalisation of the Defence Re-thinking Review. More broadly, in the public domain, credit for dealing with the reportedly large numbers of cases of abuse within Defence over time exposed by the DLA Piper Report and the activities of the Defence Abuse Response Taskforce tended to be counterbalanced by continuing adverse media coverage of such cases, resulting in further reputational impact for Defence.

Pursuant to section 110R of the Defence Act, in 2013–14 the IGADF provided a detailed report to the CDF on the operations of the Office of IGADF.

CDF commissions of inquiry

The CDF appoints commissions of inquiry (COIs) primarily to inquire into the deaths of ADF members that appear to have arisen out of, or in the course of, their service. The CDF may also appoint a COI into any other matter concerning the ADF, although this would only occur for the most serious or complex matters. COIs are intended to provide the CDF with accurate information as a basis for internal decision-making. COI reports may include recommendations intended to prevent a recurrence of incidents. Lessons learned from COIs are considered in the design and review of policy, practices, procedures and orders, and may affect decisions concerning equipment, systems and personnel.

COIs are appointed by the CDF and are presided over by a civilian with judicial experience. They may be constituted by a president alone or by a president with additional members, who may be civilians or ADF members. The appointment of a civilian president is intended to give these inquiries a degree of independence beyond that possessed by other forms of military inquiry, while the qualification of judicial experience is intended to ensure that they are conducted professionally and efficiently. The independence and judicial experience of COI presidents promotes confidence in the integrity of COIs.

During 2013–14, four COIs were appointed, completed or remained in progress. The deaths of other members which appeared to arise out of, or in the course of, their service occurred in circumstances specified by a minister in the Defence portfolio as circumstances in which a COI was not required.

Able Seaman Ewan McDonald

A COI into the death of Able Seaman Ewan McDonald was appointed on 21 September 2012. The family and next of kin were in attendance at the public hearing, which concluded on 5 March 2013. The COI submitted its report on 16 August 2013. The outcomes of the COI will shortly be briefed to the next of kin. A decision on whether or not the report will be publicly released is yet to be made.

Sapper Jordan Ronald Penpraze

Sapper Jordan Ronald Penpraze died on 11 October 2012 as a result of a single vehicle roll-over accident three days earlier. A COI into the death was appointed on 24 October 2012, and hearings commenced on 8 April 2013. Hearings have been adjourned while criminal proceedings against the driver of the vehicle take place.

Midshipman Peter Bach

A COI into the death of Midshipman Peter Bach was appointed on 24 November 2012. The family of Midshipman Bach attended the hearings, which commenced on 8 March 2013. The COI submitted its report on 15 October 2013. The outcomes of the COI have been briefed to the next of kin. A decision on whether or not the report will be publicly released is yet to be made.

Fire at Marrangaroo Training Area

A COI into the circumstances surrounding a fire at the Marrangaroo Training Area on 16 October 2013 was appointed on 26 October 2013. Hearings commenced on 9 December 2013, and the COI submitted its report on 31 January 2014. A redacted copy of the report was publicly released on 17 June 2014.

CDF inquiry officer inquiries

Inquiry officer inquiries (IOIs) are generally appointed by the CDF as a fact-finding tool following combat or combat-related deaths of ADF members. IOI reports are used to inform the CDF before appointing a COI, or to inform the Minister for Defence before specifying that a member’s death has occurred in circumstances in which a COI is not required.

In a paper on Afghanistan tabled in conjunction with a ministerial statement on 9 February 2012, the then Minister for Defence, the Hon Stephen Smith MP, stated that the past focus of the IOI process had been on the public release of IOI reports, which had been released as a matter of course. The minister indicated that the focus needed to be on the timely provision of the report to the family of the deceased. Any decision on publicly releasing a report would come after weighing the wishes of family members and public interest in the release of the report.

During 2013–14, one IOI into a combat death was appointed and completed. This death occurred in circumstances specified by the minister as circumstances in which a COI was not required.

Corporal Cameron Stuart Baird, VC, MG

Corporal Cameron Baird, 2nd Commando Regiment, was killed in action as a result of enemy fire in Afghanistan on 22 June 2013. An IOI was appointed on 5 July 2013, and the inquiry officer submitted their report on 12 September 2013. The outcomes of the IOI have been briefed to the family. A redacted copy of the report was publicly released on 7 March 2014.

A number of other IOIs into combat and combat-related deaths that were completed during the previous financial year were announced by Defence as having been concluded. The reports were released to the public in some instances.