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Chapter 2 - Departmental overview


Purposes

The Public Governance, Performance and Accountability Act 2013 (PGPA Act) defines ‘purposes’ as ‘the objectives, functions or role’ of an entity.

Defence’s primary role is to protect and advance Australia’s strategic interests through the provision of military capabilities, to promote security and stability, and to provide support for the Australian community and civilian authorities as directed by the Government.

In the 2017–18 Defence Corporate Plan, the Defence purposes were revised from three in the previous year’s plan to two core outcomes:

  • Defend Australia and its national interests.
  • Protect and advance Australia’s strategic interests.

Further information on the two Defence purposes is in the 2017–18 Defence Corporate Plan. Defence’s performance in achieving its purposes during the 2017–18 reporting period is described in Chapter 3 of this report, ‘Annual performance statements’.

Strategic direction

The Government expects Defence to be able to defend Australia and its national interests, play an active role in contributing to regional security and stability, and contribute to coalition operations around the world where our interests are engaged. To deliver on these requirements, we are building a unified and integrated One Defence organisation, led by a strong strategic centre. Continued focus on improvement and implementation of the four remaining recommendations of the First Principles Review will continue into 2018–19.

The 2016 Defence White Paper identified Australia’s strategic defence interests as a secure and resilient Australia; a secure near region, encompassing maritime South-East Asia and the South Pacific; a stable Indo-Pacific region; and a rules-based global order that supports our interests. To secure these interests, Australia must build on its strong network of bilateral and multilateral relationships. Through regular dialogue and practical cooperation, Defence is strengthening its engagement with partners to support shared responses to shared challenges.

This engagement continued to be supported by the Government’s commitment to stable and sustainable funding growth to invest in a more potent and capable Defence Force. Defence expenditure will be increased to 2 per cent of gross domestic product by 2020–21.

The Defence strategic centre sets the performance requirements for Defence, provides the resources that enable the Groups and Services to operate, and monitors and measures performance to ensure that Defence delivers on Government policy direction effectively and efficiently. Defence will continue to build its strategic centre to strengthen accountability and top-level decision-making; improve policy formulation and review; and improve the quality of advice provided to the Government.

Defence portfolio structure

As at 30 June 2018, the Defence portfolio is supported by three ministers:

  • Senator the Hon Marise Payne as Minister for Defence.
  • the Hon Christopher Pyne MP as Minister for Defence Industry.
  • the Hon Darren Chester MP as Minister for Defence Personnel, Minister for Veterans’ Affairs, and Minister Assisting the Prime Minister for the Centenary of ANZAC.

Defence is established as a Department of State under the Administrative Arrangements Order. The Department of Defence operates under the Public Service Act 1999 and is a non-corporate Commonwealth entity under the PGPA Act. The ADF is constituted through the Defence Act 1903.

In addition to the Department of Defence and the ADF, the Defence portfolio comprises other entities including Defence Housing Australia, the Australian Defence Force Cadets, and a number of statutory offices, canteens, trusts and companies.

Legislation that establishes these entities includes the Defence Housing Australia Act 1987, the Defence Act 1903, the Army and Air Force (Canteen) Regulation 2016, the Navy (Canteen) Regulation 2016, the Services Trust Funds Act 1947, the Royal Australian Air Force Veterans’ Residences Act 1953, and the Corporations Act 2001.

The portfolio also contains the Department of Veterans’ Affairs and associated bodies as designated in the Administrative Arrangements Order.

Figure 2.1: Defence portfolio structure as at 30 June 2018

Figure 2.1: Defence portfolio structure as at 30 June 2018


Note: The Department of Veterans’ Affairs is not included in Figure 2.1.

Changes in ministerial responsibilities

Following the Prime Minister’s announcement of changes to the ministry on 19 December 2017,
the Hon Michael McCormack MP was sworn in as the Minister for Defence Personnel on 20 December 2017, replacing the Hon Dan Tehan MP.

The Hon Darren Chester MP was sworn in as Minister for Defence Personnel on 5 March 2018, replacing
the Hon Michael McCormack MP.

Senator the Hon Marise Payne continued as the Minister for Defence, and the Hon Christopher Pyne MP
continued as the Minister for Defence Industry.

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Outcomes and programs

Defence’s annual Portfolio Budget Statements detail the outcomes and programs structures for the Defence portfolio. Within this framework, the outcome is the intended result, impact or consequence of our actions. We work towards achieving our outcomes through undertaking activities and delivering results for each program.

Figure 2.2 shows Defence’s two outcomes for 2017–18, together with the related programs. The Portfolio Budget Statements describe the performance criteria and targets to be used in assessing and monitoring the performance of Defence in achieving government outcomes.

Figure 2.2: Defence’s outcomes and programs, 2017–18

Purpose Outcome Statement Budget Program
Purpose 1: Defend Australia and its national interests. Outcome 1: Defend Australia and its national interests through the conduct of operations and provision of support for the Australian community and civilian authorities in accordance with Government direction. 1.1 Operations Contributing to the Safety of the Immediate Neighbourhood
1.2 Operations Supporting Wider Interests
1.3 Defence Contribution to National Support Tasks in Australia
Purpose 2: Protect and advance Australia’s strategic interests. Outcome 2: Protect and advance Australia’s strategic interests through the provision of strategic policy, the development, delivery and sustainment of military, intelligence and yenabling capabilities, and the promotion of regional and global security and stability as directed by Government. Departmental
2.1 Strategic Policy and Intelligence
2.2 Defence Executive Support
2.3 Chief Finance Officer
2.4 Joint Capabilities
2.5 Navy Capabilities
2.6 Army Capabilities
2.7 Air Force Capabilities
2.8 ADF Headquarters
2.9 Capability Acquisition and Sustainment
2.10 Estate and Infrastructure
2.11 Chief Information Officer
2.12 Defence People
2.13 Defence Science and Technology
Administered
2.14 Defence Force Superannuation Benefits
2.15 Defence Force Superannuation Nominal Interest
2.16 Housing Assistance
2.17 Other Administered

Note: Portfolio Budget Statement programs mapped to Defence Purposes and Outcomes for 2017-18. This table reflects the information as per the Portfolio Additional Estimates Statements 2017–18.

Organisational structure

The Secretary of the Department of Defence and the Chief of the Defence Force jointly manage the organisation as a diarchy. The term ‘diarchy’ reflects the individual and shared responsibilities and accountabilities of the Secretary and the Chief of the Defence Force in ensuring that Defence meets Australian Government requirements. The manner in which the diarchy operates is described further in directions given to the Secretary and the Chief of the Defence Force by the Minister for Defence.

As a result of the implementation of the First Principles Review, there have been changes to the accountabilities, structures, systems and processes that build and operate the required organisational capacity. The First Principles Review also introduced the One Defence business model, which focuses Defence’s organisational capacity on achieving Government-directed outcomes. The business model has three key features:

  1. A stronger strategic centre able to provide clear direction, contestability of decision-making, as well as enhanced control of resources and monitoring of organisational performance.
  2. An end-to-end approach for capability development.
  3. Enablers that are integrated and customer-centric with greater use of cross-functional processes, particularly in regional locations.

Figure 2.3 shows the elements and relationships of Defence’s organisational structure as at 30 June 2018.

Figure 2.3: Defence organisational structure as at 30 June 2018

Figure 2.3: Defence organisational structure as at 30 June 2018


Note: This organisational chart is correct as at 30 June 2018. For a more current view, visit www.defence.gov.au. Biographies and high-resolution images of key Defence leaders and senior managers are available at the Defence Leaders site, www.defence.gov.au/Leaders.

Changes in senior leadership

The following changes in leadership occurred during 2017–18:

  • On 1 July 2017, Air Vice-Marshal Warren McDonald was appointed as the inaugural Chief of Joint Capabilities.
  • On 23 August 2017, Dr Peter Lawrence, the previous Chief Information Officer, resigned.
  • On 23 August 2017, Mr Aiyaswami Mohan commenced acting as the Chief Information Officer.
  • On 28 October 2017, Ms Rebecca Skinner commenced acting as the Associate Secretary.
  • On 28 October 2017, Mr Marc Ablong commenced acting as the Deputy Secretary Strategic Policy and Intelligence.
  • On 2 November 2017, Mr Stephen Johnson commenced acting as the Enterprise Director Naval Shipbuilding in the Capability Acquisition and Sustainment Group.
  • On 20 November 2017, Ms Angela Diamond commenced acting as the Chief Finance Officer.
  • On 4 January 2018, Mr Michael Burgess was appointed as the Director-General Australian Signals Director designate in the Strategic Policy and Intelligence Group.
  • On 19 January 2018, Mr Phillip Prior, the previous Chief Finance Officer, retired from the Australian Public Service.
  • On 1 February 2018, Mr Stephen Pearson was engaged as the Chief Information Officer.
  • On 1 March 2018, Lieutenant General John Frewen was appointed as the Principal Deputy Director-General, Australian Signals Directorate designate, within the Strategic Policy and Intelligence Group.
  • On 5 March 2018, Ms Roxanne Kelley, the previous Deputy Secretary Defence People, transferred to the Department of Social Services.
  • On 5 March 2018, Mr Richard Oliver commenced acting as the Deputy Secretary Defence People.
  • On 6 March 2018, Mr Brendan Sargeant, the previous Associate Secretary, retired from the Australian Public Service.
  • On 3 April 2018, Mr Scott Dewar commenced acting as the Deputy Secretary Strategic Policy and Intelligence.
  • On 3 May 2018, Mr Simeon Gilding was appointed as the Deputy Secretary Signals Intelligence & Network Operations in the Strategic Policy and Intelligence Group.
  • On 21 May 2018, Mr Steven Groves was appointed as the Chief Finance Officer.
  • On 25 May 2018, Air Marshal Mel Hupfeld was appointed as the Chief of Joint Operations.
  • On 28 June 2018, Ms Justine Greig was appointed as the Deputy Secretary Defence People.

Financial summary

Defence has a sound financial position, with sufficient cash reserves and future appropriations to fund its debts as and when they fall due. Defence’s departmental net cash spend was $34.9 billion in 2017–18. This was an underspend of $26.2 million when compared to the revised estimate in the Defence Portfolio Budget Statements 2018–19, excluding expenditure on operations funded on a No Win, No Loss basis.

Defence received an unqualified audit report on the 2017–18 Financial Statements from the Australian National Audit Office. These statements are in Chapter 11, ‘Financial statements’ [PDF-2.62 MB].

See Chapter 4, ‘Financial performance’, for a financial overview of 2017–18.

People summary

Defence’s workforce includes Australian Defence Force (ADF) members of the Navy, Army and Air Force and Australian Public Service (APS) employees.

Figure 2.4 shows the ADF’s actual funded strength at 30 June 2018 was 58,363, compared with 58,612 at 30 June 2017. The actual full-time equivalent APS workforce at 30 June 2018 was 17,728, compared with 17,308 at 30 June 2017.

Figure 2.4: ADF and APS comparative funded strength for 2016–17 and 2017–18

Figure 2.4: ADF and APS comparative funded strength for 2016–17 and 2017–18


Detailed information on Defence’s workforce is provided in Chapter 7, ‘Strategic workforce management’.

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