OUTCOME PERFORMANCE

2005–06 was a demanding year for the Group as Australia's strategic environment continued to present complex challenges.

Strategic Planning

Strategy Group led efforts to deliver the Government's strategic update, Australia's National Security: A Defence Update 2005, released in December 2005 by the then Minister for Defence. The Update examined the key features of Australia's contemporary strategic environment and outlined Defence's contribution to Australia's national security policy. It described how Defence is responding to the Government's requirement to shape the ADF as a highly capable and flexible military force able to meet a wide range of strategic tasks. The Update also informed Defence's capability decisions, corporate management and military strategy.

The groundwork for enhancing strategic planning was laid in 2005–06, but more work will be undertaken in 2006–07 by Strategic Policy Division to ensure there is a clear and coherent basis for strategic and operational level decision making. In the latter part of 2005–06, Strategic Policy Division worked on articulating the strategic priorities that guide planning within Defence. In collaboration with Capability Development Group, Strategy Group issued, for the first time, a Strategy Planning Framework Handbook which documents our key planning processes and staff relationships. The framework will lead to better and more integrated staff work and decision making and aims to ensure that Defence's strategic documents are congruent, comprehensive and coherent.

Policy advice regarding ADF Operations

Throughout the year, Strategy Group has been involved in whole-of-government efforts to foster national stability, integrity and cohesion in our immediate neighbourhood. Strategy Group provided advice to enable the Government to make judgements on developments in Solomon Islands and Timor-Leste and to support the subsequent ADF deployments. We remain focused on providing policy advice to guide Australia's continuing contribution to nurturing stability in these countries.

During 2005–06, the Group provided policy advice in support of operations in Timor-Leste, Solomon Islands, Afghanistan and Iraq. In the case of Afghanistan, advice was provided on options for ADF operations, including preparations for the imminent deployment of the Reconstruction Task Force. Similarly, advice was provided on the transfer to Iraqi security control of Al Muthanna province, the ADF's participation in operational overwatch and developing a bilateral defence relationship with Iraq, Timor-Leste and Solomon Islands.

International Engagement

Strategy Group supported an extensive range of strategic relationships through continued involvement in multilateral security forum arrangements in the Asia Pacific region as well as bilateral defence and security relationships. In September 2005, Australia and the Philippines co-hosted an Association of South East Asian Nations Regional Forum Workshop on Civil-Military Cooperation in response to natural disasters.

Our alliance with the United States continued to strengthen with the signing of a Memorandum of Understanding for the Joint Combined Training Centre and the commencement of the United States Pacific Air Force Strategic Bomber Training Program in Australia. Australia signed separate Memoranda of Understanding on defence cooperation with India and Turkey. These arrangements provide a framework for our increasing defence engagement with both nations. Australia's close cooperation with Japan in Iraq has provided a firm foundation for future practical security cooperation, both with Japan and the United States.

In 2005–06, we continued to focus on counter-terrorism cooperation with most Association of South East Asian Nations members, including resumption of counter-terrorism training with Indonesia through Exercise Dawn Kookaburra, which was held in February 2006. Australia also reached agreement for a joint project to deliver an Army watercraft capability to the Armed Forces of the Philippines. Through the Defence Cooperation Program, Australia provided assistance to Cambodia in deploying its first ever peacekeeping contingent in support of the United Nations' Mission in Sudan.

Strategy Group also supported Australia's expanding counter-proliferation efforts. Defence has been a key agency in coordinating Australia's involvement in the multinational Proliferation Security Initiative, which is working to prevent the transhipment of weapons of mass destruction. In April 2006, Australia hosted Exercise Pacific Protector 06, which was the first Proliferation Security Initiative air interdiction exercise to be held in the Asia Pacific region, with representatives from 32 countries attending.

Domestic Security Policy

In early 2006, Parliament passed amendments to the Defence Act 1903. These amendments will enable the ADF to respond more quickly and effectively in the event of a domestic terrorist incident. In particular, the changes to Part IIIAAA of the Act will:

• improve the coordination mechanisms for responding to a terrorist incident;
• provide operational flexibility for situations in which the ADF may be required to respond to domestic security incidents to support civil authorities; and
• clarify the legal powers and protections for ADF personnel when conducting operations in support of domestic security.

The amendments do not change the fundamental principles underlying Defence support for domestic security, as State and Territory authorities will retain primary responsibility to respond to a terrorist incident within their jurisdictions. The amendments provide a clear and accessible legislative basis for the use of the ADF as a last resort to aid civil authorities in protecting the interests of the Commonwealth and States and Territories against a domestic terrorist threat.

Strategy Group also undertook a range of other important tasks during the year. These included managing the funding agreement between the Government and the Australian Strategic Policy Institute and managing aspects of Australia's compliance with international arms control regimes. We have also been active in developing Defence's strategic policy workforce through delivering defence and strategic policy seminars, supporting strategic studies in universities and think tanks, and providing strategic studies and counter-terrorism scholarships.

Capability Performance Information

Output 5.1 International Policy, Activities and Engagement

This output provides strategic and international policy advice to the Government to enable it to make sound judgements on, and develop appropriate responses to, changes in Australia's strategic circumstances and specific security issues. It also uses strategic policy guidance to develop recommendations for the Government on international engagement activities and initiatives.

Output 5.2 Strategic Policy and Military Strategy

This output provides input into the development of Defence strategic reviews and updates; policy advice on national, defence and military strategy; guidance for the development of long-term defence capability; defence aspects of non-proliferation and arms control; and advice and management of export controls for defence and dual use items.

Table 2.41 International Policy, Activities and Engagement

Performance Targets	Performance
Provide the Government with comprehensive and timely policy advice on current and emerging international Defence issues.	Achieved. Defence provided comprehensive and timely policy advice to the Government that contributed to Australia's international strategic objectives. This included policy advice in support of ministerial visits to foreign countries. Defence also provided advice on: issues associated with the effort to stabilise Timor-Leste; to rebuild Iraq and Australia's involvement in Afghanistan; advancing Australia's alliance objectives with the United States in areas such as missile defence and interoperability; the Regional Assistance Mission to Solomon Islands; the Enhanced Cooperation Program with Papua New Guinea ; defence relations with the wider Asian region; the development of Defence cooperation with other nations; and regional counter-terrorism assistance.
Manage Defence's international engagement activities to support Australia's efforts to promote regional and global security.	Achieved. Defence undertook a comprehensive range of international engagement activities to promote regional and global security. This included dialogue between senior Australian and foreign defence officials, consultation and cooperation on areas of mutual interest, training and training-related projects and exercises conducted under the Defence Cooperation Program. Defence supported multilateral security initiatives such as hosting the Proliferation Security Initiative Exercise Pacific Protector 06.
Ensure Defence's overseas representatives contribute to the effective management of Australia's defence interests in the context of overall bilateral relationships.	Achieved. Defence's overseas representatives successfully contributed to the effective management of Australia's defence interests, achieved largely through their advice on, and personal contributions to, developing and strengthening bilateral relationships with allies, neighbours, the Middle East and Europe. Their activities were guided by Defence's objectives for international engagement as well as directives to Defence Attachés.
Achieve the Defence Cooperation Program.	Achieved. Defence successfully managed the Defence Cooperation Program, consisting of activities aimed at strengthening defence relationships in accordance with the Defence International Engagement Plan. These activities included providing training, technical advice, infrastructure development and logistics support to regional nations. Specific details can be found in the Defence Cooperation section (pp. 147–153).

The Group continued management of the funding agreement between the Government and the Australian Strategic Policy Institute, established in 2001, which functions as an independent strategic policy research centre.

The institute received $2.8m from Defence in 2005–06. In 2006–07, funding will total $2.901m. This funding supports the Australian Strategic Policy Institute's core research program and public engagement plan, and contributes to debate through reports and a program of seminars, workshops and strategic dialogues between government and academic representatives.

 

Table 2.42 Strategic Policy and Military Strategy

Performance Targets	Performance
Provide the Government and Defence with comprehensive and timely strategic policy advice on current and emerging strategic issues in the international and domestic environment that affect Defence.	Achieved. Provided comprehensive and timely advice to the Government and Defence by: monitoring the environment and producing strategic guidance for Government consideration and to meet the requirements of the Defence Procurement Review and Defence Management and Finance Plan; delivering the strategic review, Australia's National Security: A Defence Update 2005; preparing four Quarterly Strategic Reviews; and undertaking assessments of the ability of the ADF to provide military response options at designated levels of readiness, and reporting this monthly to the Defence Committee, including recommended changes to preparedness levels, contingency planning and remediation of capability deficiencies.
Provide comprehensive and timely advice to the Government and Defence on military strategy and future military concepts that reflect the changing strategic environment.	Achieved. Provided military strategic planning guidance for several contingencies, and timely and responsive strategic policy advice on developments that could affect the need for deployment of the ADF.  This advice was provided to the Government, as well as various high-level Defence committees.  It included revised military strategic priorities, the drafting of a Defence Space Policy, ongoing evaluation of Defence and whole-of-government business continuity plans, and the development of future warfighting concepts.
Provide comprehensive and timely advice to the Government and Defence on proliferation issues and administer counter-proliferation and export control activities as required by legislation.	Achieved. Defence coordinated and took part in the international Proliferation Security Initiative, and developed and staged the Proliferation Security Initiative Exercise Pacific Protector 06 in April 2006, focusing on regional outreach.  Australia's compliance with international arms control regimes was successfully managed, as was the administration of Australia's export control system for military and dual use goods.
Provide the Government and Defence with improved policy input to the whole-of-government domestic security and counter-terrorism programs.	Achieved. Defence provided advice on amendments to Part IIIAAA of the Defence Act 1903 to streamline processes, improve legal powers and protections for ADF personnel, and expand the types of scenarios under which Defence can provide aid to the civil authorities.  These amendments were passed by Parliament in February 2006.
Develop and enhance Defence's policy workforce.	Achieved. This target was achieved through the delivery of Defence and strategic policy seminars; development of a strategic policy education framework; provision of strategic studies and counter-terrorism scholarships; and support of strategic studies in universities and think tanks.

Cost to Government

Table 2.43 Outcome Five—Strategic Policy for the Defence of Australia and its Interests

	Budget Estimate(1)	Additional Estimate(2)	Actual Result	Variation(3)	Variation(3)
	2005–06	2005–06	2005–06	2005–06	2005–06
	$'000	$'000	$'000	$'000	%
INCOME
Revenue
Goods and services	2,291	3,904	6,954	3,051	78.1
Interest	–	–	–4	–4	–
Other revenue	8,890	9,142	1,188	–7,954	–87.0
Total Revenue	11,181	13,046	8,138	–4,908	–37.6
Gains
Net foreign exchange Gains	–	–	–	–	–
Assets now recognised	14	2,977	6,686	3,709	124.6
Net gains from sale of assets	–	–	–	–	–
Other gains	–	–	301	301	–
Total Gains	14	2,977	6,987	4,010	134.7
Total Income	11,195	16,023	15,125	–898	–5.6
Operating Expenses
Employees	87,417	86,514	88,463	1,949	2.3
Suppliers	149,860	155,506	152,349	–3,156	–2.0
Grants	12	76	134	58	75.8
Finance Cost	304	326	1,010	684	209.9
Depreciation and amortisation	4,926	6,152	6,604	451	7.3
Write down and impairment of assets	5	171	2,934	2,764	1,620.4
Net foreign exchange losses	–	–	–83	–83	–
Net losses from sale of assets	–	97	–71	–168	–172.7
Other expenses	–	194	32	–162	–83.3
Total Expenses	242,524	249,036	251,373	2,337	0.9
Price to Government for Outcome Five	231,329	233,013	236,248	3,235	1.4

Table 2.44 Breakdown of Outcome Five by Output

	Budget Estimate(1)	Additional Estimate(2)	Actual Result	Variation(3)	Variation(3)
	2005–06	2005–06	2005–06	2005–06	2005–06
	$'000	$'000	$'000	$'000	%
Output 5.1—International Policy, Activities and Engagement	188,067	190,039	190,445	406	0.2
Output 5.2—Strategic Policy and Military Strategy	43,262	42,975	45,803	2,828	6.5
Price to Government for Outcome Five	231,329	233,014	236,248	3,234	1.4

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