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Chapter 4

PEOPLE

This chapter provides a summary of our performance against the personnel priorities and initiatives in 2005–06, together with details of our workforce and related staffing matters.

Workforce Overview

The workforce overview is in two parts. The first section contains information on average funded strength during 2005–06 which is used by Defence for budget and management purposes and provides a measure of Defence's performance against its budget and personnel estimates over the financial year. The second section contains ADF workforce recruiting and separations data. Information on the actual number of people employed by Defence as at 30 June 2006 appears in the Appendices.

Defence Workforce—Budget Aspect

This section provides information on budgeted average staffing levels for the year and compares actuals with estimates for the financial year. The following tables assess performance against budget and revised staffing level estimates for 2005–06.

The average funded strength of the Permanent Force reduced by 1,032 to 51,159 in the 2005–06 Additional Estimates due to recruitment and retention difficulties. The actual average strength for 2005–06 of 51,151 was within 8 of the reduced estimate. Although this was only a small variation compared with the revised estimate, the average strength of the ADF during 2005–06 reduced by 662 from 51,813 in 2004–05 to 51,151 in 2005–06. Table 4.2 provides details by each of the three Services.

Table 4.2 ADF Permanent Force Average Funded Strength(1)(2)
  2004–05 Actual 2005–06 Budget Estimate 2005–06 Revised Estimate 2005–06 Actual Variation(3) %
Navy 13,089 13,209 12,800 12,767 –33 –0.3
Army 25,356 25,484 25,171 25,241 70 0.3
Air Force 13,368 13,498 13,188 13,143 –45 –0.3
Total Permanent Forces 51,813 52,191 51,159 51,151 –8 –0.02

Notes:

  1. Staffing numbers for Permanent Forces are based on average funded strengths and includes Reservists undertaking full-time service. The average funded strength of Reservists undertaking full-time service in 2005–06 was 995, comprising Navy 262, Army 579 and Air Force 154.
  2. Includes ADF members in the DMO.
  3. 2005–06 Actual compared to the Revised Estimate.

Table 4.3 shows the number of Reservists who rendered paid service during 2005–06. In total, 19,464 Reservists undertook paid service, 686 less than the revised estimate of 20,150. The main reasons for the shortfall included difficulties in recruitment and retention, as well as lower than projected use of Reserve days by non-Service Groups. Although actual numbers were 686 below forecasts, some 189 more Reservists rendered service in 2005–06 compared with 2004–05.

Table 4.3 ADF Reserve Paid Strength(1)(2)
  2004–05 Actual 2005–06 Budget Estimate 2005–06 Revised Estimate 2005–06 Actual Variation(3) %
Navy 1,243 1,850 1,850 1,598 –252 –13.6
Army 15,845 16,000 16,000 15,579 –421 –2.6
Air Force 2,187 2,300 2,300 2,287 –13 –0.6
Total Reserve Forces 19,275 20,150 20,150 19,464 –686 –3.4

Notes:

  1. Excludes the 995 Reservists in 2005–06 who undertook full-time service in the Permanent Force. These are included in Table 4.2.
  2. Includes Reservists in the DMO.
  3. 2005–06 Actual compared to the Revised Estimate.

Table 4.4 shows details of the Australian Public Service average strength, expressed as full-time equivalents, for 2005–06. This excludes the Defence Materiel Organisation's staffing which is shown in the Defence Annual Report 2005–06 Volume 2. The average strength was 13,577 which was an increase of 156 compared with the revised estimate of 13,421. The increase was due to improvements in recruitment and retention outcomes during the year.

Table 4.4 APS Average Funded Strength(1)
  2004–05 Actual 2005–06 Budget Estimate 2005–06 Revised Estimate 2005–06 Actual Variation(2)
Defence Groups         %
Vice Chief of the Defence Force 1,045 799 883 887 4 0.5
Navy 722 728 731 711 –20 –2.7
Army 625 669 692 676 –16 –2.3
Air Force 858 880 885 875 –10 –1.1
Corporate Services and Infrastructure Group 3,901 3,732 3,926 3,899 –27 –0.7
Defence Personnel Executive 1,089 1,184 1,182 1,209 27 2.3
Defence Science and Technology Organisation 2,168 2,202 2,227 2,224 –3 –0.1
Other Groups 2,982 3,176 2,895 3,096 201 6.9
Total APS 13,390 13,370 13,421 13,577 156 1.2

Notes:

  1. This table excludes workforce data for the DMO.
  2. 2005–06 Actual compared to the Revised Estimate.

Professional Service Providers

In addition to military and civilian employees, Defence engages a number of Professional Service Providers as part of its total workforce. These are individuals with specialist skills contracted to fill APS line positions usually because of Defence's inability to recruit or retain civilian staff with particular specialist skills and the filling of military vacancies. Table 4.5 shows details of the number of Professional Service Providers engaged by Defence for 2005–06, expressed as an average strength. While the table shows an increase of 79 against the revised estimate, there was an overall decrease of 199 from the previous financial year.

Table 4.5 Professional Service Providers Average Funded Strength(1)
Defence Groups 2004–05 Actual 2005–06 Budget Estimate 2005–06 Revised Estimate 2005–06 Actual Variation(2)
Vice Chief of the Defence Force 9 6 4 4 0
Navy 6 6 6 4 –2
Army 0 0 0 1 1
Air Force 27 16 16 22 6
Corporate Services and Infrastructure Group 35 38 71 87 16
Defence Personnel Executive(3) 933 771 769 810 41
Defence Science and Technology Organisation 3 16 16 8 –8
Other Groups 505 488 358 383 25
Total PSPs 1,518 1,341 1,240 1,319 79

Notes:

  1. This table excludes workforce data for the DMO.
  2. 2005–06 Actual compared to the Revised Estimate.
  3. A large proportion of Defence Personnel Executive Professional Service Providers were engaged to provide health services to the ADF.

Personnel numbers by service and rank

Table 4.6 shows the breakdown of personnel by Service and rank, including Defence APS employees.

Table 4.6 Breakdown of Personnel Numbers by Service and Rank
  2004–05 Actual 2005–06 Budget Estimate 2005–06 Revised Estimate 2005–06 Actual
Navy
Star-ranked officers 36 34 34 40
Senior officers 433 429 403 443
Junior officers 2,480 2,548 2,462 2,504
Other ranks 10,140 10,198 9,901 9,780
Sub-total permanent Navy 13,089 13,209 12,800 12,767
Reserves(1) 1,243 1,850 1,850 1,598
Sub-total Navy 14,333 15,059 14,650 14,365
Army
Star-ranked officers 51 53 53 57
Senior officers 603 603 608 644
Junior officers 4,626 4,597 4,677 4,744
Other ranks 20,076 20,231 19,833 19,796
Sub-total permanent Army 25,356 25,484 25,171 25,241
Reserves(1) 15,845 16,000 16,000 15,579
Sub-total Army 41,201 41,484 41,171 40,820
Air Force
Star-ranked officers 38 40 38 38
Senior officers 515 492 510 517
Junior officers 3,511 3,512 3,459 3,477
Other ranks 9,305 9,454 9,181 9,111
Sub-total permanent Air Force 13,368 13,498 13,188 13,143
Reserves(1) 2,187 2,300 2,300 2,287
Sub-total Air Force 15,556 15,798 15,488 15,430
APS
Senior executives 80 93 99 92
Senior executive relief staff(2) 16 – – 10
Senior officers(3) 2,819 3,170 3,324 3,112
Senior officer relief staff(2) 262 – – 237
Others 10,214 10,107 9,998 10,126
Sub-total APS(4)(5) 13,390 13,370 13,421 13,577
Professional Service Provider(s)(6) 1,518 1,341 1,240 1,319
Total Workforce 85,998 87,052 85,970 85,511

Notes:

  1. The 2005–06 Reserve strength represents Reservists who undertook paid service.
  2. Relief staff represents the full-time average of personnel acting within a higher classification for short duration pending permanent filling action or while the incumbents are taking leave, acting in higher positions or are on secondment to other agencies.
  3. Senior Officers comprise substantive Executive Levels 1 and 2.
  4. Staffing numbers for APS are based on average full-time equivalent.
  5. The DMO became a prescribed agency on 1 July 2005. The figures for APS personnel and Professional Service Providers do not include APS and Professional Service Providers employed within the DMO. Refer to Defence Annual Report 2005–06 Volume 2 for details.
  6. Professional Service Providers are individuals under contract filling line positions.

Employee Expenses

Employee expenses totalled $6,285.8m, or $73.0m less than the revised estimate of $6,358.8m. The variation comprises permanent military employee expenses (–$16.2m), Reserve employee expenses (–$9.6m) and civilian employee expenses (–$47.2m). Table 4.7 provides details.

Table 4.7 Explanation of Variations in Employee Expenses
  2005–06 Budget Estimate 2005–06 Revised Estimate 2005–06 Actual Result Variation
  $m $m $m $m %
Salaries, Allowances, Superannuation and Leave Expense(1) 4417.2 4221.2 4196.9 –24.3 –0.6
Housing 428.5 422.7 419.4 –3.3 –0.8
Health Services 148.2 167.6 180.1 12.5 7.5
Fringe Benefits Tax 317.3 297.8 296.7 –1.1 –0.4
Subtotal Permanent ADF 5,311.2 5,109.3 5,093.1 –16.2 –0.3
Navy Reserves 13.1 14.6 15.3 0.7 4.8
Army Reserves 95.5 97.6 89.3 –8.3 –8.5
Air Force Reserves 21.5 23.4 21.4 –2.0 –8.5
Subtotal Reserves 130.1 135.6 126.0 –9.6 –7.1
Salaries, Allowances, Superannuation and Leave Expense 1,125.9 1,090.6 1,051.7 –38.9 –3.6
Other Expenses including Fringe Benefits Tax 20.3 23.3 15.0 –8.3 –35.6
Subtotal APS 1,146.2 1,113.9 1,066.7 –47.2 –4.2
Total Employee Expenses 6,587.5 6,358.7 6,285.8 –72.9 –1.1

Note:

  1. Other Expenses include Comcare Premium and Superannuation Guarantee Charge.
Permanent Military Employees (–$16.2m)

Military employee expenses totalled $5093.1m, or $16.2m less than the revised estimate of $5109.3m. This decrease was due to:

  • a variation in Salaries, Allowances, Superannuation and Leave Expense of –$24.3m due to:
    • an overestimate in the original budget estimate (–$9.8m);
    • underspend in the Defence People Plan due to delays in preparing proposals for approval and consequently the implementation of various initiatives (–$10.8m);
    • a decrease to budget due to an overestimate of the Superannuation Guarantee Charge in respect of Health Service Professionals (–$2.9m); and
    • a variation in average funded strength comprising Navy (–33), Army (+70) and Air Force (–45) (–$0.8m);
  • a decrease in military housing costs due to a lower than anticipated achievement against the Direct Rent Bill coupled with a decrease in maintenance costs and cleaning services (–$3.3m); and
  • lower than forecast Fringe Benefits Tax payments reflecting lower personnel numbers and related conditions of service payments which are subject to FBT (–$1.1m).
  • Military health expenditure was higher than anticipated (+$12.5m) due to difficulties in forecasting actual expenditure. Overall this expenditure increased by only 7 per cent in 2005–06 compared with 18 per cent growth in 2004–05. Areas of significant increase in costs in 2005–06 included:
    • the full year cost impact of new contracts for contract health practitioners, primarily for medical officers and nursing staff;
    • increases in private hospital costs and in some areas, increased usage; and
    • increased health items expenses due to obligations under Military Rehabilitation and Compensation Act 2004.
Reserves Employees (–$9.6m)

ADF Reserves expenses totalled $126.0m, representing a decrease of $9.6m from the 2005–06 revised estimates of $135.6m. This was due to an increase in Reservists undertaking full-time service (995 in 2005–06 compared with 649 in 2004–05), a lower than anticipated number of Reservists due to ongoing difficulties in recruitment and retention, as well as lower than projected use of Reserve days by non-Service groups.

Civilian Employees (–$47.2m)

Civilian employee expenses totalled $1,066.7m, which was $47.2m lower than the 2005–06 revised estimate of $1,113.9m. The decrease was due to:

  • the bringing to account of leave expenses late in 2004–05 rather than as budgeted in 2005–06 (–$20.4m);
  • an adjustment of Workers Compensation (Comcare) Premiums to a Suppliers expense as a result of a new Finance Minister's Order (–$15.6m);
  • variation in actual versus planned strength offset by an overestimate of the original budget (–$11.9m); and
  • other minor variations including Fringe Benefits Tax payments (+$0.7m).

Costs of the Reserve

Salaries and allowances costs for the Reserve are shown in Table 4.7. Table 4.8 below provides additional details of the costs in supplier expenses relating to the Reserves Enhancement Initiatives.

The Reserves Enhancement Initiative provided funds to make employer support payments. This scheme provides financial assistance to eligible employers to help offset the costs of releasing employees for most categories of ADF service. Employer support payments are paid at a set weekly rate and the weekly rate is equivalent to the average weekly full-time adult ordinary time earnings. The variation was due primarily to lower than anticipated take up of employer support payments.

Table 4.8 Reserves Enhancement Initiatives
  2005–06 Budget Estimate 2005–06 Revised Estimate 2005–06 Actual Result Variation
  $m $m $m $m %
Reserve Enhancement 20.0 17.4 15.8 –1.6 –9.1

ADF Enlistments and Recruiting

The ADF enlisted 5,367 permanent members, 4,591 men and 776 women, for the 12 months to 30 June 2006, as shown in Table 4.9. This was 433 more than in 2004–05.

The recruiting achievement against the target for the Permanent Forces for 2005–06 was 84 per cent, which was four per cent higher than in 2004–05. The 2005–06 recruiting achievement of 77 per cent for the Reserves was also higher, with a five per cent increase from 2004–05. Further detail is provided in Table 4.10 and Table 4.11.

Table 4.9 Permanent Force Enlistments 2004–05 and 2005–06(1)(2)(3)
  Navy Army Air Force(4) ADF
  Men Women Men Women Men Women Men Women
2004–05
Trained Force
Officers 27 4 151 27 41 12 219 43
Other ranks 53 10 205 34 62 15 320 59
Training Force
Officers 134 49 246 51 139 34 519 134
Other ranks 787 177 2,032 162 389 93 3,208 432
Total 1,001 240 2,634 274 631 154 4,266 668
2005–06
Trained Force
Officers 31 5 139 36 65 23 235 64
Other ranks 54 9 166 26 78 18 298 53
Training Force
Officers 117 52 250 48 154 49 521 149
Other ranks 757 212 2,135 158 645 140 3,537 510
Total 959 278 2,690 268 942 230 4,591 776

Notes:

  1. Figures in this table show actual staff.
  2. Enlistments exclude Reserves commencing periods of full-time duty.
  3. Figures include inter and intra-Service transfers processed by the Services and, therefore, do not correlate with the recruiting activity shown in Table 4.10.
  4. All Air Force recruits are enlisted into the training force.
Table 4.10 ADF Permanent Force Recruiting Activity 2004–05 and 2005–06(1)
  Navy Army Air Force ADF
2004–05
Total inquiries 7,138 24,669 12,107 43,914(2)
Formal applications 3,099 6,849 2,951 12,899
Applicants enlisted 1,136 2,309 700 4,145
Target 1,551 2,849 762 5,162
Percentage achieved 73 81 92 80
2005–06
Total inquiries 8,725 31,434 14,726 54,885(3)
Formal applications 2,816 6,482 3,371 12,669
Applicants enlisted 1,134 2,502 1,041 4,677
Target 1,585 2,804 1,182 5,571
Percentage achieved 72 89 88 84

Notes:

  1. These figures only include ab initio enlistees and, therefore, do not correlate with the enlistments shown in Table 4.9.
  2. In addition, there were 16,754 tri-Service, Permanent and Reserve force inquirers who were undecided on which Service they wished to join and whether they were interested in Permanent or Reserve commitment.
  3. In addition, there were 17,959 tri-Service, Permanent and Reserve force inquirers who were undecided on which Service they wished to join and whether they were interested in Permanent or Reserve commitment.
Table 4.11 Reserve Force Recruiting Activity for 2004–05 and 2005–06
  Navy Army Air Force ADF
2004–05
Total inquiries 927 20,568 1,869 23,364(1)
Formal applications 118 5,563 462 6,143
Applicants enlisted 33 2,194 145 2,372
Target 131 2,870 278 3,279
Percentage achieved 25 76 52 72
2005–06
Total inquiries 1,010 18,620 2,533 22,163(2)
Formal applications 152 5,223 544 5,919
Applicants enlisted 32 2,179 221 2,432
Target 135 2,636 397 3,168
Percentage achieved 24 83 56 77

Notes:

  1. In addition, there were 16,754 tri-Service, Permanent and Reserve force inquirers who were undecided on which Service they wished to join and whether they were interested in Permanent or Reserve commitment.
  2. In addition, there were 17,959 tri-Service, Permanent and Reserve force inquirers who were undecided on which Service they wished to join and whether they were interested in Permanent or Reserve commitment.

Chart 4.1: ADF Full Time Recruiting Performance 2002–03 to 2005–06

Navy

Navy - Full Time Recruiting Performance: 2002-03 Recruited 1556, Achieved 84.5%; 2003-04 Recruited 1515, Achieved 86.1%; 2004-05 Recruited 1136, Achieved 73.2%; 2005-06 Recruited 1134, Achieved 71.5%

Army

Army - Full Time Recruiting Performance: 2002-03 Recruited 1842, Achieved 78.7%; 2003-04 Recruited 2418, Achieved 84.5%; 2004-05 Recruited 2309, Achieved 81.0%; 2005-06 Recruited 2502, Achieved 89.2%

Air Force

Air Force - Full Time Recruiting Performance: 2002-03 Recruited 924, Achieved 94.3%; 2003-04 Recruited 814, Achieved 89.6%; 2004-05 Recruited 700, Achieved 91.9%; 2005-06 Recruited 1041, Achieved 88.1%

ADF

ADF - Full Time Recruiting Performance: 2002-03 Recruited 4322, Achieved 83.7%; 2003-04 Recruited 4747, Achieved 85.8%; 2004-05 Recruited 4145, Achieved 80.3%; 2005-06 Recruited 4677, Achieved 84.0%

The above charts show the number of full-time personnel recruited and the percentage achieved of the annual target by each Service and the ADF over the last four financial years. The ADF's recruiting performance improved in 2005–06, due mainly to a higher achievement rate in the Army and a larger target in the Air Force.

Chart 4.2: ADF Reserve Recruiting Performance 2002–03 to 2005–06

Navy

Navy - Reserve Recruiting Performance: 2002-03 Recruited 54, Achieved 33.8%; 2003-04 Recruited 31, Achieved 42.5%; 2004-05 Recruited 33, Achieved 25.2%; 2005-06 Recruited 32, Achieved 23.7%

Army

Army - Reserve Recruiting Performance: 2002-03 Recruited 2889, Achieved 92.3%; 2003-04 Recruited 2317, Achieved 84.0%; 2004-05 Recruited 2194, Achieved 76.4%; 2005-06 Recruited 2179, Achieved 82.7%

Air Force

Air Force - Reserve Recruiting Performance: 2002-03 Recruited 122, Achieved 38.6%; 2003-04 Recruited 146, Achieved 51.6%; 2004-05 Recruited 145, Achieved 52.2%; 2005-06 Recruited 221, Achieved 55.7%

ADF

ADF - Reserve Recruiting Performance: 2002-03 Recruited 3065, Achieved 85.0%; 2003-04 Recruited 2494, Achieved 80.1%; 2004-05 Recruited 2372, Achieved 72.3%; 2005-06 Recruited 2432, Achieved 76.8%

The above charts show the number of part-time personnel recruited and the percentage achieved of the annual target by each Service and the ADF over the last four financial years. The ADF's recruiting performance improved in 2005–06, due mainly to a higher achievement rate in the Army and a larger target in the Air Force.

ADF Separations

In 2005–06, separation rates for the permanent force were:

  • Navy—11 per cent;
  • Army—12 per cent;
  • Air Force—8 per cent; and
  • ADF—11 per cent.

The total number of ADF separations decreased in each of the three Services from 2004–05. Separation rates remain below the ten-year average separation rate for each Service and the ADF as a whole.

Table 4.12 ADF Permanent Force Separations 2004–05 and 2005–06(1)(2)
    Voluntary(3) Involuntary(4) Age Retirement Cadets and Trainees Total
2004–05
Navy Officers 178 21 – 50 250
  Other ranks 815 224 2 310 1,351
Army Officers 349 28 1 91 469
  Other ranks 1,578 659 3 504 2,744
Air Force Officers 277 20 2 55 354
  Other ranks 620 62(5) 19 72 773
Total ADF Officers 804 70 3 196 1,073
Other ranks 3,013 944 24 886 4,868
2005–06
Navy Officers 148 15 1 68 232
  Other ranks 763 237 – 214 1,214
Army Officers 335 29 – 87 451
  Other ranks 1,649 592 2 428 2,671
Air Force Officers 223 14 18 34 289
  Other ranks 619 76 11 88 794
Total ADF Officers 706 58 19 189 972
Other ranks 3,031 905 13 730 4,679

Notes:

  1. Figures in this table show actual staff.
  2. Non-effective personnel (personnel on maternity leave and leave without pay) and Reserves completing periods of full-time duty are not included.
  3. 'Voluntary' includes redundancies and resignations.
  4. 'Involuntary' primarily comprises members who were medically unfit or unsuitable for further training and Management Initiated Early Retirement.
  5. Adjusted from 61 to 62 to account for one retrospective separation.

Chart 4.3: permanent ADF and Service Separation Rates July 2002 to July 2006

Navy

Navy - Separation Rates

Army

Army - Separation Rates

Air Force

Air Force - Separation Rates

ADF

ADF - Separation Rates

The above charts show the variation in the 12–month rolling separation rate for the ADF and each Service. Over the latter part of 2005–06, the rates for each Service have been relatively static. The rates vary within a range of two to three per cent.

Navy Personnel

The Navy 'Sea Change' program remains focused on retention. By implementing a wide range of personnel management initiatives and updating both conditions of employment and service, the Navy is actively addressing personnel issues and responding to changing expectations of the current and future workforce.

Officer recruitment in the seaman, supply, training systems and undergraduate doctor and dentist professional qualification streams has improved since 2004–05, but recruiting shortfalls occurred in technical trades, combat systems operators, stewards and some officer specialisations. This underachievement is a reflection of the competition between Defence and other organisations for a diminishing labour resource. Low recruitment figures for electronics technicians, doctors, marine and electrical engineering officers also remain a concern.

Army Personnel

The Army is developing a Retention and Recruiting Plan that aims to support the Army's growth, offering a range of broad based and targeted retention measures. These will include financial incentives intended as short-term inducement for soldiers and officers to serve on for a specified period in order to maintain current capabilities, while Army support for the centralised ADF recruiting function increases.

In order to assist the ADF recruiting effort, the Army will be expanding its involvement in a number of areas including school visits and road shows. A range of measures are also under consideration that will attempt to shorten the amount of time it takes to process potential enlistees. The use of targeted retention initiatives for critical trades will continue, noting that the first tranche of retention bonuses for critical trades has had a healthy take-up rate.

Air Force Personnel

The Air Force maintained a strong focus on retention of personnel, resulting in a reduction in the separation rate of trained personnel. Broad based personnel initiatives contained in the Air Force Personnel Strategy continued to result in good retention levels across most employment groups.

The Air Force also sustained a high level of recruiting achievement in the competitive national labour market, resulting in overall growth of the workforce. Targeted initiatives addressed the critical risk categories of air traffic control officer, medical officer and environmental health surveyor. The Air Force increased the use of Reserve personnel to effectively substitute for specific shortfalls in permanent force numbers where necessary.

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