Office of the

Minister for Defence

MIN 61/97 - Friday, 11 April, 1997

The Minister for Defence, Mr Ian McLachlan, today released the Defence Efficiency Review and announced a Defence Reform Program, based on the Review's 70 recommendations and findings.

In keeping with the Govemment's election commitment not to cut defence spending, resources freed by the Defence Reform Program will be redirected to enhancing military capabilities to keep pace with changing strategic and military circumstances.

Key Defence Reform Program initiatives include:

• Defence administration will increasingly focus on supporting the combat elements of the Australian Defence Force. This involves a cultural change away from a preoccupation on managing current activities, cash and inputs and towards a focus on Defence's key output, developing and maintaining highly capable combat forces.
• The size of the Defence Headquarters will be cut, and the numbers of committees and senior ranking military and civilian positions reduced to speed up decision making and reinforce lines of responsibility and accountability.
• Recognising the fundamental importance of the Chiefs of Navy, Army and Air Force, the Service Chiefs will have geater responsibility in overall Defence policy development. The single Services will remain as separate entities with the Chiefs in command of their Service.
• Command responsibilities will be made clearer, with operational headquarters amalgamated. New directives will be issued to the Chief of Defence Force and Secretary of Defence and by CDF to the Service Chiefs.
• An integrated joint Defence Headquarters developing policy and providing advice to all Defence senior managers.
• Acquisition functions will be collocated and reorganised into groups focusing on common industry sectors or equipment types (e.g. surface ships, aircraft and related systems, communications) rather than divided by Service.
• Support and administrative functions will be consolidated and duplication cut to maximise efficiency. This includes base logistics, engineering support, officer education, common technical training, personnel management, estate management, information management, and regional and base support.

Last year the Minister asked the Review, chaired by Dr Malcolm McIntosh, to examine Defence management; to eliminate unnecessary administrative practices and duplication; and to ensure the organisation focused on core functions.

Mr McLachlan said the Review built on a substantial record of Defence reform. However, the report identified areas where further change was necessary.

"l have directed the Chief of the Defence Force, General John Baker, and the Secretary of the Department of Defence, Mr Tony Ayers, to implement the Defence Reform Program as quickly as possible," Mr McLachlan said.

Mr McLachlan said that the initial changes would be in place from 1 July l997, with most changes to processes and organisations being achieved over the next four years.

The Defence Reform Program will achieve one-off savings in excess of $500 million. At maturity, there will be at least $770 million with the possibility of $1,000 million annual costs cut from support areas and redirected into enhancing military capabilities.

There will be a civilian staff reduction of around 3,100 positions. Some 4,700 military positions wiII be cut from administration and support areas. About half the military positions will be re-established in combat and combat support areas.

A further 7,000 military and 5,900 civilian positions will be tested in an acceleration of the Commercial Support Program.

"Given the scale of changes proposed, I regret that some redundancy programs will be required," Mr McLachlan said.

"However, in recognition of the contribution that Defence personnel will be making to these reforms, early action will be taken to negotiate productivity-based agency agreements for both Defence Force and civilian personnel.

Some personnel reductions will be felt in the ACT. However the Government will consider measures to offset some of these effects by evaluating proposals such as collocating the three Single Service Staff Colleges in the ACT.

It is too early to say in detail what impact the Reform Program will have on other areas of Australia. There will be some personnel reductions in Defence administration positions in some areas.

However, the effect of the Reform Program will be to increase resources spent around Australia on combat and combat-support units. Australian industry will also benefit from increased equipment and commercial support possibilities.

Mr McLachlan said that he had asked the Chief of the Defence Force and the Secretary of Defence to report regularly on progress in implementation.

"The Defence Efficiency Review's 70 findings and recommendations will be used as benchmarks to measure reform progress.

"I expect that there may be some marginal changes from the Review recommendations as the Defence Reform Program progresses," the Minister said.

"We will continue to look for opportunities to increase efficiency and effectiveness."

Mr McLachlan congratulated Dr McIntosh and his colleagues, ie many members of the Defence organisation and external advisers who contributed to the Review.

"The Review says the 'vast majority of proposals for improvement' came from serving Defence personnel and civilians. The Review received 296 submissions and team members held around 500 interviews, the vast majority with Defence personnel.

"This does not surprise me. While some are naturally cautious about change, the majority in Defence know reform is needed and are eager to get on with the job.

"I am confident that the Defence organisation will successfully meet the challenge of reform so we can strengthen our defence capabilites," Mr McLachlan said.

Jim Bonner Ph 0419 438 490

See also:

• Defence Efficiency Review Report
• Other Media Statements and Speeches
• Defence Home Page