Comments by the Hon Ian McLachlan, AO, MP

Minister for Defence


Friday, 11 April 1997


Today I am releasing the findings of the Defence Efficiency Review, and announcing an implementation plan to reform Defence administration.

This program will be based on the seventy recommendations and findings of the Defence Efficiency Review.



The Government's Defence Reform Program will improve the speed and quality of decision making in Defence by:

As well as increasing the efficiency and effectiveness of Defence Department administration, the Defence Reform Plan will:

It will take us four years to achieve these returns in terms of funds realised from efficiencies.

In keeping with our policy announced before the last election, the total level of Defence spending will not be cut.

Funds released by the Defence Reform Program will be used to enhance training, and to modernise and strengthen the combat capabilities of the Defence Force.

The Defence Efficiency Review studied administration, not capability needs.



The Strategic Review, which is still under development, will set equipment and defence capability priorities.

These will be considered by Government in due course. A number of priorities are obvious, including, in no particular order:

I could add forty more to that list.

In addition to that we need to put more money towards exercising and operations. The Government has identified shortfalls in training and readiness which need more funding.

And we need, as well, to properly compensate our military and civilian Defence personnel for their demanding work.

I have asked the Secretary of Defence and the Chief of the Defence Force to have the new structure in place by July 1st this year.

I will report to the Parliament on progress in implementation.



The Defence Efficiency Review started from the point that Defence's purpose is to provide highly capable military forces to protect Australia.

We do not identify any potential threats at present, but as a principle the Defence Organisation must be organised so it can fight a war, and it must adapt this organisation to peacetime conditions.

The Defence Reform Program ensures that Defence administration will increasingly focus on supporting the combat 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 civilian positions reduced to speed up decision making and reinforce lines of responsibility and accountability.

The Review investigated the Canadian model of amalgamating the Services, and decided it was not appropriate for Australia.



The single Services will remain separate -- with the Chiefs in Command of their Services.

Recognising the fundamental importance of the single Services, the Chiefs of Navy, Army and Air Force, the Service Chiefs will have greater responsibility in overall Defence policy development.

I will issue new directives to the Chief of the Defence Force and the Secretary of Defence. The Chief of Defence Force will issue new directives to the Service Chiefs.

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.



In terms of personnel reductions, the effect of these changes over the next four years will be to reduce Defence civilian positions by 3,100.

Some 4,700 military positions will be cut from administration and support. About half the military positions will be re-established in combat and combat-support areas.

Senior officer and senior Defence civilian numbers (that is, Colonel level and above) will be reduced by about 20 per cent.

I regret that some redundancy programs will be required.

But, recognising the contribution that Defence personnel will make to these reforms, early action will be taken to negotiate productivity based agency agreements for both Defence Force and civilian personnel.



On the regional impact of the DER, some reductions will be felt in the ACT. The Government will consider offsetting measures by evaluating proposals such as co-locating the Service Staff Colleges in the ACT.

There will be some personnel reductions in Defence administration positions in some areas.

The review identifies a number of defence facilities which will be considered for disposal.

Defence cannot afford to carry the financial burden of many obsolescent bases dating back to the Second World War and earlier.

Facilities disposals will involve the usual process of negotiating with community and other stake-holders.

More generally, 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.



I would like to thank Dr Malcolm McIntosh, his Senior Review Panel and the DER Secretariat, particularly Brigadier Peter Dunn and Mr Patrick Hannan for their effort and for the excellent outcome of the review.


The DER involved an exhaustive consultation process.

The Review says the "vast majority of proposals for improvement" came from serving Defence personnel and civilians.

The DER tapped an enormous amount of energy and support for reform among the men and women of the Defence Organisation.

I am confident that the Defence Reform Program will make the organisation more efficient and effective, and that it will free resources to enhance our combat capability.

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