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Chapter 5 - Corporate governance


Defence is administered by a diarchy, which is the term used to describe the joint leadership of Defence by the Secretary of Defence and the Chief of the Defence Force, under the general control of the Minister for Defence. The concept, which is supported by legislative and administrative arrangements, encompasses the individual and joint responsibilities and accountabilities of the Secretary and the Chief of the Defence Force.

Within the diarchy:

  • the role of the Chief of the Defence Force is to command the Australian Defence Force (ADF) and be the principal adviser to the Minister on military matters, including operations
  • the role of the Secretary is that of the principal civilian adviser to the Minister. The Secretary has all the rights, duties and powers of an agency head under the Public Service Act 1999 and is responsible for the Department of Defence and the ADF under the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The Secretary is responsible for advising the Minister for Defence on policy and departmental issues, and matters relating to the stewardship of Defence resources.

Senior management committees and their roles

Defence has seven senior management committees, which are the primary mechanisms for providing direction and assuring the alignment of strategy, capability and resources. A brief overview of each committee is provided in this section.

Defence Committee

The Defence Committee is the primary decision-making committee in the department. It is focused on the major capability and resource trade-offs and the management of the Secretary and the Chief of the Defence Force’s shared accountabilities. The Defence Committee is also responsible for setting the direction and driving the implementation of the 2016 Defence White Paper and the recommendations from the First Principles Review.

The Defence Committee is supported by two subordinate committees—the Enterprise Business Committee and the Investment Committee.

Table 5.1 shows membership of the Defence Committee as at 30 June 2017.

Table 5.1: Membership of the Defence Committee, as at 30 June 2017

Position Role Incumbent
Secretary Chair Mr Brendan Sargeant (acting)
Chief of the Defence Force Alternate Chair (in Secretary’s absence) Air Chief Marshal Mark Binskin
Associate Secretary Responsible for enterprise planning, performance and risk management, and the integration of corporate enabling services Mr Brendan Sargeant
Vice Chief of the Defence Force Responsible for championing joint capabilities and future force design (including preparedness settings and military strategy), and integrating military enabling services (such as joint logistics policy, joint health and joint education) Vice Admiral Ray Griggs
Deputy Secretary Strategic Policy and Intelligence Responsible for policy, strategy, contestability, strategic risk and intelligence, including the three Defence intelligence agencies Ms Rebecca Skinner
Chief Finance Officer Responsible for financial control and assurance Mr Phillip Prior

Enterprise Business Committee

The Associate Secretary chairs the Enterprise Business Committee, which is responsible for ensuring the effective running of Defence. Its remit includes corporate planning, performance monitoring and reporting, enterprise risk management, information management and service delivery reform.

Table 5.2 shows membership of the Enterprise Business Committee as at 30 June 2017.

Table 5.2: Membership of the Enterprise Business Committee, as at 30 June 2017

Position Incumbent
Associate Secretary (Chair) Mr Brendan Sargeant
Vice Chief of the Defence Force Vice Admiral Ray Griggs
Deputy Secretary Strategic Policy and Intelligence Ms Rebecca Skinner
Chief Finance Officer Mr Phillip Prior
Chief of Navy Vice Admiral Tim Barrett
Chief of Army Lieutenant General Angus Campbell
Chief of Air Force Air Marshal Leo Davies
Deputy Secretary Capability Acquisition and Sustainment Mr Kim Gillis
Deputy Secretary Defence People Ms Roxanne Kelley
Chief Information Officer Dr Peter Lawrence
Deputy Secretary Estate and Infrastructure Mr Steve Grzeskowiak
Chief Defence Scientist Dr Alex Zelinsky

Investment Committee

The Vice Chief of the Defence Force chairs the Investment Committee, which is focused on the future force and is responsible for bringing the future force and supporting enablers into being. The Investment Committee governs the delivery of the Integrated Investment Program through review of proposals, taking into account force requirements, all necessary enabling functions and full-life costs. The Investment Committee provides advice to the Defence Committee to assure the alignment of strategy, capability and resources.

Table 5.3 shows membership of the Investment Committee as at 30 June 2017.

Table 5.3: Membership of the Investment Committee, as at 30 June 2017

Position Incumbent
Vice Chief of the Defence Force (Chair) Vice Admiral Ray Griggs
Associate Secretary Mr Brendan Sargeant
Deputy Secretary Strategic Policy and Intelligence Ms Rebecca Skinner
Chief Finance Officer Mr Phillip Prior
Chief of Navy Vice Admiral Tim Barrett
Chief of Army Lieutenant General Angus Campbell
Chief of Air Force Air Marshal Leo Davies
Deputy Secretary Capability Acquisition and Sustainment Mr Kim Gillis
Chief Defence Scientist Dr Alex Zelinsky
Deputy Secretary from the Department of Finance Mr David Fredericks
Deputy Secretary from the Department of the Prime Minister and Cabinet Mr Allan McKinnon
First Assistant Secretary Contestability (permanently invited official) Mr Michael Shoebridge

Defence Audit and Risk Committee

The Defence Audit and Risk Committee, chaired by Mr Paul Rizzo, operates under the authority of the Secretary and is a central element of governance in Defence. It provides robust, independent advice on all aspects of Defence governance to the Secretary and the Chief of the Defence Force. The role and responsibilities of the Defence Audit and Risk Committee are to review all aspects of the governance and assurance frameworks, including financial, performance and risk management, the internal controls framework, compliance, accountability and audit.

Table 5.4 shows membership of the Defence Audit and Risk Committee as at 30 June 2017.

Table 5.4: Membership of the Defence Audit and Risk Committee, as at 30 June 2017

Position Role Incumbent
External member Chair Mr Paul Rizzo
External member Deputy Chair Mr Alan Beckett
Associate Secretary Member Mr Brendan Sargeant
Vice Chief of the Defence Force Member Vice Admiral Ray Griggs
External member Member Ms Jennifer Clark
First Assistant Secretary Audit and Fraud Control Division Adviser Dr Tom Clarke (acting)
Chief Finance Officer Observer Mr Phillip Prior
Australian National Audit Office Observer Ms Carla Jago
Australian National Audit Office Observer Mr Garry Sutherland

Chiefs of Service Committee

The Chief of the Defence Force chairs the Chiefs of Service Committee, which is the primary mechanism for providing his direction to the Australian Defence Force and for governing achievement of the Chief of the Defence Force Preparedness Directive. The effectiveness of military operations in meeting government policy requirements is monitored through the Chief of the Defence Force’s Strategic Command Group.

Strategic Policy Committee

The Strategic Policy Committee is a whole-of-Defence forum that considers and makes decisions on key strategic issues including, but not limited to, strategic guidance for major capability decisions; development of Cabinet submissions on major policy issues; defence policy for major initiatives or international engagements; and the Defence position for significant international dialogues.

The Strategic Policy Committee is chaired by the Secretary, and the decisions of the committee are binding across the Defence organisation.

Gender Equality Advisory Board

The Gender Equality Advisory Board was established to drive and shape the strategic direction of the Secretary’s and the Chief of the Defence Force’s gender equality priorities within the broader Defence cultural reform agenda. The board considers the most significant gender equality issues applicable to the Defence workforce, and monitors and evaluates whole-of-Defence performance on these matters.

The Gender Equality Advisory Board comprises seven internal Defence members, including the Secretary and the Chief of the Defence Force, four external members and one special adviser. The board is chaired jointly by the Secretary and the Chief of the Defence Force.

Performance and accountability

The purpose of enterprise performance management is to keep strategy, capability and resources aligned with Government direction. Performance management is a critical part of Defence’s overall management strategy, and the PGPA Act obliges all Commonwealth officials to apply good governance and management practices and procedures in their day-to-day work.

Defence’s Enterprise Performance Management Framework was implemented in November 2016. This framework describes how Government policy direction and requirements are translated into the required corporate planning and budget allocation framework and then cascaded into a set of activities that are implemented and resourced through Group- and Service-level plans.

Defence’s Strategy Framework 2017 was released in May 2017 and is a key element of Defence enterprise performance management. Within the Strategy Framework, policy direction from Government includes the Defence White Paper, the Integrated Investment Program, the Defence Industry Policy Statement, the First Principles Review and the Defence budget. This policy direction shapes strategic policy guidance, including the Defence Planning Guidance and Australia’s Military Strategy.

The high-level architecture of Defence’s enterprise performance management is depicted in Figure 5.1.

Figure 5.1: Defence enterprise performance management architecture

Figure 5.1: Defence enterprise performance management architecture

As part of the Enterprise Performance Management Framework, the Defence Corporate Plan is underpinned by an internal Defence Business Plan. The business plan provides all Defence personnel with guidance about how the planned enterprise performance will be measured and how the activities in the corporate plan will be implemented. The business plan assigns enterprise accountabilities and responsibilities to members of the Senior Leadership Group, in accordance with the Secretary and Chief of the Defence Force Joint Directive on Enterprise Performance Management.

The Defence performance report provides the Enterprise Business Committee, the Defence Committee and the Minister for Defence with an update of Defence’s achievement of the purposes and activities in the Defence Business Plan and other enterprise-level plans. The Defence performance report also monitors the enterprise-level risks and provides Defence’s leadership team with the information they need to make decisions about Defence’s enterprise strategy and focus, including early identification of issues that may require their intervention. Three Defence performance reports were prepared during 2016–17.

The performance criteria in the 2016–17 Defence Corporate Plan and the 2016–17 Portfolio Budget Statements (PBS), while not yet fully aligned, demonstrate a clearer relationship between corporate plan activities and PBS deliverables than in 2015–16. Greater alignment of the performance information has been achieved across the 2017–18 PBS and the 2017–18 Defence Corporate Plan, and will enable Defence to tell a more targeted and effective story in the Defence Annual Report for 2017–18 about the extent to which Government policy outcomes were achieved, and how Defence delivered the capability required by Government over the reporting period.


In 2016–17, under the direction of the Associate Secretary, Defence continued to improve the alignment of its strategic and business environments to support the management of the future requirements and challenges outlined in the 2016 Defence White Paper.

Out of this work, Defence adopted a new risk management model that aligns the accountabilities and responsibilities for risk identification, analysis and management with those for business planning and performance evaluation. This model empowers accountable officers in providing direction and seeking assurance that risks are appropriately managed at the right level of the organisation.

Defence’s model comprises three interdependent systems of risk management, coexisting at three different conceptual and organisational levels. These systems look at risks that may impact Government decisions on Defence capability and policy, shaping Defence’s strategy; limit Defence’s capacity to generate and maintain the required capability, shaping Defence’s capacity; and impact specific Defence capabilities and outputs such as programs, projects and policy initiatives, shaping Defence’s performance.

Defence’s work on risk management was supported by the identification of the four enterprise risks that, when managed appropriately, ensure Defence has the capacity to manage the volatility and uncertainty of Australia’s strategic environment. Defence will continue to mature this approach in 2017–18, developing a tighter relationship between risk and performance management across the enterprise.

Major projects management

The annual Major Projects Report is a joint publication of Defence and the Australian National Audit Office (ANAO), and is prepared in accordance with guidelines endorsed by the Joint Committee of Public Accounts and Audit (JCPAA). The report provides a review and analysis of the progress of selected major Defence acquisition projects managed by Defence, with the aim to improve the accountability and transparency of Defence acquisitions for the benefit of Parliament and other stakeholders.

The JCPAA assesses the overall content, accessibility and transparency of the information provided in the Major Projects Report, in addition to specific details of individual projects.

The JCPAA’s review of the 2014–15 Major Projects Report (ANAO report no. 16 of 2015–16) was published in May 2016. It is intended that the Major Projects Report is published in November each year; however, the tabling date is dependent on the resolution of issues that arise in any given year. The published reports are available on the ANAO website at

In accordance with paragraph 27 of Australian Accounting Standard AASB 101 Presentation of Financial Statements, Defence’s financial statements, except for cash flow information, are prepared using the accrual basis of accounting. The financial data provided within the Major Projects Report continues to be prepared on an accrual basis.

Commonwealth departments are appropriated on a cash basis and Defence manages its capital programs on a cash basis in order to achieve a balanced cash outcome. Accordingly, all financial data related to projects and Defence’s capital programs provided within the Defence Portfolio Budget Statements, Portfolio Additional Estimates Statements, and annual report continue to be prepared on a cash basis.

Capability delivery

The First Principles Review’s recommendation 2.11 stipulated the need for significant investment in the development of:

  • an operational framework that briefly but comprehensively explains how the organisation operates and the roles and responsibilities within it
  • a detailed set of life cycle management processes that provide the project and engineering discipline with which to manage complex materiel procurement from initiation to disposal
  • a review architecture that reinforces accountability at all levels and brings together information at each level upon which good management decisions can be made.

The First Principles Review recognised that such an investment would involve a large amount of work but was essential for the proper governance of project management. The review also recognised the need for this work to be underpinned by a strong and enduring approach to communication to ensure quality employee and stakeholder commitment.

The major components implemented to meet the intent of recommendation 2.11 include:

  • a new capability life cycle as the core Defence business process for all major Defence projects, including capability and enabling (estate, infrastructure and ICT) projects. Importantly, project proposals now use the new Smart Buyer risk assessment framework to inform decisions about tailored approval pathways
  • the development of a streamlined Defence investment approval process for capability projects based on a shared understanding of risk. Defence worked closely with the central agencies, particularly the Department of Finance and the Department of the Prime Minister and Cabinet, to develop this process
  • the transition to the Smart Buyer decision-making framework, enabling capability managers and project teams to identify key project risks and to develop tailored project execution strategies. These tailored strategies form a central part of the business case as projects progress through approval points
  • the implementation of the Capability Acquisition and Sustainment Group’s business framework, defining how the Group governs, organises and manages operations more efficiently and effectively, across the capability life cycle, with a focus on achieving Defence outcomes
  • the establishment of centres of expertise within the Capability Acquisition and Sustainment Group, providing support to ensure the right people with the right skills are provided at the right time. This includes recruiting staff, managing careers, creating development opportunities, and job allocation. The centres of expertise are also responsible for the Group’s policies, processes and procedures
  • the creation of a range of processes and forums to ensure ongoing improvement in the capability life cycle process, involving senior representation from the capability managers and delivery groups. The primary objective is to develop, improve, standardise and rationalise governance across Defence in support of the capability life cycle to achieve capability outcomes.


Through the audit work program, Defence addressed areas of high-level risk, or activities with potential control deficiencies, that could lead to significant operational or financial loss. In 2016–17, Defence’s Audit Branch issued 17 audit reports and completed 14 Management-Directed Tasks.

Defence worked with the Australian National Audit Office on a number of audits into Defence governance and management arrangements. The Australian National Audit Office completed six performance audits on Defence, and three cross-portfolio audits involving Defence. Further details are available in Chapter 6—Assurance.

Fraud and ethics

Throughout the reporting period and in accordance with the Commonwealth Fraud Control Framework 2014, Defence met its mandatory obligations to prevent, detect and respond to fraud and corruption. Defence has a comprehensive fraud and corruption control program that features a range of strategies to manage, evaluate and report fraud and corruption activities, including:

  • the promotion of a strong ethical culture through mandatory and focused training, publications and an ethical advice service
  • a rigorous fraud and corruption risk assessment program focusing on Defence-wide vulnerabilities
  • an intelligence-led and targeted fraud and corruption detection program
  • investigation of detected fraud, corruption, misconduct and unethical conduct with the application of appropriate criminal, civil, administrative or disciplinary action
  • recovery of proceeds from fraudulent and corrupt conduct
  • developing and strengthening partnerships, both at the Commonwealth and international level, to facilitate information-sharing arrangements.


In 2016–17, there were 259 fraud investigations registered within Defence, with 274 investigations completed during the year (some of those completed were registered in previous years). Approximately 24 per cent of completed investigations resulted in criminal, disciplinary or administrative action. Of these, approximately 40 per cent related to disciplinary action under the Defence Force Discipline Act 1982.

Table 5.5. shows determined fraud losses and recoveries in 2016–17 and the preceding four years.

Table 5.5: Determined fraud losses and recoveries, 2012–13 to 2016–17


Compliance with the finance law

During 2016–17, Defence reported 29 instances of significant noncompliance with the finance law, proven as fraud committed by an official and addressed by Defence authorities through criminal, disciplinary or administrative action. Significant fraud cases are also reported separately to the Minister for Defence in accordance with reporting requirements set out in the Commonwealth Fraud Control Framework. Strategies for minimising instances of fraud are outlined above (see ‘Fraud and ethics’).

Exercise of the Defence Minister’s powers under the Customs Act

In accordance with the requirements of section 112BC, within Division 1AA of the Customs Act 1901, the Minister for Defence must table a statement on the exercise of the Minister’s powers under Division 1AA of the Act for each preceding year. For the period 1 July 2016 to 30 June 2017, the Minister for Defence exercised the powers pursuant to Division 1AA of the Act on one occasion.

Report of the Inspector-General of the Australian Defence Force

The position of Inspector-General of the Australian Defence Force (IGADF) is established under section 110B of the Defence Act 1903. The IGADF, who holds a statutory appointment outside the ordinary chain of command, independently and impartially monitors and assesses the health and effectiveness of the military justice system. A new Inspector-General of the Australian Defence Force Regulation 2016 came into force on 1 October 2016, providing additional IGADF functions.

The functions of the IGADF are to:

  • provide the Chief of the Defence Force with a mechanism for internal audit and review of the military justice system
  • provide an avenue by which failures in the military justice system may be examined and remedied
  • provide advice on matters concerning the military justice system
  • conduct internal reviews of redress of grievances
  • conduct inquiries into or investigate deaths of Australian Defence Force (ADF) members (where the death appears to have arisen out of, or in the course of, the member’s Defence service)
  • inquire into or investigate matters concerning the ADF as directed by the Minister for Defence or the Chief of the Defence Force.

Consistent with previous reporting periods, the operating tempo in the Office of the IGADF remained relatively high in 2016–17. Twenty-nine submissions were under inquiry at the start of the reporting period, and an additional 61 inquiry submissions were received by the IGADF during 2016–17. During the same period, 42 submissions were finalised. The remaining 48 inquiry submissions were ongoing at the end of the reporting period.

In addition to these inquiry submissions, the IGADF received 32 submissions relating to Service Police professional standards matters. Of these, 19 became the subject of IGADF investigations, while 13 were assessed by the IGADF as matters that should more appropriately be addressed by another Defence investigative authority.

During 2016–17, 53 military justice performance audits were conducted. This represents approximately 10 per cent of all auditable ADF units. Potential material deficiencies were identified in one unit. Units identified as having potential material deficiencies are re-audited within 12 months. During the conduct of the military justice performance audits, 2,669 ADF personnel participated in focus group discussions.

In 2016–17, the IGADF initiated 43 new reviews of deaths in service of ADF members and finalised 23 reviews (18 from deaths in previous years and five from 2016–17). The IGADF also finalised four formal inquiries into ADF member deaths, finalised one inquiry into a non-death matter, and recommenced management and coordination of administrative support for the resumption of a Chief of the Defence Force Commission of Inquiry.

In 2016–17, there were 423 new applications for redress of grievance received, an increase of approximately 8 per cent from 2015–16. Ninety-one of these applications were submitted under the Defence Force Regulations 1952, while 332 were submitted under the Defence Regulation 2016, which came into effect on 1 October 2016.

In 2016–17, there were 370 applications for redress of grievance finalised, some of which were received in the same financial year, while others had been received in previous reporting periods.

Pursuant to section 110R of the Defence Act 1903, the IGADF prepares an annual report on the operations of the Office of the IGADF for the Minister, for presentation to the Parliament, at the end of each financial year. For more information and to access a copy of the latest IGADF annual report, visit