2RHPZ
08-01-2004, 03:33 AM
The department and the force are in crisis. Is it time for an independent review, ask Paul Dibb and Richard Brabin-Smith
31jul04
IT is apparent that the defence organisation has become dysfunctional. It is our view that there should be a fundamental review of what has gone wrong. It is time to consider whether the top management structure, which is built around a diarchy shared by the secretary of the Department of Defence and the chief of the Australian Defence Force, should be changed -- because it no longer seems to work the way it should.
Among all commonwealth government departments, Defence has a unique structure.
Arthur Tange devised it in 1973. At that time there was, in addition to the Department of Defence, four other departments in the defence group -- navy, army, air and supply, each with its own minister and secretary. Tange's central idea was that "the direction of the total defence program towards national objectives and policies" required that these functions be brought together under a single department, although the navy, army and air force would retain their separate identities.
Significantly, the new position of chief of the defence force staff was to have more effective central control of operations and related military activities, and the secretary would have strengthened civilian control of spending. The secretary of the Department of Defence became the principal adviser on policy, resources and organisation to the minister. The CDFS was to be the principal military adviser to the minister, and he was to be consulted by the single services on important matters, so that he could exercise greater influence in the development of the services towards "integrated national defence objectives".
All this was far-sighted innovation by Tange as he sought to bring about consolidation of the command, policy oversight and administration of the armed services into a single department. Tange also introduced greater intellectual rigour with regard to decision-making through new departmental structures concerned with strategic policy, force development and financial resources.
From the very beginning, there was resistance from the services. They were used to going their separate ways and through their own ministers. But what was really provocative was the idea that the secretary and the CDFS should have equal status and share responsibility for the top management of the defence organisation, under ministerial direction.
And it was not until 1986 that the position of chief of the defence force was created with the power of command over all three services. Tange's objective was to eliminate -- or at least to mitigate -- the adversarial relationship that had existed between the services and with the department. His aim was to bring about "the unobscured oversight of policy" over single service bids for weapons and manpower. He hoped that the intermingling of service officers and civilians in the new department "would create an atmosphere of mutual confidence."
This did not occur. The Defence Efficiency Review of 1997 uncovered startling evidence of service cultures that continued to resent the authority of the CDF, and which had little concept of management efficiency or responsibility. In attempting to address these issues the review recommended more integration of military and civilian functions in a new body called Australian Defence Headquarters.
But the Howard Government has brought about what can only be described as the re-emergence of single service dominance in defence decision-making. This is partly because there is ambiguity over the Government's defence policy. Does it or does it not support Defence Minister Robert Hill's ambitions for expeditionary forces capable of operating alongside the Americans and his unconvincing desire for the ADF "to fight and win in major conventional conflict"? There is clearly tension between such ideas and John Howard's statement recently that "the primary focus of the ADF remains the defence of Australia and supporting stability in our immediate region".
This confusion has served only to encourage expensive wish lists in the single services. The service chiefs now have unprecedented access to the minister and the Prime Minister. There is nothing wrong with this, except that it has emboldened the service chiefs to short-circuit the force structure decision-making process in defence and go direct to the minister with proposals to purchase their favourite weapons, preferably without competition.
It is hard to discern the overall coherence in defence decision making that taxpayers have the right to expect. Whatever happened to the independent civilian input, which Tange devised, into this vital area of how the public's money is to be spent? Is that advice wanted? Is it proffered? What we have now is the breakdown of any objective and intellectually rigorous approach to the determination of force structure.
There are other serious issues concerning the failure of the department to manage properly. Its accounts will be qualified again this year by the Australian National Audit Office for the third successive year. The introduction of accrual accounting, at the Government's direction, was a disaster that diverted defence from not dealing with an increasingly irresponsible attitude to accountability (or what a former secretary called "learned helplessness") in budgeting and financial management, as well as serious logistics deficiencies.
According to a recent report by the Boston Consulting Group, there continue to be huge problems with the department's information systems. These are attributed to a non-productive culture. The chief areas of concern are: avoidance of accountability, consensus-based decision-making that delays action, a lack of rigour and compliance with business standards, a bias towards self-interest and a lack of trust.
Australia is not alone in having accounting problems -- the US, UK and Canadian defence organisations struggle with similar shortcomings. Defence is undoubtedly making progress but the situation it finds itself in is, at least in part, to do with an attitude that money is a free good. As one service chief is reported to have said in a committee last year when taken to task about his service's inaccurately recorded leave liabilities (amounting to about $700 million across the ADF as a whole): "Don't bother me with that, I'm going to war." We acknowledge that the ADF has experienced demanding overseas operations recently that have put it under considerable stress, but that does not excuse a careless attitude towards financial accountability.
So, what is to be done? It is our view that there should now be a fundamental review of what has gone wrong. This will need to identify why present arrangements have failed to deliver accurate answers for government when faced with policy-sensitive crises. The chain of command demonstrably failed in at least two such cases: the children-overboard affair in 2001 and (in spite of lessons learned) the recent questions on what defence knew about the treatment of Iraqi prisoners. In both cases the reputations of the secretary and the CDF suffered. In neither case can this be levelled at poor working relations between the individuals concerned; the problem seems to be failure in the chain of command and policy insensitivity at the working level.
This review will need to be carried out by experts well versed in the management of large, complex organisations. The huge amounts of money involved, the large number of people employed, and the mix of cultures mean that complexity is unavoidable. Matters are not helped by the short tenure of people in key positions and, in some cases, inappropriate appointments (civilian and military). We would prefer that the diarchy be made to work again, but that would be a serious challenge.
So we need some alternatives. One solution would be to have only one senior executive at the top, as with all other commonwealth departments. The problem with this is that the secretary cannot command troops and the CDF should not have responsibility for policy as well as military command. In the private sector this would be resolved by making one of them the chief executive officer (the secretary) and the other the chief operating officer (the CDF).
Another approach would be to separate the Department of Defence, and its responsibility for policy advice to the minister, from the Headquarters Australian Defence Force. The latter would be a separate commonwealth entity and consist of the CDF, VCDF and the three services; they would be allocated a budget to manage that would include pay, leave, accommodation, operations costs, military intelligence and capability development. The department would include an autonomous acquisition organisation, defence policy and intelligence estimates, and would be responsible for contributing to national security policy more broadly.
Each senior executive would be solely responsible for administering a separate budget and performance in this regard would be measured and rewarded -- or (and this is important) penalised. This would risk turning warriors into accountants, which is not what Australian taxpayers think they want from a defence force.
Crucially, we must reinstate thorough and independent analytical processes to review military proposals to spend taxpayers' money on force structure. This is integral to how our democratic system of government should work.
And any new management structures will need to ensure that there are much clearer lines of authority and responsibility.
The need to consider radical options is now urgent. The critical nature of the issues in our national defence, and their enormous costs, demand nothing less. Paul Dibb and Richard Brabin-Smith are at the Strategic and Defence Studies Centre at the Australian National University. Both of them have served as deputy secretaries of the Department of Defence.
31jul04
IT is apparent that the defence organisation has become dysfunctional. It is our view that there should be a fundamental review of what has gone wrong. It is time to consider whether the top management structure, which is built around a diarchy shared by the secretary of the Department of Defence and the chief of the Australian Defence Force, should be changed -- because it no longer seems to work the way it should.
Among all commonwealth government departments, Defence has a unique structure.
Arthur Tange devised it in 1973. At that time there was, in addition to the Department of Defence, four other departments in the defence group -- navy, army, air and supply, each with its own minister and secretary. Tange's central idea was that "the direction of the total defence program towards national objectives and policies" required that these functions be brought together under a single department, although the navy, army and air force would retain their separate identities.
Significantly, the new position of chief of the defence force staff was to have more effective central control of operations and related military activities, and the secretary would have strengthened civilian control of spending. The secretary of the Department of Defence became the principal adviser on policy, resources and organisation to the minister. The CDFS was to be the principal military adviser to the minister, and he was to be consulted by the single services on important matters, so that he could exercise greater influence in the development of the services towards "integrated national defence objectives".
All this was far-sighted innovation by Tange as he sought to bring about consolidation of the command, policy oversight and administration of the armed services into a single department. Tange also introduced greater intellectual rigour with regard to decision-making through new departmental structures concerned with strategic policy, force development and financial resources.
From the very beginning, there was resistance from the services. They were used to going their separate ways and through their own ministers. But what was really provocative was the idea that the secretary and the CDFS should have equal status and share responsibility for the top management of the defence organisation, under ministerial direction.
And it was not until 1986 that the position of chief of the defence force was created with the power of command over all three services. Tange's objective was to eliminate -- or at least to mitigate -- the adversarial relationship that had existed between the services and with the department. His aim was to bring about "the unobscured oversight of policy" over single service bids for weapons and manpower. He hoped that the intermingling of service officers and civilians in the new department "would create an atmosphere of mutual confidence."
This did not occur. The Defence Efficiency Review of 1997 uncovered startling evidence of service cultures that continued to resent the authority of the CDF, and which had little concept of management efficiency or responsibility. In attempting to address these issues the review recommended more integration of military and civilian functions in a new body called Australian Defence Headquarters.
But the Howard Government has brought about what can only be described as the re-emergence of single service dominance in defence decision-making. This is partly because there is ambiguity over the Government's defence policy. Does it or does it not support Defence Minister Robert Hill's ambitions for expeditionary forces capable of operating alongside the Americans and his unconvincing desire for the ADF "to fight and win in major conventional conflict"? There is clearly tension between such ideas and John Howard's statement recently that "the primary focus of the ADF remains the defence of Australia and supporting stability in our immediate region".
This confusion has served only to encourage expensive wish lists in the single services. The service chiefs now have unprecedented access to the minister and the Prime Minister. There is nothing wrong with this, except that it has emboldened the service chiefs to short-circuit the force structure decision-making process in defence and go direct to the minister with proposals to purchase their favourite weapons, preferably without competition.
It is hard to discern the overall coherence in defence decision making that taxpayers have the right to expect. Whatever happened to the independent civilian input, which Tange devised, into this vital area of how the public's money is to be spent? Is that advice wanted? Is it proffered? What we have now is the breakdown of any objective and intellectually rigorous approach to the determination of force structure.
There are other serious issues concerning the failure of the department to manage properly. Its accounts will be qualified again this year by the Australian National Audit Office for the third successive year. The introduction of accrual accounting, at the Government's direction, was a disaster that diverted defence from not dealing with an increasingly irresponsible attitude to accountability (or what a former secretary called "learned helplessness") in budgeting and financial management, as well as serious logistics deficiencies.
According to a recent report by the Boston Consulting Group, there continue to be huge problems with the department's information systems. These are attributed to a non-productive culture. The chief areas of concern are: avoidance of accountability, consensus-based decision-making that delays action, a lack of rigour and compliance with business standards, a bias towards self-interest and a lack of trust.
Australia is not alone in having accounting problems -- the US, UK and Canadian defence organisations struggle with similar shortcomings. Defence is undoubtedly making progress but the situation it finds itself in is, at least in part, to do with an attitude that money is a free good. As one service chief is reported to have said in a committee last year when taken to task about his service's inaccurately recorded leave liabilities (amounting to about $700 million across the ADF as a whole): "Don't bother me with that, I'm going to war." We acknowledge that the ADF has experienced demanding overseas operations recently that have put it under considerable stress, but that does not excuse a careless attitude towards financial accountability.
So, what is to be done? It is our view that there should now be a fundamental review of what has gone wrong. This will need to identify why present arrangements have failed to deliver accurate answers for government when faced with policy-sensitive crises. The chain of command demonstrably failed in at least two such cases: the children-overboard affair in 2001 and (in spite of lessons learned) the recent questions on what defence knew about the treatment of Iraqi prisoners. In both cases the reputations of the secretary and the CDF suffered. In neither case can this be levelled at poor working relations between the individuals concerned; the problem seems to be failure in the chain of command and policy insensitivity at the working level.
This review will need to be carried out by experts well versed in the management of large, complex organisations. The huge amounts of money involved, the large number of people employed, and the mix of cultures mean that complexity is unavoidable. Matters are not helped by the short tenure of people in key positions and, in some cases, inappropriate appointments (civilian and military). We would prefer that the diarchy be made to work again, but that would be a serious challenge.
So we need some alternatives. One solution would be to have only one senior executive at the top, as with all other commonwealth departments. The problem with this is that the secretary cannot command troops and the CDF should not have responsibility for policy as well as military command. In the private sector this would be resolved by making one of them the chief executive officer (the secretary) and the other the chief operating officer (the CDF).
Another approach would be to separate the Department of Defence, and its responsibility for policy advice to the minister, from the Headquarters Australian Defence Force. The latter would be a separate commonwealth entity and consist of the CDF, VCDF and the three services; they would be allocated a budget to manage that would include pay, leave, accommodation, operations costs, military intelligence and capability development. The department would include an autonomous acquisition organisation, defence policy and intelligence estimates, and would be responsible for contributing to national security policy more broadly.
Each senior executive would be solely responsible for administering a separate budget and performance in this regard would be measured and rewarded -- or (and this is important) penalised. This would risk turning warriors into accountants, which is not what Australian taxpayers think they want from a defence force.
Crucially, we must reinstate thorough and independent analytical processes to review military proposals to spend taxpayers' money on force structure. This is integral to how our democratic system of government should work.
And any new management structures will need to ensure that there are much clearer lines of authority and responsibility.
The need to consider radical options is now urgent. The critical nature of the issues in our national defence, and their enormous costs, demand nothing less. Paul Dibb and Richard Brabin-Smith are at the Strategic and Defence Studies Centre at the Australian National University. Both of them have served as deputy secretaries of the Department of Defence.