Address to the Australian Defence Magazine Conference
Hyatt Hotel Canberra
16 February, 2011
A BIG YEAR AHEAD
***CHECK AGAINST DELIVERY***
Last year at the Land Warfare Conference I told the story of a Private I met at Robertson Barracks who had just returned to Australia.
He was still alive to talk to me because of his mates, their training and their equipment.
It was all these things that saved his life.
Since I gave that speech, more soldiers have been wounded in Afghanistan, and one has lost his life.
But many other soldiers have been saved by the bravery of their mates, the quality of their training and the effectiveness of their equipment.
The same things are saving lives here at home too.
It has been a terrible summer. The floods and the cyclone in Queensland have shown us Mother Nature at her worst. But they have also shown us the ADF at its best.
The men and women of the ADF have done some incredible things in the last few weeks. They:
- Delivered more than a million kilos of supplies into affected communities;
- Air-lifted183 patients from CairnsHospital in a single night; and
- Evacuated more than 1000 people stranded by rising flood waters.
They were only able to do those things because of the men and women on the ground who put them in the air and kept them there. A lot of those people work for people in this room.
An old pilot told me last year that unless your ground crew can put you on the start line – no pilot’s worth two bob. In the last few weeks there have been a lot of people doing a lot of hard work to get our planes and helicopters to the start line.
Last week I spoke to a bloke named Col Beal. He heads up the Black Hawk maintenance team for Boeing at Oakey.
The Black Hawks have flown more than 450 hours already this year, and for every hour in the air they need a lot of hours of maintenance and preparation on the ground.
That means Col’s team have worked long hours – early in the morning and late at night. Some came back from Christmas holidays. Some had their own homes flooded.
Col had his head under a Black Hawk when his car was washed down the street the day that inland tsunami hit Toowoomba.
It’s because of men and women like Col and his team that so many supplies were delivered and so many people were winched to safety.
One of those people was an elderly woman living near the town of Forest Hill in the LockyerValley.
On the 11th of January she got the shock of her life when she found an Army sergeant – in a flight suit and helmet – standing in her living room.
It was about 7:30pm and getting dark.
He had been winched into her yard and dropped into chest high water.
He rushed into her house and told her they had to go.
She said she was fine and that her daughter was coming to pick her up in her car.
But that wasn’t going to happen – all the roads had been cut off.
The Sergeant told me she then went to get her purse, looked for some money and told him she couldn’t afford a helicopter.
He told her – “don’t worry, this one’s a freebie”.
She then went into the kitchen to put the jug on and asked him if he would like a cup of tea.
He said he would love one – but there was no time. It was now pitch black. The helicopter had been overhead for 25 minutes with a crew and 3 other rescued people onboard – and they were running low on fuel.
He got her to the front steps of the house and they winched her up – with live electrical wires only 6-8 feet away – and into the Black Hawk.
This was only able to happen because of a brave and patient man, his crew up above and a team back at Oakey who had worked into the night to get that helicopter to the start line.
It’s a nice story from a terrible day, in a terrible month.
But it‘s just one story. The same sort of work has been going on right across the Defence Industry. So to Col and his team, to you and to everyone in the Australian Defence Industry that puts our men and women at the start line – thank you.
That said – we have a lot more work to do this year.
Decisions and delivery
The Prime Minister has said this year will be a year of decision and delivery.
That’s true right across government, including Defence.
There are big decisions to make this year on projects like:
- LAND 121 phase 3; and
- Future naval helicopters.
This is also a year where a lot of materiel will be delivered.
In Army we are:
- rolling out the C-RAM counter missile system in Afghanistan;
- the new Multicam uniform I announced in November will roll out in the next few months; and
- the lighter TBAS combat body armour being made by ADA in Bendigo will go with the third Mentoring Taskforce when they deploy in the middle of this year.
We are also:
- enhancing our bushmaster vehicles – to provide even more protection from IED blasts; and
- In the next few weeks we will take delivery of the first new G-Wagons vehicles, with modules made by Varley in the Hunter.
In Air Force we will:
- take delivery of the final 9 Super Hornets; and
- work towards Initial Operating Capability on Wedgetail.
- work on the first Air Warfare Destroyer will keep ramping up. The first blocks will be shipped by barge from the Hunter and Melbourne to Adelaide this year, the first large delivery of Aegis equipment is due in April, and the workforce will keep growing – hitting a peak of about 1200 in early next year;
- Sea trials on the Anzac Class Anti-Ship Missile Defence (ASMD) system – designed and developed by CEA here in Australia – will start soon; and
- this Friday the first LHD hull hits the water in Spain.
This is also a year where we are going to have to work hard to lift our performance.
One of the biggest challenges we face is schedule slippage. As Dr Gumley told us yesterday, the ANAO report says that DMO’s biggest 22 projects are (on average) about 30 per cent over schedule.
When milestones aren’t met industry isn’t paid and money is reprogrammed into future years – that is bad news for Defence capability and bad news for the defence industry.
It is not the only challenge we face.
Minister Smith talked in detail yesterday about the challenges we face with our amphibious fleet.
We decommissioned the Manoora a few weeks ago because the work required to get it back to sea would have cost more than $20 million and take until next April. Given it was due to be decommissioned at the end of next year, this didn’t represent value for money.
The Kanimbla also requires a lot of work and will not be available until April next year. More work is also required on the Tobruk.
As Minister Smith said, the origins of our current challenges are not new. Like many problems on my desk, the seeds were sown a long time ago.
The advice we released yesterday from the CDF and the Secretary of the Defence Department confirms that ever since these ships were upgraded a decade ago, not enough resources have been allocated to them.
It also identifies systemic and cultural problems in the repair and maintenance of these ships.
These problems were brought to the surface because of the actions of the Seaworthiness Board. It was established in 2009 to provide the Chief of Navy with an independent review of maritime systems.
As Minister Smith said yesterday, it is designed to find problems and that is what it has done. Our job is to fix them.
That’s why we have asked Defence to prepare a new amphibious transition plan
One part of this is capability – making sure we have the amphibious capability we need between now and the middle of the decade when the LHDs arrive.
We have struck an agreement with the New Zealand Government to share key capabilities including HMNZS Canterbury as part of a joint Ready Response Force. We are also exploring the potential lease or purchase of a Bay Class Vessel from the UK Government. It is one of a number of options we have asked Defence to explore.
Another part of the transition plan must be reforming the structures and culture that underpin the repair and maintenance of our amphibious fleet. That’s why Minister Smith and I announced yesterday we have appointed an independent team – led by Paul Rizzo – to address the problems in the repair and maintenance of our amphibious fleet and oversee the early implementation of these reforms.
The third part of the transition plan will be training. The LHDs are bigger than our last aircraft carrier HMAS Melbourne. And they operate differently. They have a floating dock. They can carry up to 1000 troops, 100 armoured vehicles and 12 helicopters in the hanger. They will operate like a floating airport. Preparing for this will require a lot of work.
All of this already makes it a busy year ahead.
But there is a lot more work to do – including reforming the way we do things.
There has been a lot of reform in Defence over the last few years. This includes the 2009 Defence White Paper, the Strategic Reform Program, the defence funding model, the Kinnaird and Mortimer reforms.
A lot has been done – but there is still more to do.
As Minister Smith mentioned yesterday, in the first quarter of this year we will bring forward a number of reforms to improve accountability in Defence and the way projects are managed.
These will focus on making sure we get things right at the start. The logic here is pretty simple – 80 per cent of problems with projects occur in the first 20 percent of the projects life.
The reforms will also focus on picking up problems early, like schedule slippage, taking action to fix them before they get worse and the extra steps we need to take to remediate projects if they do go bad.
Projects of Concern
On that point the Projects of Concern List has been an outstanding success – and a credit to my predecessor Greg Combet.
In the three years since it was established, seven projects have come off the list – two have been cancelled and five have been successfully remediated.
I am hopeful we can take a few more off the list later this year, but it is going to require a lot of hard work and all of us working together.
That’s why yesterday I met with CEO’s from three companies who have projects on the list. After this speech I will meet with four more companies with projects on the list.
The purpose of these meetings is simple – to make sure there is focus at the top of Government, Defence and Industry to remediate these projects and ultimately take them off the list. I have already found them very productive and useful – and I intend to do them twice a year.
I also want to put more rigour and measurable standards into the Projects of Concern process. I am working with Defence and industry on this and it will form part of the reforms Minister Smith and I bring forward.
The Defence Capability Plan
Late last year we released an update of the DCP – outlining future projects for the next 10 years.
The next DCP will be released mid year – and will then be updated on line as changes are approved by Government.
Last week I met with the Australian Industry Group Defence Council.
One of the things we talked about was greater industry input into the DCP. And earlier input. The suggestion from the group was that we need to improve the operation of the Capability Development Advisory Forum and the associated land, sea and air environmental working groups. The Australian Strategic Policy Institute (ASPI) made the same recommendation in its 2010 report into the DCP.
To be effective the working groups need a clear purpose. That means looking at the future pipeline of work and the capability of industry to meet it. It also means identifying gaps in the pipeline or existing capabilities and making recommendations on how to address them.
PICs and SICs
That’s why I have asked Defence to stress test our Priority Industry Capabilities and Strategic Industry Capabilities – PICs and SICs.
They need to be more than just a list of capabilities. We need to know how healthy they are.
That means checking the health of these capabilities in our large companies.
It also means checking the health of these capabilities in our SMEs. As one CEO told me the other day, most of this work is subcontracted. If we don’t check the health of our SMEs in this area we could get a false diagnosis.
It also means checking how healthy these capabilities are inside Defence.
We will do PICs first and then SICs.
It is one of a number of things I am doing to strengthen the operation of PICs and SICs. I have also asked Defence to:
- improve their definition of the essential elements of the capabilities and the implications for Government;
- make the distinction between PICs and SICs clearer;
- determine appropriate intervention strategies to support PICs;
- integrate them more effectively into the Australian Industry Capability Program, SADI and the Global Supply Chain Program; and
- make sure they are embedded in the DCP process.
I am also looking at ways to strengthen the Australian Industry Capability program and will have more to say about that later this year.
All of the things I have spoken about mean working with you. But there are two things where I especially want your help. One is the Strategic Reform Program. The other is the Trade Cooperation Treaty with the United States.
Strategic Reform Program
As I said late last year, we have done well to meet our SRP targets so far, but over the next few years things will get harder and I want your help to help us get there.
I know industry has a lot of good ideas. A lot have already been offered and not all have been heard. I want to draw on your expertise.
I am looking for good ideas that don’t just make you money and save tax payers’ money. I want ideas that will reform and improve the way we do things.
Earlier this month I wrote to the CEOs of our top 40 Defence Companies asking for their ideas – but the invitation is open to everyone.
If you have an idea it can be submitted via the Defence and Industry ePortal. It will be considered by the DMO’s Industry SRP Taskforce and the CEO of the DMO and the Secretary of Defence will report to me every three months on the projects you have put forward and Defence’s consideration and implementation of them.
Yesterday Dr Gumley mentioned a number of SRP Pilots we are running with companies like Thales, Qantas Defence Services, KBR and Jacobs. This afternoon, he will go through each of these projects in more detail. This is a good approach. It allows both of us to try before we buy and I am hopeful that some of the ideas I am seeking from you now will form part of the next round of pilot projects.
Trade Cooperation Treaty
The Trade Cooperation Treaty provides enormous opportunity for Australian industry. It will create a framework for trade between Australia and the US in certain Defence materiel without the need for export licences.
It has the potential to reduce delays caused by export control regulations, improve delivery times, improve sustainment and provide greater opportunities for Australian companies in US contracts.
But to make sure the Treaty fulfils its potential I need to hear from you.
We have completed the first round of industry consultation – facilitated by Ken Peacock – and got some good feedback. If you missed these meetings there is another one at Avalon in a few weeks time.
The next round of more detailed consultation will happen in a few months when we will be seeking your feedback on the exposure draft of the legislation.
I need industry to focus on this. This is a great opportunity. It’s important we get it right. Otherwise it won’t be used.
That’s why I want you to get involved. I want to know what your concerns are now – not after the legislation is passed and the system is up and running.
All of that makes for a big year ahead.
A lot of decisions to make, projects to deliver and reforms to implement.
Most importantly, a lot of work to do with you.
I said when I got this job I would be in a factory, shipyard or workshop once a week. 22 weeks into the job my office tells me I have now visited 26. That’s pretty good, but I can see from the size of this room I still have a long way to go.
This is a big industry and the work we do is important.
It can be the difference between life and death for a 19 year old private in Afghanistan or for a 90 year old pensioner in Queensland.
We can only do this if we work together, and I am looking forward to working with you in the year ahead.