LAND WARFARE CONFERENCE
19 November 2010
**Check against delivery**
When I started this job a few weeks ago one of the first people to text me was Kim Beazley.
He said welcome to the defence foundry – and a big part of Australian industry.
I caught up with Kim last week and he told me: “I’m so bloody envious of you”.
I think he’d swap jobs with me if he could.
It’s been a busy first couple of weeks.
I’ve told my staff that I want to be on a military establishment and in a factory or worksite every week.
It’s the only way to really understand what is going on …and I have done a lot of it already.
I’ve met workers doing the deep maintenance on our submarines in Adelaide, the men and women building Bushmasters in Bendigo and saving lives in Afghanistan, and the engineers, tradesmen and apprentices in factories, workshops and shipyards across the country.
Greg Combet told me that I would love doing this job – and he was right.
He also told me that the Australian defence industry is full of people who are genuinely committed to the national interest – and I have got to meet many of them already.
The jobs we do are very important.
I am also very conscious I have big shoes to fill. Greg brought a real focus to defence procurement, and initiated a number of important reforms.
Things like the Projects of Concern list and the Government’s Mortimer Review – which Greg played a leading role in implementing.
The message I want to give today is one of continuity.
I want to continue the work that Greg has already done – and build on it.
That means working closely with industry to continue to improve defence procurement.
It doesn’t mean you will like every decision I make, but it does mean I will listen to you.
I understand a bit about what it’s like to be on the other side of this lectern.
Before I entered Parliament I worked for Transurban – the major infrastructure company behind roads like the M7 in Sydney.
Infrastructure is not defence, but there are some similarities.
Government is usually the customer. The projects are big, they carry risk, they don’t come along that often and there is a lot at stake. The pipeline of work is important.
There are a few primes – and they contract work out to a lot of SME’s.
On some projects they’re competitors – on others they are working together.
The importance of this industry isn’t lost on me.
I didn’t realise it until I got this job, but there are about 25 companies in my own electorate who do work for defence.
They are just a small part of an industry than employs about 29,000 Australians.
They are central to maintaining and enhancing our defence capabilities.
The only way to get this work done is working in partnership – that means Government, Defence and industry.
THE DECADE AHEAD
There are some big challenges ahead.
80 per cent of our war fighting assets will be replaced or upgraded over the next 15 years.
We will spend over $150 billion on the acquisition and sustainment of defence assets over the next decade.
And about half of this will be spent locally.
The updated public Defence Capability Plan will be released shortly.
It will outline Defence’s needs for the next 10 years.
It will show that in-country acquisition and sustainment expenditure are forecast to grow at 4.2 per cent and 3.1 per cent per annum respectively.
The projected compound average annual growth rate for total in-country expenditure over the next 10 years is 3.5 per cent.
In other words, Defence spending each year in Australia will grow from about $5.5 billion now to around $7.5 billion (in today’s dollars) by the end of the decade.
This doesn’t mean there won’t be difficult times ahead. The volume of work in different sectors and regions will vary as overall spending increases over the decade ahead.
There are some tremendous opportunities in the future. But there are also plenty of challenges.
Here are five:
1. The Strategic Reform Program
First – the Strategic Reform Program.
We have done well on this so far, and I want to particularly thank industry for working with us on this.
But as the SRP ramps up it will get harder and industry will play an important role in finding and delivering savings that can be reinvested in the defence budget.
There are great opportunities for new ideas to come from industry that will help us hit our SRP targets – and deliver the capability the ADF needs in the future.
I know you have offered plenty already and not all have been heard.
I want you to know I will be actively seeking to draw on your expertise to help us do this.
2. The Pipeline of Work
Another challenge that has been raised with me is the pipeline of work.
This is a chunky business, continuity of work in any particular sector or region isn’t guaranteed, but I recognise its importance.
Projects won’t go ahead just to make work – but a smoother pipeline of work has benefits for everyone.
For industry – it means greater efficiency, higher productivity and the retention of key skills.
For Government – it means higher quality of work, reduced risk and the retention and development of priority capabilities.
There is work to do here, but the reforms we are making to maritime sustainment are an example of what I am talking about. Contracts will be awarded next year for the maintenance of Navy’s major surface fleet for the next five years.
This is a significant change. It will provide more certainty of work for industry and workers, and end the burden of bidding for every job.
Let me know if you think there are opportunities to do this in other areas.
3. SME’s access to work and export markets
SME’s are an important part of our defence industry – and they face a number of their own challenges.
I met with Graeme Priestnall from the Australian Industry and Defence Network last week and we talked about things like how Australian Industry Capability Plans operate and the definition and implementation of PICs and SICs.
Getting into the global supply chains of the primes is a big opportunity for Australian SME’s – and the Global Supply Chain Program has already started to do this. But there’s clearly more to do.
4. Improving Project Management
Improving project management within the DMO and Defence is another important challenge.
The Kinnaird Reforms are working well.
So is the Projects of Concern list, which I and the Minister for Defence recently updated – adding one project and releasing the details of two projects on the list.
Most of the projects on the list are Pre-Kinnaird, and many are going well and might be able to be removed in the next year or two.
But we will continue to monitor all projects – and add new projects to the list when necessary.
There is more to do in improving project management.
Part of this is implementing the recommendations of the Mortimer Review to drive greater transparency, accountability and better value for money.
It also means making the DMO more businesslike by importing commercial disciplines on procurement and sustainment procedures.
There is still more work to do here and the Minister for Defence and I are looking closely at the next stage of reforms.
Another challenge is attracting and retaining skilled workers.
As John O’Callaghan from AIG told the Defence Skilling Summit in September – the booming mining sector will make this challenge more difficult for Australian defence companies.
The Budget Update (MYEFO) released last week showed that new engineering construction is expected to grow by more than 16 per cent this financial year and 21 per cent next year.
The mining industry alone is planning $55 billion of investment this financial year, pushing business investment as high as it has been in 40 years.
This will create challenges right across the economy.
In Defence it will make it harder to recruit and retain a strong skills base.
This isn’t just a challenge for Government. It’s a challenge for both of us.
Over the next decade the Australian Government will invest more than $138 million in skills training and support in the Defence sector.
As you know, an important part of this is SADI – the Skilling Australia’s Defence Industry program.
It has already funded more than 15,000 training places, including about 1,500 apprentices.
In the next 12 months we will allocate a further $12.5 million to support 68 companies – 4,928 training places and up to 400 apprentices.
There’s been a big debate in the Parliament over the past few weeks about our involvement in Afghanistan.
This debate has been a good thing. It has brought the important work our troops are doing there to the front pages of our newspapers.
And it has confirmed the support of both sides of politics to this important task.
The work we’re doing to improve the protection of our troops deployed in Afghanistan has been an important part of this debate.
The Government has allocated over $1.1 billion in new force protection measures arising out of the force protection review, and a lot of this work has been done by people in this room.
One of these is the up-armouring of our Bushmasters being done by Thales.
Another is the new Tiered Body Armour System (called TBAS) being developed in partnership with ADA.
The development of TBAS will allow troops to insert different armour plates in their rigs, depending on the conditions – making their armour more adaptable to individual missions.
Army is working towards having TBAS ready for Mission Rehearsal Exercises early next year and expects that when Taskforce 9 deploy in the middle of next year they will go with this new equipment
MULTICAM COMBAT UNIFORM TRIAL
One improvement you might not be aware of is a trial of a new combat uniform.
For the past 12 months our Special Forces troops in Afghanistan have been trialling a new Mulitcam combat uniform made by Crye Precision, based in the United States, and worn by selected US and British combat troops in Afghanistan.
The preliminary results of this trial indicate that the camouflage pattern provides our troops with greater levels of concealment across the range of different terrains in Afghanistan – urban, desert and green.
It also makes it easier for them to do their job.
The Multicam shirt and trousers:
- have elbow and knee pads built in to reduce soft tissue injuries;
- are cooler and designed to be worn under body armour;
- have a padded waist band to make it more comfortable under webbing or a field pack; and
- have more pockets and a stretch fabric at the joints.
The feedback from Special Forces soldiers has been extremely positive.
They have said it is the uniform they want to wear.
Based on this feedback, the Chief of Army, Lieutenant General Ken Gillespie, has decided to extend this trial for the next 12 months to Australian troops operating ‘outside the wire’ in Afghanistan to provide them with added protection.
Defence has now made an urgent order for these combat uniforms from the United States. We are doing this to get these to our troops as soon as possible.
I have also instructed the DMO to begin discussions with Crye Precision about the possibility of obtaining a licence to manufacture this uniform in Australia and develop our own unique camouflage pattern.
This is just one of a number of things happening in the procurement and supply of ADF clothing and personal equipment.
REVIEW AND REFORM
Earlier this year Defence commissioned two separate independent reviews, commonly known as the Lewincamp and Whalan Reviews.
Jeff Whalan conducted a review of the reporting of defects with ADF Personal Equipment and Combat Clothing, otherwise known as the RODUM system.
Frank Lewincamp conducted a review of the policy framework for clothing procurement.
Both reviews are now complete and I am releasing both reports today and the Government’s response.
THE WHALAN REVIEW
I’ll start with the Whalan review.
As many of you will know the RODUM system is the primary way we capture information about equipment deficiencies and seek to drive improvement in the equipment we issue.
Whalan found that the RODUM system was sound in concept but could be improved through broadening and simplifying its operation.
Whalan also made a number of recommendations to reform the wider clothing and equipment system.
- Expanding the choice soldiers have about selected items of personal equipment.
We already do this with combat boots – soldiers can choose to wear the supplied Terra boots or choose from a range of 9 other options that they can purchase.
Whalan recommends that “managed choice” should be expanded to a selected range of combat clothing and personal equipment with Defence pre-certifying items as suitable for use.
Other recommendations include:
- Improving the use of feedback from troops using defence equipment in training and on operations – so better decisions can be made about the equipment to purchase, improve or replace; and
- Modernising the supply chain for combat clothing and equipment to make it leaner and more responsive.
Whalan points to the web based trial recently completed by the UK Ministry of Defence that allows personnel to order uniforms from an online catalogue and have them delivered directly to an authorised address worldwide.
The British trial has proved to be faster and more responsive than the traditional supply chain – and they are proposing to extend the trial to a larger number of personnel.
Whalan recommends Defence consider this sort of innovation.
He also recommends a number of other changes to the supply chain, including making clothing and personal equipment orders smaller and more frequent – to allow Defence to respond quicker to change, scientific breakthroughs and feedback from troops.
All up the Whalan review makes 18 recommendations. The Government will implement all of them.
A lot of them are consistent with the feedback I received from the soldiers I met recently at Robertson Barracks in Darwin – who were about to deploy or had recently returned.
They liked the idea of more choice, and they made it clear to me that what they wanted was a system that was more responsive to their changing needs.
I agree with them – and will be working hard to make improvements to the system.
THE LEWINCAMP REVIEW
The Lewincamp Review was commissioned in February this year in response to community and industry concern about the manufacturing of Australian combat uniforms.
It makes a number of important findings and recommendations.
The Government will implement most of them – but not all of them.
I want to make it clear today that the Government supports the continued manufacture of the standard combat uniform – the shirt and pants – in Australia.
Obviously the needs of our troops will always come first. Where there is an operational need that can’t be met in Australia – like the Multicam trial – we will take action to get it into theatre as soon as possible.
But the Government supports the manufacture of the standard combat shirt and pants in Australia.
I also want to drive more local competition in this market.
Defence currently requires two garment manufacturers to be involved in supplying the DPCU. This works well, ensuring a healthy competitive tension in the market.
There is also opportunity for more local competition in the supply of the treated fabrics used in garment manufacture as well.
There is a lot of work ahead.
Defence has been working on the development of a midpoint combat uniform to replace the standard and desert variants of the camouflage pattern with one pattern.
The potential purchase of a licence for the Multicam uniform may provide another option to develop a new combat uniform with our own unique camouflage pattern.
That’s why I have asked Defence to merge these two projects into one – to expedite the development of a new combat uniform.
SPECIAL PROJECT TEAM
I have asked Defence to establish a special project team under the leadership of an SES band 1 or military equivalent – to implement the agreed recommendations of the Whalan and Lewincamp Reviews and coordinate the development of the next generation of combat uniforms.
Its two top priorities will be to:
- oversee the development of a new combat uniform; and
- develop a business case for the design and implementation of a integrated online ordering, management and supply system that would allow soldiers to:
- order clothing and potentially some personal equipment;
- track the timing and progress of their orders; and
- file a RODUM report.
Like in the UK, this will begin as a graduated trial.
To improve the efficiency of the delivery of clothing and personal equipment to our troops it also makes sense to review and improve the Q store or Central Issue Point Model.
That’s why as part of the online trial I have also asked the project team to provide advice to Government on potential improvements that could be made to the distribution system.
Ladies and gentlemen.
It’s great to be here at the Land Warfare Conference.
I’m looking forward to walking around the floor this morning…although with about 250 stalls here, I’m not going to get to everyone.
I’d like to thank you all for being here this morning.
I’ve spoken a lot about reviews, reports and recommendations.
But it’s important to remember the reason we do this job.
I mentioned earlier that in the past few weeks I have met a lot of people in a lot of factories and workshops.
But the person who has had the biggest impact on me was a young Private I met at Robertson Barracks.
He told me his story.
While the rest of us were still celebrating Christmas two years ago he was in a fire fight in the Chora Valley.
His platoon was ambushed.
As he ran to find cover behind a tree he was shot through both legs.
He survived because his mates dragged him 600 metres — through irrigation ditches, around small mud brick walls and a compound, taking as much cover as they could along the way.
He was carried the last 200 hundred metres to a Bushmaster by one of his mates, who carried him over his shoulder.
His mates got him to the medivac helicopter that got him back to Tarin Kowt. He was operated on there and then again in Germany.
Meeting him had a big impact on me.
I got to meet him because of his mates, because of the training they received and because of the equipment they had.
It reminded me how important the decisions are that I make.
How important the decisions are – that we all make.