David Smith calls for the Government to act on the findings of previous reviews of Defence, and urgently invest in engineering and technical expertise.
Tuesday, 2 September 2014
Four years ago, serious engineering maintenance problems were exposed when half a billion dollars worth of maritime defence capability was retired early. One of the navy’s key supply ships, HMAS Kanimbla, lost power entering Sydney Harbour and narrowly missed coming aground. The Kanimbla and its sister ship, HMAS Manoora, were decommissioned.
This failure led to a review (the Rizzo review) that exposed the high level of risk caused by the loss of engineering capability in government agencies. It was hardly the first defence review to identify the risk, nor was it the last.
Before the Rizzo review, the need to rebuild civilian engineering capability was identified in the Navy Civilian Engineering Workforce Study in 2010. Similar issues were identified in a Deloitte-authored engineering workforce review and in a Senate inquiry into defence procurement, both in 2012.
The Coles review, also in 2012, identified substantial problems with submarine maintenance, including the failure to retain and develop engineering skills caused by a recruitment freeze. Warning bells were sounded further back, too, with the Sea King (2005) and HMAS Westralia (1998) disasters.
Fast forward to this year, and the government is embarking on a ”first-principles review” of defence. Yet before the review had been commissioned, let alone made any recommendations, the government decided to shed 2200 of defence’s civilian employees. Defence Minister David Johnston memorably said that the workforce was ”a little bit fat and happy”.
A useful ”first principle” might have been to fully understand what the organisation needed to deliver and maintain, and to profile the workforce accordingly.
Another useful ”first principle” might have been to take a hard look at the preceding reviews and to implement relevant recommendations. One of the most telling graphics in an Australian National Audit Office’s report last year, Capability Development Reform, is that which shows Defence’s mapping of recommendations from major reviews (pictured right). It is a cat’s cradle of inactions that is ultimately unreadable. At its heart, however, is a persistent reluctance to deal properly with technical skill gaps across the organisation.
The financial and safety risks associated with failing to address engineering capability are becoming more serious. As the Navy Civilian Engineering Workforce Study put it, ”sound independent engineering saves money and most importantly lives and reputation”. Yet governments of all colours have continued to erode in-house technical expertise.
Australia’s public services have undergone a dramatic shift in technical, engineering and scientific capacity. Governments employed about 100,000 specialists in these fields three decades ago, yet there are now fewer than 20,000 across the public sector.
It is well established that the tide started to turn in the 1980s, when it became fashionable for governments to trim budgets and outsource their technical capacity to the private sector. Less understood, however, is what this depletion in expertise means today.
This year, governments around Australia will spend $33 billion on infrastructure. However, Deloitte Access Economics research shows governments waste an average of 12.7 per cent of this type of spending because they lack the in-house capacity to scope, design or even oversee the infrastructure they want to build. This suggests governments will waste $4.2 billion this year alone. The same problems exist in maintaining our public asset base.
Without technical capacity, governments can neither manage nor assess what the private sector sells them – they have effectively become cashed-up, uninformed buyers. Taxpayers are being gamed by infrastructure-hungry, knowledge-poor governments that simultaneously pump out rhetoric about the need for fiscal prudence in hard times.
Yet mega-waste across governments is just the tip of this iceberg. A perfect storm is building in defence, and the risks, costs, dangers and scale of these problems demands intervention from the highest level. As the Deloitte workforce review found, without a competent Australian Public Service engineering and technical workforce, the probability of materiel failures or unplanned retirements of capability greatly increases, with costly consequences.
This is no storm in a teacup. Problems are coming to a head that directly threaten operational capacity across the military.
The first is the challenge that Defence faces in managing complex procurements with a reduced workforce. Recent reports have revealed that the $8 billion air warfare destroyer project is $500 million over budget and expected to be delivered two years late. With the spectre of more cost blowouts and waste to come, the government has questioned Defence’s capacity to manage the acquisition of ships and submarines, and is exploring offshore options. Yet of the 3000-strong workforce on the destroyer project, fewer than 90 staff are from Defence. And, regardless of their effort, there is no way engineers and technical specialists can enact effective oversight of such a large project with so few resources.
While local construction comes with some, largely identifiable risks, overseas purchase is not a panacea. It comes with its own risks, most of which will be unable to be tested until the item is received, and even then may be unknown until disaster strikes. Running down your science and engineering capability at the same time is an irrational approach.
The 2012 Deloitte workforce review found that 55 per cent of Defence engineering vacancies were critical, or provided a risk, to engineering capability. Since then, we have had a recruitment freeze and significant actual and planned reductions in engineering and science staffing across Defence. Even in the navy, where the Rizzo review had at least minimised engineering workforce reductions, significant cuts are planned for the engineering and technical workforce in the Australian Maritime Warfare Centre.
At a time the government is spending significantly on new and updated weapon systems, it makes no sense to erode your capacity to be a smart customer. Cuts to Defence’s technical workforce may appear penny-wise, but they are pound-foolish in the long term.
Senior Defence engineers identified the crux of the problems in a recent survey, and painted a powerful picture: ”Professionals are being squeezed out of the decision-making process, whereby we are buying off-the-shelf items and no technical integrity is conducted or being conducted by external contractors who may or may not have the Defence interest in their best interest. Under-resourced projects due to [full-time-equivalent staff] cutbacks will mean that there will be often one engineer working on a large body of work and if they leave or are sick there is no one to pick up the work. Corners are being cut due to projects being under resourced.”
Successive cuts to engineering, scientific and technical expertise have now created dangerous capacity gaps that risk both national security and operational safety. Technical specialists – already under immense pressure to do more with less – know this and are extremely concerned. As the ADF’s deputy chief, Vice-Admiral Ray Griggs, said when the Rizzo review was released: ”We have for far too long viewed engineering as an overhead and not as a mission enabler.”
The Defence Minister, Johnston, can no longer pretend he is unaware. He was a member of the Senate committee that inquired into procurement procedures for Defence capital projects in 2012. In response to evidence about the consequences of outsourcing maintenance and deskilling the organisation, Johnston, who was then the shadow minister, said the submissions ”highlight the symptoms of what is fundamentally wrong within the organisation”.
You cannot rebuild engineering capability, as recommended by the Rizzo review, by freezing recruitment and cutting thousands of jobs.
To worsen matters, the government’s approach to enterprise bargaining is likely to have unintended effects on engineering and science capability across Defence.
Enterprise agreements should be workplace enablers rather than ideological straightjackets. While the general approach to pay and conditions has rightly made headlines and sends a message to staff that they are not valued, other aspects of the approach to bargaining will have adverse effects.
The government is intent on removing agency-specific work-level standards and related classifications. In Defence, this will undermine the developed engineering and science competencies that underpin classification structures, and, at the same time, make it difficult to progress agreement approaches that recognise and value expertise, experience, mentoring and knowledge transfer. These are areas that the plethora of reviews have identified as critical in maintaining and rebuilding engineering and science skills across Defence. Johnston must act now and exempt Defence from this approach to bargaining.
But let’s return to first principles. A succession of reviews have all reached similar conclusions. A more secure Australia relies on greater sophistication and specialist expertise, not less. Deep cuts to civilian jobs, pay and conditions will not fill the skills gaps.
The government must recognise the significant contribution engineering and technical expertise makes to national security and keeping our forces operational. This is not a new or an individual view: a chorus of industry voices have called for adequate engineering expertise in the public sector.
As the Australian Strategic Policy Institute’s Peter Layton said recently: ”We’ve been there, done that, and it cost us all a lot of money. The best example is navy, which the Rizzo review found had in earlier reform programs significantly cut their headquarters engineering expertise, saved minimal cash and ended up with poorly maintained amphibious vessels that required much more money to put right. The Coles review of submarines was similarly scathing. To improve efficiency, Defence management needs to get better, not get cut.”
It is time the government acted on the advice before it. The team responsible for drafting the next white paper (yet another one) is currently consulting stakeholders across the country. One question it is asking is how Defence should invest in its people.
The right answer is back in Griggs’s call to stop discarding technical professional staff: instead, value their expertise and experience, and respect them. The wrong answer is further cuts to engineering and science capability and an offensive approach to enterprise bargaining.
We cannot afford yet more failures. The safety of our nation, our troops and the liquidity of our taxpayers depends on it.