Defence can’t fix itself and that matters for our security
First Principles Review and Defence Strategic Review

Letting Defence implement the Strategic Review itself will fail, just as the First Principles Review did.

Written by

Michael Shoebridge

How trusting of Deputy Prime Minister Marles to receive a scathing report about how broken the Defence bureaucracy is and to then turn to that same bureaucracy to heal itself. And how important for Australia’s security that he reconsiders and changes course.

That’s because recent history with reforming Defence tells us the course he’s on will fail.

At least the problem is clear.  According to the Government’s recent Strategic Review, Australia’s security environment continues to deteriorate and our military needs to be a more powerful deterrent force. 

But the public version of the review by Stephen Smith and Angus Houston overflows with analysis of various Defence processes and functions that it finds are ‘not fit for purpose’. These include Defence’s entire end-to-end approach to delivering Australia’s military capability, which is where around one third of the $52 billion annual budget goes.

The Strategic Review’s conclusions make it clear that the Defence organisation of 2023 is even more broken than the one examined by the previous big defence review, the 2015 First Principles Review, just 8 years ago. 

According to the Strategic Review, the Defence Force itself is ‘not fully fit for purpose’.  The Navy fleet needs its own review.  Various multi-billion dollar projects have been cancelled or are under review. Investment programs focus on project management risk not the strategic risks that Defence is there to address. Defence’s approach to its workforce, including recruitment and retention of ADF members, has been failing. Defence has failed to implement previous directions to enhance bases, ports and barracks across northern Australia, to address fuel storage and supply issues and to create a domestic missile production enterprise.

This shouldn’t be true, because back in 2014, we were told the First Principles Review’s purpose was ‘to ensure Defence was fit for purpose, able to respond to future challenges and was able to deliver the Government’s strategy with the minimum resources necessary’. 

It was needed because ‘waste, inefficiency and rework are palpable.  Defence is suffering from a proliferation of structures, processes and systems with unclear accountabilities.  These in turn cause institutionalised waste, delayed decisions, flawed execution, duplication, a change-resistant bureaucracy, over-escalation of issues for decision and low engagement levels amongst employees’.

After that review was delivered, the then departmental Secretary and Chief of the Defence Force were tasked by the Minister to implement its 75 recommendations. To do this the Secretary chaired an Implementation Committee that met weekly, assisted by an external Oversight Board.

News about the fundamental changes and improvements was all good, at least as reported by Defence to its Minister and by that Minister in her statement to Parliament in June 2017.  After the two year implementation period, Marise Payne told Parliament that 63 of the 75 recommendations had been implemented, with the reforms creating ‘a leaner, stronger, more efficient Defence organisation’.  She told us that his had not happened by chance and thanked the then Secretary, Dennis Richardson, and CDF, Mark Binskin because ‘their unwavering and steadfast leadership has been essential in delivering these reforms’.

But success was clearly overstated and celebration premature given this year’s Strategic Review and its dire diagnoses of the same processes and problems that the First Principles Review had apparently fixed.  After reading the public version of the Defence Strategic Review it’s hard to label the earlier review and its implementation anything but failures. The private version Smith and Houston handed to the prime minister must put this conclusion beyond doubt.

And that’s where the surprise is. With this very recent history, it is very hard to understand how prime minister Albanese, and the current defence minister Richard Marles, could take the same approach to the changes demanded by the Strategic Review that their predecessors took to reforming Defence after the First Principles Review.  But this is what is happening.  Richard Marles has tasked the Defence organisation to implement the Strategic Review and to fix all those things about itself that Smith and Houston say are broken. 

And, in another echo of the First Principles experience, the Secretary and CDF will be assisted in their work by a small external group. This time, though, the group includes the secretary (Richardson) who was personally accountable for delivering the First Principles Review reforms, a former foreign affairs deputy secretary (Richard Maude) and a former secretary of Finance (Rosemary Huxtable), not people with business or industrial experience.

We can have no expectations that this will work, but we can also rely on a time lag between now and when this next failure becomes obvious. That’s because reviews take time to digest and actions to address and report on their recommendations all take time too.  But if the government’s judgement that the next three years may be a defining period for the security of Australia and our region is right, time is not something we have a lot of.

So, Richard Marles needs to take stock and change course.  The Albanese government should learn from the Coalition’s past mistakes not repeat them.

Our times require delivery of tangible things quickly: functional ships, missile and munitions manufacturing plants, upgraded bases and supply systems, electronic systems and novel weapons like the drones and counter drone systems being used so widely and effectively in Ukraine.

The last time Australia faced these circumstances was before World War Two, and then we turned to the industrialists – people who run, make, build and deliver things – to turn out the aircraft, weapons, munitions and ships we needed. And we ensured that bureaucracy either got out of their way or worked to enable their success.  The Americans took the same approach, turning American defence industry into the ‘arsenal of democracy’.

That approach is needed again now, even if it means working around our broken Defence organisation while it learns from this alternative path to improving our military power and our security.    

A version of this article was first published in the Australian on 19 June 2023.