05/09/2002 MSPA 50902/02

Communicating with the media, the community and industry - a Defence perspective

Based on an Address to the ACT White Pages Business Series
by Allan Hawke
Department of Defence

5 September 2002

Defence’s purpose in life is to defend Australia and its national interests.

That sounds simple enough, but the reality is somewhat different. It is a large and complex enough undertaking in its own right to spend some $14 billion in cash per year wisely, let alone to consume the effort and intellect of around 100,000 Australians directly - plus some thousands more from industry that provide essential services to us.

Sustaining public support for this level of commitment relies on communication, that the Australian Defence Force is doing its job efficiently and effectively, and that the organisation which supports our sailors, soldiers, air men and women is investing the taxpayers’ dollars to help those at the frontline do their jobs better.

If Defence were a private company selling a consumer product, we would need to promote public awareness of our brand – to maintain our brand perception as one of quality and reliability, as an organisation that delivers what’s asked of it.

While it’s fair enough to talk about the business of defence, Defence is not a business. Business is all about the profitability of service delivery; Defence and the public sector is largely about accountability for getting the job done and the way we do it.

The defence and security of the nation are the first and foremost responsibilities of the Commonwealth. To serve the nation and the Australian public provides a sense of purpose, duty and meaning to Defence’s people. To us, then, Defence is far more important, far more fundamental, than a business.

We are, of course, acutely conscious of our need to account to the Defence Minister, and through him to the Parliament and the people, for the results we’re there to achieve and the public funding we receive.

That accountability also requires us to demonstrate to the community that we provide them with value for their money.

If we show through our actions that we have the capabilities and expertise to protect the nation and its vital interests, and communicate effectively what we are doing to the community that sustains us, that will help to demonstrate that the safety and security of Australians is in good hands.

The media, notwithstanding its high concentration in the Canberra Press Gallery, contribute significantly in this respect. They are a key part of Australia’s institutional framework.

Defence’s actions, whether they be deployments to the Maritime Interception Force in the Gulf, border protection, the SAS in Afghanistan or our Service personnel in East Timor, Bougainville and elsewhere around the world, showcase the professionalism and skill of our uniformed men and women. Reporting on our operations and deployments is almost always complimentary.

Our words, including public documents like the Defence White Paper, reflect Australia’s place in the world, and the role of our Defence Force in promoting and protecting that place.

Our actions and our words are sometimes presented directly to the Australian community. More often, they are interpreted and projected through the lens of the media, without whom we could not sustain public support for our endeavours.

The media, in turn, depends on Defence as a source of news and information – without the world of activity there is nothing to report. We need to be aware, however, that nature abhors a vacuum and sometimes provides an opportunity for vested interests to fill.

Although the APS must remain apolitical in nature, this does not mean that it carries out its functions in a political vacuum. Public servants need to understand the political outcomes sought by Government and to organise their practical work programs to meet those interests.

In my experience, however, it’s been rare for Departments to be any good at developing strategies to help Ministers and the Government sell the message.

I am, of course, aware that there can be a political benefit in the good publicity that comes from selling a message well. That awareness does not diminish in any way our responsibility for advising on the most effective ways of conveying factual information on policies and programs. Nor does it contradict the Guidelines on Official Conduct which say that "Public servants should not publicly comment on policy by either criticising it or promoting it".

Press reporting of Defence is mixed – some is good, some is not so good. That’s not surprising. We always pay close attention to constructive criticism.

Allegations of misbehaviour by Service personnel, the children overboard affair and adverse comment on legacy projects – the Collins submarines, Seasprite helicopters, the M113 armoured personnel carriers, Bushmaster mobility vehicles, the FFG frigates, the landing craft Manoora and Kanimbla, and other examples have all provided a fruitful field to lambast Defence.

We regret criticism that is not well informed or fair and we take some consolation from the fact that the Australian community supports Defence and respects the men and women engaged in the profession of arms.

86 per cent of Australians say they are proud of the ADF – the highest figure recorded over the past 20 years. Similar percentages believe the ADF is effective (85%) and well trained (87%). 84% think the defence of Australia is the most - or one of the most - important responsibilities of Government. Between 50 and 60% of Australians say that the ADF should be bigger. Only 20 per cent disagree that Defence gives good value for money.

Almost 80 per cent of Australians say that they trust ADF personnel more than any other source of information about national security and defence.

These figures come from recent research into community attitudes to national security and defence. The 86 per cent high point of community pride in the ADF recorded in April 2002 shows a steady increase in public support for Defence since 1989 when it measured 66 per cent.

These findings suggest that Australians exercise a level of judgement and perception beyond the simple acceptance of media reporting. They may mean that the media’s role is far more tenuous and subtle than suspected.

Is that what lies behind the astounding finding that only 40 per cent of Australians now watch a TV news program or read the news part of the paper each day – the corollary, of course, being that 60% don’t do either. What’s even more revealing, is that 50 per cent of Australians no longer trust the news media as a source of information.

Defence personnel and members of the media share a common fundamental fact – we both exist to serve the public and their interests: Defence members through execution of the Government’s policies and programs; the media by reporting on our actions and providing information and analysis on which the community can form independent judgements.

Journalists scrutinise power, but they also exercise it, in doing that (like the public service), they seek to be accountable, to engender trust, without which they cannot fulfil their public responsibilities.

I had occasion recently to look at the MEAA’s Code of Ethics. Among other things, these journalists commit themselves

* to seek the truth * to honesty * to fairness * to independence; and * to respect for the rights of others

Of the 20 standards MEAA members agree to uphold, the first includes a duty to:

"Report and interpret honestly, striving for accuracy, fairness and disclosure of all essential facts."

A problem with reporting on Defence may be its inherent complexity. Coming to grips with all the detail is hard enough for insiders, it must be daunting for others. Reporting on it in the necessarily compressed formats of the space and time available to the newspapers and television will always be fraught with difficulty.

A few recent examples might serve to illustrate this point; the SIEV X matter, the claimed "blow out" in major projects, and the Joint Strike Fighter decision.

SIEV X - Suspected Illegal Entrant Vessel X - is the label most commonly given to an overloaded boat that left an Indonesian port in October 2001 and sank with the loss of over 350 lives.

The "X" stands for unknown, not number ten in the series, and in Defence it was more commonly referred to as the Abu Quassey vessel after the people smuggler concerned.

Since April this year, SIEV X has been the subject of detailed and intense media reporting and analysis. Much of this alleges a conspiracy and coverups in Defence and elsewhere. It has been labelled "Australia’s Watergate" by Tony Kevin and "The largest Australia-related catastrophe in history" by Robert Manne. The reputation and integrity of Australia’s Defence Force and the Government that directs it have been impugned by these and other commentators.

The ADF has a hard-earned and proud history of rescuing people in distress – and of providing such assistance unconditionally. Ignoring that, much of the speculation about SIEVX has centred on accusations that Defence either turned a blind eye to the situation or did not do enough to prevent or limit the consequent loss of life.

So what did Defence know and do?

The vessel seems to have sunk on or about 3pm local time on 19 October 2001.

In the days leading up to then, we were interested in the "imminent" departure of three vessels from Indonesia for Christmas Island. Information on the time and place of departure was rarely accurate and would change from one report to the next. Vessels reported to have left either returned to the port of departure or to some other port in Indonesia.

As given in evidence to the Senate Select Committee by the then Head of Coastwatch, Rear Admiral Bonser, reports on a possible Abu Quassey vessel commenced as early as August 2001.

Coastwatch received information that the vessel was expected to depart, or had departed, Indonesia on four different dates in August, anywhere within a seven-day block in September, and on five separate dates in October. The reports immediately prior to its sinking had SIEV X departing a number of locations from central to western Java.

Even now, its departure port is still not definitive, reports suggesting it sailed from two different locations in Sumatra.

Our efforts to detect and intercept the people smugglers’ vessels included a comprehensive surveillance operation in Australian and international waters between Java and Christmas Island.

Daily P-3C Orion flights of four to five hours’ duration covered the 440 km by 280 km surveillance area. HMAS ARUNTA and its embarked helicopter patrolled the area closer to Christmas Island, ready to intercept vessels after they had been identified by the Orions and as they approached the contiguous zone, 24 nautical miles from Christmas Island.

This surveillance and interception operation continued unabated throughout the period 17 to 23 October.

Due to the ship’s helicopter being unserviceable on 19 October, an additional Orion flight was launched in direct support of the ship and was on task from 1644 to 2115 Christmas Island time.

This Orion was tasked to give priority to the area that the helicopter would normally have monitored, that is the South West and South East segments as shown on this slide. The flight used up more fuel than normal due to poor weather (which degraded radar performance and required close track spacing) and the different operational mode required at night to identify contacts. After searching the Southern areas, it had insufficient fuel remaining to cover the lower priority Northern segments of the area. The standard morning Orion flight had earlier that day covered the North West and North East search areas from 0900 to 1030 under similar adverse weather conditions.

None of the four surveillance flights comprising some 19 hours on task flown in the period 17 to 19 October detected the SIEV X. Nor were any distress messages ever received by Australian authorities. And nothing in the intelligence collection, analysis and reporting provided any reason to change the standard surveillance pattern.

The 20 October Orion flight flew over the area where SIEVX may have been if the SBS Dateline report is accurate, but it did not detect anything of concern. The weather at this time continued to be very poor with low cloud and rain in all areas.

Without any indication that there was a vessel in distress or an accurate position, I’m told that sighting survivors in the water under the prevailing weather conditions would be highly improbable.

After the SIEV X sank on 19 October, we received reports that the vessel was small and overloaded. This, in itself, was not unusual, as most SIEVs would have fitted this description at the time.

On 22 October, three days after the vessel sank, Coastwatch received information which they believed corroborated the departure of the vessel and led them to assess it might be overdue. They also noted that this was not unusual and might be due to a range of factors including diversions. Once again, this did not constitute a declared distress situation. The first time that Defence knew the vessel had sunk was from reports on 23 October after the survivors had been returned to Indonesia.

Some commentators have made much about where the vessel may or may not have sunk. Defence has no first hand knowledge of where it actually sank and cannot verify where the survivors were found.

You may recall some survivors reporting the presence of two ships with searchlights, which they believed to be naval vessels.

Let me say quite categorically that no Australian Navy ships were anywhere near the vicinity of where Dateline reports the survivors were recovered (SLIDE). The nearest of our ships was HMAS ARUNTA which was here near Christmas Island at the time.

Defence welcomes informed public scrutiny. We resent unwarranted accusations and slurs on our character.

The Minister for Defence made available the experts involved in Operation RELEX to the Senate Select Committee inquiring into these matters. These witnesses included Commanders and staff at all levels of the command chain for the operation. The evidence provided to the Committee by Defence personnel offers a somewhat different perspective to that which relies on speculation, hearsay and selective reporting elsewhere.

In summary, there is nothing, I repeat, nothing, that Defence could have done in relation to the tragic fate of SIEV X. At the time, Defence had conflicting reports of departure, ports and times and no information that SIEV X was in distress, let alone the locality of where it sank.

The ADF is justifiably proud of its record in safety of life at sea situations, as demonstrated by the bravery of our sailors in rescuing the people from other SIEVs when those vessels sank or were in difficulty. Defence and our Service personnel reject unfounded assertions that we were somehow complicit in the fate of the SIEV X.

There was no conspiracy to let innocent people die. SIEV X was a human tragedy. But it is not one for which Defence is responsible.

Let me turn now to communication, the media and defence industry.

As I mentioned earlier, Defence is often criticised about our relationship with industry – that we buy poor equipment, gold plate our capability needs, change our requirements after we’ve signed the contract, fail to manage the contract appropriately, pay too much for it, take too long to decide what we want and to get it into service.

I could cite examples where some or all of these claims are true.

What continues to surprise me is the one-sided nature of most reports about these matters. Almost by definition, it’s all Defence’s fault. Industry seems to escape any scrutiny or critical comment.

It’s been rare for industry to step up to the crease and face the bowling with us. When sitting up there on the Hill, "enjoying" the heat of hearings, I sometimes wonder why industry is not called before them to account for their performance.

That’s a hint for Parliamentary Committees, but surely it’s part and parcel of the partnership arrangement the players are seeking. That simple single step would do more than anything else I can think of to inform the debate and improve the outcomes.

On Tuesday and yesterday, we saw a fair bit of air play about a claimed $5 billion "blow out" in Defence purchases due to major cost overruns and delays in 16 of Defence’s 20 largest acquisition programs.

This claim shows an eye for a good headline, but scant regard for facts and standard business practice, in either the public or private sector.

First of all, the facts. On the question of cost, Defence was asked: has there been any increase in the cost of any major capital equipment project worth $10m or more over that originally approved?

The answer was yes, and the total increase for the 16 projects identified, from original approval was $5.1 billion.

Of this total, changes in project cost due to price escalation accounted for $3.4 billion, or two thirds of the total. What does this mean? It’s fairly simple – price escalation is inflation.

The submarine and ANZAC ship projects date from the mid 80s; the increase due to inflation from these two projects alone is $2.7 billion – and that has been funded as part of the normal adjustment process of the Defence budget. It has nothing whatsoever to do with a "cost blow out". Price adjustments (meaning inflation related adjustments) are built into long term private sector and public sector contracts as standard business practice. It would be a nonsense to do otherwise.

Of the remaining third, $1.5 billion of the $1.7 billion relates to exchange adjustments. These adjustments reflect changes to project costs resulting from movements in exchange rates since the inception of the project. They are a direct result of the fall in the purchasing power of the Australian dollar over the last 15 years. Successive Governments have taken the view that Defence should be neither a winner nor a loser when it comes to foreign exchange variations. Indeed, the Howard Government confirmed the no loss/no gain principle in this year’s budget and that Defence should continue not to be a player in the hedging game. That is correctly left to the experts.

I might add that while Defence has received net additional funding for exchange movements over the last few years, it was not always thus. We have handed money back to Consolidated Revenue in the past, and we will do so in the future if the Australian dollar appreciates against the budget parameters. We do not seek, or get, any credit for this. And neither should we – it is normal business.

That leaves around $200m, for what are "real" increases in this group of projects. But even here there is more to the story. First of all, "real" increases don’t just happen. The largest real increase relates to the decision of a previous Government to change the scope of the ANZAC ship project to acquire a larger gun. A real increase of $104m to be sure; not one resulting from mismanagement, but rather a change in what the Government of the day wanted to buy.

Real increases in cost not due to changes in scope do occur, and more frequently than I would like. But they are not as frequent as some would have you believe, and their total magnitude is still small given the total size of our major capital program.

Collins has been our biggest headache, and we are going to have to pay more if we are to realise its capability. Given all the media attention, you might think that the real increase required is of the order forty, fifty per cent or more. It’s not that bad, but that’s no comfort to just how bad it is. The eventual figure may well prove to be around 20%, and while this is not a good outcome, we have to remember that this was the largest and most technically complex project Defence and Australian industry has undertaken for many years. Even this outcome compares reasonably well with equivalent projects elsewhere in the world. And we will have the world’s best conventional submarine, backed by our alliance relationship with the United States – shades of the F-111 debate!

We take every step we can to manage projects within their approved cost, and for the great majority, we succeed at doing just that. You could be forgiven for thinking otherwise.

If the Anzac Ship project had come in $1.765 billion over budget, that would indeed be a national scandal. $1.573 billion of this was price and exchange – an entirely proper contractual provision for changes in the Australian dollar and inflation over a 14 year period. The real increases in this project (which stem mainly from the previous Government’s decisions to acquire the larger Mark 45 gun [$104m] and to support international collaboration on the project [$80m]) amount to less than five per cent – a remarkably good outcome, especially when considered against the economic benefits this project has brought to the country. I look forward to the list of private sector projects which meet this test of success.

The new special purpose aircraft have already been delivered on my watch and we’ve signed major contracts for Airborne Early Warning and Control aircraft and armed reconnaissance helicopters.

That same report earlier this week, said that the latter project was already $274 million over budget and 17 months late. That was news to me. Since this contract was signed in December last year, there has not been one dollar of real increase and it remains on track for the contracted delivery date of December 2004.

It is, of course, just these sorts of things and other shortcomings that our acquisition and logistics reform program (defence materiel for the afficionados) has been addressing since its formation on 1 July 2000.

The Defence Materiel restructuring aims to integrate our acquisition and support elements, improve the way we do our business and our relations with industry, speed up our decision and acquisition processes, and locate the support elements with the platforms.

One of the marked differences between the public and private sectors can be found in the approach to incentives, sanctions and rewards. Our major acquisition competitions seem to have had little regard to past performance. Each competition commenced with a blank sheet of paper. Proven performers enjoyed little advantage. A track record of poor performance received no penalty.

That’s one reason we’ve introduced a ‘company scorecard’, to monitor performance on Defence projects. We share this information with the individual companies, and are using it to inform future contractual decisions.

Each month, the Defence Committee (our top 14 people) review the top 20 projects by value, and other projects by exception.

Both of these steps increase the transparency of Defence’s and Industry’s acquisition performance.

Industry has been strongly supportive of our initiatives to streamline decision making and to put aside tenders as soon as we judge them to be no longer competitive. The benefits seem obvious – industry avoids the cost of maintaining bid teams unnecessarily; Defence reduces its acquisition costs; and the Services get their new equipment sooner.

My colleague, Mick Roche, the Under Secretary Defence Materiel, said that one test of our reform package would be the first occasion on which a bid was dismissed within weeks of tenders closing. And so it was with the AIR 87 helicopter competition.

But, the Government’s early decision to buy 22 new armed reconnaissance helicopters from Eurocopter attracted some quite adverse press reporting, perhaps proving that it’s always the case of damned if you do and damned if you don’t!

Some commentators seemed to argue the competition should be continued for the sake of competition, regardless of cost.

In the AIR 87 case, we declined one tender after four weeks, a second after three months, and, at the same time, notified a third that they would be held in reserve, but should stop spending. All of these decisions were based on clear margins of capability, cost and Australian Industry Involvement.

Politics played no part in the decision. The process was completely in accordance with the Request for Tender. To suggest otherwise, as some did, is pure cant.

There has been similar censure of the Government’s recent decision to commit up to $300 million over the next ten years to the System Design and Development phase of the Joint Strike Fighter program.

These criticisms include:

* the decision was far too early – we should have waited; * that we were unthinkingly following the US; * that it was too risky – the project would run over schedule and over budget; * that we had "bought" a paper aeroplane; and * that the JSF was not a replacement for the F111 – it lacked the range and weapons load.

These claims were usually not accompanied by realistic alternatives, objective analysis or constructive suggestions. They reflect the tendency for people to argue what they’re against, not what they’re for – the latter being a much harder ask.

One could almost be forgiven for thinking that by taking an appropriate strategic decision at the right time, some commentators had been caught off guard.

Perhaps that’s why some have suggested we should have spent another two years examining the options - that we should have followed the paralysis by analysis path that we’ve been accused of in the past!

Had we done that:

* the contenders would have wasted another two years’ expenditure on a pointless competition; * Australian industry would have been excluded from the biggest ever international defence program; * we would have had no opportunity to influence the program; * a subsequent decision to purchase the F35 would cost significantly more without the SDD investment.

While it is true that the JSF program will be more developed in the next two to three years, there is no prospect of the emergence of a new contender, JSF is the only next generation aircraft in prospect, and the alternatives (existing generation aircraft) would simply be that much older.

And it’s also true that there is nothing to beat the F22 as an air superiority fighter – but at nearly three times the JSF price, it is not affordable (or necessary) in the strategic environment we face.

As for JSF being a paper aircraft, there are three Lockheed aircraft representing all variants which have made 139 flights and logged 107 flying hours to date.

To meet the competition requirements, Lockheed and Boeing each had to produce test bed prototype aircraft. They did so, to cost, to schedule and to specification – not bad for so-called paper aeroplanes.

The successful Lockheed Martin design has been relatively stable, backed by over 20000 hours of wind tunnel testing.

Risk is better controlled than in many Australian-unique projects we have entered in the past. The US is genuine about containing the cost of the program, requirements creep is under very senior control, and the risk is shared by three US Services and the eight development partners. This, plus the fact that the US Services simply cannot allow this project to falter as their F14, F15, F16, F18 and AV8 fleets age out, provides us with a deal of comfort.

There will be no guaranteed work-share along the lines of typical European practice as this would result in additional costs. Australian industry will have to demonstrate their wares in a "best value" environment. We’ll provide the opportunity to compete. I have every confidence that our industry people and products will rise to the challenge.

There will be winners and losers with this program. Not every company which would have participated in a traditional Australian Industry Involvement program will win work – but those that do will be part of a global 3000 plus platforms project. This work will be sustainable - it will position Australian industry in global supply chains, and provide international visibility.

With our colleagues from the Department of Industry, Tourism and Resources, we are now negotiating the terms of Australia’s involvement in the program. The other members of the partnership are the UK, Canada, Netherlands, Denmark, Norway, Italy and Turkey.

Agreement with the US Department of Defense on the SDD phase is a pre-requisite for industry participation in the development and production of the aircraft.

Key issues include the level of capability we require and securing opportunities for Australian industry in the global development, production and support phases of the program – not just the Australian order in accordance with past practice.

Our up-front investment will provide an opportunity to recoup that money and more through contracts won by Australian industry, a discounted purchase price and favourable acquisition terms.

A decision on our future air combat capability requirements is unlikely to be taken until about 2006. This accords with the forecast transition from the F/A-18 and F-111 fleets currently in service.

Partnership in the SDD program provides opportunities for industry to contribute to the development of the aircraft and grow their own industrial skills. It opens the door for the potential for ongoing ‘smart’ work.

With the capability, cost and industry opportunities related to JSF clearly pointing to its competitiveness, Government’s decision at this time saves competitors’ ongoing investment in a competition they were not strongly placed to win. Our anlaysis of other contenders revealed a clear margin of superiority in favour of the JSF. As the only other next generation contender the F22 was considered to be beyond our price range: Other options did not provide the generational leap in capability to see us through to 2030.

So much for the criticism that we subverted our own processes.

The JSF is a next generation aircraft which features stealth, long range, advanced sensors and extensive data link capabilities. When combined with AEW&C, JORN and new generation tanker aircraft, the JSF will provide a significant advance in Australia’s air combat capability.

Australian companies that win contracts should expect to be involved beyond SDD, and into full-scale production and subsequent in-Service support.

This applies to the global JSF market, not just those aircraft acquired by Australia.

So, successful Australian companies could be part of the supply chain for aircraft numbering in the thousands internationally, not just the up to one hundred that Australia may acquire.

Australians have a tendency to become overly absorbed with shortcomings. In the media, this may be reinforced by the conventional wisdom that their readers, listeners and viewers prefer bad news to good. As Russell Baker has recently written there can be a tendency to serve the rule "If its bleeds, it leads".

I know the media are contemplating their navels about the reception they’ve been subject to of late, just as we in Defence are determined to learn from our mistakes and put in place mechanisms in an endeavour to prevent a repetition of them.

It’s equally important that successes be acknowledged.

As with all organisations, Defence does not always perform to its full potential, but it does so much more often than not.

Without wishing to labour the point any further, let me simply say that the media, like the public service, will and should continue to be measured on performance. For both, the cost of failure will be high.

Pound for pound, our armed forces are right up there with the best in the world. That’s largely due to the calibre of the people we produce to serve the profession of arms. For various reasons, most of Defence’s worries lie in the rear echelons, particularly here in the head shed in Canberra. We’re fixing those, but far better to have that problem than poor performance where it really matters.

If I have left you with the impression that I am proud of what the men and women in Defence have achieved over the last few years, then you have got the message that I’m trying to communicate to the media, the community and industry.

We are an organisation of people "working hard at work worth doing". Communicating that message is hard work at times, but the public is listening.


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