Will the Kinnaird Review deliver some overdue efficiency in Defence budgets?

Recently the government released the report of the so-called Kinnaird Review - an external review of problems in major Defence projects chaired by Malcolm Kinnaird AO.

That there have been near disastrous problems in a long and depressing succession of major defence projects is not open to dispute. I documented many of these failures in an appendix to a submission (PDF, 254KB) to a Senate inquiry held last year. In that submission I observed that there have been many inquiries and reports over at least the last three decades, but that the succession of disasters just keeps on keeping on.

Will this latest report be any different? The immediate cynical response, strongly backed up by prior experience, will be to say: "no, it's the same old story." And that may well turn out to be the case. If so, the Defence Department will probably make a mess of major new acquisitions such as the multi-billion dollar Airborne Early Warning aircraft. For its part, government will simply cough up the extra squillions needed to patch up the disaster post facto. Business as usual, with the taxpayer footing the bill for massive ineptitude. This is a real risk.

Yet I am not going to predict such an outcome; at least, not yet. My main reason for hesitancy lies not in any misplaced belief that the Defence Department will suddenly mend its errant ways, throwing overboard the culture which gave us the Collins-class submarines, the failed minehunters, the long overdue and over-budget JORN surveillance radar (finally delivered this year), and so on. Not likely.

Rather it lies in two facts: this review was external, and commissioned by the government itself through the Minister (Senator Hill). It did not report to the Defence Department but to the Secretary of the Department of Prime Minister and Cabinet, and thence to the Minister for Defence. I take this as a signal that the review was a genuine rather a cosmetic effort.

Second, the review echoes sentiments widely held by conservative MPs who, with their business orientation and instinctive dislike of public sector waste, are not impressed when Defence blows yet another few tens of millions on some failed project. In short, cutting back on Defence's culture of waste is consistent with the instincts of politicians who do not like to see public money spent inefficiently (unless, maybe, it's in their own electorate).

Thus it may be that the government will really attempt to rein in Defence's wasteful culture at long last. One can only hope.

How will we know? In the longer run the acid test of course will be project outcomes. Will they be delivered more or less on time and on budget? Will there be transparency and accountability along the way? We can only wait to see when it comes to indicators like these. It will take years to be certain.

But there are also useful shorter-term indicators. In particular we will need to see a maintenance of the kind of accountability practised by Minister John Moore. He appeared to harbour a healthy distrust of his Department and was not afraid to openly criticise or even fire senior figures. This kind of accountability concentrates the bureaucratic mind wonderfully, in contrast to the sort wherein people who have made poor decisions are gently moved sideways on nice fat pensions or into do-nothing jobs on full salary. If we see a succession of Defence Ministers (never mind the Party) who manifestly distrust the Department, who believe it is trying to "snow" them, to conceal or minimise problems, to protect its own senior ranks, then we will well on the way to real and long-lasting reform.

The present conservative government has an ideological "thing" about defence. It thinks (probably rightly) that there is political mileage in talking up threats and funding defence. But, though I deplore this kind of political cynicism, there is nothing in it inconsistent with Defence being forced by vigilant scrutiny and sceptical Ministers to perform to a much improved standard of efficiency.

If this were to happen, we reap two benefits. Our national security is improved because things we plan to have available will by and large become available when we expect and at a reasonable cost. Second, large sums - probably hundreds of millions a year - will be freed up because Defence is no longer wasting them.

The Kinnaird proposals themselves require detailed discussion. In this non-specialist forum perhaps all I should do is note that in some respects they resemble reforms brought in by the British about thirty years ago, with the creation of a "Procurement Executive" responsible for defence acquisitions. This did help the British, but in the end they fell back into a pattern of over-time/over-budget projects, because the culture of accountability was not enforced over the long term.

One possible flaw in the Kinnaird proposals is their (unintended) potential to wholly separate end-users from procurers. If this potential were fully realised we could in the worst case create a situation in which military users had equipments foisted on them by civilians with no idea of the day-to-day operational problems their neat bureaucratic solutions were causing. This is one extreme of a spectrum. The other is a situation where the military dictate all requirements regardless of personnel and running-cost issues, and the Defence budget then comes under impossible cost pressures. In trying to avoid the latter, Kinnaird may be risking the former.

The key issue, however, is long-term transparent accountability. Readers of my columns here will not be surprised at this conclusion, but in some Defence management circles it is still seen as a dangerous if not actually subversive novelty; something to be given lip-service only. But let it become established via Kinnaird in major Defence acquisitions and we have real hope of improvement. Without it, Kinnaird has laboured in vain.