More than 1,000 civilian jobs could be lost as part of a sweeping overhaul of Australia’s defence structures that will include abolishing the Defence Materiel Organisation (DMO).
A government-commissioned review has also called for the sale of unnecessary defence properties, the axing of a number of senior executive roles, and the removal of one three-star position.
The so-called “first principles” review, headed by David Peever, suggested the defence shakeup after finding its organisational model and processes were “complicated, slow and inefficient”.
These structures caused “institutionalised waste, delayed decisions, flawed execution, duplication, a change-resistant bureaucracy, over-escalation of issues for decision and low engagement levels amongst employees”.
The report, published on Wednesday, recommended major changes in the purchasing of military equipment and supplies. The DMO employs 5,000 people in about 70 locations and is spending more than $12.5bn on equipment and services this financial year.
The review said the DMO had been “beset with problems” and had become “top heavy, complex and unnecessarily deep”, causing cost blowouts and delays.
It called for the DMO to be disbanded, with its core responsibilities transferred to the Defence department’s proposed new “capability acquisition and sustainment group”.
More broadly, the report said downsizing was already occurring within defence, with full-time-equivalent staff numbers reducing from 22,300 in mid-2012 to 19,500 in October 2014, largely through natural attrition and a tightening of recruitment practices.
“This report provides a targeted approach to staff reductions based on implementing our recommendations, which could lead to a defence public service workforce within the range of 16,000 to 17,000 full-time equivalents,” it said.
“The initiatives will also lead to the reallocation of around 1,000 Australian Defence Force personnel back to the services.”
But the defence minister, Kevin Andrews, used slightly different figures at a media conference to release the final report.
Andrews said staffing levels were already down to about 19,000 at present and “we think that trajectory … will probably end at around the 17-18,000 mark”. The net reduction in positions would be about 1,000, he said.
The government has also been urged to consolidate its estate holdings by selling all unnecessary properties, including 17 bases identified in a yet-to-be released report from 2012.
The report provided a conservative estimate of the value of disposing these 17 sites over 30 years of $1.4bn, including property sales at a market value of $570m.
Peever, a former managing director of Rio Tinto Australia, said the review team had found defence operated “as a loose federation where the parts are not well joined up and, therefore, not a good fit for purpose for the challenging agenda which defence has before it”.
Andrews said the government supported 75 of the 76 recommendations and implementation would take two years.
The Labor opposition said it would carefully consider the report, but was concerned job losses had “the potential to significantly erode capability”.
“Labor is always supportive of well-directed reform and efficiency measures, but such reforms should not be used as an excuse for yet more job cuts in defence,” said a joint release from Labor’s defence spokesman, Stephen Conroy, veterans’ affairs spokesman, David Feeney, and the opposition parliamentary secretary for defence, Gai Brodtmann.
Nadine Flood, the national secretary of the Community and Public Sector Union, said the loss of defence public service jobs would have an impact on frontline services.
“Having soldiers driving desks, not tanks, makes no sense,” Flood said. “Over the past five years around 4,000 civilian jobs have been slashed from defence, many in regional Australia.”
The Defence department has the largest holding of land in Australia, and in 2010 spent more than $20bn on maintaining its 394 commonwealth-owned properties.
Neil James, from the Australian Defence Association thinktank, said: “The biggest single problem in defence estate presently in marginal electorates is that no state or federal politician or local mayor will allow a base to be shut down even when it should be … It’s a pity the report didn’t say that.”
Defence needed to clearly explain to the government and the community the reasons parts of the estate were no longer required, the report said, calling for improvements to the disposal process.
Andrews said the government would consider disposing of redundant defence properties on a case-by-case basis and was not working to a particular timeframe.
“We will look at it in terms of what our future force structure requirements are, what our needs are and it will be looked at in the context of the white paper,” he said.
“The recommendations have been around for some time to dispose some defence estate. Obviously there are sensitivities in particular locations in relation to disposal of defence estate but the reality is that if you’re keeping redundant estate that’s soaking up funds that could be used and needed elsewhere.”
The other members of Peever’s review team were the former defence minister Robert Hill, former army chief Peter Leahy, former BAE Systems executive Jim McDowell and former finance minister Lindsay Tanner.
