THE HON. JOEL FITZGIBBON MP
Minister for Defence
Tuesday, 12 May 2009
081/2009
BUDGET 2009-10
DEFENCE SAVINGS INITIATIVES
The Minister for Defence Joel Fitzgibbon today announced further details of
the Defence Strategic Reform Program. This program is a key element of
the Government’s financial plan to fund the force structure, readiness,
sustainment, personnel, infrastructure and other objectives outlined in the
2009 Defence White Paper.
The Government’s financial plan for Defence includes the Strategic Reform
Program, other savings initiatives, our existing commitment to grow the
Defence Budget by 3 per cent average real growth until 2017-18 followed
by 2.2 percent average real growth to 2029-30, and a new indexation
arrangement.
The Strategic Reform Program and other initiatives will deliver savings of
around $20 billion over the decade, which includes approximately $5 billion
over the forward estimates. The success of this program will depend upon
fundamental changes to policy, practices and culture across the department.
Mr Fitzgibbon said the Defence Strategic Reform Program would deliver
significant savings to Defence and ensure the affordability of initiatives in the
White Paper.
The Strategic Reform Program will change the way Defence does business,
and will draw on detailed analysis of every aspect of Defence, including
strategic planning, managing major cost pressures, capability, logistics and
workforce management, amongst other areas. Money saved through this
Program will be reinvested into priority Defence programs and capability
acquisitions. This reinvestment provides an enormous incentive for Defence
to achieve the $20 billion worth of savings. The Program will also improve
Defence planning and accountability arrangements, while significantly
enhancing productivity. The program will establish a blueprint for the Australian
Defence Force to become the world’s most productive Defence Force.
Defence will reform its costing methodology to more accurately forecast major
acquisition costs, improve the governance and oversight of cost estimates,
and implement more efficient business practices. In response to the Defence
Procurement and Sustainment Review, the Government has also directed
Defence to implement a 20-point plan to make Defence equipment acquisition
and sustainment more business-like.
Key reforms to Defence business practices that will generate savings include:
Reforms to the design of the military support backbone, including
supply chain and inventory management and military equipment
maintenance. These efficiencies will deliver savings of approximately
$1.5 billion in saving across the forward estimates and $5.5 billion
across the decade.
The creation of more efficient enterprise support functions, such as the
information and communications technology infrastructure, reducing the
use of contractors and providing more centralised support to the ADF.
These efficiencies will deliver savings of approximately $0.5 billion
across the forward estimates and $3.5 billion across the decade.
The Defence workforce will be rebalanced to ensure that we have the
people with the right skills in the right jobs. Our highly trained military
members will focus their skills where they are most needed and,
wherever possible, expensive contractor positions will be converted
to Australian Public Service positions. These efficiencies will deliver
savings of approximately $0.5 billion across the forward estimates
and $2 billion across the decade.
Defence will reduce input costs to doing business, including
non-equipment procurement. These costs can be reduced through
changing Defence’s approach to business. Examples include
procuring more competitively priced products and making greater
use of Defence’s extensive videoconference network rather than
undertaking single-day travel. These efficiencies will deliver savings
to Defence of approximately $1 billion over the forward estimates
and $4.5 billion over the decade.
Defence will make further savings through a range of other initiatives,
including more effective major equipment procurement practices
through the implementation of the Mortimer Review. These savings will
deliver saving to Defence of approximately $1.5 billion over the forward
estimates and $5 billion over the decade.
The range of savings planned in this Budget will be drawn from comprehensive
efficiencies in administrative, sustainment, workforce, estate, and ICT functions.
“This savings program is achievable but requires a firm commitment to
implementing these reforms. Defence must manage its budget better in the
future and deliver improved taxpayer value for Defence dollars,” said
Mr Fitzgibbon.
The Government will closely monitor the implementation of the Strategic
Reform Program. As part of the recently announced five-yearly White Paper
cycle, the Government will direct an independent audit be undertaken to
ensure that Defence remains on track and that reform is enduring.
“Most importantly, these changes will enable the White Paper to be delivered
in full. We are constantly looking to ensure every Defence dollar is spent well,
investing in the Defence Force we need,” Mr Fitzgibbon said.
Media contacts:
Christian Taubenschlag (Joel Fitzgibbon):
02 6277 7800 or 0438 595 567
Defence Media Liaison:
02 6265 3343 or 0408 498 664
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