Australian Defence Magazine Conference (excerpt)
(Source: Australian Department of Defence; issued Feb. 24, 2007)
Excerpt of a speech by the Hon. Dr Brendan Nelson, Minister for Defence
Australian Defence Magazine Conference
Canberra, Thursday, 22 February 2007

(Excerpt begins)

In terms of change, and how quickly things do change, I was reflecting on some of the things that have happened over that past year. The government announced that there will be a 3 per cent increase in defence funding after 2016, compounding the 3 per cent real.

We also announced the acquisition of four C-17 Globemasters, the first of which, as you know, has already been delivered. We received the first 18 of 59 M1A1 Abrams tanks ahead of schedule and ahead of budget. We've also announced that we will increase the size of the Australian army by two battalions, taking it from six to eight, essentially motorised battalions.

We have also announced, and I announced in April last year, when the automatic flight control system went down on the Seasprite, that enough is enough. And I've specifically asked the naval leadership and the Defence Materiel Organisation to prepare three detailed options for me to consider, supported with a strong business case in terms of continuing, or alternatively a different kind of capability, or, thirdly, possibly not continuing with the project at all, particularly when you think that you're looking at an interim operational capability 10 years after the original delivery date and that decision will be made very shortly, I can assure you.

We've also has here, quite appropriately, debate about our new air combat capability, and as a lay person coming to your profession – both in terms of defence industry and the uniformed profession of arms – within a few months of acquainting myself with the complexity of the issues surrounding new air combat capability, I was convinced of two things. The first is that the Joint Strike Fighter is indeed the correct aircraft for Australia's needs. 95 per cent of the capability of that aircraft is in the public arena. But it's the other 5 per cent that really counts, and there is no question that is the correct aircraft for us. But our new air combat capability derives itself and relies upon, not only the JSF but also all of the multipliers which go around it.

So as we well know, the airborne early warning command and control platform, the Wedgetail with Boeing is approximately two years behind schedule.

We have significant schedule issues with Vigilare the ground-based network-centric air warfare system. We also have some challenges with the boom on the multi-role air tanker transport, the A330.

We also have challenges with the radar warning receiver and some other elements that the electronic warfare self-protection system on the F/A-18 upgrade and, needless to say, the man hours and complexity involved in the centre barrels presents a significant challenge

Those and other aspects of the new air combat capability and the vagaries of the US political system in terms of the rate of delivery of the Joint Strike Fighter is such that by halfway through last year I was convinced that Australia should not take the risk – particularly if the F-111s had to be retired prematurely through some unexpected engineering issue – we should not, under any circumstances, take the risk of having a gap. And it is for that reason that we are seriously looking at acquiring a squadron of F/A-18F Super Hornets Block 2.

And I know there's a debate about whether or not Australia should be looking at an F-15 or some other kind of aircraft. The reality is the F-15 is about 30 to $40 million more expensive than the Super Hornet. It is approaching the end of its life. It also has a low observable profile which is not attractive to our country's needs. It also has limited transferability in terms of weapons. We are a Hornet country.

The Block 2-F has maritime strike capability. It can also transmit the JDAM coordinates to an F/A-18. It has about 30 per cent transferability in terms of componentry. It's also off the shelf, so to speak, and the first could potentially be delivered toward the end of next year.

The US Navy will fly it till 2030, and I find it rather interesting that some of the critics of the decision for the government to look at it are the same people that are quite happy to criticise the government for some of the legacy projects in terms of orphan capability.

The reality is that if the JSF and all of the capabilities surrounding the new air combat capability could be delivered on time, it's not an option we'd be looking at and certainly not one we'd be looking at if the F-111s could confidently fly for another decade or more.

The other thing that ought to be emphasised in relation to the JSF, by the way, we knew that the US Air Force would be delaying its rate of acquisition when we made the decision. We expected about a 30 per cent reduction in the rate of acquisition. We still expect the US military however to acquire about two and a half thousand of the aircraft in contrast to the 183, or thereabouts, F-22s that they will have.

We are not prepared as a country of 20 million people requiring a hundred aircraft to sign on for 20 per cent of the global on costs of an F-22, and knowing that as brilliant an air-to-air combat aircraft that it is, that it is not specifically the right aircraft for Australia.

We've also had a significant year of achievement with DMO and I pay credit again to Steve Gumley for what he's done there. I will not defend the indefensible in terms of acquisition and sustainment contracts so long as I'm privileged to be the minister. But equally, I think it's my responsibility to also paint a picture of when things are actually going pretty well.

We closed 93 projects in the three years from July 2003. Ten of them were late and over budget - $131 million - but 53 came in early and below budget, saving us $95 million.

We've also had a year in which we decided to develop defence industry policy and I can confirm that the Cabinet has agreed to the policy. It is largely consistent with the draft that was released with which you are all familiar and I make no apology for saying that there are nine strategic objectives in the policy which I will release shortly. And it includes a requirement on us to work with you to define key defence capability for Australia, to make sure that those projects that are worth more than $50 million, what is the supply chain? Where do the SMEs fit into that supply chain and how do they do it?

In addition, if they're more than $50 million, what is the potential for Australian participation in that project in a formal sense?

We also will be working very hard to build a defence export development program as a part of the DMO, and I emphasise collaboratively in consultation with yourselves. And you will also see our determination supported by money to bring SMEs into the R&D area of defence and also to see that we have increased seamlessness between trainees from basic apprentices through to high end engineers between the DMO and defence industry and in one of our three services.

We also undertook a review into the clothing section of the DMO. I was suspicious when I was first appointed that Steve and his people were working flat out on air warfare destroyers and F/A-18 upgrades and there might have been a few issues at that end. Once I got some outsiders in to have a look at it, there was no doubt we were right.

We've now well embarked on serious reform in that area and I think it's fair to say that the defence industry that supplies us in that area is a little bit more satisfied with the way things are going.

I also asked Barry Cusack and three others from the outside Defence to join the CFO and the chief information officer in putting together a Business Improvement Board. You will see a ramp up in their activities particularly in looking at ordinance and institutional efficiency and productivity throughout this year.

I expect to receive also Elizabeth Proust's report on the management review into the non-operational aspects of the Department – to receive that certainly by the end of next month – and anyone who thinks that I don't implement reports that I commission and receive should speak to anyone that was involved in the clothing review. And if you're not satisfied with that, have a chat to Professor Dibb when the meeting is over.

I can assure you that we mean business in this regard and that is in the sense of fully respecting the finest cultures and traditions of Defence whilst at the same time seeing that every single person that works in it - civilian and uniformed - is doing a task that is appropriate to their skills and training and which maximises the support we give to our 3000 people that are out in the field.

It's also been a year in which I said one of the objectives was that we would discharge our statutory obligations financially. We've now got $19.6 billion of your money in defence as our budget and that represents, as you well know, a 7.3 per cent increase on last year. And for the first time, we've now gone from a no opinion disclaimer from the Auditor-General to a true and fair, except as you know for some areas in ordinance and general inventory and we've got some flow on effects from the income statement.

But significant progress has been made for which the former secretary Ric Smith and the CFO, in particular, should take special credit, but I can assure you we've still got a long way to go.

It's also been a year in which we've seen the North Koreans attempt to launch a Taepodong-2 missile and set off a nuclear explosion. It's been a year in which we've seen the Iranians further push the envelope on its nuclear aspirations. (end of excerpt)

Click here for the full text, on the Australian DoD website.


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