defence annual report€¦ · this report has been prepared in accordance with section 63 of the ....

Defence AnnuAl

RepoRt 2008-09

VOLUME ONE DepARtMent of Defence

KeY Defence StAtIStIcS2004-05 2005-06 2006-07 2007-08 2008-09 change

2007-08 to 2008-09 /

More information

Corporate and FinancialFinancial Performance ($m)

Income 17,448 17,249 18,480 21,085 21,674 chapter 2 Appendix 9

expenses 18,318 17,394 19,147 21,686 22,617 chapter 2 Appendix 9

operating result -870 -145 -667 -601 -943 chapter 20 Appendix 9

Accounts paid by due date (%)

88.2 90.9 95.4 92.5 93.2 Appendix 9

People

total ADf members (AfS)

51,813 51,151 51,504 53,167 55,081 Chapter 1

Ab initio recruitment target met (%)

80 84 84 77 76 Appendix 7

ADf separation rate (%)

11 11 11.2 9.8 9.4 Appendix 7

female ADf members (%)

13.2 13.3 13.4 13.6 13.5 Appendix 7

total Defence ApS personnel (fte A)

13,390 13,577 14,516 15,087 14,489 Chapter 1

unacceptable behaviour complaints received

749 685 846 765 873 Appendix 7

comcare Investigations

45 34 69 99 49 Appendix 7

Corporate Support

foI requests received 206 171 184 175 152 Chapter 6

Video news Releases 141 67 109 284 256 Chapter 6

operational

number of operations with ADf involvement

14 22 19 19 18 chapter 9

DEFENCE ANNUAL REPORT 2008-09 VOLUME 1 I

The Hon Senator Faulkner Minister for Defence Parliament House

Dear Minister

We present the annual report of the Department of Defence for the year ended 30 June 2009. This report has been prepared in accordance with Section 63 of the Public Service Act 1999.

Subsection 63(1) of the Act requires that our report to you be tabled in the Parliament.

The report has been divided into two volumes. Volume One is the Department of Defence’s report. Volume Two is the report of the Defence Materiel Organisation, a prescribed agency within Defence. The volumes summarise the performance of Defence for 2008-09 and include all mandatory information required by legislation.

In accordance with Section 45 of the Financial Management and Accountability Act 1997 and pursuant to Regulation 19 of that Act, we are satisfied that Defence has prepared fraud risk assessments and fraud control plans and has in place appropriate fraud prevention, detection, investigation, reporting and data collection procedures and processes that meet the specific needs of Defence and comply with the Commonwealth Fraud Control Guidelines 2002.

Yours sincerely

I J Watt AO A G Houston AC, AFC Secretary Air Chief Marshal Department of Defence Chief of the Defence Force

II DEFENCE ANNUAL REPORT 2008-09 VOLUME 1

GUIDE TO THE REPORTThe format and content of this volume reflects the requirements developed by the Department of the Prime Minister and Cabinet and approved by the Joint Committee of Public Accounts and Audit in June 2009 under subsections 63(2) and 70(2) of the Public Service Act 1999.

This report addresses the Department of Defence and the Australian Defence Force (ADF), which are collectively referred to as ‘Defence’. Volume 2 of this report addresses the Defence Materiel Organisation as a prescribed agency. The Department of Veterans’ Affairs and Defence Housing Australia, which are parts of the Defence Portfolio, have separate annual reports. The Australian Strategic Policy Institute, funded substantially by Defence, is a Government-owned company incorporated under the Corporations Act 2001 and has a separate annual report.

Annual reports, portfolio budget and additional estimates statements are the principal formal accountability mechanisms between the Government, departments and the Parliament. Portfolio budget statements set out performance targets for departmental outputs. Portfolio additional estimates statements may contain revised targets and annual reports describe achievement against the revised targets.

In addition, Defence’s annual reports are designed to link performance during the year under review with performance forecasts contained in the portfolio budget statements for the following year.

Change to report structureIn 2008-09, Defence’s Outcome reporting structure changed significantly as promulgated in the Portfolio Budget Statements 2008-09. As a consequence of this, the annual report has been restructured to take advantage of the improved transparency offered by the more defined linkages between organisational outputs and accountable Groups and Services.

STYLE CONVENTIONSThe following style conventions are used in the report:

– nil n/a not applicable (unless otherwise specified) $m $ million $b $ billion

Figures in tables and in the text may be rounded. Figures in text are generally rounded to one decimal place, whereas figures in tables are generally rounded to the nearest thousand or million. Discrepancies in tables between totals and sums of components are due to rounding.

ISSN 1323 5036

ISBN 978-0-642-29714-3

© Commonwealth of Australia 2009

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Commonwealth Copyright Administration, Information and Security Division, Attorney-General’s Department, 2-5 National Circuit, Barton ACT 2600 or posted at www.ag.gov.au/cca.

http://www.ag.gov.au/cca/

DEFENCE ANNUAL REPORT 2008-09 VOLUME 1 III

Cont

ents

CONTENTSGuide to the Report ......................................................... iiStyle conventions ............................................................ iiContents.......................................................................iii

SECTION 1 OVERVIEW

CHAPTER 1 2008-09 OVERVIEW ..........................................2Foreword by the Secretary of Defence & the Chief of the Defence Force............................................................................2Australians chalk one up for education in Tarin Kowt ..................................17White Paper ....................................................................................18

CHAPTER 2 RESOURCES OVERVIEW....................................... 21Financial Overview ......................................................... 21Suppliers Overview ........................................................ 27People Overview ........................................................... 27Capital Overview............................................................ 32A Lasting Relationship with East Timor.................................. 35

SECTION 2 ORGANISATIONAL GOVERNANCE

CHAPTER 3 ORGANISATIONAL STRUCTURE................................. 38Portfolio structure.......................................................... 38

CHAPTER 4 STRATEGIC GOVERNANCE ..................................... 41Departmental role & functions ........................................... 41Strategy & strategic reform .............................................. 41

CHAPTER 5 CORPORATE GOVERNANCE ................................... 47Senior Defence committees ............................................... 47Other governance structures ............................................. 50

CHAPTER 6 EXTERNAL SCRUTINY .......................................... 56Parliamentary Committees ............................................... 56Judicial decisions & decisions of administrative tribunals .......... 56Auditor-General’s reports ................................................ 57Ombudsman reports ........................................................ 57Freedom of information ................................................... 58Public Affairs ................................................................ 60

SECTION 3 OUTCOME PERFORMANCE

CHAPTER 7 PERFORMANCE SUMMARY ..................................... 62Outcome & Output structure change .................................... 62Cost of Defence Outcomes ................................................ 63

IV DEFENCE ANNUAL REPORT 2008-09 VOLUME 1

CHAPTER 8 OUTCOME 1 PERFORMANCE .................................. 66Outcome 1 Summary ....................................................... 66Output Group 1.1 Office of the Secretary & CDF ...................... 70Output Group 1.2 Navy Capabilities ..................................... 74What the White Paper means for the Navy ..............................................79Output Group 1.3 Army Capabilities ..................................... 80What the White Paper means for the Army ..............................................84Output Group 1.4 Air Force Capabilities ................................ 85What the White Paper means for the Air Force ..........................................89Output Group 1.5 Intelligence capabilities ............................. 90Output Group 1.6 Defence Support ...................................... 94Output Group 1.7 Defence Science & Technology ..................... 98Output Group 1.8 Chief Information Officer ..........................101Output Group 1.9 Vice Chief of the Defence Force ..................105Output Group 1.10 Joint Operations Command.......................108Output Group 1.11 Capability Development...........................111Output Group 1.12 Chief Finance Officer ..............................113Output Group 1.13 People Strategies & Policy........................115Output Group 1.14 Superannuation & housing support services for current & retired Defence personnel & other administered items 119

CHAPTER 9 OUTCOMES 2 & 3 PERFORMANCE ......................... 121Cost of ADF operations....................................................121Outcome 2 Military Operations & other tasks directed by the Government to achieve the desired results ...........................124Output Group 2.1 Operations contributing to the security of the immediate neighbourhood................................................126Output Group 2.2 Operations supporting wider interests ...........128Outcome 3 Defence’s support to the Australian community & civilian authorities to achieve the desired results .............................132Output Group 3.1 Defence contribution to national support tasks in Australia.....................................................................134Defence assistance to the civil community ............................................. 137

SECTION 4 LEGISLATION ADMINISTERED BY DEFENCE

CHAPTER 10 ANNUAL REPORT ON ADMINISTRATION & OPERATION OF THE DEFENCE HOME LOAN SCHEMES .......................................... 140

The Defence HomeOwner Scheme (Defence Force (Home Loans Assistance) Act 1990) .....................................................141The Defence Home Ownership Assistance Scheme (Defence Home Ownership Assistance Scheme Act 2008)...............................143

DEFENCE ANNUAL REPORT 2008-09 VOLUME 1 V

Cont

ents

SECTION 5 APPENDICES

APPENDIX 1 EXTERNAL SCRUTINY 146Parliamentary Committees ..............................................146Auditor-General’s reports ................................................150Freedom of information ..................................................151

APPENDIX 2 MILITARY JUSTICE 158Reforming the Military Justice System .................................158

APPENDIX 3 DEFENCE COOPERATION PROGRAM 162APPENDIX 4 MAJOR CAPITAL FACILITIES 165

Approved Major Capital Facilities Projects ............................165APPENDIX 5 ENVIRONMENTAL MANAGEMENT 185

Land management & biodiversity conservation .......................185Interaction with marine & aquatic environments ....................186Heritage management ....................................................186Climate change.............................................................186Energy management ......................................................186Water & waste management ............................................187Pollution prevention & contaminated sites management ..........187National environment protection measures ..........................187Infrastructure development..............................................188Ozone-depleting substances & synthetic greenhouse gases ........188Environmental training & awareness ...................................188Strategic partnerships.....................................................189Defence environmental management system ........................189Environmental impact assessment .....................................190Defence referrals under the EPBC Act..................................190Defence Environment & Heritage Panel................................191Incident reporting .........................................................191Administration of Commonwealth Policy on the Management of Land Affected by Unexploded Ordnance (UXO)..............................191

APPENDIX 6 MAJOR CAPITAL EQUIPMENT PROGRAM 193Public Defence Capability Plan 2009....................................193The Approved Major Capital Equipment Program.....................193

APPENDIX 7 PEOPLE 195Defence actual staffing ..................................................195ADF workforce management .............................................203Equity & diversity..........................................................220Occupational Health & Safety ...........................................222Complaint handling & resolution ........................................226Compensation for detriment caused by defective administration .230APS Code of Conduct .....................................................230

VI DEFENCE ANNUAL REPORT 2008-09 VOLUME 1

APPENDIX 8 PURCHASING & CONTRACTING 232Assessment of purchasing against core policies & principles ......232Contracts ...................................................................235Legal Expenses .............................................................237Advertising & Market Research ..........................................237

APPENDIX 9 FINANCIAL TRANSPARENCY 243Asset Management.........................................................243Efficiencies .................................................................243Payment of Accounts ......................................................244Grants .......................................................................245Financial statements ......................................................251

CHAPTER 11 DEFENCE ANNUAL REPORT 2007-08 .................... 364

CHAPTER 12 ERRORS & OMISSIONS .................................... 364

SECTION 6 INDEXES & GLOSSARY

LEGISLATION 366ACRONYMS & ABBREVIATIONS 367GLOSSARY 369COMPLIANCE INDEX 376INDEX 378

SECTION 1OVERVIEW

2 DEFENCE ANNUAL REPORT 2008-09 VOLUME 1

CHAPTER 1 2008-09 OVERVIEW

FOREWORD BY THE SECRETARY OF DEFENCE & THE CHIEF OF THE DEFENCE FORCE2008-09 was another busy year for Defence. The Australian Defence Force (ADF) was engaged in 18 operations around the world with a peak contribution of 3,500 personnel. The Government released the 2009 White Paper, the most comprehensive ever compiled, which sets out a clear plan for the future size and shape of the ADF. Closely linked to the White Paper is the Strategic Reform Program, an ambitious program that will reform the way Defence does business in order to increase efficiency and effectiveness, and provide savings which will be reinvested to fund Force 2030.

In 2008-09 Defence continued to perform very well in a wide range of operations. This year, Defence was engaged in operations in East Timor, Solomon Islands, Papua New Guinea and the Northern Indian Ocean, and maritme security operations in the South China Sea in support of regional security. In the Middle East, Defence contributed to coalition efforts in order to deny Afghanistan as a safe haven for terrorist groups and also supported the

Multinational Force effort to develop a stable and secure environment in Iraq. In Africa, the Middle East, Iraq, Afghanistan, and East Timor, Defence also supported United Nations Missions and our forces operated in the Gulf region and the Horn of Africa to counter the threat of piracy. Here at home, Defence assisted the civil authorities' response to the devastating Victorian bushfires and floods in Queensland and New South Wales. Defence also provided personnel to support the Government's intervention to assist indigenous communities. Finally, Defence played a central role in protecting Australia's borders and offshore maritime assets.

We are very proud of the efforts of our deployed personnel and the way in which they are conducting themselves. They are fine ambassadors for Australia and are furthering our reputation with our allies as a reliable, professional and skilled fighting force. In January, Trooper Mark Donaldson was recognised for his exceptional skill and bravery when he was awarded the Victoria Cross, the first Australian in almost forty years to be honoured in this way. Trooper Donaldson was deployed to Afghanistan as part of the


DEFENCE ANNUAL REPORT 2008-09 VOLUME 1 3

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Special Operations Task Group when he displayed exceptional courage in circumstances of great peril. His actions were of the highest accord and in the finest traditions of the Australian Defence Force. His bravery should be an example to us all.

This year saw the release of a new Defence White Paper that provides a basis for the further development of our Defence capability. Force 2030 provides a formidable set of military capabilities that will keep our country secure into the future in an evolving strategic environment. The White Paper was the result of over twelve months of comprehensive internal and external reviews, audits and scrutiny. The Force prescribed in the White Paper, Force 2030, will deliver a modern and innovative ADF, which is balanced, networked and deployable. Force 2030 will be staffed by dedicated and professional people, both military and civilian, who operate within a culture of adaptability, and excel at joint, interagency and coalition operations.

Over the past 12 months the ADF has continued its evolution towards becoming an increasingly innovative and adaptive force. Each of the three Services embarked on improvement initiatives supporting the Strategic Reform Program. Navy also implemented measures to evolve to a more positive, progressive, and people focused organisation through the 'New Generation Navy' initiative. The 'Adaptive Army' initiative set in place improvements to command and control, force generation and force preparation. Air Force continued with its 'Air Force: One Team' cultural approach in order to reaffirm our Air Force as a values based, inclusive workforce focused on professional mastery.

2008-09 also signalled the start of significant, deep and holistic reform in every part of Defence.

The Strategic Reform Program is the most far reaching reform ever undertaken by Defence. It involves improvements to many areas of Defence, from the way we plan and develop strategy to the way we procure goods and services. The Strategic Reform Program is a long-term program, a decade long campaign, that will change Defence culture and deliver sustainable improvements in the way Defence conducts business. This program will be challenging, but we are confident that the men and women of Defence will be able to achieve this program of reform. Together we will produce a more efficient and effective organisation.

As a result of the Strategic Reform Program Defence will deliver gross savings from efficiencies and cost reductions over the coming decade of around $20 billion. This money will be reinvested to deliver Force 2030. Without it, we will not be able to deliver Force 2030. That is why, after operations, there is no higher priority in Defence than the Strategic Reform Program. We, along with our leadership colleagues, are personally committed to delivering the savings, and reforms, for Government.

In implementing the Strategic Reform Program, we have drawn on the lessons from previous reform programs in Defence, including the need for strong internal and external governance. A key development in the area of transparency and accountability is regular progress reporting to Government, and the formation of the external Defence Strategic Reform Advisory Board.

In addition to seeking deep reform, Defence worked hard to improve its transparency and accountability mechanisms this year. Defence achieved unqualified financial statements, and established a new Freedom of Information and Records Management Branch to ensure that we are well positioned to implement a pro-disclosure culture.



Sadly, this year we lost five fine young men who were killed on operations in Afghanistan. Our thoughts are with the families and friends of these brave soldiers as they cope with their terrible loss. In addition to those we lost, a number of our people were also wounded on operations-some with significant and permanent wounds-and continue to undergo rehabilitation. As they embark upon their long path of recovery, we wish them well as they heal and make decisions about their future.

Of course, none of what we achieve would be possible without the assistance of Defence families. Life in Defence offers its members challenging and rewarding careers. However, in addition to offering many opportunities, the military lifestyle can also be demanding, not only for the ADF member, but also for their families. So we also thank Defence families, military and civilian, for their ongoing love and support.

Finally, we would like to thank all members of Defence for their contribution over the past year. We would also like to thank the previous Secretary, Mr Nick Warner, who leaves an important legacy, including the 2009 White Paper and the Strategic Reform Program, and improved governance and financial frameworks.

I J Watt AO A G Houston AC, AFC Secretary Air Chief Marshal Department of Defence Chief of the Defence Force


Year in ViewJuly 2008

‘Haul a Hornet’ for cystic fibrosis inter unit charity challenge at

RAAF Base Williamtown, for John Hunter Children's Hospital. Members of

381 Expeditionary Combat Support Squadron putting their all into the pull.

Ceremonial flypast of the Boeing 707 during the 33 Squadron "End of an era" parade at RAAF Base Richmond. Left to right: Wing Commander Guy Wilson, Air Commodore Jack Plenty, Air Vice-Marshal Mark Skidmore, Wing Commander Jim Ghee.


August 2008

HMAS Ballarat in Milford Sound, New Zealand, during a deployment to the South West Pacific.

Soldiers from the fourth Reconstruction Task Force at Tarin Kowt, Afghanistan, take part in the AFL's "Kick around Australia" to celebrate the 150th anniversary of the AFL.

NORFORCE Patrolman Private Leonard Lamilami from Croker

Island takes in the surrounding countryside near the indigenous

community of Oenpelli in the Northern Territory during a break from

driver training activities.


Year

in V

iew

September 2008

Passing overhead the Tomaree Headland at Port Stephens, is a formation including a Royal Australian Air Force F/A-18B Hornet and three US Oregon Air National Guard F-15C Eagles. The F-15Cs were in Australia to support Australian combat instructors training.

Participants of the Australian Defence Force Parliamentary

Program spend a week working in Parliament House.

Flares light up the night sky at Forward Operating Base Armadillo in the Helmand province of Afghanistan, helping to observe and deter Taliban activity.


October 2008

Navy Cadets of the Training Ship Shoalhaven enjoying

their day out at the HMAS Albatross Air Spectacular.

Corporal Renee Phillips of Alpha Company, 1st Military Police Battalion, Townsville, providing security and direction at the beach head during amphibious training near Cowley Beach, south of Innisfail in far north Queensland.

Captain Clare O'Neill of the works section from the Reconstruction Task Force 4 at the

new women's hospital in Tarin Kowt, Afghanistan.


Year

in V

iew

November 2008

Soldiers supporting the cleanup after the destruction wrought by Brisbane's worst storms in more than 20 years.

Privates Scott Walker, left, and Clancy Townsend; both 6th Battalion, the

Royal Australian Regiment, push across the ropes obstacle on their way to

winning the 7th Brigade Military Skills Competition held at the Army's Land

Warfare Centre, Canungra.

C-130J Hercules (A97-049) flies along the East coast of NSW to mark the 50th Anniversary of C-130 Hercules service with the Royal Australian Air Force.


December 2008

Air Force cooks show off the tools of their trade. From left to right,

Corporal Cassandra Mather, Sergeant Mick Dixon,

Leading Aircraftman Lachlan Robinson, Leading Aircraftman Callam Stacey, and Leading Aircraftwoman Kina Nobel feed

around 200 personnel at RAAF Base Learmonth during Operation Resolute.

Preparing to celebrate Christmas in Afghanistan are: Flying Officer Rebecca Rogers (back left), Flight Lieutenant Skye Smith (back right) Leading Aircraftwoman Nicole O'Hehir (front left), Commander Task Group 633.2 Wing Commander Perry Jolley (santa), Leading Aircraftwoman Rachael Collins (front right) and CPL Nikki Brown (front centre).

HMAS Arunta stays in position off of the yacht Generali while

Australian medical personnel assist and transfer an injured

French yachtsman.


Year

in V

iew

January 2009

Trooper Mark Donaldson VC, wife Emma Donaldson and daughter Kaylee pose for photographs following the ceremony awarding the Victoria Cross for Australia to Trooper Donaldson.

Anzac class ship HMAS Warramunga departs

Diamantina Pier at Fleet Base West, Garden

Island, WA, for the Middle East Area of Operations.

With his cheer squad in fine voice, Leading Aircraftman Lachie Wray, a clerk with the International Stabilisation Force, practises his thong throwing for Australia Day celebrations in East Timor.


February 2009

An Air Force Caribou aircraft flying low along the Great Australian Bight. It was announced in February that

Australia's fleet of DHC-4 Caribou aircraft would be retired.

During Operation VIC Fire Assist, Lieutenant Colonel Chris Connelly speaks to key personnel from the Community Service Hub Flowerdale after the local community meeting at Flowerdale Hotel.

An Army Black Hawk helicopter transporting a pallet of aid from Townsville to Ingham as part of the relief effort

to the flood-stricken community


Year

in V

iew

March 2009

The Chief of the Defence Force, Air Chief Marshal Angus Houston, congratulates cadets during the Chief of Defence Force Parade.

Explosive Detection Dog, Mandy, with handler Sapper David Brown grins ear to ear as she displays her ADF Trackers and

War Dogs Association medals.

HMAS Darwin (foreground) with HMAS Sydney for the Royal Australian Navy's Fleet Review 2009.


April 2009

HMAS Sydney's ship's company at a dawn service held at sea to commemorate

ANZAC Day.

An F/A-18 Hornet at RAAF Base Tindal during Exercise Arnhem Thunder.

Members of the Royal Australian Air Force participating in Exercise Red

Flag 09-03 line the hardstand of Nellis Air Force Base in Nevada,

United States.


Year

in V

iew

May 2009

1st Mentoring and Reconstruction Task Force mothers (left to right) Sergeant Donna Bourke, Warrant Officer Class Two Cassandra Jones, Corporal Nicole Spohn and Corporal Ivona Bartusch share photos of their kids as they celebrate Mothers Day in Tarin Kowt, Afghanistan.

Seaman Law (left) and Seaman Zylstra heave in a berthing line as HMAS Manoora departs Sydney Harbour for her South East Asian Deployment.

Petty Officer Marine Technician Tyron Mason-Powell visits the grave of his Great Great Grandfather, Lieutenant James Bruce, Australian Imperial Force at Villers-Bretonneux, the Somme, Northern France.


June 2009

Australian Officers from the 1st Mentoring and Reconstruction

Task Force welcome local government and building industry

representatives to a thank-you ceremony and meal for the

Tarin Kowt Trade Training School, held at the main Australian base in

Oruzgan Province.

Live firing of RBS-70 missile by members of 16 Airfield Defence, at the live firing range in Woomera, South Australia.

Minister for Defence, Senator John Faulkner, is briefed on counter improvised explosive device (CIED) techniques at the Tarin Kowt

CIED training facility. In the background, soldiers conduct a demonstration of the

techniques used to defeat IEDs.


Case

Stu

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Case Study

AUSTRALIANS CHALK ONE UP FOR EDUCATION IN TARIN KOWTThe future of education is looking bright in Tarin Kowt with the official reopening on 13 August of a school refurbished during 2008-09 by Australian Army Engineers. The original school had suffered from years of neglect during the Taliban regime.

After the refurbishment, the school contains 21 new classrooms and complete site services: new ablutions, a generator, septic system and a water tower.

Mentoring and Reconstruction Task Force - Two (MRTF-2) Commanding Officer, Lieutenant Colonel Peter Connolly, joined the Oruzgan Governor Assadullah Hamdam and Tarin Kowt Mayor, Maulawi Obaidullah for the official opening.

Governor Hamdam thanked Australian Army engineers for their efforts in refurbishing the School.

‘It’s important that people get an education,’ Governor Hamdam said, ‘by education we know the difference between good and bad.’

Lieutenant Colonel Connolly said that construction is also progressing on the redevelopment of a new school specifically for girls.

These and other construction projects will have a positive effect within the region.

‘These projects contribute to an extremely important line of operations within MRTF-2’s holistic approach to counter insurgency,’ Lieutenant Colonel Connolly said.

Oruzgan Director of Education, Malem Rahmattulah Khan, also stressed the importance of education and construction projects.

‘Education is like the eyes of the human, if a man does not have eyes then he doesn’t know where he’s going,’ Mr Khan said.

‘So by this school their eyes will be open. We concur with this; however, this is not enough. We want more schools like this so that our society can receive a good education.’

The Commanding Officer of the Mentoring and Reconstruction Task Force, Lieutenant Colonel Peter Connolly (2nd from left), alongside the Dutch Commander of Task Force - Uruzgan and his policy advisor, and the Oruzgan Governor and his Director of Education at a ribbon-cutting ceremony to mark the opening of the Tarin Kowt Boy's School.


Case Study

WHITE PAPEROn 2 May 2009, the Prime Minister, the Hon Kevin Rudd MP, launched in Sydney the Defence White Paper Defending Australia in the Asia Pacific Century: Force 2030 onboard HMAS Stuart. This is the first White Paper in over eight years, the previous papers being delivered in 1976, 1987, 1994 and 2000.

The White Paper affirms the Government’s commitment to the defence of Australia, the security and stability of the regional security environment, and a rules-based global security order. It confirms the centrality of the alliance relationship with the United States and reaffirms Australia’s commitment to the United Nations system.

The White Paper notes the increasing uncertainty of the strategic environment and better positions Defence to respond to conflicts, contingencies and humanitarian and disaster relief activities in that future environment. It states that Australia’s military strategy will be predominantly a maritime one where we will seek to control the air and sea approaches to Australia, if necessary by defeating hostile forces in their bases or staging areas, or attacking them in transit.

The key long-term force structure choices made by the Government are to double the number of submarines by building 12 new boats in South Australia, build a new class of frigates that will be optimised to detect and destroy submarines, provide more than 1,100 new combat vehicles to the Army as well as increasing its general firepower, mobility and survivability, and equip the Air Force with around 100 Joint Strike Fighters.

The Government is making a significant long-term investment in the capability of the ADF while at the same time remediating the current and projected force. To achieve this, the Government has directed the most complex and far reaching reforms of Defence business ever undertaken, including within the DMO, with the redirection of significant internal Defence resources to the development of new capability.

As part of the White Paper the Government agreed to a new funding model for Defence. This new Defence funding package provides Defence with greater funding stability and certainty while requiring Defence to drive efficiencies and improve productivity. The savings and efficiencies form part of the Strategic Reform Program as discussed on page 41.

Defence's funding will be based on the following funding principles:

• 3 per cent average real growth to 2017-18

• 2.2 per cent average real growth from 2018-19 to 2029-30

• 2.5 per cent fixed price indexation from 2009-10 to 2029-2030, with the 2.5 per cent to be calculated from 2009-10 but applied from 2013-14

• agreement that Defence will reinvest all savings from the Strategic Reform Program and other initiatives into higher priority Defence capabilities

• agreement that Defence will make savings of $2b, which will be returned to Defence beyond 2015-16 in line with the revised funding requirements

• an extension of the efficiency dividend of 1 per cent of the administrative activities for the life of the White Paper.


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Case Study - White Paper

Development processThe White Paper development process comprised a Force Structure Review, a number of internal reviews, an independent Defence Budget Audit, a community consultation program and advice from a Ministerial advisory panel.

Force Structure ReviewA major part of the development process was the Force Structure Review, which allowed the Government to examine and develop options on the size, capacity and shape of the ADF for the period to 2030. This classified review identified the likely tasks for the ADF; determined the joint capabilities needed to undertake these tasks; and developed an appropriate force structure to deliver these joint capabilities. The focus throughout was to ensure the nature of future joint, inter-agency and coalition operations was understood as well as a careful consideration of key issues such as concurrency, preparedness and sustainability.

Internal ReviewsIn addition to the Force Structure Review, a series of accompanying classified reviews were conducted across a range of Defence business areas in order to inform development of the White Paper.

The reviews addressed the processes associated with the development of the Defence Capability Plan: preparedness, personnel and operating costs; uniformed and civilian workforce; the force disposition and facilities investment program; information technology requirements; intelligence and security; the defence industry capacity we require, as well as science and technology and logistics management needs.

These reviews provided important input into the development of defence business and budget priorities as part of the White Paper and, in particular, identifying potential reform proposals to be implemented as part of the Strategic Reform Program.

CostingThe Government’s financial plan for Defence will fully fund the force structure, readiness, sustainment, personnel, infrastructure, and other objectives outlined in the White Paper.

For the period 2009-10 to 2012-13, Defence will receive funding from Government of $104.4b. In addition Defence will generate $3.5b in net savings and efficiencies during the same period.

Collectively, these amounts will enable Defence to deliver White Paper initiatives totalling $7.5b over the forward estimates.

The ongoing financial uncertainty has been taken into account as part of the Government’s considerations of the White Paper and fluctuations in exchange rates and other price indices that impact on the Defence budget have informed these considerations.


Case Study - White Paper

OtherA Community Consultation Panel was appointed by Government and included chair Mr Stephen Loosley, deputy chair Mr Arthur Sinodinos AO, and panel members Rear Admiral Simon Harrington (Retired) AM, the Hon Mr Peter Collins AM QC, and Professor Tanya Monro. Over 450 written submissions were received by the panel and 30 public meetings were held in all states and territories, at which over 600 people attended. The panel provided interim and final briefings to Defence during the consultation process and their report was presented to the Government ahead of its decisions on the White Paper.

The Minister for Defence, the Hon Mr Joel Fitzgibbon MP, also appointed a Ministerial Advisory Panel to provide him with external advice on key issues associated with the White Paper. The panel consisted of Major General Peter Abigail (Retired), Dr Mark Thomson and Professor Ross Babbage.

Left to right: Commander Andrew Masters, Rear Admiral Steve Gilmore AM CSC RAN, Rear Admiral Nigel Coates AM RAN, Air Marshal Mark Binskin AM, Lieutenant General Ken Gillespie AO DSC CSM, Vice Admiral Russell Crane AM CSM RAN, Air Chief Marshal Angus Houston AC AFC, and Prime Minister, the Hon Kevin Rudd MP at the launch of the Defence White Paper 2009 onboard HMAS Stuart.


CHAPTER 2 RESOURCES OVERVIEW

FINANCIAL OVERVIEWDepartmental FinancesDepartmental Cash FlowThe Defence Departmental net cash spend as at 30 June 2009 was $22,057.9m. Following the 2008-09 Portfolio Additional Estimates, additional funding of $141.4m for foreign exchange movements was provided to Defence. The additional funding reduced Defence's overspend from $165.9m to $24.5m for the 2008-09 financial year.

Figure 2.1 Departmental net cost of service (cash) five year trend

25,000

20,000

15,000

10,000

5,000

0 2004-05 2005-06 2006-07 2007-08 2008-09 Year

Net cost of service (cash)

15,82817,299

19,26120,221

22,058

NOTE

1. Departmental net cost of services figures based on in-year dollars.



Table 2.1 Departmental net cost of service (cash)2008-09

Budget Estimate

$'000

2008-09 Revised

Estimate[1]

$'000

2008-09 Actual Result$'000

2008-09 Variation

$'000

Cost of serviceSupplier payments 7,419,221 7,991,960 7,989,626 -2,334Employee payments 7,812,961 7,819,037 7,941,096 122,059Purchase of specialist military equipment

4,643,777 4,410,297 3,691,703 -718,594

Purchase of inventory 1,416,959 1,430,178 1,809,094 378,916Purchase of property, plant and

equipment[2]1,306,751 1,236,249 1,144,454 -91,795

Other[3] 527,971 537,936 677,264 139,328

Total cash used 23,127,640 23,425,657 23,253,237 -172,420

Own source revenue[4] 1,534,383 1,533,678 1,195,370 -338,308

Net cost of service (cash) 21,593,257 21,891,979 22,057,867 165,888Funded by

Appropriation Bills 1 & 3 (Price of Outcomes)

19,392,037 20,231,213 20,023,700 -207,513

Appropriation Bills 2 & 4 (Equity Injection)

2,365,736 1,805,180 1,805,180 -

Other appropriation movements 55,000 114,669 244,067 129,398Return of contributed equity -219,516 -259,083 -15,781 243,302Cash holdings from previous appropriations

- - 701 701

Total funding source 21,593,257 21,891,979 22,057,867 165,888

Additional output funding[5] - 141,401 - -141,401

Revised Total funding source 21,593,257 22,033,380 22,057,867 24,487

NOTES

1. As published in the Portfolio Additional Estimates Statements 2008-09 and the Portfolio Budget Statements 2009-10.

2. Includes purchase of land and buildings, property, plant and equipment and infrastructure and intangibles.

3. Includes grants, GST payments, finance costs, repayment of debts and other cash used.

4. Includes sale of goods and services, other cash received, GST and proceeds from sale of assets.

5. Fundng for foreign exchange movements per Portfolio Budget Statements 2009-10.



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Departmental Income and ExpensesThe Defence Departmental deficit as at 30 June 2009 was $943.1m. This variation is primarily due to:

• the write-down and impairment of assets relating to data cleansing activity as part of the MILIS/SDSS project, and annual impairment and write down adjustments relating to Specialist Military Equipment (SME), General Stores Inventory (GSI) and Explosive Ordnance (EO)

• the reversal of previous asset write-downs mainly due to asset stocktake adjustments and data cleansing activity as part of the MILIS/SDSS project

• depreciation during 2008-09 for SME assets that were in-use but for which a depreciation charge had not been estimated.

Table 2.2 Departmental income and expenses

2008-09 Budget

Estimate$'000

2008-09 Revised

Estimate[1]

$'000


2008-09 Variation

$'000Income

Revenue from Government 19,392,037 20,231,213 20,268,308 37,095

Other income[2] 919,592 1,124,852 1,405,158 280,306

Total income 20,311,629 21,356,065 21,673,466 317,401Expenses

Suppliers 8,528,758 9,155,541 8,858,112 -297,429Employees 7,941,313 8,127,297 8,278,901 151,604Depreciation and amortisation 3,660,134 3,650,134 3,907,639 257,505

Other[3] 181,424 423,093 1,571,924 1,148,831

Total expenses 20,311,629 21,356,065 22,616,576 1,260,511Surplus/(deficit) attributable

to the Australian Government

- - -943,110 -943,110

NOTES

1. As published in the Portfolio Additional Estimates Statements 2008-09.

2. Includes sale of goods and rendering of services, rental income, other revenue and gains.

3. Includes grants, finance costs, write-down and impairment of assets, losses from sale of assets and other expenses.



Administered FinancesAdministered Cash FlowThe Defence Administered net cost of service as at 30 June 2009 was $732.5m representing an underachievement of $236.2m compared to the revised estimate. Administered cash flows primarily relate to Military Superannuation and Defence Housing Australia dividends. Due to the nature of these activities the Administered net cost of service fluctuates year to year.

The variation primarily reflects:

• higher superannuation contributions made by members reflecting legislative changes in treatment of allowances

• recognition of tax equivalent payment from Defence Housing Australia

• new arrangements whereby grants were paid directly to the local Governments by Treasury.

Figure 2.2 Administered net cost of service (cash) five year trend850

800

750

700

650

600

550 2004-05 2005-06 2006-07 2007-08 2008-09 Year

Net cost of service (cash)

616

703 694686

733

NOTES

1. Net administered cost of services figures based on in-year dollars.



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Table 2.3 Administered net cost of service (cash)

2008-09 Budget

Estimate$'000

2008-09 Revised

Estimate[1]

$'000


2008-09 Variation

$'000Cost of service

Military benefits 1,672,100 1,672,100 1,650,486 -21,614Subsidies 52,638 50,868 30,556 -20,312Grants 23,300 23,300 - -23,300Other - - 97 97

Cash Used 1,748,038 1,746,268 1,681,139 -65,129Cash received

Military superannuation contributions

731,000 731,569 866,674 135,105

Licence fees 4,711 4,711 2,874 -1,837Interest 13 187 245 58Dividends 60,448 41,100 69,031 27,931Other 569 - 9,787 9,787

Cash received 796,741 777,567 948,611 171,044Net cost of service 951,297 968,701 732,528 -236,173Funded byAppropriations

Cash from the Official Public Account for appropriations

1,748,038 1,748,038 1,681,302 -66,736

Cash transfer to the Official Public Account

-796,741 -779,337 -948,774 -169,437

Cash holdings at the beginning of the reporting period

- - - -

Total funding source 951,297 968,701 732,528 -236,173

NOTES




Administered Income and ExpensesAs at 30 June 2009 Defence Administered Income was $917.2m representing a $139.6m variance to the revised estimate. This variance is primarily due to:

• superannuation contributions made by members were higher than planned due to changes in the superannuation legislation which resulted in a number of previously excluded military allowances being included in the ordinary time earnings calculations

• recognition of tax equivalent payments from Defence Housing Australia.

As at 30 June 2009 the Defence Administered expenses were $3,501.0m representing a $536.2m variance to the revised estimate. This variation primarily reflects:

• lower fringe benefit tax (FBT) payments for personnel qualifying for the Defence home owner subsidies

• superannuation benefits were higher than planned due primarily to a decrease in the interest rate used by the Actuary from 6.6 per cent to 5.6 per cent. Of less significance is the increase in the compulsory retirement age from 55 to 60 years of age which has increased the provisions for death and invalidity benefits payable

• new arrangements whereby grants were paid directly to the local Governments by Treasury.

Table 2.4 Administered income and expenses

2008-09 Budget

Estimate$'000

2008-09 Revised

Estimate[1]

$'000


2008-09 Variation

$'000

Income administered on behalf of Government

Total income 796,741 777,567 917,152 139,585

Expenses administered on behalf of Government

Total expenses 2,966,638 2,964,868 3,501,031 536,163

NOTES


Military Superannuation contributions 731,000 731,000 831,091 100,091

Dividends 60,448 41,100 72,723 31,623

Licence fees 4,711 4,711 2,874 -1,837

Interests 13 187 244 57

Other 569 569 9,549 8,980

Foreign exchange gains - - 671 671

Military superannuation benefits 2,848,700 2,848,700 3,429,000 580,300

Military retention benefits 42,000 42,000 36,720 -5,280

Defence home owner subsidies 52,638 50,868 35,302 -15,566

Grants 23,300 23,300 - -23,300

Other - - 9 9



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SUPPLIERS OVERVIEW The Defence suppliers expenditure consists of inventory consumption, sustainment, service fees, garrison support, research and development, lease costs, Comcare premiums, travel, freight, removal costs, utilities, legal expenses, training, security services and advertising. The 2008-09 revised cash estimate was $7,992.0m, Defence achieved $7,989.6m which is a variance of $2.3m.

PEOPLE OVERVIEW Defence recognises that its people are fundamental to Defence capability. A primary objective of Defence is to ensure that there is the correct balance of military and APS people with the appropriate skills and experience to provide the capabilities needed to undertake complex military operations, to support operations adequately across a number of fields, and to administer the organisation. A discussion of Defence’s performance against people management is included in Chapter 8, Output Group 1.13 – People Strategies and Policy, and data on the actual number of people employed by Defence as at 30 June 2009, ADF workforce management, enlistments and separations is at Appendix 7—People.

Workforce overviewThe workforce overview contains statistical information on average funded strength during 2008-09 which is used by Defence for budget and management purposes. It provides a measure of Defence’s performance against its budget and workforce estimates for the financial year.

ADF PermanentThe increase in average funded strength from 2007-08 to 2008-09 for ADF permanent members is a consequence of improved recruitment and retention outcomes, as shown in Table 2.5. The average funded strength achievement for ADF Reservists on continuous full-time service in 2008-09 was 1,694, comprising Navy 504, Army 943 and Air Force 247, compared to 1,704 in 2007-08.

The ADF is on target to meet the planned growth over the next 10 years.

Table 2.5 ADF Permanent Force Average Funded Strength[1][2]

NOTES

1. Figures in this table are average funded strengths: they are not a ‘headcount’. Reservists undertaking full-time service are included in the figures. Employees on forms of Leave Without Pay are not included.

2. Includes ADF members in the DMO.


4. 2008-09 achievement compared to the Revised Estimate; as a difference and a percentage.

2007-08 Actual

2008-09 Budget

Estimate

2008-09 Revised

Estimate[3]

2008-09 Actual

Variation[4] %

Navy 12,935 13,230 13,231 13,182 -49 -0.4Army 26,611 27,461 27,463 27,833 370 1.4Air Force 13,621 14,056 14,054 14,066 12 0.1Total Average Funded Strength 53,167 54,747 54,748 55,081 333 0.6



ADF ReservesTable 2.6 shows the number of Reservists who rendered paid service during 2008-09. In 2008-09, 20,277 Reservists undertook paid service, 63 fewer than in 2007-08.

Table 2.6 ADF Reserve Paid Strength[1][2][3]

NOTES

1. Reservists on full-time service in the Permanent Force are included in Table 2.6 above.

2. Includes Reservists in the DMO.

3. Includes the High Readiness Reserve Force, Active Reserve Force and Specialist Reserve Force.


5. 2008-09 Actual compared with the Revised Estimate, as a difference and a percentage.

APS workforceTable 2.7 shows details of the APS average strength, expressed as full-time equivalent average (FTE-A), for 2008-09. This excludes the DMO’s APS workforce, which is shown in the Defence Annual Report 2008-09 - Volume 2. The average strength achievement was 14,489 in 2008-09, a decrease of 598 from 2007-08. The decrease is the result of the success of measures taken to better control APS staffing numbers and the outsourcing of some Regional Information and Communications Technology functions.

Table 2.7 APS Full-Time Equivalent Average[1][2]

NOTES

1. Figures in the table are average full-time equivalent (FTE); they are not a headcount.

2. This table excludes workforce data from the DMO.


4. 2008-09 actual FTE compared with the revised estimate, as a difference and a percentage.

2007-08 Actual

2008-09 Budget

Estimate

2008-09 Revised

Estimate[4]

2008-09 Actual

Variation[5] %

Navy 1,795 2,000 2,000 2,032 32 1.6Army 15,892 15,315 15,315 15,473 158 1.0Air Force 2,653 2,600 2,600 2,772 172 6.6Total Paid Reserves 20,340 19,915 19,915 20,277 362 1.8

2007-08 Actual

2008-09 Budget

Estimate

2008-09 Revised

Estimate[3]

2008-09 Actual

Variation [4] %

Total APS (Full-Time Equivalent –Average) 15,087 14,754 14,815 14,489 -326 -2.2



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ContractorsIn addition to military and APS employees, Defence engages contractors with specialist skills to fill certain vacancies requiring particular expertise. Table 2.8 details the number of contractors engaged by Defence to fill positions in 2008-09, expressed as full-time equivalents. There was an increase of 388 from the previous financial year, primarily due to Defence adopting the Department of Finance and Deregulation definition of a contractor. As a result, some contractors who were not previously considered contractors are now included. However, even coming from this higher base, Defence managed to achieve a decrease of 158 against the revised estimate. This decrease includes a movement away from use of contractors for contract health services.

Table 2.8 Contractors Full-Time Equivalent Average[1]

NOTES

1. This table excludes the contractor workforce data for the DMO.


3. 2008-09 actual compared to the revised estimate.

2007-08 Actual

2008-09 Budget

Estimate

2008-09 Revised

Estimate[2]

2008-09 Actual

Variation[3] %

Total Contractors (Full-Time Equivalent – Average) 620 1,165 1,166 1,008 -158 –13.6



Average Staffing SummaryTable 2.9 shows the average funded strength summary by Service, rank and level groupings, including the full-time equivalent average for APS and contractors.

Table 2.9 Average Funded Strength by Service and Rank and Level[1][2]

2007-08 Actual

2008-09 Budget

Estimate

2008-09 Revised

Estimate[3]

2008-09 Actual

Navy Star-ranked officers 50 48 48 45Senior officers 474 476 476 499Junior officers 2,583 2,822 2,822 2,641Other Ranks 9,828 9,784 9,785 9,897

Gap Year Participants[4] - 100 100 100

Sub-total Permanent Navy 12,935 13,230 13,231 13,182Reserves 1,795 2,000 2,000 2,032Sub-total Navy 14,730 15,230 15,231 15,214

Army Star-ranked officers 75 74 73 72Senior officers 720 719 720 757Junior officers 5,044 4,978 5,031 5,202Other ranks 20,772 21,190 21,139 21,473


Sub-total Permanent Army 26,611 27,461 27,463 27,833Reserves 15,892 15,315 15,315 15,473Sub-total Army 42,503 42,776 42,778 43,306

Air Force Star-ranked officers 51 49 49 52Senior officers 574 585 583 596Junior officers 3,712 3,837 3,837 3,838Other ranks 9,284 9,335 9,335 9,488


Sub-total Permanent Air Force 13,621 14,056 14,054 14,066Reserves 2,653 2,600 2,600 2,772Sub-total Air Force 16,274 16,656 16,654 16,838

APS Senior executives 103 122 124 112

Senior executive relief staff[5] 18 - - 14

Senior officers[6] 3,485 3,874 3,941 3,714

Senior officer relief staff[5] 426 - - 256

Others 11,055 10,758 10,750 10,393

Sub-total APS[7] 15,087 14,754 14,815 14,489

Contractors[7][8] 620 1,165 1,166 1,008

Total Average Funded Strength 89,214 90,581 90,644 90,855



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NOTES

1. The figures in this table are average funded strength for ADF members (including Reservists undertaking full-time service) and full-time equivalent average for APS members; they are not a headcount.

2. Reserve AFS is not calculated; refer to Table 2.6 for Reserve paid strength details.


4. ADF Recruitment and Retention Initiative.

5. Relief staff represents the full-time average of employees acting within a higher classification for short duration pending permanent filling action or while the incumbents are taking leave, acting in higher positions or are on secondment to other agencies.

6. Senior officers comprise substantive Executive Levels 1 and 2.

7. The figures for APS and contractors exclude the DMO.

8. Contractors are individuals under contract subject to direct management by Defence.

Employee ExpensesEmployee expenses totalled $8,278.9m, or $151.6m more than the revised estimate of $8,127.3m.

Table 2.10 Variations in employee expenses

NOTE

1. As published in the Portfolio Additional Estimates Statements 2008-09

2008-09Budget

estimate$m

2008-09Revised

estimate[1]

$m

2008-09Actual result

$m

2008-09Variation

$mADFPermanent Salary, allowances, superannuation and leave liability

5,354 5,545 5,628 83

Housing 481 481 571 90Health Services 246 246 262 16Fringe Benefits tax 300 299 291 -8Reserves Salary and Allowances 192 192 219 27Total ADF Employee Expenses 6,573 6,764 6,971 207APSSalaries, allowances, superannuation and leave liability

1,362 1,357 1,300 -57

Other expenses, including fringe benefits tax

6 6 8 2

Total APS Employees Expense 1,368 1,363 1,308 -55Total Employee Expenses 7,941 8,127 8,279 152



CAPITAL OVERVIEWCapital Investment Program SummaryThe Capital Investment Program comprises four elements:

• the Major Capital Equipment Program comprising:

- the Defence Capability Plan (Unapproved Major Capital Equipment Program) – managed by the Chief Capability Development Group and reported in Output Group 1.11 and Appendix 6

- the Approved Major Capital Equipment Program – managed by the CEO DMO and reported in Appendix 6 and Volume 2 of the Defence Annual Report 2008-09

• the Major Capital Facilities Program - managed by the Deputy Secretary Defence Support and reported in Output Group 1.6 and Appendix 4

• Other Capital Purchases Program – managed by the Service Chiefs and Group Heads

• Capital Receipts Program – managed by the Service Chiefs and Group Heads.

Table 2.11 shows the financial details of the capital component of the Capital Investment Program for 2008-09.

Table 2.11 Capital expenditure component of the Capital Investment Program 2008-09

NOTES

1. Includes Approved Major Capital Equipment Program and the Defence Capability Plan.

2. Includes land and buildings and components of infrastructure.

3. Includes plant and equipment, intangibles, heritage and cultural, and components of infrastructure.

4. Excludes finance costs, inventory and purchasing costs.

5. The Major Capital Equipment Program revised estimate planned for a higher capital component to operating split.

6. The capital receipts program grossed $62.7m and returned $14.0m to the Government.

Major Capital Equipment ProgramDefence Capability PlanIn 2008-09, the Government agreed to four first pass project approvals and seven second pass approvals, plus a number of other studies and project development activities. Notable approvals included first pass approval for Joint Counter Improvised Explosive Device capability (JP 154 Phase 1) and Amphibious Watercraft Replacement (JP 2048 Phase 3), and second pass approval for Enhanced Land Force Additional Upgraded M113 Armoured Personnel Carriers (LAND 106) and Military Satellite Capability (JP 2008 Phase 5A). Funding for initial studies for the SEA 1000 programs to replace the Collins class submarines was also approved during 2008-09. Additional information is reported in Output Group 1.11 and Appendix 6.

2008-09 Budget

Estimate$m

2008-09 Revised

Estimate$m

2008-09 Actual

Result[4]

$m

2008-09 Variation

$m

Major Capital Equipment Program [1] 4,446 4,121 3,234 [5]-887

Major Capital Facilities Program [2] 748 668 861 193

Other Capital Purchases Program[3] 757 858 741 -117

Capital Receipts Program[6] -66 -66 -49 17

Total Capital Investment Program 5,885 5,581 4,787 -794



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The Approved Major Capital Equipment ProgramThe approved major capital equipment program comprises those projects of significance which, following approval, are transferred from the Defence Capability Plan to the DMO to manage the acquisition phase.

Funding for approved major capital equipment projects is provided by Defence to the DMO under separate Materiel Acquisition Agreements for each project.

As part of the White Paper development process, the thresholds for approving projects were lifted in April 2009, with the threshold for joint approval by the Minister for Defence and Minister for Finance and Deregulation lifted to projects costing between $20m and $100m (previously $8m to $50m). The threshold for projects approved by the National Security Committee of Cabinet was lifted from $50m to $100m.

Total DMO expenditure (including operating) was $4,659.9m on the approved major capital equipment program, which was $671m more than the revised estimate. Major variations contributing to the result in 2008-09 include:

• AIR 5349 Phase 1 Bridging Air Combat Capability (+$375m)

• SEA 4000 Phase 3 Air Warfare Destroyer (+$40m)

• LAND 106 M113 Upgrade (+$38m)

• JP 2008 Phase 5A Indian Ocean UHF SATCOM Capability (+$35m)

• JP 2008 Phase 4 Next Generation SATCOM Capability (+$34m)

• AIR 5333 Vigilaire (+$33m)

• AIR 87 Phase 2 Armed Reconnaissance Helicopter (+$27m)

• Other project variations (+$89m).

The DMO closed 23 projects in 2008-09 some of which included:

• F/A-18 Hornet Upgrade AIR 5376 Phase 1

• C130H EWSP System Upgrade AIR 5401 Phase 3A

• Night Fighting Equipment LAND 53 Phase 1B

• Mine Warfare Command Support System SEA 1297 Phase 2B

• Digital Hydrographic Database SEA 1430 Phase 1

Additional information is reported in Volume 2 of the Defence Annual Report 2008-09.

Major Capital Facilities Program Total expenditure on Defence's Major Capital Facilities Program in 2008-09 was $963.4m. This was $205.1m above the projected result of $758.3m. Capital expenditure in 2008-09 was $860.8m, of which $754.6m was spent on major capital facilities projects and $96.1m on medium capital facilities projects. The balance of $10.1m was expended on acquisitions and a number of smaller projects in their defects liability periods.

The overspend in this Program was within agreed parameters, reflecting the Heavy Airlift Capability Permanent Facilities project progressing ahead of schedule, and other programming adjustments during the year managed at the Portfolio level.

Further information can be found at Appendix 4.



Other Capital Purchases ProgramThe other capital purchases program comprises:

• minor capital projects valued between $250,000 and $20m, the majority of which are new equipment, modifications or enhancements to equipment

• purchase of repairable items

• other plant and equipment

• software and intangibles

• heritage and cultural items

The actual result for other capital purchases was $741.5m, which was $116.7m below the revised estimate of $858.2m.

Capital Receipts ProgramThe capital receipts program comprises proceeds from disposal of properties, specialised military equipment, commercial vehicles and other plant and equipment items. Under the Financial Management and Accountability Regulations 15 and 16, Defence can retain amounts received in relation to any program or scheme determined in writing by the Finance Minister. Defence is required to return property disposal proceeds to Government in the form of equity, but is authorised to increase its annual departmental appropriation by the costs of remediation and disposal of real property, from the sale proceeds of those properties.

Property DisposalIn 2008–09, Defence achieved gross capital receipts from the property disposal program of $4.9m, $224.6m less than the revised estimate of $229.5m. The outcome reflects the impact of the economic downturn on the property market and a reprioritisation of the program.

Sale of Defence Housing and AnnuityIn 2008-09, $18.8m was received for the sale of annuities by Defence Housing Australia and the net amount of $11.7m was returned to Government.

Proceeds from Sale Specialist Military EquipmentDefence received $2.6m from the sale of specialist military equipment in 2008-09, with $2.3m returned to government, allowing Defence to retain $0.3m.

Proceeds from Sale of Other Property, Plant and EquipmentDefence received and retained $35.4m from the sale of Other Property, Plant and Equipment in 2008-09.


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A LASTING RELATIONSHIP WITH EAST TIMORAustralia leads the 650-strong International Stabilisation Force (ISF) with support from the New Zealand Defence Force. The ISF assists the Government of East Timor and the United Nations to bring stability, security and confidence to the Timorese people.

Over the last year, Australian Army Engineers have been busy constructing new facilities for the East Timorese people including two extra classrooms for the Gleno High School in the Ermero District and, with the help of the East Timor Defence Force, a new medical clinic in the town of Uaimori.

As part of its role in East Timor, the ISF conducts approved capacity building engineering activities which are designed to improve local infrastructure and contribute to the peace and prosperity of East Timor. School refurbishments have become a major focus of such engineering tasks.

In March 2009, the new Specialist Training Wing for the East Timor Defence Force was opened. The complex will enable the ADF to train the East Timor Defence Force personnel in infantry, communications, engineering and medic skills, from beginners to advanced courses.

Australian and Timorese engineers work together to build the new medical clinic in the town of Uaimori.

In the year of the tenth anniversary of Timorese independence and the arrival of the Australian led multi-national peacekeeping force, the re-dedication on Anzac Day of a memorial in the mountains behind Dili also points to the lasting relationship that Australia continues to share with its island neighbour.

Case Study


Located a short drive through the mountains at the village of Dare, the memorial was originally erected by members of the 2/2nd Independent Company in 1969 as a gift to the Timorese people. The memorial commemorates the sacrifice of the East Timorese people, known as Creados, who fought alongside Australian soldiers during World War II, hiding and looking after the Australians in the mountains until their evacuation in 1943.

The memorial had been neglected until Kirsty Sword-Gusmao, wife of the Timor-Leste Prime Minister, asked the ISF to redevelop the site.

Army Engineers from 1st Combat Engineer Regiment in Darwin enthusiastically responded to the request and over a ten day period erected a new concrete memorial featuring the colour patches of the 2/2nd and 2/4th Independent Commando Companies.

Sapper Shane Gibbs is presented with a

traditional Tais scarf by the children of the Fatunaba Memorial Primary School. Sapper Gibbs had assisted with the refurbishment of

the Dare Memorial in East Timor.

Case Study

SECTION 2 ORGANISATIONAL GOVERNANCE


CHAPTER 3ORGANISATIONAL

STRUCTUREPORTFOLIO STRUCTUREThe Defence portfolio consists of a number of component organisations. The three most significant are:

• The Department of Defence—a department of state, headed by the Secretary of Defence

• The Australian Defence Force (ADF)—consists of the three Services (including Reserves) and headed by the Chief of the Defence Force (CDF). Each Service Chief also administers their respective cadet service, although the cadet service is not a component of the parent Service

• The Defence Materiel Organisation (DMO)—a prescribed agency within the Department of Defence, headed by its Chief Executive Officer (CEO).

In practice, these bodies work together so closely that they are effectively one organisation known simply as Defence (or the Defence organisation). A series of internal directives and delegations effectively create a unified organisation. Figure 3.1 shows how the integrated organisation is structured.

The portfolio also contains a number of smaller entities, including:

• A number of statutory offices created by the Defence Force Discipline Act, 1982 which are independent but reside administratively within Defence. These include the Judge Advocate General, the Chief Military Judge, the Director of Military Prosecutions, the Registrar of the Australian Military Court and the Inspector General of the Australian Defence Force.

• Various trusts and companies, including:

- Defence Housing Australia (DHA)

- Army and Air Force Canteen Service Board of Management

- Royal Australian Navy Central Canteens Board

- Trustees of the Australian Military Forces Relief Trust Fund

- Australian Strategic Policy Institute Ltd

- Royal Australian Air Force Veterans’ Residences Trust

- Trustees of the Royal Australian Air Force Welfare Trust Fund

- Trustees of the Royal Australian Navy Relief Trust Fund

- SAS Trust Fund

- AAF Company

- Royal Australian Air Force Welfare Recreation Company.

CHAPTER 3 ORGANISATIONAL STRUCTURE


Port

folio

str

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The Minister for Defence’s portfolio also contains the Department of Veterans’ Affairs and its associated bodies, as it is designated as part of the Defence portfolio in the Administrative Arrangements Order. The Department of Veterans’ Affairs is administered separately from Defence.

Figure 3.1 The Defence Portfolio

Departmental structure Defence consists of the ADF—members of the Navy, the Army and the Air Force—and members of the Australian Public Service under the joint leadership of the Secretary and CDF, both under the Minister for Defence. Within the diarchy, the Secretary and CDF are responsible for 'joint administration' of the ADF. The CDF commands the ADF and is the principal military adviser to the Minister. He has responsibility for all aspects of military operations and for the military workforce. The Secretary is the principal civilian adviser to the Minister and carries out the functions of an agency head within the APS. The Secretary has responsibility under the Financial Management and Accountability Act 1997 and is responsible for the civilian workforce.

The organisational structure reflects Defence’s new outcome and output framework as discussed in Chapter Seven. Groups and Services provide the specialist advice and support that underpins Defence’s ability to ensure the efficient and effective operation of Defence and the development of future capability.

Structural changesDuring 2008-09, there were no major structural changes within Defence. However, Defence continued to review and modify its internal structure to better reflect the Government’s Defence policy objectives and to continue driving performance improvement. Key changes included:

• The creation of the Strategic Reform and Governance Executive (SRGE) to oversee, integrate and coordinate the Strategic Reform Program.

• The creation of the position of the Chief Audit Executive within the Office of the Secretary and Chief of the Defence Force (OSCDF) Group. The Executive leads Defence’s internal audit function. In parallel with this, the role of the Inspector General Defence was reviewed and focuses on promoting ethical use of Commonwealth resources in Defence.

• The separation of International Policy Division from the Intelligence, Security and International Policy (IS&IP) Group occurred on 1 July 2009. The Division joined the Strategy Executive within OSCDF Group and IS&IP Group was retitled Intelligence and Security Group.

Australian Defence Force

Navy Air Force

Army

Navy Reserves

Department of Defence

Defence Materiel Organisation

Disciplinary appointments

(DFDA)

Defence Housing Australia

Various small trusts &

companies

Army Reserves

Air Force Reserves

Navy Cadets

Army Cadets

Air Force Cadets

CHAPTER 3 O

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ISATION

AL STRUCTU

RE

40D

EFENCE AN

NU

AL REPORT 2008-09 VO

LUM

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Figure 3.1 Defence’s organisational structure as at 30 June 2009

Office of the Secretary & Chief of Defence Force Group

Inspector GeneralMr Ray Bromwich

*

Inspector General ADFMr Geoff Earley

**

Parliamentary SecretaryDefence Support

The Hon Dr Mike Kelly AM MP

Minister for DefenceSenator the Hon John Faulkner

Minister for Defence Personnel, Materiel and Science

The Hon Greg Combet AM MP

Judge Advocate GeneralMAJGEN The Hon Justice

Richard Tracey**

Chief Military JudgeBRIG Ian Westwood

*

Director Military ProsecutionsBRIG Lyn McDade

*

Chief of the Defence ForceACM Angus Houston

****

SecretaryMr Nick Warner

****

Deputy Secretary Strategy (Acting)

Mr Peter Jennings***

Deputy Secretary Intelligence and Security

Mr Stephen Merchant***

Deputy Secretary Defence Support

Mr Martin Bowles***

Chief Information OfficerMr Greg Farr

***

Chief of ArmyLTGEN Ken Gillespie

***

Chief of Air ForceAIRMRSHL Mark Binskin

***

Chief Finance OfficerMr Phillip Prior

***

Chief of Joint OperationsLTGEN Mark Evans

***

Chief of NavyVADM Russ Crane

***

Chief Capability DevelopmentVADM Matt Tripovich

***

Deputy Secretary People Strategies and Policy

Mr Phil Minns***

Chief Defence ScientistProfessor Robert G. Clark

***

(1) (6)

Vice Chief of the Defence ForceLTGEN David Hurley

***(1)

(1) (2)

(1) (2)

(1) (2)

(1) (3)

(4)

(1) (6)

(1)(1)

Defence Materiel Organisation

Deputy Secretary Strategic Reform and Governance

Dr Margot McCarthy***

Chief Executive OfficerDr Stephen Gumley

(7)

* Stars refer to ADF Star rank or SES Band levels.(1) Statutory appointment.(2) Reports directly to the Minister for Defence in accordance with Section 196A of the Defence Force Discipline Act 1982.(3) The Inspector-General ADF is directly responsible to the Chief of the Defence Force (CDF).(4) The Inspector-General reports directly to the Secretary and CDF.

(5) Chief Audit Executive reports directly to the Secretary and CDF.(6) Section 9(3) of the Defence Act 1903 requires the Service Chiefs to advise the Minister on matters relating to their command.(7) Under the agreed business model for DMO as a prescribed agency, the CEO DMO Ministerial Directive identifies that the CEO DMO is directly accountable to the Minister for DMO’s performance but remains accountable to the Secretary and CDF.

(1) (6)

Chief Audit ExecutiveMr Geoff Brown

** (5)


CHAPTER 4STRATEGIC

GOVERNANCEDefence’s mission is ‘to defend Australia and its national interests’. In fulfilling this mission, we serve the Government of the day and are accountable to the Commonwealth Parliament – which represents the Australian people – to efficiently and effectively carry out the Government’s defence policy.

DEPARTMENTAL ROLE & FUNCTIONSRoleThe primary role of Defence is to defend Australia against armed attack. Australia's defence policy is founded on the principle of self-reliance in the direct defence of Australia, but with a capacity to do more when required to support key alliances and international defence relationships.

ValuesWithout diminishing the existing single-Service and Australian Public Service (APS) values, or their use, specific Defence values have been established to provide a common and unifying thread for all people working in Defence. These values are:

• Professionalism – striving for excellence

• Loyalty – commitment to each other and Defence, in serving the Government of the day

• Integrity – doing what is right

• Courage – moral and physical strength

• Innovation – striving for better ways of doing business

• Teamwork – working together with respect, trust and a sense of collective purpose.

STRATEGY & STRATEGIC REFORM Defence’s strategic directionThe 2009 Defence White Paper Defending Australia in the Asia Pacific Century: Force 2030 sets out Defence’s strategic direction over the next 20 years, and explains how the Government plans to strengthen the foundations of Australia’s defence during this period. The White Paper affirms the Government’s commitment to the defence of Australia, the security and stability of the regional security environment, and a rules-based global security order. It confirms the centrality of the alliance relationship with the United States, and reaffirms Australia’s commitment to the United Nations system.

CHAPTER 4 STRATEGIC GOVERNANCE


The Government seeks to develop the ADF required for the defence of Australia and its approaches, taking into account our unique strategic interests, and including the need to hedge against future uncertainty. Australia’s defence policy continues to be founded on the principle of self-reliance in the direct defence of Australia and our unique strategic interests, but with a capacity to do more when required, consistent with those strategic interests we might share with others, and within the limits of our resources. The ADF will provide tailored contributions to assist with Defence’s key strategic interests which include foremost the defence of Australia against armed attack, a secure immediate neighbourhood, strategic stability in the wider Asia-Pacific region, and a stable rules-based international order.

In terms of military power, this defence policy means that Defence must have the capacity to:

• act independently when Australia has unique strategic interests at stake and in circumstances where we would not wish to be reliant on the combat forces of any foreign power

• lead military coalitions where we have shared strategic interests at stake with others, and in circumstances where we would be willing to take on a leadership role

• make tailored contributions to military coalitions where we share wider strategic interests with others and are willing to accept a share of the burden in securing those interests.

This reflects Australia’s desire to play an active and constructive international role based on middle power diplomacy, self-reliant defence capabilities and a risk-based approach to assessing, prioritising and resourcing Defence.

Australia’s military strategy will be predominantly a maritime one where Australia will seek to control the air and sea approaches to Australia. Defence’s capabilities will create a smarter, globally flexible force better able to deal with the strategic environment.

Australia will continue to promote its strategic interests, its network of alliances, its bilateral and multilateral defence relationships, and the growing range of multilateral security forums and arrangements in the region. These connections help us to promote stable strategic frameworks in our immediate neighbourhood, in the wider Asia-Pacific region, and at the global level.

Strategic Reform ProgramThe new White Paper sets out the Government’s plan to build a stronger ADF. This plan has been named Force 2030 and will keep the country secure at a time when significant strategic change in the Asia-Pacific region means that we must be prepared for uncertainty.

Building Force 2030 will take significant and sustained investment to acquire the military capabilities, and the infrastructure to support it, that are needed to meet Australia’s future challenges. Substantial funding is also needed to remediate key areas in Defence where under-investment in past years has left vulnerabilities in our military capabilities and reduced the critical support functions to the ADF.

The Defence organisation needs fundamental reform if it is to achieve these goals and be well placed to support and operate Force 2030. The Strategic Reform Program (SRP) draws on detailed analysis from almost every aspect of the Defence enterprise, informed by an independent audit of the Defence budget, and will be planned, led and managed on a whole-of-Defence basis.



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Over a decade, the SRP will deliver gross savings of around $20b. Although this target is fixed, the reforms must be flexible enough to capture opportunities for making the right changes when they arise. This money will be reinvested to deliver stronger military capabilities, to remediate areas where there has not been enough funding in the past and to modernise the Defence enterprise ‘backbone’, all of which are essential to support the fighting force.

The SRP will provide much greater transparency in how Defence manages its budget. This will strengthen Defence’s accountability, and that of the individuals within Defence, to the Government, to Parliament and the Australian taxpayer. The SRP will also improve Defence’s strategic and corporate level planning, which will strengthen the link between strategic planning and the definition and development of military capabilities; better control the cost of military preparedness; and tighten governance and systems to ensure that Defence accurately forecasts and manages major acquisitions. The implementation of smarter, tighter and more cost effective business processes and practices will make sustainment and support management more efficient and effective; improve cost effectiveness for military capability and procurement processes; and create the basis for a more efficient Defence Estate footprint.

A Strategic Reform and Governance Executive, led by a Deputy Secretary, has been established to oversee, integrate and coordinate the reform program. This small team will report on its progress and ensure that the reforms are implemented in a sustainable way that will deliver the savings required.

In addition to this, a Defence Strategic Reform Advisory Board, with a mix of public and private sector members, will provide advice on how the reforms should be implemented and report to the Government on the reforms.

The White Paper also states the Government’s intention to prepare a new Defence white paper at intervals no greater than five years. To ensure this five-yearly white paper development process is as thorough as possible, the Government intends to conduct, in the year prior to any white paper, a number of precursor activities including: a formal strategic risk assessment; a comprehensive force structure review; and an independent audit of the Defence enterprise to ensure the affordability of Defence plans. Reform on this scale is never easy, but the benefit is that these changes will give Australia a stronger, more agile and harder-hitting Defence Force. After support to current military operations there is no higher priority for Defence than to deliver these reforms.

The SRP consists of a comprehensive suite of improvements to the way Defence conducts its business and will require significant investment to achieve them. Reform will comprehensively and fundamentally improve the management of Defence, making the organisation more efficient and effective, and creating significant savings to reinvest in building a stronger Defence force, keeping Australia safe in the decades to come.

The SRP will be delivered through a range of ‘reform streams’. Out of these streams, six will generate reforms that will lead to the majority of the savings.



Reform StreamsSmart SustainmentIn the area of sustainment, the maintenance of military equipment and inventory and supply chain management will be made more efficient. Reform will focus on becoming more productive and eliminating waste in the maintenance and supply-chain processes, and reducing inventory costs through smarter procurement processes and reducing the size of inventory holdings. These reforms will involve changes to the way Defence operates and supports military equipment to reduce the cost of ownership. The aim is a better equipped and prepared ADF at a lower cost.

This is a broad based reform program involving the three Services, the DMO and Defence industry suppliers. Smart sustainment is not about compromising capability to save costs; it is about delivering improved levels of capability at less cost by improving productivity and eliminating waste. While efficiencies can be found in support areas, quality or safety will not be compromised.

Industry suppliers to Defence will also have a big part to play in the success of this program. Defence will work with industry to make commensurate productivity improvements in order to maintain their long term supply opportunities and to find ways to reduce costs without compromising Defence capability.

Defence will develop appropriate incentive arrangements in its future maintenance contracts to encourage industry to implement ongoing productivity improvements. In many cases changes to existing contracts will be required. These new arrangements in the form of rolling term contracts encourage industry to implement ongoing productivity improvements as a way of securing longer-term supply opportunities. They also provide Defence with appropriate and timely triggers to re-tender for supply in areas where suppliers are not delivering efficiencies.

By focusing on eliminating waste and reducing inventory costs through smarter procurement processes and reducing the size of inventory holdings, about $5b will be saved in gross terms over the decade.

Workforce and Shared ServicesIn the workforce and shared services stream alone, it is anticipated about $3.3b of gross savings will be made. This will be achieved by focusing on three key areas:

• civilianising some military support positions

• converting contractors to Australian Public Service staff

• creating a leaner, more effective business support model across the whole of Defence.

Civilianisation of some military support positions will ensure that wherever possible, permanent military personnel are employed where they are critical to delivering and sustaining combat capability and have military specialist competencies. Workforce reform will not adversely affect combat and combat-related capability. Over 75 per cent of current military personnel are posted to combat or combat-related roles and this will not change.

The additional people needed to meet the capability goals of the White Paper will more than offset any decrease in jobs associated with reform initiatives. The net result will be around an additional 3,000 military and 300 civilian jobs over the decade.

Contractors - many of whom are in place because of past caps in Defence's APS workforce - cost between 15 and 30 per cent more than APS employees. There will be around 1,100 contractor positions that will be converted to APS positions.



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Core business processes across the entire organisation need to be examined to eliminate unnecessary work, reduce the number of low value-adding tasks, and streamline and automate workflows where possible. This will include a move to a greater use of shared services in areas such as payroll, human resources, financial services and procurement.

Workforce reform will see savings of about $1.9b during the next decade. The Government has agreed to allow Defence to manage its workforce in an integrated way based on the funding available rather than specific targets and caps for individual categories. This will provide a more flexible and adaptive workforce.

In the area of shared services, there will be savings of about $1.4b during the next decade.

Non-Equipment ProcurementDefence spends about $5b a year across the 23 categories of non-military goods and services from external suppliers, in areas such as travel, building maintenance, freight, training, advertising and office supplies.

Significant savings will be achieved by challenging current business practices and making hard decisions in the way we use services to ensure we constrain demand across the organisation. Further savings will be achieved through improving governance arrangements and supporting processes to standardise and streamline the contracting and buying practices, and remove waste and duplication across Services and Groups. Initiatives include; ensuring greater access to electronic business, self-administration and use of automated processes.

The comprehensive reforms in this area will see an estimated gross saving of about $4b during the next 10 years.

LogisticsCurrently Defence's logistics infrastructure is widely dispersed, costly, inefficient and falling short of contemporary commercial practice. Facilities are ageing, some dating back to World War II. This causes inefficiencies due to layout, process and technology use. A significant investment is required to improve Defence’s logistics infrastructure network, optimising the use of associated technologies and then applying similar reforms to the retail network. Defence plans to replace outdated warehousing facilities with those that incorporate industry’s best practice processes and take full advantage of relevant technologies.

Adoption of automated technologies together with improved business processes and procedures will ensure that Defence inventory is optimised and the management of that inventory is both cost effective and efficient. Additionally, through targeted investment in logistics technology Defence will markedly improve logistics planning, management and execution, and provide much needed end-to-end supply chain visibility.

This initiative invests in Information Communications Technology hardware which is already in commercial use. This will provide Automated Identification Technology capabilities for enhanced visibility and accuracy of Defence stock and achieve significant productivity gains of between 40 to 50 per cent, with inventory accuracy estimated to improve to at least 95 per cent.

The Strategic Reform Program will see Defence improve its logistics infrastructure network, its planning, management and execution. These reforms will deliver significant productivity gains and are expected to deliver savings of approximately $330m over the decade.



Information Communication and Technology (ICT)The ICT reform stream will deliver savings and increased effectiveness through a consolidated, standardised Defence Information and Communications Technology environment, with a centralised strategy and governance framework.

The new Defence Information Environment (DIE) will support both Defence war fighting and business reforms objectives through to 2030. Staff will find that the DIE, which will be one network connecting fixed and deployed locations, will include all security levels and be able to determine that the right person has the right authority to access information.

ICT reform will see gross savings of about $1.9b during the next decade.

ReservesPart-time members of the ADF are critical to the organisation’s operations – both at home and off-shore.

Defence will grow its High Readiness Reserve capability and changes under the SRP will generate about $380m in savings during the next decade.

As part of the SRP, Defence will develop a plan to ensure an improved and more effective use of part-time members.

Other StreamsThe other nine streams will increase effectiveness and efficiency across Defence, placing downward pressure on costs. The other streams are:

• Strategic Planning

• Capability Development

• Output-Focused Budget Model

• Estate

• Preparedness, Personnel and Operating Costs

• Intelligence

• Science and Technology

• Procurement and Sustainment (Mortimer).

A detailed and comprehensive implementation plan is being developed, which will enable Defence to undertake this decade-long campaign of reform.


CHAPTER 5CORPORATE

GOVERNANCE Defence’s governance structure comprises the Secretary and CDF, who as the ‘diarchy’ jointly oversee the operation of Defence, and the senior executive as outlined in the Defence organisational structure at Figure 1. These are supported by committees as discussed below.

SENIOR DEFENCE COMMITTEESDefence has 10 senior Defence committees, each of which provides targeted, informed and strategic advice to the Secretary and CDF.

Figure 1.1 Structure of senior Defence committees

Defence CommitteeThe Defence Committee is the primary advisory body, supporting the Secretary and Chief of the Defence Force in meeting their joint obligations under the Ministerial Directive for the management and administration of Defence. It is chaired by the Secretary and provides holistic senior management advice to the Secretary and CDF on strategic management and governance issues and monitors the overall performance of Defence.

Minister for Defence

Chief of the Defence Force

Secretary of Defence

Defence Committee

Chiefs of Service Committee

DefenceAudit and Risk

Committee

Defence Capability and

Investment Committee

Defence Information and Communication

Technology Committee

Defence Occupational Health and Safety

Committee

Defence People Committee

Financial Management Controls

Committee

Workforce and Financial

Management Committee

Defence Capability Committee

CHAPTER 5 CORPORATE GOVERNANCE


During 2008-09, the Committee has improved its focus on overarching strategic issues, through the development of the Defence Performance Report and Scorecard. This report provides an opportunity for the members of the committee to take a more strategic risk-based approach to the overall management of the Defence organisation.

From left to right (top row): Dr Margot Mcarthy, Mr Stephen Merchant, Dr Stephen Gumley, Mr Phil Minns, Major General David Morrison AM, Mr Mike Pezzullo, Vice Admiral Russell Crane AM CSC RAN, Air Marshal Mark Binskin AM, Mr Greg Farr, Vice Admiral Matt Tripovich AM CSC RAN, Mr Phillip Prior, Mr Martin Bowles. (Bottom row): Lieutenant General David Hurley AO DSC, Mr Nick Warner, Air Chief Marshal Angus Houston AC AFC, Professor Robert Clark.

Chiefs of Service CommitteeThe Chiefs of Service Committee provides military advice to the Chief of the Defence Force to assist him in commanding the ADF and providing military advice to Government.

Defence Audit & Risk CommitteeThe Defence Audit and Risk Committee (DARC) was established by the Secretary and CDF in accordance with section 46 of the Financial Management and Accountability Act 1997. It is chaired by Mr Paul Rizzo, who has a strong background in blue chip and public sector business management, and provides advice to the Secretary and CDF on all aspects of governance, including audit, assurance, compliance and risk issues.

As part of reforms to the role and effectiveness of the Committee instituted in 2008, the Committee’s Charter was broadened to provide a greater focus on assisting Defence in building its enterprise risk management practices and advising the Secretary and CDF on the appropriate limits to Defence’s risk exposure. Consequently, in June 2009 the Committee was renamed the Defence Audit and Risk Committee.

In addition to providing strategic risk management advice, through 2008-09 the DARC continued its critical roles of reviewing the preparation of Defence’s financial statements and overseeing internal audit activities to ensure that improvements in these areas were sustained and enhanced.



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Senior Defence CommitteesDefence Capability and Investment CommitteeThe Defence Capability and Investment Committee reviews major capability and investment issues by seeking to ensure that resourcing, including capital investment and operating costs, is consistent with Defence’s strategic priorities and resourcing strategy.

Defence Capability CommitteeThe Defence Capability Committee considers and develops options for current and future capability. The committee is a subcommittee of the Defence Capability and Investment Committee and focuses on individual major capital investment projects.

Workforce and Financial Management CommitteeThe Workforce and Financial Management Committee ensures the efficient and effective allocation of Defence resources to meet strategic objectives. It reviews all funding requests and workforce planning initiatives including the allocation of the workforce to meet performance objectives, and also provides strategic direction on reprioritisation of Defence resources.

Defence Information and Communication Technology Committee The Defence Information and Communication Technology Committee (DICTC) was re-instated as a Senior Defence Committee in August 2008, and as the predominant ICT Committee for Defence. The Committee’s role is to provide strategic direction on the planning, expenditure and allocation of ICT resources across Defence, as well as ensure alignment between Defence priorities and ICT investments and provide support to the Secretary and the CDF by providing a focused forum in which to assess competing ICT investment priorities for Defence.

The Chief Information Officer (CIO) as the Coordinating Capability Manager of the Defence Information Environment has responsibility for ensuring that Defence has a dependable, secure and integrated Information Environment capable of supporting Defence business and military operations. With many other groups reliant on the successful delivery of high-quality ICT services, the CIO is therefore required to coordinate and assess whole-of-Defence ICT investment priorities including ICT Reform on behalf of the Secretary and the CDF who have sought to strengthen input into Defence ICT strategic priorities through the establishment of the DICTC.

Defence Occupational Health and Safety CommitteeThe Defence Occupational Health and Safety (OHS) Committee has oversight of the Defence OHS Strategy, Defence-wide OHS initiatives and improvements, the development and implementation of the Defence OHS management system, and assessing Defence’s OHS performance and compliance.

Defence People CommitteeThe Defence People Committee provides strategic direction on the critical workforce initiatives and people policies needed to generate organisational capability required by Defence. Its responsibilities include the development and oversight of strategic HR and workforce plans, which entails defining and articulating the commitments Defence makes as an organisation to its potential and current serving members and employees.



Financial Management and Controls Committee The Financial Management and Controls Committee is responsible for overseeing and monitoring financial remediation projects, the financial control environment, the remediation of Australian National Audit Office findings, and risks to financial statements. During the year the activities of this committee were subsumed by the Workforce and Financial Management Committee and a forum consisting of group finance officers.

OTHER GOVERNANCE STRUCTURES Internal auditAudit DivisionAudit Division provides assurance to the Secretary, CDF, and Chief Executive Officer DMO, that financial and operational controls designed to manage the organisation's risks and achieve objectives are operating in an efficient, effective and ethical manner. The Division also assists Defence senior managers and the DMO Executive in improving the business performance of their organisations.

During 2008-09, Audit Division provided internal audit services in accordance with the annual audit work plan that was approved by the DARC. During 2008-09 a range of audit tasks were completed comprising corporate level audits from the work program and unplanned audits or consulting activities in response to client requests. A total of 44 audit reports were issued including 36 Defence specific, four DMO specific and four covering both Defence and the DMO. A further eight audits were in the reporting phase as at 30 June 2009. The Division also provided client support during the conduct of nine ANAO performance audits.

As part of Defence’s commitment to improving management and accountability, the Secretary announced that he would strengthen the internal audit function. This included the creation of a new position of Chief Audit Executive (CAE) and Mr Geoff Brown was appointed to this position in June 2009. The CAE is an adviser to the DARC and is assisting with the Strategic Reform Program.

In addition, a co-source arrangement with an external service provider, Walter Turnbull, was established in October 2008 to supplement staffing during peak demands and provide access to audit skills in specialist areas.

Office of the Inspector General of the ADF Internal monitoring of the military justice system by the Office of the Inspector General of the ADF continued throughout the reporting period with quarterly reports being made to the Chiefs of Service Committee. It was pleasing to note that the positive conclusions reached in the independent review of the health and effectiveness of the ADF military justice system undertaken by Sir Laurence Street and Air Marshal Fisher (Retired) were generally consistent with the results arising from the IGADF internal monitoring program.

The number of formal inquiries into alleged failures in the military justice system completed during the reporting period, at 56, was slightly up on the previous year. In addition, 57 military justice audits of ADF units were conducted during the reporting period, with 2,923 personnel taking part in focus groups. Of those 57 audits, 49 were assessed as ‘satisfactory’, one as a failure and seven as ‘satisfactory with significant



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shortcomings’. Overall, the standard of compliance with military justice requirements by ADF units audited remains good.

Further details on the operation of the office of the IGADF and the military justice system can be found in Appendix 2, and the Inspector General of the ADF’s annual report.

Chief of the Defence Force Commissions of InquiryCDF Commissions of Inquiry (COI) are appointed primarily to inquire into deaths of Australian Defence Force members that appear to have arisen in the course of their service. Commissions of Inquiry are established to provide accurate and reliable information concerning the facts surrounding an incident or situation. The purpose of a COI is to inform internal Defence decision-making by thoroughly and impartially examining deaths and other serious incidents – principally with a view to preventing similar incidents from occurring in the future. The outcomes of these inquiries assist in obtaining timely information on incidents that affect Defence personnel, training and policy, which is vital for Defence’s capability.

COIs are appointed by the CDF and are presided over by a civilian with judicial experience. They may be constituted by a President alone, or additional members who may be civilians or ADF members.

Defence understands the importance of conducting such inquiries in a way that promotes confidence in the integrity of the COI process. Accordingly, subject to considerations of security and the exercise of legal discretion by the COI Presidents, COIs are conducted in public.

During the reporting period three COIs concerning the deaths of ADF members were appointed by the CDF and one, HMAS Sydney II, continued to gather information. A further COI, Swan Island, was finalised. The COIs convened for reporting during 2008-09 are discussed below.

HMAS Sydney IIHMAS Sydney II COI was appointed by the CDF on 28 March 2008 to inquire into the loss of the HMAS Sydney II off the coast of Western Australia on 19 November 1942. The COI held 36 days of hearings in Sydney, Perth, Brisbane and overseas from 30 May 2008. The COI report was finalised and released on 12 August 2009.

Swan IslandSergeant Craig Martyn Linacre, Corporal Michael Anthony McAvoy and Corporal David Graham O’Neill died on 9 April 2007, in a single vehicle accident near Swan Island in Victoria. The CDF appointed a COI on 4 October 2007 to inquire into the facts and circumstances surrounding the deaths of the three Special Air Service Regiment personnel. The Commission completed its hearings in July 2008 and submitted its report to the CDF in September 2008. The CDF has commenced implementation consultations in regard to the report’s recommendations.

Squadron Leader HughesSquadron Leader Adam Luke Hughes died on 21 January 2008. On 26 July 2008, the CDF appointed a COI to inquire into the circumstances surrounding Squadron Leader Hughes’ death. The Commission conducted hearings during February, March and April 2009 and submitted its report to the CDF in June 2009. The CDF is currently considering the report recommendations.



Private McBridePrivate Edward Alexander McBride died on 7 February 2007. The CDF initially decided to suspend appointment of a COI into Private McBride’s death while preliminary investigations by the Queensland Coroner and Queensland Police were conducted. Defence has been working in cooperation with the Queensland Coroner and the CDF appointed a COI on 4 April 2009. It is anticipated that hearings will commence in October 2009.

The Coroner determined that he will conduct an inquest and held direction hearings on 12 June 2009. Defence has made application to appear as an interested party at the subsequent hearings.

Corporal GossCorporal John Richard Goss died on 31 July 2007. On 18 October 2008 the CDF appointed a COI to inquire into the circumstances surrounding his death. The Commission completed its hearings in January 2009 and submitted its report to the CDF in February 2009. The CDF directed implementation action in regard to the report’s recommendations in June 2009.

Inquiry Officer inquiries into combat deathsInquiry Officers (IO), appointed by the CDF, are used to inquire into the circumstances surrounding the deaths in combat of ADF members. Ten ADF members have been killed in combat since the commencement of Operation Slipper in 2001. The IO inquiries convened during 2008-09 are discussed below. On each occasion the CDF accepts the IO Report(s) in lieu of the requirement for a COI he is required to request the Minister for Defence to obviate him of that Regulated requirement.

Signaller McCarthySignaller Sean Patrick McCarthy, Special Air Service Regiment, was killed when the vehicle in which he was travelling was struck by an Improvised Explosive Device (IED) on 8 July 2008. The IO submitted his report to the CDF in August 2008. The CDF has commenced implementation action in regard to the report’s recommendations.

Lieutenant FussellLieutenant Michael Kenneth Housdan Fussell, 4th Battalion (Commando), The Royal Australian Regiment, was killed when struck by an IED during a dismounted patrol on 27 November 2008. The IO submitted his report to the CDF in December 2008. Following consideration of the IO report Defence sought to inquire into two issues identified by the Inquiry Officer. These issues related to broader concerns regarding training and leadership that may or may not be related to Lieutenant Fussell's death.

This new inquiry will specifically inquire into whether there is any basis to these concerns. It was not designed to further investigate the direct cause of Lieutenant Fussell's death. Mr Christopher Ritchie, AO, a retired Vice Admiral of the Royal Australian Navy, was appointed to head the new inquiry. The inquiry team also included Reserve specialists, Commodore Tim Wood RFD QC, a judge in the County Court of Victoria, and Brigadier Damian Roche, an Army training expert.

Vice Admiral Ritchie submitted his report to the CDF in July 2009. The CDF has commenced implementation consultation in regard to the report's recommendations

Private Sher

Private Gregory Michael Sher, 1st Commando Regiment, was killed in a rocket attack on 4 January 2009. The IO submitted his report to the CDF in February 2009. The CDF has commenced implementation action in regards to the report’s recommendations.



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Corporal Hopkins

Corporal Mathew Ricky Andrew Hopkins, 7th Battalion, The Royal Australian Regiment, was killed during an engagement with the Taliban on 16 March 2009. The IO submitted his report to the CDF in May 2009. All implementation action in regard to the report’s single recommendation was completed in June 2009.

Sergeant TillSergeant Brett Ian Till, Incident Response Regiment, was killed by an explosion during a route clearance task on the 19 March 2009. The IO submitted his report to the CDF in late May 2009. The CDF is currently considering the report recommendations.

The Defence Security Authority Investigation into alleged investigation by Defence of activities of former Minister FitzgibbonOn 26 March 2009, the Canberra Times alleged that Defence officials had conducted a covert investigation of the Minister for Defence. The Defence Security Authority (DSA) investigated these claims.

The DSA investigation focused on Defence staff with the skills, knowledge and access required to undertake the alleged activities. 1,368 statutory declarations and 641 interviews were completed, involving a total of 1,721 people across Defence. Audits were conducted of Defence IT networks and phone records to identify unauthorised access to the Minister's network accounts and personal information.

The investigation found no evidence in Defence to support the allegations. The Inspector-General of Intelligence and Security conducted an independent inquiry into the allegations as they related to the Defence Signals Directorate. His findings were consistent with those of the DSA investigation.

Risk managementA structured and strategic approach to risk management is an important aspect of Defence’s governance framework. Our approach to risk management is designed to enhance decision making at all levels of the organisation, but particularly decision making by Defence’s senior leaders, through the systematic identification and management of risk.

During 2008-09, the Defence Committee began considering regular, strategically-focused reporting on key areas of risk. All Groups and Services also began developing risk management plans and this work will continue in 2009-10. Work also commenced on the development of a Fundamentals of Risk Management e-learning course which will be rolled out for all Defence personnel in early 2009-10.



Ethics awareness & fraud controlFraud and ethics awarenessA fraud and ethics awareness program underpins Defence’s and the DMO’s approach to fraud control. The awareness program includes provision of face to face presentations, e-learning, videos, newsletters and a dedicated intranet site for information and advice. Fraud and ethics training is mandatory for APS employees in Defence.

During 2008-09, 200 fraud and ethics awareness presentations were given to some 12,000 Defence and DMO personnel across Australia. In addition, almost 13,000 personnel accessed awareness training through the Defence CAMPUS online learning portal.

Fraud controlIn line with the Commonwealth Fraud Control Guidelines, Defence is in the process of completing a fraud risk assessment which will inform the development of a new Defence Fraud Control Plan (No. 8) to be completed in December 2009.

Fraud investigationsThere were 429 fraud investigations registered within Defence and DMO during 2008-09 and 391 completed (some of those completed were registered in previous years). Approximately 22 per cent of completed investigations resulted in criminal, disciplinary or administrative action. Of these, around 43 per cent related to action under the Defence Force Discipline Act 1982.

The determined loss for completed fraud cases in 2008-09 was $0.7m, while monies recovered amounted to $0.3m. Over the last five financial years, detected fraud has averaged approximately $1.1m per year, within a range of $0.7m to $2.3m.

Table 5.1 Determined fraud loss and recoveries 2004-05 to 2008-09[1]

NOTES

1. The determined loss and recoveries information is based on investigations closed in the relevant year.

2. Debts are often not assessed and/or recovered in the same year that the loss occurred.

3. The historically low rate of recovery of determined fraud loss is due primarily to the following factors. Firstly, investigations often confirm a loss to the Commonwealth, but recoveries are not possible due to evidentiary limitations and/or the lack of a suspect. Secondly, serious frauds which have resulted in successful convictions often establish significant reparation amounts. Subsequent recovery from a convicted offender who may have been imprisoned, is unemployed, has few assets and is (or becomes) bankrupt, can be very difficult. Even when a recovery arrangement has been successfully entered into with the offender, it can often be many years before the full amount owed is recovered.

2004-05 $

2005-06 $

2006-07 $

2007-08 $

2008-09 $

Loss 1,003,642 962,339 707,230 2,302,281 690,452

Recovery[2][3] 52,984 114,524 112,320 189,494 300,796



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Defence Whistleblower schemeThe legislative basis for the scheme lies in section 16 of the Public Service Act 1999, Public Service Regulations 2.4-2.7 and Public Service Commissioner Directions. It provides an alternative and independent way for any person - including ADF personnel, public servants in Defence or the DMO, and suppliers of goods and services - to report alleged misconduct or unethical behaviour.

All allegations raised under the scheme are assessed. Those assessed as warranting investigation are then subject, as appropriate, to investigation by Inspector General staff or referred to other relevant Defence investigative or review organisations. Feedback is provided on the outcome of investigations and, where wrongdoing is judged to have occurred, action is taken through civil courts or under the Defence Force Discipline Act 1982 or the APS Code of Conduct.

The 213 reports made to the scheme in 2008-09 reflected an increase over the average number of whistleblower reports made over the last five financial years (179). There is no clear reason for the increase, although it may simply reflect an increasing awareness of, and confidence in, the operation and utility of the scheme.

Allegations of fraud and unethical conduct account for about 70 per cent of all reports made through the scheme. The remainder consists of matters such as harassment, mismanagement of resources, use of drugs, discrimination, occupational health and safety, and security.

Table 5.2 Reports made to the Defence Whistleblower Scheme 2004-05 to 2008-09 2004-05 2005-06 2006-07 2007-08 2008-09

Reports 162 178 168 176 213


CHAPTER 6EXTERNAL SCRUTINY

PARLIAMENTARY COMMITTEES Defence is subject to a high level of scrutiny throughout the year, including appearances before parliamentary committees. Defence attended three estimates hearings in 2008-09 before the Senate Standing Committee on Foreign Affairs, Defence and Trade.

Defence also appeared before many other public hearings and private briefings to explain a wide variety of issues, including capability acquisition and sustainment, financial management, and strategic and international policies. To ensure proper accountability of operations and administration, Defence provided parliamentary committees with eight written submissions to inquiries, gave evidence at 16 public hearings and provided six private briefings, and replied to 74 questions on notice.

Defence also tabled three Government Responses to parliamentary committee reports during the financial year.

Further information on Defence’s specific parliamentary committee activities can be found at Appendix 1.

JUDICIAL DECISIONS & DECISIONS OF ADMINISTRATIVE TRIBUNALS During 2008-09, all but one of the remaining claims for common law damages brought by former crew of HMAS Melbourne were resolved.1 The review of the remaining claims undertaken by Mr Jeremy Gormly SC concluded on 30 October 2008. Mr Gormly assisted Defence to resolve 24 claims during the period of his review.

On 30 June 2009, Justice North of the Federal Court of Australia delivered his judgment in the Comcare proceedings against the Commonwealth of Australia (Chief of Army) concerning the death of Cadet Nathan Francis. Cadet Francis, aged 13 years, who was participating in a school bivouac, died suddenly from anaphylactic shock following consumption of a peanut-based satay combat ration pack supplied by the Australian Army. The Court found that the Commonwealth of Australia, as the employer of Cadet Francis, had breached its duty of care to Cadet Francis under the Occupational Health and Safety Act 1991 (Cth). It imposed a pecuniary penalty of $210,100, an amount slightly less than the maximum ($242,000) for such a breach. In a related matter, where a group of cadets became lost in the bush for 18 hours, the Commonwealth entered into a written undertaking with Comcare that is designed to prevent a recurrence of such an incident. This matter was adjourned for one year to allow the Commonwealth to demonstrate compliance with the terms of the undertaking.

On 26 August 2009, the High Court of Australia handed down its decision in Lane v Morrison [2009] HCA 29. The Court unanimously declared that the provisions

1. The last remaining claim was settled on 15 July 2009.

CHAPTER 6 EXTERNAL SCRUTINY


Aud

itor

-Gen

eral

’s r

epor

ts

establishing the Australian Military Court in the Defence Force Discipline Act 1982, were invalid. The Government introduced interim legislation through the Military Justice (Interim Measures) Bill (No.1) and the Military Justice (Interim Measures) Bill (No.2). Both Bills were passed by the Senate on 10 September 2009 and the House of Representatives on 14 September 2009. The Military Justice (Interim Measures) Bill (No.1) reintroduces the former system of trials by court martial and Defence Force Magistrate. The Military Justice (Interim Measures) Bill (No.2) gives effect to most punishments awarded and orders made by the former Australian Military Court. The reintroduction of trials by court martial and Defence Force Magistrate is an interim measure until a long-term solution that is compliant with Chapter III of the Constitution, is agreed for dealing with serious service offences.

AUDITOR-GENERAL’S REPORTS Six Auditor-General’s reports relating directly to Defence and the DMO were tabled during 2008-09. The relevant areas within Defence and the DMO are working on implementing the key findings and recommendations from these reports. Defence and the DMO also contributed to three cross-portfolio Auditor-General’s reports in 2008-09.

Further information on the Auditor-General’s reports relating to Defence can be found at Appendix 1.

OMBUDSMAN REPORTSDefence Force OmbudsmanThere were no formal reports to the Chief of the Defence Force pursuant to section 15 of the Ombudsman Act 1976, nor were any reports raised under sections 16, 17 or 19 of the Act relating to the operations of the ADF during the period under report.



FREEDOM OF INFORMATIONDefence is reforming its processes to better meet its Freedom of Information (FOI) requirements. In 2007-08 Defence only met the 30 day statutory time limit for responding to requests for access to documents for 38 per cent of cases. In 2008-09 this figure fell to 15 per cent.

Defence has identified that its FOI performance is an issue and has taken significant structural steps to address it. On 9 June 2009, the Secretary and the CDF created a new branch to coordinate FOI matters, as well as overall records management and archives administration.

The management of FOI issues will not always be an easy area for Defence. Some issues are inherent in the complexity of the requests received, and some are associated with the sensitivity or classification of information. Defence has initiated key steps to change some of the cultural barriers to handling FOI requests. These include improved communication, visibility and accountability for FOI requests within the senior levels of the department, training for decision makers and the development of a dedicated FOI database to monitor the progress of requests. Staff from the new Branch will also work through the FOI process with action areas to ensure that requests are processed as soon and as efficiently as possible.

Defence is committed to being transparent in its handling of FOI requests and about its implementation of the Freedom of Information Act 1982, including meeting the requirements of section 8 of the Act, as well as providing details on the number of requests for access to documents and the time taken to answer them.

Table 6.1 shows the number of freedom of information requests received and completed or otherwise dealt with in 2008–09. The figures refer to requests for access to documents under section 15 of the Act. Defence also received nine requests under Part V of the Act for amendment or annotation of records of personal information (11 in the previous financial year). Applications for internal review numbered five (10 in the previous financial year) and two applications were made to the Administrative Appeals Tribunal for review of freedom of information decisions (three in the previous year).

In addition to formal freedom of information requests, the Freedom of Information Directorate responded to around 750 inquiries that did not require consideration under the Act, including requests for access to personnel records that were re-directed for administration, in accordance with section 15A of the Act. Section 15A provides for access to be given in such cases, outside the provisions of the Act, through established administrative channels.

Table 6.1 Requests for access to documents

NOTE

1. In addition to this figure, 3 requests are outstanding from 2006-07.

2007-08 2008-09

Number of requests received [1]175 152

Number of requests finalised (including withdrawn and transferred to another agency)

174 167

Number of requests withdrawn 46 14Number of requests transferred to another agency 2 2Number of requests outstanding 54 40



Free

dom

of

info

rmat

ion

Table 6.2 shows the performance of Defence in meeting the 30-day statutory time limit for responding to requests for access to documents. The time limit continues to be a challenge for Defence, in part because of the relatively high proportion of complex requests, often relating to operational and policy matters, involving a large number of documents and difficult issues. Such requests represented 24 per cent of total requests in 2008–09.

Further information about Defence’s dealings with freedom of information requests in 2008-09, including information about costs incurred, will be published in the Freedom of Information Annual Report, which the Department of the Prime Minister and Cabinet is required to present to Parliament in accordance with section 93 of the Act.

Table 6.2 Time taken to answer requests for access to documents[1]

NOTES

1. The 30-day deadline may be extended by an additional 30 days to allow for consultation with third parties.

Further information on Defence’s FOI procedures and contact points, authorised decision makers, and specific information required under section 8 of the Act can be found at Appendix 1.

2007-08 2008-09Requests answered in less than 30 days (with % of total) 48 (38.0) 23 (15.2)Requests answered in 30 to 60 days (with % of total) 32 (25.4) 39 (25.8)Requests answered in 60 to 90 days (with % of total) 23 (18.3) 32 (21.2)Requests answered in more than 90 days (with % of total) 23 (18.3) 57 (37.8)



PUBLIC AFFAIRSDefence is committed to increasing public awareness of Defence activities and meeting its responsibility to remain publicly transparent and accountable. Defence met this commitment in 2008-09 by:

• providing personnel and resources to cover Defence activities conducted overseas and throughout Australia, including:

- deploying on nine short-notice overseas operational tasks in support of the ADF operations in Solomon Islands, Iraq and Afghanistan

- providing 32 personnel (public affairs officers and photographers) to standing operational rotations in the Middle East Area of Operations (MEAO), and East Timor

- travelling extensively throughout Australia to cover 41 national tasks including support to the Victorian bushfire relief effort as part of Operation VIC Fire Assist, assistance to Border Protection Command, the repatriation and funerals of Australian soldiers killed on operations, and the United States Secretary of State’s visit to Australia.

• providing staff to set up and run the Public Affairs Bureau to Exercise Talisman Sabre 09, and support to Exercise RIMPAC 08 (Hawaii).

• facilitating 11 opportunities for media agencies (21 journalists) to visit its personnel in the MEAO. These activities have included three media tours, a number of VIP visits, and a range of minor engagements.

• providing greater access for media agencies to cover the activities of Australian troops in Afghanistan.

• providing media awareness briefings to 37 Force Preparation Courses involving 3,105 participants and provided media training to 1,569 participants.

• completing 3,202 visual imagery (stills and video) tasks, with 25,273 still images processed and approved for distribution. The Defence imagery database now contains 145,054 images approved for distribution.

• receiving 145 hours of video from Military Camera Teams, resulting in 95 hours of edited vision consisting of 256 Defence video news releases, 119 compiles and 481 web videos.

• fielding 5,453 media inquires and issuing 957 media releases and alerts in support of Government and departmental announcements, media launches, events and in response to emerging issues. In addition, the Public Inquiry Officer responded to 2,210 public inquiries.

• updating the Defence Internet Website to improve usability and search function. There were just under five million visits and just under 52 million page views.

• producing 69 editions of the fortnightly Navy, Army and Air Force newspapers (23 editions of each newspaper) including:

- distributing more than 1.31m copies to Defence members at home and abroad, as well as subscribers. Online versions of the papers were also produced fortnightly.

• producing 10 editions of Defence magazine and distributing 142,000 copies to Defence members, establishments and individual subscribers.

• editing and distributing 696 hometown stories about individual ADF members to their regional or suburban newspapers resulting in 70 per cent being published in more than 160 newspapers across Australia.

SECTION 3OUTCOME PERFORMANCE


CHAPTER 7 PERFORMANCE

SUMMARYOUTCOME & OUTPUT STRUCTURE CHANGEPrior to the 2008-09 Budget, the Government had seven outcomes for Defence. Of these, six were departmental outcomes which mainly focused on the delivery of military capabilities, and one was an administered outcome. In the 2008-09 Budget, Defence implemented a new outcome and output framework. The new structure increased the Government’s and the community’s visibility of what Defence delivers as it is aligned with Defence’s internal resource allocations and accountability structure, and specifies performance indicators and targets used to assess and monitor the performance of Defence in achieving government outcomes.

Under the new structure, Defence will report against the following three outcomes:

• Outcome 1: Australia’s national interests are protected and advanced through the provision of military capabilities and the promotion of security and stability

• Outcome 2: Military operations and other tasks directed by Government to achieve the desired results

• Outcome 3: Defence’s support to the Australian community and civilian authorities achieves the desired results.

Details of the new outcome structure can be found in Chapter Six of the Portfolio Budget Statements 2008-09.

Measuring PerformanceDefence’s performance against its Key Performance Indicators (KPIs) is measured on the following four-point scale.

— Not achieved. None or minimal progress was made against targets in 2008-09. Explanations are provided in the ‘further information’ column.Partially achieved. Some targets were met, and any issues are being managed.Substantially achieved. Targets were mostly met and any issues are being managed.Achieved. All targets for 2008-09 were met or exceeded.

CHAPTER 7 PERFORMANCE SUMMARY


Cost

of

Def

ence

Out

com

es

COST OF DEFENCE OUTCOMESTable 7.1 Total cost of Defence Outcomes and Outputs on an accrual basis, 2008-09

NOTES

1. Budget Estimates are consistent with Portfolio Budget Statements 2008-09.

2. Revised Estimates are consistent with Portfolio Additional Estimates Statements 2008-09.

3. Variation figures are the difference between Actual Result and Revised Estimate.

4. The actual amounts reported in Outcomes 2 and 3 do not include various accrual expenses such as depreciation and asset impairment as these items cannot be reliably attributed to these Outcomes. This is consistent with the requirements of the 2008-09 Finance Ministers Orders and Accounting Standard AAS1052.

5. Similarly DMO expenditure of $448m in support of operations cannot be reliably disaggregated to the level required for the purpose of Note 32 in the 2008-09 Financial Statements and as such is included in Outcome 1.

6. After including $448m from Outcome 1, the costs attributed to Outcomes 2 and 3 reconcile with the total costs of operations shown in Table 9.2.

2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Outcome 1: Australia's national interests are protected and advanced through the provision of military capabilities and the promotion of security and stability

Departmental Net Cost of Service 18,379,067 19,099,284 20,466,340 1,367,056 7Administered Net Cost of Service 2,169,897 2,187,301 2,583,879 396,578 18

Net Cost of Service for Outcome 1 20,548,964 21,286,585 23,050,219 1,763,634 8Outcome 2: Military operations and other tasks directed by the Government to achieve the desired resultsNet Cost of Service for Outcome 2 1,000,107 1,119,066 730,521 -388,545 -35Outcome 3: Defence's support to the Australian community and civilian authorities to achieve the desired resultsNet Cost of Service for Outcome 3 12,863 12,863 14,557 1,694 13Net Cost of Service for Defence Outcomes

21,561,934 22,418,514 23,795,297 1,376,783 6

Departmental Net Cost of Service 19,392,037 20,231,213 21,211,418 980,205 5

Administered Net Cost of Service 2,169,897 2,187,301 2,583,879 396,578 18

Total Cost of Defence Outcomes 21,561,934 22,418,514[4,5,6]

23,795,297 1,376,783 6



Table 7.2 Overall cost to Government of Defence Outcomes (Departmental and Administered), 2008-09

NOTES




Outcome 1$'000

Outcome 2$'000

Outcome 3$'000

Total$'000

DepartmentalExpenses

Employees 8,037,886 238,650 2,365 8,278,901Suppliers 8,348,687 497,233 12,192 8,858,112Grants 14,349 - - 14,349Depreciation and amortisation 3,907,639 - - 3,907,639Finance cost 94,366 - - 94,366Write-down of assets and impairment of assets

1,345,808 - - 1,345,808

Net losses from sale of assets 97,957 - - 97,957Other expenses 25,495 87 - 25,582

Total expenses 21,872,187 735,970 14,557 22,622,714Income

RevenuesGoods and services 723,111 5,449 - 728,560Other revenue 32,875 - - 32,875Total Revenue 755,986 5,449 - 761,435GainsReversals of previous asset write-downs

642,299 - - 642,299

Net gains from sale of assets 6,138 - - 6,138Other Gains 1,424 - - 1,424Total Gains 649,861 - - 649,861

Total income 1,405,847 5,449 - 1,411,296Net cost of Departmental Outcomes[1,2,3]

20,466,340 730,521 14,557 21,211,418

AdministeredRevenues 917,152 - - 917,152Expenses 3,501,031 - - 3,501,031Net cost of Administered outcomes 2,583,879 - - 2,583,879



Cost

of

Def

ence

Out

com

es

Table 7.3 Cost to Government of Departmental Outcomes, 2008-09

NOTES




4. Other revenue includes rental income.




8. This variation is $37.1m higher than the variation in Table 2.2 due to additional funding received post-Portfolio Additional Estimates 2008-09 relating to foreign exchange movements, which reduced the deficit to $943.1m.

2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employee Benefits 7,941,313 8,127,297 8,278,901 151,604 2Suppliers 8,528,758 9,155,541 8,858,112 -297,429 -3Grants 1,556 11,556 14,349 2,793 24Depreciation and amortisation

3,660,134 3,650,134 3,907,639 257,505 7

Finance costs 48,925 48,925 94,366 45,441 93Write-down and impairment of assets

130,000 361,670 1,345,808 984,138 272

Losses from asset sales - - 97,957 97,957 100Foreign exchange losses - - 434 434 100Other expenses 943 942 25,148 24,206 2,570

Total expenses 20,311,629 21,356,065 22,622,714 1,266,649 6Income

RevenuesGoods and services 766,347 720,986 728,560 7,574 1

Other revenue [4] 45,545 90,201 32,875 -57,326 -64

Total revenue 811,892 811,187 761,435 -49,751 -6GainsReversal of previous asset write-downs

100,000 300,507 642,299 341,792 114

Net gains from sale of assets - 5,458 6,138 680 12Other gains 7,700 7,700 1,424 -6,276 -82Total gains 107,700 313,665 649,861 336,196 107

Total income 919,592 1,124,852 1,411,296 286,445 25

Net cost of all outcomes 19,392,037 20,231,213[5,6,7]

21,211,418[8]

980,205 5


CHAPTER 8OUTCOME 1

PERFORMANCE Outcome 1 Australia’s National Interests are Protected and Advanced Through the Provision of Military Capabilities and the Promotion of Security and Stability

OUTCOME 1 SUMMARYThe primary focus of Outcome 1 is on maintaining the capacity to support current commitments and provide response options to the Government to meet the range of potential future, domestic, regional and global contingencies. It also covers working collaboratively with our neighbours and the broader international defence community and contributing to coalition operations in support of Australia’s national interests. As well as the provision of military capabilities, this outcome encompasses all of the policy, command and support functions undertaken by the organisation.

There are 14 output groups encompassed in Outcome 1. Defence’s administered appropriations relating to Superannuation and Housing Support Services for Current and Retired Personnel are also covered by Outcome 1.

At the start of 2008-09 Outcome 1 aimed to address the strategic objectives set out in the 2000 Defence White Paper and the two key elements of the then current Defence policy response enunciated in the Defence Update 2005 and confirmed in Defence Update 2007. Successful development and release of the new White Paper during 2008-09 brought the strategic objectives up to date. Accordingly, the strategic objectives are:

• a secure Australia

• a secure immediate neighbourhood

• stability in the Asia-Pacific region

• a rules-based global security order.1

Apart from supporting current operations and delivering the White Paper as part of Outcome 1, Defence continued its strong commitment on the recruitment and retention of ADF personnel.2

Defence’s plan to implement reform to improve effectiveness, efficiency and enhance governance, as well as implement a program of efficiency and economy measures has been rolled into the Strategic Reform Program.

Table 8.1 provides the financial detail for Outcome 1.

1. More information on strategic objectives is available under Strategy and Strategic Reform on page 41 in Section 2.

2. More information on recruitment and retention of ADF personnel is available under Output Group 1.13 on page 115, with supporting information and figures provided in Appendix 7—People.

CHAPTER 8 OUTCOME 1 PERFORMANCE


Out

com

e 1

Sum

mar

y

Table 8.1 Total cost of Defence Outcome 1 - Australia's National Interests are Protected and Advanced Through the Provision of Military Capabilities and the Promotion of Security and Stability

2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Output group 1.1—Office of the Secretary and CDFDepartmental Net Cost 82,848 87,883 207,055 119,172 136Output group 1.2—Navy CapabilitiesDepartmental Net Cost 3,636,215 3,812,268 3,979,224 166,956 4Output group 1.3—Army CapabilitiesDepartmental Net Cost 4,568,693 4,795,768 5,014,621 218,853 5Output group 1.4—Air Force CapabilitiesDepartmental Net Cost 3,866,691 3,837,250 3,905,684 68,434 2Output group 1.5—Intelligence CapabilitiesDepartmental Net Cost 647,795 629,247 501,071 -128,176 -20Output group 1.6—Defence SupportAdministered items - specific purpose payment

23,300 23,300 - -23,300 -100

Departmental Net Cost 3,108,623 3,244,835 3,168,997 -75,838 -2Output group 1.7—Defence Science and TechnologyDepartmental Net Cost 351,990 385,070 374,906 -10,164 -3Output group 1.8—Chief Information OfficerDepartmental Net Cost 699,984 656,375 696,623 40,248 6Output group 1.9—Vice Chief of the Defence ForceDepartmental Net Cost 262,016 325,503 1,317,631 992,128 305Output group 1.10—Joint Operations CommandDepartmental Net Cost 48,437 38,763 95,462 56,699 146Output group 1.11—Capability DevelopmentDepartmental Net Cost 342,919 179,240 129,739 -49,501 -28Output group 1.12—Chief Finance OfficerDepartmental Net Cost 421,723 736,970 818,598 81,628 11Output group 1.13—People Strategies and PolicyDepartmental Net Cost 341,132 370,112 256,727 -113,385 -31Output group 1.14—Superannuation and Housing Support Services for Current and Retired Defence Personnel and other Administered ItemsSpecial appropriations:

Defence Force Retirement Benefits Act, 1948 Part VIC , s.82ZJ (1)[1]

91,430 91,430 78,000 -13,430 -15

Defence Force Retirements and Death Benefits Act, 1973 Part XII, s.125 (3) [1]

1,439,070 1,439,070 1,547,000 107,930 7

Military Superannuation and Benefits Act, 1991 Part V, s.17[1]

1,360,200 1,360,200 1,840,720 480,520 35



NOTES




4. Departmental outputs = Expenses - Total income.

5. Administered items = Expenses, revenue is returned to Government.

6. Does not include net capital receipts.

7. These are accrual figures.




Defence Force (Home Loan Assistance) Act, 1990 Part IV, s.38[1]

52,638 11,000 8,348 -2,652 -24

Defence Home Ownership Assistance Scheme Act 2009

- 39,868 26,954 -12,914 -32

Parliamentary Entitlements Act, 1990 Part I, s.11[1]

- - 9 9 100

Total Expenses output for group 1.14 2,943,338 2,941,568 3,501,031 559,463 19Total Revenue output for group 1.14 796,741 777,567 917,152 139,585 18Administered Net Cost for output group 1.14

2,146,597 2,164,001 2,583,879 419,878 19

Net Cost of Service for Outcome1 20,548,964 21,286,585 23,050,219 1,763,634 8Departmental Net Cost of Service 18,379,067 19,099,284 20,466,340 1,367,056 7Administered Net Cost of Service 2,169,897 2,187,301 2,583,879 396,578 18

Total resources for Outcome 1 20,548,964 21,286,585[8,9,10]

23,050,219 1,763,634 8

2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %



Out

com

e 1

Sum

mar

y

Table 8.2 Departmental cost summary for Outcome 1- Australia's National Interests are Protected and Advanced Through the Provision of Military Capabilities and the Promotion of Security and Stability

NOTES




4. The actual amounts reported in Outcomes 2 and 3 do not include various accrual expenses such as depreciation and asset inpairment as these iems cannot be reliably attributed to these Outcomes. This is consistent with the requirements of the 2008-09 Finance Ministers Orders and Accounting Standard AAS1052.

5. Similarly DMO expendature of $448m in support of operations cannot be reliably disaggregated to the level required for the purpose of Note 32 in the 2008-09 Financial Statements and as such is included in Outcome 1.


2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees 7,735,276 7,885,471 8,037,886 152,415 2Suppliers 7,721,825 8,253,715 8,348,687 94,972 1Grants 1,557 11,556 14,349 2,793 24Depreciation and amortisation

3,660,134 3,650,134 3,907,639 257,505 7

Finance cost 48,925 48,925 94,366 45,441 93Write-down of assets and impairment of assets

129,999 361,670 1,345,808 984,138 272

Net losses from sale of assets

- - 97,957 97,957 100

Other expenses 943 942 25,495 24,553 2,606Total Expenses 19,298,659 20,212,421 21,872,187 1,659,766 8Income

RevenuesGoods and services 766,347 709,271 723,111 13,840 2Other revenue 45,544 90,201 32,875 -57,326 -64Total Revenue 811,891 799,472 755,986 -43,486 -5GainsReversals of previous asset write-downs

100,000 300,507 642,299 341,792 114

Net gains from sale of assets

- 5,458 6,138 680 12

Other Gains 7,700 7,700 1,424 -6,276 -82Total Gains 107,700 313,665 649,861 336,196 107

Total Income 919,591 1,113,137 1,405,847 292,710 26

Net cost of Outcome 1 18,379,067 19,099,284[4,5,6]

20,466,340 1,367,056 7



OUTPUT GROUP 1.1 OFFICE OF THE SECRETARY & CDFThe primary role of the Office of the Secretary and CDF Group is to support the Secretary and CDF so that they can better respond to the demands of high operational tempo while also delivering high quality policy advice, driving organisational reform and exercising strategic leadership. A key focus is to ensure that there is a close linkage between the Government’s strategic direction and Defence’s business planning and performance framework. The Office of the Secretary and CDF is closely monitoring and managing the vast array of operational, commercial, financial, regulatory and other risks associated with the Defence mission of defending Australia and its national interests.

In 2008-09, the following organisational changes were implemented within the Group to better align objectives and responsibilities:

• Strategic Reform and Governance Executive was established to oversee and coordinate the implementation of the SRP

• Following the new Executive’s creation, Strategy, Coordination and Governance Executive was restructured and renamed Strategy Executive

• International Policy Division was transferred from Intelligence, Security and International Policy (IS&IP) Group on 1 July 2009. IS&IP Group was subsequently retitled Intelligence and Security Group

• The position of the Chief Audit Executive (CAE) was created to lead Defence’s internal audit function. The role of the Inspector General was also reviewed.1

The Office of the Secretary and CDF Group made progress throughout 2008-09 on a number of program deliverables.

The Defence Authority and Accountability Framework was reviewed to reduce duplication of guidance documents including Defence instructions and policy manuals.

An Enterprise Risk Management Framework has been established and management plans against a number of enterprise risks are being developed by relevant Groups and Services. Further efforts to establish a robust system for managing risk in Defence will continue as part of the Strategic Reform Program. For more information in how Defence manages risk, see page 53 in Chapter 2.

Business Continuity Management in Defence is progressing well and progress in business impact analysis and plan development is continuing. A Defence Strategic Business Impact Analysis was completed in June 2009 and preparations are underway for Group and Service business impact analyses.

1. More information on the role of the Inspector General Defence in Defence’s management of fraud and ethics awareness is available under the Corporate Governance section on page 50 in Chapter 5.



Out

put

Gro

up 1

.1 O

ffic

e of

the

Sec

reta

ry &

CD

F

Military Justice ReformA number of achievements were successfully accomplished during the reporting period, including:

• completion of the first independent review into the health of the reformed military justice system, conducted by former Chief Justice of NSW, Sir Laurence Street AC KCMG QC, and former Chief of the Air Force, Air Marshal Les Fisher AO (Retired)

• completion of purpose-built premises to house the Australian Military Court (AMC)

• introduction of new procedures in the summary justice system to simplify evidentiary processes and safeguard the rights of individuals by improving their rights to elect to be tried by, and to appeal to, the AMC, which was replaced in September 2009 by trials by courts martial and Defence Force Magistrate

• adoption of common investigative standards for Service Police based on the Australian Government Investigation Standards

• development of a comprehensive strategic policing plan to guide the future development of the Australian Defence Force Investigative Service.

Providing advice to GovernmentDefence has continued to maintain its high performance throughout 2008-09 in the provision and monitoring of timely and accurate advice to support our Ministers and Parliamentary Secretaries, and in providing training to ensure advice is high quality.

Table 8.3 Responsiveness to Ministers

NOTE

1. The figures include correspondence completed from the previous financial year.

The decrease in the number of items of ministerial correspondence provided to the Ministers and Parliamentary Secretary can be attributed to revised processes for the management of routine personnel matters. Under the new process these matters are more appropriately managed within Defence rather than at Ministerial level.

During the year, 33 Cabinet submissions and one memoranda were provided to Cabinet or the National Security Committee of Cabinet. This shows a slight increase from the 2007-08 figure of 33 submissions or memoranda.

Table 8.4 Ministerial awareness and training 2008-09

2006-07 2007-08 2008-09Submissions and briefs 5,660 3,891 4,273Ministerial correspondence tasked 9,347 9,845 6,962

Ministerial correspondence completed[1] 9,582 10,264 6,975

Total submissions and correspondence handled 15,242 14,155 11,248% provided on time 71 86 85

Course PersonnelDemocratic System of Government (e-learning module) 785Question Time Tours 217Supporting our Ministers with Good Policy Advice (Graduate workshops) 124Defence Government Awareness 203Defence Ministerial Writing 409Developing Complex Submissions 153Working With Ministers 68Total 1,959



Key Performance indicators[1]

NOTE

1. The performance information relating to the reforms of the military justice system and, in particular, the establishment of the Australian Military Court, summarise the achievements of 2008-09 prior to the decision handed down by the High Court of Australia on 26 August 2009.

KPI Status Further informationEnsure both Defence strategic policy and business strategy align with Government direction and priorities, provide clear guidance for the activities of Defence, and be responsive to external developments.

Strategic Policy Division was involved in the development of the White Paper and continued to provide overarching strategic guidance and supporting plans that have informed Defence decision-making. The Division also continued to provide advice on and manage key strategic matters such as: space, cyber and missile defence; strategic strike capabilities and effects; strategic education for the policy workforce and Australian export controls and Defence’s involvement in domestic counter-terrorism.

Ensure policy advice provided to the Government is accurate, timely and responsive, and offers practical and cost-effective approaches to fulfil the Government’s defence responsibilities.

To ensure Defence provides high quality advice to Ministers in a timely and accurate manner, emphasis has continued on the development and delivery of ministerial training. Defence personnel, at all levels, have access to a range of training, in both electronic and face-to-face formats, which assists in enhancing their skills for responding to Ministers.See page 71 for details of training provided by the Group to improve the quality of advice provided to Ministers and Parliamentary Secretaries from across Defence.

Prepare the draft Defence White Paper for Government consideration.

See case study on page 18 in Chapter 1.

Lead Defence reform, through implementation of the Defence Business Model and other reform initiatives.

Subsumed in the SRP. Under the SRP, Defence will introduce an authoritative and transparent Defence business model. A new business model will clearly outline business functions and processes across Defence that support the delivery of key outputs.

Enhance Defence’s governance framework, through clearer authority and accountability and more rigorous performance management, assurance and audit processes.

Subsumed in the SRP. The SRP has three key elements designed to make Defence more efficient and effective. These elements will address accountability, planning and productivity.

Continue implementation of the reforms to the military justice system, including the full establishment of the Australian Military Court, and support to the external review of the effectiveness of the military justice system.

The reform program continued to address the agreed recommendations arising from the 2005 Senate Foreign Affairs, Defence and Trade References Committee Report into The Effectiveness of Australia’s Military Justice System and previous reviews, with progress being monitored on a quarterly basis by the Chiefs of Service Committee. At the end of the reporting period, implementation of most of the outstanding recommendations was either complete or substantially complete, although some changes are likely to require more time to properly bed down.See Appendix 2 for a summary of military justice system reform strategies and achievements in 2008-09. For an extended discussion, the IGADF’s full report is available online at www.defence.gov.au/annualreports.

http://www.defence.gov.au/annualreports/



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Table 8.5 Cost summary for Output 1.1 - Office of the Secretary and CDF

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %

ExpensesEmployees 53,564 54,893 100,604 45,711 83Suppliers 29,812 33,307 103,710 70,403 211Grants 89 89 3,204 3,115 3,500Depreciation and amortisation

354 486 1,858 1,372 282

Finance cost - - - - -Write-down of assets and impairment of assets

10 - 1,111 1,111 100


- - - - -

Other expenses - - 5 5 100Total Expenses 83,829 88,775 210,492 121,717 137Income

RevenuesGoods and services 979 887 1,403 516 58Other revenue 3 5 1,711 1,706 34,120Total Revenue 981 892 3,114 2,222 249GainsReversals of previous asset write-downs

- - 122 122 100

Net gains from sale of assets - - 201 201 100Other Gains - - - - -Total Gains - - 323 323 100

Total Income 981 892 3,437 2,545 285Net cost of 1.1 - Office of the Secretary and CDF

82,848 87,883 207,055 119,172 136



OUTPUT GROUP 1.2 NAVY CAPABILITIESThe Navy provides maritime forces that contribute to the ADF’s capacity to defend Australia, contribute to regional security, support global interests, shape the strategic environment and protect national interests. This is done by providing maritime patrol and response, interdiction and strategic strike, protection of shipping and offshore territories and resources, maritime intelligence collection and evaluation, hydrographic and oceanographic operations, and escort duties. Peacetime activities include maritime surveillance and response within Australia’s offshore maritime zones, hydrographic, oceanographic and meteorological support operations, humanitarian assistance, and maritime search and rescue.

The Navy’s achievements in 2008-09 include:

• The Navy substantially achieved the levels of preparedness directed by the CDF. Personnel shortages, major upgrades and equipment defects precluded full achievement. During the year the Navy continued to support Operations Catalyst and Slipper in the Middle East, and Operation Resolute in support of Border Protection Command, primarily off Northern Australia. The reinvigoration of naval aviation, area air warfare, amphibious lift and undersea capabilities were progressed through the white paper and capability development process.

• The New Generation Navy (NGN) Transformation Program commenced on 11 November 2008. At its heart, the program is focused on ensuring the future health and enrichment of the Navy through cultural, leadership and structural reforms. These will permit the Navy to deliver future capability and embed signature behaviours that reflect a focus on people, performance and professionalism. The program will assist the Navy to respond to the Defence White Paper and the Defence Strategic Reform Program (SRP). A key outcome of the program is to achieve a sustainable submarine capability. The Submarine Workforce Sustainability Review identified a range of challenges and made 29 recommendations for urgent reforms to the way the Navy manages its submariners and its submarines. The Navy is implementing all recommendations within the context of NGN.

• To better support the training of the Navy’s workforce, two Anzac class frigates, while remaining within readiness parameters, were designated as training platforms under the ‘Plan Train’ initiative. The ships were used alongside and at sea to progress individual training and maximise training opportunities for a number of officer and sailor categories. The major workforce initiative, ‘Sea Change’, which implemented significant improvements for the Navy people, achieved its primary objective and has been now absorbed into normal Navy business. The collective effect of the Navy Capability Allowance (approved in April 2008), the Graded Officer Pay Structure (implemented in August 2007) and the Graded Other Ranks Pay Structure (implemented April 2009) are factors in assisting to stabilise total numbers in the Navy’s workforce. Further information on the Navy’s recruitment and retention performance is available in Appendix 7—People.



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Key performance indicators

NOTES

1. Mission Capability measures capability for assigned tasks. It is defined as the required level of unit readiness for the actual tasking for which the force element has been scheduled at any time through its operational cycle. Tasking includes all scheduled activities to achieve assigned Defence operations, international engagement requirements and levels of preparedness required for a military response. Mission capability is assessed against Unit Ready Days (URD) ‘achieved’ and calculated by dividing the total number of mission capable days recorded throughout the year by the URD achieved to produce a percentage.

KPI Status Further informationProvide timely, accurate and considered advice on Navy capabilities to the CDF, the Secretary and the Government.

Timely, accurate and considered advice on Navy capabilities to the CDF, the Secretary and the Government was substantially achieved, with 94 per cent of all Ministerial submissions being delivered on time.

Achieve levels of preparedness directed by the Chief of the Defence Force for military response options with a warning time of less than 12 months.

Levels of preparedness were mostly met. The factors affecting full achievement included the limited numbers in the Seahawk and Sea King helicopter fleets, personnel shortages and unscheduled maintenance requirements in the Navy’s submarine fleet.

Achieve a level of training that maintains core skills and professional standards across all outputs.

Levels of training were largely met. The reduced availability of some ships, submarines and helicopters presented a challenge in training sufficient qualified personnel to maintain core skills and standards across all outputs.

Achieve mission capability[1] for assigned tasks.

Mission capability was mostly met. A range of systems-related defects across the force elements affected availability to complete all assigned tasks.

Achieve Hydroscheme 2007-10 data and surveying tasking requirements to meet national hydrographic surveying and charting obligations.

Overall achievement was 84 per cent. Units recorded 613 Survey/Sortie Days Achieved (SDA) from 726 Survey/Sortie Days Planned (SDP).Specific achievements were as follows:• Hydrographic ships – 95 per cent (247 SDA from

259 SDP). Equipment defects and inclement weather reduced achievement.

• Survey motor launches – 80 per cent (217 SDA from 270 SDP). Equipment defects and inclement weather reduced achievement.

• Laser airborne depth sounder aircraft – 82 per cent (75 SDA from 92 SDP). Delays in the sensor upgrade program reduced achievement.

• Deployable geospatial support team – 70 per cent (74 SDA from 105 SDP). Underachievement was due to staff shortages, which resulted in cancellation of some survey taskings.



Force element targets[1]

Target Status Further InformationOutput 1.2.3

4 Adelaide class frigates

857 URD[2]112 per cent – (960 URD achieved)Rescheduling of a major maintenance period resulted in increased platform availability.

8 Anzac class frigates 2,091 URD

102 per cent – (2,128 URD achieved)The overachievement of URD was a result of maintenance rescheduling, which increased availability.

Output 1.2.4

16 Seahawks 3,100 flying hours

91 per cent – (2,809 flying hours)Flying hours were below target because there was less operational tasking than forecast.

6 Sea Kings 1,100 flying hours

74 per cent – (815 flying hours) Sea King availability was affected by systems-related defects and extensions to scheduled major maintenance.

13 Squirrels3,200 [4,000] flying hours

96 per cent – (3,062 flying hours)

Output 1.2.5

14 Armidale class patrol boats3,500 URD

99 per cent – (3,471 URD achieved)

Output 1.2.6

6 Submarines762 [684] URD

82 per cent – (622 URD achieved)The underachievement was due to delays in HMA Ships Farncomb and Collins completing mid-cycle dockings and the delay to HMAS Waller completing an intermediate docking period.

Output 1.2.7

1 Oil Tanker280 URD

105 per cent – (294 URD achieved)The overachievement was due to major maintenance rescheduling, which increased availability.

1 Replenishment Ship365 URD

100 per cent – (365 URD achieved)

Output 1.2.8

6 Coastal mine hunters2,071 [2,088] URD


2 Auxiliary minesweepers 638 [730] URD


2 Clearance diving teams730 URD


Output 1.2.9

1 Heavy landing ship 365 URD


2 Amphibious landing ships642 URD

95 per cent – (607 URD achieved) The underachievement was due to major maintenance rescheduling, which reduced availability.

6 Heavy landing craft1,911 [1,958] URD




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1. Where figures were updated in the PAES, the PBS estimate is shown in brackets.

2. Unit Ready Days (URD) are the number of days that a force element is available for tasking, by the Fleet Commander, either outside of major maintenance and within planned readiness requirements or in accordance with contracted availability.

3. The Chart Production Office was formerly referred to as the Australian Hydrographic Office.

Output 1.2.10

2 Hydrographic ships 730 URD


4 Survey motor launches1,016 [1,148] URD


1 Laser airborne depth sounder aircraft 600 [900] Flying Hours

82 per cent – (496 hours achieved) The flying hours underachievement was due to a delayed return to service from a sensor upgrade program, a change in scheduled maintenance and inclement weather.

1 Deployable geospatial support team 365 URD


1 Chart Production Office[3]

249 URD


1 Naval Air Station Weather and Oceanographic Centre240 URD

102 per cent – (244 URD achieved) Overachievement was due to extra requirements for forecasters to meet unscheduled activities.

2 Mobile Meteorological and Oceanographic teams730 URD


Navigational Chart Productions:• 50 New

charts/editions• 60 Electronic

navigational chart cells

Chart Production:• 110 per cent (55 new charts/editions)

Overachievement was due to unplanned simple chart conversions

• 206 per cent (329 electronic navigational chart cells)

Additional software licenses and improvements to hardware enabled an increase in production beyond that forecast.

Defence Support:• 30 [10] New Military

Geographic Information (MGI) products/editions

• 6 MGI foundation datasets

Defence Support:• 170 per cent (51 new MGI products/editions)• 200 per cent (12 MGI foundation datasets)Demand for products by Defence and approved civilian organisations exceeded forecast. All requirements were met.

Oceanographic database production:• 6 Web Enabled

Datasets

333 per cent - (20 Web Enabled Datasets) Process automation enabled improvements in dataset generation beyond that forecast.



Table 8.6 Cost summary for Output 1.2 - Navy Capabilities

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees 1,312,505 1,346,212 1,349,977 3,765 0Suppliers 1,355,147 1,458,069 1,438,937 -19,132 -1Grants - - - - -Depreciation and amortisation 1,015,076 935,102 1,080,237 145,135 16Finance cost - 90,006 4,749 -85,257 -95Write-down of assets and impairment of assets

31,684 58,663 178,567 119,904 204

Net losses from sale of assets - - 84,983 84,983 100Other expenses - - 12 12 100

Total Expenses 3,714,412 3,888,052 4,137,462 249,410 6Income

RevenuesGoods and services 47,647 43,183 41,165 -2,018 -5Other revenue 5,049 9,307 228 -9,079 -98Total Revenue 52,697 52,490 41,393 -11,097 -21GainsReversals of previous asset write-downs

25,500 23,294 116,320 93,026 399

Net gains from sale of assets - - - - -Other Gains - - 525 525 100Total Gains 25,500 23,294 116,845 93,551 402

Total Income 78,197 75,784 158,238 82,454 109Net cost of 1.2 - Navy Capabilities

3,636,215 3,812,268 3,979,224 166,956 4


Case

Stu

dy

WHAT THE WHITE PAPER MEANS FOR THE NAVY The 2009 Defence White Paper has focused significantly on enhancing Australia’s maritime capabilities for the 21st century.

During the next 20 years, the Navy’s force structure will include new major destroyers and frigates, submarines, amphibious ships, offshore combatant vessels, naval combat helicopters and other advanced enabling capabilities.

Key capability decisions relevant to this enhanced maritime force include:

• a fleet of 12 new Submarines to replace the current six Collins class submarines

• a fleet of eight new larger frigates to replace the current Anzac class frigates

• two new Landing Helicopter Dock ships that will invigorate Defence’s amphibious capability

• a new strategic sealift ship to strengthen the Navy’s amphibious and transport capability

• a fleet of at least 24 new naval combat helicopters

• six new MRH-90 multi-role helicopters that will replace the general utility service previously provided by the Sea King fleet

• a fleet of 20 offshore combatant vessels equipped with modular mission systems that will incorporate the capabilities presently provided by the separate patrol boat, hydrographic and mine hunter fleets

• six new ocean-going heavy landing craft with greater range and speed than the aging Balikpapan class heavy landing craft

• replacement of HMAS Success with a new replenishment and logistic support ship.

The Air Warfare Destroyer (AWD) Program (SEA 4000) will deliver an affordable, effective, flexible and sustainable AWD capability for the security of Australia

Case Study



OUTPUT GROUP 1.3 ARMY CAPABILITIESThe Army contributes to the achievement of the Government’s defence objectives through the provision of capabilities for land and special operations. The Army also provides forces for peacetime tasks, including enhancing the national domestic security response to terrorist, chemical, biological, radiological or explosive incidents. The Army provides capabilities centred around special forces; light and medium combined arms operations; army aviation; combat and logistic support; and units for protective operations.

2008-09 achievements include:

• The implementation of the Adaptive Army initiative has been the keynote event within the Army during 2008-09. It delivers a standardised and more efficient preparation and assessment of forces for operations, and better aligns the Army with joint operational planning by restructuring the roles of Headquarters 1st Division. The Forces Command is now responsible for the execution of a new, unified individual and collective training and education continuum, which will deliver significant efficiencies. The Special Operations Command remains largely unchanged, maintaining its responsibility to generate and operationally prepare the Special Forces capability.

• These organisational changes enable follow-on initiatives in the Army to improve management of personnel, deliver efficiencies in materiel and inventory use, and enhanced knowledge management, training and education. The Adaptive Army aligns with the aims of the Strategic Reform Program and a broad range of efficiencies will be derived by aligning individual and collective functions into single commands.

• There has been strong growth as part of the Enhanced Land Force capability. On two occasions company-sized elements became operationally deployable and deployed. During 2008-09, 144 Protected Mobility Vehicles (PMV) were delivered and contracts were signed to upgrade 81 M113 Light Armoured Fighting Vehicles and an additional 239 PMV. Stage 1 facilities were approved and construction will commence in the second half of 2009 and be completed in 2010.

• The Army has over 2,300 personnel deployed on operations in both regional and non-regional commitments. The Adaptive Army implementation program has seen the review and rationalisation of the Army’s command and control structures, to ensure that the Army’s force generation, preparation and certification procedures are efficient and highly adaptive. Forces Command was raised on 1 July 2009, enabling the development and implementation of a new Army Training Continuum.

• A single Army Training Continuum concept has been developed for progressive implementation from 2009-10. It will support Forces Command’s mission by unifying individual and collective training experiences for individuals, teams and units. This approach will permit Forces Command to generate the right mix of force elements at the right level of capability to begin mission-specific training for operational deployment in support of the Government’s strategic objectives. In 2008-09, the Army continued to develop the optimum learning culture mandated by CDF’s Learning Culture Inquiry. Key deliverables included focusing on the learner,



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continuing to foster the Army’s values and behaviours, seeking the right balance of training and education, and developing instructors as leaders, mentors, coaches and subject-matter experts.

• There has been strong growth in the Army's Regular workforce through 2008-09, with personnel growth of 1,399 to a total of 27,828 at 1 July 2009. Growth has been achieved through a combination of increased enlistments, particularly from personnel with prior-service, and separation rates remaining below target at 10.3 per cent as at 1 July 2009. Further information on the Army’s recruitment and retention performance is available in Appendix 7—People.

Key performance indicatorsKPI Status Further informationProvide timely, accurate and considered advice on Army capabilities to the CDF, the Secretary and the Government.

The timely and accurate advice to Government and the Defence’s senior principals was achieved with 97 per cent of all ministerial submissions being delivered on time. Overall, the Army received 740 pieces of ministerial correspondence throughout 2008-09.

Achieve levels of preparedness directed by the CDF.

The Special Operations capability achieved almost all preparedness requirements. Medium Combined Operations continue to meet most allocated preparedness requirements, however continue to be impacted by operational commitments and introduction into service of the upgraded mechanised capability under the Hardened and Networked Army and the Enhanced Land Force. Light Combined Operations and Aviation Operations were substantially achieved over the period, with limitations on employment of Blackhawk helicopters into medium to high threat environments currently being addressed through an Electronic Warfare and Self Protection project. The motorised capability is experiencing impacts due to increased commitment of Protected Mobility Vehicles to the Middle East Area of Operations, resulting in a limited ability to meet contingency requirements as well as the Enhanced Land Force milestones for motorised combined arms operations. The Army Reserve continues to develop the High Readiness Reserve capability.


The Army has continued to improve its ability to deliver training to soldiers at the right time, place and to the required standard. The introduction of the Army Training Continuum will further improve the Army’s ability to evaluate and measure professional standards of soldiers in their workplace.




NOTE


Target Status Further InformationOutput 1.3.5

6 CH-47D Chinook1,570 (1,270) flying hours

109 per cent – (1,388 flying hours). Due to operational commitments in Afghanistan, the target for future years has been adjusted to reflect new requirements.

34 S-70A9 Black Hawk7,500 flying hours

96 per cent – 7,175 flying hours. Target substantively achieved. This is the best achievement against Black Hawk helicopter targets in the past 10 years.

41 B-206 Kiowa10,360 flying hours

77 per cent – 7,978 flying hoursDue largely to the commencement of the Kiowa withdrawal plan. The targets for future years have been adjusted in accordance with the drawdown plan.

14 Armed Reconnaissance Helicopter (ARH)5,520 flying hours

— 25 per cent – 1,795 flying hours16 ARH have now been delivered. The serviceability of aircraft has been less than expected, resulting in insufficient serviceable aircraft available to meet the target. As ARH matures it its expected achievement will improve. The acquisition of this asset is still underway and more detail is provided in the DMO volume.

2 MRH-90 Multi Role Helicopter600 flying hours

— 21 per cent – 121.7 flying hoursSix MRH-90 aircraft have now been delivered to DMO. The serviceability of aircraft has been significantly less than expected, resulting in insufficient serviceable aircraft available to meet the target. The acquisition of this asset is still underway and more detail is provided in the DMO volume.

3 B300 King Air 3502,000 flying hours

(90 per cent – 1,795 flying hours)B300 King Air will be transferred to Air Force in December 2009. Army will no longer have a fixed wing capability.



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Table 8.7 Cost summary for Output 1.3 - Army Capabilities

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees 2,566,784 2,676,425 2,703,106 26,681 1Suppliers 1,474,789 1,732,040 1,586,058 -145,982 -8Grants 78 10,078 10,104 26 0Depreciation and amortisation 616,608 446,579 630,188 183,609 41Finance cost - - 1,654 1,654 100Write-down of assets and impairment of assets

18,121 29,935 298,805 268,870 898

Net losses from sale of assets - - - - -Other expenses - - 2,110 2,110 100


RevenuesGoods and services 65,986 59,803 54,475 -5,328 -9Other revenue - - 586 586 100Total Revenue 65,986 59,803 55,061 -4,742 -8GainsReversals of previous asset write-downs

41,700 38,163 158,868 120,705 316

Net gains from sale of assets - 1,323 3,474 2,151 163Other Gains - - 1 1 100Total Gains 41,700 39,486 162,343 122,857 311

Total Income 107,686 99,289 217,404 118,115 119Net cost of 1.3 - Army Capabilities

4,568,693 4,795,768 5,014,621 218,853 5


WHAT THE WHITE PAPER MEANS FOR THE ARMYThe Adaptive Army will be equipped with world class technology and increased combat power and survivability. It will have enhanced ability to operate as a modern networked, mobile and highly adaptable force.

Army’s improvement and enhancement under the White Paper will include:

• a new combat vehicle system providing around 1,100 vehicles with greatly improved firepower, protection and mobility. The system will be equipped with the Army’s integrated battle management systems from inception

• around 7,000 support vehicles to replace the current varied fleets of wheeled transport and logistic support vehicles

• improved communications and command and control systems for land forces

• improved mobility through the acquisition of seven new CH47F (Chinook) medium-lift helicopters

• enhanced firepower through new artillery, both self-propelled and towed, as well as replacement mortars and a new direct fire anti-armour weapon

• improved protection for individual soldiers in dismounted close combat

• improved fire support provided by the ‘Tiger’ Armed Reconnaissance Helicopters (ARH)

• acquisition of 30 MRH-90 helicopters to replace the Army’s Black Hawk helicopter troop lift aircraft. They will enter service with the Army in 2011

• improved ground-based air defence through the replacement or upgrade of the Army’s RBS-70 missile system. The more advanced system will also include a new counter-rocket and counter-mortar capability to protect land forces from artillery, rockets and mortar fire.

The Army future force structure will include land combat and combat support forces (infantry, armour, artillery, combat engineers, and aviation) that are able to operate as combined-arms teams in the joint environment. They will be supported by enabling combat support elements (intelligence, signals and construction engineers) and combat service support systems (logistics and health). They will be highly mobile and able to adapt to different physical and social environments and capable of assuming a leadership role for a coalition combat, stabilisation or reconstruction operation.

Forces will continue to be based on three combat brigades (of around 4,000 troops each) consisting of multiple battalion-sized units. The establishment of two additional infantry

battalions planned under the Enhanced Land Force will continue.

The Army will be able to combine its combat and combat support units to generate 10 battalion-sized ‘battlegroups’ tailored for a wide range of operations.

An Australian CH-47 arrives with vital supplies including an engine for a Bushmaster at the construction site of a bridge destroyed by Taliban extremists.

Case Study



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OUTPUT GROUP 1.4 AIR FORCE CAPABILITIESThe Air Force applies capabilities to protect Australia and its national interests by providing a unique combination of flexibility, reach, precision and speed of response. The Air Force’s vision is to be a balanced, networked, expeditionary force that conducts air and surface operations focusing on air combat, combat support of air operations, surveillance and response, and airlift. These capabilities are supported through our command, training and integrated operational support agencies.

The Air Force’s capabilities can be deployed globally and rapidly to achieve the ADF’s key tasks of defending Australia, contributing to the security of the region and supporting Australia’s wider interests through participation in coalition operations and disaster responses. In particular, the Air Force’s air combat capability is essential for securing control of the air, a prerequisite for most ADF operations.

2008-09 Achievements

• Throughout 2008-09, the Air Force continued to support operations in the Middle East with airlift, P-3 Orion patrols, the Control and Reporting Centre, and embedded personnel in Joint and Coalition Force Headquarters. The Air Force also significantly contributed to border protection operations and regional engagement.

• The Air Force is preparing its organisation and people for the most wide-ranging and complex transition into service of aircraft and systems in its history. While there have been delays in some projects, the Air Force progressed planning during 2008-09 and will be prepared to enable a smooth and seamless acceptance of capabilities when they are delivered.

• The Air Force Improvement Program aligns with the aims of the Strategic Reform Program and was established in January 2008, to develop a culture and systematic methodology to improve capabilities. Training was developed to facilitate ongoing improvements, and the first trial improvement activities were completed to reduce the risk for larger capability improvement projects.

• The Air Force’s Personnel Strategy played a significant role in achieving exceptional retention rates (as shown in the separation rate table below) and strong recruiting. In particular, flexible work practices and an emphasis on meeting members' needs led to strong growth in the trained force. Further information on the Air Force’s recruitment and retention performance is available in Appendix Seven—People.

• The Air Force continues to meet Government operational requirements whilst evolving to meet future requirements through ongoing sustainable reform.





KPI Status Further informationProvide timely, accurate and considered advice on Air Force capabilities to the CDF, Secretary and the Government.

Air Force capability reporting at all levels of command, throughout each Force Element Group, provides detailed issues to higher headquarters. Formal input by Air Force Headquarters ensures that the Chief of the Defence Force and Government receive relevant information, and all submission timelines are met.

Achieve levels of preparedness directed by the CDF for military response options with a warning time of less than 12 months.

Preparedness levels demonstrated through the deployment of a Control and Reporting Centre to Afghanistan; continuous P-3 Orion, C-130 Hercules and more recently C-17 Globemaster III deployments to the Middle East under Operations Catalyst and Slipper; very high rate of effort for the P-3 supporting Operation Resolute. Additionally, rapid and sustained responses to humanitarian crises and disaster relief including; Victorian bushfire support by P-3 and C-130 aircraft and specialist personnel teams; DHC-4 and C-130 flood relief for North Queensland.


lAll Force Element Groups have met their directed evel of training and competencies.

Achieve mission capability for assigned tasks.

As per the directed preparedness levels, all relevant military response options have been rapid and sustained. Contributions to exercises including Red Flag 09, Pitch Black 09, RIMPAC 08, Bersama Lima and Bersama Shield have all successfully satisfied set objectives.

Target Status Further informationOutput 1.4.3

57 PC-9/SA (T)20,000 flying hours

93 per cent (18,579 flying hours)

8 B3005,700 flying hours

85 per cent (4,829 flying hours)The underachievement is attributed to a short term reduction in Air Force and Navy Observer training.



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Output 1.4.4

12 C-130H Hercules3,200 flying hours

106 per cent (3,380 flying hours) The 180 hour overachievement is attributed to increased Middle East Area of Operations tasking for the C-130.

12 C-130J Hercules7,000 flying hours

103 per cent (7,205 flying hours) The 205 hour overachievement was attributed to an increase in support to both ADF and national tasking requirements including Middle East Area of Operations support.

4 C-17 Globemaster III4,000 [5,000] flying hours

84 per cent (3,367 flying hours)The underachievement was the result of immature logistics support; immature development of aircrew and technical workforce – both related to the introduction of this new capability into service; Large Aircraft Infra Red Countermeasures modification program and an increase in the number of shorter sorties which reduced the flying hours needed for the year.

1 KC-30A Multi-Role Tanker Transport100 flying hours

— 0 Flying hoursDue to delivery schedule slippages, with the proposed entry date for the platform moved to 2009-10.

14 DHC-4 Caribou4,100 flying hours

64 per cent (2,626 flying hours)The underachievement is a reflection of ongoing aircraft serviceability and availability issues due to ageing aircraft issues as well as the December 2009 planned withdrawal date reducing tasking.

2 B737 BBJ1,414 flying hours


3 CL604 Challenger2,403 flying hours


Output 1.4.6

19 P-3 Orion7,900 flying hours


1 AEW & C350 flying hours

— 0 Flying hoursThe underachievement is attributed to delivery schedule slippages with the proposed entry date for the platform moved to 2011.

Output 1.4.7

71 F/A-18 Hornet11,500 flying hours


15 F-1113,250 flying hours

81 per cent (2,644 flying hours)The underachievement is attributed to resource and capacity constraints, as well as the retention of appropriately experienced technical staff associated with the F-111 planned withdrawal date of December 2010.

33 Hawk Lead-in Fighter7,600 flying hours

86 per cent (6,561 flying hours)Hawk flying was restricted for a period while essential maintenance was conducted.

4 PC-9 Forward Air Control training aircraft1,030 flying hours

85 per cent (879 flying hours)The underachievement is due to temporary rate of effort reduction to permit completion of squadron maintenance program.

Output 1.4.8

3 PC-9822 flying hours

77 per cent (631 flying hours)One PC-9 was off line to complete Electronic Flight Instrumentation System installation.

Target Status Further information



Table 8.8 Cost summary for Output 1.4 - Air Force Capabilities

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees 1,340,578 1,378,432 1,375,132 -3,300 -0Suppliers 1,479,011 1,615,457 1,538,505 -76,952 -5Grants - - - - -Depreciation and amortisation

1,176,091 938,132 1,181,965 243,833 26

Finance cost - 7,885 6,975 -910 -12Write-down of assets and impairment of assets

19,693 32,407 81,372 48,965 151

Net losses from sale of assets - - - - -Other expenses - - 344 344 100


RevenuesGoods and services 115,981 105,114 100,331 -4,783 -5Other revenue - - 401 401 100

Total Revenue 115,981 105,114 100,732 -4,382 -4GainsReversals of previous asset write-downs

32,700 29,949 175,474 145,525 486

Net gains from sale of assets - - 2,300 2,300 100Other Gains - - 103 103 100Total Gains 32,700 29,949 177,877 147,928 494

Total Income 148,681 135,063 278,609 143,546 106Net cost of 1.4 - Air Force Capabilities

3,866,691 3,837,250 3,905,684 68,434 2


Case

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WHAT THE WHITE PAPER MEANS FOR THE AIR FORCEThrough the White Paper, the Air Force will be able to generate air power for the defence of Australia, support regional stability and nation building in the South West Pacific and East Timor, and contribute to coalition operations where and when necessary.

The White Paper plans to deliver approximately 100 F–35 Lightning II Joint Strike Fighter (JSF) aircraft with enhanced simulation and mission rehearsal systems. Furthermore, introduction of improved military air traffic control, navigation and communications systems that will permit closer alignment of the military and civilian national systems. In addition, the Air Force will:

• continue to acquire five KC–30A multi-role tanker aircraft supporting JSF, Super Hornet, Wedgetail and C-17 Globemaster III aircraft

• continue to acquire six Wedgetail Airborne Early Warning and Control aircraft

• continue to introduce 24 F/A–18F Super Hornets

• continue to enhance our capacity to collect and fuse air surveillance information so our Recognised Air Picture remains relevant for future joint operations

• replace our P–3 Orion aircraft with eight new maritime patrol aircraft supplemented by up to seven large high-altitude, long-endurance uninhabited aerial systems

• supplement the current C–130J Hercules fleet with two additional C–130J Hercules aircraft and retire the C–130H aircraft, and acquire a new battlefield airlift aircraft.

The Air Force will contribute to the whole of Defence reform program involving some internal workforce and organisational restructuring and modest growth to Permanent Air Force strength and will deliver a significant efficiency dividend. The Air Force will be far better positioned in the future to fight and win, to employ air power in combat, to offer comprehensive air power options to Government, and to support our community during difficult times.

The F-35 Joint Strike Fighter (JSF).

Case Study



OUTPUT GROUP 1.5 INTELLIGENCE CAPABILITIESIn 2008-09 intelligence capabilities were provided by the Intelligence, Security and International Policy Group. The Group had three primary responsibilities; to deliver intelligence capability for Defence, to lead the development of security policy, standards and plans to meet Defence’s protective security requirements, and to provide international policy advice to Government. From 1 July 2009, international policy advice was transferred to the Office of the Secretary and Chief of Defence Force Group and will be reported against Output Group (‘Program’) 1.1 in 2009-10.

In 2008-09, the Group’s achievements included:

• The Defence Signals Directorate (DSD) demonstrated capacity to surge in a crisis and produce intelligence to meet a wide range of national intelligence priorities while remaining focused on support to military operations and counter-terrorism. An increased awareness of cyber threats raised the demand for DSD services and the DSD provided a range of advice and assistance to federal and state government agencies on the security of their networks. The DSD was also involved in developing the cyber warfare component of the White Paper during 2008-09.

• In October 2008, the Defence Imagery and Geospatial Organisation (DIGO) Bendigo staff successfully transitioned into the new purpose-built facility, allowing the organisation to operate as an integrated entity.

• The Defence Intelligence Organisation (DIO) delivered Information Communications Technology (ICT) infrastructure and connectivity to the new Headquarters Joint Operations Command (HQJOC) facility in Bungendore, NSW.

• The Defence Security Authority (DSA) met the continued strong demand for security clearances and commenced implementation of technological developments to improve the management and support of the security vetting process.

• The International Policy (IP) Division provided advice on Australia’s military contribution to Afghanistan, the withdrawal of Australian forces from Iraq, and Australia’s presence in East Timor. Significant arrangements were finalised including the Australia-Japan Memorandum on Defence Cooperation, the Australia-Indonesia Joint Statement on Defence Cooperation and the Australia-Singapore Defence Cooperation Agreement.



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Key performance indicatorsKPI Status Further informationSupport the Government, Defence and other agencies with high quality intelligence and policy advice.

The DIGO maintained its strong focus on supporting ADF operations and exercises and its national customers by providing high-quality geospatial data and products.The DIO continued to provide the Government, Defence and the ADF with timely, accurate and relevant intelligence assessments, advice and services.The DSD maintained signals intelligence support to Government priorities to inform intelligence assessments and policy advice to the Government.The IP Division provided prompt and comprehensive policy advice on international defence issues, including the increase to Australia’s military contribution to coalition operations in Afghanistan and the withdrawal of Australia’s military involvement in Iraq.

Attract, develop and maintain a skilled workforce.

The DIGO refined its recruitment and marketing strategies to attract the best people at both entry and senior levels, and made a significant investment in training to develop unique skills and capabilities. The DIO reduced its annualised separation rate to approximately 12 per cent at 30 June 2009, down from 16 per cent in 2007-08.The DSD’s Strategic Recruitment Timeline guided programmatic and direct recruitment to meet DSD’s new requirements for 2008-09.The DSA identified protective security employment streams and provided guidance to managers on training and development opportunities for each stream.

Achieve international best practice in supporting military, police and wider security operations.

The DIGO provided timely, accurate and high quality intelligence and security policy advice in support of ADF, police and wider security operations.The DIO provided comprehensive intelligence support to ADF operations, particularly operations in Afghanistan, Iraq, East Timor and Solomon Islands.The DSD provided threat warning and situational awareness advice to inform ADF and law enforcement decision-making on operations.The DSA prioritised security clearance actions directly related to operations.

Strengthen the approach to security.

The DSD enhanced the Government’s situational awareness and response to cyber threats through increased staffing and investment in DSD’s information security area.The Chief Security Officer was appointed to lead the Defence protective security effort and establish the Defence Security Community, incorporating protective security practitioners across Defence and Defence Industry. The DSA strengthened Defence’s protective security governance framework, continued the refinement of the security risk assessment process and redeveloped protective security training.



Develop ‘next generation’ intelligence, geospatial and security capabilities.

During 2008-09, the DIGO worked to improve the accessibility of its products by commencing development of a Web Mapping Service which will be completed in September 2009.The DIO delivered improved ICT capability, achieved proof of concept of an advanced collaborative analytical tool and delivered ICT connectivity to HQJOC.The DSD developed advanced analytical skills in its workforce and combined these with innovative technological solutions to keep pace with changing technologies.The DSA progressed projects to introduce electronic processing of security clearances.

Deliver capability dividends through international partnerships.

The DIGO fostered continued bilateral and trilateral engagement, identified opportunities for enhanced cooperation and supported the reintegration of New Zealand into the geospatial intelligence community.The DSD leveraged its international partnerships to enable new capabilities and reporting to meet the Government’s intelligence and information security priorities.The IP Division achieved capability dividends through fostering practical defence cooperation with Australia’s allies and friends. International engagement activities promoted constructive regional cooperation and better positioned the ADF for participation in coalition operations and regional cooperative activities including counter-terrorism and humanitarian assistance/disaster relief operations. Key activities included the ADF participating in the first ASEAN Regional Forum field activity on disaster relief and implementing the enhanced Defence Cooperation Program with East Timor and Pakistan. Performance information on the Defence Cooperation Program is available in Appendix 3.

KPI Status Further information



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Table 8.9 Cost summary for Output 1.5 - Intelligence Capabilities

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees 269,147 275,959 228,284 -47,675 -17Suppliers 353,441 347,816 219,887 -127,929 -37Grants - - - - -Depreciation and amortisation

59,885 42,207 53,611 11,404 27


1,591 205 3,363 3,158 1,540

Net losses from sale of assets - - 453 453 100Other expenses - - - - -

Total Expenses 684,064 666,187 505,598 -160,589 -24Income

RevenuesGoods and services 36,188 32,797 1,736 -31,061 -95Other revenue 81 150 781 631 421


- 3,993 2,010 -1,983 -50

Net gains from sale of assets - - - - -Other Gains - - - - -Total Gains - 3,993 2,010 -1,983 -50

Total Income 36,269 36,940 4,527 -32,413 -88Net cost of 1.5 - Intelligence Capabilities

647,795 629,247 501,071 -128,176 -20



OUTPUT GROUP 1.6 DEFENCE SUPPORTThe Defence Support Group is a multi-faceted business that brings together responsibility for delivering most of the shared services that support the ADF and other Defence Groups.

The Group’s achievements in 2008-09 include:

• providing legal advice, policy development and training support for extensive changes to the Military Discipline System (discussed further in Output Group 1.1 – Office of the Secretary and CDF on page 70), including the complete revision of the Discipline Law Manuals

• facilitating the signing of two treaties (the Agreement to amend the Defence Chapeau Agreement with the United States, and the Agreement with Singapore for the Singapore Armed Forces use of the Shoalwater Bay Training Area), and the passing of two Defence Acts by the Parliament:

- The Defence Legislation (Miscellaneous Amendment) Bill 2008, which, among other things, incorporated the Third Additional Protocol to the Geneva Conventions (establishing a third emblem called a ‘Red Crystal’), and amended the Defence (Special Undertakings) Act 1952

- The Defence Legislation Amendment Bill (No. 1), which introduced a discretionary Tactical Payment Scheme, and amended the Defence Home Ownership Assistance Scheme Act 2008;

• successfully completing the Headquarters Joint Operations Command facility at Bungendore NSW on time and to budget through a public private partnership project

• as part of the White Paper development process, holistically re-examining the Defence estate and the role it plays in supporting the ADF, primarily to ensure the estate is strategically aligned, affordable and sustainable and supports capability

• obtaining Government agreement to additional funding for the Defence Estate and Defence’s five key basing principles.

Key performance indicatorsKPI Status Further informationDeliver DSG products and services on time and on budget to support the development and delivery of Defence capability.

Defence Support has fully supported the continuing introduction of new capability such as the Super Hornet, Hardened Networked Army and Enhanced Land Force, enabling these new capabilities to be introduced on time and on budget. During the year, public private partnerships such as Single LEAP (Living Environment and Accommodation Precinct) Phase 1 and Headquarters Joint Operations Command have been brought online.Defence Support has also provided support to all major domestic operations including the Victorian bushfires, as well as backfilled for personnel on overseas operations without any increase to the budgetary bottom line.



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Implement revised responsibilities and accountabilities for base support.

Defence Support and the three Services commenced rolling out the Base Accountabilities Model across Defence bases, which clearly defines and delineates accountabilities for capability and operational support, and for base support services, for completion by the end of December 2009.

Improve DSG’s business and governance as part of broader Defence reform and implementation of Defence’s response to the Defence Management Review.

Defence Support commenced wider Group reform in late 2008 which resulted in structural reform and business improvement to streamline governance arrangements and service delivery. This work is ongoing.

Improve DSG engagement with industry to develop collaborative relationships and ensure effective and efficient products and services are delivered.

Defence Support undertook a range of activities to engage with industry including:• conducting the Defence Support Conference as a

pre-event to the Defence+Industry Conference 2009

• conducting DSG-Industry CEO Breakfast forums to nurture robust relationships and communication with our leading suppliers on strategic matters

• managing performance of major suppliers under existing contracts and Annual Performance Reviews under standing offer panel arrangements

• attendance at various stakeholder meetings with industry representatives.

Optimise ADF operational capability through the deployment of ADF lawyers to provide access to relevant and timely legal support.

During 2008-09, ADF legal officers provided, and will continue to provide through 2009-10, legal assistance in the Middle East, Solomon Islands and East Timor, including negotiating hosting arrangements for operational deployments. The provision of legal support to commanders within Australia continues for training, advocacy services for members, assistance in administrative inquiries, and complaint handling and the proper and lawful functioning of the ADF discipline system.See Appendix Eight for discussion of Defence’s legal expenses and Appendix 1 for outcomes of judicial decisions and decisions of administrative tribunals.

Provide ADF members with high quality service residences, relocation and travel services using cost-effective contract arrangements.

The purchaser-provider arrangements between Defence and Defence Housing Australia (DHA) have continued to provide suitable housing for Defence members to meet operational needs. See Appendix Eight for discussion of Defence’s purchaser-provider arrangements with DHA for provision of service residences and relocation support.




Manage, develop and sustain the Defence estate to meet Defence and Government requirements by developing and delivering major estate and environment programs on time and to budget.

Infrastructure Division managed, developed and sustained the Defence estate, which comprises approximately 370 owned properties, 25,000 assets and over 3 million hectares of land with a gross replacement value in excess of $62b, approximately 350 leases within Australia and 220 overseas leases. Infrastructure Division delivered major estate programs, including the Major Capital Facilities program, the facilities operations program, environment programs, the facilities lease and disposal programs and public private partnership projects including Headquarters Joint Operations facilities. For more information on these activities, see Appendices Four (Major Capital Facilities) and Five (Environmental Management).Infrastructure Division contributed significantly to the White Paper and the Companion Reviews and undertook estate planning activities to ensure the Defence estate meets Defence and Government requirements.

Provide professional support services to ADF members and families, including delivery of family support programs and bereavement support in the situation of death and serious casualties.

ADF members and their families have benefitted from the professional support provided by Defence Support in 2008-09. The following statistics highlight the services delivered: • a total of 40,607 instances of client contact for

the Defence Community Organisation• bereavement support to the families of 41

deceased ADF members• support to 2,772 ADF dependants recognised as

having special needs• facilitation of Defence School Transition Aides in

130 primary schools and Defence Transition Mentors in 48 secondary schools around Australia

• provision of 1,100 long daycare positions at Defence child care centres.

Provide for the timely recognition to ADF members and ex-serving members in accordance with the Australian and Imperial Honours and Awards systems and civilian long service recognition.

• ADF members received their medal entitlements within three months from the date of completing eligible service.

• Ex-serving members received all medal entitlements within three months of receipt of an application.

• The system for recognising civilian long service was amended during 2008-09. All outstanding awards have now been issued. Civilians will now receive their award within three months of receipt of an application.




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NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees 1,204,934 1,234,825 965,967 -268,858 -22

Suppliers 1,406,578 1,500,870 1,564,097 63,227 4

Grants 1,390 1,397 1,041 -356 -25Depreciation and amortisation

672,867 660,791 754,482 93,691 14

Finance cost 48,925 49,163 67,362 18,199 37Write-down of assets and impairment of assets

1,632 14,737 81,227 66,490 451


- - 12,489 12,489 100

Other expenses 941 882 22,434 21,552 2,444Total Expenses 3,337,266 3,462,665 3,469,097 6,432 0Income

RevenuesGoods and services 227,235 204,879 221,344 16,465 8Other revenue 1,408 3,660 12,632 8,972 245Total Revenue 228,643 208,539 233,976 25,437 12GainsReversals of previous asset write-downs

- 4,326 65,328 61,002 1,410

Net gains from sale of assets - 4,965 - -4,965 -100Other Gains - - 796 796 100Total Gains - 9,291 66,124 56,833 612

Total Income 228,643 217,830 300,100 82,270 38Net cost of 1.6 - Defence Support

3,108,623 3,244,835 3,168,997 -75,838 -2



OUTPUT GROUP 1.7 DEFENCE SCIENCE & TECHNOLOGYThe Defence Science and Technology Organisation (DSTO) provides science and technology support to Defence. DSTO also supports the research and technological needs of Australia’s other national security agencies.

During 2008-09 DSTO directly contributed to Defence outcomes through saving resources, enhancing current capabilities, and through risk reduction of new capabilities. High priority was given to directly supporting Headquarters Joint Operations Command and the ADF operational commanders. Through targeted recruitment, strategic partnerships and learning programs, DSTO continued to sustain world class science and technology skills and capabilities covering the spectrum of technology requirements of Defence, including platforms and weapons, sensors and systems, operations analysis and command, control, communications and intelligence. DSTO collaborations with national and international partners continued to provide substantial leverage for Defence.

DSTO achievements in 2008-09 include:

• in collaboration with the United States Air Force, successfully launched the first of a series of eight flights in the Hypersonic Flight Research Experimentation Program, testing and validating flight control and telemetry systems

• through world-leading analysis, enabled structural life extension of the F/A-18 airframe centre barrel, with resultant savings of over $400m

• demonstrated the viability of firing the Advanced Short Range Air–Air Missile in new operational modes, substantially improving its performance against advanced threats

• undertook a joint Australian/United States trial to successfully prove the performance of the Joint Strike Fighter’s radar

• deployed the DSTO-developed Shapes Vector cyber security system into the United States Navy and trialled it for use in Australian cyber security operations

• supported, via the DSTO Joint Decision Support Centre, evidence-based decision making across Defence and the development of the national crisis coordination capability

• significantly enhanced the operational capability of the Jindalee Over the Horizon Radar Network through unique implementation of advanced radio-frequency waveform technology

• rolled out the logistics Vital Planning and Analysis tool for operational use in the ADF

• provided complete ship weapons damage modelling and analysis, and expert advice and opinion to the HMAS Sydney II Commission of Inquiry

• established a DSTO Advisory Board to provide strategic advice and guidance to the organisation

• developed strategies to re-balance its workforce to meet future Defence Capability Plan requirements

• in November 2008, DSTO held an industry open day in Melbourne to foster collaboration with industry and academia; commercial licences for two new DSTO technologies are progressing as a result



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• provided ongoing support to the Defence Materials Technology Centre, an important emerging technology transfer/collaboration mechanism with Australian industry

• reinvigorated industry alliance mechanisms and refreshed DSTO’s engagement with Australian universities, with over 300 active agreements during 2008-09 across 27 universities.

Key performance indicatorsKPI Status Further informationSupport the Minister with high quality advice on matters of defence science and technology.

In addition to providing formal briefings as requested, DSTO provided 79 ministerial submissions and provided responses to 22 ministerial representations. All advice provided was within stipulated timeframes. Ministerial announcements were supported by 38 media releases, and DSTO hosted ministerial visits to its sites on seven occasions. DSTO provided support for the Minister for Defence Science and Personnel during two overseas visits and supported his participation in 15 events as part of engagement with industry, universities and other stakeholders.

Provide effective, relevant and timely science and technology advice/solutions to support military operations and enhance mission effectiveness.

DSTO provided direct support to ADF operations, principally through technical solutions to operational problems often connected with the threat from improvised explosive devices, and through providing analysis and advice to deployed commanders. As well as providing support from within Australia, including scientists on the staff of Headquarters Joint Operations Command, DSTO deployed scientists to headquarters within Operations Catalyst, Slipper and Astute. Technology insertion teams were also deployed and DSTO’s contributions to operations were highly valued by Australian operational commanders.

Provide effective assistance and support to capability acquisition decision making and to the sustainability of the current force.

DSTO provided science and technology (S&T) support to Defence in accordance with Defence priorities in: decision making, by timely provision of 18 technical risk assessments and 16 technical risk certifications for Defence Capability Plan projects seeking Government approval• acquisition, with support provided to 100 per

cent of projects where S&T support was essential (overall 80 per cent of development projects and 65 per cent of acquisition projects were supported)

• sustainment, with 53 per cent of client S&T support requests addressed.

Identify and/or develop new technologies relevant to Defence.

DSTO continued to assess the potential impact of emerging and rapidly evolving technologies such as nanotechnology on Defence capabilities and operations. Eleven Capability & Technology Demonstrator (CTD) Program projects were completed and the CTD Extension Program was established, with five initial projects.

Maintain a strategically-designed program of forward-looking research supporting DSTO’s science and technology capability needs.

DSTO maintained a program of corporate research initiatives drawing on research capabilities across the organisation. The program addressed significant current and future Defence problems such as smart materials, automation of the battlespace and hypersonics. It ensures science and technology capabilities across DSTO are nurtured through targeted forward-looking research that positions DSTO to respond to future Defence requirements. In response to the White Paper, an enhanced program of Corporate Enabling Research has been planned for 2009-10.



Table 8.11 Cost summary for Output 1.7 - Defence Science and Technology

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees 252,407 259,090 254,767 -4,323 -2Suppliers 106,081 131,418 138,529 7,111 5Grants - - - - -Depreciation and amortisation

17,924 20,028 20,456 428 2


114 90 637 547 608


- - 6 6 100

Other expenses - - - - -Total Expenses 376,527 410,626 414,395 3,769 1Income

RevenuesGoods and services 21,173 19,189 38,886 19,697 103Other revenue 3,364 6,201 85 -6,116 -99Total Revenue 24,537 25,390 38,971 13,581 53GainsReversals of previous asset write-downs

- 166 518 352 212

Net gains from sale of assets - - - - -Other Gains - - - - -Total Gains - 166 518 352 212

Total Income 24,537 25,556 39,489 13,933 55Net cost of 1.7 - Defence Science and Technology

351,990 385,070 374,906 -10,164 -3



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OUTPUT GROUP 1.8 CHIEF INFORMATION OFFICERThe Chief Information Officer Group provides Defence with dependable, secure and integrated Information and Communication Technology (ICT) capabilities to support efficient and effective conduct of Defence operations, and the conduct of Defence business.

Reform and investment across Defence’s ICT systems is a priority for the Government and Defence, and is central to the recommendations coming out of the whole-of Government Review of the Australian Government’s Use of Information and Communication Technology by Sir Peter Gershon, the White Paper and the Defence Strategic Reform Program. The ICT companion review to the White Paper detailed the problems long-term under-investment in ICT has created in the Defence Information Environment. To address this, during 2008-09, the Group embarked on a new strategy for the remediation and reform of Defence ICT. Defence will be working closely with AGIMO to align with whole-of-Government initiatives for cost saving and efficiency dividends.

Achievements in 2008-09 include:

• introducing an automatic power-off to all Defence computers at Russell Offices, Canberra as part of a ‘Green ICT’ pilot program, resulting in the base power load during off-peak hours being reduced by 25 per cent and saving approximately $25,690 a year per building. This initiative was estimated to save $3-5m per year if implemented across all Defence operations and reduce carbon dioxide by some 30000 tons annually. This is equivalent to removing 7,500 cars from our roads

• successfully negotiating the Microsoft Large Reseller Account and creating the pricing model for ICT products and services that will deliver cost reductions to Defence and other government departments and agencies

• completing the upgrade of the Resource and Output Management Accounting Network (ROMAN) finance system almost $1m under budget

• signing a multi-million dollar contract with the United States for the provision of a satellite communications payload over the Indian Ocean that will enhance communications for deployed forces in the Middle East Area of Operations and the Indian Ocean Region

• delivering a networked wireless e-learning capability to support the Adaptive Army initiative Classroom of the 21st Century

• delivering a range of communications services to the remote Bradshaw Field Training Area, Northern Territory, and Shoalwater Bay, Rockhampton, to support Exercise Talisman Saber 2009 including access to Defence Restricted Network, Defence Secret Network, Voice and Coalition and Joint Combined Training Capability System

• development of an ICT internal mobility program and skilling framework that promotes the acquisition, maintenance and improvement of ICT skills and establishes clear Defence ICT career pathways.



Key performance indicatorsKPI Status Further informationProvide timely and high-quality ICT advice to the CDF, the Secretary and the Minister.

During 2008-09, CIO continued to improve its mechanisms for reporting on and monitoring of key ICT projects and ICT advice to the Secretary, CDF and Minister, notably through the re-establishment of the Defence ICT Committee in August 2008. Further information on the Committee is provided in Chapter 5 of this report.

Provide targeted ICT services that meet Defence needs.

The Group has seen measured improvements in the provision of ICT services through its technical refresh program, establishment of ICT change management processes and regional ICT transition back to the Group.The Group migrated to a stakeholder aligned organisation, improving engagement and driving towards a collaborative approach to developing ICT capabilities. Stakeholder Engagement Teams were established to work with Defence customers to ensure alignment between the business and ICT. Introduction of a new Google Search Engine assisted Defence users in discovering and sharing information across the Defence network.The Group also developed a successful concept demonstrator for the Defence Secret Network Unified Communications to deliver a secure, scalable and survivable voice over IP solution for Defence.During 2008-09, the Group managed to reduce the number of outstanding jobs on the Defence Secret Network by 45 per cent. Due to updated doctrine, training and improved compliance the Group has seen a 32 per cent reduction in Cryptographic (Communications Security) incidents over the last year. Due to an increase in customer demand for secret video conferencing services, the Group has responded by increasing its infrastructure capacity to meet Defence’s needs. On average, requests for secret video conferencing services have doubled during the year to about 690 a month.

Improve the performance of the core Defence networks.

During the year, investment was targeted to resolve maintenance issues and standardise equipment. The Group developed a strategy to consolidate Defence Data Centres to reduce maintenance costs and Defence’s ICT carbon footprint.Through the introduction of improved change management processes there was a 34 per cent reduction in the number of Defence Restricted Network unplanned outages between December 2008 to July 2009. The Defence Secret Network saw a 13 per cent reduction in the number of unplanned outages during the same period.

Develop and implement a Defence ICT Strategy.

The Defence ICT Strategy for the remediation and reform of Defence information and communication technology has been developed and is due for release in the second half of 2009. The Defence SRP and ICT reform program is the principle vehicle for the management and delivery of the Defence ICT Strategy.A single Defence ICT portfolio work plan was also developed to improve alignment between ICT and Defence investment priorities as identified through the SRP development process.



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Develop a way forward for Defence enterprise systems.

An Enterprise Solutions Branch was established to address the way forward for enterprise systems. Major enabling projects were brought forward for early Government approval to support the enterprise systems planning process. This included JP2080 – Upgrade Financial and Personnel Systems.The Group is working with Industry to develop a Defence wide enterprise architecture framework to support standardisation, integration and the use of common services.

Develop and manage secure information sharing capabilities to support planning and conduct of ADF operations, exercises and Defence business.

The Group developed an interoperability improvement plan to improve connectivity and information sharing to support the planning and conduct of combined operations and Defence business activities. Defence is now able to publish documents up to Secret level for the release to Australia, Canada, United Kingdom and United States onto US SIPRNET, United States counterparts in the Office of the Secretary of Defense, Pacific Command, Central Command and European Command.

Significantly reduce costs and time to implement ICT solutions for Defence.

The Group implemented tighter cost control, new ICT sourcing and bundling strategies to standardise, consolidate, rationalise applications and assets across all parts of Defence. The Group also implemented an ICT ‘Plan, Build and Run’ operating model to allow faster decision and delivery cycles plus reduced costs and ‘time to market’.As a result of the whole-of Government Review of the Australian Government’s Use of Information and Communication Technology, the Group has implemented strategies for the reduction of full time contractor workforce and the conversion of Professional Service Provider positions to Australian Public Service employees. This will work to reduce service costs, retain a skilled workforce, and deliver efficiencies in the long-term.




Table 8.12 Cost summary for Output 1.8 - Chief Information Officer

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees 90,698 92,948 102,532 9,584 10Suppliers 524,144 488,970 445,957 -43,013 -9Grants - - - - -Depreciation and amortisation

89,102 80,242 127,684 47,442 59

Finance cost - - 13,621 13,621 100Write-down of assets and impairment of assets

2,423 - 12,350 12,350 100

Net losses from sale of assets - - - - -Other expenses - - - - -

Total Expenses 706,367 662,160 702,144 39,984 6Income

RevenuesGoods and services 6,383 5,785 1,141 -4,644 -80Other revenue - - 1,042 1,042 100


- - 3,285 3,285 100

Net gains from sale of assets - - 53 53 100Other Gains - - - - -Total Gains - - 3,338 3,338 100

Total Income 6,383 5,785 5,521 -264 -5Net cost of 1.8 - Chief Information Officer

699,984 656,375 696,623 40,248 6



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OUTPUT GROUP 1.9 VICE CHIEF OF THE DEFENCE FORCEVice Chief of the Defence Force (VCDF) Group’s mission is to facilitate the development and delivery of Defence Joint Force Capability. The Group enables Defence to meet its Outcome 1 objectives through providing strategic-level management and situational awareness of current and potential ADF commitments for Defence and other government agencies; joint military professional education and training; joint and combined ADF doctrine; joint capability management policy; joint logistics; joint health; input to joint capability development; and initiatives to develop the capacity of the ADF Reserves to support ADF capability.

In 2008-09, the Group enhanced its ability to develop and deliver Joint Force Capability through organisational change and restructure. The Group expanded through the addition of the Joint Health Command, the Asia Pacific Civil-Military Centre of Excellence, the ADF Investigative Service, and the establishment of the Joint Capability Coordination Division. VCDF Group also assumed responsibility for Cadet Policy Branch.

Key achievements across the Group in 2008-09 include:

• coordinating Capability Manager responsibilities for intelligence, surveillance reconnaissance, electronic warfare, network centric warfare, cyber warfare and simulation

• strategic planning for Operations, including planning for the conclusion of Australia's military commitment to the rehabilitation of Iraq

• 263 ADFA undergraduate students, 159 course members of the Australian Command and Staff College, and 46 course members of the Centre for Defence Strategic Studies graduated in December 2008, including 76 overseas students

• the implementation of recommendations arising from the independent report by Professor David Dunt Review of Mental Health Care in the ADF and Transition through Discharge

• provision of logistic and health support to ADF global, regional, and domestic operations

• completion of the Reserve Census and Attitude Survey, that will inform improved conditions of service for Reservists

• active engagement in military and civilian workforce planning and management to ensure short and long term workforce requirements are addressed at the strategic level

• innovative partnering arrangements with civilian health organisations to attract and retain health practitioners

• conclusion of a number of international logistics support agreements including with Italy and Indonesia

• implementation of the logistics assurance program to reform inventory

• implementation of a revised Defence asbestos eradication and management plan.

In May 2009, the Asia Pacific Civil-Military Centre of Excellence became part of the VCDF Group. The Centre was opened by the Prime Minister in November 2008 as a whole-of-government initiative supporting best practice in the way civilian, police and military agencies work together for conflict and disaster management overseas. The Centre includes staff from Defence, the Department of Foreign Affairs and Trade, AusAID, Australian Federal Police, and the Attorney-General’s Department.



Key performance indicatorsKPI Status Further informationProvide timely and high quality advice on strategic aspects of current and potential commitments to the CDF, the Secretary and the Minister.

VCDF Group, has provided timely and accurate advice on strategic aspects of potential and current ADF commitments, through coordinated joint military strategic engagement and input to government, allies, coalition partners and other agencies. Military Strategic Commitments has provided direct operational staff support to the CDF and assists in the provision of the CDF’s intent for commitment to operations.

Enhance ADF joint and combined operational capability.

The establishment of Joint Capability Coordination Division, within VCDF Group, allowed VCDF to assume responsibility for the coordination of the capability of the joint and combined operational force.The Division implements VCDF’s responsibilities of coordinating the capability of joint forces by aligning resources to meet agreed organisational goals. This is achieved by working closely with other Defence Groups and Services, selected government departments and key coalition partners.

Enhance the capacity of the Reserves to support ADF capability.

Cadets, Reserve and Employer Support Division enhances capacity of the Reserve to support ADF capability by promoting the partnership between the ADF, the employer and the Reservist. These activities include:approximately 380 ‘Exercise Stretch’ participants took part in over 14 activities, and approximately 115 employers took part in five ‘Boss Lift’ exercises. These exercises provide employers of Reservists an insight into the Reserve activities of their employee.employer and industry engagement and the Office of Reserve Service Protection activities promote an understanding of the rights and obligations of Reservists and employers in relation to ADF service. the Employer Support Payments Scheme compensates employers and self-employed Reservists undertaking service.

Provide logistics support and services for ADF operations.

VCDF Group, through Joint Logistics Command, coordinated: • logistic support to ADF operations, exercises and

directed activities to enable mission success• logistic support to enable the Services to meet

their raise, train and sustain functions. Implement the Defence Strategic Logistics Plan.

Joint Logistics Command is actively engaged in implementing the Defence Strategic Logistics Plan as detailed in the Strategic Reform Program. A comprehensive engagement process with staff throughout Australia is complete and implementation is in progress.

Continue to improve inventory management.

The Inventory Assurance Program has been completed with end of stocktake program results falling within the Defence Audit and Risk Committee mandated tolerances.The Accelerated Disposals Program to remove “inventory no longer required” has also been successful. Since the commencement of the Program in March 2008, there have been 191,020 disposal transactions processed, resulting in 122,690 stock line items (11,707,989 physical items) being disposed. The book value of the disposed items is approximately $358.8m.



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Optimise ADF operational capability through the development of deployable health capabilities to support a wide range of operations to which the ADF could be committed.

VCDF Group, through Joint Health Command, has provided health support to the current range of ADF operational tasks and exercises while continuing to provide garrison health support to the ADF.Joint Health Command is engaged in the process to secure a comprehensive e-health system which will improve management of health data to contribute to improved health care for the ADF. The independent report by Professor David Dunt Review of Mental Health Care in the ADF and Transition through Discharge is complete and the enhanced mental health care programs are being implemented. The Joint Health Command is also undergoing a reform of health business in line with the Defence Strategic Reform Program.

2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees 153,622 157,471 483,576 326,105 207Suppliers 355,449 428,448 589,021 160,573 37Grants - - - - -Depreciation and amortisation

339 2,708 8,011 5,303 196


26,419 234 609,522 609,288 260,379

Net losses from sale of assets - - 26 26 100Other expenses - - - - -

Total Expenses 535,829 588,861 1,690,156 1,101,295 187Income

RevenuesGoods and services 241,319 218,678 261,350 42,672 20Other revenue 32,394 44,572 2,153 -42,419 -95Total Revenue 273,713 263,250 263,503 253 0GainsReversals of previous asset write-downs

100 108 109,022 108,914 100,846

Net gains from sale of assets - - - - -Other Gains - - - - -Total Gains 100 108 109,022 108,914 100,846

Total Income 273,813 263,358 372,525 109,167 41Net cost of 1.9 - Vice Chief of the Defence Force

262,016 325,503 1,317,631 992,128 305




OUTPUT GROUP 1.10 JOINT OPERATIONS COMMANDJoint Operations Command consists of the Headquarters and specialised components: Special Operations, Border Protection Command, Northern Command, Joint Movements Group and when raised, Joint Task Forces.

The Headquarters component includes embedded support elements, such as movements, joint and combined exercises, logistics and welfare support for deployed forces. The Headquarters plans, mounts, conducts and controls all Defence operations. The Chief of Joint Operations Command is also responsible for the ADF’s commitment to the Coastwatch civil surveillance program and Border Protection Command tasking, providing maritime surveillance assets that are tasked routinely in accordance with the Government’s direction.

In November 2008, the Headquarters commenced the move from various locations in Sydney and Canberra to a purpose-built facility in Bungendore, NSW. The General John Baker Complex was officially opened by the Prime Minister on 7 March 2009. Careful management of the relocation project ensured the move was successful and that command and control functions were not disrupted during the move.

The ADF operations that were conducted and controlled by the Headquarters during 2008-09 are detailed in this report under Outcomes 2 and 3.

Major exercise commitments were met, including the following joint or combined exercises:

Exercise Description/Objective

Combined ADF/Five Power Defence Arrangement ExercisesBersama Shield 09May 2009

To exercise assigned Five Power Defence Arrangement forces in the conduct of joint and combined operations in a multi-threat scenario for the defence of Malaysia and Singapore.

Combined ADF/United States Exercises Dugong 08October 2008

Exercise Dugong is a combined mine counter measures and explosive ordnance disposal exercise involving the Navy’s Mine Warfare and Clearance Diving assets and a combined Australian / United States Explosive Ordnance Disposal (EOD) unit. The aim of the exercise is to deploy force elements to a remote locality/primary port to conduct combined mine-clearance and EOD operations. The exercise is designed to progress collective mine counter measures and EOD capability and proficiency towards operational preparedness objectives requirements.

Other Combined ExercisesRimpac 08June-July 2008

Exercise Rimpac is a biennial multilateral exercise held near Hawaii intended to enhance tactical proficiency of participating units in a wide array of combined operations at sea. By enhancing interoperability, Rimpac helps to promote stability in the Pacific Rim region.

Kakadu 08July-August 2008

Exercise Kakadu is a multilateral maritime warfare exercise conducted in Darwin and the North Australia Exercise Area. Units from Australia, France, Japan, Malaysia, New Zealand, Pakistan, Papua New Guinea, Singapore and Thailand along with observers from Indonesia, Philippines, Republic of Korea and Vietnam participated in the exercise. The aim of the exercise is to develop interoperability in multilateral maritime operations in a regional maritime coalition environment.

Singaroo 08July 2008

Exercise Singaroo is a bilateral maritime warfare exercise conducted by the Republic of Singapore Navy and the Royal Australian Navy (RAN). The aim of the exercise is to improve the interoperability of the Singapore Armed Forces and the ADF in combined maritime procedures and tactics.



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Mastex 08August 2008

Exercise Mastex is a combined RAN and Royal Malaysian Navy maritime exercise to improve interoperability and mutual understanding. The aim of the exercise is to strengthen the bilateral relationship and enhance mutual cooperation and understanding between the Malaysian Armed Forces and the ADF.

Austhai 08September 2008

Exercise Austhai is a combined maritime exercise conducted between elements of the RAN and the Royal Thai Navy. The aim of Exercise Austhai is to enhance the relationship between the two forces in order to develop a level of interoperability for the conduct of combined operations.

Swift Eagle 08October 2008

Exercise Swift Eagle is an ADF unilateral exercise to evaluate the preparedness of high readiness rapid deployment force elements, including the tactical brigade headquarters and the follow-on battalion group, selected supporting air, maritime and Special Forces elements to conduct short notice operations. The objective of Exercise Swift Eagle is to practice entry by air and sea and conduct a non-combatant evacuation in a medium intensity ground scenario as well as testing the ready capacity of the on-line battalion.

ASWEX 08November- December 2008

Exercise ASWEX is conducted to improve anti-submarine warfare (ASW) capability and interoperability between maritime and air ASW platforms in a multi-threat environment; to improve specific skills at the operator level and develop and assess operational effectiveness at the unit level. The primary aim of the exercise is to practice and evaluate collective ASW concepts, tactics and procedures.

Red Flag 09February- March 2009

Exercise Red Flag is a major exercise using a dense integrated air defence network that requires the employment of advanced tactical procedures. Red Flag objectives are to enhance interoperability with the United States and the United Kingdom defence forces and conduct air combat training in a complex high threat environment.

Tamex 09-1March 2009

Exercise Tamex is a Navy/Air Force multilateral exercise with New Zealand, the United States and Japan. The exercise combines basic maritime patrol aircraft Anti-Submarine Warfare and Anti-Submarine Surveillance activities. The aim is for P-3 Orion aircraft to practice joint anti-submarine operations with a Navy submarine with guided missile capabilities.

KPI Status Further informationADF forces are effectively deployed and sustained.

Linked to Outcomes 2 and 3.

Command of ADF forces is effective and the Government’s strategic objectives for operations are achieved.

Linked to Outcomes 2 and 3.

Achieve levels of preparedness directed by the CDF for forces identified for operational tasks.

Deployed forces met preparedness levels directed by CDF.

Meet major ADF exercise commitments.

Joint and combined exercises were conducted in accordance with the Program of Major Service Activities.

Successful move of the headquarters to Bungendore, NSW.

The move was completed in March 2009 and the headquarters is fully operational.

Exercise Description/Objective



Table 8.14 Cost summary for Output 1.10 - Joint Operations Command

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses


2,587 31 1,924 1,893 6,106


-6 - 141 141 100


- - 1 1 100

Other expenses - - 2 2 100Total Expenses 48,918 39,199 95,721 56,522 144Income

RevenuesGoods and services 481 436 -47 -483 -111Other revenue - - 212 212 100Total Revenue 481 436 165 -271 -62GainsReversals of previous asset write-downs

- - 94 94 100

Net gains from sale of assets - - - - -Other Gains - - - - -Total Gains - - 94 94 100

Total Income 481 436 259 -177 -41Net cost of 1.10 - Joint Operations Command

48,437 38,763 95,462 56,699 146



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OUTPUT GROUP 1.11 CAPABILITY DEVELOPMENTCapability Development Group develops and manages the Defence Capability Plan (DCP). The Group develops defence capability investment proposals for Government consideration, and maintains a ‘sponsor’ role during the acquisition process and delivery of the capability to the relevant Capability Manager. The Group has a close relationship with the DMO and the Capability Managers.

The Group monitors and manages the development of an executable DCP within fiscal and other resource constraints.

Significant projects progressed for Government approval during 2008-09 included the:

• replacement of the Army’s Field Vehicle and Trailer Fleet (LAND 121 Phase 4)

• development of the Tactical Information Exchange Domain (Data Links) (JP 2089 Phase 2A)

• development of the Joint Counter Improvised Explosive Device Capability (JP 154 Phase 1)

• development of the Future Submarine project (SEA 1000)

• improvements to the ADF’s Satellite Communication Systems (JP 2008 Phase 5A).

Key Performance indicatorsKPI Status Further informationProvide timely and high quality advice on strategic aspects of capability development to the CDF, the Secretary and the Minister.

Not all scheduled approvals were achieved as some of the projects listed in the Portfolio Budget Statements 2008-09 for consideration by Government were deferred pending the release of the White Paper in May 2009.

Produce a Defence Capability Strategy to support Defence capability planning processes.

A specific Defence Capability Strategy was not produced during 2008-09, as the intent was met during the development of the White Paper. Chapter 8 of the White Paper highlights key capability attributes that guide force development. A Defence Capability Strategy will be produced in 2009-10 in line with the development of Defence Planning Guidance.

Develop an affordable and executable Defence Capability Plan.

A new Defence Capability Plan was developed as part of the White Paper. Details are provided in Appendix Six.



Table 8.15 Cost summary for Output 1.11 - Capability Development

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses


269 484 680 196 41


- - 14 14 100



RevenuesGoods and services - - - - -Other revenue - - 189 189 100

Total Revenue - - 189 189 100GainsReversals of previous asset write-downs

- - 1 1 100

Net gains from sale of assets - - - - -Other Gains - - - - -Total Gains - - 1 1 100

Total Income - - 190 190 100

Net cost of 1.11 - Capability Development

342,919 179,240 129,739 -49,501 -28



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OUTPUT GROUP 1.12 CHIEF FINANCE OFFICERThe Chief Finance Officer Group is responsible for giving strategic financial advice and information to Ministers, the Secretary, the CDF and Defence Senior Leaders. It provides a whole-of-Defence focus for planning, management, monitoring and reporting of key deliverables to the Government, including Defence’s outputs.

The Group is responsible for Defence’s financial governance and assurance and manages Defence’s budget and its financial policies, principles and practices in accordance with the Financial Management and Accountability Act 1997.

The Group drives Defence’s financial management and improvement programs through uniform financial management approaches, a streamlined accountability structure, a financial controls framework, and training and skilling programs.

During 2008-09 there was an extensive review of Defence’s Chief Executive Instructions. This resulted in a re-write of the Instructions so they give clear, concise and unambiguous direction to meet Defence’s obligations under the Financial Management and Accountability Act 1997, with detailed processes and guidance provided by the accompanying new policy document FINMAN 5 - Financial Management Manual.

Key performance indicatorsKPI Status Further informationProvide timely and high quality financial advice to the Minister, the Secretary and CDF.Produce Defence’s Budget, Financial Statements and the annual Defence Management and Finance Plan within agreed or statutory timelines.Reduce qualification of the Financial Statements.

Defence is in the second year of unqualified accounts.

Strengthen Defence’s costing capability.

The Chief Finance Officer is undertaking continual improvement of the cost assurance capability function.



Table 8.16 Cost summary for Output 1.12 - Chief Finance Officer

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees 374,090 289,368 318,607 29,239 10Suppliers 31,172 49,250 396,835 347,585 706Grants - -8 - 8 -100Depreciation and amortisation 2,148 523,226 46,400 -476,826 -91Finance cost - -98,129 4 98,133 -100Write-down of assets and impairment of assets

28,230 225,399 78,444 -146,955 -65

Net losses from sale of assets - - - - -Other expenses 2 60 588 528 880


RevenuesGoods and services 2,975 18,520 1,326 -17,194 -93Other revenue 3,245 26,306 12,844 -13,462 -51Total Revenue 6,220 44,826 14,170 -30,656 -68GainsReversals of previous asset write-downs

- 200,508 8,001 -192,507 -96

Net gains from sale of assets - -830 109 939 113Other Gains 7,700 7,700 - -7,700 -100Total Gains 7,700 207,378 8,110 -199,268 -96

Total Income 13,920 252,204 22,280 -229,924 -91

Net cost of 1.12 - Chief Finance Officer

421,723 736,970 818,598 81,628 11



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OUTPUT GROUP 1.13 PEOPLE STRATEGIES & POLICYDefence is a large, complex organisation with unique people management challenges. People Strategies and Policy Group (PSP) is responsible for:

• leading the development and measurement of people strategies to deliver Defence's capability outcomes

• working with human resources partners in the Services and Groups, and the Defence Support Group, to ensure that Defence attracts, develops, motivates and retains the workforce capability required to execute the Defence strategy

• optimising the Defence people management system to support cost-effective people capability.

Key achievements in 2008-09 include:

• development of the Defence People Management Framework, a vision for the Defence People System and identification of a range of Defence People Imperatives and associated priority actions

• continuation of the remuneration reform program, with implementation of the graded other ranks pay structure and adjustments to the Star Rank Remuneration Arrangement

• continued implementation of the Government's ADF Retention and Recruitment program, including commencement of the Defence Home Ownership Assistance Scheme on 1 July 2008, and the launch of new Defence Technical Scholarships in October 2008

• development and roll-out of the Defence Human Resource Metrics System designed to identify current human resources performance and areas for improvement

• as part of the White Paper, development of a range of initiatives to provide a compelling employment offer and continue to sustain a healthy workforce, including enhanced support to ADF families, a range of diversity strategies, housing and accommodation assistance options and enhanced ADF health support.

Key performance indicatorsKPI Status Further informationProvide timely and high quality advice on strategic aspects of people strategy and policy to the CDF, the Secretary and the Minister.

The Ministers, Secretary and CDF have been provided with a comprehensive overview of the workforce impact of implementing the Strategic Reform Program.Early advice and progress reports have been provided on negotiations for the next Defence Enterprise Collective Agreement and the issues that could be of primary importance to Defence and the Government.Early identification and reporting on recruitment and retention issues and initiatives has occurred, particularly on sensitive issues.In conjunction with the Ministers, a range of workforce initiatives were developed for the White Paper.



Deliver an enhanced recruitment capability and outcome.

Tables A7.7 to A7.11 in Appendix 7 detail ADF workforce entry information and the number of inquiries and applications during 2008-09. Ab initio enlistments dropped by 224 from the previous year due to transitional issues associated with the introduction of a new recruiting model. Changeover to the new recruiting contract occurred on 1 February 2009.To minimise the impact of increased activity on recruiting pipeline congestion, inquiry filtering and candidate processing was tailored towards identifying and fast-tracking strong candidates and those applying for priority jobs.

Provide robust workforce research and analysis to inform the development of strategies that generate Defence capability.

A range of workforce research and analysis has been supplied to support the development and implementation of HR strategies across Defence. The Defence Human Resource Metrics System was launched on 30 April 2009, providing, in electronic dashboard form, a variety of HR measures to monitor and enhance policies and initiatives. Concurrently, the Group is developing an integrated workforce intelligence capability, which will ensure that timely and valid research and analysis is conducted to inform decision-makers on the highest priority HR issues. The workforce intelligence capability will be in place by the end of December 2009.

Provide a strategic, capability-led workforce plan for the total Defence workforce.

The Defence Strategic Workforce Plan 2007-17 articulates the future workforce needs and issues. The next Plan is in draft form. The Plan reinforces the workforce planning cycle to ensure that future capability including people can be delivered. The Plan examines issues for military members (permanent and reserve) and civilian employees. Future plans will be aligned with the White Paper, and will be produced every five years. The Plan will be finalised later in 2009.

Develop people strategies and policies to conserve the workforce through establishing and maintaining the Australian Defence Force as an employer of choice.

Defence Force Recruiting operations were restructured during 2008-09 to provide a more responsive, candidate-focused recruitment process.Advertising and marketing campaigns were also implemented to address common misconceptions of the Navy, Army and Air Force brands, generate interest in ADF careers among the target audience and raise awareness of ADF career and training opportunities, particularly for priority jobs. These changes helped deliver the very strong inquiries and applications results achieved in 2008-09.The Group continues to fulfill its commitment to recruit and retain people by generating contemporary reward and benefit strategies. This will ensure Defence maintains or exceeds its status compared with other public and private organisations, as an employer of choice.Remuneration arrangements are discussed in Appendix 7.




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Improve effectiveness of occupational health and safety (OHS) policies and practices.

Defence continues to improve OHS performance through improving both systems and knowledge. The Defence OHS Committee has commissioned a diagnostic study into Defence safety culture to occur later in 2009. The recognition of commitment and individual skills underpinning OHS improvement has been highlighted, along with their impact on safety culture. In addition, verification of Defence improvement to and compliance with OHS practices and policies is occurring through the establishment of an assurance capability.Defence OHS performance is discussed in Appendix 7.

Further improve complaint handling and resolution.

Improvements in complaint handling and resolution have been achieved with a strong increase in the use of alternative resolution strategies for resolving complaints. Reduced handling times for initial formal redress of grievance management from over four months to between two and three months demonstrates further improvement. Fairness and Resolution centres across Australia provide a widely accepted and accessible mechanism to assist members in resolving work place issues. The ComTrack complaint management system has been implemented.Complaint management performance is discussed in Appendix 7.

Deliver an improved youth development outcome for Australian Defence Force Cadets.

The three Cadet corps revised and improved their Cadet and Cadet Staff development programs. There has been a modest increase in military-like activities and the number of Cadets attending annual camp activities. Modest replacement of equipment occurred in the last financial year.Completion of the Australian Defence Force Cadet Review has established an agenda for positive reform of the ADF Cadet Scheme. The Cadet function transferred to the VCDF program from 1 July 2009.




Table 8.17 Cost summary for Output 1.13 - People Strategies and Policy

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses


6,884 118 143 25 21


88 - 254 254 100



RevenuesGoods and services - - 1 1 100Other revenue - - 12 12 100

Total Revenue - - 13 13 100GainsReversals of previous asset write-downs

- - 3,254 3,254 100

Net gains from sale of assets - - - - -Other Gains - - - - -Total Gains - - 3,254 3,254 100

Total Income - - 3,267 3,267 100Net cost of 1.13 - People Strategies and Policy

341,132 370,112 256,727 -113,385 -31



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OUTPUT GROUP 1.14 SUPERANNUATION & HOUSING SUPPORT SERVICES FOR CURRENT & RETIRED DEFENCE PERSONNEL & OTHER ADMINISTERED ITEMSThe objective of this output group is to report contributions and the movement in liabilities associated with the two military superannuation schemes; the Defence Force Retirement and Death Benefits Scheme (DFRDB) and the Military Superannuation and Benefits Scheme (MSBS). The DFRDB was closed to new participants in 1991. Since then, MSBS has been available to all full-time members of the ADF. Both schemes are managed on Defence’s behalf by ComSuper. Since 1991, Defence has paid the MSBS Retention Benefit to eligible MSBS members after 15 years of continuous eligible service. The purpose of the Retention Benefit is to encourage members to serve until they have completed 20 years of service. Due to legislative amendments passed in 2005, the Retention Benefit is not available to members who enlisted after 6 October 2005.

Housing Assistance reports dividends received on behalf of the Government from Defence Housing Australia (DHA), payments to DHA to manage the existing Defence Home-Owner Scheme (DHOS) and also payments to the Department of Veterans Affairs to manage the new Defence New Home Ownership Assistance Scheme (DHOAS). DHA is classified as a Government Business Enterprise and is required to make a commercial rate of return for Government. Through Defence, DHA pays an annual dividend on its operating profit to Government. The Commonwealth’s Competitive Neutrality Guidelines requires DHA to make tax-equivalent payments to Government in lieu of paying state and territory taxes. Tax-equivalent payments form part of DHA’s dividend return to Government. Since July 2007, DHA pays income tax directly to the Australian Taxation Office.

Performance information for DHOS and DHOAS is covered in Section Four.

The recommendations of the Review of Military Superannuation Arrangements are under consideration by the Government.



Table 8.18 Cost summary for Output 1.14 - Superannuation and Housing Support Services for Current and Retired Defence Personnel and other Administered Items

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Net foreign exchange losses

- - - - -

Housing subsidies 52,638 50,868 35,302 -15,566 -31Grants - - - - -Retention benefits 42,000 42,000 36,720 -5,280 -13Military superannuation benefits

2,848,700 2,848,700 3,429,000 580,300 20

Other Expenses - - 9 9 100Total Expenses 2,943,338 2,941,568 3,501,031 559,463 19Income

RevenuesInterest 13 187 244 57 30Net foreign exchange gain - - 671 671 100Dividends 60,448 41,100 72,723 31,623 77Licence fees 4,711 4,711 2,874 -1,837 -39Military superannuation contributions

731,000 731,000 831,091 100,091 14

Other 569 569 9,549 8,980 1,578Total Income 796,741 777,567 917,152 139,585 18Net cost of 1.14 - Superannuation and Housing Support Service for Current and Retired Defence Personnel and other Administered Items

2,146,597 2,164,001 2,583,879 419,878 19


CHAPTER 9OUTCOMES 2 & 3 PERFORMANCE

COST OF ADF OPERATIONSThe Government provided $1,048.7m in the 2008–09 Budget for the net additional costs of current ADF operations. At Additional Estimates, the Government provided further funding of $170.2m in 2008–09 for continuation of operations in Iraq and Afghanistan.

Actual expenditure was $1,194.9m, or $24.0m less than the revised additional estimates as shown in Table 9.1.

Table 9.1 Net additional cost of Operations

Explanations for VariationsOperations in Afghanistan (Operation Slipper)The 2008-09 Budget initially provided $618.9m for the continuation of operations in Afghanistan in 2008-09. Subsequent to the Budget, the Government approved a further $42.1m in 2008-09, primarily for additional force protection measures, providing a total allocation of $661.0m.

Actual expenditure on operations in Afghanistan for 2008-09 was $40.9m more than the revised estimate mainly due to the incorporation of broader Middle East Area of Operation activities as a result of the re-assignment of Force Elements from Operation Catalyst.

Operations in Iraq (Operation Catalyst)The withdrawal of the Overwatch Battle Group (West) and the Australian Army Training Team occured in mid-2008. The 2008-09 Budget initially provided $215.7m for the continuation of operations in Iraq in 2008-09. Subsequent to the Budget, the

2008-09Budget

Estimate$m

2008-09Revised

Estimate$m

2008-09Actual Result

$m

2008-09Variation

$m

Operation

Operation Astute 174 169 165 -4

Operation Slipper 619 661 702 41

Operation Resolute 13 13 10 -3

Operation Catalyst 216 349 291 -58

Operation Anode 27 27 25 -2

Operation Outreach - - 2 2

Total Net Additional Costs 1,049 1,219 1,195 -24


Government approved a further $133.2m in 2008-09 primarily for additional force protection and equipment purchases, providing a total allocation of $348.9m.

Actual expenditure for operations in Iraq was $58.0m less than the revised estimate and this was due to the re-assignment of Force Elements to Operation Slipper.

Operations in Iraq (Operation Kruger)Operation Kruger commenced on 1 January 2009 and is the ADF contribution to provide protection to the Australian Embassy and Diplomatic personnel in Baghdad. The capability and associated budget was previously provided under Operation Catalyst. Operation Kruger has 100 personnel who are accredited to the Australian Embassy under the Vienna Convention on Diplomatic Relations.

From 1 January 2009, funding for Operation Kruger was provided from Operation Catalyst.

Operations in East Timor (Operation Astute)The 2008-09 Budget initially provided $174.3m for this operation in 2008-09. Subsequent to the Budget, the Government approved a reduced ADF presence of 650 personnel in East Timor occurring in January 2009. This reduced the total allocation for 2008-09 to $169.1m.

Actual expenditure for operations in East Timor was $4.4m less than the revised estimate mainly due to a variation in the reimbursement from the Government of New Zealand for the provision of services and facilities to the New Zealand contingent in East Timor.

Operations in Solomon Islands (Operation Anode)The 2008-09 Budget for Operation Anode was $27.1m.

Actual expenditure for the operations in Solomon Islands was $2.0m less than the revised estimate, mainly due to a lower than expected take up of the employer support payment scheme and logistic support costs.

Coastal Surveillance Operations (Operation Resolute)Operation Resolute consolidates previous ADF operations including Operations Relex II (unauthorised arrivals) and Operation Cranberry (illegal fishing and smuggling). The Government provided an allocation of $12.8m in the 2008-09 for this operation.

Actual expenditure for Operation Resolute was $2.8m less than the revised estimate mainly due to changes in the contractual arrangements for Aero Medical Evacuation.

Northern Territory National Emergency Response (Operation Outreach)Operation Outreach concluded on 30 June 2008 resulting in no further budget being allocated in 2008-09.

Actual expenditure for Operation Outreach was $2.3m in 2008-09. This was due to the carry-over of costs from 2007-08 relating to the requirement to complete construction of capital facilities in the Northern Territory.

Status of Funding from all OperationsTable 9.2 provides a summary of the current actual and planned expenditure on operations covering the period 1999-00 to 2011–12. In summary, the net additional cost of operations announced to date is $10.5b.

CHAPTER 9 O

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ME 1

123

Cost of ADF operations

Table 9.2 Operational Cash Payments

NOTES

1. The Budget Estimates have been updated since publication of the Portfolio Additional Estimates Statements 2008-09.

1999-00 to 2004-05

Actual Result

$m

2005-06 Actual Result

$m


$m


$m


$m

2009-10 Budget

Estimate[1]

$m

2010-11 Budget

Estimate[1]

$m

2011-12Budget

Estimate[1]

$m

Total

$m

Operation

Operation Astute 3,190 24 191 206 165 214 19 - 4,009

Operation Bel Isi 48 - - - - - - - 48

Operation Slipper 491 91 223 395 702 1,381 181 109 3,573

Operation Resolute 78 10 9 7 10 13 15 - 142

Operation Catalyst 811 351 399 502 291 2 - - 2,355

Operation Anode 118 13 17 24 25 30 - - 227

Operation Sumatra Assist 37 8 - - - - - - 45

Operation Acolyte 0 10 - - - - - - 11

Operation Deluge - - 3 4 - - - - 7

Operation Pakistan Assist - 10 - - - - - - 10

Operation Outreach - - - 12 2 - - - 15

Operation Kruger - - - - - 60 12 2 74

Total Net Additional Costs 4,773 517 843 1,149 1,195 1,699 227 111 10,513

Sources of Funding for Operations

Government Supplementation 4,773 507 843 1,128 113 1,650 227 111 9,350

Department of Foreign Affairs and Trade - 9 - - - - - - 9

Department of Defence (Absorbed) - 1 - 22 1,082 50 - - 1,154

Total Cost 4,773 517 843 1,149 1,195 1,699 227 111 10,513

CHAPTER 9 OUTCOMES 2 & 3 PERFORMANCE


OUTCOME 2 MILITARY OPERATIONS & OTHER TASKS DIRECTED BY THE GOVERNMENT TO ACHIEVE THE DESIRED RESULTSOutcome 2 summary The ADF has contributed to the achievement of the Government’s strategic objectives, defined for the 2008-09 reporting period in the 2000 Defence White Paper as defending Australia, contributing to the security of the immediate neighbourhood, and supporting wider interests. These objectives were reaffirmed in the new White Paper released in May 2009.

Regional stability has been maintained through operations in East Timor and Solomon Islands. Defence has contributed to foster international relationships throughout the region, in particular through the continuance of the Defence Cooperation Program.

The ADF continued to contribute effectively to Coalition efforts to deny international terrorist safe havens in Afghanistan, and is making a significant contribution to the training and mentoring of the Afghan National Army. Australia has continued its involvement with United Nations peace keeping operations in Iraq, Afghanistan, Sudan, Israel, Syria and Lebanon, as well as East Timor. The ADF also supports Middle East peace efforts through an ongoing contribution to the Multinational Force and Observers in the Sinai. Significantly, Defence has withdrawn its military contribution to the multinational force in Iraq and has aligned its remaining military presence to provide security for the Australian Embassy in Baghdad.

Table 9.3 Total cost of Defence Outcome and Outputs 2, 2008-09

NOTES







2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Output group 2.1 – Operations Contributing to the Security of the Immediate NeighbourhoodDepartmental Net Cost 202,311 197,166 173,161 -24,005 -12Output group 2.2 – Operations Supporting Wider InterestsDepartmental Net Cost 797,796 921,900 557,360 -364,540 -40

Total resources for Outcome 2 1,000,107 1,119,066 [4,5,6]730,521 -388,545 -35



Out

com

e 2

Mili

tary

Ope

rati

ons

& o

ther

tas

ks d

irec

ted

by t

he G

ov-

ernm

ent

to a

chie

ve t

he d

esir

ed r

esul

ts

Table 9.4 Departmental cost summary for Outcome 2

NOTES







2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees 206,036 241,826 238,650 -3,176 -1Suppliers 794,071 888,955 497,233 -391,722 -44Grants - - - - -Depreciation and amortisation - - - - -Finance cost - - - - -Write-down of assets and impairment of assets

- - - - -

Net losses from sale of assets - - - - -Other expenses - - 87 87 100

Total Expenses 1,000,107 1,130,781 735,970 -394,811 -35Income

RevenuesGoods and services - 11,715 5,449 -6,266 -53Other revenue - - - - -Total Revenue - 11,715 5,449 -6,266 -53GainsReversals of previous asset write-downs

- - - - -

Net gains from sale of assets - - - - -Other Gains - - - - -Total Gains - - - - -

Total Income - 11,715 5,449 -6,266 -53

Net cost of Outcome 2 1,000,107 1,119,066 [4,5,6]730,521 -388,545 -35



OUTPUT GROUP 2.1 OPERATIONS CONTRIBUTING TO THE SECURITY OF THE IMMEDIATE NEIGHBOURHOODOperations contributing to the security of the immediate neighbourhood are designed to help the stability, integrity and cohesion of the immediate neighbourhood, which Australia shares with Indonesia, New Zealand, Papua New Guinea, East Timor and the island countries of the Southwest Pacific.

Throughout 2008-09, the ADF has continued to contribute to support the Governments of East Timor (Operation Astute) and Solomon Islands (Operation Anode) in promoting regional stability. Both contributions have continued to provide secure environments allowing national efforts to improve governance, law and order and capacity. The improving security situation in both East Timor and Solomon Islands has provided the ADF with the opportunity to reduce force levels consistent with Government direction. The ADF has continued to foster international relations throughout the region, particularly through the continuance of Defence Cooperation Programs in Papua New Guinea, East Timor and other Southwest Pacific Island Nations.

Table 9.5 Output Group 2.1 – Operations Contributing to the Security of the Immediate NeighbourhoodOperation Objective Status ContributionPNG Assist IIDecember 2008

To support the whole-of-government assistance to the Government of Papua New Guinea (PNG) to provide relief materials and air transport to northern PNG, New Ireland and Manus following recent flooding and tidal surges.

Completed One deployment of a C-130 Hercules transport aircraft was conducted.

Tower Commenced 2006

Contribute to the United Nations Integrated Mission in East Timor.

Current One staff officer and three military liaison officers.

AstuteCommenced 2006

Contribute security support to the Government Of East Timor (GOTL) and the United Nations Mission in East Timor (UNMIT).

Current The ADF contributes approximately 660 personnel as part of the International Stabilisation Force (ISF). Apart from commanding the ISF, the ADF provides a Battle Group and an Aviation Group.

AnodeCommenced 2003

Contribute to the DFAT-led Regional Assistance Mission to Solomon Islands (RAMSI). The ADF mission is to assist in the provision of a secure and safe environment that facilitates RAMSI efforts to support and develop Solomon Islands institutions.

Current The ADF leads the coalition military contribution to RAMSI and currently provides 143 personnel to the operation.

GatewayCommenced 1981

Conduct Northern Indian Ocean and South China Sea maritime surveillance patrols.

Current One P-3 Orion maritime patrol aircraft for four patrols per year.



Out

put

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up 2

.1 O

pera

tion

s co

ntri

buti

ng t

o th

e se

curi

ty o

f th

e im

-m

edia

te n

eigh

bour

hood

Key Performance Indicators

Table 9.6 Cost Summary for Output 2.1 - Operations Contributing to the Security of the Immediate Neighbourhood

NOTES




KPI Status Further informationADF operations meet their stated objectives within the Government’s guidance.

Four current operations and one completed met Government direction in 2008-09.

ADF forces are effectively deployed and sustained.

ADF forces were effectively deployed, sustained and re-deployed during 2008-09.

Forces are withdrawn for reconstitution when they are no longer required.

Security conditions based force reductions in both East Timor and Solomon Islands.

2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees 45,618 43,526 42,837 -689 -2Suppliers 156,693 165,355 135,622 -29,733 -18Grants - - - - -Depreciation and amortisation

- - - - -


- - - - -



RevenuesGoods and services - 11,715 5,298 -6,417 -55Other revenue - - - - -Total Revenue - 11,715 5,298 -6,417 -55GainsReversals of previous asset write-downs

- - - - -


Total Income - 11,715 5,298 -6,417 -55Net cost of 2.1 – Operations Contributing to the Security of the Immediate Neighbourhood

202,311 197,166 173,161 -24,005 -12



OUTPUT GROUP 2.2 OPERATIONS SUPPORTING WIDER INTERESTSOperations supporting wider interests are designed to contribute to United Nations and international efforts to uphold global security.

Concurrency pressures that may arise from sustained deployment of major force elements will be addressed through monitoring ADF concurrency closely to ensure the ADF retains flexible response options for the Government. Possible significant deterioration in the security environment requiring additional ADF elements will be managed by working closely with other Australian agencies and international partners to monitor threats.

In 2008-09, Defence has strengthened its contribution to Operation Slipper. The ADF Task Force in Afghanistan has been transformed to undertake effective mentoring of local security forces as part of its commitment to build the capacity of indigenous security forces under the North Atlantic Treaty Organisation strategy. United Nations commitments were strengthened through Operation Riverbank in Iraq and Operation Hedgerow in Sudan. The ADF also supported international actions and contributed to operations to counter the threat to merchant shipping from piracy.

Table 9.7 Output Group 2.2 – Operations Supporting Wider Interests

Operation Objective Status Contribution

AzureCommenced 2005

Contribute to the United Nations Mission in Sudan.

Current 17 ADF personnel act as United Nations Headquarters staff, national support element staff or United Nations military observers.

Catalyst2003 - 2009

Support the Australian Government’s contribution to the stabilisation and rehabilitation of Iraq.

Completed All 35 ADF personnel, embedded in Coalition Headquarters were withdrawn from Iraq by 30 July 2009.

HedgerowCommenced 2008

Contribute to the joint African Union / United Nations hybrid Mission in Darfur, (Sudan).

Current Two ADF personnel serve as UN Headquarters staff or specialist officers.

KrugerCommenced 2009

Support Australian Government relations with Iraq through the delivery of tailored security support to the diplomatic mission.

Current Approximately 80 ADF personnel serve in a security detachment. This function will gradually transition to security services provided by the Department of Foreign Affairs and Trade.

PaladinCommenced 1956

Contribute to the United Nations Truce Supervisory Organisation in the Middle East.

Current 11 ADF personnel act as staff officers at the headquarters in Jerusalem or as military observers in the Golan Heights and South Lebanon.

Palate IICommenced 2005

Provide a Military Liaison Officer to the United Nations Assistance Mission in Afghanistan.

Current One military liaison officer located in the mission headquarters, Kabul.

MazurkaCommenced 1982

Contribute to the Multinational Force and Observers in the Sinai.

Current 25 ADF personnel serve as specialist staff and military observers.

RiverbankCommenced 2008

Contribute to the United Nations Assistance Mission for Iraq .

Current Two ADF personnel serve as military advisors in the United Nations Headquarters.



Out

put

Gro

up 2

.2 O

pera

tion

s su

ppor

ting

wid

er in

tere

sts

SlipperCommenced 2001

Contribute to the international coalition against international terrorism across the Middle East. The ADF contributes both to the NATO-led International Security Assistance Force-Afghanistan and broader efforts in the Middle East.

Current The ADF currently has more than 1,200 personnel deployed including:• An Australian National

Headquarters element commanded by a two star officer.

• The Mentoring and Reconstruction Task Force, which mentors an Afghan National Army Infantry Battalion and conducts construction projects to assist the Afghan Government achieve a stable and secure future for its people. The taskforce also runs a Trade Training School that provides instruction in basic trades.

• A Special Operations Task Group, which provides enhanced provincial security by disrupting Taliban extremist’s command and control and supply routes.

• A Rotary Wing Group that provides helicopter support to the ADF and coalition forces deployed in Southern Afghanistan.

• A Force Communications Unit that has staff deployed throughout the Middle East providing specialist communications support to deployed Australian Forces.

• A Force Support Unit that is the main logistics supplier for personnel and equipment in the Middle East.

• A Major Navy Fleet Unit that undertakes maritime security operations in the Arabian Gulf, Gulf of Oman, Gulf of Aden, Arabian Sea and Red Sea.

• An Air Component Command consisting of a Maritime Patrol Aircraft Group which provides maritime surveillance of the Arabian Gulf, Arabian Sea and overland surveillance of Afghanistan, and an Air Movements Group which provides air movements support to ADF and coalition aircraft.




Key Performance IndicatorsKPI Status Further informationADF operations meet their stated objectives within the Government’s guidance.

Australia is working with the international community to implement the North Atlantic Treaty Organisation (NATO) Comprehensive Strategic Political Military Plan for Afghanistan, agreed to by the Australian Prime Minister at the NATO Bucharest Summit in April 2008. Global Security is being enhanced through security cooperation with nations in the Middle East, including through maritime security and counter piracy operations.

ADF forces are effectively deployed and sustained.

ADF commitments under Operation Slipper in Afghanistan and the Middle East were increased. Operation Kruger was implemented to provide security support to the Australian Embassy in Baghdad.Defence is sustaining its commitment to seven United Nations activities (Operations Riverbank, Hedgerow, Paladin, Palate II, Azure, Mazurka and Tower).

Forces are withdrawn for reconstitution when they are no longer required.

Operation Catalyst ceased with effect from 31 July 2009.The Control and Reporting Centre ceased operations on 7 July 2009, after more than two years of operations in Kandahar, Afghanistan.



Out

put

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up 2

.2 O

pera

tion

s su

ppor

ting

wid

er in

tere

sts

Table 9.8 Cost Summary for Output 2.2 - Operations Supporting Wider Interests

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses


- - - - -


- - - - -


- - - - -

Other expenses - - 87 87 100Total Expenses 797,796 921,900 557,511 -364,389 -40Income

RevenuesGoods and services - - 151 151 100Other revenue - - - - -Total Revenue - - 151 151 100GainsReversals of previous asset write-downs

- - - - -

Net gains from sale of assets

- - - - -

Other Gains - - - - -Total Gains - - - - -

Total Income - - 151 151 100Net cost of 2.2 – Operations Supporting Wider Interests

797,796 921,900 557,360 -364,540 -40



OUTCOME 3 DEFENCE’S SUPPORT TO THE AUSTRALIAN COMMUNITY & CIVILIAN AUTHORITIES TO ACHIEVE THE DESIRED RESULTSOutcome 3 summaryThe ADF may be requested to support the Australian Government and communities in both emergency and non-emergency roles. Activities that may be requested by civil authorities and government departments include search and rescue, emergency assistance, disaster recovery, surveillance, and security and non-emergency constabulary tasks. Defence responds to these requests commensurate with capacity and priorities against other directed tasks.

Border Protection Command undertook extensive surveillance activity throughout the Australian Exclusive Economic Zone and supported cooperation programs throughout the South-west Pacific. The ADF is a major capability provider to Border Protection Command in the conduct of these tasks.

Table 9.9 Total cost of Defence Outcome and Outputs 3, 2008-09

NOTES







2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Output group 3.1 - Defence Contribution to National Support Tasks in AustraliaDepartmental Net Cost 12,863 12,863 14,557 1,694 13Total resources for Outcome 3 12,863 12,863 [4,5,6]14,557 1,694 13



Out

com

e 3

Def

ence

’s s

uppo

rt t

o th

e A

ustr

alia

n co

mm

unit

y &

civ

il-ia

n au

thor

itie

s to

ach

ieve

the

des

ired

res

ults

Table 9.10 Departmental cost summary for Outcome 3

NOTES






6. After including $448m from Outcome 1, the costs attributed to Outcomes 2 and 3 reconcile with the total costs of operations shown in Table 9.2

2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees - - 2,365 2,365 100Suppliers 12,863 12,863 12,192 -671 -5Grants - - - - -Depreciation and amortisation

- - - - -


- - - - -



RevenuesGoods and services - - - - -Other revenue - - - - -

Total Revenue - - - - -GainsReversals of previous asset write-downs

- - - - -


Total Income - - - - -

Net cost of Outcome 3 12,863 12,863 [4,5,6]14,557 1,694 13



OUTPUT GROUP 3.1 DEFENCE CONTRIBUTION TO NATIONAL SUPPORT TASKS IN AUSTRALIANational support tasks undertaken by the ADF may include the security of the Australian coastline from illegal immigration, smuggling, quarantine evasion and other intrusions to Australian sovereignty, counter-terrorism responses, search and rescue and natural disaster relief.

The ADF contributes to the Coastwatch civil surveillance program and Border Protection Command tasking, providing maritime surveillance assets that are tasked routinely in accordance with the Government’s direction.

Concurrency pressures that may arise from sustained deployment of major force elements will be addressed through monitoring ADF concurrency closely to ensure the ADF retains flexible response options for the Government. Possible significant deterioration in the security environment requiring additional ADF elements will be managed by working closely with federal and state agencies to monitor threats.

Key achievements included significant assistance to States and Territories. This comprised approximately 800 ADF personnel assisting the response to the Victorian Bushfires, assistance during the Queensland, New South Wales and Papua New Guinea floods and other contributions during other minor emergencies. The ADF was also involved in long range search and rescue operations in the Southern Ocean in December 2008. These activities were additional to supporting Government intervention in indigenous communities and the assignment of assets to Border Protection Command to combat maritime security threats, including unauthorised boat arrivals and illegal fishing.

Table 9.11 Output Group 3.1 – Defence’s Contribution to National Support Tasks in AustraliaOperation Objective Status ContributionResoluteCommenced 2006

To deter unauthorised boat arrivals, support Australian sovereignty rights and fisheries law enforcement in Australia’s Economic Exclusion Zone and the Southern Ocean by contributing to Southern Ocean fisheries patrols.

Current The ADF currently provides the following assets to Border Protection Command:• One Major Navy Fleet Unit• Up to nine Navy patrol boats• Up to three P-3 Orion

maritime patrol aircraft• Army Regional Force

Surveillance Units• A Transit Security Element.

Solania[1]

Commenced 1988

Conduct South-West Pacific maritime surveillance patrols.

Current One deployment of a P-3 Orion maritime patrol aircraft was conducted.

Outreach June 2007 – November 2008

To provide support to the whole of government support to indigenous communities in the Northern Territory.

Completed Provision of general support to the Northern Territory intervention in particular support to community surveys, child health checks and installation of police workplace and custodial facilities. Support was largely provided by Reserve Force Units.



Out

put

Gro

up 3

.1 D

efen

ce c

ontr

ibut

ion

to n

atio

nal s

uppo

rt t

asks

in

Aus

tral

ia

NOTE

1. Operation Solania also contributes to Output Group 2.1.

Key Performance Indicators

VIC Fire AssistFebruary – March 2009

Support to the Victorian Government recovery efforts following the February 2009 Bushfires.

Completed The ADF deployed 800 personnel including:• A Joint Task Force

Headquarters• Defence Liaison Officers• An Engineering Support

Group that assisted with fire fighting and containment measures and re-opening of roads

• A Search Task Group• P-3 Orion Maritime Patrol

Aircraft fire spotting surveillance flights

• Primary Health Care and Psychology Support teams

• Provision of emergency accommodation for 550 people

• Establishing tented ‘Community Service HUBS’ to be used by emergency management agencies to provide a link with people displaced from their homes

• Emergency relief facilities that provided health services, water distribution and sanitation operations

• Helicopter support.Note: Operation Testament was completed in August 2008 and was reported in the Defence Annual Report 2007-08.

KPI Status Further informationThe ADF contribution to national support tasks in Australia meets Government directives.

Defence is a major capability contributor to whole-of-government initiatives, including the Government intervention in indigenous communities.

The ADF response to requests for Defence Force Aid to the Civil Authorities is effectively managed, sustained and reported.

The ADF has provided timely and appropriate resources through Border Protection Command in order to facilitate the effective countering of maritime security threats and resources to support natural disaster responses over the year.

The ADF response to requests for Defence Assistance to the Civil Community is effectively managed, sustained and reported.

Defence has provided significant contributions to civil emergencies domestically, offshore and regionally.




Table 9.12 Cost Summary for Output 3.1 - Defence Contribution to National Support Tasks in Australia

NOTES




2008-09Budget

estimate[1]

2008-09Revised

estimate[2]


2008-09

Variation[3]

$'000 $'000 $'000 $'000 %Expenses

Employees - - 2,365 2,365 100Suppliers 12,863 12,863 12,192 -671 -5Grants - - - - -Depreciation and amortisation - - - - -Finance cost - - - - -Write-down of assets and impairment of assets

- - - - -



RevenuesGoods and services - - - - -Other revenue - - - - -Total Revenue - - - - -GainsReversals of previous asset write-downs

- - - - -


Total Income - - - - -Net cost of 3.1 – Defence Contribution to National Support Tasks in Australia

12,863 12,863 14,557 1,694 13


Case

Stu

dy

DEFENCE ASSISTANCE TO THE CIVIL COMMUNITYOperation VIC Fire Assist As the Victorian bushfire situation deteriorated over the weekend of February 7 and 8, the Army and Air Force moved quickly to provide support to recovery efforts.

From a standing start, the Army shifted more than 260 tonnes of equipment in the first week. At its peak, there were about 800 people in Joint Task Force 662 and within two weeks the headquarters had rotated almost 2,000 Defence personnel through the area of operations of Australia's worst natural disaster.

The field kitchen at Kinglake Civil Relief Centre deployed with the expected task of feeding 150 soldiers. The next day the kitchen was feeding 1,000 people.

An advance party of engineers was in place with emergency services on Sunday evening, 8 February, at Broadford and by Monday afternoon the newly created Engineer Support Group was cutting containment lines around the rim of the fire area. All up, the Group cut 75km of containment lines and the chainsaw teams cleared 35km of roads.

Two reserve platoons were deployed to Yea and Alexandra to establish accommodation for emergency services and civilians, and 160 Army reserves formed the Search Task Group attached to the Victoria Police. The Group did initial searches of 1,300 homes - work that it would have taken months for the already-stretched state authorities to do, according to the then Police Chief Commissioner Christine Nixon.

The unique information-collection capabilities and endurance of the Air Force's P-3 Orions also came to the fore, with one launched on Monday 9 February to collect imagery of the fire-ravaged areas.

The aircraft conducted daylight flights of up to nine hours duration over the next few days to capture imagery from all the affected areas to enable authorities to identify destroyed and damaged properties, scan for possible survivors, check for possible spot fires, map fire fronts and also provide coverage of areas inaccessible to ground-bound civilian authorities.

Meanwhile, at RAAF Base East Sale, Wing Commander Sharyn Bolitho and local Defence staff formed part of the Wellington Shire Municipal Emergency Response Centre. They were on standby to provide assistance if required, and the base received an aircraft with relief firefighters from South Australia.

In the wake of the fires, a 37 Squadron Hercules was used to fly a five-person police forensics team and two vehicles from RAAF Base Pearce to Melbourne's Tullamarine airport

Commander 4 Brigade, Brigadier Michael Arnold, has special mention for the troops.

'I hope that in these tragic circumstances [these troops] get a great sense of worth, a sense they were critically important and that their efforts were highly valued by the Australian community.'

Joint Task Force 662 soldiers unload fresh water during Operation VIC Fire Assist.

Flying Officer Adam Saber positions his AP-3C Orion over one of the fire fronts, so the crew can assess the speed and size of the

fire, during Operation VIC Fire Assist.

Case Study


HMAS Arunta rescues badly injured French sailorAn extended Fleet Reduced Activity Period was introduced over the 2008-09 Christmas break to enable members of the Royal Australian Navy not deployed on operations to enjoy some well deserved respite. However, to ensure the Navy remained able to respond to short notice operational contingencies, two Operational Response Vessels were maintained at eight hours notice for sea throughout December 2008 and January 2009.

On the evening of Thursday 18 December 2008, Headquarters Joint Operations Command advised the Navy that French yachtsman, Yann Elies, who was competing in the ‘Vendee Globe’ round-the-world yacht race onboard the yacht Generali, had suffered a broken femur. Race officials classified Mr Elies’ condition as life-threatening and a decision was taken to rescue him using HMAS Arunta. Within hours of notification, HMAS Arunta had recalled her ship’s company, embarked a Royal Flying Doctor Service Medical Officer and sailed for the Southern Ocean. After steaming 850 nautical miles at high speed in challenging sea conditions, HMAS Arunta successfully rescued the badly injured Mr Elies on Saturday 20 December 2008. The rescue crew was also able to secure Mr Elies’ yacht, making it water-tight in order to provide time for a salvage crew to consider subsequent retrieval.

Following the rescue, and while returning to Perth, WA, HMAS Arunta received an additional request to assist with the supply of 400 litres of diesel fuel to the dismasted yacht Ecover, which was located 420 nautical miles from Cape Leeuwin, WA. After successfully transferring the fuel, HMAS Arunta returned to Fleet Base West on the evening of Monday 22 December, landing Mr Elies to the care of medical authorities ashore.

HMAS Arunta’s rapid response once again demonstrated the quality of the Navy’s training and the Fleet’s ability to respond at short notice to operational contingencies.

The boat crew on HMAS Arunta's Rigid Hull Inflatable Boat stands by to assist medical personnel onboard the yacht 'Generali' as they help the injured french yachtsman Yann Elies.

Case Study

SECTION 4LEGISLATION ADMINISTERED BY DEFENCE


CHAPTER 10 ANNUAL REPORT ON ADMINISTRATION & OPERATION OF THE

DEFENCE HOME LOAN SCHEMES

Defence currently has two home ownership schemes in operation.

The Defence HomeOwner Scheme (DHOS) is administered under the Defence Force (Home Loans Assistance) Act 1990 (the Act). From 1 July 2008 the Scheme was superseded by the Defence Home Ownership Assistance Scheme (DHOAS). The DHOS closed to new applications from serving ADF members on 30 June 2008, and will close to new applications from former ADF members and other eligible persons on 30 June 2010. The National Australia Bank has agreed to continue as the sole provider for the Scheme.

The DHOAS, was implemented on 1 July 2008 and is administered under the Defence Home Ownership Assistance Scheme Act 2008 of which the Department of Veterans’ Affairs is the Scheme Administrator.

The Acts for both of these Schemes require that an Annual Report be prepared for the Minister on the administration and operations of the Acts. These annual reports are provided below.

CHAPTER 10 ANNUAL REPORT ON ADMINISTRATION & OPERATION OF THE DEFENCE HOME LOAN SCHEMES


The

Def

ence

Hom

eOw

ner

Sche

me

(Def

ence

For

ce (

Hom

e Lo

ans

As-

sist

ance

) A

ct 1

990)

THE DEFENCE HOMEOWNER SCHEME (DEFENCE FORCE (HOME LOANS ASSISTANCE) ACT 1990) ObjectivesThe objectives of the DHOS are to:

• attract and retain ADF personnel

• encourage home ownership during service as a cost-effective alternative to rental assistance

• assist in the reintegration of ADF personnel into the community on return to civilian life.

DescriptionThe DHOS is a Government initiative that provides a subsidy on the interest payable on a home loan for members of the ADF. The Scheme is open to permanent ADF members who enlisted between 15 May 1985 and 30 June 2008 and to those permanent ADF members who elected to revoke their entitlement under the Defence Service Homes Scheme in favour of a Defence HomeOwner entitlement. Reserve and Emergency Force personnel who provide efficient part-time service are also eligible for assistance.

The benefits are provided under an agreement between the National Australia Bank and the Commonwealth. Interest subsidy is paid on loans between $10,000 and $80,000. Spouses who are both members of the ADF can apply for a combined subsidised loan of up to $160,000. The subsidy amount is calculated at 40 per cent of the average monthly interest.

Providing a member has an entitlement under the Scheme, the subsidised loans can be transferred from one home to another during service as often as is required, and once within two years of the date of separation from the ADF.

Subsidy EntitlementThe subsidy entitlement period is calculated on the number of completed years of effective full-time service after completion of a five-year qualifying period. The qualifying period for Active Reservists is eight continuous years of efficient service.

For members with recognised operational or war-like service, the qualifying period does not apply and the maximum period of the subsidy may be extended from 20 to 25 years. There are special considerations for re-joining members; widows and widowers; and eligible persons and members discharged as a result of a compensable disability.

Performance for 2008-09During 2008-09 the Department of Veterans’ Affairs received 230 applications for entitlement certificates and processed 132 applications for loan subsidies. There were 4,176 approved loans current as at 30 June 2009. With the introduction of the DHOAS on 1 July 2008, the DHOS experienced a significant decline in applications for entitlement certificates and loan subsidies.

Members either discharging or transferring to the reserves comprised 41 per cent of the new subsidy applications.



Performance evaluation of the Scheme’s administrationFrom 1 July 2008 the administration of the Scheme transferred from Defence Housing Australia to the Department of Veterans’ Affairs, who were appointed on completion of a competitive tender process.

The National Australia Bank has met its obligations to the Commonwealth in managing home loans under the Scheme.

No appeals were lodged with the Administrative Appeals Tribunal in 2008-09.

Table 10.1 Applications for payment of subsidy by type of assistance[1]

NOTE

1. The figures are taken from the subsidy applications.

Table 10.2 Comparison of activities

NOTE

1. Entitlement certificates are valid for 12 months.

Operational costsThe Department of Veterans’ Affairs is paid an annual management fee and service delivery fees for its administration of both the DHOAS and the DHOS. The operational costs for the DHOS are reported on page 144 in conjunction with administration costs for the DHOAS.

Activity 2004-05 2005-06 2006-07 2007-08 2008-09Buy a home 744 661 583 366 56Re-finance a loan 366 338 294 154 46Enlarge a home 2 8 7 1 1Build a home 156 145 112 75 23Renovate a home 33 32 21 14 6

Activity 2004-05 2005-06 2006-07 2007-08 2008-09Applications for entitlement Certificate received

1,913 1,724 1,526 801 230

Entitlement certificate issued[1] 1,855 1,674 1,483 770 196

Applications for entitlement certificate declined/withdrawn

58 50 43 31 34

Applications for payments of subsidy received

1,301 1,184 1,017 610 132

Applications for payments of subsidy approved

1,286 1,170 1,001 597 130

Applications for subsidy declined/withdrawn

15 14 16 13 2

Amount of Commonwealth subsidy paid

$9.3m $9.9m $10.6m $11.5m $8.5m

Number of subsidy payees as at 30 June

6,683 6,745 6,665 6,272 4,176



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THE DEFENCE HOME OWNERSHIP ASSISTANCE SCHEME (DEFENCE HOME OWNERSHIP ASSISTANCE SCHEME ACT 2008)ObjectivesThe objectives of the DHOAS are to:

• attract and retain ADF personnel

• encourage home ownership during service as a cost-effective alternative to rental assistance

• assist in the reintegration of ADF personnel into the community on return to civilian life.

The Scheme provides progressively higher levels of benefits to ADF personnel as an incentive to remain in effective service. It is designed to respond to market conditions in the housing and home finance sectors by providing eligible members with benefits that will assist them to afford home ownership in the current housing market.

DescriptionThe DHOAS is a Government initiative that provides a subsidy on the interest payable on a home loan for eligible members of the ADF. The scheme is open to current and former ADF members who have been in effective service on or after 1 July 2008. Members are eligible for the loan subsidy on completion of the relevant qualifying period and on accrual of a service credit.

As the Scheme Administrator, the Department of Veterans’ Affairs is responsible for assessing member applications, issuing subsidy certificates to eligible members, and depositing subsidy payments into DHOAS home loan accounts.

Three appointed Home Loan Providers have the exclusive right to offer members DHOAS home loans. They are Australian Defence Credit Union, Defence Force Credit Union and the National Australia Bank.

Subsidy EntitlementThere is a three-tier system of subsidised loan limits that determine the amount of subsidy assistance members receive. The longer a member serves, the higher their subsidy tier level.

The subsidy entitlement period is calculated on the number of completed years of effective service in either the Permanent Forces or the Reserve Forces. This period does not include the qualifying period of four consecutive years of service for Permanent members, and eight consecutive years of effective service for members of the Reserve Forces.

The maximum period of entitlement to the Scheme is 20 years for members who have not performed war-like service; and up to 25 years for members who have performed war-like service.

There are special considerations for re-joining members, surviving partners of deceased members, and eligible persons and members discharged as a result of a compensable condition. Members’ use of previous Defence home loan subsidy schemes is taken into account in assessing an entitlement under the DHOAS.



Performance for 2008-09The Scheme commenced with exceptionally high levels of interest from members. Department of Veterans’ Affairs was overwhelmed with applications for Subsidy Certificates in the first months of operation, and significant numbers of applications continue to be received each month.

In 2008-09, a total of 14,276 members were issued Subsidy Certificates, of which 6,989 received subsidy assistance. A total of $22.2m was spent in subsidy payments.

DHOAS roadshows were conducted at ADF establishments throughout Australia to inform members about the new scheme and provide members with the opportunity to make enquiries and meet with representatives from Defence, the Department of Veterans’ Affairs and the three home loan providers. The roadshows were conducted over a period of three months and consisted of 97 DHOAS presentations which were attended by an audience of over 9,000 ADF members

At the time of applying for a subsidy certificate, 62 per cent of DHOAS applicants indicated that the Scheme would influence their decision to remain in the ADF in the future, while 48 per cent of applicants indicated that the Scheme was a key factor in their choosing to remain in the ADF.

In 2008-09, amendments to the DHOAS Act were passed in the Defence Legislation Amendment Act (No.1) 2009, to correct a number of unintended outcomes and improve administration of the scheme. The amendments covered the eligibility and entitlement of some rejoining members, criteria for issue of a subsidy certificate, conditions on the lump sum payment option, calculation of loan capital for multi-party loans, and delegation of the power to give notice of reviewable decisions.

Performance evaluation of the Scheme’s administrationThe Department of Veterans’ Affairs has met its obligations to the Commonwealth under the Act and has provided effective service to the Scheme and members of the ADF. Defence is satisfied with the Department of Veterans’ Affairs performance in administering the Scheme. There were also no appeals lodged with the Administrative Appeals Tribunal.

Table 10.3 Comparison of Activities

NOTE

1. Subsidy certificates are valid for 12 months.

Operational CostsThe Department of Veterans’ Affairs is paid an annual management fee and service delivery fees for its administration of both the DHOAS and the DHOS. Total administration fees amounted to $5.9m (excluding GST) during 2008-09, including $86,517 to participate in the DHOAS promotional roadshows.

Defence received a total of $3.3m in remuneration in respect of DHOAS loans from the three home loan providers.

Activity 2008-09Applications for subsidy certificates registered 14,852

Subsidy certificates issued[1] 14,276

Applications for subsidy certificate declined/withdrawn 576Number of subsidy payees as at 30 June 2009 6,989Conditional rejections 80Amount of Commonwealth subsidy paid $22.23m

SECTION 5APPENDICES


APPENDIX 1EXTERNAL SCRUTINY

PARLIAMENTARY COMMITTEES This section reports on Defence’s activities in relation to parliamentary committee inquiries and activities from 1 July 2008 to 30 June 2009. Further information on the parliamentary reports, inquiries and hearings detailed below can be accessed through the Australian Parliament House website, www.aph.gov.au.

Joint CommitteesJoint Committee on Public Accounts & AuditInquiry into Financial Management & Equipment Acquisition in the Department of Defence & Defence Materiel Organisation

On 8 August 2008, the Committee tabled its report, Report No 411 – Progress on equipment acquisition and financial reporting in Defence. Defence prepared a Government response that was tabled on 28 January 2009.

Report No 412 – Audit Reports reviewed during the 41st Parliament

On 25 August 2008, the Committee tabled its report, making one recommendation of Defence interest. Defence prepared a Government response that was tabled on 18 June 2009.

Review of the Auditor General’s Report No 27: Management of the M-113 Armoured Personnel Carrier Upgrade Project

On 15 June 2009, Defence witnesses provided evidence at a public hearing. No questions were taken on notice.

Joint Standing Committee on Foreign Affairs, Defence & TradeInquiry into Defence Annual Report 2005-06

Following the tabling of the Committee’s review of the Defence Annual Report 2005-06 on 2 June 2008, Defence prepared a Government response which was tabled in Parliament on 13 November 2008.

Inquiry into Australia’s relationship with ASEAN

On 12 September 2008, Defence witnesses attended a public committee hearing. Three questions were taken on notice and Defence submitted the responses to the Committee on 7 January 2009. The Committee tabled its report on 24 June 2009.

Inquiry into Australia’s Trade and Investment Relations with Asia, the Pacific and Latin America

On 2 October 2008, Defence provided a submission to the Committee.

Inquiry into Defence Annual Report 2006-07

The Committee’s response was tabled on 1 December 2008, with five recommendations. The Government response has been developed and provided to the Department of the Prime Minister and Cabinet.

Inquiry into Defence Annual Report 2007-08

On 16 April 2009, Defence witnesses attended a public hearing where 14 questions were taken on notice. Responses were provided to the Committee on 24 June 2009. A supplementary hearing was held on 19 June 2009 with five questions taken on notice. Responses to these five questions had not been provided to the committee at the conclusion of 2008-09.

Inquiry into RAAF F-111 Deseal/Reseal workers and their families

On 17 April 2009, Defence witnesses provided evidence at a committee hearing. On 25 June 2009, the Committee tabled its report, with the Department of Veterans’ Affairs leading the development of the Government response.

http://www.aph.gov.au

APPENDIX 1 EXTERNAL SCRUTINY


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Visits by the Committee On 28-29 July 2008, the Committee attended a two day public hearing for the F111 Deseal/Reseal Inquiry.On 1 September 2008, the Committee attended a Defence Intelligence Organisation Brief.On 28-29 October 2008, the Committee visited the Submarine Force Element Group at HMAS Stirling.13 March 2009, the Committee attended the Avalon Airshow.31 March-1 April 2009, the Committee visited the Army Aviation Training Centre in Oakey, Enoggera Barracks and the ARH/MRH-90 assembly facility in Brisbane. 5 June 2009, the Committee visited Headquarters Special Operations Command, Holsworthy Barracks.

Joint Standing Committee on TreatiesTreaty between Australia and the United States Concerning Defense Trade Cooperation

Defence provided responses to Committee on 5 August 2008 to eight questions that were taken on notice during a public hearing on 16 June 2008.

Agreement with the United Arab Emirates on Defence Cooperation

On 25 August 2008, Defence witnesses gave evidence at a committee hearing. One question was taken on notice and the response was provided to the Committee on 22 September 2008. On 16 October 2008, the Committee tabled its report and the Agreement has been ratified.

Agreement between the Government of Australia and the Government of the French Republic regarding Defence Cooperation and Status of Forces

On 26 August 2008, the Agreement was tabled. On 15 September 2008, Defence witnesses gave evidence at a committee hearing and three questions were taken on notice. On 16 October, Defence provided responses to the Committee and the Committee’s report was tabled.

Agreement between the Government of Australia and the North Atlantic Treaty Organisation on the Security of Information

Defence witnesses provided evidence at a hearing on 23 February 2009. No questions were taken on notice. On 12 March 2009, the Committee tabled its report, with one recommendation. As the recommendation required no action, Defence has not prepared a Government response.

Report No 95 – Review into treaties tabled on 4 June, 17 June and 26 August 2008

On 24 April 2009, Defence was invited to respond to the Committee’s report and recommendations. The response was cleared by the Minister for Defence on 29 June 2009.

Convention on Cluster Munitions On 15 June 2009, Defence witnesses gave evidence at a committee hearing. A supplementary hearing was held on 22 June 2009. Two questions were taken on notice and Defence developed responses which were submitted to the Tabling Office by the Department of Foreign Affairs and Trade (DFAT). Defence is now contributing to a DFAT-led Government response.

Joint Standing Committee on Electoral MattersInquiry into 2007 Federal Election On 5 August 2008, Defence provided a submission to the

Committee and on 17 October 2008, Defence witnesses gave evidence at a committee hearing. No questions were taken on notice.

Parliamentary Joint Committee on Intelligence & SecurityReview of administration and expenditure No 6 – Australian intelligence agencies

Defence lodged a submission with the Committee on 1 August 2008. Defence representatives provided evidence to the Committee at private hearings on 28 August (the Defence Signals Directorate), 16 October (the Defence Intelligence Organisation) and 13 November 2008 (the Defence Imagery and Geospatial Organisation).

Review of administration and expenditure No 7 – Australian intelligence agencies

Defence lodged a submission with the Committee on 19 February 2009. Defence representatives provided evidence to the Committee at a private hearing on 21 April 2009.

Visits by the Committee There were no visits to the Defence intelligence agencies by the Committee during 2008-09.

Additional briefing In February 2009, Defence provided a briefing to the Committee at their request on the Defence security vetting process.



Senate Committees

Joint Standing Committee on Public WorksReport No 6/2008 – Construction of New Warehousing Facilities at Wadsworth Barracks, East Bandiana, Victoria

This project was considered by the Committee at a public hearing on 7 August 2008 and cleared by Parliament on 4 September 2008. Construction commenced in May 2009 and is expected to be completed in 2010.

Report No 8/2008 – Australian Super Hornet Facilities Project, RAAF Base Amberley, Queensland

This project was considered by the Committee at a public hearing on 20 August 2008 and cleared by Parliament on 23 October 2008. Construction commenced in early 2009 and is expected to be completed by late 2010.

Report No 9/2008 – Puckapunyal Redevelopment, Victoria

This project was considered by the Committee at a public hearing on 6 November 2008 and cleared by Parliament on 3 December 2008. Construction is expected to start in the second half of 2009 and be completed in 2011.

Report No 1/2009 – Enhanced Land Force Stage 1 Facilities project, Lavarack Barracks, Townsville, Queensland and other Defence bases around Australia

This project was considered by the Committee at a public hearing on 22 January 2009 and cleared by Parliament on 19 March 2009. Construction is expected to start in the second half of 2009 and be completed in 2011.

Report No 2/2009 – RAAF Base Edinburgh Redevelopment Stage 2, South Australia

This project was considered by the Committee at a public hearing on 21 April 2009 and cleared by Parliament on 28 May 2009. Construction is expected to commence in the second half of 2009, with completion expected in 2011.

Senate Standing Committee on Foreign Affairs Defence & TradeBudget Supplementary Estimates Defence witnesses appeared at a hearing on 22 October

2008 and three questions were taken on notice at the hearing. Responses were provided to the Committee on 4 December 2008.

Budget Additional Estimates Defence witnesses provided evidence to the Committee on 25 February 2009. Twelve questions were taken on notice during the hearing. Defence received two additional written questions. Responses were forwarded to the Committee on 29 April 2009.

Budget Estimates 2008-09 On 3 and 4 June 2009, Defence gave evidence to the Committee at a public hearing. Eleven questions were taken on notice, and a further eight were received in writing. Responses had not been provided to the Committee at the conclusion of 2008-09.

Inquiry into Australia’s involvement in Peacekeeping Operations

On 1 August 2008, the Committee tabled its report, making 38 recommendations. Defence has commenced drafting a Government response. Due to the complexity of the issues involved, the Minister has extended the due date for the Government response to the second half of 2009.

Review of reforms to Australia’s military justice system

On 24 September 2008, the Committee tabled its report, making 13 recommendations. Defence is currently developing a Government response in consultation with the Department of the Prime Minister and Cabinet.

Inquiry into Economic and Security Challenges facing PNG

On 21 November 2008, Defence attended a public hearing. Five questions were taken on notice and responses were forwarded to the Committee on 7 January 2009. On 19 June 2009, Defence attended a follow-up hearing. Five questions were taken on notice with responses to be provided later in 2009.

Inquiry into the Provision of Defence Legislation (Miscellaneous Amendments) Bill 2008

On 12 February 2009, Defence provided responses to three written questions on notice from the Committee. On 20 February 2009, the Committee tabled its report.

Mortimer Review A private session was held by the Committee with Mr Mortimer on 19 March 2009. The Government’s response was released on 2 May 2009.

Inquiry into Naval Shipbuilding There was no Government response prepared by Defence as action was pursued through the White Paper process.



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House Committees

Senate Standing Committee on EconomicsInquiry into the Current State of Australia’s Space, Science and Industry Sector

Defence officials attended a public hearing on 29 July 2008 and took one question on notice. The response was provided to the Committee on 29 August 2008.

Senate Standing Committee on Environment, Communications & the ArtsInquiry into the Operation of the Environmental Protection and Biodiversity Conservation Act.

On 23 September 2008, Defence provided a submission to the Committee. On 9 December 2008, Defence witnesses gave evidence at a public hearing and no questions were taken on notice. The Committee tabled two reports on 18 March 2009 and 30 April 2009. Defence will not provide a Government response as the recommendations did not relate to Defence’s activities.

House of Representatives Standing Committee on Industry, Science & InnovationInquiry into Research Training and Research Workforce in Australian Universities

Defence provided a submission in 2007-08 and the Committee tabled its report on 1 December 2008. There were no recommendations that directly related to Defence.

House of Representatives Standing Committee on Legal & Constitutional AffairsInquiry into Whistleblowing Protection

On 2 September 2008, Defence provided a submission to the Committee. On 25 February 2009, the Committee tabled its report with one recommendation of Defence interest. Defence is currently developing the Government response in consultation with the Department of the Prime Minister and Cabinet.

House of Representatives Standing Committee on PetitionsPublic Hearings on Petitions On 24 September 2008, Defence witnesses provided

evidence at a public hearing. No questions were taken on notice.

House of Representatives Standing Committee on CommunicationsInquiry into Cyber Crime On 29 June 2009, Defence provided a submission to the

Committee.



AUDITOR-GENERAL’S REPORTSThis section provides specific information on the Auditor-General’s reports that were completed in 2008-09 that relate to Defence’s and the DMO’s activities. Audit Report No 23 – Management of the Collins-class Operations Sustainment, tabled 25 February 2009

The audit focused on performance information reporting by the submarine System Program Offices on reliability, safety systems and logistic support services. In the context of the sustainability arrangements, the audit considered combat system upgrades and personnel escape and rescue systems. The ANAO made one recommendation in the audit report. Defence and DMO agreed to the recommendation, with qualification, noting that progress would be made as resources allowed.

Audit Report No 27 – Management of the M113 Armoured Personnel Carrier Upgrade Project, tabled 27 March 2009

The objectives of this audit were to assess: • the progress of the M113 Armoured Personnel Carrier Upgrade

Project against stated schedule, cost and technical performance objectives

• the DMO’s progress in implementing the recommendations and addressing the findings of ANAO Audit Report No. 3 2005–06, Management of the M113 Armoured Personnel Carrier Upgrade Project.

Defence and DMO agreed to all three recommendations made in the report.

Audit Report No 31 – Army Reserve Forces, tabled 8 May 2009

The objective of this audit was to: • assess the Army’s progress in addressing the issues previously

identified in Defence reviews and ANAO audits as affecting the Army Reserve’s capability

• identify the extent that the Army Reserve is capable of contributing to contemporary Australian Defence Force capability requirements through fulfilling its assigned roles and tasks.

Defence agreed to all four recommendations contained in the audit report. Defence has already started action to implement several of the recommendations which will remediate deficiencies and improve capability.

Audit Report No 32 – Management of the Tendering Process for the Construction of the Joint Operation Headquarters, tabled 19 May 2009

The objective of the audit was to review Defence’s management of the Head Quarters Joint Operations Command project’s tender process, including probity management, for the construction of the joint operation headquarters in order to provide assurance that the policy principles for the use of private financing had been followed.No recommendations were raised; however, Defence is addressing issues outlined in the report.

Audit Report No 41 – The Super Seasprite, tabled 17 June 2009

The focus of the audit was on Defence’s and the DMO’s administration of the Super Seasprite project. In light of the Government's decision to cancel the project, the objective of the audit was revised to place greater emphasis on those issues that resulted in the failure of the project to provide the required capability, and highlighting project management lessons for major Defence acquisitions going forward. The audit report made seven recommendations. Defence and the DMO agreed to five recommendations without qualification and two recommendations with qualification.

Audit Report No 48 – Planning and Approval of Defence Major Capital Equipment Projects, tabled 30 June 2009

The objective of this audit was to assess whether the strengthened two–pass approval process for major capital equipment projects is being implemented effectively.Defence and the DMO agreed to all four recommendations made in the report. Defence and the DMO will implement the recommendations through the Defence Strategic Reform Program.



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Cross-Portfolio ReportsDefence and the DMO also contributed to three cross-portfolio Auditor-General’s reports in 2008-09:

FREEDOM OF INFORMATIONThis section provides additional information on Defence’s FOI processes and how members of the public can lodge an FOI request. Detailed information that meets the reporting requirements under Section 8 of the Freedom of Information Act 1982 is also included.

Defence’s functions and decision making powersInformation about Defence’s structure and functions, including its organisational chart, can be found in section 2 – Organisational Governance. Information about legislation administered by the Minister for Defence is published in the Administrative Arrangements Order. Further information relating to decision making powers can be found in the online version of this report.

Authorised decision makersDecisions on requests made to Defence under the Act may be made by the Minister for Defence, the Secretary of Defence, or by persons acting under authority. The authority to release documents or to refuse requests for access to documents is held widely throughout Defence at the Director level (Executive Level 2 and Colonel or equivalent rank) and above.

Authority to make decisions of other kinds under the Freedom of Information legislation, such as the power to impose charges on applicants, has also been delegated to appropriate officers. Details can be obtained from the Defence Freedom of Information Directorate, using the address and contact numbers below.

Audit Report No 19 – CMAX Communications Contract for the 2020 Summit, tabled 4 February 2009

The objectives of this audit were to:• examine whether the appointment of CMAX Communications Pty Ltd

as a provider of communications support and advice for the 2020 Summit was consistent with the Commonwealth procurement framework and sound principles of public administration

• assess the effectiveness of the administration of the CMAX Communications contract by the Department of Prime Minister & Cabinet.

The audit report made one recommendation for the Department of the Prime Minister and Cabinet.

Audit Report No 20 – Approval of Funding for Public Works, tabled 5 February 2009

The objective of the audit was to assess:• the planning and delivery of capital works projects by proponent

agencies.• the extent to which projects have delivered on what was intended• the extent to which proponent agencies have complied with the

requirements of the Public Works Committee Act 1969 and approved procedures.

Defence and the DMO agreed to all four recommendations made in the report.

Audit Report No 25 – Green Office Procurement and Sustainable Office Management, tabled 11 March 2009

The objective of this audit was to assess and report on the progress being made by Government agencies in achieving better practice in green office procurement and sustainable office management. Sixty-three agencies were included in an audit survey. Detailed validation was carried out in nine of these agencies, including Defence.Defence agreed to all seven recommendations made in the report. Defence has established several energy and sustainability programs and initiatives that are attending to the ANAO’s recommendations.

http://www.defence.gov.au/fr




Procedures and contact pointsA request for access to documents under the Act must be made in writing and provide sufficient information concerning the documents to enable Defence to identify them. The request has to be accompanied by a $30 application fee and should include a telephone number and a return address in Australia at which the applicant can be contacted. In some cases, a fee may not be required or may be remitted by Defence.

Requests under the Act should be sent to:

Freedom of Information and Records Management Branch CP2-3-050 Campbell Park Offices CANBERRA ACT 2600

Phone: (02) 6266 2200 Facsimile: (02) 6266 2112 Email: [email protected]

Applicants seeking access to documents may be liable to pay charges at rates prescribed by the Freedom of Information (Fees and Charges) Regulations.

PrivacyDefence is subject to the Privacy Act 1988 and, when dealing with personal information, it must comply with the 11 Information Privacy Principles prescribed in the Act.

Decision making and other powers affecting members of the publicInformation regarding decision making and other powers affecting members of the public is available through the Defence website at www.defence.gov.au/foi.

Arrangements for public participationAustralian Defence Human Research Ethics CommitteeThe Australian Defence Human Research Ethics Committee’s mission is to promote and encourage ethical health research in the military context, with responsibility for the review and monitoring of all human research in Defence. It is structured in accordance with the National Health and Medical Research Council’s national statement on ethical conduct in research involving human participants and has representatives external to Defence.

Defence Families of AustraliaDefence Families of Australia is an independent advisory group convened by Defence to represent the diversity of today’s Defence families. Its aim is to improve the quality of life for ADF families by providing them with a forum for expressing their views, for reporting and making recommendations to the CDF, and for influencing policy that affects ADF families.

Defence Reserves Support CouncilThe Defence Reserves Support Council provides a link between the ADF, employers and the community from which the Reserves are drawn. The council aims to enhance the capability contribution of the Reserve to the ADF by assisting Defence in promoting the benefits of employing Reservists and encouraging support for the Reserve by promoting flexible partnerships with the community in general and with employers in particular.

http://www.defence.gov.au/foi/



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Environmental Advisory CommitteesEnvironmental Advisory Committees provide advice on environment and heritage matters relating to Defence areas. These areas include Shoalwater Bay Training Area, Townsville Field Training Area, Greenbank Training Area and Wide Bay Training Area, Queensland; Jervis Bay Marine Park, ACT/NSW; Garden Island, Western Australia; and Mount Bundy Training Area and Bradshaw Field Training Area, Northern Territory. The committees consist of representatives from Defence, the local community and business organisations.

National Workplace Relations CommitteeThe National Workplace Relations Committee, established under the Defence Collective Agreement 2006–2009, deals with a wide range of employment matters affecting Defence civilian employees. It provides a forum for management and union delegates to consult on current and future Defence workplace policies and conditions.

Royal Australian Air Force Veterans’ Residences TrustThe purpose of the Royal Australian Air Force Veterans’ Residences Trust is to provide residences so that qualifying former members of the Royal Australian Air Force (RAAF) and their dependants, in needy circumstances, can be accommodated. There are three Trustees:

• one trustee is nominated by the Returned Services League of Australia

• a second trustee is nominated by the RAAF Association and

• the third trustee is nominated by the Chief of Air Force, and may be a currently serving or a former member of the RAAF.

Defence Special Needs Support Group The Defence Special Needs Support Group is an independent volunteer organisation dedicated to providing support, information and assistance to Australian Defence Force families who have members with special needs.

Categories of documentsDocuments available as part of a public register and subject to a fee or other chargeDocuments in this category relate to oceanographic data (copies of original survey documents, and hydrographic and oceanographic data held by the Navy on computer file).

Documents available for purchase by the publicDefence has a number of documents available for purchase including:

• annual flying safety calendar, aeronautical maps and charts, supplements and planning documents, and aerial photographs

• Defence cataloguing handbooks and information

• documents that are available for inspection or purchase by the public in accordance with section 9 of the Act, that is manuals, instructions and the like that are used by, or are available to, Defence staff for making decisions affecting the public

• draft and final environmental impact statements (held by, and available from, the Defence Support Group)

• journals and magazines published by Service schools



• manuals that have been cleared for release and sale to the public (for example, the Defence Freedom of Information Manual, which is available through the Freedom of Information Directorate)

• Service newspapers (available by annual subscription)

• tide tables (Australian national tide tables and navigational charts and publications are available for purchase either through appointed chart agents or directly from the Hydrographic Office).

Documents available free of charge to the public Defence holds a wide range of documentary material that can be provided free of charge—and some are available online. These include:

• academic calendars and prospectuses for Defence educational institutions

• academic publications and research papers

• booklets and brochures from the Defence Community Organisation

• Cadet Policy Manual

• capability development guides, including the Defence Capability Plan and the Defence Simulation Manual

• corporate videos

• fact sheets

• flying and ground safety publications made available by the Air Force

• general Defence material (pamphlets, brochures, and posters), and the Australian Defence Force Journal available on request or at Defence exhibitions, launches and open days

• Defence magazine

• Defence Family Matters magazine

• the Defence Fast Facts booklet

• information on military retirement and superannuation schemes

• manuals and guides relating to APS and ADF pay and conditions, including the Australian Defence Force Member's Guide to ADF Pay and Conditions of Service, the Defence Force Pay and Conditions Manual, the Defence Collective Agreement 2006–2009, the Defence Workplace Relations Manual, and exempt legislative instruments under the Defence Act 1903, including determinations made under section 58B and 58H of the Defence Act 1903

• material relating to the activities of the DSTO, consisting of brochures and booklets, research news, selected technical reports, technical and research press releases and lectures given at professional, commercial and public events

• notices to mariners, containing hydrographic advice to correct navigational charts, as well as documents and detailed information about exercises and firings (issued by the Navy)

• organisational material (functional statements, organisation charts and duty statements)

• outcomes of Defence Reviews and investigations

• pamphlets and brochures on graduate employment programs and scholarships in Defence for APS employees and APS graduate careers page on the internet



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• pamphlets, brochures, guides and application forms relating to export control and obligations imposed through export controls, including the Australian export control list (part of the Defence and Strategic Goods List)

• personnel documentation and records, including medical and psychological records (ordinarily only released to the subject of the records or to a third party authorised by the subject)

• policy documents, such as the Strategic Reform Program: Delivering Force 2030 and the Defence Update 2007, Strategy Planning Framework Handbook, Joint Operations for the 21st Century and Force 2020 (These documents can be accessed at www.defence.gov.au)

• procurement manuals and guidelines produced by the DMO

• procurement policy and procedural guides, contract templates and Defence industry statements

• scientific publications

• recruitment pamphlets, brochures and video media, the 'career explorer' computer software program on ADF career options, and an internet home page on ADF career options

• technical material, including technical details of obsolete and selected current equipment, unclassified technical reports and Defence (Australia) Standards

• transcripts of public seminars conducted by Defence

• information and reports about unexploded ordnance on non-Defence land.

Electronic documents Defence’s internet homepage contains material that may be of interest to the general public, including departmental media releases and speeches, statutory reports, including Defence annual reports and the Defence Portfolio Budget Statements and Additional Estimates Statements, Service-specific information, including Service newspapers, journals, handbooks and academic papers; and export control information.

Information is available on the Asia Pacific Civil-Military Centre of Excellence, including the Centre’s Strategic Statement, Strategic Plan, organisational structure, staff biographies and activity reports

Departmental press releases are available by email from the press release service by subscription. Photos of a Defence nature are also freely available from the image gallery on the site, but copyright laws apply. Ministerial press releases and speeches are linked to the Defence website.

Other documentsDefence maintains records in various forms and locations relating to its functions. Records are retained for varying periods depending on their administrative and historical value and are disposed of in accordance with standards and practices approved by the National Archives of Australia. Some categories of documents held are:

• accounting records

• arrangements with other Government agencies and with state and territory governments and agencies

• Cabinet documents (including submissions, memoranda, minutes and promulgation of decisions)

• committee records

http://www.defence.gov.au



• documents setting out conditions of service (including documents relating to financial conditions for overseas service)

• contractual documents, requests for tender documents and industry study reports

• departmental instructions, circulars and reference books

• documents concerning quality assurance

• guidelines held in electronic form by the Directorate of Classified Archival Records Review that are used in determining which matter, if any, contained in classified Defence historical records is exempt from public access under paragraphs 33(1)(a) and (b) of the Archives Act 1983. New guidelines are created, or existing ones revised or abolished, from time to time

• documents relating to industrial matters (including agenda and minutes of meetings of various industrial committees and councils, occupational health and safety committees and policy on industrial practices within the department)

• international agreements and arrangements held in a register of agreements.

• ministerial submissions and briefing papers

• personal documentation (for example, recruitment, enlistment and promotion documents and those relating to medical and psychological issues)

• technical publications (relating to the maintenance of ADF material, and drawings, specifications and standards relating to ships, aircraft and other equipment in use)

• working papers (internal working papers are maintained throughout the organisation on a wide range of policy, technical and administrative subjects).

Facilities for accessing documentsThe following areas within Defence maintain access points at which information about their activities is available:

Defence Science and Technology OrganisationDirector Defence Science Communications Defence Science and Technology Organisation Department of Defence CANBERRA ACT 2600

Phone: (02) 6128 6376

Ministerial Support and Public Affairs DivisionDirector General Public Affairs Department of Defence CANBERRA ACT 2600

Phone: (02) 6265 2999

Defence Publishing ServiceACT/Southern NSW Region Defence Support Group Department of Defence CANBERRA ACT 2600

Phone: (02) 6266 2022



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Hydrographic OfficeLocked Bag 8801 WOLLONGONG NSW 2500

Phone: (02) 4221 8612

Documents that are available for inspection or purchase by the public in accordance with section 9 of the Freedom of Information Act 1982 are listed in an index available through the National Archives of Australia and through the Defence Freedom of Information and Records Management Branch. Arrangements to inspect listed documents, or to purchase copies, may be made by contacting the Freedom of Information and Records Management Branch.


APPENDIX 2MILITARY JUSTICE

REFORMING THE MILITARY JUSTICE SYSTEMAn effective military justice system that is able to achieve an appropriate balance between the need to maintain discipline and the need to pay due regard to the rights of individuals is a vital element in ensuring the operational effectiveness of the ADF. The ongoing military justice reform program has introduced many changes to strengthen that balance and improve public confidence in the accountability, transparency and fairness of the system. This was confirmed during the reporting period both by internal monitoring and independent external review of the system in operation.

Oversight of the Military Justice SystemThe means to ensure an ongoing scrutiny of the military justice system is one of the important safeguards of its continued health and effectiveness. While this is a responsibility of all levels of command, ongoing monitoring of the system is conducted on a routine basis by the office of the IGADF through its military justice audit program, analysis of statistical data, and administrative inquiry processes. In 2008-09 this routine monitoring was complemented by the independent Street-Fisher review and hearings conducted by the Senate Standing Committee on Foreign Affairs Defence and Trade.

Senate Standing Committee on Foreign Affairs Defence and Trade Fourth Progress ReportThe Senate Standing Committee on Foreign Affairs, Defence and Trade tabled its fourth and final progress report on reforms to Australia’s military justice system in September 2008. The report acknowledged the considerable progress made to improve the military justice system and encouraged Defence to continue the reform momentum with a focus on transparency, accountability, independence and scrutiny to preserve and promote the integrity of Australia’s military justice system. The Committee made 13 recommendations relating to the AMC, ADFIS, the Inspector General of the ADF (IGADF) and Defence Legal. A Government response is expected to be tabled in Parliament early in the next reporting period.

Independent Military Justice ReviewAn independent review into the health of the reformed military justice system conducted by Sir Laurence Street and Air Marshal Fisher (Retired) commenced on 14 April 2008. The review team conducted 128 interviews with members and functional groupings within Defence, along with 58 visits to ADF establishments, commands and units over a six month period.

APPENDIX 2 MILITARY JUSTICE


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The team delivered its report on 23 January 2009. Its principal conclusions were that the military justice system:

• is delivering and should continue to deliver impartial, rigorous and fair outcomes

• has greater transparency and enhanced oversight

• is substantially more independent of the chain of command

• is effective in maintaining a high standard of discipline both domestically and in the operational theatre.

The review team identified a number of areas where further improvements could be made to the reformed military justice system and made 49 recommendations to address these issues and ensure the system is better positioned for the future. The final report was publicly released in March 2009.

The Defence response and implementation plan for the report was considered by the Chiefs of Service Committee (COSC) on 26 March 2009. Of the 49 recommendations, 45 were agreed and a comprehensive plan for implementation of the recommendations over a three year period was approved. Progress will be reported to the COSC on a quarterly basis.

The Australian Military CourtThe Australian Military Court (AMC) completed its first full year of operation in calendar year 2008, having commenced in October 2007. A busy year included the move to permanent purpose built quarters in Canberra, articulation of business processes, and the establishment of staffing and budget levels. Separate action was also commenced to select a number of part-time military judges to assist the Chief Judge, and two permanent military judges.

In calendar year 2008, 91 trials were conducted resulting in 571 convictions. Of note, one third of all trials and 79 per cent of convictions were for offences involving the misuse of Commonwealth credit cards. The Street-Fisher review recommended the creation of a new offence under the Defence Force Discipline Act 1982 that would allow, under certain conditions, for such offences to be tried at the summary level thus freeing the Court to deal with more serious matters. A further 23 trials were conducted during the remainder of the 2009 reporting period.

During the reporting period a number of challenges to the jurisdiction of the AMC were lodged in the High Court and Federal Court. On 26 August 2009, the High Court of Australia handed down its decision in Lane v Morrison [2009] HCA 29. The Court unanimously declared that the provisions establishing the AMC in the Defence Force Discipline Act 1982, were invalid.

Further detail on the operation of the AMC and the office of the Director of Military Prosecutions (DMP) is available from their respective annual reports as tabled in Parliament in June 2009.

Reform of the ADF Investigative CapabilityImplementation of the 2006 Audit of the Australian Defence Force Investigative Capability Report (Whiddett/Adams Report) continued during the reporting period under the direction of the Provost Marshal ADF. At 30 June 2009, 78 of the 99 recommendations were implemented and three more were nearing completion. Progress was reported on a quarterly basis to the COSC through IGADF.



Recruitment, retention and cultural issues in ADFIS were also identified by Sir Laurence Street and Air Marshal Fisher (Retired) as requiring urgent attention. To assist remediation, a high-level governance board, chaired by the Vice Chief of the Defence Force, was established in December 2008. Membership includes the IGADF, Head Defence Legal, and an Assistant Commissioner of the Australian Federal Police. Although recruiting and retention issues continue to prove challenging, there is full confidence that all recommendations will be implemented within the forecast five year change management period.

Progress against the Learning Culture InquiryImplementation of recommendations arising from the 2006 inquiry led by Mr Andrew Podger AO, into the learning culture at ADF training institutions continued steadily throughout 2008-09. By the end of the reporting period, 32 of the 46 agreed recommendations had been fully implemented, and significant progress had been made toward finalising the remaining 14. All actions necessary to fulfill Defence’s commitments are expected to be completed in the 2009-10 financial year.

Military DisciplineFrom all available evidence, discipline across the ADF is generally well maintained and dispensed equitably and fairly. Feedback from IGADF focus group surveys indicates that an overwhelming majority of ADF members surveyed are satisfied with the maintenance of discipline in their respective Services.

A revised system of summary procedures that simplified evidential requirements and enhanced the rights of ADF members to elect trial by, or appeal to, the AMC, successfully commenced operation on 20 September 2008 after a comprehensive ADF-wide training program. Further experience with the revised arrangements in practice will indicate whether any additional adjustments to the system will be necessary.

Use of the less formal Discipline Officer Scheme to deal with minor infractions has increased. The expansion of the scheme to now apply to all ADF members up to the rank of Army Captain or equivalent, has been well received. Previously the scheme was limited to members who were officer cadets, or members below non-commissioned rank.

Adverse Administrative ActionA further enhancement to the visibility and oversight of military justice processes during the reporting period was achieved with the capture of the first full year of adverse administrative sanction data through the Conduct Reporting and Tracking System. 778 sanctions were recorded in calendar year 2008 and a further 505 sanctions in the first half of calendar year 2009. The availability of this data enables adverse administrative action to be better monitored. The requirement to report administrative sanction outcomes has also encouraged a greater awareness of procedural fairness obligations and the need to properly substantiate adverse administrative decisions.

Conduct of Administrative InquiriesIGADF military justice audits indicate that general awareness of, and compliance with, guidance provided for the conduct of quick assessments has greatly improved over the reporting period. This now better serves command in ascertaining the facts and identifying appropriate action following an incident.



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Capture of data relating to administrative inquiries in the ADF’s Administrative Inquiry Tracking System, which became operational in 2006, has proved somewhat problematic. The system was intended to provide visibility of formal inquiries conducted under the Defence (Inquiry) Regulations and enable monitoring of the implementation of agreed recommendations arising from such inquiries. Difficulties with reporting compliance have identified a need to conduct a functional review during the next reporting period to improve the system’s utility as a governance management tool and its ‘user friendliness’.

The Right to ComplainIt was observed in last year’s report that at the grassroots level there was a more mature approach to the complaint submission and handling process than had previously existed. The 2008 Defence Attitude Survey and Military Justice Supplement confirm that the majority of respondents believe that complaints made to the chain of command would be dealt with fairly and impartially.

IGADF military justice audit focus group feedback supports this observation, leading to the conclusion that ADF units provide a fair, equitable and inclusive work environment with very few exceptions. Unfortunately, difficulties in recruiting and retaining suitably qualified case officers to staff redresses of grievance for decision by Service Chiefs, led to a backlog in the latter half of the reporting period and a consequent increase in the time taken to deal with complaints. Action to overcome the shortage of case officers has been taken and it is expected that the backlog will be cleared by the end of 2009. Further details on complaints handling is available in section 3 Chapter 8, Output Group 1.13, People Strategies and Policies of this Report.


APPENDIX 3DEFENCE COOPERATION

PROGRAMIn 2008-09, the Program’s achievements included:

• Papua New Guinea

- The Defence Cooperation Program (DCP) with Papua New Guinea (PNG) continues to provide support to the PNG Defence Force (PNGDF) through a program of training, exercises and infrastructure upgrades. Defence recently supported the upgrade of the water reticulation system at Taurama Barracks and the training of 70 PNGDF members in Australia. The DCP progress was reviewed at the Ministerial Forum held in Brisbane in June 2009 and Australia reaffirmed its continued support for the development of a professional defence force in PNG with improved capabilities in core areas such as border and maritime security.

• South Pacific Region

- In 2008–09, Defence’s South Pacific engagement focused on capacity building and security forces’ professional development. DCP assistance to the Cook Islands, Federated States of Micronesia, Kiribati, Palau, Republic of Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu totalled $12.4m, which included training for 194 people. The ADF in-country advisers worked closely with their South Pacific counterparts to foster regional capability. The ADF continued to lead the military component of the Regional Assistance Mission to Solomon Islands. Defence engagement with Fiji remained suspended.

• Pacific Patrol Boat Program

- The Pacific Patrol Boat Program completed its 22nd year of contribution to the maritime surveillance and fisheries protection in the Pacific. Defence supports the patrol boats, which are owned by the Pacific Island Nations, by providing in-country operational and technical advisors, funding for fuel and maintenance, and continuing the Life Extension Program which will double the service life of the patrol boats. Through additional fuel provided under the Sea Days Incentive Program, Defence has continued to encourage Pacific Island Nations to increase the number of sea days spent patrolling their maritime territories.

• South-East Asia

- Defence continues to work closely on security cooperation with partner countries in the region, specifically, Brunei, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Priority areas for cooperation include counter-terrorism, peacekeeping, maritime security, defence reform, and English language training. Over 400 candidates from the region were trained in Australia during 2008-09. Participation in ASEAN Regional Forum activities continues to be focused on humanitarian assistance and disaster relief.

APPENDIX 3 DEFENCE COOPERATION PROGRAM


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• Multinational Activities

- Australia supported four successful regional multilateral maritime surveillance activities, involving nineteen Pacific Patrol Boats and fifteen regional countries. Defence continued to engage closely with quadrilateral security partners (United States, New Zealand and France) in the Pacific to ensure our security engagement remains coordinated, particularly with regard to supporting aerial maritime surveillance in Pacific Island Nations.

• Five Power Defence Arrangements.- Australia’s membership of the Five Power Defence Arrangements (FPDA) remains

a key element of defence cooperation between the five member nations (Malaysia, Singapore, Australia, New Zealand and the United Kingdom) and continues to provide a stabilising influence in the region. The FPDA continues to develop its joint and combined capacity to meet conventional threats, as well as its capacity to confront emerging non-conventional regional security challenges by incorporating maritime security and humanitarian assistance and disaster relief scenarios into exercises.

• East Timor

- The DCP with East Timor was expanded in 2008-09, with the number of in-country advisers supporting the DCP increased from 18 to 24. The DCP continued to focus on building the capacity of the East Timorese Defence Force and Secretariat of Defence, particularly in the areas of engineering, maritime security, logistics, infantry training, medical skills and English language. A significant achievement was the construction of a specialist training facility for the East Timor Defence Force at Metinaro.

APPENDIX 3 DEFENCE COOPERATION PROGRAM


Table A3.1 Defence Cooperation Program funding

NOTE

1. Predominantly relates to support of the Pacific Patrol Boat Program, including the Life Extension Program.

2007-08 Estimated

actual $m

2008-09 Budget

estimate $m

2008-09 Actual

$mPapua New Guinea 9.773 13.357 12.293South PacificEast Timor 8.500 8.197 14.085Vanuatu 1.400 1.366 1.660Solomon Islands 1.900 1.689 1.924Tonga 2.200 2.047 2.949Western Samoa 0.500 0.462 0.853Cook Islands 0.450 0.373 0.307Fiji 0.504 0.192 0.292Marshall Islands 0.850 0.775 1.033Federated States of Micronesia 0.897 0.897 0.941Tuvalu 1.400 1.186 1.110Kiribati 0.765 0.765 0.740Palau 0.808 0.858 0.566

Multilateral General Assistance[1] 13.025 18.940 20.817

Sub-total South Pacific 33.199 37.747 47.277

South-East Asia Singapore 0.121 0.150 0.044Philippines 5.792 10.140 7.887Thailand 3.068 2.922 3.595Malaysia 4.547 4.466 5.376Indonesia 5.009 5.105 4.780Vietnam 2.128 1.928 2.265Cambodia and Laos 0.764 1.187 1.189Brunei 0.093 0.063 0.088

Sub-total South-East Asia 21.522 25.961 25.224Other regional activities 9.454 8.453 7.872

Total Defence Cooperation funding 73.948 85.518 92.666


APPENDIX 4MAJOR CAPITAL

FACILITIESThe Major Capital Facilities Program funds the construction of buildings and infrastructure including specialised ranges, training and accommodation facilities, maintenance hangars, messes and warehouse facilities. The program develops facilities and infrastructure to support the introduction of new military equipment into operational service, as well as maintaining facilities to support Defence personnel where they work, live and train. The program comprises approved and unapproved major and medium projects.

Approval processes for capital facilities projects vary according to value. Major capital facilities projects costing over $15m are subject to the Government’s approval and review by the Joint Statutory Committee on Public Works (PWC). Projects approved by the PWC in 2008-09 are listed in Appendix 1—External Scrutiny. Medium facilities projects have budgets between $250,000 and $15m. Medium facilities projects between $8m and $15m are subject to Departmental or the Government’s approval, but are generally not subject to inquiry by the PWC.

Total expenditure on Defence's Major Capital Facilities Program in 2008-09 was $963.4m. This was $205.1m above the projected result of $758.3m.

Capital expenditure in 2008-09 was $860.8m, of which $754.6m was spent on major capital facilities projects (Table A4.1) and $96.1m on medium capital facilities projects (Table A4.4). The balance of $10.1m was expended on acquisitions and a number of smaller projects in their defects liability periods.

Operating expenditure in 2008-09 was $102.6m. Operating expenses include all costs incurred in developing projects, such as completing preliminary designs, environmental clearances and cost plans for projects.

APPROVED MAJOR CAPITAL FACILITIES PROJECTSTable A4.1 and the following descriptions provide details on progress and expenditure during 2008-09 on major capital facilities projects. Major capital facilities projects are those expected to cost more than $15m.

APPENDIX 4 MAJOR CAPITAL FACILITIES


Table A4.1 Approved major capital facilities projects by state and federal electorateTotal

Estimated Expenditure

$m

Cumulative Expenditure

to 30 June 2009

$m

2008-09 Budget

Estimate

$m

2008-09 Additional

Estimate

$m

2008-09 Actual

expenditure

$m

NEW SOUTH WALES Eden-MonaroHeadquarters Joint Operations Command

Command, Control, Communications, Computing and Intelligence Systems 99.7[1] 90.9 42.1 56.6 47.8

GilmoreHMAS Albatross

Multi Role Helicopter

Facilities[2] – 3.1 – 5.1 3.1

Hughes Holsworthy

Special Operations Working Accommodation and Base Redevelopment Stage 1 207.7 184.1 13.0 14.6 13.0171 Aviation Squadron Relocation 92.0 81.9 17.0 13.2 11.8

Newcastle Williamtown

RAAF Williamtown Redevelopment Stage 1 and Airborne Early Warning and Control Works and Multi Role Tanker Transport Pavement Works 132.7[3] 126.0 15.4 12.0 12.0

Total New South Wales 532.1 486.0 87.5 101.5 87.7

Victoria IndiBandiana

Joint Logistics Unit Victoria – Warehousing 36.4 1.3 – 3.0 1.3



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Defence Force School of Signals 101.3 26.3 60.0 25.0 23.8

McEwenMonegeetta

Land Engineering Agency Test Services Relocation 35.9 9.0 20.0 10.0 9.0

Puckapunyal

Redevelopment[4] 41.7 0.3 - - 0.3

Total Victoria 215.3 36.9 80.0 38.0 34.4

Queensland Blair Amberley

RAAF Amberley Redevelopment Stage 3 331.5 169.3 130.0 150.0 156.8Heavy Airlift Capability – Permanent

Facilities[5] - 108.9 80.0 80.0 97.6Australian Super

Hornet Facilities[6] 110.1 18.0 – 16.0 18.0

BrisbaneEnoggera

Base Redevelopment Stage 1 80.2 29.0 – 25.5 29.0Multi Role Helicopter

Facilities[2] – 7.6 – 7.0 7.6

GroomOakey

Multi Role Helicopter

Facilities[2] – 6.9 – 8.2 6.9

Leichhardt Cairns

HMAS Cairns Redevelopment 76.3 68.0 18.0 18.0 16.0

Total Estimated

Expenditure

$m


to 30 June 2009

$m

2008-09 Budget

Estimate

$m

2008-09 Additional

Estimate

$m

2008-09 Actual

expenditure

$m



Herbert Townsville

Lavarack Barracks Redevelopment Stage 4 207.2 110.1 69.0 69.0 67.8Heavy Airlift Capability – Permanent

Facilities[5] – 14.3 10.0 14.0 14.3Multi Role Helicopter

Facilities[2] – 9.4 – 7.7 9.4

Total Queensland 805.3 541.5 307.0 395.4 423.4

South Australia

WakefieldEdinburgh Defence Precinct

Hardened and Networked Army Facilities 597.4[7] 85.0 – 85.0 85.0

RAAF Edinburgh

Redevelopment

Stage 2[4] 99.6 0.2 - - 0.2Heavy Airlift Capability – Permanent

Facilities[5] – 21.3 20.0 20.0 19.6

Total South Australia 697.0 106.5 20.0 105.0 104.8

Western Australia

PearceRAAF Pearce – Redevelopment Stage 1 142.2 26.1 34.0 36.8 25.4Heavy Airlift Capability – Permanent

Facilities[5] – – 0.2 0.2 –Total Western Australia 142.2 26.1 34.2 37.0 25.4

Northern Territory

Lingiari RAAF Tindal

Redevelopment Stage 5 58.7 1.2 – 2.0 1.2

Total Estimated

Expenditure

$m


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$m

2008-09 Budget

Estimate

$m

2008-09 Additional

Estimate

$m

2008-09 Actual

expenditure

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Airborne Early Warning and Control Aircraft Facilities 64.2 1.1 – 4.8 1.1

Timber Creek

Bradshaw Field Training Area Infrastructure 72.6 71.1 7.6 6.5 6.3

Solomon Darwin

Darwin Naval Base – Patrol Boat Facilities 19.2 14.8 1.4 2.0 1.5

Robertson Barracks Redevelopment 72.1 1.4 – 9.7 1.4RAAF Darwin Redevelopment Stage 2 49.8 1.2 – 1.8 1.2Heavy Airlift Capability – Permanent

Facilities[5] – 32.6 20.0 16.0 32.6Total Northern Territory 336.6 123.4 29.0 42.8 45.3

Australian Capital Territory

CanberraDefence Signals Directorate

Australian Capital Territory

Accommodation[4] 29.1 12.5 – – 12.5

FraserHMAS Creswell Redevelopment 83.6 7.5 9.7 6.0 7.5

Total Australian Capital Territory 112.7 20.0 9.7 6.0 20.0

Other

MalaysiaRoyal Malaysian Air Force – Butterworth

Australian Defence Force Facilities Rationalisation 23.6 14.1 14.0 11.5 13.6

Total Other 23.6 14.1 14.0 11.5 13.6

Total Estimated

Expenditure

$m


to 30 June 2009

$m

2008-09 Budget

Estimate

$m

2008-09 Additional

Estimate

$m

2008-09 Actual

expenditure

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NOTES

1. Increase in approved budget is related to price supplementation, out-turning, land acquisition, relocation and project management.

2. Multi Role Helicopter Facilities has an approved budget of $168.7m (including $31.5m for simulation facilities being delivered and reported by the DMO) covering four locations: HMAS Albatross (Nowra); RAAF Base Townsville; the Army Aviation Centre (Oakey); and Gallipoli Barracks, Enoggera (Brisbane).

3. The budget figure is the approved project budgets for the RAAF Williamtown Redevelopment Stage 1 and Airborne Early Warning and Control Works projects and the addition of the Multi Role Tanker Transport Pavement Works project. Budget amended subsequent to publication of Portfolio Budget Statements 2008-09.

4. Project approved after publication of the Portfolio Additional Estimates Statements 2008-09.

5. RAAF Amberley Heavy Airlift Capability – Permanent Facilities has an approved budget of $268.2m covering five locations, RAAF Base Amberley, RAAF Base Edinburgh, RAAF Base Darwin, RAAF Base Townsville and RAAF Base Pearce.

6. The $117.1m budget for Australian Super Hornet facilities includes both the development and delivery phase budgets. The delivery phase budget of $110.1m has been adjusted to reflect the final expenditure from the development phase.

7. The $623.7m budget for Hardened and Networked Army facilities includes the development and delivery phase budgets. The delivery phase budget of $597.4m has been updated to reflect the final expenditure from the development phase.

8. These projects cross both State and electoral boundaries. Expenditure estimates and results for 2008-09 are provided in the table for each location.

Various locations[8]

Multi Role Helicopter Facilities 137.2Heavy Air Lift – Permanent Facilities 268.2Enhanced land Force Facilities – Stage 1 793.1Defence Facilities at HMAS Harman and other locations 111.1

Total Various 1,309.6Programming Adjustments - - -28.9 -161.8 -TOTAL 4,174.4 1,354.5 552.5 575.4 754.6

Total Estimated

Expenditure

$m


to 30 June 2009

$m

2008-09 Budget

Estimate

$m

2008-09 Additional

Estimate

$m

2008-09 Actual

expenditure

$m



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Table A4.2 Performance of major capital facilities projectsLocation Status 2008-09 AchievementsNew South WalesHeadquarters Joint Operations Command – Provision of Command, Control, Communications, Computing, Intelligence Systems, Land Acquisition and Other Costs

This project delivered the new Headquarters Joint Operations Command facility near Bungendore NSW (provided under public private partnership arrangements) with command, control, communications, and computing and intelligence systems. The project included land acquisition, relocation and project management costs necessary to establish the new capability for effective command and control of ADF operations. Remaining activities include finalisation of land acquisition with one landowner and rectification of defects.

Holsworthy—Special Operations Working Accommodation and Base Redevelopment Stage 1

This project provides facilities to support Special Operations Command elements including the Tactical Assault Group (East) and the Incident Response Regiment. It also includes an upgrade of the base infrastructure. Key working accommodation and supporting base infrastructure upgrades were completed in October 2008. The remaining works are scheduled for completion in 2010.

Holsworthy—171 Aviation Squadron Relocation

This project provides facilities to support 171 Aviation Squadron. The key facilities were completed and occupied in March 2009. The remaining works are scheduled for completion in 2010.

Williamtown—RAAF Base Williamtown Redevelopment Stage 1 and Airborne Early Warning and Control Works and Multi Role Tanker Transport Pavement Works

This project has provided a major upgrade to the base infrastructure. The project also included the construction of a new headquarters building, hangar and working accommodation for the airborne early warning and control capability. The remaining project element, construction of an ordnance loading complex, commenced in 2008 and is expected to be completed in late 2009.

VictoriaBandiana—Joint Logistics Unit Victoria Warehousing

This project will provide new and upgraded warehousing, storage and ancillary support facilities at Bandiana. Construction commenced in May 2009 and is expected to be completed in 2010.

Watsonia—Defence Force School of Signals

This project will provide new working accommodation, improved security arrangements and upgraded living in accommodation for the Defence Force School of Signals at Simpson Barracks. Construction commenced in October 2008, and is on the revised schedule following initial delays experienced in tendering the works. Completion is expected in 2011.



Monegeetta—Land Engineering Agency Test Services Relocation

This project will relocate existing land materiel test and evaluation functions, currently conducted at Maribyrnong, to new facilities at Monegeetta. Construction commenced in January 2009, and is on a revised schedule following initial delays experienced in tendering the works. Completion is expected in 2010.

Puckapunyal Redevelopment This project will address a number of shortcomings in existing training facilities, engineering infrastructure, security provisions and personnel facilities at the base. Procurement of a construction contractor is progressing on schedule for construction to start in the second half of 2009. Completion is expected in 2011.

QueenslandAmberley—RAAF Base Amberley Redevelopment Stage 3

This project will provide new trainee living-in accommodation and messing facilities, physical fitness facilities, office, medical and working accommodation, consolidation of maintenance facilities, construction of a new fuel farm and a base security upgrade. Construction is ahead of schedule, with key facilities expected to be completed progressively in the second half of 2009. Completion is expected in 2011.

RAAF Base Amberley—Australian Super Hornet Facilities

This project will provide new, expanded and modified facilities and infrastructure at RAAF Base Amberley to support the introduction into service of the Super Hornet aircraft. Construction commenced in early 2009 and is on schedule for completion by late 2010.

Cairns—HMAS Cairns Redevelopment This project provides a combination of new and refurbished facilities to accommodate a full range of operational and support functions at HMAS Cairns including appropriate berthing space and shore services to accommodate all vessels to be home-ported. The construction phase of the project was completed in July 2009.

Townsville—Lavarack Barracks Stage 4 This project will provide upgraded working accommodation for various Army elements located at Lavarack Barracks. Facilities for B Squadron 3rd/4th Cavalry Regiment were completed on schedule in 2009. Construction of the facilities for 4th Field Regiment and 3rd Combat Engineer Regiment are progressing on schedule.

Location Status 2008-09 Achievements



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Enoggera—Base Redevelopment Stage 1

This project will provide new working accommodation for Headquarters 7th Brigade, address shortcomings in base engineering services, and provide a new combined catering and messing facility. Construction commenced in late 2008 and is progressing on schedule. Completion is expected in 2010.

South AustraliaEdinburgh Defence Precinct—Hardened and Networked Army Facilities

This project will provide facilities and infrastructure to support the establishment of a mechanised battle group in the Edinburgh Defence Precinct. Some additional infrastructure will also be provided at Murray Bridge and in the Cultana Training Area. Construction commenced in late 2008, and the works are progressing on schedule. While the project is not expected to be completed until 2012, facilities are expected to be progressively available for occupation starting in December 2010.

RAAF Base Edinburgh – Redevelopment Stage 2

This project will provide new working accommodation and upgrades to engineering services. Parliamentary clearance was obtained on 28 May 2009. Procurement of construction contractors is progressing on schedule for construction to start in the second half of 2009. Completion is expected in 2011.

Western AustraliaRAAF Base Pearce—Redevelopment Stage 1

This project will provide new and refurbished operational, training, domestic support and aircraft maintenance facilities, improvements and upgrading of engineering services and demolition of redundant facilities. Construction commenced in July 2008. Progress has been affected by delays in procuring subcontractors. Notwithstanding these delays, the project is expected to be completed on schedule in 2011.

Northern TerritoryKatherine—RAAF Base Tindal Redevelopment Stage 5

This project comprises a number of elements to expand and upgrade existing working accommodation, construct new working accommodation and to augment electrical and water supply infrastructure. Progress has been affected by delays in procuring the managing contractor for the project. Procurement of subcontractors is on schedule. Construction is expected to start in the second half of 2009, with completion in 2011.




Katherine—RAAF Base Tindal Airborne Early Warning and Control Facilities

This project will provide facilities and infrastructure at RAAF Base Tindal to support the introduction into service of the new airborne early warning and control aircraft. The scope of work includes new taxiways, operational facilities and working accommodation. Progress has been affected by delays in procuring the managing contractor for the project. Construction is expected to start in the second half of 2009 and is due for completion in 2011.

Timber Creek—Bradshaw Field Training Area Infrastructure

This project provides engineering services and infrastructure to allow the use of Bradshaw as a field training area for the 1st Brigade. The construction phase of this project was completed in early 2009.

Darwin—Darwin Naval Base Patrol Boat Facilities

This project provides upgraded facilities at the Darwin Naval Base for the new Armidale class patrol boats. Minor works remain to be finalised in the second half of 2009.

Darwin—Robertson Barracks Redevelopment

This project comprises three individual project elements: the Robertson Barracks Redevelopment project; LAND 907 facilities project; and the Hardened and Networked Army facilities project. The Robertson Barracks Redevelopment will provide new and upgraded facilities for training, emergency response, working accommodation and equipment support. The LAND 907 facilities project will provide parking and working accommodation for heavy tank transport vehicles and other tank support services. The Hardened and Networked Army project will provide additional working accommodation and other support facilities. While delays have been experienced in contracting the managing contractor, construction is expected to start in late 2009 and be completed in 2012.

Darwin—RAAF Base Darwin Redevelopment Stage 2

This project will upgrade existing facilities including fuel farms and workshops and construct a new logistics headquarters. Design work is well advanced and procurement of contractors is progressing satisfactorily. Construction is expected to start in late 2009 and be completed in 2011.

Australian Capital TerritoryHMAS Creswell Redevelopment This project will provide new and

upgraded facilities for the training of Navy officers upon initial entry and senior sailors in the areas of leadership, management and personal development. Construction commenced in June 2009. The project completion date has been revised to mid 2011 to reflect an extended design and procurement phase.




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Defence Signals Directorate—ACT Accommodation

This project provides working accommodation for the Defence Signals Directorate. Construction commenced in January 2009 and is progressing on schedule. Completion is expected by early 2010.

MalaysiaRMAF Butterworth—Australian Defence Force Facilities Rationalisation

The project will provide three new headquarters buildings, a combined armoury, a sewage treatment plant, and will refurbish some other existing support facilities. Construction commenced in 2008 and is on schedule for completion in 2010.

Various LocationsMulti Role Helicopter Facilities This project will provide a range of

helicopter shelters, maintenance and operational facilities, simulator buildings and deeper maintenance facilities to support the introduction into service of the Multi Role Helicopter aircraft. The project will involve a mix of new facilities, refurbishment and adaptive reuse of existing facilities. The proposed facilities and infrastructure will be located at RAAF Base Townsville, the Army Aviation Centre (Oakey), HMAS Albatross (Nowra), and Gallipoli Barracks, Enoggera (Brisbane). Construction works is progressing on schedule at all four sites, with progressive completion expected to start by early 2010.

Heavy Air Lift Capability—Permanent Facilities

This project will provide new facilities for the introduction into service of the C-17 Globemaster III Heavy Lift aircraft. The scope of the project includes a headquarters, maintenance facilities, air movements and cargo facilities, a simulator, warehousing and support facilities an airfield pavement works at the RAAF Base Amberley home base. The upgrading of airfield pavements, movements and cargo facilities and supporting infrastructure at RAAF Bases Edinburgh, Townsville, Darwin and Pearce will also be included. Construction is on schedule, with key facilities at RAAF Bases Darwin, Edinburgh, Townsville and Amberley expected to be completed progressively starting in the second half of 2009.

KEY

Achieved Substantially Achieved

Partially achieved




Status of Major Projects foreshadowed for Government &/or Parliamentary Joint Statutory Committee on Public Works Consideration in 2008-09 Table A4.3 lists those facilities proposals presented by Defence to the Government and the PWC in 2008-09.

Table A4.3 Program of Major Works (by state, federal electorate and locality)Status as at 30 June 2009

VictoriaIndiBandiana: Joint Logistics Unit Victoria – Warehousing Expediency motion

4 September 2008

McEwenPuckapunyal Redevelopment Expediency motion

3 December 2008

Queensland

BlairAmberley: RAAF Base Amberley – Australian Super Hornet Facilities

Expediency motion23 October 2008

BrisbaneEnoggera: Base Redevelopment Stage 1 Expediency motion

25 June 2008RAAF Base TownsvilleAdditional Chinook Helicopter Facilities In development

South Australia

WakefieldEdinburgh Defence Precinct: Hardened and Networked Army Facilities

Expediency motion25 June 2008

Edinburgh: RAAF Base Edinburgh Redevelopment Stage 2 Expediency motion28 May 2008

Northern Territory

SolomonDarwin: RAAF Base Darwin Redevelopment Stage 2 Expediency motion

25 June 2008Darwin: Robertson Barracks Redevelopment (includes LAND 907 and Hardened and Networked Army projects)


Lingiari

Katherine: RAAF Base Tindal Redevelopment Stage 5 Expediency motion25 June 2008

Katherine: RAAF Base Tindal Airborne Early Warning and Control Facilities


Various locationsMulti Role Helicopter Facilities Expediency motion

25 June 2008Enhanced Land Force – Facilities Stage 1 Expediency motion

19 March 2009



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ExemptionsDefence sought and obtained exemptions from PWC scrutiny for the following projects:

• RAAF Base Tindal – Airfield Pavements and Airfield Lighting project on the basis of repetitive works

• Defence facilities at HMAS Harman and Other Locations project on the basis that the works were for Defence purposes.

• Defence Signals Directorate ACT Accommodation projects on the basis that the works were for Defence purposes.

Approved projects under private financing arrangementsEden-Monaro—Headquarters Joint Operations CommandThe Headquarters Joint Operations Command Project amalgamated Joint Operations staff located in Canberra and Sydney into an integrated staff structure at the General John Baker Complex headquarters facility constructed approximately 11 kilometres south-west of Bungendore, New South Wales. The building infrastructure for the Headquarters Joint Operations Command Project was handed over to Defence on 9 July 2008.

Single Living Environment and Accommodation Precinct (Single LEAP) Phase 1In the 2004-05 Budget, the Government announced funding of $113.2m over the following four financial years, and a commitment of ongoing funding thereafter, to remediate the worst of the permanent single members’ living-in accommodation around Australia, potentially through public private partnership (PPP) arrangements.

In December 2006, Defence and Plenary Living (LEAP 1) Pty Ltd entered into a PPP contract for delivery of 1,395 accommodation units at RAAF Base Amberley, near Ipswich, Queensland (295 units); Holsworthy Barracks in Liverpool, New South Wales (600 units); and Gallipoli Barracks in Enoggera, Queensland (500 units). The PPP agreement provided that Plenary would fund, design and construct facilities at the three sites and thereafter, provide accommodation services and facilities maintenance for a period of 30 years. Construction activities were completed on the third and final facility in January 2009, approximately 3.5 months ahead of schedule. Each facility generally runs at or near full occupancy.

Approved projects being developed for private financing arrangementsProject Single Living Environment and Accommodation Precinct (Single LEAP) Phase 2Project Single LEAP Phase 2 represents an extension to the Phase 1 requirements for permanent Living-in-Accommodation to meet Defence’s previously identified priorities. Project Single LEAP Phase 2 is expected to provide contemporary units and associated facilities and services at further ADF bases across Australia. The project has been affected by delays in procurement, arising generally as a result of the global financial crisis. Procurement action is continuing and Defence expects to put a recommendation to the Government in 2009-10.



Other major capital facilities projects foreshadowed for 2008-09Defence Site Platypus Contamination RemediationThe Minister for the Environment, Heritage and the Arts, the Hon Peter Garrett AM MP, formally gazetted the transfer of the former HMAS Platypus site in Neutral Bay, Sydney, New South Wales, to the Sydney Harbour Federation Trust (Trust) in June 2009. A Memorandum of Understanding that sets out the arrangements for the vesting of the site to the Trust and the rights and obligations of the Trust and Defence in relation to the land has also been executed. The Australian Government, through Defence, will provide for the contamination remediation of the site and $20m was transferred to the Trust in 2008-09 as the first tranche of funding for the cost of remediation.

Approved medium capital facilities projectsTable A4.4 shows spending in 2008-09 for medium facilities projects. Medium facilities projects are those expected to cost between $250,000 and $15m.

Table A4.4 Approved medium capital facilities by state and federal electorateTotal

estimated expenditure

$’000

Cumulative expenditure

to 30 June 2009

$’000

2008-09 Budget

estimate

$’000

2008-09 Revised

estimate

$’000

2008-09 Actual

Expenditure

$’000

New South Wales

Kingsford Smith Randwick

Disposal and Rationalisation –Interim Works 15,650 12,316 2,640 7,760 6,337

LindsayDefence Establishment: Orchard Hills

Follow-on Stand-off

Weapon Facilities[1] 6,125 2,835 2,783 2,750 2,802Standard missile test facility

modifications[2] 1,960 1,024 – – 1,024Office Accommodation and Entry Redevelopment 2,020 202 – 1,800 202

WentworthHMAS Watson

Bridge simulator

building upgrade[2] 1,700 – – – –

Total New South Wales 27,455 16,377 5,423 12,310 10,365

Victoria

Flinders HMAS Cerberus

West Head Gunnery Range 13,395 7,578 12,000 7,500 7,464



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IndiBandiana

Army Logistics Training Corp – Supply Training Wing Upgrade 9,157 2,653 – 3,000 2,653

Melbourne Ports

DSTO Environmental Test Chamber 3,500 828 3,000 1,000 766

McEwenMonegeetta

Land Engineering Agency Perimeter Security Fence

Upgrade[2] 2,500 423 - - 423

Total Victoria 28,552 11,482 15,000 11,500 11,306

Queensland

BlairAmberley

RAAF Base Amberley Contaminated Land Remediation 5,590 3,780 1,100 170 -Enhanced Land Force Stage 1 Works – Living in

Accommodation[2] 10,400 8,817 - - 8,817

BrisbaneEnoggera

8/9th Battalion Royal Australian Regiment Interim Working Accommodation 2,700 2,278 - 2,700 2,278

9th Battalion Royal Queensland Regiment Interim Working Accommodation 4,323 2,738 - 4,323 2,738

Capricornia Rockhampton

Western Street Depot Redevelopment 11,700 11,048 7,000 9,870 9,965

Washramp[2] 1,106 837 - - 837Shoalwater Bay Training Area

Urban Operation Training Facility

Enhancement[2] 1,353 1,121 - - 1,121

Total estimated

expenditure

$’000


to 30 June 2009

$’000

2008-09 Budget

estimate

$’000

2008-09 Revised

estimate

$’000

2008-09 Actual

Expenditure

$’000



GroomOakey

Weapons Training Simulator System 2,000 1,809 700 730 829

HerbertMount Stuart Training Area

Explosive Ordnance Roads Upgrade 1,159 1,070 - 1,000 1,070Townsville Field Training Area

Urban Operations Training Facility 4,462 1,900 - 4,260 1,900

Lavarack Barracks

Joint Theatre Distribution Systems

Facilities[3] 13,300 4,301 - 3,400 4,301

Combat Training Centre - Interim Working Accommodation 4,000 2,063 - 4,000 2,063

KennedyMacrossan Depot

Joint Theatre Distribution Systems

Facilities[3] - 5,310 - 3,300 5,310

Total Queensland 62,093 47,072 8,800 33,753 41,229

South Australia

BoothbyWarradale Barracks

Weapons Training Simulator System 2,300[4] 1,655 - 1,995 1,655

Wakefield Edinburgh Defence Precinct Minor

Facilities[2] 4,409 12 - - 12RAAF Base Edinburgh

Electronic Warfare Test and Evaluation Pod Support

Facility[2] 1,300 63 - - 63

Total estimated

expenditure

$’000


to 30 June 2009

$’000

2008-09 Budget

estimate

$’000

2008-09 Revised

estimate

$’000

2008-09 Actual

Expenditure

$’000



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Port WakefieldExplosives Storehouse Replacement 13,250 8,361 10,000 8,000 8,343

Defence Science and Technology Organisation: Edinburgh

Countermine Facility Refurbishment 2,550 2,300 2,400 2,000 2,280Weapons Systems Division Refurbishment 1,350 1,229 1,200 1,100 1,218Combat Missions Systems Research Centre Extension 1,950 1,699 1,800 1,700 1,689Over The Horizon Radar System Program Office Additional Working Accommodation 4,000 3,709 3,850 3,500 3,661

Total South Australia 31,109 19,028 19,250 18,295 18,921

Western Australia Brand

ANZAC System Program Office - Office Refurbishment 3,450[4] 3,438 3,220 3,144 3,362

Garden Island

Navy Personnel and Training Centre (West) and School of Survivability and Ship Safety (West) 4,470 2,354 3,850 2,000 2,176

CurtinCampbell Barracks

Helicopter Underwater Escape

Training Facility[2] 9,723 99 - - 99Project REDFIN Interim Hangar

Facility[2] 2,000 118 - - 118FremantleIrwin Barracks

Western Australia University Regiment Relocation 807 519 - 800 519

Total estimated

expenditure

$’000


to 30 June 2009

$’000

2008-09 Budget

estimate

$’000

2008-09 Revised

estimate

$’000

2008-09 Actual

Expenditure

$’000



PearceBindoon Training Range: Access Control Facility 2,730 259 2,255 400 259

Total Western Australia 23,180 6,787 9,325 6,344 6,533

Tasmania

FranklinFort Direction

Explosive Storage

Upgrade[2] 6,400 207 - - 207Total Tasmania 6,400 207 - - 207

Nothern TerritoryLingiariTimber Creek

Bradshaw Field Training Area Instrumented Air

Weapons Range[2] 4,400 3,640 - - 3,640RAAF Base Tindal

Follow-on Stand-off

Weapon Facilities[1] - 2,970 2,614 2,950 2,970SolomonDarwin

Naval Fuel Installation Rectification 7,200[4] 321 6,060 2,340 321

RAAF Base DarwinSpecial Operations Forward Mounting Facility 5,585 733 5,070 5,070 532

Total Northern Territory 17,185 7,664 13,744 10,360 7,463Australian Capital Territory

CanberraMajura Field Training Area

Camp Blake Kitchen

Redevelopment[2] 3,500 59 - - 59Total Australian Capital Territory 3,500 59 - - 59TOTAL 199,474 108,676 71,542 92,562 96,083

Total estimated

expenditure

$’000


to 30 June 2009

$’000

2008-09 Budget

estimate

$’000

2008-09 Revised

estimate

$’000

2008-09 Actual

Expenditure

$’000



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NOTES

1. Follow-on Stand-off Weapon Facilities has an approved budget of $6.125m covering two locations: Defence Establishment Orchard Hills and RAAF Base Tindal.

2. Project approved after publication of the Portfolio Additional Estimates Statements 2008-09.

3. Joint Theatre Distribution Systems Facilities has an approved budget of $13.3m covering two locations, Lavarack Barracks and Macrossan Depot.

4. Budget increase approved after publication of the Portfolio Additional Estimates Statements 2008-09.

Medium capital projects proposed for consideration in 2008–09.Table A4.5 shows details on the progress of new (proposed) medium capital facilities projects foreshadowed in 2008–09.

Table A4.5 Status of proposed medium capital projects for consideration in 2008-09 by state, federal electorate and locality

Federal electorate

Locality Status as at 30 June 2009

New South WalesLindsay Orchard Hills: Office Accommodation and Entry

RedevelopmentApproved

Orchard Hills: Modification of Standard Missile Test Facility ApprovedHughes Liverpool Military Area: High Voltage Reticulation System

UpgradeNow a major project

Hunter Singleton: School of Infantry: Urban Operations Training Facility

In development

Wentworth HMAS Watson: Bridge Simulator ApprovedVictoriaIndi Bandiana: Supply Wing Army Logistics Training Centre Upgrade ApprovedMcEwen Land Engineering Agency: Proving Ground Perimeter Security ApprovedGippsland RAAF Base East Sale: School of Air Traffic – Tower Visual

Simulator Facility ExtensionIn development

QueenslandCapricornia Shoalwater Bay Training Area: Camp Growl Stage 2 In development

Field Firing Target System In development3 Phase Power Supply In development

Flynn Over the Horizon Radar: 3 Phase Power Supply Cancelled by Sponsor

Groom Oakey Fuel Farm upgrade In developmentHerbert Lavarack Barracks: Stockpile Remediation Withdrawn:

incorporated into major capital facilities project

Mount Stuart Training Area: Explosive Ordnance Depot ApprovedTownsville Field Training Area: Urban Operations Training Facility

Approved

South AustraliaBoothby Warradale Barracks: Weapons Training Simulation System

FacilityApproved

Wakefield Port Wakefield: Battery Firing Facility In developmentPort Wakefield: Vibration Test Facility In developmentEdinburgh Defence Precinct: Minor Units Facilities ApprovedWoomera Prohibited Area: Disposal Explosive Ordnance Storage Facilities

In development



Western AustraliaCurtin Swanbourne: Campbell Barracks: Helicopter Underwater

Escape Training FacilityApproved

Swanbourne: Campbell Barracks: Project REDFIN Facilities Stage 1A

Approved

TasmaniaBass Scottsdale: Specific Nutritional Capability In development

Franklin Fort Direction: Explosive Ordnance Upgrade ApprovedNorthern TerritorySolomon Darwin: Shoal Bay Receiving Station Facilities Upgrade In development

Timber Creek: Bradshaw Field Training Area – Instrumented Air Weapons Range

Approved

Robertson Barracks: 1 Aviation Regiment Facilities Upgrade In developmentRobertson Barracks: Barracks Power Supply Upgrade In development

Australian Capital TerritoryFraser 1 Joint Public Affairs Unit Facility In development

Majura Field Training Area: Camp Blake Kitchen Upgrade Approved

Various LocationsCountermine Capability Facilities (Land 144) In developmentSpecial Operations: National Storage Facilities In developmentJoint Theatre Distribution Systems Facilities ApprovedData Centre Infrastructure Upgrade Approved

Federal electorate

Locality Status as at 30 June 2009


APPENDIX 5 ENVIRONMENTAL

MANAGEMENTThis section reports on Defence’s environmental performance and contribution during 2008-09 to ecologically sustainable development under section 516A of the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act).

Overall, Defence continued to improve environmental performance through the implementation of the Defence Environmental Strategic Plan 2006-20091. The section also reports on Defence’s administration of the Commonwealth Policy on the Management of Land Affected by Unexploded Ordnance.

LAND MANAGEMENT & BIODIVERSITY CONSERVATIONDefence completed a review of its internal planning guidance for the management of feral animals, weeds, environmental diseases and overabundant native species on the Defence estate so that it is more closely aligned with the Government’s AusBIOSEC framework. To assist Defence personnel in implementing this guidance, a number of technical publications were developed.

Defence has piloted a draft policy for measuring and monitoring the sustainability of Defence training areas at Majura, Cultana and Puckapunyal based on the identification of key indicators and thresholds.

Under the Defence Biodiversity Conservation Program a range of policies, processes, surveys and monitoring initiatives are implemented to conserve biodiversity values on priority sites, including meeting the requirements of threat abatement plans and recovery plans.

The Threatened Species Database was updated with recent EPBC and state listings, further facilitating wider access to centralised information on national and state-listed threatened species and ecological communities occurring on the Defence estate. The database assists in informing planning and management strategies for the Defence estate. To complement the database, an investigation was undertaken to determine the extent of critical habitat occurring on the Defence estate.

1. The plan can be accessed at: www.defence.gov.au/environment/strat_plan.pdf

http://www.defence.gov.au/environment/strat_plan.pdf

APPENDIX 5 ENVIRONMENTAL MANAGEMENT


INTERACTION WITH MARINE & AQUATIC ENVIRONMENTS Defence activities in the marine environment were undertaken in accordance with the ADF Maritime Activities Environmental Management Plan1. The plan guides the full range of activities Defence is likely to undertake in the marine environment, including the use of military sonar. The plan is reviewed and updated as required to take into account the adoption of new technology and improvements in scientific knowledge.

HERITAGE MANAGEMENT Defence developed guidelines for assessing heritage significance and is currently completing the Recognising Our Heritage: Self Assessment Kit, a sub-component of the Defence Heritage Toolkit.

Other achievements included finalising public notifications for 12 Heritage Management Plans, commencing a second round of public notifications for 30 recently completed Plans and continuing to integrate heritage considerations into Defence business processes.

CLIMATE CHANGEDefence continued to implement initiatives in support of the Government’s agenda on climate change. This included work to set climate change and sustainability policies and targets for implementation across the Defence estate. A discussion paper on climate change impacts on Defence was circulated internally. Responses will assist to develop the Defence Climate Change and Sustainable Development Strategy.

ENERGY MANAGEMENT Earth Hour 2009 was promoted widely across Defence and many Defence bases across Australia participated by switching off non-essential lights and other electrical equipment in facilities wherever possible.

In line with the Government’s commitment toward use of E10 fuel, Defence has mandated the use of E10 fuel where possible in Defence fleet cars.

Roll-out of an electricity sub-metering system continued. Sub-meters will be installed at Defence sites over a three year period to support energy management improvements at different facility types.

Defence achieved a reduction of more than five per cent across the estate in electricity usage. This achievement is attributed in part to the initiative that commenced in June 2008 to automatically power down computers on the Defence network at night.

Defence implemented a program of pilot trials to investigate more efficient technologies. A pilot project in South Queensland involved upgrades to the lighting system of a large warehouse that is estimated to reduce greenhouse gas emissions by 205 tonnes per annum. Upgrades and adjustment of the heating ventilation and air conditioning controls has also occurred at many sites. Time control of air conditioning

1. For further information refer to: www.navy.gov.au/environment

http://www.navy.gov.au/Environment



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and hot water systems by linking to the Building Management System has lowered power consumption by reducing the running time of hot water units and air conditioning plant. The development of the new Hardened and Networked Army facilities in Edinburgh (SA), provided an opportunity for gas connection to reduce reliance on electricity and improve energy efficiency.

WATER & WASTE MANAGEMENT Defence continued to incorporate water management and waste minimisation strategies into its business processes. Defence actively participated in regional water reduction strategies, including the audit of water infrastructure to identify leaks and recycling of water at vehicle washpoints. The new Hardened and Networked Army facility in Edinburgh (SA) incorporates rainwater harvesting and recycling of approximately 53 megalitres a year.

Under the National Packaging Covenant, Defence met its reporting obligations in October 2008 and developed a data management tracking system to assist with future reporting on agreed sites.

POLLUTION PREVENTION & CONTAMINATED SITES MANAGEMENT Defence has a program to manage and remediate land that has historically been contaminated by Defence use. The National Contaminated Sites Remediation Program has been underway for six years and has completed initial desktop studies at the 70 highest risk sites, detailed contamination risk investigations at 60 sites and managed 44 site remediation projects. Defence continued to participate in the Cooperative Research Centre for Contamination Assessment and Remediation of the Environment, and continued formal staff training on contamination assessment and remediation technologies through the University of South Australia.

Defence also remained involved in four collaborative research projects to provide access to leading edge technologies and improve the understanding and cost-effective management of contaminated sites in Defence.

Defence developed a policy that mandated zero release of fire fighting Aqueous Film Forming Foam to the environment, and withdrawal of certain types of related products from service. Defence also conducted a national review of the pollution prevention measures in place at fire training grounds.

NATIONAL ENVIRONMENT PROTECTION MEASURES Defence continued to contribute to the Minister for the Environment, Heritage and the Arts’ Annual Report on the Government’s implementation of National Environment Protection Measures (NEPMs) and the effectiveness of those NEPMs. Defence continued to report under the National Pollutant Inventory (NPI).

In consultation with the Department of the Environment, Water, Heritage and the Arts, Defence has developed alternative arrangements for streamlining implementation of the National Pollutant Inventory and Movement of Controlled Waste NEPMs across Defence.



Defence reported to the NPI on fuel storage and emissions at 36 facilities, and developed NPI handbooks for Defence staff and its contractors. A review of a range of contracts was also undertaken to ensure measures are in place to allow Defence contractors to meet the requirements of the Movement of Controlled Waste NEPM.

INFRASTRUCTURE DEVELOPMENTDefence continued to implement its green buildings policy for designing energy, water and waste efficiencies into new building developments and, where feasible, incorporated green building features into its existing building stock when they were repaired or refurbished1.

OZONE-DEPLETING SUBSTANCES & SYNTHETIC GREENHOUSE GASES Joint Logistics Command continued to work closely with the Department of the Environment, Water, Heritage and the Arts, and Fire Protection Association Australia to ensure that all permits, licenses and exemptions necessary for the effective management of ozone depleting substances (ODS) and synthetic greenhouse gases (SGG) are in place. To support Defence’s ozone layer and climate protection objectives, Joint Logistics Command developed a Manual that delivers a framework for import and export of ODS and SGG, fire protection systems, plus refrigeration and air-conditioning systems. A presentation on Defence’s leadership in ozone and climate protection was delivered at the ‘Importance of Military Organisations in Protecting the Climate’ conference in Paris, November 20082.

ENVIRONMENTAL TRAINING & AWARENESS Defence continued to develop and deliver environmental training and awareness initiatives. These included environmental induction programs for personnel using Defence bases and training areas, inclusions in Service courses and development of training videos. The revised Defence Environmental Education Strategy was completed.

Defence continued the annual scheme of Environment and Heritage Awards by the Chief of the Defence Force and the Secretary of Defence. At a ceremony in September 2008, six individuals and teams were recognised for major achievements in environmental management.

1. More information can be found at: www.defence.gov.au/im/policy/green_building

2. More information can be found at: www.igsd.org/conferences/Paris2008/2d%20Tope.pdf

http://www.defence.gov.au/im/policy/green_building/main.htm

http://www.igsd.org/conferences/Paris2008/2d%20Tope.pdf



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STRATEGIC PARTNERSHIPSDefence continued to establish and maintain strategic partnerships with universities, local community groups, key stakeholders, local governments and non-government organisations1.

DEFENCE ENVIRONMENTAL MANAGEMENT SYSTEM Defence has continued to implement and develop its Environmental Management System (EMS) at sites across the estate including bases, training areas and offices. Under the EMS, Defence implements a risk-based approach to the assessment and management of potential adverse impacts to the environment. To ensure continual improvement a national program of EMS management reviews at major sites was conducted. Work commenced to refresh and implement streamlined and consolidated EMS frameworks across the Northern Territory/Kimberley, Sydney Central and Sydney West South regions. A refreshed EMS administration framework was implemented across ACT region. Recertification was obtained by Puckapunyal Military Area, Victoria, and certification was maintained for the EMS at RAAF Base Townsville, Queensland.

Further progress was made in implementing the Defence EMS in Groups and Services, planning and business processes. Examples include:

• improvements to environmental procedures under environmental management plans covering ADF Maritime Activities, Air Operations (draft procedures) and Joint Logistics Command Warehouse Activities (draft procedures)

• completion of Navy- and RAAF-specific environmental awareness videos

• development and maintenance of environment-specific websites, including by Infrastructure Division, the Navy, the Air Force, the DMO, Joint Logistics Command and the Defence Science and Technology Organisation

• the Navy’s introduction of a perpetual award for Fleet Environmental Performance to promote environmental stewardship in Fleet units and

• improvements made to Navy and Joint Logistics Command incident reporting systems.

1. More information can be found at: www.defence.gov.au/environment

http://www.defence.gov.au/environment



ENVIRONMENTAL IMPACT ASSESSMENT Defence routinely undertakes environmental impact assessments to ensure that the effects of Defence activities on the environment are appropriately considered and managed. The level of environmental impact assessment conducted for a specific Defence activity depends upon the degree of environmental risk posed by the activity.

After taking into account the values and resilience of the receiving environment, Defence activities that pose only a low risk to the environment are typically controlled through existing management practices such as standard operating procedures, standing orders, environmental management plans and environmental clearance certificates. Examples include routine individual and small unit training, minor construction works such as refurbishments and the use of some new or upgraded equipment.

Defence activities such as large scale training, major infrastructure works, the introduction of major equipment and any activity likely to affect important environmental values require a higher level of environmental impact assessment. This may involve literature reviews, field surveys, impact prediction (modelling), evaluation of alternatives and identification of impact mitigation measures. For some projects Defence seeks input from state and local governments, the local community and the general public.

Environmental assessments and approvals were issued for 12 important Defence infrastructure and capability related projects in 2008-09. An example is the comprehensive environmental impact assessment of Stage 1 of the Enhanced Land Force (ELF) project. Preliminary environmental advice or studies were completed on a further 222 projects.

DEFENCE REFERRALS UNDER THE EPBC ACTUnder the EPBC Act, Defence is required to consult with the Department of the Environment, Water, Heritage and the Arts to ensure that Defence activities that will have, or are likely to have, a significant impact on the environment only proceed with the approval of the Minister for the Environment, Heritage and the Arts. In 2008-09, Defence formally referred two actions for assessment and approval under the EPBC Act, as shown in the following table.

Table A5.1 Defence actions referred under the EPBC Act, 2008-09

Referral Title Number Date referred Referral decision Current statusSoil remediation works at Belconnen Naval Transmitting Station, ACT.

2008/4251 4 August 2008 Approval required Assessment completed. Approved with conditions

Australian Super Hornet flying operations at RAAF Base Amberley, QLD.

2008/4410 21 August 2008 Approval required Assessment in progress



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DEFENCE ENVIRONMENT & HERITAGE PANELThe Defence Environment and Heritage Panel provide a range of specialist environmental consultancy services throughout Defence to assist in the identification, mitigation and management of environmental risks and impacts. A new panel was established in February 2009. Environmental and heritage work to the value of $11.9m was undertaken from July 2008 to February 2009. Under the new panel, a further $5.9m of environmental and heritage work was undertaken to June 2009.

INCIDENT REPORTINGDefence maintained its environmental incident reporting processes under the Defence EMS to ensure continual improvement and to support good environmental performance. 324 incidents were reported in 2008-09 across the estate and none was considered significant.

ADMINISTRATION OF COMMONWEALTH POLICY ON THE MANAGEMENT OF LAND AFFECTED BY UNEXPLODED ORDNANCE (UXO)Defence provided advice to federal, state and local government authorities and individual land holders on the policy, technical and commercial aspects of UXO management in Australia. Relationships established with administrations in all states and territories were maintained in 2008-09 and continue to be effective.

The National Unexploded Ordnance Office upgraded its geographic information system and website detailing sites in Australia that are confirmed as, or suspected of being, contaminated by UXO. As at 30 June 2009, the National Office has identified 1,215 sites. The website1 continues to provide information to the public on UXO safety matters to enable determinations to be made whether or not individual land titles of interest are potentially contaminated. If affected, appropriate advice is offered and an e-mail contact provided.

Defence financed two UXO surveys in conjunction with the Western Australia government to confirm the categorisation of potential UXO sites at Chidlow and Northam.

The Defence Unexploded Ordnance Panel was established in 2001 and continues to provide an efficient and effective means to deliver Defence-sponsored investigative surveys and remediation projects. The panel currently comprises three specialist commercial contractors and one consultant. Non-Defence organisations are free to contact the UXO companies that are accredited to the Defence UXO Panel and to engage them directly for UXO services.

1. The website is at: www.defence.gov.au/uxo

http://www.defence.gov.au/uxo



Defence placed full-page UXO warnings in school children’s handbooks in all states and territories. Defence also provided UXO safety posters and leaflets to National Parks and Wildlife Service offices and for distribution to state police and members of the public.

There was one reported unexploded ordnance-related incident that caused two members of the Australian public to be injured. As at 30 June 2009, there have been no instances in Australia where a member of the public has been injured by UXO except where UXO has been deliberately disturbed and mishandled.


APPENDIX 6MAJOR CAPITAL

EQUIPMENT PROGRAMPUBLIC DEFENCE CAPABILITY PLAN 2009The Public DCP 2009 contains equipment acquisition proposals planned for Government consideration (first or second pass approval) in the next four years, covering a range of Defence capabilities, including land forces, air forces, maritime forces (both surface and sub-surface), strike and network centric warfare. The plan is reviewed and updated annually to take account of changing strategic circumstances, new technologies and changed priorities.

The DCP is implemented through a strengthened ‘two pass’ approval by the Government. The Group continued to improve the effectiveness of the capability development process, notably in the use of test and evaluation and simulation prior to pre-second pass consideration. In 2008-09, the Government agreed to four first pass project approvals and seven second pass approvals, plus a number of other studies and project development activities. Notable approvals included first pass approval for Joint Counter Improvised Explosive Device capability (JP 154 Phase 1) and Amphibious Watercraft Replacement (JP 2048 Phase 3) and second pass approval for Enhanced Land Force Additional Upgraded M113 Armoured Personnel Carriers (LAND 106), Military Satellite Capability (JP 2008 Phase 5A) and Direct Fire Support Weapon (Land 40 Phase 2). Funding for initial studies for the SEA 1000 program to replace the Collins class submarines was also approved during 2008-09.

THE APPROVED MAJOR CAPITAL EQUIPMENT PROGRAMThe approved major capital equipment program comprises projects which, following approval, are transferred from the DCP under Capability Development Group to the DMO to manage the acquisition phase. Funding for approved major capital equipment projects, is provided by Defence to the DMO under separate Materiel Acquisition Agreements for each project.

For most of 2008-09, projects costing between $8m and $50m were approved jointly by the Minister for Defence and the Minister for Finance and Deregulation, and those costing more than $50m by the National Security Committee of Cabinet. After April 2009, these thresholds changed so projects costing $20m-$100m required joint Ministerial approval, and projects costing more than $100m received approval from the Committee.

APPENDIX 6 MAJOR CAPITAL EQUIPMENT PROGRAM


Since the creation of the DCP in 2000, some 250 major projects or phases of projects have been approved with an all-up cost of approximately $49.0b. During 2008-09, a number of projects and studies were approved at a cost of around $1.1b, as shown in Table A6.1. Some of the projects listed in the Portfolio Budget Statements 2008-09 for consideration by Government were deferred pending the release of the White Paper in May 2009. The Government will be presented with further projects for consideration in 2009-10.

Table A6.1 List of Major Capital Equipment Projects Approved by the Government in 2008-09

NOTES:

1. This project has received a partial second pass approval in 2008-09, with the remainder to be approved later.

2. This project has been split into two parts: Part 1: Acquisition-FMS case – 1, and Part 2: Through Life Support (TLS) – 5.

Key to Project Status Categories

Project

No Phase Name

Approval Budget

(Band $m)

Status as at 30 June

2009Support to the Development of the Major Capital Equipment Program

RPDE Rapid Prototyping and Development & Evaluation

<$100m

CTD 13 Capability and Technology Demonstrator <$100m

PDF 2009 Project Development Funding 2009 <$100m

First Pass Approval

AIR 9000 SCAP 1 Seahawk Capability Assurance Program 1 <$100m 4

LAND 121 4 Overlander - Field Vehicles and Trailers <$100m 4

JP 154 1 Joint Counter Improvised Explosive Device <$100m 4

JP 2048 3 Amphibious Watercraft Replacement <$100m 4

Second Pass Approval

AIR 5276 CAP 1 Capability Assurance Program 1 <$100m 2

AIR 5440 1 C-130J Block Upgrade Project - Global Program Arrangement[1]

<$100m 5[2]

JP 2089 2A Tactical Information Exchange Domain (Data Links)

<$100m 1

LAND 106 Enhanced Land Force Additional Upgraded M113 Armoured Personnel Carriers

$100m-$500m 1

JP 2068 2B.1 Computer Network Defence <$100m 4

JP 2008 5A Military Satellite Capability $100m-$500m 4

JP 2030 8 ADF Joint Command Support Environment <$100m 1

DEF 224 3 Force Level Electronic Warfare <$100m 1

LAND 40 2 Direct Fire Support Weapon $100m-$500m 2

JP 2008 3F Military Satellite Capability <$100m 2

1 Project under way (contract signed)2 Tender Closed3 Out to Tender4 Yet to go to Tender5 Various: Either contributing to more than one project or consisting of several internal

phases of varying status


APPENDIX 7PEOPLE

DEFENCE ACTUAL STAFFING This section outlines the changes in the workforce that occurred during 2008-09 and provides workforce information as at 30 June 2009. It includes numbers of people (headcount), employment categories, locations and gender information. The figures shown for APS staff do not include those employed by the DMO.

At 30 June 2009, Defence had 70,311 permanent employees comprising 55,068 permanent ADF members and 15,243 APS staff.

In the 12 months to June 2009, the permanent ADF strength increased by 1,925. The Reserve Force comprised 25,493 employees. The total ADF workforce was 81,106, and included 17,918 Navy Permanent, Gap Year and Reserve members, 45,166 Army Permanent, Gap Year and Reserve members and 18,022 Air Force Permanent, Gap Year and Reserve members. In the 12 months to 30 June 2009, the Reserve component of the ADF increased by 617, from 24,876 to 25,493. This included both Reservists on Continuous Full Time Service and Active Reserves. At 30 June 2009, 2,630 Reservists were also Defence APS employees.

At 30 June 2009 there were 15,243 APS staff. This number included all APS staff recorded as active employees and included full-time, part-time, ongoing and non-ongoing, and paid and unpaid employees.

Figure A7.1 shows the percentage of Defence people by type of service (ADF, APS, Reserves) and Figure A7.2 by the Service to which they belong. In addition to military and APS employees, Defence engages a number of contractors as part of its total workforce. Further details are provided in Table 2.8 in Chapter 2.

Figure A7.1 Defence workforce estimate by type as at 30 June 2009

Permanent ADF

Gap Year

Reserves

APS

Contractors

56.5%

0.4%16.3%

26.2%

0.6%

APPENDIX 7 PEOPLE


Figure A7.2 Defence workforce estimate by Service as at 30 June 2009

Tables A7.1 through to A7.6 provide information on Defence staffing levels showing rank/level, gender, location and with some tables highlighting Defence Senior Management.

Table A7.1 Defence workforce comparison as at 30 June 2008 and 30 June 2009

NOTES

1. Figures do not include Gap Year program, which is reported in Table A7.2, nor any Reserves including those on Continuous Full-Time Service.

2. The Navy's permanent strength as at 30 June 2008 adjusted to account for retrospective transactions. The Army's permanent strength as at 30 June 2008 adjusted to account for retrospective transactions. The Air Force's permanent strength as at 30 June 2008 adjusted to account for one retrospective separation.

3. APS strength as at 30 June 2008 was adjusted to account for retrospective hire, separation and transfer transactions.

4. Net Transfers represents the net effect of transfers between Defence and the DMO for APS. This figure may differ from the DMO figures in Volume 2 of this report due to differing data run dates.

5. APS figures include paid and unpaid employees, which covers full-time, part-time, ongoing and non-ongoing employees.

Navy Army Air Force ADF APS[6]

30 June 2008

Permanent[1][2] 12,876 26,425 13,842 53,143

APS[3] 15,884Total (as at 30 June 2008) 12,876 26,425 13,842 53,143 15,884Separations

Permanent[1] 1,383 2,767 893 5,043APS 1,823Sub-Total 1,383 2,767 893 5,043 1,823

Net Transfers[4]

APS 71Sub-Total 71Additions

Permanent[1] 1,484 4,170 1,314 6,968APS 1,253Sub-Total 1,484 4,170 1,314 6,968 1,253

Permanent[1] 12,977 27,828 14,263 55,068APS 15,243Total (as at 30 June 2009) 12,977 27,828 14,263 55,068 15,243Variation 101 1,403 421 1,925 -641

Navy

Army

Air Force

APS

Contractors

0.4%

18.4%

46.4%

18.5%

16.3%

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Table A7.2 Defence Gap Year comparison as at 30 June 2008 and 30 June 2009

NOTES

1. 700 participants are recruited each calendar year. However, the distribution within each calendar year (and consequently financial year totals) varies as Service intake and training schedules dictate.

Navy Army Air Force ADF TotalParticipants as at 30 June 2008 82 387 97 566

Additions[1]

Ab initio 187 324 112 623Transferred from Reserves 1 2 - 3Sub-Total 188 326 112 626Outgoing

Transferred to Permanent 41 125 21 187Transferred to Reserves 8 231 39 278Other separations from Gap Year 51 83 48 182Sub-Total 100 439 108 647Participants as at 30 June 2009 170 274 101 545Variation 88 -113 4 -21

APPENDIX 7 PEOPLE


Defence workforce by gender & employment categoryTable A7.3 ADF Permanent, Gap Year and Reserves Forces, and APS, by gender and employment category[1][2][3]

As at 30 June 2008 As at 30 June 2009Men % Women % Men % Women %

Navy[4][5]

Trained ForceOfficers 1,754 13.6 393 3.1 1,753 13.5 397 3.1Other Ranks 6,304 49.0 1,202 9.3 6,376 49.1 1,242 9.6

Training ForceOfficers 638 5.0 204 1.6 616 4.7 205 1.6Other Ranks 1,841 14.3 540 4.2 1,857 14.3 531 4.1

Total Navy 10,537 81.8 2,339 18.2 10,602 81.7 2,375 18.3

Army[6]


Training ForceOfficers 775 2.9 156 0.6 892 3.2 159 0.6Other Ranks 2,269 8.6 179 0.7 2,752 9.9 176 0.6

Total Army 23,864 90.3 2,561 9.7 25,140 90.3 2,688 9.7

Air Force[7]


Training ForceOfficers 536 3.9 172 1.2 520 3.6 176 1.2Other Ranks 678 4.9 103 0.7 758 5.3 123 0.9

Total Air Force 11,559 83.5 2,283 16.5 11,867 83.2 2,396 16.8ADF PermanentTrained Force

Officers 8,953 16.8 1,680 3.2 9,137 16.6 1,754 3.2Other Ranks 30,270 57.0 4,149 7.8 31,077 56.4 4,335 7.9

Training ForceOfficers 1,949 3.7 532 1.0 2,028 3.7 540 1.0Other Ranks 4,788 9.0 822 1.5 5,367 9.7 830 1.5

Total ADF Permanent 45,960 86.5 7,183 13.5 47,609 86.5 7,459 13.5

Gap YearNavy 35 6.2 47 8.3 79 14.5 91 16.7Army 310 54.8 77 13.6 204 37.4 70 12.8Air Force 58 10.2 39 6.9 59 10.8 42 7.7Total Gap Year 403 71.2 163 28.8 342 62.8 203 37.2

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NOTES

1. Figures in this table show actual employee numbers (headcount) as at 30 June 2008 and 30 June 2009.

2. ADF Permanent headcount does not include Gap Year participants who are reported separately in this table.

3. Percentage figures are calculated against the individual Service totals. The Service totals for 2008–09 can be found in Table A7.1.

4. The Navy’s permanent strength as at 30 June 2008 adjusted to account for retrospective separations and members who failed to enlist.

5. Seaman-ranked sailors have been classified in the Training Force.

6. The Army’s permanent strength as at 30 June 2008 adjusted to account for retrospective transactions.

7. The Air Force’s permanent strength as at 30 June 2008 adjusted for one retrospective separation and incorrect recording of gender.

8. Reserves include all active members (training, deployed and other part-time military work commitments) and those on Continuous Full-Time Service as at 30 June 2009.

9. The APS headcount does not include DMO employees.

10. 30 June 2009 figures for APS include 2,630 APS employees that are also counted as Reserve members.

11. APS strength as at 30 June 2008 adjusted to account for retrospective hire, separation and transfer transactions.

12. Grand Total only includes ADF Permanent and APS.

13. The Air Force's reserve strength as at 30 June 2008 adjusted for retrospective transactions.

Reserves[8]

Navy 3,749 15.1 939 3.8 3,826 15.0 945 3.7Army 14,341 57.6 2,404 9.7 14,678 57.6 2,386 9.4

Air Force(13) 2,705 10.9 738 3.0 2,851 11.2 807 3.2Total Reserves 20,795 83.6 4,081 16.4 21,355 83.8 4,138 16.2

APS[9][10][11] 9,185 57.8 6,699 42.2 8,720 57.2 6,523 42.8

Total[12] 55,145 79.9 13,882 20.1 56,329 80.1 13,982 19.9

As at 30 June 2008 As at 30 June 2009Men % Women % Men % Women %

APPENDIX 7 PEOPLE


Table A7.4 APS by gender and category[1][2][3]

NOTES

1. Figures in this table are actual employee numbers (headcount) as at 30 June 2008 and 30 June 2009.

2. Figures include paid and unpaid employees.

3. Figures do not include DMO employees.

4. Figures for 2007-08 adjusted to account for retrospective transactions.

5. Part-time now includes staff with weekly hours less than the standard hours, regardless of position type, rather than only members in part-time positions.

As at 30 June 2008[4] As at 30 June 2009

Full-time Part-time[5] Total Full-time Part-time[5] Total

Ongoing employeesMales 8,896 108 9,004 8,457 121 8,578Females 5,851 637 6,488 5,624 666 6,290Total Ongoing 14,747 745 15,492 14,081 787 14,868

Non-ongoing employeesMales 160 21 181 122 20 142Females 172 39 211 198 35 233Total Non-ongoing 332 60 392 320 55 375Males 9,056 129 9,185 8,579 141 8,720Females 6,023 595 6,618 5,822 701 6,523Total APS 15,079 805 15,884 14,401 842 15,243

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Defence Workforce by Employment LocationTable A7.5 Distribution of Defence workforce by employment location as at 30 June 2009[1]

NOTES

1. Figures in this table show actual employees numbers (headcount) as at 30 June 2009, not average funded strengths.

2. ACT includes employees located at Jervis Bay.

3. Overseas figures represent employees posted for long-term duty.

4. Permanent Forces figures include paid and unpaid members.

5. Employees are shown in the location that they are administered.

6. Members serving on ships are included against the state or territory in which the ship is home-ported.

7. Reserve Forces figures include Reserves on Continuous Full-Time Service.

8. APS figures include paid and unpaid employees, which covers full-time, part-time, ongoing and non-ongoing staff.

9. APS figures do not include DMO employees.

10. 30 June 2009 figures for APS include 2,630 APS employees that are also counted as Reserve members.

NSW Vic. Qld SA WA Tas. NT ACT[2] O/S[3] Total

Permanent Forces[4][5][6] Navy 6,076 1,807 850 70 2,194 19 639 1,147 175 12,977Army 6,925 3,105 9,941 559 836 88 3,895 2,186 293 27,828Air Force 5,191 1,005 2,823 1,797 428 14 1,013 1,696 296 14,263Sub-total 18,192 5,917 13,614 2,426 3,458 121 5,547 5,029 764 55,068

Gap Year Navy – 170 - - - - - - - 170Army 125 103 42 - - - 4 - - 274Air Force 1 100 - - - - - - - 101Sub-total 126 373 42 – – – 4 – – 545

Reserve Forces[6][7] Navy 1,215 489 710 166 833 177 100 1,078 3 4,771Army 4,784 2,915 4,249 1,340 1,781 579 721 687 8 17,064Air Force 881 459 927 392 261 52 123 563 - 3,658Sub-total 6,880 3,863 5,886 1,898 2,875 808 944 2,328 11 25,493ADF Total 25,198 10,153 19,542 4,324 6,333 929 6,495 7,357 775 81,106

APS[8][9][10] 2,374 2,540 1,130 1,853 422 97 399 6,341 87 15,243Total 27,572 12,693 20,672 6,177 6,755 1,026 6,894 13,698 862 96,349

APPENDIX 7 PEOPLE


Table A7.6 Distribution of APS by employment location as at 30 June 2009[1][2]

NOTES

1. Figures in this table show actual employee numbers as at 30 June 2009 and include paid and unpaid staff.

2. Figures do not include APS employees in DMO.

3. ACT includes employees located at Jervis Bay.

4. Overseas figures represent staff on long-term duty.

5. Senior Executive Service includes Band 1, 2 and 3 SES, Chief of Division and Medical Officer Class 6 classifications.

6. SES relief staffing indicates non-SES officers who are temporarily acting in SES positions. These officers are on Additional Responsibility Payments (ARP) while the incumbents are taking leave, acting in higher positions or on secondment to other agencies.

7. Includes Executive Levels 1 and 2.

8. Executive relief staffing indicates APS levels on Additional Responsibility Payments while the incumbents are taking leave, acting in higher positions or on secondment to other agencies.

9. Other APS levels include levels 1 to 6.

NSW Vic. Qld SA WA Tas. NT ACT[3] O/S[4] Total

Secretary - - - - - - - 1 - 1Senior Executive Service[5] 1 5 1 8 - - - 99 1 115SES relief staffing[6] - - - - - - - 12 - 12Executive levels[7] 258 566 72 736 54 7 37 2,224 59 4,013Executive relief staffing[8] 30 9 9 20 5 1 8 218 1 301Other APS Levels[9] 2,085 1,960 1,048 1,089 363 89 354 3,787 26 10,801Total 2,374 2,540 1,130 1,853 422 97 399 6,341 87 15,243

APPENDIX 7 PEOPLE


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ADF WORKFORCE MANAGEMENTADF workforce entry and separation rates contribute to maintaining total ADF workforce strength within a small bandwidth of workforce size approved by government. At the end of the financial year the ADF had achieved +0.6 per cent (+333) of its workforce strength targets as reported in the Portfolio Additional Estimates Statements 2008-09 , made up of Navy -0.4 per cent (-49), Army +1.4 per cent (+370) and Air Force +0.1 per cent (+12).

ADF workforce entryADF enlistments include all entrants (ab initio recruits and prior service entrants) who joined the ADF in the financial year. The ADF enlisted 6,968 permanent members, 6,020 men and 948 women, for the 12 months up to 30 June 2009, as shown in Table A7.7. This was 108 less than in 2007-08. In addition, a total of 626 people (396 men and 230 women) were enlisted in the ADF Gap Year initiative.

Of the total number enlisted, 1,517 entrants had prior military service in either the Reserves, another Service, another nation, previous permanent force or transferred from the Gap Year initiative. There were 5,451 ab initio entrants.

Table A7.7 Permanent Force workforce entry, 2007-08 and 2008-09[1][2][3]

NOTES

1. Figures in this table show actual Permanent Force employees enlisted from all sources (headcount).

2. Enlistments exclude Reserves commencing periods of continuous full-time service.

3. Figures include ab initio enlistees and inter- and intra-service transfers processed by the Services. Tables A7.8 and A7.9 provide the split between prior service enlistments and ab initio recruiting respectively.

4. Army, Navy and Air Force enlistments shown in the Defence Annual Report 2007-08 have been adjusted due to backdated transactions.

5. Gap Year participants are not included in Permanent Force figures.

6. The remainder of the 700 Gap Year participants for the 2009 calendar year will be recruited progressively between July and November 2009.

Navy[4] Army[4] Air Force[4] ADF Total

Men Women Men Women Men Women Men Women 2007-08Trained ForceOfficers 34 8 154 25 106 35 294 68 362Other Ranks 66 5 375 49 131 24 572 78 650Training Force Officers 122 55 355 59 162 64 639 178 817Other Ranks 1,023 321 2,785 222 719 177 4,527 720 5,247Total 1,245 389 3,669 355 1,118 300 6,032 1,044 7,076

Gap Year[5] 44 56 400 102 60 40 504 198 7022008-09 Trained Force Officers 37 4 140 28 85 17 262 49 311Other Ranks 71 11 518 74 127 14 716 99 815Training Force Officers 95 48 359 61 187 57 641 166 807Other Ranks 962 256 2776 214 663 164 4,401 634 5,035Total 1,165 319 3,793 377 1,062 252 6,020 948 6,968

Gap Year[5] 87 101 247 79 62 50 396 230 626[6]

APPENDIX 7 PEOPLE


Table A7.8 Permanent Force prior service entry, 2007-08 and 2008-09[1][2]

NOTES

1. Figures in this table show actual employees (headcount).

2. Defence Force Recruiting processed 184 people with prior military service.

3. Army, Navy and Air force enlistments in the Defence Annual Report 2007-09 have been adjusted due to backdated transactions.

Navy Army Air Force ADF Total

Men Women Men Women Men Women Men Women

2007-08[3]

Overseas entrants 42 4 131 4 49 6 222 14 236Reserve transfers 36 4 489 83 100 19 625 106 731Service transfers 26 3 24 6 64 16 114 25 139Re-enlistments 29 6 120 7 58 9 207 22 229Gap Year transfers 1 - 52 13 - - 53 13 66Total 134 17 816 113 271 50 1,221 180 1,4012008-09 Overseas entrants 30 – 93 4 42 2 165 6 171Reserve transfers 58 13 577 83 79 18 714 114 828Service transfers 16 7 45 8 63 10 124 25 149Re-enlistments 24 1 103 2 46 6 173 9 182Gap Year transfers 17 24 88 37 11 10 116 71 187Total 145 45 906 134 241 46 1,292 225 1,517

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Table A7.9 ADF Permanent Force ab initio entry, 2007-08 and 2008-09Navy Army Air Force ADF

2007-08[1]

Total inquiries[2] 9,358 32,395 13,657 55,410Formal applications 3,213 7,427 3,167 13,807

Ab initio enlisted[3] 1,483 3,095 1,097 5,675Target enlistments 2,045 4,081 1,286 7,412

Enlistments achieved (%) 73 76 85 77

2008-09[4]

Total inquiries[5] 13,391 38,315 21,250 72,956Formal applications 3,651 8,229 3,868 15,748Ab initio enlisted 1,294 3,130 1,027 5,451Target enlistments 1,802 4,143 1,194 7,139


NOTES

1. Inquires and applications inclusive of Gap Year.

2. In 2007-08, 8,433 inquiries were received from people undecided on Service or commitment.

3. The number of Army applicants enlisted as shown in the Defence Annual Report 2007-08 has been adjusted due to retrospective transactions.

4. Inquires and applications exclusive of Gap Year.

5. In 2008-09, 13,156 inquiries were received from people undecided on Service or commitment.

Figures A7.3 to A7.6 show the number of full-time ADF members recruited (shaded bars) and the percentage achieved (line) of the annual target by each Service and the ADF over the last 10 financial years. The number of permanent workforce entry into each Service and the ADF decreased slightly in 2008-09.

Figure A7.3 Navy full-time ab initio entry 1999-00 to 2008-092,000

1,500

1,000

500

0

100%

80%

60%

40%

20%

0%

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

Figure A7.4 Army full-time ab initio entry 1999-00 to 2008-09

0

1,000

2,000

3,000

4,000

0%

20%

40%

60%

80%

100%

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

APPENDIX 7 PEOPLE


Figure A7.5 Air Force full-time ab initio entry 1999-00 to 2008-091,500

1,000

500

0

100%

80%

60%

40%

20%

0%

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

Figure A7.6 ADF full-time ab initio entry 1999-00 to 2008-097,000

6,000

5,000

4,000

3,000

2,000

1,000

0

100%

80%

60%

40%

20%

0%

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

Table A7.10 ADF Gap Year entry activity 2007–08 and 2008-09[1]

Navy Army Air Force ADF

2007-08

Total inquiries[1] 983 5,534 806 7,323Formal applications 255 1,010 243 1,508Ab initio enlisted 100 500 100 700Transfers from Reserve - 2 - 2Target 100 500 100 700

Percentage achieved (%) 100 100 100 100

2008-09[2]

Total inquiries[3] 1483 4,927 1647 8,057Formal applications 529 812 327 1,668Ab initio enlisted 187 324 112 623

Transfers from Reserves[4] 1 2 - 3Target 192 317 116 625

Percentage achieved (%) 98 103 97 100

NOTES

1. 8,433 inquiries were received from people undecided on Service or commitment in 2007-08.

2. The inquiries and applications are for the period 1 May 2008 to 30 Apr 2009 and not the whole financial year. This is due to the Gap Year campaign running between these dates.

3. 13,156 inquiries were received from people undecided on Service or commitment in 2008-09.

4. Two Army Reservists transferred to Army Gap Year and one transferred to Navy Gap Year.

APPENDIX 7 PEOPLE


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Table A7.11 Reserve Force entry activity, 2007-08 and 2008-09[1][2]

Navy Army Air Force ADF

2007-08

Total inquiries[1] 967 10,742 1,689 13,398Formal applications 188 3,962 543 4,693Applicants enlisted 71 2,207 262 2,540Target 144 2,150 439 2,733


2008-09

Total inquiries[2] 1,066 12,680 1,415 15,161Formal applications 255 4,479 483 5,217Applicants enlisted 99 2,056 215 2,370Target 127 2,787 340 3,254


NOTES

1. In addition, there were 8,433 inquiries about Tri-Service, Permanent and Reserve Force who were undecided on which Service they wished to join and whether they were interested in Permanent or Reserve commitment.

2. In addition, there were 13,156 inquiries about Tri-Service, Permanent, Gap Year and Reserve Force who were undecided on which Service they wished to join and whether they were interested in Permanent, Gap Year or Reserve commitment.

Figures A7.7 to A7.10 show the number of part-time ADF members recruited (shaded bars) and the percentage achieved (line) of the annual target by each Service and the ADF over the last ten financial years.

Figure A7.7 Navy part-time entry 1999-00 to 2008-09

0

20

40

60

100

80

120

0%

20%

40%

60%

80%

100%

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

APPENDIX 7 PEOPLE


Figure A7.8 Army part-time entry 1999-00 to 2008-09

0

500

1,000

1,500

2,500

2,000

3,000

3,500

0%

20%

40%

60%

80%

100%

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

Figure A7.9 Air Force part-time entry 1999-00 to 2008-09350

300

250

200

150

100

50

0

100%

80%

60%

40%

20%

0%

y / /

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

Figure A7.10 ADF part-time entry 1999-00 to 2008-093,500

3,000

2,500

2,000

1,500

1,000

500

0

100%

80%

60%

40%

20%

0%

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

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ADF SeparationsAs at 30 June 2009, the 12-month rolling separation rates for the Permanent Force were:

• Navy – 10.8 per cent

• Army – 10.3 per cent

• Air Force – 6.4 per cent

• ADF – 9.4 per cent.

Table A7.12 ADF Permanent Forces separations, 2007-08 and 2008-09[1][2][3]

NOTES

1. Figures in this table show actual employees (headcount).

2. Classifications are not mutually exclusive, and an individual is placed in only one group. The order of classifications is as follows: age retirement; cadets and trainees; and the remainder are classified as voluntary or involuntary.

3. Personnel on maternity leave or on leave without pay, Reservists rendering continuous full-time service and Gap Year are not included.

4. 'Voluntary' includes voluntary redundancies and resignations.

5. 'Involuntary' primarily comprises members who are medically unfit, unsuitable for further duty, who died whilst serving or who fell into the 'Management Initiated Early Retirement' category.

6. Amendments to Navy and Army 2007-08 figures are due to retrospective separations.

7. Amendments to Air Force 2007-08 figures are due to a retrospective separation and a duplicate transaction.

Voluntary[4] Involuntary[5] Age retirement

Trainees Total

2007-08

Navy[6] Officers 111 15 1 47 174Other Ranks 751 176 3 308 1,238

Army[6] Officers 276 30 - 134 440Other Ranks 1,374 447 - 481 2,302

Air Force[7] Officers 193 16 3 52 264Other Ranks 519 65 6 128 718

Total Permanent Forces

Officers 580 61 4 233 878Other Ranks 2,644 688 9 917 4,258Total 3,224 749 13 1,150 5,136

2008-09Navy Officers 139 24 - 66 229

Other Ranks 624 171 - 359 1,154Army Officers 249 53 1 109 412

Other Ranks 1,361 490 - 504 2,355Air Force Officers 196 19 - 54 269

Other Ranks 443 68 1 112 624

Total Permanent Forces

Officers 584 96 1 229 910Other Ranks 2,428 729 1 975 4,133Total 3,012 825 2 1,204 5,043

APPENDIX 7 PEOPLE


Figures A7.11 to A7.14 show the variation in the 12 month rolling separation rate for the ADF and each Service over the last 10 years. The higher separation rate in 2001 is due to the impact of the 2000-01 Air Force redundancy program. The lower separation rates between June 2002 and June 2005 are due to two reasons: an increase in Army recruiting in the previous two to four years and as a result members being obliged to serve out their initial period of service and therefore unable to leave; and fewer Air Force members were able to separate following the Air Force redundancy program. ADF long-term separation rates typically vary between 10 and 13 per cent. Current low separation rates result from the combined impact of retention initiatives taken by Defence and the impact of the Global Financial Crisis.

Figure A7.11 Navy separation rates, 2000-09

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Figure A7.12 Army separation rates, 2000-09

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Figure A7.13 Air Force separation rates, 2000-09

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Figure A7.14 ADF separation rates, 2000-09

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APPENDIX 7 PEOPLE


APS separationsTable A7.13 APS separations 2007-08 and 2008-09[1]

NOTES

1. Figures do not include DMO employees.

2. Voluntary figures include voluntary redundancies (due to Commercial Support Program, Defence Reform Program or Program Initiated).

3. Involuntary figures include breach of conduct, invalidity retirement, involuntary redundancies, lack of qualifications, non-performance, term probation and death.

4. Resignation/retirement figures include resignation, retirement (minimum age and SES) and completion of non-ongoing (may include some suspended records affecting the end headcount).

5. Transfers include transfers/promotions to other government departments. Movements between Defence and the DMO are not included.

6. Figures for 2007-08 adjusted to account for retrospective transactions.

Voluntary[2] Involuntary[3] Resignation/ Retirement[4]

Transfers[5] Total

2007-08Senior Executive Service - - 9 2 11Senior Officers 2 15 243 97 357Other Staff 17 46 1,235 177 1,475

Total APS (2007-08)[6] 19 61 1,487 276 1,8432008-09 Senior Executive Service - - 5 8 13Senior Officers 18 16 176 74 284Other Staff 356 61 975 134 1,526Total APS (2008-09) 374 77 1,156 216 1,823

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Defence senior managementTable A7.14 Star-ranked officers as at 30 June 2009[1][2]

NOTES

1. Officers on acting or higher duties are not included.

2. Figures do not include Reservists, including Reservists on CFTS.

3. Promotions include those officers promoted between levels.

4. Separations include only permanent officers who have separated from Defence or transferred to Reserves.

5. Figures include three Chaplains (one from each Service).

Table A7.15 APS Senior Executive Service employees as at 30 June 2009[1][2][3]

Total star rank 2008-09 promotions[3] 2008-09 separations[4]

Men Women Total Men Women Total Men Women TotalFour starNavy - - - - - - - - -Army - - - - - - - - -Air Force 1 - 1 - - - - - -Three star Navy 2 - 2 1 - 1 1 - 1Army 3 - 3 - - - 1 - 1Air Force 1 - 1 1 - 1 1 - 1Two star Navy 9 - 9 1 - 1 1 - 1Army 16 1 17 2 - 2 3 - 3Air Force 9 - 9 3 - 3 4 - 4One star

Navy[5] 32 2 34 6 - 6 8 - 8

Army[5] 50 2 52 8 1 9 6 - 6

Air Force[5] 37 2 39 7 1 8 2 - 2Total 160 7 167 29 2 31 27 - 27

Total SES 2008-09 Engagements[4] 2008-09 Separations[5]

Men Women Total Men Women Total Men Women TotalSenior ExecutiveSecretary 1 – 1 – – – – – –Band 3 7 1 8 1 – 1 2 – 2

Band 2[6] 19 4 23 3 – 3 1 1 2Band 1 48 20 68 1 – 1 7 2 9Chief of Division – – – – – – - – -Grade 3 3 – 3 – – – – – –Grade 2 10 3 13 – – – - – -Senior Executive

Relief Staff[7] 7 5 12 – – – – – –Total 95 33 128 5 – 5 10 3 13

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NOTES

1. Figures in this table show actual employee numbers at their substantive level, but not staff on longer term unpaid leave.

2. Gains and losses do not reflect movement of officers between levels in each of the Senior Executive Service and Chief of Division streams.

3. Numbers exclude SES officers in the DMO. These figures are reported in Volume 2 of this report.

4. Engagement figures include new engagements and transfers from other agencies.

5. Separation figures include resignations, retirements, redundancies, promotions and transfers to other departments.

6. Senior Executive Band 2 includes Medical Officer Grade 6.

7. Relief Staff indicates non-SES officers who are temporarily acting in SES/Chief of Division positions while the incumbents are taking leave, acting in higher positions or on overseas duty.

Remunerating Defence’s peopleDefence remuneration is underpinned by a legal framework that provides separate mechanisms for setting pay and conditions for ADF members and Defence APS employees. The main legislation relevant to remuneration in Defence is the Defence Act 1903, Fair Work Act 2009 and the Public Service Act 1999.

The independent Defence Force Remuneration Tribunal is responsible for setting pay and pay-related allowances for members of the ADF. Other financial conditions of service that recognise the special characteristics of service are determined by the Minister for Defence under section 58B of the Defence Act 1903.

Defence non-SES APS employees are covered by a collective agreement. Some non-SES positions have remuneration supplemented by public service determinations or set by Australian workplace agreements. SES employees have remuneration and conditions of service set by contract, public service determinations or Australian workplace agreements. Star rank officers’ remuneration and conditions of service are set by the Star Ranks Remuneration Arrangement.

Main features of Defence workplace arrangements and agreementsBoth the ADF and Defence APS employee workplace arrangements and agreements present a package of pay and conditions which include a values-based employment framework, flexible working and leave arrangements. Defence workplace arrangements and agreements recognise the importance of recruiting and retaining the best people.

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Table A7.16 Defence APS base salary ranges by classification as at 30 June 2009

NOTES

1. SES and non-SES individual arrangements salary ranges exclude the DMO.

2. Includes rates for Chief of Division 3.

3. Includes rates for Chief of Division 2 and Medical Officer Class 6.

4. Certified Agreement salary ranges also apply to APS employees in the DMO.

5. Includes rates for Academic, Legal and Science specialist structures.

6. Includes rates for Public Affairs and Legal specialist structures.

7. Includes rates for Public Affairs specialist structures.

8. Includes rates for Registered Nurse and Occupational Health Nurse specialist structures.

9. Includes rates for Enrolled Nurse specialist structures.

Salary Range ($)Classification Minimum Maximum

Individual arrangements[1]

SES Band 3[2] 222,548 305,100

SES Band 2[3] 150,325 210,351SES Band 1 124,348 148,754Non-SES 53,622 163,130

Collective Agreement[4]

Executive Level 2 95,511 151,442[5]

Executive Level 1 82,809 101,402[6]

APS Level 6 65,520 77,103[7]

APS Level 5 59,807 64,062[8]

APS Level 4 53,622 58,864APS Level 3 48,112 52,572APS Level 2 42,239 47,484[9]

APS Level 1 37,323 41,896

APPENDIX 7 PEOPLE


Table A7.17 ADF salary ranges as at 30 June 2009

NOTES

1. (E) is ‘equivalent rank’ across the Services.

2. General (E) and some Lieutenant General (E) rates are set by the Remuneration Tribunal.

3. Includes rates for Medical Officers on specialist structure.

4. Includes rates for Dental Officers on specialist structure.

5. Includes transitional rates for other rank appointed as officer.

6. Includes rates for Service Warrant Officer.

7. Includes rates for Chaplains on specialist structure.

Salary Range ($)Classification Minimum MaximumOfficer of the Permanent Force (Equivalent)

General (E)[1] 312,840[2] 312,840[2]

Lieutenant General (E) 242,510[2] 250,100[2]

Major General (E) 189,138 208,052Brigadier (E) 127,430[7] 184,226Colonel (E) 113,727[7] 165,058[4]

Lieutenant Colonel (E) 92,383[7] 155,262[3]

Major (E) 70,025 139,584[3]

Captain (E) 54,844 135,068[3]

Lieutenant (E) 45,592 95,569[5]

2nd Lieutenant (E) 42,597 89,217[5]

Other rank of the Permanent Force (Equivalent)Warrant Officer Class 1 (E) 62,105 102,244[6]

Warrant Officer Class 2 (E) 57,202 88,570Staff Sergeant (E) 55,283 85,444Sergeant (E) 49,430 81,715Corporal (E) 42,714 74,722Lance Corporal (E) 39,290 69,452Private Proficient (E) 38,479 68,641Private (E) 37,684 67,846

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Table A7.18 Defence Workplace Agreements and Arrangements as at 30 June 2009

NOTES

1. Excludes the Secretary who is appointed by the Prime Minister.

2. Excludes DMO civilian employees.

3. Includes one SES Band 1 officer on temporary transfer to another agency, noting that he still has an active agreement with Defence.

4. Statutory office holders not included in headcount figures in previous tables.

5. Includes ADF members billeted to the DMO.

6. Star rank numbers reflect permanent personnel only.

7. Includes ADF Permanent Force and Reservists up to the rank of COL (E).

8. Includes ADF Permanent Force. Figures do not include those Members covered by the Specialist Officer Salary Structure.

SES Non SES

Civilian[1][2]

APS employees covered by Collective Agreement - 15,129APS employees covered by individual arrangements 122[3] 49

Statutory office holder[4] 1 -

Australian Defence Force[5] Star Rank[6] Non-Star Rank[7]

Members covered by ADF Workplace Remuneration Arrangement[8] - 80,939Members covered by Star Ranks Remuneration Arrangement 157 -Specialist Officer Salary Structure - Chaplains 3 -ADF Statutory Office Holders 7 -

APPENDIX 7 PEOPLE


Table A7.19 Defence performance pay[1][2][3]

NOTES

1. Subject to performance, employees may be entitled to a higher pay point within the salary band for their classification. This salary advancement is not considered performance pay. An employee whose employment conditions are governed by the DeCA and who is at the top of his or her classification’s salary band may, subject to performance, receive a lump sum payment of the greater of $500 or one per cent of his or her rate of pay (adjusted for part-time hours, if applicable). As this lump sum payment does not affect the employee’s nominal salary, it is considered performance pay.

2. The data in this table represents employees who were paid performance pay at any point during 2008-09. The DMO’s APS performance pay is reported separately in Volume 2 of this report.

3. Under the DeCA, employees who were within one per cent of the top of their salary range were eligible to receive a combination of performance progression (increase in rate of salary) and the top of range lump sum payment. Their salary was increased until it reached the top of the range, and the bonus described in footnote 1 was paid, reduced by the dollar amount of salary increase.

4. For reporting purposes, employees who were on the top of their salary range as at 31 October 2008 are considered to have been eligible for the top of range lump sum payment. This eligibility data does not include those employees who received the combination of a salary increase and a lump sum payment as described in note 3. The eligibility data does not include those employees who are at the top of the lower classification within a broadband. For this reason, the numbers of employees in the table above who received the bonus in some classifications is greater than the number who appear to have been eligible.

5. Medical Officer grades have been included in the EL2 classification.

Level (Substantive)

Staff eligible[4]

Number of staff paid

Aggregated Amount paid

$

Average payment

$

Range

$APS Trainee 2 2 1,000 500 500-500APS Level 1 195 192 92,858 484 133-500

APS Level 1-3 22 11 5,481 498 367-526APS Level 2 1,012 947 445,233 470 52-526APS Level 3 1,045 815 393,725 483 127-526APS Level 3–4 102 95 49,734 524 65-571APS Level 3 – EL1 (Legal) 15 9 8,852 984 984-984APS Level 4 727 546 297,171 544 102-589APS Level 4–5 327 275 161,594 588 70-621APS Level 4-6 33 49 31,648 646 247-726APS Level 5 1,458 1,061 644,173 607 52-726APS Level 5–6 7 5 3,630 726 726-726APS Level 6 1,870 1,544 1,086,252 704 102-749APS 6 – EL1 (Academic) 20 15 13,151 877 467-906Executive Level 1 1,331 1,192 955,033 801 80-1,300

Executive Level 2[5] 899 798 893,071 1,119 133-2,188Total 9,065 7,556 5,082,606 673 52-2,188

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Table A7.20 Non-salary benefits as at 30 June 2009[1][2]

NOTES

1. Non-salary benefits are dependent upon eligibility criteria and may not be available to all employees.

2. Excludes Senior Executive Staff and non-Senior Executive Staff employees on Australian Workplace Agreements or determinations made under Section 24(1) of the Public Service Act 1999 in the DMO.

All non SES employees could access the following benefits:

Employee assistance program Flexible remuneration packaging Learning and developmentTransition management services, including financial adviceFlexible working arrangements including home-based and part-time work

Subject to availability, eligibility criteria and operational requirements, employees could also access:

Defence-supported child careStudy assistanceDefence amenitiesDependant care costs Time off for long business travel Mobile phone for official useFamily care roomsAirline lounge membershipHome office equipment

Under individual remuneration arrangements, SES staff could access all the above benefits, together with the following benefits:

Motor vehicle for official and private use, plus fuel Professional membershipsFinancial advice on remuneration and conditions of serviceHome office equipmentParking

ADF Non-Star Rank members could access the following benefits:

Flexible remuneration packaging Learning and developmentMedical and dental treatmentPharmaceuticalsHousing and accommodation benefitsTransition management services, including financial advice

Subject to availability, eligibility criteria and operational requirements, ADF non-Star Rank members could also access:

Defence supported child careStudy assistanceDefence amenitiesDependant Care costs Time off for long business travel Mobile phone for official useFamily care roomsAirline lounge membershipHome office equipment

ADF Star Rank members could access all the above benefits, together with the following benefits:

Motor vehicle for official and private use, plus fuel ParkingProfessional membershipsFinancial advice on remuneration and conditions of serviceHome office equipment

APPENDIX 7 PEOPLE


EQUITY & DIVERSITYIn order to maintain competitiveness in the employment marketplace, and to support the expansion of the ADF, Defence is striving to create an organisation that is more broadly attractive to, and representative of, the Australian community than is presently the case. This will ensure greater diversity within the Defence workforce.

The Workplace Equity and Diversity Plan 2007-09 details Defence’s commitment to the principles of equity and diversity and includes performance indicators to ensure compliance with legal obligations and Defence’s values. The Plan can be found at www.defence.gov.au/fr.

GenderThe Chief of the Defence Force’s external Reference Group on Women is making recommendations based on their own experiences in non-traditional workplaces to overcome systemic, cultural, attitudinal and behavioural aspects of the ADF environment that directly or indirectly discriminate against the recruitment, retention, development and management of women.

To gain a greater understanding of the issues facing Defence women, since 1 July 2008 the then Minister for Defence Science and Personnel held 15 ministerial meetings with both ADF and civilian women, across a broad range of ranks, experiences and length of service.

To improve the recruitment of women to the ADF, Defence Force Recruiting is continuing to implement the ADF Recruitment of Women Strategy. This strategy aims to increase the number of women recruited by improving awareness of the career options available and by better preparing candidates for the physical and mental challenges they will encounter.

To improve retention, Defence is continuing to investigate strategies in the areas of career management, flexible working arrangements, training and professional development, work and family balance and support. In March 2009, the CDF developed an action plan to consolidate current initiatives linked to gender, the outcomes of the round table meetings and the reference group initiatives.

The three Services are also implementing personnel initiatives that will have a direct impact on the retention and development of women.

Examples of initiatives in the Navy included the cultural reform component of New Generation Navy and involvement with the Australian Women’s Leadership Symposium. The Army initiatives included efforts to improve representation in combat support roles and new tailored physical fitness and reconditioning programs for women. Examples within the Air Force included a new ‘inclusivity’ program, efforts to ensure female representation in key positions as role models, and investigating a ‘Stay in Touch’ initiative to actively engage members during extended periods of leave and make it easier for them to transition back to work.

Indigenous participationThe Directorate of Indigenous Affairs was launched in July 2008 to provide a single point of contact for Defence Indigenous issues. The Directorate oversees the implementation of initiatives and strategies arising from the Defence Reconciliation Action Plan which is available at www.defence.gov.au/fr.



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The report on the Defence Reconciliation Action Plan 2007-2009, will be available online, and outlines what Defence has done to advance Indigenous recruitment, retention and participation in the last two years. Development of the Defence Reconcilation Action Plan 2010-12 is continuing following extensive consultation with the ADF, including the Regional Force Surveillance Units, APS employees and external stakeholders.

The ADF Indigenous Employment Strategy, which was formally launched by the then Minister of Defence Science and Personnel in July 2008, encompasses initiatives to attract and recruit more Indigenous people from remote, regional and urban communities throughout Australia. Work is in progress under its three themes of changing perceptions; specialised pathways; and ongoing support to Indigenous ADF members. A cultural integration package is being developed to assist Defence workplaces in embracing cultural diversity on a daily basis. Indigenous pre-recruitment courses have been trialed in Townsville, Newcastle and Western Sydney, resulting in a promising level of enlistments. The Defence Aboriginal and Torres Strait Islander Network has been reinvigorated with 110 delegates registered for a conference planned for July 2009.

The APS Indigenous Employment Strategy is under review to comprehensively address the attraction and retention of Indigenous Australians through increasing opportunities to participate more fully in the Defence APS workforce. This includes participation by Defence in the National Indigenous Cadetship Project, Indigenous Graduate Recruitment, Indigenous entry level recruitment and the Indigenous Contract Management Diploma Course. Directorate APS staff have attended several Indigenous Employment and Careers Expos in Queensland. In addition, the Defence Science Indigenous Scholarship was awarded for the first time in March 2009.

People with a disabilityDefence's reporting requirements in its employer role under the Commonwealth Disability Strategy framework are met by its input into the annual Australian Public Service Commission’s State of the Service Report.

The Disability Action Plan, published by Defence in December 2008, is structured around the recommendations of the Management Advisory Committee's 2006 report Employment of people with disability in the APS. Deputy Secretary People Strategies and Policy is the Defence Diversity Champion and, as part of Defence's ongoing commitment to whole–of–government initiatives, is participating in an APS–wide committee that will drive the employment of people with disability more broadly across the APS.

The implementation of the action plan has focused on removing barriers to employment and supporting existing employees with disability.

In partnership with the Australian Employers’ Network on Disability, Defence participated in a paid work experience program and provided placements for three students. Recruitment advertising and information packs material have been reviewed and a diversity statement included.

To support retention, Defence has established an online network, undertaken a review of the reasonable adjustment policy and updated the disability intranet website. The process for the delivery of assistive technology has been revised and delivery times improved. Additionally, training and resources have been provided to supervisors of employees with disability.

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OCCUPATIONAL HEALTH & SAFETYOccupational Health & Safety Management System developmentProgress with realising the objectives and priorities of the Defence Occupational Health and Safety Strategy 2007-2012 occurred under the oversight of a reinvigorated Defence OHS Committee. The committee is now jointly chaired by the Deputy Secretary People Strategies and Policy and the Vice Chief Defence Force (VCDF), with the broader membership expanded to include representation from the Services and those Groups that play a key role in influencing OHS outcomes across the organisation. Members renewed their commitment to promoting a culture of safety throughout Defence, and prioritising the management of health and safety within core business.

The Services and Groups continued to effect improvements in their systems to ensure alignment with the whole-of-Defence OHS Management System. In addition, significant effort was invested in determining the future development path for evolving and maturing Defence’s occupational medicine and occupational hygiene capability.

Education and awareness, recognition & rewardExperts in OHS have long recognised that strong leadership and an active learning culture will improve occupational accident, injury and illness performance within an organisation. Defence is committed to improving these aspects of its OHS performance and has in place an expanding range of education and awareness programs aimed at achieving greater levels of knowledge and commitment.

This year marked the sixth year of the Defence Occupational Health and Safety Awards, which represent the pinnacle of occupational health and safety awards within Defence. The awards are targeted at recognising and rewarding innovative OHS practices and solutions.

The quality and innovation of solutions shown by entrants to these awards continues to improve, indicating Defence people recognise that they can individually, and as part of a team, improve occupational health and safety in their workplaces. Winners of Defence Awards continue to achieve national recognition and success at the Safety, Rehabilitation and Compensation Commission Safety Awards and in the Australian Safety and Compensation Council – Safe Work Australia Awards.

Safety, Rehabilitation and Compensation Commission Safety Awards finalists included Defence Support Group, South Australia for the ‘Flying the Falcons’ program, which provided an alternative approach to bird management at Defence establishments. Lieutenant Commander Tracey Elliot received a high commendation for her work on developing an injury prevention and fitness program for Australian Defence Force Academy Cadets. Defence has finalists and winners in the 2009 awards to be presented in September 2009.

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Management informationDefence recognises the importance of information to understand and effectively manage its OHS performance. A project is underway that will acquire a commercial-off-the-shelf management information system. The Occupational Health and Safety Management Information System will be an enterprise wide solution for use by personnel throughout the Groups and Services. Its use will enable identifying areas to improve occupational health and safety outcomes with the potential to reduce the high capability and financial costs of work-related injuries and illnesses.

Defence Civilian Injury/Illness Prevention & Management SystemDefence investment in the prevention and management of workplace injury and illness through the Defence Civilian Injury/Illness Prevention and Management System, has resulted in a 12 per cent reduction in the incidence of work related injury and illness in 2008-09. An 81 per cent return to work performance for 2008-09 compares favourably with the overall performance of all Commonwealth agencies.

The effectiveness of the Defence Civilian Injury/Illness Prevention and Management System is also evident through a further reduction in the Defence civilian workers’ compensation premium rate from 1.27 per cent of payroll in 2007-08 to 1.01 per cent for 2008-09, well below the Commonwealth average of 1.36 per cent.

ADF Rehabilitation ProgramThe ADF Rehabilitation Program was developed to ensure that injured or ill ADF members receive early referral for rehabilitation assessment and coordinated management to deal with their injury or illness quickly, thereby supporting their early return to duty. The rate of referrals decreased marginally during the year as a result of improved understanding on the part of Medical Officers as to how to best use referral triggers for the system to achieve positive outcomes. The case closure rate reduced slightly during the year as a result of the initial introduction of the ISIS accounts processing system. The program met budget targets, with an efficiency and effectiveness model applied ensuring rehabilitation cases only remained open which offered value to the ADF member and value for money for Defence.

Health and Safety Management ArrangementsHealth and safety management arrangements apply to ADF members and Defence employees as well as contractors and third parties in certain circumstances. Defence has implemented health and safety management arrangements within a flexible framework, taking into consideration the risks, hazards and organisational structure and size of units, ships, bases and establishments.

Notification and reporting of incidentsThe collection of OHS information such as incidents provides an ongoing record for Defence people who have suffered an injury or exposure. This information may later be retrieved if a compensation claim is made. Moreover, it enables Defence to identify trends when developing preventative strategies and OHS policy, ensuring a safer working environment. The figures shown in the following three tables may be updated in subsequent years to include incidents that occurred in previous years but which may not have been reported or recorded for that year at the time of preparation of that year’s annual report.

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Table A7.21 Incident reporting[1]

NOTES

1. Includes all people working for, or affected by, Defence undertakings, that is ADF, APS, Reserves, contractors and members of the public.

2. Includes the DMO's incident reports.

3. An incident report records an event that causes, or has potential to cause, injury or illness to Defence employees or other people, as a result of a Defence undertaking.

4. Comcare reportable deaths.

5. Serious personal injury is defined as an injury or disease in a person caused by work–related employment for which the person needs to be given emergency treatment by a registered medical practitioner, treated in a hospital as a casualty without being admitted to hospital, or admitted to hospital.

6. Incapacity is when an employee is unable to perform work for 30 or more consecutive days or shifts.

7. A dangerous occurrence is a near miss event that could have, but did not result in fatality, serious personal injury or incapacity. This includes exposures.

Incident Performance ReportingFigure A7.15 Comcare Reportable Incidents 2008-09

2006-07 2007-08 2008-09

Total incident reports[2][3] 18,474 16,389 14,207

Comcare notifiable deaths[4] 3 3 9

Serious personal injury[5] 897 1,119 1,214

Incapacity[6] 241 166 104

Dangerous occurrence[7] 1,249 1,337 1,358Total Comcare notifiable 2,390 2,625 2,685

1,500

1,250

1,000

750

500

250

0

2004-05 2005-06 2006-07 2007-08 2008-09

Death Incapacity Dangerous occurenceSerious personal injury

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Investigations by ComcareDetails of investigations conducted by Comcare across Defence over the last three years are reported in the following table.

Table A7.22 Investigations by Comcare[1]

NOTES

1. Includes DMO data.

2. Comcare undertakes three categories of OHS investigations: review of previous investigation, targeted (at specific OHS concerns), and reactive (in response to an accident or incident).

Notices issued to Defence by Comcare investigatorsThe number of notices issued to Defence by Comcare investigators over the last three years is reported in the following table.

Table A7.23 Comcare notices[1]

NOTES

1. Includes DMO data.

2. Based on incidents and occurrences that contravene the OHS Act or Regulations.

3. Issued to remove an immediate threat to the health or safety of personnel.

4. Issued for a specific period of time to remove a threat to the health or safety of personnel.

5. Issued to individuals to inform them of a specific breach of the OHS Act.

6. Issued when Comcare requires plant or substances from an incident as evidence, or to carry out testing.

7. Issued where an investigation reveals a breach of the Act but Comcare has decided not to pursue a statutory enforcement option

2006-07 2007-08 2008-09

Reports[2]

Review of previous investigations 11 17 1Targeted investigations 2 13 4Reactive investigations 56 69 44Total 69 99 49

Reports 2006-07 2007-08 2008-09

Improvement notices[2] 19 3 5

Prohibition notices[3] 6 7 4

Do not disturb notices[4] 3 3 5

Letters of statutory obligation[5] 4 - -

Removal of plant or substances[6] 1 1 1

Letter of Warning[7] – – 1Total 33 14 16

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Federal Court ProsecutionIn 2007, an Australian Army Cadet died as the result of a peanut allergy while participating in a Unit bivouac in the Wombat State Forest, Victoria. Details of the Federal Court’s findings are discussed in Chapter 6 - External Scrutiny.

In addition to the civil proceedings, Comcare has accepted an enforceable undertaking from the ADF, which requires the ADF to make mandatory improvements in its systems to protect cadet safety. Comcare will be closely monitoring the Australian Defence Force implementation of the enforceable undertaking to ensure that the objective of safety in cadet activities is met. The major remedial actions involve:

• reviewing and improving the Army Cadet risk management framework, policies and training

• reviewing and improving warning labels on combat ration packs and restricting issue.

Asbestos ManagementComcare commenced an investigation into the Navy’s alleged use of asbestos without exemptions on 9 December 2008. The focus of the Comcare investigation is on ensuring that there is no immediate risk to Navy personnel, contractors and the public. Comcare is examining Defence’s systems to identify and control use of asbestos in naval platforms and will determine if there were any breaches of OHS laws. Defence continues to assist Comcare and the Safety Rehabilitation and Compensation Commission in the conduct of the investigation.

As this is a whole of Defence management issue, governance arrangements have been revised, with the VCDF now the single point of authority and accountability. A working group has also been established to guide implementation of Defence's Asbestos Eradication and Management Plan. A key element of this plan is to conduct a 100 per cent physical audit of all ADF sites.

COMPLAINT HANDLING & RESOLUTIONADF Redress of Grievance 257 new applications for redress of grievance were received. Of these, 117 (45.5 per cent) were withdrawn1, not granted or not reviewable; the remainder being granted, partially granted or still under review. 259 applications were finalised at unit level. Of these, 150 (58 per cent) were withdrawn, not granted or not reviewable; the remainder being granted or partly granted2. The primary focus of complaints remain termination of service decisions, career management issues, and conditions of service entitlements

Approximately one third of applicants who are dissatisfied with the redress decision of their commanding officer refer their complaint to their Service Chief or to the CDF for further review.

1. Withdrawn complaints are those withdrawn by the member prior to the authority making a formal decision on the merits of the complaint. This includes complaints withdrawn due to an acceptable outcome being provided through administrative resolution or alternative dispute resolution, and those withdrawn because the member does not wish to proceed with the complaint.2. Redresses of grievance recorded as finalised may have been received in the preceding year. Redresses of grievance are finalised when the complainant chooses not to pursue the grievance further or when the process of inquiry and merit decision is complete. A complainant who is not satisfied with the out-come of a redress of grievance submitted at unit level has a right to refer the complaint for inquiry by the Service Chief. Officers, warrant officers, chief petty officers and flight sergeants have a further right to refer the complaint for inquiry by the CDF if not satisfied with the Service Chief level inquiry.

APPENDIX 7 PEOPLE


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When a redress of grievance is referred to the CDF or a Service Chief, priority is allocated based on the nature of the complaint. Higher numbers of referrals contesting termination of service decisions, particularly under Part VIII of the Defence Act 1903, is creating a backlog of cases as these cases are given the highest priority. As a consequence there has been an increase in the number of referrals to the Defence Force Ombudsman complaining of delays in processing redresses of grievance to the Service Chiefs.

Figure A7.16 Military redresses of grievance received and finalised 2006–07 to 2008–09275

270

265

260

255

250

245

240

235

230

225

265

2006-07 2007-08 2008-09

Received Finalised

270

257

241

248

259

APS Review of Actions The total number of applications for Review of Actions received across Defence increased by 20 from 66 the previous year. This past year has seen Fairness and Resolution Branch provide additional training and advice to regional Review of Actions delegates and their staff, with a particular focus on assessing the entitlement to review and how to best manage applications accepted for review. This ‘outreach’ is considered to have increased the general awareness of the Review Of Actions review entitlement in Defence and therefore contributed to the increase in the overall applications received.

APPENDIX 7 PEOPLE


Figure A7.17 APS reviews of actions received and finalised, 2006–07 to 2008–09[1]

NOTE

1. Includes DMO figures.

Unacceptable BehaviourIn 2008–09, 873 complaints of unacceptable behaviour were received. Although there has been a 12 per cent increase from last year, this figure continues to represent complaints from less than one per cent of the Defence workforce. During the reporting period, 822 complaints were finalised with 551 (63 per cent) being substantiated.

Figure A7.18 shows the total number of complaints reported over the past three years. This includes ADF members, Defence APS employees, complaints against contractors or where the identity of the respondent is unknown.

Figure A7.18 Reported unacceptable behaviour complaints received and finalised, 2006–07 to 2008–09[1]

NOTE


100

90

80

70

60

50

40

30

20

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73

Received

2006-07 2007-08 2008-09

Finalised

66

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800

700

600

500

400

300

200

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846

2006-07 2007-08 2008-09

Received Finalised

766

873

648

506

822

APPENDIX 7 PEOPLE


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Alternative Dispute Resolution, Prevention & Early Intervention StrategiesFairness and Resolution Centres in each mainland capital city provide a one–stop–shop for assistance and support in relation to dispute resolution and equity issues for the Defence population.

Significant focus in 2008 and 2009 has been placed on improving prevention and early intervention strategies and processes to enhance the capacity of commanders, managers and individuals to resolve conflict in the workplace. These strategies assist personnel to better understand a difficult workplace dynamic that adversely impacts on them, and then helps them to develop creative and constructive options and alternatives for early and effective resolution.

In addition, a suite of Defence on-line learning and face-to-face awareness and training packages has been developed during 2008-09 to assist commanders, managers and individuals in the timely resolution of workplace conflict.

The increased use of these services and support is a positive shift away from reliance on formal complaint procedures.

Figure A7.19 Alternative dispute resolution interventions, 2006–07 to 2008–09[1]

NOTE


300

250

200

150

100

50

0

2531

03

Mediation

2006-07 2007-08 2008-09

Workplace conference Conflict coaching Interactive problem solving

85

123

79

81

136

270

8

APPENDIX 7 PEOPLE


COMPENSATION FOR DETRIMENT CAUSED BY DEFECTIVE ADMINISTRATIONThe Defence Legal Division in Defence Support manages claims made under the Compensation for Detriment Caused by Defective Administration (CDDA) scheme. The Department of Finance and Deregulation has general oversight of the scheme1.

In Defence, the majority of claims made under the scheme are from current serving and former members of the ADF. Although the scheme has not been developed specifically to deal with ADF disputes, it is a means by which ADF members can seek compensation, whether or not their redress of grievance has been upheld. The restrictive criteria that apply under the scheme means that compensation cannot be awarded in many instances, although the member may have grounds for complaint.

A revised Chief Executive Instruction on the range of discretionary mechanisms was released on 1 July 2009. These mechanisms include the CDDA scheme, compensation under section 73 of the Public Service Act 1999, and Act of Grace and ex-gratia payments. The revised Chief Executive Instruction describes the mechanisms more broadly, with specific reference to the Finance Circular 2006/05 – Discretionary Compensation Mechanisms.

Table A7.24 Compensation for Detriment Cause by Defective Administration Claims Summary

APS CODE OF CONDUCT The Australian Public Service (APS) Code of Conduct and APS values are set out in the Public Service Act 1999. The code sets out the conduct expected of APS employees and obliges all employees to uphold the APS values. The values establish the framework in which the APS operates, underpinning relationships and behaviour.

During 2008-09, Defence finalised investigations of 107 employees for breaches of the Code of Conduct. This figure represents less than one per cent of the Defence APS workforce. The total number of suspected breaches was 157 (note that an employee can be suspected of more than one breach). Of the 107 employees investigated, 45 were found to have breached at least one element of the code and 71 sanctions were imposed. Employment was terminated in seven cases, reduction in classification was applied in five cases and a financial penalty was applied in 22 cases. The remaining sanctions involved formal reprimands and counselling. A further 18 employees resigned during the investigative process and before any sanctions were imposed.

1. An explanation of how the scheme and other discretionary remedies operate can be found on the Department of Finance and Deregulation website at www.finance.gov.au.

Financial Year Claims Received Payments Made Amounts Paid ($)2008-09 41 20 624,5582007-08 34 19 451,4972006-07 40 20 652,0352005-06 50 20 321,6602004-05 47 29 332,0622003-04 54 21 359,010

http://www.finance.gov.au

http://www.finance.gov.au

APPENDIX 7 PEOPLE


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Of the 45 employees found to have breached the Code this year, five appealed to the Office of the Merit Protection Commissioner for reviews of the finding of a breach and the sanctions applied. The Commissioner upheld the delegate’s decisions in four of the cases and declined to review the fifth case.

In 2008-09, there was an increase in cases of bullying and harassment cases as well as inappropriate behaviour cases. Several of these did not proceed to the finding of a breach as the respondents were found to be medically not fit for duty.

Table A7.25 Code of conduct investigations2006-07 2007-08 2008-09

Number of employees investigated 86 126 107Number of employees who breached the Code 67 79 45Number of sanctions issued 86 166 71Terminations 9 14 7Financial sanctions 22 34 27


APPENDIX 8PURCHASING & CONTRACTING

ASSESSMENT OF PURCHASING AGAINST CORE POLICIES & PRINCIPLES Defence's purchasing policies are developed and managed by the DMO in accordance with the Commonwealth Procurement Guidelines. Defence's purchasing activities are governed by the Defence Chief Executive Instructions and a range of associated internal guidance on procurement processes and practices. During 2008-09, this ensured that Defence's purchasing was undertaken in an accountable and transparent manner compliant with relevant legislation and general Government policies. Competitive procurement processes were encouraged, ensuring value for money through the efficient, effective and ethical use of resources. As required by the Commonwealth Procurement Guidelines, Defence's Annual Procurement Plan 2008-09 is available online at www.tenders.gov.au.

As an initiative of the Strategic Reform Program, a centre of procurement and contracting excellence will be established in the Defence Support Group to provide guidance and strategies to ensure Defence non-equipment procurement is undertaken with an improved commercial approach. Additionally, these reforms will ensure an efficient and consistent approach to non-equipment procurement and contracting across the whole of Defence.

Purchaser-provider arrangementsDefence Materiel OrganisationUnder the Defence/DMO Business Model acquisition and sustainment of capital equipment are governed by a series of Materiel Acquisition Agreements and Materiel Sustainment Agreements. An initial prepayment transaction is made to the DMO at the commencement of each financial year based on all approved activities. Based upon advice provided by the DMO, Defence’s prepayment is progressively reduced during the year as expenses are recorded, or assets recognised.

The acquisition of major and minor capital equipment is governed by a series of Materiel Acquisition Agreements between Defence and the DMO. The 2008-09 prepayment was based upon estimated cash flow requirements for all currently approved major capital projects, including their operating component.

The sustainment of equipment by the DMO is governed by a series of Materiel Sustainment Agreements. The 2008-09 prepayment covered the product costs for all materiel products. The contracted component covers payments by the DMO to external suppliers for repairs and maintenance, inventory purchases including explosive ordnance, general stores, fuel and repairable items.

http://www.tenders.gov.au/

APPENDIX 8 PURCHASING & CONTRACTING


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The DMO also received prepayment for both acquisition and sustainment service fees from Defence for new government approvals throughout the year. The DMO acquisition service fee is funded on the basis that it will cover project staffing and associated overheads. Similarly, the DMO sustainment service fee covers the DMO operating costs, including staff and overheads in the delivery of the sustainment program. From 2009-10, the DMO’s operating costs will be directly appropriated to the DMO.

Department of Foreign Affairs & Trade Defence maintains a service-level agreement and a memorandum of understanding with the Department of Foreign Affairs and Trade (DFAT) for the provision of services at DFAT-managed overseas posts. The agreement facilitates efficient and effective Australian Government business overseas by avoiding unnecessary duplication of common services at overseas posts.

The services provided for Defence under the agreement include personnel administration, residential and office accommodation, security, financial advice and transactional processing for Australian-based and program support staff engaged at overseas posts. The cost of the agreement was $3.9m in 2008-09.

Defence Housing AustraliaDefence and Defence Housing Australia (DHA) have two formal agreements: the Services Agreement for Housing and Related Requirements (the Services Agreement); and the Relocation Services Agreement. The agreements formalise the relationship between Defence as purchaser and DHA as provider of housing and related services.

During 2008-09, the Services Agreement was reviewed to incorporate the allocation and tenancy management of Defence housing into the contract arrangements as an Addendum. Under the agreement, DHA continues to provide suitable housing for Defence members to meet the operational needs of Defence in accordance with Defence policy. Defence expects DHA to provide appropriate numbers of houses in suitable locations in accordance with Defence policy. Under the Relocation Services Agreement DHA coordinates and administers domestic relocations.

During 2008–09, the cost to Defence for DHA to provide housing and relocation services for ADF members was $452.4m. This amount includes a number of projects initiated by Defence to address specific housing needs, including upgrading of on-base heritage housing and the implementation of the Member Choice Accommodation for Members Without Dependents posted to Darwin.

ComcareDefence pays an annual workers compensation premium to Comcare to meet the cost of workers compensation claims for APS personnel who suffer work-related injuries or illnesses during the year and the cost of managing those claims. The premium paid for 2008-09 was $13.3m.

Defence is also required to pay regulatory contributions to Comcare to fund costs incurred by Comcare and the Safety Rehabilitation and Compensation Commission for regulatory functions performed under the Safety Rehabilitation and Compensation Act 1988 and the Occupational Health and Safety Act 1991. For 2008-09, the regulatory contributions were $6.2m for the ADF and $0.5m for APS personnel.

Defence has a positive working relationship with Comcare, which promotes regular review of claims management performance and Defence’s injury prevention and return to work performance indicators, as well as sharing information to improve performance. Defence was satisfied with the level of service provided by Comcare in 2008-09.



ComSuperDefence pays ComSuper an agreed annual administration fee for providing administration services (excluding optional administration services) for current and former military personnel who are either contributing, deferred benefit, or pensioner members of the MSBS, DFRDB or the Defence Forces Retirement Benefits Scheme. The expenses for 2008-09 were $23.22m.

The Department of Finance and Deregulation is responsible for negotiating the Commonwealth-wide superannuation administration services provided by ComSuper for APS employees. Defence is required to pay the fees negotiated for APS employees which for 2008-09 were $3.807m.

Performance service level standards which form part of the 2007-09 Service Level Agreement negotiated with the MSB Board, the DFRDB Authority, ComSuper and Defence, apply to the delivery of services provided by ComSuper. ComSuper’s overall performance against its service level standards for 2008-09 was 88.25 per cent, representing a 4.25 per cent increase from the previous year.

The improvement results from initiatives and changes put in place during the year. These have resulted in the payment of benefits in a timelier manner, the issue of member statements earlier, improvements in the processing and reconsideration of invalidity matters and the more effective handling of complaints and ministerial representations.



Cont

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CONTRACTS ANAO access clausesThe Defence contracting templates include standard clauses providing for Auditor-General access to contractor and major subcontractors premises, records and accounts. Defence has identified the following contracts which do not comply with the requirement to provide Auditor-General access.

Table A8.1 Contracts that do not include the ANAO access clauseContractor Amount Purpose Reason for exclusionProject Outcomes Pty Ltd

$519,930 Support for the Interim Flight Screening and Basic Flying Training Project Team

Contract was entered into under DMOSS standing offer panel. Deed for DMOSS was signed in 2005.

CIT Solutions Pty Ltd $134,518 Provision of civil accreditation for Air Force

Contract was drafted prior to DPPI 11/2008 being issued (contract was effective 1 August 2008).

CIT Solutions Pty Ltd $102,888 Air Force accreditation Contract was drafted prior to DPPI 11/2008 being issued (contract was effective 1 August 2008).

LAM Agency Pty Ltd $1,950,000 Developing, maintaining and evaluating local area marketing for Defence Force Recruiting Centres (DFRCs) and Army Reserve Units

Contract was drafted by legal advisors engaged through Defence Legal. The contract does not make specific provision for audit access, but includes the following clause:8.6.1 During the performance of the Contract, the Contractor shall permit the Commonwealth Representative or any person authorised by the Commonwealth Representative access to its premises, and access to any of its records or accounts in connection with performance of work under the Contract. The Commonwealth may copy any records or accounts for the purposes of the Contract.

Australian Surf Rowing Team

$166,000 Defence sponsorship Sponsorship standard agreements were developed by legal advisors engaged through Defence Legal.

Australian Football League (AFL)

$900,000 Defence advertisements

Sponsorship standard agreements were developed by legal advisors engaged through Defence Legal.



Contracts exempt from AusTenderIn 2008-09, Defence reported a total of 59 contracts, standing offers or variations thereto, with a total value of $83.525m, which were subject to an exemption under the Freedom of Information Act 1982.

ConsultanciesDefence engages consultants where it lacks specialist expertise or when independent research and assessment are required. The process for selecting consultants is consistent with the Commonwealth Procurement Guidelines and Defence’s procurement policies.

During 2008-09, Defence entered into 817 new consultancy contracts reporting total actual expenditure (including GST) of $41.1m. In addition, 508 ongoing consultancy contracts report a total $31.7m actual expenditure (including GST).

Information on consultancy contracts can be found on the AusTender website at www.tenders.gov.au.

Table A8.2 Total expenditure on consulting contracts over 3 years, 2006-07 to 2008-09

Table A8.3 shows a summary by Defence Group of consultancies let with a total contract value of $10,000 (including GST) or more, in 2008-09. The details of consultancy contracts let in 2008-09 are available in the online version of this Report on the Defence website at www.defence.gov.au/annualreports.

Table A8.3 Consultancies let in 2008-09 by Output Group

2006-07 2007-08 2008-09

$47.3m $68.0m $72.8m

Output GroupNumber of

contracts letTotal contract

value ($)

Office of the Secretary and CDF 16 1,210,351

Navy Capabilities 4 2,319,437

Army Capabilities 20 2,026,610

Air Force Capabilities 4 383,959

Intelligence Capabilities 19 1,401,243

Defence Support 347 29,763,159

Defence Science and Technology 5 176,082

Chief Information Officer 17 8,728,845

Vice Chief of the Defence Force 41 9,286,640

Joint Operations Command 5 2,454,762

Chief Finance Officer 6 2,204,155

People Strategies and Policy 23 1,383,113

Total 507 61,338,356

http://www.tenders.gov.au/




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LEGAL EXPENSESExpenditure on internal and external legal services in 2008-09 is shown in the following tables. Internal expenses include salaries for military and civilian staff, divisional operating costs and military justice reimbursements. External expenses are professional fees, disbursements and legal assistance at Commonwealth expense.

Table A8.4 Estimated Expenditure on Internal and External Legal Services 2007-08 and 2008-09

Table A8.5 Estimated Cost Breakdown of Internal Legal Expenses

Table A8.6 Estimated Cost Breakdown of External Legal Expenses

ADVERTISING & MARKET RESEARCHParticulars of amounts relating to advertising and market research paid by, or on behalf of, Defence during 2008-09 are shown in the following tables, including details of the persons or organisations paid. Particulars of payments less than $10,900 (including GST) are not included. Advertising and market research information for the DMO is available in Volume 2 of this report.

Type of Legal Expenditure2007-08

$m2008-09

$mInternal 30.2 34.6External 26.4 24.9Total 56.6 59.5

Items2007-08

$m2008-09

$mSalaries for military lawyers 12.3 13.1Salaries for civilian staff 10.1 11.9ADF Reserve legal officers 4.7 5.6Operating costs of Defence Legal Division 2.5 2.2Military justice reimbursements 0.6 1.8Total 30.2 34.6

Items2007-08

$m2008-09

$m

Professional fees—Defence legal panel 20.4 21.0Disbursements 4.4 3.3Legal Assistance at Commonwealth Expense 1.6 0.6Total 26.4 24.9



Table A8.7 Total advertising and market research expenditure by type of agency

Table A8.8 Total advertising and market research expenditure by Output Group

NOTES

1. At the end of 2008-09 International Policy moved to the Office of the Secretary and CDF Group.

2. Joint health services have moved from Defence Support Group to Vice Chief of the Defence Force Group.

2006-07 2007-08 2008-09$ $ $

Advertising 8,023,058 6,627,677 19,630,165Market Research 1,096,037 1,340,252 646,701Polling - - -Direct Mail - 81,652 224,033Media Advertising 25,810,444 35,249,329 34,600,399

Total 34,929,539 43,298,910 55,101,298

2006-07 2007-08 2008-09$ $ $

Office of the Secretary and Chief of the Defence Force Group [1] - 166,063 141,179Navy 675,279 396,950 259,737Army 334,319 169,071 147,678Air Force 323,085 417,846 307,672

Intelligence, Security & International Policy [1] 1,564,418 969,749 497,371

Defence Support Group [2] 1,808,044 1,943,137 1,300,542Defence Science and Technology Organisation 728,744 345,373 94,394Chief Information Officer Group 169,854 190,973 328,796

Vice Chief of the Defence Force Group [2] 131,278 1,466,167 482,421Joint Operations Command 22,747 51,631 15,413Capability Development Group - - -Chief Finance Officer Group - 28,783 35,115People Strategies and Policy Group 29,171,771 37,153,167 51,385,840Total 34,929,539 43,298,910 54,996,158



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Table A8.9 Particulars of advertising and market research by Output Group2008-09 Purpose

$Office of the Secretary and Chief of the Defence Force GroupAdvertising

HMA Blaze Pty Ltd 87,290 Recruitment advertising — CivilianHMA Blaze Pty Ltd 53,889 Public Notices

Total Office of the Secretary & Chief of the Defence Force Group

141,179

NavyAdvertising

HMA Blaze Pty Ltd 68,235 Recruitment advertising Universal McCann Australia 24,920 Recruitment advertisingNavy Newspaper 32,356 General advertising

Media Advertising Universal McCann Australia 92,560 Advertising - Fleet Air Arm Museum & RAN

Heritage CollectionHMA Blaze Pty Ltd 20,840 Advertisement placements including

dissemination feesSpatchurst Design Associates Pty Ltd

20,826 Advertising - Fleet Air Arm Museum & RAN Heritage Collection

Total Navy 259,737 ArmyMedia Advertising

HMA Blaze Pty Ltd 47,264 Public AnnouncementsArmy Newspaper 26,517 Public AnnouncementsHMA Blaze Pty Ltd 11,083 Recruitment advertising - CivilianArmy Newspaper 32,785 Recruitment advertising - MilitaryNavy Newspaper 11,743 Recruitment advertising - MilitaryRAAF Newspaper 18,288 Recruitment advertising - Military

Total Army 147,678 Air Force Advertising

White Pages 14,698 Directory ListingAffiliate Marketing Solutions Pty Ltd

20,000 Online advertising - Facebook and NineMSN

Paula M Promotions 20,596 Advertising / promotional materialsHMA Blaze Pty Ltd 153,548 Recruitment Advertising

Media Advertising Fairfax Radio Network 42,230 Promotional / recruitment advertisingKids Media Pty Ltd 56,600 Promotional / recruitment advertising

Total Air Force 307,672 Intelligence, Security & International Policy Advertising

Expressions 12,823 Development of marketing programMedia Advertising

HMA Blaze Pty Ltd 467,082 Recruitment advertisingHaymarket Media 17,466 Recruitment advertising

Total Intelligence, Security & International Policy

497,371



Defence Support GroupAdvertising

HMA Blaze Pty Ltd 1,023,895 Recruitment advertising — CivilianAPS Commission 276,647 Recruitment advertising — Civilian

Total Defence Support Group 1,300,542Defence Science and Technology Organisation

Advertising

HMA Blaze Pty Ltd 94,394 Recruitment advertising — Civilian

Total Defence Science and Technology Organisation

94,394

Chief Information Officer GroupAdvertising

HMA Blaze Pty Ltd 181,178 Recruitment advertising — Civilian

Media Advertising

The Australian 100,836

The Canberra Times 46,782

Total Chief Information Officer Group

328,796

Vice Chief of the Defence Force GroupAdvertising

Lawrence Computing 11,375 Civilian recruitment advertisingMedia Advertising

Universal McCann 245,754 Defence Reserve Support Council Communication Strategy

HMA Blaze Pty Ltd 88,144 Advertising generalHMA Blaze Pty Ltd 137,148 Civilian Recruitment advertising

Total Vice Chief of the Defence Force Group

482,421

Joint Operations CommandAdvertising

Island Sun Newspaper 15,413 Weapon firing practice (firing area safety alerts)

Total Joint Operations Command

15,413

Chief Finance Officer GroupMedia Advertising

The Canberra Times 13,995 Recruitment advertising — CivilianThe Australian 21,120 Recruitment advertising — Civilian

Total Chief Finance Officer Group

35,115

People Strategies and PolicyAdvertising

HMA Blaze Pty Ltd 2,058,806 Planning and placement of non-campaign advertising for Defence Force Recruitment

HMA Blaze Pty Ltd 106,868 Recruitment advertising - CivilianGeorge Paterson Y&R Pty Ltd 6,175,394 Printing, Production, Retainer Fees

2008-09 Purpose$



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Visual Jazz 3,197,645 Online Advertisement CreationADIQ Pty Ltd 127,500 Data collection for campaign advertisingAFL Northern Territory 50,000 General SponsorshipAustralian Association of Career Councillors

65,600 Sponsorship of CDAA Conference

Australian Business Case Studies Pty Ltd

35,000 Business Case Study Project

Australian Football League 1,270,088 SponsorshipAustralian Medical Students Association

24,409 2008 Sponsorship AMSA

Australian Surf Rowers 163,368 Sponsorship & Navy Naming RightsAwards Australia 60,000 SponsorshipBasketball Australia 205,085 Sponsorship of WNBLWorkz4u Ltd 13,637 Annual Scientific Meeting-Trauma SocietyEngineering Australia 20,091 SponsorshipEOC Group 208,474 Sponsorship-Employment ExposHobsons Australia Pty Ltd 23,500 Sponsorship of ACS SeminarsLAM Agency Pty Ltd 1,889,726 Non-campaign media advertising for Defence

Force RecruitingManpower Services (Aust) Pty Ltd

808,518 Event Vehicle Program running costs. Merchandise.

Medical Student Association Notre

12,273 Sponsorship Activities 2009

Melbourne Careers Expo Pty Ltd

18,900 Exhibitor Fees

Military Shop 12,317 Merchandise Funding for Army AviationReed Business Information Pty Ltd

17,225 General Practitioners Conference

Regent Cinemas 82,164 ADF Careers cinema advertisingReinvent Your Career 24,720 Career ExposRoyal Agriculture Society of NSW

13,118 Exhibition Space at Royal Easter Show

Ryebuck Media Pty Ltd 675,000 Management fees for the implementation of the Defence 2020 program

Self Adhesive Markings 12,971 Navy crest, Surf RowersSensis Pty Ltd 50,000 WAP AdvertisingVETNETWORK 15,000 Sponsorship of Conference

Market Research

Open Mind Research Group Pty Ltd

120,268 Qualitative research to maximise ADF recruitment targets

Blue Moon 200,150 Market Research on ADF recruitment

Visual Jazz 13,614 Buzz monitoring Project

Woolcott Research Pty Ltd 311,960 Qualitative research to maximise ADF recruitment targets

Direct Mail Canprint rebilled by Manpower

138,537 Direct Marketing campaign

2008-09 Purpose$



Canberra Mailing & Envelopes 64,551 Store & Distribute merchandise & collateUnimail Pty Ltd 18,025 Unigrad and Univac Package

Media Advertising Universal McCann Australia 33,081,338 Advertisement placement including

dissemination feesTotal PSP Group 51,385,840

2008-09 Purpose$


APPENDIX 9 FINANCIAL

TRANSPARENCYASSET MANAGEMENTDefence manages some $61.6b in assets. This comprises approximately $33.9b of specialist military equipment, $13.9b of land and buildings, $4.9b of inventory, $0.9b of heritage and cultural assets, $0.5b of intangibles and $7.5b of other assets such as cash, receivables and prepayments.

In accordance with section 44 of the Financial Management and Accountability Act 1997, the Chief Executive of Defence has a responsibility to manage Defence assets in a way that promotes efficient, effective and ethical use of Commonwealth resources.

Although Defence reports major non-financial assets on its balance sheet, the DMO acts as project manager on behalf of Defence for both the acquisition and sustainment of Defence military assets and inventories.

During 2008-09, Defence continued to build on the 2007-08 improvements in asset management and reporting, particularly in relation to monitoring and reporting of non-control accounts, and improving system and business process controls. This included:

• continuing to systematically improve the logistic and accounting management processes for General Stores Inventory and Repairable Items

• enhancing a monthly management assurance program covering controls, reconciliations and analytics

• implementing a Defence-wide cycle of balance sheet reconciliations for all non-control accounts

• reducing the balance of non-control accounts, resulting in more accurate asset records

• designing and implementing new reporting processes that place greater focus on the value of assets under construction.

EFFICIENCIESIn 2008-09, Defence embarked upon a program to implement internal efficiencies and economies to identify savings of up to $10b across 10 years, for reinvestment in higher priority activities. This program has been incorporated by the Defence Strategic Reform Program.

An initial exercise identified savings and efficiencies in a range of non-operational areas across Defence totalling $477.6m in 2008-09. Further efficiencies resulted in additional savings of $174.6m, giving total savings of $652.2m in 2008-09. Table A9.1details the savings achieved by Defence.

APPENDIX 9 FINANCIAL TRANSPARENCY


Table A9.1 Savings achieved

NOTES




4. Funds not required in 2008-09 moved to future years.

PAYMENT OF ACCOUNTSIn 2008-09, Defence paid 1,455,884 or 93.2 per cent of all payment transactions within a 30-day target. This result is ahead of the 90 per cent Government benchmark. The volume of payments through Defence Purchase and Travel cards represents more than 69 per cent of all payments, which continues to have a positive effect on the paid by due date result.

Table A9.2 Accounts paid by due date, 2006-07 to 2008-09

2008-09Budget

Estimate[1]

$m

2008-09Revised

estimate[2]

$m


$m

2008-09Variation[3]

$mSavingsEfficiencies in the sustainment procurement cycle 26 26 31 5Reduction in the sustainment budget to fund the sinking of HMAS Adelaide 3 3 3 -Reduction in the major capital facilities program to fund the Kings Highway upgrade 23 23 23 -Reduction in administrative travel and other administration costs 13 13 55 43Reduction in scientific research programs 2 2 2 -Reduction in project definition costs for major capital equipment projects 10 10 10 -

Sub-total savings 77 77 124 47

Reprogramming savings[4] 191 191 191 -Savings to fund overseas Operations measures 209 209 209 -Additional savings achievedReduction in minor capital purchases - - 6 6Savings in acquisition contracts - - 50 50Savings in major capital facilities program - - 7 7Savings in defence capability plan - - 9 9Savings in other capital purchases - - 3 3Savings in employee-related costs - - 19 19Efficiencies in a range of other programs - - 33 33Sub-total additional savings achieved - - 128 128

Total Savings Achieved 478 478 652 175

2006-07 2007-08 2008-09Number of accounts paid 1,662,503 1,654,870 1,562,259Accounts paid by due date 1,585,716 1,530,079 1,455,884Percentage of accounts paid by due date 95.4 92.5 93.2



Gra

nts

GRANTSFor the period 1 January to 30 June 2009 A grant of $10m was made to the Special Air Service Resources Trust.

Information on grants awarded by Defence since 1 January 2009 is available at http://www.defence.gov.au/publications/web_based_reporting.xls.

For the period 1 January to 30 June 2009The following table provides details of the Discretionary Grants Program administered

Table A9.3 Summary of Discretionary Grants approved, 2007-08 to 31 December 2008

NOTES

1. GST inclusive where applicable.

Grant Program2007-08 [1]

$’0002008-09 [1]

$’000Army Military History Research Grants Scheme 55 75Defence Family Support Funding Program 911 1,057

Other grants The Australian Army Centenary History of the Great War 1914-1918 Five-volume series of publications re-examining Australia’s participation in the Great War (multi-year grant) - 30Australian Member Committee of the Council for Security Cooperation in the Asia-Pacific (multi-year grant) 95 55Kokoda Foundation 102 110Livingstone Shire Council 1,895 -International Institute for Strategic Studies for the Asia Seminar Series 81 -International Institute for Strategic Studies for the Shangri-La Dialogue 121 -Townsville Maritime Historical Society Inc 200 -Murdoch University 15 -Royal United Services Institute of Australia 86 -Submarine Institute of Australia 208 -Associate Professor Neville Meaney - 18

Total 3,769 1,345

http://www.defence.gov.au/publications/web_based_reporting.xls



Army Military History Research Grants SchemeThis scheme supports and encourages research into the role and involvement of the Army in the development of the nation. Recipients of grants and expenditure under the scheme in 2008-09 are shown in Table A9.4. Table A9.4 Army Military History Research Grants Scheme Expenditure, 2008-09Grantee Title of research Amount

of Grant $

Australian Capital Territory Mr Rhys Crawley To assist in research towards a PhD and a book on the

August 1915 offensive at Gallipoli13,000

Ms Victoria D’Alton The administrative and bureaucratic analysis of the AIF and Victoria Cross on the Western Front

5,000

Dr Ian Howie-Willis A biography of Major General Sir Samuel Burston 5,000Ms Kerry Neale Facially disfigured Commonwealth Great War veterans 9,700Mr Nick Fletcher and Mr Craig Tibbits

A Unit history of the 56th Battalion 2,800

Total Australian Capital Territory 35,500New South Wales Mr Phillip Bradley The Salamaua Campaign 7,000Mr Peter Dean Lieutenant General Sir Frank Berryman 6,000Total New South Wales 13,000South AustraliaDr Michelle Cunningham Re-evaluating the Sandakan Death March 6,000Dr Paul Skrebels The 27th Battalion Unit History 6,000

Total South Australia 12,000Western Australia Mr David Evans Australian diplomacy in Portuguese Timor 2,000Mr Graham McKenzie Smith Parts two and three of every Australian Army Unit in WWII 5,000Total Western Australia 7,000TasmaniaDr David Coombes The Australian Army’s contribution to the Battle of

Bullecourt7,500

Total Tasmania 7,500Grand Total 75,000



Gra

nts

Defence Family Support Funding ProgramThe Defence Family Support Funding Program provides funds to support projects and services initiated by Defence families. The program is also available to existing groups in the community composed of, or benefiting, Defence families. Net grant expenditure on the Defence Family Support Funding program in 2008-09 is summarised in Table A9.5.

Table A9.5 Defence Family Support Funding Program direct grants expenditure, 2008-09

OrganisationAmount of grant

$

Australian Capital TerritoryDuntroon Community Centre Inc 38,890Duntroon Community Centre Inc – Capital Crafters 4,630Duntroon Community Centre Inc – Playschool 6,800Duntroon Community Centre Inc – Playgroup 1,532Gungahlin Defence Families Playgroup 1,879

Total Australian Capital Territory 53,731

New South WalesBanksia House Interest Group – Parents Playgroup 5,198Banksia House Interest Group – Administration 2,322Banksia House Interest Group – Craft Group 1,330Shoalhaven Defence Families Association Inc Nowra 10,195Waratah Interest Group Inc, Liverpool 5,180Waratah Interest Group Inc, Liverpool – Coffee, Craft and Chat 2,620Anklebiters Playgroup – Randwick 1,409

Kissingpoint Cottage 33,025Northern Beaches Defence Families Playgroup 8,010Defence Special Needs Support Group (Williamtown) 1,040RAAF Williamtown Umbrella Support Group Inc – Administration 1,585RAAF Williamtown Umbrella Support Group – Welcome Baskets 4,040RAAF Williamtown Umbrella Support Group – Craft Group 1,950RAAF Williamtown Umbrella Support Group – Toy Library 2,037RAAF Williamtown Umbrella Support Group – Toy Library – New Airconditioner 996Forest Hill Defence Community Group Inc 3,380RAAF Wagga Playgroup 1,300Kapooka Playgroup 1,698Blamey Community Group 8,603

Total New South Wales 95,918

Northern TerritoryTindal Kids Space 28,902Tindal Community Times 1,133Tindal Playgroup 3,845Katherine Playgroup 800Casuarina Street Primary School 3,158Billeroy Road Community Centre RAAF Darwin 38,649Larrakeyah Neighbourhood House 40,867



North Australia Area Family Support Committee Inc 46,630Robertson Barracks Family Group Inc – Administration 13,754Robertson Barracks Family Group Inc 6,382Robertson Barracks Family Group Inc – Administration 6,810The Top Ender Tri Services Newsletter Inc 72,548

Total Northern Territory 263,478

QueenslandDefence Groups in Gallipoli 13,884Pine Rivers Family Association Inc 915Kokoda Barracks Families Association 8,630Toowoomba Defence Families Support Association Inc 26,959Tri-Service Defence Families Support Association Inc 29,721Tropical North Family Centre Inc 42,529Defence Community and Recreation Centre 33,716Defence Community and Recreation Centre – Shade and Fencing 17,076Defence Community and Recreation Centre – Extreme Tuesdays 595

Total Queensland 174,025

South AustraliaWoodside Defence Families Association – Administration 21,506

Woodside Defence Families Association – Family Welcome 684Woodside Defence Families Association – Kids Club 517Woodside Defence Families Association – Playgroup 334Woodside Defence Families Association – Craft Group 668Woodside Defence Families Association – Community Hall 460North East Defence Community Playgroup 3,060

Total South Australia 27,229

TasmaniaDowsing Point Community Centre Inc 24,410Total Tasmania 24,410VictoriaCerberus Cottage Family and Friends Inc 39,572East Sale Family Group 27,078Bandiana Neighbourhood House Inc – Outdoor Play 2,310Bandiana Neighbourhood House Inc – Coffee Machine and Furniture 1,484Bandiana Neighbourhood House Inc – Childcare Support 2,860NECANA Association Inc 3,451NECANA Association Inc – Pac-a-Picnic 5,350NECANA Association Inc – Community Development Worker 22,000NECANA Association Inc – Hume Coffee Club 2,120Baranduda Community Centre 2,750Mactier Community Centre 31,668Defence Special Needs Support Group (Melbourne West) 2,540


$



Gra

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Defence Special Needs Support Group (National) 13,100Defence Special Needs Support Group (National) Coordinators Conference 28,100Williams Defence Community House 38,715Williams Defence Community House – Wippa Snappa’s Playgroup 2,320Williams Defence Community House – Craft Groups 4,235Williams Defence Community House – Melbourne West Deployment Support Group 1,620Williams Defence Community House – Williams Defence Community Newsletter 3,205Puckapunyal and District Neighbourhood Centre Inc 41,922Puckapunyal Kindergarten Association Inc 4,862Little Tackers Playgroup 3,740

Total Victoria 285,002

Western AustraliaMarilla House Community Centre Inc 33,313Karrakatta Community House Inc 39,439Special Air Service Regiment Auxiliary 17,880Pilbara Regiment Family Group 9,020Pearce Community Toy Library and Social Group Inc 2,053

Total Western Australia 101,705

InternationalButterworth Support Group (Malaysia) – Administration 1,800Butterworth Support Group (Malaysia) – Furphy Printing Magazine 400Butterworth Support Group (Malaysia) – Play Equipment 500Butterworth Support Group (Malaysia) – Welcome Packs 420Butterworth Support Group (Malaysia) – Santa Suit 250Port Moresby Australian Defence Families Club 9,282

Total International 12,652

Grand Total 1,038,150


$



Table A9.6 Defence Family Support Funding Program seeding grants expenditure, 2008-09

OTHER GRANTSThe Australian Army Centenary History of the Great War 1914-1918 A grant of $30,000 was made to Professor Jeffrey Grey, of University College, Australian Defence Force Academy to publish a five volume series of publications re-examining Australia’s participation in The Great War, in time to commemorate the centenary of this conflict in August 2014. This is a multi-year grant totalling $400,000.

Australian Member Committee of the Council for Security Cooperation in the Asia-PacificA grant of $55,000 was made to the Australian Member Committee of the Council for Security Cooperation in the Asia-Pacific (Aus-CSCAP). Aus-CSCAP seeks to facilitate and promote dialogue on security issues in the Asia-Pacific. Many of these issues are of direct relevance to Australia’s strategic environment. Aus-CSCAP provides a forum in which Defence personnel can informally discuss issues with a range of experts from academic, diplomatic and governmental backgrounds.

Kokoda FoundationA grant of $110,000 was made to the Kokoda Foundation to assist with funding for the Australia-United States Trilogy Dialogue with the topic of 'Strategy Options for the Western Pacific' held on 20-23 November 2008. The Kokoda Foundation aims to foster research and innovative thinking on Australia’s future security challenges. The Kokoda Foundation is a not-for-profit organisation that focuses on issues relating to national security and whole-of-nation responses to crises and threats.

Associate Professor Neville MeaneyA grant of $18,000 was made to Associate Professor Neville Meaney, of the University of Sydney, to support the publication costs of A History of Australian Defence and Foreign Policy, 1901-23. The grant would also subsidise Sydney University Press to publish his previous work Australia and World Crisis, 1914-23, as well as reprint another previous work entitled The Search for Security in the Pacific.


$

New South WalesShoalhaven Defence Community Family association Inc – Nowra. 2,250

Total New South Wales 2,250

QueenslandDefence Community and Recreation Centre – Weipa 8,250

Total Queensland 8,250

VictoriaBandiana Neighbourhood House 1,920Cerberus Cottage Family and Friends Inc 1,000Puckapunyal Kindergarten Association Inc 5,000

Total Victoria 7,920

Grand Total 18,420



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FINANCIAL STATEMENTS



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Department of Defence

Financial Statements for the Period Ended 30 June 2009



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The above statement should be read in conjunction with the accompanying notes.

Department of Defence INCOME STATEMENT for the period ended 30 June 2009

2009 2008

Notes $'000 $'000

INCOME

Revenue

Revenue from Government 3A 20,268,308 19,693,267

Sale of goods and rendering of services (including cost recovery) 3B 728,560 688,840

Rental income 3C 9,083 7,073

Other revenue 3D 23,792 42,724

Total revenue 21,029,743 20,431,904

Gains

Foreign exchange 4G - 1,077

Reversals of previous asset write-downs and impairments 3E 642,299 648,476

Other gains 3F 1,424 3,295

Total gains 643,723 652,848

Total Income 21,673,466 21,084,752

EXPENSES

Employee benefits 4A 8,278,901 7,521,605

Suppliers 4B 8,858,112 8,418,858

Grants 4C 14,349 18,000

Depreciation and amortisation 4D 3,907,639 3,657,849

Finance costs 4E 94,366 44,146

Write-down and impairment of assets 4F 1,345,808 1,952,353

Foreign exchange losses 4G 434 -

Losses from asset sales 4H 91,819 2,152

Other expenses 4I 25,148 54,815

Total Expenses 22,616,576 21,669,778

Surplus (Deficit) attributable to the Australian Government (943,110) (585,026)



2009 2008

Notes $'000 $'000

ASSETS

Financial Assets

Cash and cash equivalents 5A 28,088 29,223

Trade and other receivables 5B 612,538 462,185

491,408

Total financial assets 640,626

Non-Financial Assets

Land and buildings 6A, 6G 13,922,381 12,837,055

Specialist military equipment 6B, 6G 33,796,794 32,401,931

Plant and equipment 6C, 6G 1,102,356 1,147,762

Infrastructure 6D, 6G 5,052,145 4,710,245

Intangibles 6E, 6G 468,504 357,625

Heritage and cultural assets 6F, 6G 869,393 807,931

Inventories 6H 4,942,343 4,952,741

Prepayments 6I 529,682 1,055,217

58,270,507

151,294

58,913,209

Total non-financial assets 60,683,598

Assets held for sale 6J 23,768

Total Assets 61,347,992

LIABILITIES

Payables

Suppliers 7A 839,270 857,995

Other payables 7B 322,214 290,153

1,148,148

Total payables 1,161,484

Interest Bearing Liabilities

Leases 8 870,169 404,988

404,988

Total interest bearing liabilities 870,169

Provisions

Employee provisions 9A 1,937,067 1,763,721

Restoration, decontamination and decommissioning 9B 644,730 615,572

Other provisions 9C 28,340 24,603

2,403,896

3,957,032

Total provisions 2,610,137

Total Liabilities 4,641,790

NET ASSETS

56,706,202 54,956,177

Department of Defence BALANCE SHEET as at 30 June 2009



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Department of Defence BALANCE SHEET (Continued) as at 30 June 2009

2009 2008

Notes $'000 $'000

EQUITY

Contributed equity 9,279,271 7,388,861

Reserves 13,636,846 12,834,121

Retained surplus (accumulated deficit) 33,790,085 34,733,195

TOTAL EQUITY 56,706,202 54,956,177

Current Assets 1,862,340 2,314,245

Non-Current Assets 59,485,652 56,598,964

Current Liabilities 2,957,687 2,820,126

Non-Current Liabilities 1,684,103 1,136,906


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1 Refer Note 16: Accounting for errors

The above statement should be read in conjunction with the accompanying notes

Department of Defence STATEMENT OF CHANGES IN EQUITY as at 30 June 2009

Retained Surpluses Asset Revaluation Reserve Contributed Equity Total Equity

2009

$'000

2008

$'000

2009

$'000

2008

$'000

2009

$'000

2008

$'000

2009

$'000

2008

$'000

Opening balance

Balance carried forward from previous period 1Adjustment for errors

34,733,195

-

35,384,970

(66,749)

12,834,121

-

11,900,862

-

7,388,861

-

6,876,202

-

54,956,177

-

54,162,034

(66,749)

Adjusted opening balance 34,733,195 35,318,221 12,834,121 11,900,862 7,388,861 6,876,202 54,956,177 54,095,285

Income and Expenses

Asset revaluation movements - -

802,725 933,259 - - 802,725 933,259

Subtotal income and expenses recognised directly in equity

Surplus (Deficit) for the period

-

(943,110)

-

(585,026)

802,725

-

933,259

-

-

-

-

-

802,725

(943,110)

933,259

(585,026)

Total income and expenses attributable to the Australian Government (943,110) (585,026) 802,725 933,259 - - (140,385) 348,233

Transactions with owners

Distributions to owners

Returns of equity

Returns to OPA - - - - (579,632) (1,490,897) (579,632) (1,490,897)

Contributions by owners

Appropriations (equity injection) - - - - 2,470,042 1,998,806 2,470,042 1,998,806

Restructuring (Note 10) - - - - - 4,750 - 4,750

Sub-total transactions with owners - - - - 1,890,410 512,659 1,890,410 512,659

Transfers between equity components

Closing balance attributable to the Australian Government

- - - - - - - -

33,790,085 34,733,195 13,636,846 12,834,121 9,279,271 7,388,861 56,706,202 54,956,177



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2009 2008

Notes $'000 $'000

OPERATING ACTIVITIES

Cash received

Goods and services (including cost recovery) 614,609 579,628

Appropriations (current year) 20,023,700 19,659,706

Appropriations (prior year) 96,065 50,000

Net GST received 502,992 460,131

Other cash received 15,062 80,665

Total cash received 21,252,428 20,830,130

Cash used

Employees (7,941,096) (7,259,990)

Suppliers (7,989,626) (7,731,738)

Net GST paid (514,113) (459,476)

Grants (14,349) (17,894)

Other cash used (1,646) (800)

Total cash used (16,460,830) (15,469,898)

Net cash flows from (used by) operating activities 11 4,791,598 5,360,232

INVESTING ACTIVITIES

Cash received

Proceeds from sales of land and buildings 23,738 24,486

Proceeds from sales of plant and equipment 35,440 40,300

Proceeds from sales of specialist military equipment 2,585 2

Other cash received 944 595

Total cash received 62,707 65,383

Cash used

Purchase of land and buildings (851,345) (608,490)

Purchase of plant and equipment (145,722) (156,956)

Purchase of specialist military equipment (3,691,703) (3,594,036)

Purchase of infrastructure (73,232) (53,099)

Purchase of intangibles (74,105) (60,287)

Purchase of inventory (1,809,094) (1,412,631)

Purchase of heritage and cultural assets (50) (19)

Selling costs on sale of assets (21,267) (12,459)

Finance costs (63,680) (15,193)

Total cash used (6,730,198) (5,913,170)

Net cash flows from (used by) investing activities

(6,667,491) (5,847,787)

Department of Defence CASH FLOW STATEMENT for the period ended 30 June 2009



Department of Defence CASH FLOW STATEMENT (Continued) for the period ended 30 June 2009


2009 2008

Notes $'000 $'000

FINANCING ACTIVITIES

Cash received

Appropriations - contributed equity (current year) 1,805,180 1,998,630

Appropriations - contributed equity (prior year) 148,002 -

Total cash received 1,953,182 1,998,630

Cash used

Repayment of debt (including finance lease principal) (62,209) (24,039)

Return of contributed equity (15,781) (1,490,897)

Total cash used (77,990) (1,514,936)

Net cash flows from (used by) financing activities 1,875,192 483,694

Net increase/(decrease) in cash held (701) (3,861)

Cash and cash equivalents at the beginning of the reporting period 29,223 32,007

Effect of exchange rate movements on cash and cash equivalents

Cash and cash equivalents at the end of the reporting period

4G

5A

(434) 1,077

28,088 29,223



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Department of Defence SCHEDULE OF COMMITMENTS as at 30 June 2009

BY TYPE

Commitments receivable

Lease rental income1

GST recoverable on commitments2

2009

$'000

(27,929)

(2,616,751)

2008

$'000

(28,295)

(2,628,851)

Total commitments receivable (2,644,680) (2,657,146)

Capital commitments payable

Land and buildings3

Infrastructure, plant and equipment4

Specialist military equipment5

Other capital commitments6

1,371,085

272,440

17,218,048

51,372

2,125,079

90,371

17,488,587

61,907

Total capital commitments payable 18,912,945 19,765,944

Other commitments payable

Operating leases7

Research and development8

Other non-capital commitments9

5,066,414

181,861

12,707,508

4,304,564

107,090

12,903,248

Total other commitments payable 17,955,783 17,314,902

Net commitments by type 34,224,048 34,423,700

BY MATURITY

Commitments receivable

Lease rental revenue

One year or less (14,673) (14,349)

From one to five years (5,029) (5,306)

Over five years (8,227) (8,640)

Total lease rental revenue (27,929) (28,295)

Other commitments receivable

One year or less (857,458) (300,455)

From one to five years (1,379,439) (1,801,457)

Over five years (379,854) (526,939)

Total other commitments receivable (2,616,751) (2,628,851)

Commitments payable

Capital commitments

One year or less 5,786,856 1,424,983

From one to five years 10,642,710 13,827,475

Over five years

Total capital commitments

2,483,379

18,912,945

4,513,486

19,765,944



Department of Defence SCHEDULE OF COMMITMENTS (continued) as at 30 June 2009

2009 2008

$'000 $'000

Operating lease commitments

One year or less 648,739 394,513


Over five years 2,241,554 2,124,632

4,304,564

Total operating lease commitments 5,066,414

Other commitments

One year or less 4,082,180 2,529,938


Over five years 2,752,733 2,938,553

13,010,338

34,423,700

Total other commitments

Net commitments by maturity

12,889,369

34,224,048

NOTE:

Commitments are GST inclusive where relevant. Commitments managed by the Defence Materiel Organisation (DMO) on

behalf of Defence total $21.085m, comprising:

commitments receivable of $1,901m;

capital commitments of $17,478m; and

other commitments payable of $5,508m.

The 2007-08 comparative commitment balances have been amended to include GST in respect of commitments managed by

the DMO on behalf of Defence.

1. The lease rental income includes rental contributions from Defence service members for residences sub-leased by Defence.

The lease term is normally 3 to 5 years. The lease rental receivable is calculated for 28 days which is the minimum period of

notice Defence members are required to provide before terminating the lease.

2. GST recoverable on commitments payable.

3. Outstanding contractual payments for buildings under construction.

4. Infrastructure, plant and equipment capital commitments include outstanding contractual payments for such items of

plant and equipment as the maintenance of hardware and software.

5. Outstanding contractual payments for specialist military equipment under construction. The majority of these

commitments relate to Materiel Acquisition Agreements with the DMO.

6. Other capital commitments include contractual payments for software licence agreements.

7. Operating leases included are effectively non-cancellable and are described in the table below.

8. Outstanding commitments on research and development projects including Through Life Support agreements.

9. Outstanding commitments on supplier type expenditure including general goods and services, communications, domestic,

overseas travel, removal costs, and Materiel Sustainment expenditure payable to the DMO.



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Department of Defence SCHEDULE OF COMMITMENTS (continued) as at 30 June 2009

Nature of leases General description of leasing arrangement

DHA property leases Defence leases residences under a service agreement with

Defence Housing Australia (DHA) to provide accommodation

to eligible service members. The total commitment has been

calculated based on an initial forecast of housing demand for

the period of the agreement, which is 12 years. Lease

payments are subject to the terms and conditions of the lease

and are payable to DHA.

Other property leases Defence leases both residential and commercial properties in

Australia and overseas in support of its activities. Lease

payments are subject to the terms and conditions of the lease.

Generally the leases are subject to market reviews, reviews

in accordance with agreed indexation or a combination of

both. The terms range between 1 and 101 years.

Aircraft leases Defence leases aircraft in support of scientific and military

operations and in support of parliamentary services. Lease

terms range between 2 and 12 years.

Equipment leases Defence has leases for items of equipment including computer

hardware, photocopiers and communication equipment.

General lease terms are 2 to 5 years.

Property revenue leases Defence receives revenue from the lease of property and

office space. Office space is generally let to contractors in

support of Defence activities and to other government

agencies or to local civic authorities. The terms of these

leases range between 1 and 99 years.

The above schedule should be read in conjunction with the accompanying notes.

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Department of Defence SCHEDULE OF CONTINGENCIES as at 30 June 2009

Contingent Liabilities Claims for damages/costs Total

2009 2008 2009 2008

$’000 $’000 $’000 $’000

Balance from previous period 100,146 99,602 100,146 99,602

New 60,146 21,282 60,146 21,282

Re-measurement (63,416) 14,477 (63,416) 14,477

Liabilities recognised (12,430) (35,215) (12,430) (35,215)

Expired - - - -

Total Contingent Liabilities 84,446 100,146 84,446 100,146

Contingent Assets

2009 2008 2009 2008

$’000 $’000 $’000 $’000

Balance from previous period 2,690 1,122 2,690 1,122

New 639 1,673 639 1,673

Re-measurement (2,460) 490 (2,460) 490

Assets recognised - (590) - (590)

Expired (13) (5) (13) (5)

Total Contingent Assets 856 2,690 856 2,690

Net Contingent Assets (Liabilities) (83,590) (97,456)

There are no guarantees, indemnities, warranties or letters of comfort disclosed in this schedule as the possibility of any outflow on settlement is remote. Contingent assets and contingent liabilities are classified, measured and disclosed in accordance with the requirements of AASB 137. Details of each class of contingent liability and contingent asset, including those not included above because they cannot be quantified, are disclosed in Note 12: Contingent Liabilities and Assets. The above schedule should be read in conjunction with the accompanying notes.



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Department of Defence SCHEDULE OF ADMINISTERED ITEMS for the period ended 30 June 2009

2009 2008

Notes $'000 $'000

INCOME ADMINISTERED ON BEHALF OF GOVERNMENT

Revenue

Non-taxation revenue

Sale of goods and rendering of services 17A 22 3,625

Fees and fines 17B 2,874 -

Interest 17C 244 124

Dividends 17D 72,723 134,263

Military superannuation contributions 17E 831,091 756,982

Other revenue 17F 9,527 215

Total non-taxation revenue 916,481 895,209

Total revenues administered on behalf of Government 916,481 895,209

Gains

Foreign exchange gains 17G 671 -

Total gains administered on behalf of Government 671 -

TOTAL INCOME ADMINISTERED ON BEHALF OF

GOVERNMENT 917,152 895,209

EXPENSES ADMINISTERED ON BEHALF OF

GOVERNMENT

Employee benefits 18A 3,465,720 2,849,405

Subsidies 18B 35,302 11,284

Grants 18C - 26,800

Other expenses 18D 9 4,327

TOTAL EXPENSES ADMINISTERED ON BEHALF OF

GOVERNMENT 3,501,031 2,891,816


Administered activities performed by Defence on behalf of the Government relate mainly to the provision of

superannuation and housing support services to current and retired Defence personnel. Defence also administers

reimbursements from the United Nations for costs associated with East Timor and returns the receipts to the

Government.



Department of Defence SCHEDULE OF ADMINISTERED ITEMS (continued) as at 30 June 2009

2009 2008

Notes $'000 $'000

ASSETS ADMINISTERED ON BEHALF OF

GOVERNMENT

Financial assets

Cash and cash equivalents 19A - -

Receivables 19B 59,448 55,306

Investments 19C/25 1,882,388 1,767,825

Total financial assets 1,941,836 1,823,131

Non-financial assets

Other non-financial assets - prepayments 19D 90,361 85,506

Total non-financial assets 90,361 85,506

TOTAL ASSETS ADMINISTERED ON BEHALF OF

GOVERNMENT 2,032,197 1,908,637

LIABILITIES ADMINISTERED ON BEHALF OF

GOVERNMENT

Payables

Other payables 20A 38,444 25,242

Total payables 38,444 25,242

Provisions

Employee provisions 20B/21 42,659,000 33,622,000

Total provisions 42,659,000 33,622,000

TOTAL LIABILITIES ADMINISTERED ON BEHALF OF

GOVERNMENT 42,697,444 33,647,242

Current Assets 149,809 140,812

Non-Current Assets 1,882,388 1,767,825

Current Liabilities 1,778,444 1,575,242

Non-Current Liabilities 40,919,000 32,072,000




Government.




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Department of Defence SCHEDULE OF ADMINISTERED ITEMS (continued) for the period ended 30 June 2009

2009 2008

Notes $'000 $'000

ADMINISTERED CASH FLOWS


Cash received

Sale of goods and rendering of services 200 69

Fees and fines received 2,874 -

Interest 245 146

Net GST received 60 175

Superannuation contributions 866,674 790,924

Other 9,527 215


Cash used

Subsidies (30,556) (12,200)

Employees (1,650,486) (1,517,426)

Grants - (26,800)

Net GST Paid (60) -

Other cash used (9) (4,502)

Total cash used (1,681,111) (1,560,928)

Net cash flows from (used by) operating activities (801,531) (769,399)


Cash received

Dividends 69,031 83,604


Net cash flows from (used by) investing activities 69,031 83,604

Net Increase (Decrease) in cash held (732,500) (685,795)

Cash and cash equivalents at the beginning of the reporting period - 39

Cash from Official Public Account for:

Appropriations 1,681,302 1,560,929

1,681,302 1,560,929

Cash to Official Public Account for:

Appropriations (948,774) (875,173)

(948,774) (875,173)

Effect of exchange rate movements on cash and cash equivalents (28) -

Cash and cash equivalents at the end of the reporting period 19A - -




Government.




Department of Defence NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the period ended 30 June 2009

Notes

1 Summary of Significant Accounting Policies

2 Events after the Balance Sheet Date

3 Income

4 Expenses

5 Financial Assets

6 Non-Financial Assets

7 Payables

8 Interest Bearing Liabilities

9 Provisions

10 Restructuring

11 Cash Flow Reconciliation

12 Contingent Liabilities and Assets

13 Executive Remuneration

14 Remuneration of Auditors

15 Financial Instruments

16 Accounting for Errors

17 Income Administered on Behalf of Government

18 Expenses Administered on Behalf of Government

19 Assets Administered on Behalf of Government

20 Liabilities Administered on Behalf of Government

21 Defined Benefit Superannuation Plans Administered on Behalf of Government

22 Administered Reconciliation Table

23 Administered Commitments

24 Administered Contingent Liabilities and Assets

25 Administered Investments

26 Administered Financial Instruments

27 Administered Accounting for Errors

28 Appropriations

29 Special Accounts

30 Compensation and Debt Relief

31 Assets Held in Trust

32 Reporting of Outcomes



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Note 1: Summary of Significant Accounting Policies

1.1 Objective of Defence

Defence is an Australian Government controlled entity which comprises the Department of Defence, as an Australian

Public Service organisation, and the Australian Defence Force. The objective of Defence is to defend Australia and its

national interests. Defence has implemented a new outcome and output structure in 2008-09. The new structure will

increase the Government’s and the community’s visibility of what Defence delivers, as it is aligned with Defence’s

internal resource allocations and accountabilities.

Under this new structure, Defence has reported against the following three outcomes:

• Outcome 1 – Australia’s national interests are protected and advanced through the provision of military capabilities and the promotion of security and stability;

• Outcome 2 – Military operations and other tasks directed by Government to achieve the desired results; and

• Outcome 3 – Defence’s support to the Australian community and civilian authorities achieves the desired results.

Defence activities contributing toward these outcomes are classified as either departmental or administered.

Departmental activities involve the use of the assets, liabilities, revenues and expenses controlled or incurred by

Defence in its own right. Administered activities involve the management or oversight by Defence, on behalf of the

Government, of items controlled or incurred by the Government.

Defence’s Outcome 1 includes both departmental and administered items, while Outcomes 2 and 3 are departmental

only. Defence’s administered appropriations included in Outcome 1 relate to Superannuation and Housing Support

Services for current and retired Defence personnel.

An overview of Defence’s outcome and output structure is described in Chapter 3 of the Annual Report.

The continued existence of Defence in its present form, and with its present programs, is dependent on Australian

Government policy and on continuing appropriations by Parliament for Defence’s administration and programs.

1.2 Basis of Preparation of the Financial Statements

The financial statements and notes are required by section 49 of the Financial Management and Accountability Act 1997

and are a General Purpose Financial Report.

The financial statements and notes have been prepared in accordance with:

• Finance Minister’s Orders (or FMOs) for reporting periods ending on or after 1 July 2008; and

• Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements and notes have been prepared on an accrual basis and are in accordance with the historical

cost convention, except for certain assets at fair value. Except where stated, no allowance is made for the effect of

changing prices on the results or the financial position.

The financial statements and notes are presented in Australian dollars and values are rounded to the nearest thousand

dollars unless disclosure of the full amount is specifically required.

Unless alternative treatment is specifically required by an accounting standard or the FMOs, assets and liabilities are

recognised in the balance sheet when, and only when, it is probable that the future economic benefits will flow to the

entity (in the case of an asset) or it is probable that the outflow of resources embodying economic benefits will result




(in the case of a liability) and the amounts of the assets or liabilities can be reliably measured. However, assets and

liabilities arising under agreements equally proportionately unperformed are not recognised unless required by an

accounting standard. Liabilities and assets that are unrecognised are reported in the Schedule of Commitments and

the Schedule of Contingencies (other than Unquantifiable Contingencies, which are reported at Note 12).

Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in

the income statement when, and only when, the flow, consumption or loss of economic benefits has occurred and can

be reliably measured.

Administered transactions

Administered revenues, expenses, assets, liabilities and cash flows reported in the Schedule of Administered Items and

related notes are accounted for on the same basis and using the same policies as for departmental items, except as

otherwise stated in Note 1.27.

Trust transactions

Defence has responsibility for transactions and balances relating to trust funds on behalf of third parties external to the

Australian Government. As Defence acts only in a custodial role in respect of these transactions, they are not

recognised in the financial statements but are disclosed in Note 31: Assets Held in Trust.

1.3 Significant Accounting Judgements and Estimates

(a) Significant accounting judgements

In the process of applying Defence’s accounting policies listed in this note, management has made no judgements that

would have a significant impact on the amounts recorded in the financial statements.

(b) Significant accounting estimates and assumptions

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of

future events. The key estimates and assumptions Defence has made are:

• Provisions for land decontamination, site restoration and SME decommissioning are based on Defence’s

estimates of future obligations relating to the underlying assets. Some of these estimates are supported by

external valuer’s opinions;

• Provisions for annual leave and long service leave are estimates based on expert actuarial assumptions on

the likely tenure of existing staff, patterns of leave claims and payouts, future salary movements and future

discount rates;

• Estimates and assumptions have been made in relation to inventory obsolescence in order to determine the

remaining service potential for inventory items which have experienced obsolescence or impairment and

the pricing of certain legacy items;

• Low value asset pooling estimates have been made to determine the net book value of other plant and

equipment asset pools. These include estimates relating to useful economic lives and disposal rates;

• Defence assesses non-financial assets for impairment by monitoring impairment indicators specific to an

asset’s use in the Defence context. Where these indicators signify that an asset is impaired, management has

made an estimate of the recoverable amount of those assets to determine any impairment loss;

• Defence heritage and cultural assets are stored, managed, repaired and restored in ways that will maintain

their heritage and cultural value over time. As such, an assumption is made that these assets have indefinite

useful lives and therefore no depreciation is recognised; and



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• Other provisions relate to common law claims and are subject to considerable uncertainty. However, based

on advice from the Australian Government Actuary (AGA), Defence is of the view that the estimate of the

liability is sufficiently reliable to recognise as a provision.

1.4 Changes in Australian Accounting Standards

(a) Adoption of new Australian Accounting Standard requirements

No accounting standard has been adopted earlier than the application date as stated in the standard. The following

new standards are applicable to Defence in the current reporting period.

AASB 1050 Administered Items

This standard applies to Defence for the first time for the 2008-09 financial reporting period. AASB 1050 has been

issued as a result of removal AAS 29. Some minor changes and additional requirements have been included in AASB

1050 on transition from AAS 29. There are no significant changes to Defence’s reporting and disclosure of

Administered Items as a result of the application of this Standard.

AASB 1052 Disaggregated Disclosures

This standard applies to Defence for the 2008-09 financial reporting period. The requirements of this standard relate to

the apportionment of income, expenses, assets and liabilities by major activity (outcomes) where they are reliably

attributable.

Other standards, amendments or interpretations which have become effective in the current reporting period have had

no financial or disclosure impact or do not apply to the operations of Defence.

(b) Future Australian Accounting Standard requirements

The Australian Accounting Standards Board has issued new standards, amendments to standards or interpretations

that will be effective in future reporting periods. The following standards and amendments will be applicable to

Defence from 2009-10 and are expected to have no material impact on the financial statements. The adoption of

these standards and amendments is based on Defence’s initial assessment at reporting date.

• AASB 1 First-time Adoption of Australian Accounting Standards

• AASB 3 Business Combinations

• AASB 8 Operating Segments

• AASB 101 Presentation of Financial Statements

• AASB 123 Borrowing Costs

• AASB 127 Consolidated and Separate Financial Statements

• AASB 1039 Concise Financial Reports

• AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8



• AASB 2007-10 Further Amendments to Australian Accounting Standards arising from AASB 101

• AASB 2008-1 Amendments to Australian Accounting Standard – Share-based Payments: Vesting Conditions and

Cancellations

• AASB 2008-2 Amendments to Australian Accounting Standards – Puttable Financial Instruments and Obligations

arising on Liquidation

• AASB 2008-3 Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127

• AASB 2008-5 Amendments to Australian Accounting Standards arising from the Annual Improvements Project

• AASB 2008-6 Further Amendments to Australian Accounting Standards arising from the Annual Improvements

Project




• AASB 2008-7 Amendments to Australian Accounting Standards – Cost of an Investment in a Subsidiary, Jointly

Controlled Entity or Associate

• AASB 2008-8 Amendments to Australian Accounting Standards - Eligible Hedged Items

• AASB 2008-9 Amendments to AASB 1049 for Consistency with AASB 101

• AASB 2008-11 Amendments to Australian Accounting Standard – Business Combinations Among Not-for-Profit

Entities

• AASB 2008-13 Amendments to Australian Accounting Standards arising from AASB Interpretation 17 –

Distributions of Non-cash Assets to Owners

• AASB 2009-1 Amendments to Australian Accounting Standards – Borrowing costs of Not-for-Profit Public Sector

Entities

• AASB 2009-2 Amendments of Australian Accounting Standards – Improving Disclosures about Financial Instruments

• AASB 2009-4 Amendments to Australian Accounting Standards arising from the Annual Improvements Process

• AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements

Process

• AASB 2009-6 Amendments to Australian Accounting Standards

• AASB 2009-7 Amendments to Australian Accounting Standards

• Interpretation 1 – Changes in Existing Decommissioning, Restoration and Similar Liabilities

• Interpretation 12 Service Concession Arrangements

• Interpretation 15 Agreements for the Construction of Real Estate

• Interpretation 16 Hedges of a Net Investment in a Foreign Operation

• Interpretation 17 Distributions of Non-cash Assets to Owners

• Interpretation 18 Transfers of Assets from Customers

Other standards, amendments or interpretations issued which will become effective in future reporting periods will

have no financial or disclosure impact or will not apply to the operations of Defence.

1.5 Revenue

(a) Revenue from Government

Amounts appropriated for departmental output appropriations for the year (adjusted for any formal additions and

reductions) are recognised as revenue when Defence gains control of the appropriation, except for certain amounts

that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned.

Defence draws down appropriations on a just-in-time basis. The undrawn appropriations as at 30 June 2009 are

reflected as a receivable and are available for drawdown to meet future obligations. Appropriations receivable are

recognised at their nominal amounts.

(b) Revenue from Sale of Goods and Rendering of Services

Revenue from the sale of goods is recognised when:

• the risks and rewards of ownership have been transferred to the buyer;

• Defence retains no managerial involvement nor effective control over the goods;

• the revenue and transaction costs can be reliably measured; and

• it is probable that the economic benefits associated with the transaction will flow to Defence.



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Revenue from the rendering of services is recognised by reference to the stage of completion of contracts at reporting

date. The revenue is recognised when:

• the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and

• it is probable the economic benefits of the transaction will flow to the entity.

The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs

incurred to date bear to the estimated costs of the transaction.

(c) Rental Revenue

Rental revenue is accounted for on a straight line basis over the lease term. Contingent rental revenue is recognised as

revenue in the periods in which it is earned. Lease incentives granted are recognised as an integral part of the total

rental revenue.

(d) Resources Received Free of Charge

Resources received free of charge are recognised as revenue when and only when a fair value can be reliably

determined and the services would have been purchased if they had not been donated. Use of those resources is

recognised as an expense. Fair value is determined based on actual full cost if the resources were to be purchased.

1.6 Gains

(a) Contributions of Assets

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value

when the asset qualifies for recognition (with the exception of assets valued at cost), unless received from another

Government agency as a consequence of a restructuring of administrative arrangements (Refer to Note 1.9(b)). Fair

value is assessed by asset class as described in Note 1.19(f).

(b) Sale of Assets

Gains from disposal of non-current assets are recognised when control of the asset has passed to the buyer. The gain

or loss on disposal of non-current assets is determined as the difference between the carrying amount of the asset at the

time of disposal and the net proceeds of disposal.

(c) Other Gains

Gains may be realised or unrealised and are usually recognised on a net basis. These include gains arising on foreign

exchange transactions and balances.

1.7 Impairment of Assets

Defence applies its impairment testing to the smallest identifiable group of assets that is useful to Defence in achieving

its objectives and whose utility/usefulness is largely independent of the utility provided to Defence by other assets or

groups of assets. All relevant assets were assessed for impairment during the year. Where indications of impairment

exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable

amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is

the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of

an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced

if Defence was deprived of the asset, its value in use is taken to be its depreciated replacement cost.




1.8 Grants

Contributions by Defence to other government entities, private sector organisations and individuals which have been

identified as a grant are recognised as an expense when incurred.

1.9 Transactions with the Australian Government as Owner

(a) Equity injections

Amounts appropriated which are designated as ‘equity injections’ (less any formal reductions) are recognised directly

in contributed equity in that year. Equity injection appropriations in Acts passed after the commencement of the

period are recognised from the date of royal assent.

(b) Restructuring of Administrative Arrangements

Net assets/liabilities received from or relinquished to another Australian Government agency or authority under a

restructuring of administrative arrangements are recognised as contributions or distributions of equity respectively, at

their net book value.

(c) Other Distributions to Owners including Repayments of Appropriations

The FMOs require that distributions to owners be debited to contributed equity unless it is a dividend. In 2008-09

appropriation drawn of $3.3m (2007-08: $nil) was returned to the Official Public Account together with property

disposal proceeds of $11.6m (2007-08: $16.6m). In recognising the repayments and reductions of appropriations

funding, during the year the Minister for Finance and Deregulation issued determinations to reduce Departmental

appropriations as follows:

Date Year Departmental Items Equity Injections

$’000 $’000

23 Oct 2008 2008-2009 3,296 -

24 Apr 2009

2008-2009

Total

-

3,296

560,556

560,556

1.10 Cash and Cash Equivalents

Cash and cash equivalents includes cheques and other negotiable instruments, notes and coins held, and any deposits

in bank account held at call with a bank or financial institution. Cash is measured at its nominal amount.

1.11 Financial Risk Management

Under relevant legislation and Australian Government policy, Defence is restricted from entering into borrowings,

some investments and entering into derivative transactions to offset risk exposure. As such Defence’s exposure to risk

is primarily related to credit risk on trade receivables and foreign currency risk in relation to payments to overseas

suppliers of goods and services received. However, this exposure is minimal in terms of the operations of Defence.

Defence is also exposed to some contract price escalation risk. This risk exposure is due to the difference in the basis

on which Defence is funded for price escalations from government (being the non-farm GDP deflator) to the price

escalation clauses embedded within the contracts. The risk of increased cost is managed by Defence to ensure

exposure to the Commonwealth is minimised.



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1.12 Derecognition of Financial Assets and Liabilities

Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire or the

assets are transferred to another entity. In the case of a transfer to another entity, it is necessary that the risks and

rewards of ownership are also transferred.

Financial liabilities are derecognised when the obligation under the contract is discharged, cancelled or has expired.

1.13 Receivables

Receivables for goods and services, which have 30 day terms, are measured at the nominal amounts due less any

allowance for impairment. The collectability of receivables is assessed periodically with allowance made for doubtful

debts when there is objective evidence that Defence will not be able to collect the debt. No allowance is made for

Australian Government, foreign government and employee debts as they are normally deemed to be collectable unless

there is objective evidence to the contrary.

1.14 Employee Benefits

Defence’s workforce comprises Australian Public Service (APS, i.e. civilians) and Australian Defence Force (ADF,

i.e. military) personnel. Employee benefits for each workforce component are based on the relevant employment

agreements and legislation.

Liabilities for services rendered by employees are recognised at the reporting date to the extent that they have not been

settled.

Liabilities for wages and salaries (including non-monetary benefits), annual leave and other entitlements expected to

be settled within 12 months of the reporting date are measured at their nominal amounts which are calculated with

regard to the rates expected to be paid on settlement of the liability.

All other employee benefit liabilities (including long service leave) are measured at the present value of the estimated

future cash outflows to be made in respect of services provided by employees up to the reporting date.

(a) Leave

The liability for employee benefits includes provisions for annual leave and long service leave. The liability for annual

leave is measured at the amounts expected to be paid when the liability is settled. No provision has been made for

sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of Defence is

estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employees’ remuneration, including Defence’s employer

superannuation contribution rates to the extent that leave is likely to be taken during service rather than paid out on

termination. Where there is a legal obligation to payment of leave within 12 months, even when payment is not

expected, the liability is disclosed as current.

The liability for annual leave for employees reflects the value of total annual leave entitlements at 30 June 2009 and is

recognised as a current liability, with amounts expected to be taken or paid within 12 months measured at nominal

values and amounts not expected to be taken or paid within 12 months measured at net present value.

The liability for long service leave has been determined by reference to the work of the Australian Government

Actuary. The estimate of the present value of the liability takes into account attrition rates and pay increases through

promotion and inflation.




(b) Separation and Redundancy

Provision is made for separation and redundancy benefit payments. Defence recognises a provision for termination

when it has a detailed formal plan for the terminations and has informed those employees affected that the

terminations will be carried out.

(c) Superannuation – APS Employees

Permanently appointed APS employees of Defence are members of the Commonwealth Superannuation Scheme

(CSS), the Public Sector Superannuation Scheme (PSS), the PSS Accumulation Plan (PSSap) and other

superannuation schemes held outside the Commonwealth.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution

scheme.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled

by the Australian Government in due course. This liability is reported by the Department of Finance and

Deregulation as an administered item.

Defence makes employer contributions to the employee superannuation schemes at rates determined by an actuary to

be sufficient to meet the current cost to the Government of the superannuation entitlements of the department’s

employees. Defence accounts for these contributions as if they were contributions to defined contribution plans in

accordance with AASB 119.

(d) Superannuation – ADF Members

The Defence Force Retirement and Death Benefits Scheme (DFRDB) and the Military Superannuation Benefits

Scheme (MSBS) are defined benefit superannuation plans for ADF members. Defence accounts for these

contributions in its departmental statements as if they were contributions to defined contribution plans in accordance

with AASB 119. The liability for DFRDB and MSBS is recognised in Defence’s administered statements.

1.15 Leases

A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor

to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets. In operating

leases, the lessor effectively retains substantially all such risks and benefits.

Where a non-current asset is acquired by means of a finance lease, the asset is capitalised and recognised at the lower

of the fair value of the leased asset and the present value of minimum lease payments at the inception of the contract

and a liability is also recognised at the same time for the same amount.

The discount rate used to calculate the present value of the minimum lease payments is the interest rate implicit in the

lease. Non-current assets acquired under a finance lease are amortised over the useful life of the asset. Lease

payments are allocated between the principal component and the interest expense.

Operating lease payments are expensed on a straight line basis over the term of the lease which is representative of the

pattern of benefits derived from the leased assets.

Lease incentives taking the form of ‘free’ leasehold improvements and rent holidays are recognised as an integral part

of the total consideration agreed for the use of the leased asset.



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1.16 Suppliers and Other Payables

Suppliers and other payables are recognised at amortised cost. Defence’s suppliers and other payables are of short

duration and are recognised at the amount of cash or cash equivalents required to settle the liability. Liabilities are

recognised to the extent that the goods or services have been received (irrespective of having been invoiced).

1.17 Contingent Liabilities and Contingent Assets

Contingent Liabilities and contingent assets are not recognised in the balance sheet but are disclosed in the relevant

schedules and notes. They may arise from uncertainty as to the existence of a liability or asset, or represent an existing

liability or asset in respect of which settlement is not probable or the amount cannot be reliably measured. Contingent

assets are disclosed when settlement is probable but not virtually certain, and contingent liabilities are disclosed when

settlement is greater than remote.

1.18 Acquisition of Assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of

assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus

transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration are initially recognised as assets and revenues at their fair

value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In

the latter case, assets are initially recognised at the amounts at which they were recognised in the transferor agency’s

accounts immediately prior to the restructuring.

1.19 Property, Plant and Equipment including Land, Buildings, Infrastructure, Heritage and Cultural

Assets, and Specialist Military Equipment

(a) Individual Asset Recognition Threshold

Purchases of property, plant and equipment including land, buildings and infrastructure are recognised initially at cost

where they meet the individual asset capitalisation threshold. Individual items are capitalised where the individual

value is equal to or exceeds $5,000 for buildings, infrastructure and heritage and cultural assets, $2,000 for other plant

and equipment and $0.01 for specialist military equipment and land.

(b) Componentisation

Major assets, such as specialist military equipment, are componentised if it is likely that the components will have

useful lives that differ significantly from the other parts of the asset. The useful life of components may be determined

with reference to the individual asset items, or, over the life of the related primary asset.

(c) Decontamination, Restoration and Decommissioning Costs

Where a legal or constructive obligation arises on acquisition to restore an asset back to its original condition, or

dismantle an asset at the end of its useful life, the net present value of estimated restoration and decommissioning

costs are capitalised and added to the cost of the underlying asset and depreciated over the asset’s useful life. At the

same time, a corresponding provision is recognised for these costs. When discounting is applied, the carrying amount

of the provision is adjusted to reflect the passage of time and any incremental costs are recognised as finance costs.

Where a legal or constructive obligation arises as a result of the operations of Defence (i.e. use of the asset) the cost of

restoration is recognised as an expense in the period in which the obligation arises.




One of the following past events would give rise to a constructive obligation:

• a public announcement or statement by Government or Defence that a site would be restored;

• the existence of an established pattern of past practice of restoring sites of a particular nature or type; or

• a specific policy adopted by Government with regard to restoration of sites of a particular nature or type.

(d) Reversal of Previous Asset Write-Downs

These are amounts relating to assets which have been previously written down or expensed in prior periods. In the

current year, these items have been either reversed as a write down or capitalised for the first time due to either

exceeding the capitalisation threshold or through identification during stocktakes. They may include identification of

heritage and cultural assets not previously recognised as assets.

(e) Assets under construction (AUC)

Assets under construction (AUC) are carried at cost and are separately identified as ‘work in progress’ in Note 6. They

include expenditure to date on major military capability and facilities projects. AUC projects are reviewed annually

for indicators of impairment. Prior to rollout into service, the accumulated AUC balance is reviewed to ensure

accurate capitalisation.

(f) Subsequent valuations

Land, buildings, infrastructure, plant and equipment and heritage and cultural assets are measured and disclosed at

fair value, less any accumulated depreciation and accumulated impairment losses. Specialist military equipment is

carried at cost less any accumulated depreciation and accumulated impairment losses, in accordance with the Finance

Minister’s Orders.

The basis for determining fair value is by reference to the highest and best use that is physically possible, legally

permissible and financially feasible. Where an active and liquid market exists, fair value is determined by reference to

market values, noting the highest and best use criteria and any specific factors that have been noted by the valuer.

Fair values for each class of asset are determined as shown below:

Asset Class Active and Liquid Market Exists Active and Liquid Market does not exist

Land Market selling price Replacement cost

Buildings Market selling price Depreciated replacement cost or net present

value of lease payments for leased assets

Infrastructure Market selling price Depreciated replacement cost

Plant & Equipment Market selling price Depreciated replacement cost or net present

value of lease payments for leased assets

Heritage and Cultural Estimated market selling price Depreciated reproduction cost



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Following initial recognition at cost, valuations are conducted with sufficient frequency to ensure that the carrying

amounts of assets do not materially differ from the assets’ fair values as at the reporting date. Revaluations for land,

buildings and infrastructure are conducted every three years; other plant and equipment are revalued annually on a

sample basis.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading

of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same class that

was previously recognised through profit and loss. Revaluation decrements for a class of assets are recognised through

profit and loss except to the extent that they reverse a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset

and the asset is restated to the revalued amount.

Refer to Note 1.20 for policy regarding revaluation of intangible assets.

(g) Depreciation

Property plant and equipment items having limited useful lives are systematically depreciated over their estimated

useful lives on a straight-line basis. Pooled assets are depreciated using an estimated useful life based on the average

useful lives of similar assets.

The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed in Note

4D.

Depreciation rates (useful lives) are reviewed at each reporting date and necessary adjustments are made in the

current, or current and future reporting periods, as appropriate. Residual values are re-estimated only when assets are

revalued.

The following are minimum and maximum useful lives for the different asset classes. These are not necessarily

indicative of typical useful lives for these asset classes.

2008-09 2007-08

Buildings 3 to 96 years 2 to 90 years

Infrastructure 4 to 93 years 3 to 87 years

Specialist military equipment 2 to 70 years 2 to 70 years

Other plant and equipment 2 to 70 years 2 to 70 years

Assets under finance lease 2 to 62 years 2 to 62 years

Heritage and cultural assets within Defence have been assessed to have indefinite lives. These heritage and cultural

assets are stored, managed, displayed, repaired and restored in ways that will maintain their cultural or heritage value

over time. Where conservation, restoration and preservation activities demonstrate that an asset will be maintained

for an indefinite period, these items are considered to have indefinite useful lives and therefore not subject to

depreciation. This is in accordance with the implementation guidance (G4) provided in AASB 116.

Heritage and cultural items include artefacts and memorabilia that are or may be of national historical or cultural

significance. While many of these items represent military achievements, others are associated with developments in

science and exploration, or with significant personal achievements. Some land and buildings may be of historical or

cultural significance.




While some heritage buildings are used as office accommodation, residences, storage and gymnasiums they are

primarily held for heritage and cultural purposes. Defence has assessed that the primary purpose of holding these

heritage and cultural buildings is for their heritage and cultural significance. As such, Defence will continue to classify

these assets as heritage and cultural items with an indefinite useful life and therefore will not be subject to depreciation.

Road earthworks are depreciated over the estimated useful life of the asset except where an engineering review has

determined the useful life to be indefinite, in which case no depreciation is applied.

1.20 Intangibles

Defence’s intangibles primarily comprise externally acquired and internally developed computer software for internal

use. Intangibles with gross values greater than $150,000 are only capitalised when they meet the recognition criteria

in AASB 138 Intangible Assets.

Software is amortised on a straight–line basis over its anticipated useful life. The useful lives of Defence software are

2-26 years (2007-08: 2-20 years). All software assets are assessed annually for indications of impairment.

Defence recognises its intangible assets initially at cost and measures those which have an active market at fair value

subsequent to initial recognition. If an intangible asset is acquired at no cost or for nominal consideration, other than

those acquired through restructuring, it is recognised initially at fair value as at the date of acquisition.

All Defence intangible assets are currently stated at cost or fair value less any subsequent accumulated amortisation

and accumulated impairment losses.

Acquired intellectual property may form part of the acquisition of particular tangible assets. Where the acquired

intellectual property is inseparable from the underlying tangible asset it is reflected in the value of the tangible asset in

the balance sheet.

Defence reviews the useful life of intangible assets annually based on the service potential of the assets. All Defence

intangible assets have a finite useful life and are amortised over their anticipated useful life. Where there is an

indication that the service potential of an intangible asset is impaired, the recoverable amount of that asset is

determined based on the remaining service potential. Where the recoverable amount is lower than the carrying

amount, the asset is written down to its recoverable amount.

1.21 Inventories

Defence holds inventory for its own use and does not ordinarily hold inventory for sale. Sales of inventory relate to

minor fuel sales to foreign governments. Inventory held for use is valued at cost adjusted where applicable for loss of

service potential. Defence considers that loss of operating capacity due to obsolescence is the most appropriate basis

for loss of service potential of its inventories.

Costs incurred in bringing each item of inventory (primarily explosive ordnance and general stores inventory) to its

present location and condition that are capable of being allocated on a reasonable basis are assigned to inventory. The

costs of inventories are assigned by using the weighted average cost formula.

Inventories acquired at no cost or nominal consideration are measured at current replacement cost at the date of

acquisition.

1.22 Assets Held for Sale

Non-current assets are classified as held for sale if the carrying amount is to be recovered principally through a sale



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transaction rather than through continuing use. Classification as held for sale occurs when the asset is available for

immediate sale in its present condition, and the sale is highly probable. On classification as held for sale, the asset is

measured at the lower of its carrying amount and fair value less costs to sell. Any write down to fair value less costs to

sell is recognised as an impairment loss. Assets which have been classified as held for sale are no longer subject to

depreciation or amortisation.

1.23 Prepayments

Prepayments, excluding those paid to DMO or to employees as retention benefit payments, are recognised if the value

of the payment is $50,000 or greater.

Prepayments made to DMO for acquisition and sustainment services and to employees for retention benefits, are

recognised when the payment is made irrespective of the amount.

1.24 Foreign Currency

Transactions denominated in a foreign currency are converted at the exchange rate on the date of transaction. Foreign

currency receivables and payables are translated at the exchange rate at the balance date.

Non-financial items that are measured at cost in a foreign currency are translated using the spot exchange rate at the

date of the initial transaction. Non-financial items that are measured at fair value in a foreign currency are translated

using the spot exchange rates at the date when the fair value was determined.

All exchange gains and losses are reported in the income statement.

1.25 Taxation

Defence is exempt from all forms of taxation except Fringe Benefits Tax (FBT), the Goods and Services Tax (GST)

and certain excise and customs duties.

Revenues, expenses, assets and liabilities are recognised net of GST, except:

• where the amount of GST incurred is not recoverable from the Australian Taxation Office; and

• for receivables and payables which are recognised inclusive of GST.

1.26 Investments in Co-operative Research Centres

Defence has partial ownership in, and participates in the governance of, several Co-operative Research Centres

(CRC’s). These include the Co-operative Research Centre for Advance Composite Structures (CRC ACS), the Co-

operative Research Centre for Integrated Engineering Asset Management (CRC IEAM), the Co-operative Research

Centre for Contamination Assessment and Remediation of the Environment (CRC CARE), CAST CRC Limited Co-

operative Research Centre (CAST CRC) and Co-operative Research Centre for Spatial Information (CRC SI).

Defence does not have control, joint control or significant influence over these entities.

Because Defence’s investments in these entities are immaterial, they have not been recognised in the financial

statements.




1.27 Reporting of Administered Activities

Administered revenues, expenses, assets, liabilities, contingencies and commitments and cash flows are disclosed in

the Schedule of Administered Items and related notes.

Except where otherwise stated below, administered items are accounted for on the same basis and using the same

policies as for departmental items, including the application of Australian Accounting Standards.

(a) Administered Cash Transfers to and from Official Public Account

Revenue collected by Defence, for use by the Australian Government rather than Defence, is administered revenue.

Collections are transferred to the Official Public Account (OPA) maintained by the Department of Finance and

Deregulation. Cash is drawn down from the OPA to make payments under parliamentary appropriations on behalf of

the Australian Government. These transfers to and from the OPA are reported as adjustments to the administered

cash held by Defence on behalf of the Government and reported as such in the Statement of Cash Flows in the

Schedule of Administered Items and in the Administered Reconciliation Table in Note 22. The Schedule of

Administered Items largely reflects the Australian Government’s transactions, through Defence, with parties outside

the Australian Government.

(b) Revenue

All administered revenues relate to activities performed by Defence on behalf of the Australian Government.

Administered revenues mainly comprise military superannuation contributions, payments received from the United

Nations and foreign governments, bank interest and dividends paid by Defence Housing Australia.

(c) Administered Investments

Defence reports the Australian Government’s capital investment in Defence Housing Australia (DHA) which is

outlined at Notes 19C and 25. The investment is classified as ‘available for sale’ and is measured at fair value using the

net assets valuation approach in accordance with the FMOs. The investment was assessed for impairment at year end

and no indicators of impairment were noted.

(d) Military Retention Benefits

Certain categories of ADF personnel who are members of the Military Superannuation Benefits Scheme (MSBS) and

have had 15 years of service receive retention benefits as an incentive for continued service. Retention benefit

payments are initially recorded as prepayments and amortised over the expected period of service.

(e) Military Superannuation

The Defence Force Retirement and Death Benefits Scheme (DFRDB) is a fully unfunded scheme and the Military

Superannuation and Benefits Scheme (MSBS) is a partly funded scheme. MSBS member contributions are paid into

the Military Super and Benefits Fund that is controlled by the MSB Board and are therefore not reflected in the

Schedule of Administered Items. The Australian Government, on behalf of the MSB Fund, makes funded benefit

payments to members of the scheme and is reimbursed by the MSB Fund for these payments.

The Australian Government Actuary (AGA) estimates the unfunded provisions and expected future cash flows as at

30 June each year. These estimates are reflected in the Schedule of Administered Items. The AGA completes a full

review of the unfunded liabilities (Long Term Cost Report) every three years. This was last completed in 2008.

Actuarial gains and losses for defined benefit plans are recognised applying the “direct to equity” option as outlined in

AASB 119.



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(f) Other Guarantees

There are no quantifiable administered amounts guaranteed by the Commonwealth to disclose in the Schedule of

Administered Items. There is one unquantifiable guarantee disclosed in the Administered Contingent Liabilities and

Contingent Assets Note (Note 24). At the time of completion of the financial statements there was no reason to

believe that the guarantees would be called upon and therefore recognition of a liability was not required.

(g) Indemnities

There are currently no quantifiable indemnities to disclose in the Schedule of Administered Items. There is one

unquantifiable contingency disclosed in the Administered Contingent Liabilities and Contingent Assets Note (Note

24). At the time of completion of the financial statements there was no reason to believe that the indemnities would

be called upon and therefore no recognition of any liability was required.

(h) Subsidies

Defence administers the Defence Home Owner Subsidy scheme on behalf of the Government.

Subsidy liabilities are recognised to the extent that:

(i) the services required to be performed by the recipient have been performed; or

(ii) eligibility criteria have been satisfied, but payments due have not been made.

(i) Payments to CAC Act Bodies

From 2008-09, payments to CAC Act bodies from amounts appropriated for that purpose are classified as

administered expenses, loans receivable or as an increase to the carrying amount of the investment in the relevant

portfolio department. Pre 2008-09 loan appropriations are not recognised in the accounts of the relevant portfolio

department. Defence acts as the relevant portfolio agency for Defence Housing Australia.

Note 2: Events after the Balance Sheet Date

There are no post balance date events with a material effect on the financial statements.




2009 2008

$'000 $'000

Note 3: Income

Revenue

Note 3A: Revenue from Government

Appropriations:

Departmental outputs 20,268,308 19,693,267

Total revenue from Government 20,268,308 19,693,267

Note 3B: Sale of goods and rendering of services (including cost

recovery)

Sale of goods to:

Related entities 10,153 6,532

External parties 126,276 126,319

Total sale of goods 136,429 132,851

Rendering of services to:

Related entities 394,542 356,881

External parties 197,589 199,108

Total rendering of services 592,131 555,989

Total sale of goods and rendering of services (including cost recovery) 728,560 688,840

Note 3C: Rental income

Operating leases:

Other 9,083 7,073

Total rental income 9,083 7,073

Note 3D: Other revenue

Settlement of damages 3,284 17,224

Foreign military sales refunds 4,243 1,859

Other minor revenues 9,948 17,758

Resources received free of charge

Total other revenue

6,317 5,883

23,792 42,724



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2009 2008

$'000 $'000

Gains

Note 3E: Reversals of previous asset write-downs and

impairments

Specialist military equipment 456,521 414,180

Land and buildings 29,880 27,478

Plant and equipment 13,721 61,656

Infrastructure 13,569 5,667

Heritage and cultural assets 18,711 1,023

Software and intangibles - 15,333

525,337Total property, plant and equipment and intangibles 532,402

Receivables 517 4,874

Inventory 109,380 118,265

648,476Total reversal of previous asset write-downs 642,299

Note 3F: Other gains

Other gains

Total other gains

1,424

1,424

3,295

3,295




2009 2008

$'000 $'000

Note 4: Expenses

Note 4A: Employee benefits

Australian Public Service (APS) employee benefits

Wages and salaries 949,586 940,755

Superannuation:

Defined contribution plan 38,692 37,724

Defined benefit plans 132,713 129,390

Leave and other entitlements 133,497 129,007

Fringe Benefits Tax 8,044 5,259

Separation and redundancies 14,298 179

Other allowances 25,123 22,216

Health expenses 5,706 5,232

Other employee expenses 786 1,461

Total APS employee benefits 1,308,445 1,271,223

Australian Defence Force (ADF) employee benefits

Wages and salaries

Superannuation – defined contribution plan

Housing1

Leave and other entitlements

Fringe Benefits Tax

Overseas allowances

Separation and redundancies

Other allowances

Health expenses

Other employee expenses

3,585,981

976,949

570,621

474,927

290,579

253,371

3,818

316,452

262,297

235,461

3,220,990

846,659

515,606

411,213

295,644

273,972

1,780

311,474

221,965

151,079

Total ADF employee benefits 6,970,456 6,250,382

Total employee benefits 8,278,901 7,521,605

1 Housing expenses include lease payments made to DHA for the provision of housing for Australian Defence Force (ADF) members with families. Due to their nature, these payments are classified as employee expenses. Residences leased from DHA are subleased by Defence to ADF members for a nominal charge. Sublease expenses paid by Defence to DHA and recognised as part of ADF Housing expenses were $370.42m (2007-08: $335.56m).



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2009 2008

$'000 $'000

Note 4B: Suppliers

Provision of goods - related entities 17,457 14,990

Provision of goods - external parties 1,406,559 1,309,738

Rendering of services - related entities 3,464,958 3,302,968

Rendering of services - external parties 3,568,361 3,464,238

Operating lease rentals – related entities:

Minimum lease repayments 10,752 13,965

Operating lease rentals – external parties:

Minimum lease repayments 358,268 289,184

Contingent rentals 7,727 1,124

Sublease 4,427 5,139

Workers Compensation premiums 19,603 17,512

Total suppliers expenses 8,858,112 8,418,858

Note 4C: Grants

Public sector:

State and Territory Governments 48 14

Local Governments - 1,895

Private sector:

Non-profit organisations 11,301 15,883

Overseas

Total grants

3,000

14,349

208

18,000




2009 2008

$'000 $'000

Note 4D: Depreciation and amortisation

Depreciation

Buildings 430,462 406,319

Buildings - leasehold improvements 12,490 12,025

Specialist military equipment 2,868,376 2,656,342



Total depreciation 3,782,902 3,571,007

Amortisation

Buildings under finance lease 43,842 27,202

Plant and equipment under finance lease 18,701 -

Software under finance lease 11,761 10,824

Software 47,069 45,488

Intangibles – other 3,364 3,328

Total amortisation 124,737 86,842

Total depreciation and amortisation 3,907,639 3,657,849

The aggregate amounts of depreciation or amortisation

expensed during the reporting period for each class of

depreciable asset are as follows:

Buildings 486,794 445,546

Specialist military equipment 2,868,376 2,656,342



Software and intangibles 62,194 59,640

Total depreciation and amortisation 3,907,639 3,657,849

Note 4E: Finance costs

Finance leases 77,574 31,602

Unwinding of discount for site restoration, decontamination and

decommissioning 16,788 12,540

Bank interest

Total finance costs

4 4

94,366 44,146



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2009 2008

$'000 $'000

Note 4F: Write-down and impairment of assets

Financial assets

Receivables 5,302 2,170

Total financial assets 5,302 2,170

This is represented by:

Bad debts written off 1,561 360

Impairment allowance 3,741 1,810

5,302 2,170

Non financial assets

Specialist military equipment

Assets in use 374,551 1,020,734

Work in progress 255,425 365,778

Total specialist military equipment 629,976 1,386,512

Land and buildings

Assets in use 73,031 33,816


Total land and buildings 75,848 53,454

Plant and equipment



Total plant and equipment 22,625 67,947

Infrastructure

Assets in use 459 4,581


Total infrastructure 4,890 44,186

Intangibles



Total intangibles 7,835 13,216

Heritage and cultural assets

Assets in use

Total heritage and cultural assets

908

908

-

-




2009 2008

$'000 $'000

Inventory

Write-down of general stores inventory 342,527 267,913

Write-down of explosive ordnance 254,273 116,955

Write-down of fuel 1,624 -

Total inventory 598,424 384,868

Total write-down and impairment of assets 1,345,808 1,952,353

Note 4G: Foreign exchange

Foreign exchange gains

Non-speculative 14,312 3,729

Less foreign exchange losses

Non-speculative

Total net gain (loss) foreign exchange

(14,746)

(434)

(2,652)

1,077



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2009 2008

$'000 $'000

Note 4H: Losses from sale of assets

Land and buildings

Proceeds from sale 19,870 24,486

Carrying value of assets sold (16,048) (14,853)

Selling expense (17,046) (10,618)

Net gain (loss) from sale of land and buildings (13,224) (985)


Proceeds from sale 41,816 2

Carrying value of assets sold (124,500) -

Selling expense (320) (161)

Net gain (loss) from sale of specialist military equipment (83,004) (159)

Other infrastructure, plant and equipment

Proceeds from sale 35,441 40,300

Carrying value of assets sold (31,942) (40,223)

Selling expense (1,625) (1,195)

Net gain (loss) from sale of other infrastructure, plant and equipment 1,874 (1,118)

Other assets

Proceeds from sale 4,810 595

Selling expense (2,275) (485)

Net gain (loss) from sale of other assets 2,535 110

Total net gain (loss) from sale of assets (91,819) (2,152)

Note 4I: Other expenses

Act of Grace payment Section 33 293 81

Ex-gratia payments 620 157

APS payments - 19

Defective Administration Scheme payments 734 543

Restoration in use costs

Total other expenses

23,501 54,015

25,148 54,815




2009 2008

$'000 $'000

Note 5: Financial Assets

Note 5A: Cash and cash equivalents

Cash on hand 4,794 4,614

Cash at bank - at call 23,294 24,609

Total cash and cash equivalents 28,088 29,223

Cash and cash equivalents are recognised as current assets.

Note 5B: Trade and other receivables

Goods and services 73,258 80,852

Less: Impairment allowance account (6,522) (3,302)

Net goods and services receivables 66,736 77,550

GST receivable from the Australian Taxation Office 104,244 88,096

Appropriation receivable: 348,914 247,363

Accrued revenue 29,316 34,835

Other 63,328 14,341

Total trade and other receivables (net) 612,538 462,185

Trade and other receivables are represented by:

Current 604,546 456,784

Non-current 7,992 5,401

Total trade and other receivables (net) 612,538 462,185

Trade and other receivables (gross) are aged as follows:

Not overdue 598,670 441,003

Overdue by:

Less than 30 days 1,814 4,994

30 to 60 days 6,393 1,541

61 to 90 days 639 2,339

More than 90 days 11,544 15,610

Total trade and other receivables (gross) 619,060 465,487

The impairment allowance account is aged as follows:

Not overdue - -

Overdue by:

Less than 30 days - -

30 to 60 days (2,879) -

61 to 90 days (16) (780)

More than 90 days

Total impairment allowance account

(3,627) (2,522)

(6,522) (3,302)



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Reconciliation of impairment allowance account 2009 2008

$'000 $'000

Opening balance (3,302) (6,437)

Amounts written off 423 360

Amounts recovered and reversed 98 4,874

Increase / decrease recognised in net surplus/deficit (3,741) (2,099)

Closing balance (6,522) (3,302)

Note 6: Non-Financial Assets

Note 6A: Land and buildings

Freehold land

at fair value * 4,366,438 4,432,686

Total freehold land 4,366,438 4,432,686

Buildings on freehold land

at fair value * 8,070,426 7,718,889

Accumulated depreciation (241,193) (209,062)

Total buildings on freehold land 7,829,233 7,509,827

Work in progress – at cost 980,842 484,657

Buildings held under finance lease 894,364 535,640

Accumulated amortisation (148,496) (125,755)

745,868 409,885

Total buildings 9,555,943 8,404,369

Total land and buildings 13,922,381 12,837,055

* All independent valuations were conducted by the Australian Valuation Office in accordance with the revaluation

policy stated at Note 1.19(f).




2009 2008

$'000 $'000

Note 6B: Specialist military equipment

Specialist military equipment in use other than repairable items

at cost 44,449,822 42,312,376

Accumulated depreciation (25,265,019) (23,136,189)

Accumulated impairment losses (237,554) (152,631)

Net carrying value of specialist military equipment 18,947,249 19,023,556

Repairable items

at cost 10,728,059 10,611,732

Accumulated depreciation (6,191,698) (6,497,736)

Accumulated impairment losses (97,203) (69,830)

Net carrying value of repairable items 4,439,158 4,044,166

Work in progress * 10,410,387 9,334,209

Total specialist military equipment 33,796,794 32,401,931

* Included in work in progress for specialist military equipment is $152m that is subject to Government review and

decision.

Note 6C: Plant and equipment

at fair value * 1,328,416 1,718,027


Accumulated impairment losses (2,720) (22)

852,031 978,525


Plant and equipment under finance lease 93,504 -

Accumulated amortisation (18,701) -

74,803 -

Total plant and equipment 1,102,356 1,147,762





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2009 2008

$'000 $'000

Note 6D: Infrastructure

at fair value * 5,058,624 4,712,863


4,943,549 4,637,901


Total infrastructure 5,052,145 4,710,245






2009 2008

$'000 $'000

Note 6E: Intangibles

Computer Software

Purchased

at cost 359,888 270,484


Accumulated impairment losses (2,711) -

206,390 154,306


Computer software under finance lease 126,015 64,944


49,310 -

Total purchased computer software 402,539 284,508

Internally Generated

at cost 86,114 76,879


Total internally generated computer software 33,991 33,331

Total computer software 436,530 317,839

Other Intangibles

Purchased

at cost 60,947 61,127


21,547 23,690


Total other intangibles purchased 27,562 39,263

Internally Generated

at cost 6,021 1,277

Accumulated amortisation (1,609) (754)

Total other intangibles internally generated 4,412 523

Total other intangibles 31,974 39,786

Total intangibles 468,504 357,625



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2009 2008

$’000 $’000

Note 6F: Heritage and cultural assets

at fair value *

Total heritage and cultural assets

869,393

869,393

807,931

807,931

*All valuations were either conducted by management or independently in accordance with the revaluation policy stated

at Note 1.19(f)

APPEND

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Note 6G: Analysis of property, plant and equipment, and intangibles

Table A: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment, and Intangibles (2008-2009)

Item Land

$’000

Buildings

$’000

Specialist

Military

Equipment

$’000

Infrastructure

$’000

Plant and

Equipment

(owned and

leased)

$’000

Heritage

and

Cultural

Assets

$’000

Computer

Software

Purchased

$’000

Computer

Software

Internally

Generated

$’000

Other

Intangibles

Purchased

$’000

Other

Intangibles

Internally

Generated

$’000

Total

$’000

As at 1 July 2008

Gross Book value 4,432,686 8,739,186 62,258,317 4,785,207 1,887,264 807,931 465,630 76,879 76,700 1,277 83,531,077

Accumulated depreciation/amortisation and impairment - (334,817) (29,856,386) (74,962) (739,502) - (181,122) (43,548) (37,437) (754) (31,268,528)

Net book value 1 July 2008 4,432,686 8,404,369 32,401,931 4,710,245 1,147,762 807,931 284,508 33,331 39,263 523 52,262,549

Additions: by purchase 2,123 928,660 4,377,038 94,906 211,982 50 95,501 862 7,312 - 5,718,434

by finance lease - 386,418 - - 93,504 - 61,071 - - - 540,993

Revaluations/impairments through equity (29,019) 431,125 - 393,431 (35,723) 42,911 - - - - 802,725

Reclassifications (237) (86,523) 9,160 91,770 (31,043) 698 11,856 12,900 (13,325) 4,744 -

Depreciation/amortisation expense - (486,794) (2,868,376) (246,883) (243,392) - (48,896) (9,933) (2,510) (855) (3,907,639) Revaluations/write-downs and impairments recognised in operating result (30,262) (45,586) (629,976) (4,890) (22,625) (908) (1,488) (3,169) (3,178) - (742,082)

Other movements:

Reversal of previous asset write-downs 31 29,849 456,521 13,569 13,721 18,711 - - - - 532,402

Transfers in (out) - - 49,319 (3) (148) - (13) - - - 49,155

Transfers to/from Assets Held for Sale (8,511) 10,100 125,677 - 260 - - - - - 127,526

Disposals Other disposals (373) (15,675) (124,500) - (31,942) - - - - - (172,490)

Net book value as at 30 June 2009 represented by:

Gross book value 4,366,438 9,945,632 65,588,268 5,167,220 1,597,442 869,393 632,742 86,114 66,962 6,021 88,326,232

Accumulated depreciation/amortisation and impairment - (389,689) (31,791,474) (115,075) (495,086) - (230,203) (52,123) (39,400) (1,609) (33,114,659)

Closing net book value 4,366,438 9,555,943 33,796,794 5,052,145 1,102,356 869,393 402,539 33,991 27,562 4,412 55,211,573

APPEND

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299

Financial statements


Note 6G: Analysis of property, plant and equipment, and intangibles Table B: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment, and Intangibles (2007-2008)

Item Land Buildings Specialist Infrastructure Plant and

Equipment

(owned and

leased)

Heritage Computer Computer Other

Intangibles

Purchased

$’000

Other Total

Military and Software Software Intangibles

Equipment Cultural Purchased Internally Internally

Assets Generated Generated

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

As at 1 July 2007

Gross Book value

Accumulated depreciation/amortisation and impairment

3,880,314

-

8,221,058

(222,089)

60,357,208

(27,797,736)

4,671,540

(43,646)

1,865,930

(651,686)

763,944

-

352,566

(140,170)

48,941

(22,320)

70,968

(34,240)

1,277

(623)

80,233,746

(28,912,510)

Net book value 1 July 2007 3,880,314 7,998,969 32,559,472 4,627,894 1,214,244 763,944 212,396 26,621 36,728 654 51,321,236

Additions:

by purchase

by finance lease

Revaluations/impairments through equity

Reclassifications

Depreciation/amortisation expense Write-downs and impairments recognised in operating result

3,322

-

434,508

-

-

(1,207)

597,179

118,129

295,141

(119,962)

(445,546)

(52,247)

3,596,392

-

-

(58,076)

(2,656,342)

(1,386,512)

55,113

-

169,777

125,351

(229,371)

(44,186)

244,820

-

(8,130)

7,181

(266,950)

(67,947)

19

-

41,963

982

-

-

30,717

-

-

85,687

(48,301)

(11,212)

50,263

-

-

(35,542)

(8,011)

-

2

-

-

7,734

(3,197)

(2,004)

13,243

-

-

(13,355)

(131)

-

4,591,070

118,129

933,259

-

(3,657,849)

(1,565,315)

Other movements

Reversal of previous asset write-downs

Transfers in(Out)

Transfers to/from Assets Held for Sale

7,340

-

114,213

20,138

(1)

1,618

414,180

59,067

(126,250)

5,667

-

-

61,656

(389)

3,500

1,023

-

-

15,221

-

-

-

-

-

-

-

-

112

-

-

525,337

58,677

(6,919)

Disposals

Other disposals (5,804) (9,049) - - (40,223) - - - - - (55,076)

Net book value as at 30 June 2008 represented by:

Gross book value

Accumulated depreciation/amortisation and impairment

Closing net book value

4,432,686

-

8,739,186

(334,817)

62,258,317

(29,856,386)

4,785,207

(74,962)

1,887,264

(739,502)

807,931

-

465,630

(181,122)

76,879

(43,548)

76,700

(37,437)

1,277

(754)

83,531,077

(31,268,528)

4,432,686 8,404,369 32,401,931 4,710,245 1,147,762 807,931 284,508 33,331 39,263 523 52,262,549




2009 2008

$’000 $’000

Note 6H: Inventories

Inventories – General 1,899,116 2,021,926

Inventories – Explosive ordnance 2,945,939 2,827,501

Inventories – Fuel 97,288 103,314

Total inventories 4,942,343 4,952,741

Inventories are represented by:

Current 713,665 659,728

Non-current 4,228,678 4,293,013

Total inventories 4,942,343 4,952,741

Inventory valuation dissection

Balance at cost as at 1 July 4,952,741 4,840,542

Inventory acquired during period 1,522,956 1,428,719

Inventory recognised during period 109,380 118,265

Inventory consumed during period (1,040,300) (913,224)

Inventory write downs during period (598,424) (384,868)

Transfers to inventory during period 18,867 667

Transfers from inventory during period (22,877) (137,360)

Closing balance as at 30 June 4,942,343 4,952,741

Note 6I: Prepayments

Capital prepayments 332,052 828,531

Non capital prepayments 197,630 226,686

Total prepayments 529,682 1,055,217

Prepayments are represented by:

Current 492,273 1,017,216

Non-current 37,409 38,001

Total 529,682 1,055,217

Note 6J: Assets held for sale

Land and buildings 22,265 23,854

Specialist Military Equipment 573 126,250

Other infrastructure, plant and equipment

Total assets held for sale

930

23,768

1,190

151,294



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2009 2008

$’000 $’000

Note 7: Payables

Note 7A: Suppliers

Trade creditors - non capital 755,244 811,088

Trade creditors - capital 84,026 46,907

Total supplier payables 839,270 857,995

Supplier payables are represented by:

Current 839,270 857,995

Non-current - -

Total supplier payables 839,270 857,995

Note 7B: Other payables

Australian Public Service (APS) employee payables:

Salaries and wages * 17,936 13,520

Superannuation * 2,764 3,218

Separations and redundancies * 68 18

Australian Defence Force (ADF) employee payables:

Salaries and wages * 90,513 64,233

Superannuation * 27,293 11,994

Other 183,640 197,170

Total other payables 322,214 290,153

Other payables are represented by:

Current 288,790 262,328

Non-current

Total other payables

33,424 27,825

322,214 290,153

* Salaries and wages, superannuation and separations and redundancy employee payables have been reclassified to

other payables from employee provisions consistent with the Finance Minister’s Orders.




2009 2008

$'000 $'000

Note 8: Interest Bearing Liabilities *

Finance leases payable:

Within one year

Minimum lease payments 115,954 58,452

Deduct: future finance charges (70,240) (34,498)

In one to five years

Minimum lease payments 493,099 231,499


In more than five years

Minimum lease payments 1,159,182 368,040


Finance leases recognised on the balance sheet 870,169 404,988

Lease liability is represented by:

Current 45,715 23,954

Non-current

Net lease liability

824,454

870,169

381,034

404,988

* 19 finance leases exist in relation to properties and technology. The leases are non-cancellable and for fixed terms with

an average remaining term of 11 years. The maximum number of years remaining is 30 relating to the Amberley Single

Leap finance lease to May 2039. The lease assets secure the lease liabilities. Interest rates applied averaged 8.00% (2008:

6.67%).

Contingent rent (representing the portion of the lease payments made in 2008-09 that were not fixed and subject to CPI

finance lease contract clauses) were expensed in the periods in which they were incurred on 3 finance leases and were

reported in Employee Benefits Expenses (refer Note 4A).



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The classification of current employee provisions includes amounts for which there is not an unconditional right to

defer settlement by one year, hence in the case of employee provisions the above classification does not represent the

amount expected to be settled within one year of reporting date. Employee provisions expected to be settled in twelve

months from the reporting date are $630.99m (2008: $600.74m), in excess of one year are $1,306.07m (2008:

$1,162.98m).

* Salaries and wages, superannuation and separations and redundancy employee payables have been reclassified to

other payables from employee provisions consistent with the Finance Minister’s Orders.

2009 2008

$'000 $'000

Note 9: Provisions

Note 9A: Employee provisions *

Australian Public Service (APS) employee provisions

Leave 427,972 416,402

Total APS employee provisions 427,972 416,402

Australian Defence Force (ADF) employee provisions

Leave 1,450,764 1,325,949

Other provisions 58,331 21,370

Total ADF employee provisions 1,509,095 1,347,319

Total employee provisions 1,937,067 1,763,721

Employee provisions are represented by:

Current 1,685,170 1,575,745

Non-current

Total employee provisions

251,897 187,976

1,937,067 1,763,721




2009

$'000

Note 9B: Restoration, decontamination and decommissioning

Provisions for restoration and decommissioning 310,097

Provision for decontamination1 334,633

2008

$'000

272,790

342,782

Total restoration, decontamination and decommissioning provisions 644,730 615,572

Restoration, decontamination and decommissioning provisions are represented by:

Current 86,987 85,559

Non-current 557,743 530,013

Total restoration, decontamination and decommissioning provisions 644,730 615,572

Refer to Note 9D for reconciliation 1. This provision does not represent the total cost of remediating contamination on all Defence sites rather, it provides an

estimate of the present obligation that exists in relation to these sites (see Note 1.19(c) for the accounting policy on this

matter).

Note 9C: Other provisions


Total other provisions 28,340 24,603

Other provisions are represented by:

Current 28,340 14,545

Non-current -

Total other provisions 28,340

10,058

24,603

Refer to Note 9D for reconciliation



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Note 9D: Reconciliation of provision

balances Restoration and Decontamination Other

decommissioning provision provisions

provision

$’000 $’000

$’000

Carrying amount at 1 July 2008 272,790 342,782 24,603

Payments made during financial year (4,077) (61,871) (510)

Additional provisions made 31,748 93,789 20,519

Unwinding of the discounted amount

arising from the passage of time 14,961 1,828 -

Amounts reversed

Closing balance 2009

(5,325)

310,097

(41,895)

334,633

(16,272)

28,340




Note 10: Restructuring

2008-09: There were no restructuring adjustments during 2008-09.

2007-08: Transfer of assets from the Department of Immigration and Citizenship

A number of demountable buildings and plant and equipment assets from the Woomera Immigration Reception and

Processing Centre were transferred from the Department of Immigration and Citizenship to the Department of Defence

during 2007-08.

The net book value of assets transferred from the Department of Immigration and Citizenship for no consideration

and recognised as at the date of transfer were:

2009 2008

$'000 $'000

Total assets recognised - 4,750

Net assets assumed - 4,750

Net increase (decrease) in net assets during the year

- 4,750



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2009 2008

$'000 $'000

Note 11: Cash Flow Reconciliation

Reconciliation of cash and cash equivalents as per Balance

Sheet to Cash Flow Statement

Cash at year end per Cash Flow Statement 28,088 29,223

Balance Sheet items comprising above cash 'Financial Asset-Cash' 28,088 29,223

Reconciliation of net surplus/(deficit) to net cash from/(used

by) operating activities:

Operating result (943,110) (585,026)

Depreciation and amortisation 3,907,639 3,657,849

Foreign exchange (gains) losses 434 (1,077)

Reversals of previous asset write-downs (641,781) (643,602)

(Gains) losses from assets sales 91,819 2,152

Net write-down and impairment of assets 1,340,506 1,950,183

Finance costs 94,366 44,146

Inventory consumption or expensed 1,042,037 918,130

Reallocation of appropriation receipts (3,296) 176

Restoration in use costs 23,501 54,015

Decrease/(increase) in trade and other receivables (154,821) 39,497

Decrease/(increase) in inventories (616,615) (117,685)

Decrease/(increase) in prepayments 525,534 (224,054)

Increase/(decrease) in employee provisions 173,348 99,032

Increase/(decrease) in other provisions 3,737 (21,697)

Increase/(decrease) in suppliers (83,761) 81,767

Increase/(decrease) in other payables

Net cash from/(used by) operating activities

32,061 106,426

4,791,598 5,360,232




Note 12: Contingent Liabilities and Assets Quantifiable Contingencies The Schedule of Contingencies for the Financial Year 2008-09 reports non-remote, quantifiable contingent liabilities as at 30 June 2009 in respect of claims for damages/costs of $84.45 million (2007-08: $100.15m). This amount represents an estimate of the Department’s liability based on precedent. This estimated figure is determined by conducting an objective analysis of the probable amount payable for all the matters managed by Defence’s Legal Services Panels and those matters being handled in-house by Defence Legal Division, and by making appropriate adjustments where the same matters are reported on by the members of Defence’s Legal Services Panels and Defence Legal Division. However, as an estimate, the exact amount that will become payable under these claims is uncertain. The Department of Defence is defending the claims or trying to resolve them by recourse to alternative dispute resolution measures. Consequently, the timing of outflows resulting from the claims will depend on the nature of each individual case. The Schedule also reports contingent assets in respect of claims by the Department of $0.86m (2007-08: $2.69m). The Department is expecting to succeed in its claims, although the cases are continuing. The estimated figures is determined by conducting an objective analysis of the probable amounts owing to the Department for all matters managed by Defence’s Legal Services Panels and those matters being handled in-house by Defence Legal Division. Defence also manages its exposure to financial risk through participating in Comcover - the Australian Government’s general insurance self-managed fund. Where appropriate, Defence liabilities are covered under Comcover’s General Liability, Professional Indemnity, Directors’ and Officers’ Liability, Aviation Liability and Marine Liability policies. These policies cover Defence’s legal liabilities, subject to the policy terms and conditions and only cover liabilities resulting from indemnities where the liability would have arisen in the absence of the indemnity. The extent to which particular indemnities given by Defence are or are not covered by Comcover is determined on a case by case basis, given the facts of each situation and subject to guidance under Financial Management Guidance No. 6 ‘Guidelines for Issuing and Managing Indemnities, Guarantees, Warranties and Letters of Comfort’) and Financial Management and Accountability Regulation (FMAR) 10 and Comcover guidelines in regard to contract indemnities. Subject to Defence obtaining Finance Minister approval under FMAR 10, separate agreement is needed from Comcover in respect of insurance coverage applications for particular indemnities. Unquantifiable Contingencies ADI Limited – Officers’ and Directors’ Indemnities Under the sale agreements for ADI Ltd, the Australian Government agreed to indemnify the directors, officers and employees for claims and legal costs associated with assistance related to the sale of the Australian Government’s shares in the company. The Australian Government has provided an indemnity to ADI Ltd for uninsured losses relating to specific heads of claims. HMAS Voyager / HMAS Melbourne claims Minimal provision has been made for settlement of claims arising from the HMAS Voyager / HMAS Melbourne collision in 1964. With one exception, all outstanding claims were resolved in the current financial year. Decontamination of Defence sites Defence has made financial provision for the possible costs involved in restoring, decontaminating and decommissioning Defence sites in Australia where a legal or constructive obligation has arisen (see Note 9B and Note 1.19(c) for further information). Litigation cases The Department of Defence is involved in a wide range of litigation and other claims for compensation and/or damages that may result in litigation where the matters are not able to be finalised by use of negotiation. The litigation includes common law liability claims, including for injury alleged to have resulted from the F-111 Deseal/Reseal programmes, and asbestos claims. Claims have also been received for damage caused by the use of Defence Practice Areas.



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Remote Contingencies Defence’s remote contingencies can be divided into four categories: (1) contingencies from the Defence Indemnities Register in ROMAN (for guarantees, indemnities and warrantees in contracts and agreements); (2) those arising from matters managed by Defence’s Legal Services Panels, (3) those arising from matters being handled in-house by Defence Legal Division, and (4) vehicle-related indemnities involved in the leases of senior executive vehicles taken out under the Fleet Management Agreement between the Commonwealth Government (represented by the Department of Finance and Deregulation) and LeasePlan Australia Ltd as the Fleet Manager under the Agreement and the novated lease arrangements utilised by Defence employees through salary sacrificing arrangements with various financiers. All categories are considered too remote to be included on the Schedule of Contingencies. In total, there are 8,108 instances (2007-08: 7,998) of unquantifiable remote contingent liabilities and 97 instances (2007-08: 65) of quantifiable remote contingent liabilities, to the value of $2,102.14m (2007-08: $2,101.85m). There are 3 (2007-08: 3) instances of unquantifiable remote contingent assets and 25 (2007-08: 6) instances of quantifiable remote contingent assets. A major part of the increase in the numbers and values for contingent liability matters from the 2007-08 financial year is due to the settlement of a large number of matters that had been previously reported as contingent liability matters, and the inclusion for the first time of information relating to contingent liability matters being handled in-house by Defence Legal Division. The difference in the values for contingent assets is also due to the finalisation of a number of legal matters where the issues were finalised during the financial year 2008-09 up to 30 June 2009, and the inclusion for the first time of information relating to contingent asset matters being handled in-house by Defence Legal Division. The remote contingencies managed by Defence’s Legal Services Panels and matters being handled in-house by Defence Legal Division have been objectively assessed as having a less than 5% chance of crystallising and, as such, are considered remote. Similarly, contingencies on the ROMAN Indemnities Register are remote, because no actual liability has ever arisen from them or from similar types of contingent liabilities that have been on Defence’s Indemnities Register in the past. In addition, there is no record of any indemnity under the Fleet Management Agreement and the novated lease arrangements having crystallised.




Note 13: Executive Remuneration

The number of senior executives who received, or were due to receive, total remuneration of $130,000 or more are set

out below:

Remuneration Band 2009 2008

$130,000 to $144,999 3 7

$145,000 to $159,999 10 5

$160,000 to $174,999 15 15

$175,000 to $189,999 20 28

$190,000 to $204,999 29 31

$205,000 to $219,999 24 23

$220,000 to $234,999 23 27

$235,000 to $249,999 39 26

$250,000 to $264,999 20 26

$265,000 to $279,999 17 20

$280,000 to $294,999 24 17

$295,000 to $309,999 12 12

$310,000 to $324,999 10 7

$325,000 to $339,999 2 1

$340,000 to $354,999 7 4

$355,000 to $369,999 3 -

$370,000 to $384,999 3 4

$385,000 to $399,999 1 1

$400,000 to $414,999 3 1

$415,000 to $429,999 - 3

$430,000 to $444,999 1 1

$445,000 to $459,999 1 -

$460,000 to $474,999 1 -

$475,000 to $489,999 1 2

$490,000 to $504,999 1 -

$505,000 to $519,999 3 -

$535,000 to $549,999 - 1

$610,000 to $624,999 1 -

262

Total 274

The aggregate amount of total remuneration of senior executives shown

above.

68,508,086

62,797,657

The aggregate amount of separation and redundancy/termination benefit

payments during the year to executives shown above. 2,087,700 1,683,690



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Note 13: Executive Remuneration (continued)

The Executive Remuneration Note includes remuneration details for Defence Senior Executives: the Secretary of

Defence, the Chief of the Defence Force (CDF), APS SES, ADF Star Ranked Officers, Chief of Division Grades 2 and

3, Medical Officer Grade 6 and Chaplains. In addition Executives who act in substantive SES or Star Ranked

positions are included in the note if they meet the criteria while acting at that level.

Included in the above Note:

• total remuneration based on salary and allowances, accrued superannuation, redundancy payments, accrued leave,

car parking, motor vehicle costs and fringe benefits tax, where the total remuneration exceeds $130,000;

• for ADF members only, the value of health and housing subsidy and a number of other miscellaneous allowances

(such as field allowances, career transition training, separation and retention allowances);

• remuneration paid to Senior Executives on secondment from other departments or Agencies; and

• all Military Star Ranked Officers who have been posted to the Defence Materiel Organisation (DMO) for the 2008-

09 financial year who exceed the threshold of $130,000, in accordance with Department of Finance and

Administration advice. In 2008-09 there were 25 such Officers (2007-08 25). The total remuneration for these Officers

was $6,166,555 including $501,791 in separation/redundancy payments (2007-08 $5,931,145 including $146,330 in

separation/redundancy payments). Whilst these Officers undertake a management function within DMO they remain

employees of the Department of Defence. Defence has received a payment from the DMO for these Officers in

accordance with the Military Workforce Agreement.

Not included in the Note:

• Senior Executives who are employed overseas for a period exceeding six months;

• remuneration of Senior Executives employed by Defence but on secondment to another department/agency; and

• reimbursements of out of pocket expenses.




No other services were provided by the Auditor-General.

2009 2008

$ $

Note 14: Remuneration of Auditors

Financial statement audit services are provided free

of charge to the Department.

The fair value of the services provided by the

Auditor-General was: 4,975,000 4,975,000



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Note 15: Financial Instruments

Financial risk management objectives and policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition and the basis

for measurement in respect of each class of financial asset and financial liability are disclosed in Note 1 to the financial

statements.

In accordance with Australian Government policy, Defence does not enter into reportable derivative financial

instruments.

2009 2008

$'000 $'000

(a) Categories of financial instruments

Financial assets

Loans and receivables

Cash and cash equivalents 28,088 29,223

Trade and other receivables 159,380 126,726

Carrying amount of financial assets 187,468 155,949

Financial Liabilities

At amortised cost

Suppliers 839,270 857,995

Other payables 233,241 211,191

Finance lease 870,169 404,988

Carrying amount of financial liabilities 1,942,680 1,474,174

(b) Net income and expense from financial assets


Exchange gains /(loss) 1,492 (935)

Impairment (4,785) 2,704

Net gain/(loss) on financial assets (3,293) 1,769

There is no interest income from financial assets not at fair value through the profit or loss.

(c) Net income and expense from financial liabilities

At amortised cost

Exchange gains /(loss) (1,926) 2,012

Interest expense (77,578)

Net gain/(loss) on financial liabilities (79,504)

(31,606)

(29,594)

There is no interest expense from financial liabilities not at fair value through the profit or loss.




Note 15: Financial Instruments (continued)

(d) Fair values of financial instruments

The fair values of cash, non-interest bearing monetary financial assets, trade creditors and finance leases approximate their

carrying amounts (AASB 7 paragraph 29). Finance Leases are recognised at the lower of fair value and net present value of

the minimum lease payments (AASB 117) at lease inception. The carrying amounts reported represent the amounts required

to settle each liability.

APPEND

IX 9 FINAN

CIAL TRANSPAREN

CY

DEFEN

CE ANN

UAL REPO

RT 2008-09 VOLU

ME 1

315




(e) Credit risk

Defence's maximum credit risk at the reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the Balance Sheet. Defence has

endorsed policies and procedures for debt management to reduce the incidence of credit risk. The majority of goods or services provided by Defence are provided to other government entities and

employees and therefore represent minimal credit risk exposure for Defence.

The carrying amount of financial assets, net of impairment losses, reported in the Balance Sheet represents Defence’s exposure to credit risk. Defence has no significant exposures to any

concentrations of credit risk.

Credit quality of financial assets not past due or individually determined as impaired:

0 to 30 days 31 to 60 days 61 to 90 days Over 90 days Total

Notes

2009 2008 2009 2008 2009 2008 2009 2008 2009 2008

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Financial assets:

Trade and other receivables 5B 1,814 4,994 3,514 1,541 623 1,559 7,917 13,088 13,868 21,182

Total 1,814 4,994 3,514 1,541 623 1,559 7,917 13,088 13,868 21,182

Not Past Not Past

Due Nor Due Nor Past Due or Past Due or

Impaired Impaired Impaired Impaired

Notes

2009 2008 2009 2008

$'000 $'000 $'000 $'000

Financial assets:

Cash and cash equivalents 5A 28,088 29,223 - -

Trade and other receivables 5B 145,510 105,544 20,390 24,484

Total 173,598 134,767 20,390 24,484

Ageing of financial assets past due but not impaired:

APPEND

IX 9 FINAN

CIAL TRANSPAREN

CY

316D

EFENCE AN

NU


LUM

E 1



(f) Liquidity risk

Defence's financial liabilities are payables and finance leases. The exposure to liquidity risk is based on the notion that Defence will encounter difficulty in meeting its obligations

associated with financial liabilities. This is highly unlikely due to appropriation funding and mechanisms available to Defence (e.g. Advance to the Finance Minister) and internal

policies and procedures put in place to ensure there are appropriate resources to meet its financial obligations.

The following table illustrates the maturities for financial liabilities.

Notes

On demand Within 1 year 1 to 2 years 2 to 5 years > 5 years Total

2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Financial liabilities:

Suppliers 7A - - 839,270 857,995 - - - 839,270 857,995

Other payables 7B - - 199,818 183,368 369 330 7,148 7,513 25,906 19,980 233,241 211,191

Finance lease 8 - - 45,714 23,954 65,037 26,459 183,794 93,983 575,624 260,592 870,169 404,988

Total - - 1,084,802 1,065,317 65,406 26,789 190,942 101,496 601,530 280,572 1,942,680 1,474,174



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(g) Market risk

Currency risk

Foreign currency transactions are recorded at the rate of exchange at the date of the transaction.

Foreign currency receivables, payables and provisions are translated at exchange rates current at the balance date. Exchange gains and

losses are brought to account in determining the operating result for the year. These exchange gains and losses are not speculative and

no hedging is undertaken.

Defence is exposed to foreign exchange rate risk through primary financial assets and liabilities yet a change in risk variable will not

have a significant effect on the Balance Sheet or the Income Statement.

The following table summarises the currency risk in respect of recognised financial assets and financial liabilities.

United

States

Dollars

A$'000

Malaysian

Ringgit

A$’000

Arab

Emirates

Dirham

A$’000

Euros

A$'000

Kuwait

Dinar

A$'000

British

Pounds

A$’000

Singapore

Dollar

A$’000

Solomon

Islands

Dollar

A$'000

Other

A$'000

Total

A$’000

Financial

Assets

Cash 6,089 536 233 92 68 - - 53 53 7,124

Receivables

Financial

Liabilities

1,965 20 775 130 467 - - 1,334 140 4,831

8,054 556 1,008 222 535 - - 1,387 193 11,955

Suppliers 21,542 1,565 7 869 7 1,875 99 - 82 26,046

Departmental currency risk is minimised through budget supplementation for any adverse movements in exchange rates on financial

assets and financial liabilities held in foreign currencies.

Interest rate risk

Defence reports interest-bearing finance leases that bear interest at a fixed interest rate at inception. Therefore, a change in interest

rates at the reporting date would have a nil impact.

Other price risk

Defence is exposed to a variety of commodity price risks relating to various supply contracts. These do not have a material impact

on Defence’s financial liabilities.




Note 16: Accounting for Errors

Defence has made adjustments to correct accounting errors identified during the current financial year but relating to prior years, in accordance with the requirements of AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. a) Buildings under Construction were reclassified to Buildings in Use in 2008-09. These assets should have commenced depreciation prior to 2008-09. Depreciation expense and accumulated depreciation in the comparative 2007-08 year within the 2008-09 financial statements have been retrospectively increased by $2.975m and $4.442m respectively. b) Expenditure on the Hornet Upgrade project was incorrectly capitalised to Assets Under Construction - Specialist Military Equipment (SME) in the financial years 2005-06 to 2007-08. Corrections in the 2008-09 financial statements decreased SME and retained earnings by $5.380m as at 1 July 2007, with a further decrease in SME and a corresponding increase in suppliers expense in 2007-08 of $9.071m. c) Defence had previously included recoverable amounts of Diesel Fuel Rebate (DFR) in the cost of fuel inventory. Refunds of DFR from the Australian Taxation Office were separately recognised as other revenue. In 2008-09, in accordance with AASB 102 Inventories, Defence offset DFR revenue against the cost of fuel inventory. In the 2008-09 financial statements, the 2007-08 comparative year amounts for fuel inventory, other revenue and inventory consumption have been restated. Closing fuel inventory has been reduced by $24.911m, inventory consumption has been reduced by $37.126m and other revenue has been reduced by $33.509m. Fuel inventory as at 1 July 2007 has been reduced by $28.530m. d) Following statistical analysis by Data Analysis Australia, General Stores Inventory (GSI) purchase costs in 2007-08 were estimated to be understated by 6%. Corrections in the 2008-09 financial statements increased the closing balance of GSI in 2007-08 by $33.146m with a corresponding increase to reversal of previous asset write downs. Based on an estimated full year annual consumption rate of 25% reducing balance, the closing balance of GSI was also decreased by $4.143m in 2007-08, with a corresponding increase in suppliers expense, to correct the estimated understatement in GSI consumption expense in 2007-08. e) Prior to 2007-08, Defence had incorrectly capitalised $31.372m in costs relating to various SME projects. In the 2008-09 financial statements, the 2007-08 comparative year amount for SME has been reduced accordingly. f) Employee housing expenses of $11.309m in 2007-08 were reclassified from suppliers expenses to employee expenses, as the expenses were considered employee benefits under AASB 119 Employee Benefits. g) Write off of Explosive Ordinance (EO) was erroneously understated by $4.212m in 2007-08. The 2007-08 comparative year amount for EO write offs in the 2008-09 financial statements has been retrospectively increased by $4.212m. h) Defence properties managed by Defence Housing Australia (DHA) with a net book value of $275.926m as at 30 June 2008 were erroneously classified as Assets Held For Sale (AHFS). The 2007-08 comparative year amount for AHFS in the 2008-09 financial statements has been retrospectively reduced by $275.926m, with corresponding increases to land and buildings of $273.423m, infrastructure of $.159m and heritage and cultural assets of $2.344m.



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Note 16A: Reconciliation of Equity as at 1 July 2007

Previous Adjustment Adjusted

Balance for Errors Balance

1 July 2007 1 July 2007

$'000 $’000 $'000

ASSETS

Financial assets



Total financial assets 533,689 - 533,689


Land and buildings 11,880,750 (a) (1,467) 11,879,283

Specialist military equipment 32,596,224 (b)(e) (36,752) 32,559,472

Plant and equipment 1,214,244 1,214,244

Infrastructure 4,627,894 4,627,894

Intangibles 276,399 276,399

Heritage and cultural assets 763,944 763,944

Inventories 4,869,072 (c) (28,530) 4,840,542

Prepayments 762,123 762,123

Total non-financial assets 56,990,650 (66,749) 56,923,901

Assets held for sale 144,375 144,375

TOTAL ASSETS 57,668,714 (66,749) 57,601,965

LIABILITIES

Payables

Suppliers 757,120 757,120


Total payables 940,847 - 940,847

Interest bearing liabilities

Leases 313,588 313,588

Total interest bearing liabilities 313,588 - 313,588

Provisions

Employee provisions 1,664,689 1,664,689

Restoration, decontamination and decommissioning 541,256 541,256


Total provisions 2,252,245 - 2,252,245

TOTAL LIABILITIES 3,506,680 - 3,506,680

NET ASSETS 54,162,034 (66,749) 54,095,285

EQUITY


Reserves 11,900,862 11,900,862

Retained surpluses (accumulated deficit)

TOTAL EQUITY

35,384,970 (66,749) 35,318,221

54,162,034 (66,749) 54,095,285




Note 16B: Reconciliation of Equity as at 30 June 2008



30 June 2008 30 June 2008

$'000 $'000 $'000

ASSETS

Financial assets



491,408

Total financial assets 491,408 -


Land and buildings 12,568,074 (a)(h) 268,981 12,837,055

Specialist military equipment 32,447,754 (b)(e) (45,823) 32,401,931

Plant and equipment 1,147,762 1,147,762

Infrastructure 4,710,086 (h) 159 4,710,245

Intangibles 357,625 357,625

Heritage and cultural assets 805,587 (h) 2,344 807,931

Inventories 4,952,862 (c)(d)(g) (121) 4,952,741

Prepayments 1,055,217 1,055,217

58,270,507

151,294

58,913,209

Total non-financial assets 58,044,967 225,540

Assets held for sale 427,220 (h) (275,926)

TOTAL ASSETS 58,963,595 (50,386)

LIABILITIES

Payables

Suppliers 857,995 857,995


1,148,148

Total payables 1,148,148 -

Interest bearing liabilities

Leases 404,988 404,988

404,988

Total interest bearing liabilities 404,988 -

Provisions

Employee provisions 1,763,721 1,763,721

Restoration, decontamination and decommissioning 615,572 615,572


2,403,896

3,957,032

54,956,177

Total provisions 2,403,896 -

TOTAL LIABILITIES 3,957,032 -

NET ASSETS 55,006,563 (50,386)

EQUITY


Reserves 12,834,121 12,834,121

Retained surpluses (accumulated deficit)

TOTAL EQUITY

34,783,581

55,006,563

(50,386)

(50,386)

34,733,195

54,956,177



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Note 16C: Reconciliation of Operating results as at 30 June 2008



30 June

2008 30 June 2008

$'000 $’000 $'000

INCOME

Revenue

Revenue from Government 19,693,267 19,693,267

Sale of goods and rendering of services (including

cost recovery) 688,840 688,840

Rental revenue 7,073 7,073

Other revenue 76,233 (c) (33,509) 42,724

Total revenue 20,465,413 (33,509) 20,431,904

Gains

Foreign exchange 1,077 1,077

Reversals of previous asset write-downs 615,330 (d) 33,146 648,476

Other gains 3,295 3,295

Total gains 619,702 33,146 652,848

TOTAL INCOME 21,085,115 (363) 21,084,752

EXPENSES

Employee benefits 7,510,296 (f) 11,309 7,521,605

Suppliers 8,454,080 (b)(c)(d)(f) (35,222) 8,418,858

Grants 18,000 18,000

Depreciation and amortisation 3,654,874 (a) 2,975 3,657,849

Finance costs 44,146 44,146

Write-down and impairment of assets 1,948,141 (g) 4,212 1,952,353

Losses from sale of assets 2,152 2,152

Other expenses 54,815 54,815

TOTAL EXPENSES 21,686,504 (16,726) 21,669,778

NET SURPLUS OR (DEFICIT)

ATTRIBUTABLE TO THE AUSTRALIAN

GOVERNMENT (601,389) 16,363 (585,026)




Note 16D: Explanation of material adjustments to the Cash Flow Statement for year ended 30 June 2008

Previous Adjustment for Adjusted

Balance Errors Balance

30 June 2008 30 June 2008

$'000 $’000 $'000


Cash Received

Goods and Services (including cost recovery) 579,628 579,628

Appropriations (current year) 19,659,706 19,659,706

Appropriations (prior year) 50,000 50,000

Net GST received 460,131 460,131

Other cash received 114,174 (c) (33,509) 80,665

Total cash received 20,863,639 (33,509) 20,830,130

Cash Used

Employees (7,248,681) (f) (11,309) (7,259,990)

Suppliers (7,733,976) (b)(f) 2,238 (7,731,738)

Net GST paid (459,476) (459,476)

Grants (17,894) (17,894)

Other cash used (800) (800)

Total cash used (15,460,827) (9,071) (15,469,898)

Net cash flows from (used by) operating activities 5,402,812 (42,580) 5,360,232


Cash Received

Proceeds from sales of land and buildings 24,486 24,486

Proceeds from sales of plant and equipment 40,300 40,300

Proceeds from sales of specialist military equipment 2 2

Other cash received 595 595

Total cash received 65,383 - 65,383

Cash Used

Purchase of land and buildings (608,490) (608,490)

Purchase of plant and equipment (156,956) (156,956)

Purchase of specialist military equipment (3,603,107) (b) 9,071 (3,594,036)

Purchase of infrastructure (53,099) (53,099)

Purchase of intangibles (60,287) (60,287)

Purchase of inventory (1,446,140) (c) 33,509 (1,412,631)

Purchase of heritage and cultural assets (19) (19)

Selling costs on sale of assets (12,459) (12,459)

Finance costs (15,193) (15,193)

Total cash used

Net cash flows from (used by) investing activities

(5,955,750) 42,580 (5,913,170)

(5,890,367) 42,580 (5,847,787)



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Note 16D: Explanation of material adjustments to the Cash Flow Statement for year ended 30 June 2008 (continued)

Previous Adjustment for Adjusted

Balance Errors Balance

30 June 2008 30 June 2008

$'000 $’000 $'000

FINANCING ACTIVITIES

Cash Received

Appropriations – contributed equity (current year) 1,998,630 1,998,630

Total cash received 1,998,630 - 1,998,630

Cash Used

Repayment of debt (including finance lease

principal) (24,039) (24,039)

Return of contributed equity (1,490,897) (1,490,897)

Total cash used (1,514,936) - (1,514,936)

Net cash flows from (used by) finance activities 483,694 - 483,694

Net increase/ (decrease) in cash held (3,861) - (3,861)

Cash and cash equivalents at the beginning of the

reporting period 32,007 32,007

Effect of exchange rate movements on cash and cash

equivalents 1,077 1,077

Cash and cash equivalents at the end of the

reporting period 29,223 - 29,223




2009 2008

$'000 $'000

Note 17: Income Administered on Behalf of Government

Revenue

Non-taxation revenue

Note 17A: Sale of goods and rendering of services

Rendering of services - external parties - United Nations 22 3,625

Total sale of goods and rendering of services 22 3,625

Note 17B: Fees and fines

Fees and fines 2,874 -

Total fees and fines 2,874 -

Note 17C: Interest

Deposits 244 124

Total interest 244 124

Note 17D: Dividends

Australian Government Entities - Defence Housing Australia 47,343 102,979

Competitive Neutrality Revenue - Defence Housing Australia 25,380 31,284

Total dividends 72,723 134,263

Note 17E: Military superannuation contributions

Military superannuation contributions 831,091 756,982

Total military superannuation contributions 831,091 756,982

Note 17F: Other revenue

Other 9,527 215

Total other revenue 9,527 215

Gains

Note 17G: Foreign exchange gains

Foreign exchange gains

Non-speculative 671 -

Total net gain (loss) foreign exchange 671 -



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2009 2008

$'000 $'000

Note 18: Expenses Administered on Behalf of Government

Expenses

Note 18A: Employee benefits

Superannuation 3,429,000 2,818,000

Retention benefits 36,720 31,405

Total employee benefits 3,465,720 2,849,405

Note 18B: Subsidies

Payable to related entities - Defence Force Home Loans Assistance

Subsidy 8,348 11,284

Payable to related entities - Defence Home Ownership Assistance

Scheme 26,954 -

Total subsidies 35,302 11,284

Note 18C: Grants

Public Sector:

State and Territory Governments - 26,800

Total grants - 26,800

Note 18D: Other expenses

Chartered Special Purpose Aircraft 9 4,327

Total other expenses 9 4,327




2009 2008

$'000 $'000

Note 19: Assets Administered on Behalf of Government

Financial assets

Note 19A: Cash and cash equivalents

Administered bank account - -

Total cash and cash equivalents - -

Note 19B: Receivables

Goods and services receivable – external parties 4,712 4,316

Accrued superannuation 384 331

Dividends 47,344 44,279

Competitive neutrality 7,008 6,380

Total receivables 59,448 55,306

Receivables are aged as follows:

Not overdue 55,172 55,125

Overdue by:

Less than 30 days 20 19

30 to 60 days - -

61 to 90 days 6 41

More than 90 days 4,250 121

Total receivables 59,448 55,306

Note 19C: Investments

Commonwealth authorities - Defence Housing Australia 1,882,388 1,767,825

Total investments 1,882,388 1,767,825


Note 19D: Other non-financial assets

Prepayments - retention benefits 90,361 85,506

Total other non-financial assets 90,361 85,506

Assets are represented by:

Current 149,809 140,812

Non-current 1,882,388 1,767,825



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2009 2008

$'000 $'000

Note 20: Liabilities Administered on Behalf of Government

Payables

Note 20A: Other payables


Total other payables 38,444 25,242

Provisions

Note 20B: Employee provisions

Superannuation - DFRDB 26,689,000 22,917,000

Superannuation - MSBS 15,970,000 10,705,000

Total provisions 42,659,000 33,622,000

Liabilities are represented by:

Current 1,778,444 1,575,242

Non-current 40,919,000 32,072,000




Note 21: Defined Benefit Superannuation Plans Administered on Behalf of Government

Defence administers on behalf of the Australian Government, two defined benefit superannuation plans for ADF members.

The two plans are the Defence Force Retirement and Death Benefits Scheme (DFRDB) and the Military Superannuation

and Benefits Scheme (MSBS). A general description of the plans and Defence's accounting policy for recognising actuarial

gains and losses can be found in Note 1.27(e) of these statements. The following is a reconciliation of the two plans as

required by AASB 119: Employee Benefits.

2009 2008

$'000 $'000

Defence Force Retirement and Death Benefits Scheme (DFRDB)

The amounts recognised in the balance sheet are as follows:

Present value of funded obligations

Fair value of plan assets

-

-

-

-

- -

Present value of unfunded obligations 26,689,000 22,917,000

Unrecognised past service cost - -

Net liability in balance sheet 26,689,000 22,917,000

Amounts in balance sheet:

Liabilities 26,689,000 22,917,000

Assets - -

Net liability in balance sheet 26,689,000 22,917,000

The amounts recognised in the income statement are as follows:

Current service cost 154,000 156,000

Interest on obligation 1,471,000 1,413,000

Expected return on plan assets

Past service cost

-

-

-

-

Losses (gains) on curtailments and settlements - -

Expense 1,625,000 1,569,000

Net actuarial losses (gains) recognised in equity 3,563,000 5,000

Changes in the value of the defined benefit obligation are as follows:

Net liability at 1 July

22,917,000

22,662,000

Current service cost 154,000 156,000

Interest cost 1,471,000 1,413,000

Actuarial losses (gains) 3,563,000 5,000

Benefits paid

Past service cost

(1,416,000)

-

(1,319,000)

-

Net liability as at 30 June 26,689,000 22,917,000



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$’000

Opening balance as at 30 June 2004 -

2004-05 loss 3,528,000

30 June 2005 cumulative loss 3,528,000

2005-06 gain (2,457,000)


2006-07 gain (1,503,000)

30 June 2007 cumulative gain (432,000)

2007-08 loss 5,000


2008-09 loss 3,563,000


Note 21: Defined Benefit Superannuation Plans Administered on Behalf of Government (continued)

2009 2008

$'000 $'000

Changes in the fair value of plan assets are as follows:

Opening fair value of plan assets - -

Contributions by employer 1,416,000 1,319,000

Benefits paid (1,416,000) (1,319,000)

Closing value of plan assets - -

Principle actuarial assumptions at the reporting date (expressed as weighted averages):

Discount rate at 30 June 5.60% 6.60%

Expected return on plan assets 0.00% 0.00%

Future salary increases * 4.00% 4.00%

Future pension increases 2.50% 2.50%

The principle actuarial assumptions, relating to demographics, used to update the Scheme liability at 30 June 2009 are

based on assumptions applicable as at 30 June 2008. Assumptions for the comparative financial year are based on those

which were applicable as at 30 June 2005.

* Separate promotional salary scales are used to allow for promotional salary increases.

Notes:

1. Current service cost includes the cost of benefits accruing as a result of contributions deducted from members’ salaries

that are paid into Consolidated Revenue.

2. Benefits payable under the Defence Force Retirement and Death Benefits Act 1973 are paid from Consolidated Revenue on an

emerging (or pay as you go) basis. Benefits paid under the Defence Act 1903 Determination are paid by the Department of

Defence on an emerging cost basis. Thus contributions made equal benefits paid for the DFRDB.

3. The expected employer contributions in respect of 2009-10 are $1,510m which is the expected amount of benefit

payments. Note that member contributions paid to Consolidated Revenue would be an offset to this.

4. The figures shown above include the 3% Productivity Benefit.

5. The cumulative actuarial losses and gains recognised in equity are as follows:



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2009 2008

$'000 $'000

Changes in the fair value of plan assets are as follows:

Opening fair value of plan assets 2,929,000 2,774,000

Expected return on plan assets 215,000 202,000

Actuarial gains and losses (612,000) (284,000)

Contributions by employer 330,000 261,000

Funded non-employer contributions 206,000 201,000

Benefits paid (257,000) (225,000)

2,811,000 2,929,000

The major categories of plan assets as a percentage of total assets are as follows:

Australian equities 19% 20%

Overseas equities 11% 13%

Property trusts 5% 7%

Private equity 18% 16%

Hedge funds 3% 6%

Infrastructure 10% 10%

Cash, debt instruments and other 34% 28%

Principle actuarial assumptions at the reporting date (expressed as weighted averages):

Discount rate at 30 June (unfunded component) 5.6% 6.6%

Discount rate at 30 June (funded component) 6.6% 6.9%

Expected return on plan assets 7.0% 7.0%

Future salary increases * 4.0% 4.0%

Future pension increases 2.5% 2.5%

The principle actuarial assumptions, relating to demographics, used to update the Scheme liability at 30 June 2009 are based

on assumptions applicable as at 30 June 2008. Assumptions for the comparative financial year are based on those which were

applicable as at 30 June 2005. * Separate promotional salary scales are used to allow for promotional salary increases.





Notes:

1. Employer contributions of 3% of superannuation salary are paid into the MSBS Fund. The balance of superannuation

benefits payable, after allowing for any funded part of the benefit, under the Military Superannuation and Benefits Act 1991 are

paid from Consolidated Revenue on an emerging (or pay as you go) basis. In addition, employer salary sacrifice

contributions are paid into the MSBS fund.

2. The expected employer contributions in respect of 2009-10 are $390m.

3. The expected return on assets reflects the fact that the majority of plan assets are in growth assets which would be

expected to return a premium over fixed interest investments in the long term. In recent years, the real yield on Government

bonds has been of the order of 2.5% p.a. to 3.5% p.a. In this context, a 4.5% p.a. real rate of return on plan assets seems

reasonable giving a nominal rate of return on plan assets of 7% p.a.

4. The cumulative actuarial losses and gains recognised in equity are as follows:

$’000

Opening balance as at 30 June 2004 -

2004-05 Liability loss 2,551,000

2004-05 Asset gain (75,000)


2005-06 Liability gain (1,642,000)

2005-06 Asset gain (169,000)

30 June 2006 cumulative loss 665,000

2006-07 Liability gain (901,000)

2006-07 Asset gain (212,000)


2007-08 Liability gain (365,000)

2007-08 Asset loss 284,000


2008-09 Liability loss 3,179,000

2008-09 Asset loss 612,000




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5. The comparative figures for 2007-08 incorporate figures from the draft financial statements previously used and have not

been restated to be based on the audited financial statements for the MSBS Fund for 2007-08. The difference between the

draft net asset value and the audited net asset value as at 30 June 2008 has been included in investment income for 2008-09.

6. On 1 July 2007 the compulsory retirement age for most Defence personnel was increased from 55 to 60 years of age. As a

consequence of this change, which was unintended, death and invalidity benefits increased and had to be recalculated. An

allowance has been incorporated in the service costs for MSBS to cover the higher benefits payable (excluding invalidity C

benefits).

For the 2008-09 financial year, service costs have been increased by approximately $325m to cover the higher level of benefits

payable in respect of deaths and invalidities arising during 2007-08 and the permanent increase in benefits from 1 July 2008.

Any potential changes made to the legislation to rectify the unintended consequence of increases in benefits will not apply

retrospectively but will only apply for future accrual of benefits.




2009 2008

Notes $'000 $'000

Note 22: Administered Reconciliation Table

Opening administered assets less administered liabilities as at 1 July (31,738,605) (31,290,259)

Adjustment for errors - 639,749

Adjusted opening administered assets less administered liabilities as at 1 July (31,738,605) (30,650,510)

Plus: Administered income 17 917,152 895,209

Less: Administered expenses (non CAC) 18 (3,501,031) (2,891,816)

Payments to CAC Act bodies - -

Administered transfers to/from Australian Government:

Appropriation Transfers from Official Public Account

Annual Appropriations Administered Expenses (non CAC) - 26,800

Annual Appropriations for payment to CAC Act bodies - -

Special Appropriations (limited) (non CAC) 9 4,502

Special Appropriations (limited) paid to CAC Act bodies - -

Special Appropriations (unlimited) (non CAC) 1,681,293 1,529,627

Special Appropriations (unlimited) paid to CAC Act bodies - -

Transfers to Official Public Account (948,774) (875,173)

Administered revaluation taken to/from reserves 1 114,563 29,452

Actuarial gains/(loss) (7,189,854) 193,304

Closing administered assets less administered liabilities as at 30 June (40,665,247) (31,738,605)

1 Comparative administered revaluation taken to/from reserves has been updated to reflect the adjustment for error

discussed in note 27.



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Note 23: Administered Commitments

There are no material Administered commitments to report for the current or prior year.

Note 24: Administered Contingent Liabilities and Assets

Unquantifiable Administered Contingencies

Legal Claims

During this year and prior years, ComSuper made some under payments and overpayments of pensions and benefits. While these

underpayments and overpayments have been corrected, there is a possibility of legal claims against the Commonwealth.

No claims have been received to date.

Guarantees

The Military Superannuation and Benefits Scheme (MSBS) provides occupational superannuation benefits for members of the

Australian Defence Force. Much of the day-to-day administration associated with the MSBS is conducted by ComSuper. Under the

Military Superannuation and Benefits Act 1991 the actions of ComSuper and its Commissioner are deemed to be those of the Military

Superannuation and Benefits Board (MSB Board). Defence has indemnified the MSB Board for certain specified claims that are made

in relation to acts of ComSuper and/or its Commissioner that are not recoverable elsewhere.

Contingent Assets

There are no contingent assets to report in the current or prior year.

Note 25: Administered Investments

The Australian Government holds a 100% interest in Defence Housing Australia which is a Government Business

Enterprise.

The principal activity of Defence Housing Australia is:

To deliver total housing and relocation services that meet Defence operational and client needs through a strong customer and

business focus.



2009

$'000

2008

$'000

(a) Categories of financial instruments

Financial Assets


Cash and cash equivalents - -

Receivables 59,448 55,306

Available for sale

Investment – Defence Housing Australia 1,882,388 1,767,825

Carrying amount of financial assets 1,941,836 1,823,131

Financial Liabilities

At amortised cost

Subsidies payable - -


Carrying amount of financial liabilities 38,444 25,242

(b) Net income and expense from financial assets


Interest revenue - 3

Exchange gain/(loss) 671 -

Net gain/(loss) on loans and receivables 671 3

Available for sale

Dividend revenue 72,723 134,263

Net gain/(loss) on available for sale 72,723 134,263

Net gain/(loss) from financial assets

73,394 134,266

(c) Net income and expense from financial liabilities

There were no net gain/ (loss) from financial liabilities.

(d) Fair values of financial instruments

The fair values of Defence Administered financial instruments approximate their carrying amounts.


Note 26: Administered Financial Instruments

Details of the significant accounting policies and methods adopted, including the criteria for recognition and the basis for

measurement in respect of each class of financial asset and financial liability are disclosed in Note 1 to the financial statements.

APPEND

IX 9 FINAN

CIAL TRANSPAREN

CY

DEFEN

CE ANN

UAL REPO

RT 2008-09 VOLU

ME 1

337



Note 26: Administered Financial Instruments (continued)

(e) Credit risk

Defence's maximum credit risk at the reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the Schedule of

Administered Items: Assets and Liabilities. Defence has endorsed policies and procedures for debt management to reduce the incidence of credit risk. The majority of goods or

services provided by Defence are provided to other government entities and employees and therefore represent minimal credit risk exposure for Defence.

The carrying amount of financial assets, net of impairment losses, reported in the Schedule of Administered Items: Assets and Liabilities represents Defence’s exposure to credit

risk. Defence has no significant exposures to any concentrations of credit risk.

Credit quality of financial assets not past due or individually determined as impaired:

Not Past Due Not Past Due Past Due or Past Due or

Nor Impaired Nor Impaired Impaired Impaired

2009 2008 2009 2008

Notes $'000 $'000 $'000 $'000

Financial assets:

Cash and cash equivalents 19A - - - -

Receivables 19B 55,172 55,125 4,276 181

Investments 19C 1,882,388 1,767,825 - -

Total 1,937,560 1,822,950 4,276 181

Ageing of financial assets past due but not impaired:

Notes

0-30 Days 31-60 Days 61-90 Days Over 90 Days Total

2009 2008 2009 2008 2009 2008 2009 2008 2009 2008

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial assets:

Receivables 19B 20 19 - - 6 41 4,250 121 4,276 181

Total 20 19 - - 6 41 4,250 121 4,276 181

APPEND

IX 9 FINAN

CIAL TRANSPAREN

CY

338D

EFENCE AN

NU


LUM

E 1


Note 26: Administered Financial Instruments (continued)

(f) Liquidity risk

Defence's administered financial liabilities are payables. The exposure to liquidity risk is based on the notion that Defence will encounter difficulty in meeting its obligations associated with

financial liabilities. This is highly unlikely due to appropriation funding and mechanisms available to Defence (e.g. Advance to the Finance Minister) and internal policies and procedures put

in place to ensure there are appropriate resources to meet its financial obligations. The followings table illustrates the maturities for financial liabilities

Financial liabilities:

On demand Within 1 year 1 to 2 years 2 to 5 years > 5 years Total

2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008

Note $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Other payable 20A 33,704 24,760 4,740 482 - - - - - - 38,444 25,242

Total 33,704 24,760 4,740 482 - - - - - - 38,444 25,242

(g) Market risk

Defence Administered has no material exposure to currency risk, interest rate risk or other price risk.



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Note 27: Administered Accounting for Errors

(a) In Defence’s 2007-08 financial statements, a receivable from the United Nations of $3.585m was not reported. In the

2008-09 financial statements, the 2007-08 comparative year amounts for receivables and sale of good and rendering of

services revenue have been restated.

(b) Under the Finance Ministers Orders for Financial Reporting 2008-09 Administered Investments in Portfolio Entities are

required to be measured at fair value. In previous financial years, Defence measured its Administered Investment in

Defence Housing Authority (DHA) based on DHA’s net assets as reported in DHA’s published financial statements.

These statements were prepared on a ‘for profit’ basis, with DHA’s investments measured at historical cost in accordance

with AASB 140 Investment Properties. In 2008-09, Defence measured its investment in DHA based on DHA’s ‘not for

profit’ financial statements. These statements are prepared for whole of government reporting purposes only and measure

DHA’s investments at fair value in accordance with AASB 116 Property, Plant & Equipment.

The change in the measurement of Defence’s investment in DHA is a prior period error. Retrospective adjustments have

been made in Defence’s 2008-09 financial statements in accordance with AASB 108 Accounting Policies, Changes in

Accounting Estimates and Errors, which increase Defence’s investment in DHA by $639.749m as at 1 July 2007 and

$698.382 at 30 June 2008.

Financial Assets administered on behalf of Government at 1 July 2007

Previous Balance 1 July 2007

Adjustment for Errors

Adjusted Balance 1 July 2007

Financial assets

Cash and cash equivalents Receivables Investments

Total financial assets

$'000

39 490

1,098,624 1,099,153

$'000

-

$'000

39 490

1,738,373 1,738,902

(b) 639,749

639,749

Financial Assets administered on behalf of Government at 30 June 2008

Previous Balance Adjustment for Adjusted Balance 30 June 2008 Errors 30 June 2008

$'000 $'000 $'000

Financial assets Cash and cash equivalents - - - Receivables 51,721 (a) 3,585 55,306 Investments 1,069,443 (b) 698,382 1,767,825 Total financial assets 1,121,164 701,968 1,823,131




Note 27: Administered Accounting for Errors (continued)

Income administered on behalf of Government in 2007-08

Previous Balance 2007-08

Adjustment for Errors

Adjusted Balance 2007-08

Non-taxation Revenue Revenue Sale of goods and rendering of services Fees and fines Interest Dividends Military Superannuation contributions Other Revenue Total non-taxation revenue Total revenues administered on behalf of Government

$'000

40 -

124 134,263

756,982 215

891,624

891,624

(a)

$'000

3,585 - - -

- -

3,585

3,585

$'000

3,625 -

124 134,263 756,982 3,800 895,209

895,209



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Note 28: Appropriations

As per Note 1, Defence is structured to meet three outcomes:

Outcome 1: Australia’s national interests are protected and advanced through the provision of military capabilities and the promotion of security and stability;

Outcome 2: Military operations and other tasks directed by Government to achieve the desired results; and

Outcome 3: Defence’s support to the Australian community and civilian authorities achieves the desired results.

Accordingly for Tables A to C below, all items are attributable to three outcomes.

Note 28A: Acquittal of Authority to Draw Cash from the Consolidated Revenue Fund for Ordinary Annual Services Appropriations

Particulars Departmental Outputs Total

2009 2008 2009 2008

$’000 $’000 $’000 $’000

Balance brought forward from previous period (Appropriation

Acts)

Appropriation Act:

Appropriation Act (No. 1) 2008-09

Appropriation (NTER) Act (No. 1) 2007-08

Appropriation Act (No. 3) 2008-09

Departmental appropriations reduced (Appropriation Act s10)

Comcover receipts (Appropriation Act s12)

Advance to the Finance Minister (Appropriation Act s14)

FMA Act:

Repayments to the Commonwealth) (FMA Act s30)

Appropriations to take account of recoverable GST (FMA

Act s30A)

Relevant Agency receipts (FMA Act s31)

Total appropriation available for payments

Cash payments made during the year (GST inclusive)

Balance of Authority to Draw Cash from the Consolidated

Revenue Fund for Ordinary Annual Services

Appropriations and as represented by:

182,574

19,392,037

-

839,176

(3,296)

-

-

205,635

514,113

658,424

202,236

19,170,126

15,500

507,641

-

1,026

-

823,825

459,476

638,931

182,574

19,392,037

-

839,176

(3,296)

-

-

205,635

514,113

658,424

202,236

19,170,126

15,500

507,641

-

1,026

-

823,825

459,476

638,931

21,788,663 21,818,761 21,788,663 21,818,761

(21,487,951) (21,636,187) (21,487,951) (21,636,187)

300,712 182,574 300,712 182,574

Cash at bank and on hand

Departmental appropriations receivable

GST receivable from the ATO

Adjustments under s101.13 of the Finance Minister’s Orders

not reflected above

28,088

244,608

65,111

(37,095)

29,223

99,361

53,990

-

28,088

244,608

65,111

(37,095)

29,223

99,361

53,990

-

Total as at 30 June 300,712 182,574 300,712 182,574




Note 28: Appropriations (continued)

Note 28B: Acquittal of Authority to Draw Cash from the Consolidated Revenue Fund for Other

than Ordinary Annual Services Appropriations

Operating

Outcome 1Non-operating Total

Particulars

SPP Equity Previous Years’

Outputs

2009

$’000

2008

$’000

2009

$’000

2008

$’000

2009

$’000

2008

$’000

2009

$’000

2008

$’000

Balance brought forward from

previous period (Appropriation Acts) - - 83,828 83,828 64,174 - 148,002 83,828

Appropriation Act:

Appropriation Act (No.2) 2008-09 23,300 - 2,365,736 1,998,630 - 64,174 2,389,036 2,062,804

Appropriation Act (No.4) 2008-09 - 26,800 - - - - - 26,800

Appropriation Act (No. 6) 2008-09 - - - - - - - -

Departmental appropriations

reduced (Appropriation Act s13) - - (560,556) (1,474,315) - - (560,556) (1,474,315)

CAC Act body payment items - - - - - - - -

reduced (Appropriation Act s14)

FMA Act

Repayments to the

Commonwealth (FMA Act s30) - - - - - -

Appropriations to take account of - - - - - - - -

recoverable GST (FMA Act s30A)

Total appropriations available for 23,300 26,800 1,889,008 608,143 64,174 64,174 1,976,482 699,117

payments

Cash payments made during the year - (26,800) (1,889,008) (524,315) (64,174) (1,953,182) (551,115)

(GST inclusive)

Balance of Authority to Draw Cash

from the Consolidated Revenue Fund

for Other Than Ordinary Annual 23,300 - - 83,828 - 64,174 23,300 148,002

Services Appropriations and as

represented by:

Cash at bank and on hand - - - - - - - -

Departmental appropriations - - 104,306 83,828 - 64,174 104,306 148,002

receivable

Undrawn, unlapsed administered

appropriations 23,300 - - - - - 23,300 -

Adjustments under s101.13 of the

Finance Minister’s Orders not

reflected above

- - (104,306) - - - (104,306) -

Total as at 30 June 23,300 - - 83,828 - 64,174 23,300 148,002



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Particulars

Operating Non-operating

Total Outcome 1 Equity

Previous Years’

Outputs SPP

2009 2008 2009 2008 2009 2008 2009 2008

1Reduction in administered items

Total administered items appropriated 23,300,000 - - - - - 23,300,000 -

Less administered items required per

Appropriation Act s12:

Appropriation Act (No.2) 2008-09 - - - - - - - -

Appropriation Act (No.4) 2008-09

Appropriation Act (No. 6) 2008-09 - - - - - - - -

Other annual appropriation acts

Total administered items required

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

- - - - - - - -

Total reduction in administered

items – effective 2009-2010 23,300,000 - - - - - 23,300,000 -

1 This is the first year of administered items being reduced under section 12. Numbers in this table are not rounded.

Note 28C: Acquittal of Authority to Draw Cash from the Consolidated Revenue Fund - Administered Special Appropriations

(Unlimited Amount)

The responsible agency is Defence and ComSuper has drawn against the following Special Administered Appropriations

(Unlimited Amount)

Defence Force Retirement Benefits Act 1948

Purpose: The Defence Force Retirement Benefits Act 1948 is an act to provide Retirement Benefits for

Members of the Defence Force who enlisted before 1 October 1972, and for other purposes.

All transactions under this Act are disclosed as administered items

2009 2008

Outcome 1

$’000 $’000

Cash payments made during the year

Appropriations credited to Special Accounts

(66,280)

-

(67,015)

-

Repayments to the Commonwealth (FMA Act s30)

Total charged to appropriation

- -

(66,280) (67,015)

Estimated Actual * **(91,639)





Defence Force Retirement and Death Benefits Act 1973

Purpose: Defence Force Retirement and Death Benefits Act 1973 is an act to make provision for and in

relation to a Scheme for Retirement and Death Benefits for Members of the Defence Force who enlisted before

1 October 1991.


2009 2008

Outcome 1

$’000

$’000





(1,317,920)

-

2,229

(1,228,488)

-

1,964

(1,315,691) (1,226,524)

Estimated Actual * ** (1,442,361)

Military Superannuation and Benefits Act 1991

Purpose: Military Superannuation and Benefits Act 1991 is an Act to make provision for and in relation to

an occupational superannuation scheme for, and the payment of other benefits to members of the Defence

Force, and for related purposes.


2009 2008

Outcome 1

$’000 $’000





(223,888)

-

116

(193,060)

-

115

(223,772) (192,945)

Estimated Actual * ** (1,215,600)

The responsible agency is Defence and Defence has drawn against the following Special Administered Appropriations

(Unlimited Amount)

Defence Force (Home Loans Assistance) Act 1990

Purpose: Defence Force (Home Loans Assistance) Act 1990 is an Act to provide for the payment of home loan

subsidies in respect of certain members of the Defence Force and certain other persons, and for related purposes.


2009 2008

Outcome 1

$’000 $’000

Cash payments made during the year (8,550)

-

-

(12,200)

-

-

(8,550) (12,200)




Estimated Actual (8,909) ** (11,250)



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Military Superannuation and Benefits Act 1991

Purpose: Military Superannuation and Benefits Act 1991 is an Act to make provision for and in relation to

retention benefits for ADF personnel.

2009 2008

Outcome 1

All transactions under this Act are disclosed as administered items $’000 $’000

Cash payments made during the year (42,400) (28,864)

Appropriations credited to Special Accounts - -



- -

(42,400) (28,864)

Estimated Actual (42,000) **(42,000)

Defence Home Ownership Assistance Scheme Act 2008

Purpose: Defence Home Ownership Assistance Scheme Act 2008 is an Act to provide financial assistance to

members of the Defence Force, and certain other persons, for the purchase, maintenance and development of

their homes, and for related purposes.


2009 2008

Outcome 1

$’000 $’000

Cash payments made during the year (22,255) -




- -

(22,255) -

Estimated Actual (43,989) ** 0

2009 2008 Totals for Unlimited Special Administered Appropriations

Outcome 1

$’000 $’000

Cash payments made during the year (1,681,293) (1,529,627)


Repayments to the Commonwealth (FMA Act s30) 2,345 2,079

Total charged to appropriation (1,678,948) (1,527,548)

Estimated Actual *(3,332,898) ** (2,802,850)

*2008-09 full year estimated actual as published in the 2009-10 PBS. The total cannot be allocated between the DFRB, DFRDB

and MSBS.

** 2007-08 full year estimated actual as published in the 2008-09 PBS

APPEND

IX 9 FINAN

CIAL TRANSPAREN

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346D

EFENCE AN

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Note 28D: Disclosure by Agent in relation to Appropriations

Parliamentary Entitlements Act 1990

Purpose: An act relating to the provision of benefits to the

Members of each House of Parliament for charter of

Special Purpose Aircraft. This act is administered by the

Department of Finance and Deregulation.

All transactions under this Act are disclosed as

Department of Defence Total

Departmental Administered Departmental Administered

2009 2008 2009 2008 2009 2008 2009 2008

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Total receipts - - 9 4,502 - - 9 4,502

Total payments - - (9) (4,502) - - (9) (4,502)

Balance - - - - - - - -



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Note 28E: Acquittal of Authority to draw cash from the Consolidated Revenue Fund – Special Appropriations*

No special appropriations were drawn upon by Defence under the following legislation containing Special

Appropriation clauses that are administered by the Department.

1 Air Force Act 1923

2 Approved Defence Projects Protection Act 1947

3 Cockatoo and Schnapper Islands Act 1949

4 Commonwealth and State Housing Agreement (Service Personnel) Act 1990

5 Control of Naval Waters Act 1918

Defence Act 1903, except to the extent administered by the Prime Minister and the Attorney-General and other 6

than sections 58F to 58Q, 61, 61A, 61B, 61C, 118A and 118B and paragraph 124(1)(qba)

7 Defence Force Discipline Act 1982

8 Defence Force Retirement and Death Benefits (Pension Increases) Acts

9 Defence Forces Retirement Benefits (Pension Increases) Acts

10 Defence Forces Special Retirement Benefits Act 1960

11 Defence Housing Australia Act 1987

12 Defence Reserve Service (Protection) Act 2001

13 Defence (Parliamentary Candidates) Act 1969

14 Defence (Road Transport Legislation Exemption) Act 2006

15 Defence (Special Undertakings) Act 1952

16 Explosives Act 1961

17 Geneva Conventions Act 1957, Part IV

Intelligence Services Act 2001, in so far as it relates to that part of the Department of Defence known as the

18 Defence Intelligence and Geospatial Organisation, the Defence Intelligence Organisation and the Defence Signals

Directorate

Military Rehabilitation and Compensation Act 2004, Chapter 3, in relation to rehabilitation of serving members

19 of the Australian Defence Force; and Chapter 6, in relation to treatment for injuries and diseases of serving

members of the Australian Defence Force

20 Naval Defence Act 1910

21 Royal Australian Air Force Veterans' Residences Act 1953

22 Services Trust Funds Act 1947

23 War Gratuity Act 1945

24 War Service Estates Act 1942

25 Weapons of Mass Destruction (Prevention of Proliferation) Act 1995

26 Williamstown Dockyard Employees Act 1987

* Other FMA agencies may utilise the Special Appropriations contained within these Acts. Amounts drawn down by

other agencies are required to be reported in their own financial statements.

The Department of Veteran's Affairs is part of the Defence Portfolio and is responsible for various legislation. Refer to

Department of Veteran Affairs 2008-09 Financial Statements for details.




Note 29: Special Accounts

2009 2008

$’000 $’000

Services for other Governments and Non-Agency Bodies Account (Special Public Moneys)

Legal Authority: Financial Management and Accountability Act 1997 s20 and s21

Appropriation: Financial Management and Accountability Act 1997 s20 and s21

Purpose: For expenditure in connection with services performed on behalf of other Governments and Non-Agency Bodies. This account was abolished

and replaced by the Services for Other Entities and Trust Moneys Special Account on 25 June 2009.

This account is non-interest bearing.

Balance carried from previous period 58,444 23,484

Costs recovered 63,374 63,208

GST credits (FMA Act section 30A) 3,073 1,997

Total credits 124,891 88,689

Payments made to suppliers (43,410)

(30,245)

Transfer to Service for Other Entitles and Trust Moneys Special Account (81,481) -

Total debits (124,891) (30,245)

Balance carried forward to next period and represented by: - 58,444

Cash - transferred to the Official Public Account - 58,444

Total balance carried to the next period

- 58,444

Note: Payments made to suppliers was previously overstated by $42,216.75 in 2007-08 due to credit payments which

had not been reflected on the Appropriation and Cash Management (ACM) system. ACM was updated in early July

2008 so that the current position is correct.

Defence Endowments Special Account (Special Public Moneys)

Legal Authority: Financial Management and Accountability Act 1997 s20

Appropriation: Financial Management and Accountability Act 1997 s20

Purpose: For expenditure in accordance with the conditions of each endowment.

The Defence Endowments Account was replaced with the newly established Defence Endowments Special Account on 23 June 2009. There were

no significant changes to the operation of this account.

This account is interest bearing.

Balance carried from previous period 297 306

Costs recovered - -

GST credits (FMA Act section30A) 1 -

Other receipts 46 27

Total credits 344 333

Payments made to recipients (31) (36)

Total debits (31) (36)

Balance carried forward to next period and represented by: 313 297

Cash - transferred to the Official Public Account 313 297

Total balance carried to the next period 313 297



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Note 29: Special Accounts (continued)

2009

$’000

2008

$’000

Fedorczenko Legacy Special Account (Special Public Moneys)



Purpose: For expenditure in relation to the defence of Australia of the residue of the estate of the late Petro Fedorczenko.

The Fedorczenko Legacy Fund Account was replaced with the newly established Fedorczenko Legacy Special Account on 23 June 2009. There

were no significant changes to the operation of this account.





Payments made to suppliers - (14)

Total debits - (14)




Other Trust Moneys Account (Special Public Moneys)

Legal Authority: Financial Management and Accountability Act 1997 s20 and s21

Appropriation: Financial Management and Accountability Act 1997 s20 and s21

Purpose: For expenditure of moneys temporarily held on trust or otherwise for the benefit of a person other than the Commonwealth.

This account was abolished and replaced by the Services for Other Entities and Trust Moneys Special Account on 25 June 2009.

This account is non-interest bearing.

Balance carried from previous period 2,058 4,271

Costs recovered 4,084 3,053

GST credits (FMA section30A) 15 (16)

Total credits 6,157 7,308

Payments made to suppliers (3,238) (5,250)

Transfer to Services for Other Entities and Trust Moneys Special Account (2,919) -

Total debits (6,157) (5,250)

Balance carried forward to next period and represented by: - 2,058

Cash - transferred to the Official Public Account - 2,058

Total balance carried to the next period - 2,058





2009 2008

$’000 $’000

Young Endeavour Youth Program Special Account (Special Public Moneys)



Purpose: For the receipt and payment of money in connection with the operations and activities of the STS Young Endeavour, as specified by the

Young Endeavour Program Board of Management or by the Commonwealth.

The Young Endeavour Youth Program Operating Fund Accounts (YEYPOFA) was replaced with the Young Endeavour Youth Program Special

Account (YEYPSA) established on 17th March 2009. There was no significant change to the operation of this special account.



Costs recovered 99264

GST credits (FMA section30A) (3)

(15)

Total credits 1,127 959

Payments made to suppliers (184) (93)




Cash - held by Defence - 152




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2009 2008

$’000 $’000

Services for Other Entities and Trust Moneys – Defence Special Account (Special Public Moneys)



Purpose: This account was created to disburse amounts held on trust or otherwise for the benefit of persons other than the Commonwealth. This

account amalgamates the provisions of the Other Trust Moneys and Services for Other Governments special accounts, and provides an additional

debiting clause to reduce the special account by amounts that are not Special Public Money. This special account was established on 24 June 2009.

This account is non interest bearing.

Balance carried from previous period - -

Costs recovered 6 -

GST credits (FMA section30A) 208 -

Transfer from Services for other Government and Non-agency Bodies

Special Account 81,481 -

Transfer from Other Trust Moneys Special Account 2,919 -

Total credits 84,614 -

Payments made to suppliers (9,695) -

Total debits (9,695) -

Balance carried forward to next period and represented by: 74,919 -

Cash - transferred to the Official Public Account 74,919 -

Total balance carried to the next period 74,919 -




Note 30: Compensation and Debt Relief

Compensation and Debt Relief- Administered

No 'Act of Grace' expenses were incurred during the reporting

period (2007-08: 284 expenses)*.

No waivers of amounts owing to the Australian Government were

made pursuant to subsection 34(1) of the Financial Management and

Accountability Act 1997 (2007-08: No waivers).

No ex-gratia payments were provided for during the reporting

period (2007-08: No payments). - -

2009

$

-

No expenses were paid on a periodic basis (2007-08: 284 periodic

expenses amounting to $96,934). No amounts were outstanding in

relation to payments being made on a periodic basis as at 30 June

2009 ($1,470,000 at 30 June 2008). This estimate was determined

by the Australian Government Actuary**. - -

-

2008

$

96,934

-

* All current year Act of Grace payments were made from Departmental funding.

* * ComSuper made ‘Act of Grace’ payments from Defence’s administered special appropriation.



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Note 30: Compensation and Debt Relief (continued)

2009 2008

$ $

Compensation and Debt Relief- Departmental

19 'Act of Grace' payments made during the reporting period

pursuant to authorisation given under s33 (1) of the Financial

Management and Accountability Act 1997 (2007-08: 3 payments

made).

292,251 81,483

There was 1‘Act of Grace’ payments outstanding at the end of

the reporting period (2007-08: 0 payments outstanding). 11,419 -

5 waivers of amounts owing to the Commonwealth made during

the reporting period pursuant to subsection 34(1) of the Financial

Management and Accountability Act 1997 (2007-08: 20 waivers

made). 135,982 230,797

19 ex-gratia payments made during the reporting period (2007-

08: 8 payments made). 790,000 187,092

1 ex-gratia payment outstanding at the end of the reporting

period (2007-08: 6 payments outstanding). 40,000 210,000

24 payments made under 'Defective Administration Scheme'

during the reporting period (2007-08: 23 payments made). 734,091 542,578

There were 0 payments outstanding under the ‘Defective

Administration Scheme’ (2007-08: 6 payments outstanding). - 84,949

0 payments were made during the reporting period under s73

of the Public Service Act 1999 (2007-08: 3 payments made). - 20,316

There were 0 payments outstanding under s73 of the Public

Service Act 1999 at 30 June 2009 (2007-08: 0 payments

outstanding). - -




Note 31: Assets Held in Trust

2009 2008

$’000 $’000

Young Endeavour Youth Program Public Fund (Trust)

Legal Authority: Financial Management and Accountability Act 1997 s20.

Appropriation: Financial Management and Accountability Act 1997 s20.

Purpose: To create a capital fund for the purpose of furthering youth development initiatives, to make specific acquisitions and to support the Young

Endeavour Youth Scheme through sail training for young Australians.

The fund is listed as a deductible gift recipient.





Payments made to suppliers - (1)

Total debits - (1)

Balance carried forward to next period 894 152

This balance has been disclosed as “Cash – Transferred to OPA” in Note 29 Special Accounts – Young Endeavour Youth Program

Special Account (Special Public Moneys).

Peter Mitchell Trust Fund (Trust)





Other receipts 11 9

Total credits 12 10

Payments made to suppliers (10) (9)



Cash – transferred to the Official Public Account 2 1

This balance has been included under Other Trust Moneys in Note 29 Special Accounts and after the 24th June 2009 in Services for

Other Entities and Trust Moneys (Special Public Moneys).



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Note 31: Assets Held in Trust (continued)

2009 2008

$’000 $’000

RAAF Air Power Conference (Trust)





Other receipts - 31


Payments made to suppliers - -

Total debits - -


Cash – transferred to the Official Public Account 228 228

This balance has been included under Other Trust Moneys in Note 29 Special Accounts and after the 24th June 2009 in Services for

Other Entities and Trust Moneys (Special Public Moneys).




Note 31: Assets Held in Trust (continued)

Comcare Trust Account (Trust)

Legal Authority: Financial Management Accountability Act 1997 s21.

Appropriation: Financial Management Accountability Act 1997 s21.

Purpose: Moneys held in trust and advanced to Defence by Comcare for the purposes of distributing compensation payments made in accordance with the

Safety Rehabilitation and Compensation Act 1998.

The transactions of the account have been disclosed in Note 29 Special Accounts - Services for Other Governments and Non-Agency

Bodies and after the 24th June 2009 in Services for Other Entities and Trust Moneys (Special Public Moneys).

Defence Endowments Special Account (Trust)

The transactions of the account have been disclosed in Note 29 of Special Accounts.

Fedorczenko Legacy Fund Special Account (Trust)

The transactions of the account have been disclosed in Note 29 of Special Accounts.

Non-Cash Assets

Defence accommodates and operates some non-cash assets on behalf of other governments; however, their disclosure

would compromise the activities of these assets. In accordance with clauses 17.6 and 38.4 of the FMOs the Minister for

Finance granted an exemption from disclosing these assets. Assets that can be declared amount to $20,196.



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Note 32: Reporting of Outcomes

As per Financial Statement Note 1, Defence is structured to meet three outcomes, as follows:

OUTCOME 1. AUSTRALIA’S NATIONAL INTERESTS ARE PROTECTED AND ADVANCED

THROUGH THE PROVISION OF MILITARY CAPABILITIES AND THE PROMOTION OF

SECURITY AND STABILITY

1.1 Office of the Secretary and CDF

1.2 Navy Capabilities

1.3 Army Capabilities

1.4 Air Force Capabilities

1.5 Intelligence Capabilities

1.6 Defence Support

1.7 Defence Science and Technology

1.8 Chief Information Officer

1.9 Vice Chief of the Defence Force

1.10 Joint Operations Command

1.11 Capability Development

1.12 Chief Finance Officer

1.13 People Strategies and Policy

1.14 Superannuation and Housing Support Services for Current and Retired Defence Personnel and

other Administered Items

OUTCOME 2. MILITARY OPERATIONS AND OTHER TASKS DIRECTED BY

GOVERNMENT TO ACHIEVE THE DESIRED RESULTS

2.1 Operations Contributing to the Security of the Immediate Neighbourhood

2.2 Operations Supporting Wider Interests

OUTCOME 3. DEFENCE’S SUPPORT TO THE AUSTRALIAN COMMUNITY AND CIVILIAN

AUTHORITIES TO ACHIEVE THE DESIRED RESULTS

3.1 Defence Contribution to National Support Tasks in Australia



This page is intentionally blank

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Department of DefenceNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2009

Note 32: Reporting of Outcomes

Table 32A: Net Cost of Outcome Delivery

Outcome 1 Outcome 2 Outcome 3 Payments to CAC Act bodies Total Outcomes2009 2008 2009 2008 2009 2008 2009 2008 2009 2008$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

ExpensesAdministered 3,501,031 2,891,816 3,501,031 2,891,816Departmental 21,866,049 20,883,782 735,970 762,055 14,557 23,941 22,616,576 21,669,778

Total expensesCosts recovered from provision of goods and services to the non-government sector

25,367,080 23,775,598 735,970 762,055 14,557 23,941 - - 26,117,607 24,561,594

Administered 9,527 215 9,527 215Departmental 99,992 109,937 5,448 12,138 - 678 105,440 122,753

Total costs recovered 109,519 110,152 5,448 12,138 - 678 - - 114,967 122,968Other external incomeAdministered

RevenueNon-taxation

Goods and services 22 3,625 22 3,625Fees and Fines 2,874 - 2,874 -Interest 244 124 244 124Dividends 72,723 134,263 72,723 134,263Military superannuation 831,091 756,982 831,091 756,982Other sources of non-taxation revenues - - - -

Total revenue 906,954 894,994 - - - - - - 906,954 894,994Gains

Net foreign exchange gains 671 - 671 -Total gains 671 - - - - - - - 671 -

Total administered income 907,625 894,994 - - - - - - 907,625 894,994Departmental

RevenueGoods and services revenue 623,476 566,255 623,476 566,255Rental Income 9,083 7,073 - - - - 9,083 7,073Other revenue 23,436 42,556 - - - - 23,436 42,556Total revenue 655,995 615,884 - - - - - - 655,995 615,884

GainsReversals of previous asset write-downs 642,299 648,476 - - - - 642,299 648,476Foreign Exchange Gains - 1,077 - - - - - 1,077Other gains 1,424 3,295 - - - - 1,424 3,295

Total gains 643,723 652,848 - - - - - - 643,723 652,848Total departmental income 1,299,718 1,268,732 - - - - - - 1,299,718 1,268,732Total other external income 2,207,343 2,163,726 - - - - - - 2,207,343 2,163,726Net cost/(contribution) of outcome 23,050,217 21,501,720 730,522 749,918 14,557 23,263 - - 23,795,297 22,274,900



Output 1.1 Output 1.2 Output 1.3 Output 1.4 Output 1.5 Output 1.6 Output 1.7 Output 1.8 Output 1.9 Output 1.10 Output 1.11 OOutcome 1 Output 1.1 Output 1.2 Output 1.3 Output 1.4 Output 1.5 Output 1.6 Output 1.7 Output 1.8 Output 1.9 Output 1.10 Output 1.11

2009$'000

2008$'000

2009$'000

2008$'000

2009$'000

2008$'000

2009$'000

2008$'000

2009$'000

2008$'000

2009$'000

2008$'000

2009$'000

2008$'000

2009$'000

2008$'000

2009$'000

2008$'000

2009$'000

2008$'000

2009$'000

2008$'000

Departmental expensesEmployee Benefits 53,152 1,172,204 2,389,312100,604 1,349,977 2,703,106 1,375,132 1,216,926 228,284 256,727 965,967 925,768 254,767 253,154 102,532 87,357 483,576 428,619 67,142 62,579 32,387 30,964Suppliers 103,710 17,787 1,438,937 405,821 1,586,058 584,244 1,538,505 586,990 219,887 269,411 1,564,097 1,568,176 138,529 143,786 445,957 463,117 589,021 512,193 26,511 34,788 96,848 44,017Grants 3,204 494 - 4,609 10,104 56 - 5 - - 1,041 12,836 - - - - - - - - - -Depreciation and amortisation 1,858 381 1,080,237 1,045,310 630,188 513,143 1,181,965 1,080,238 53,611 54,260 754,482 696,886 20,456 18,721 127,684 114,740 8,011 1,278 1,924 1,747 680 472Finance costs - - 4,749 2,808 1,654 414 6,975 3,545 - - 67,362 21,818 - - 13,621 - - - - - - -Write-down and impairment of assets 1,111 796 178,567 342,374 298,805 49,671 81,372 117,177 3,363 37,795 81,227 110,531 637 125 12,350 19,590 609,522 462,172 141 401 14 3Losses from asset sales (201) (5) 84,983 - (3,474) (2,097) (2,300) 1 453 (53) 12,489 1,314 6 4 (53) (13) 26 3,451 1 - - -Foreign exchange losses 5 - - - - - 4 - - - (32) - - - - - - - 2 - - -Other expenses - - 12 (54) 2,110 67 340 95 - - 22,466 54,644 - - - - - - - - - -

Total departmental expenses 210,291 72,605 4,137,462 2,973,072 5,228,551 3,534,810 4,181,993 3,004,977 505,598 618,139 3,469,097 3,391,973 414,395 415,790 702,091 684,791 1,690,156 1,407,713 95,721 99,515 129,929 75,456Funded by:Revenue

Revenues from Government 184,039 62,719 3,620,958 2,568,228 4,575,839 3,053,473 3,659,929 2,595,788 442,481 533,968 3,036,030 2,930,088 362,664 359,172 614,445 591,616 1,479,164 1,216,025 83,771 85,964 113,709 65,181Sale of goods and rendering of services 1,403 830 41,165 36,453 54,475 50,470 100,331 100,796 1,736 20,769 221,344 203,743 38,886 37,584 1,141 16,666 261,350 207,658 (47) 369 - 2Rental Income 15 - - - - - - - - 57 8,629 6,870 - - - - 439 149 - - - -Other revenue 1,696 2,640 228 (32,948) 586 583 401 478 781 1,206 4,003 2,680 85 197 1,042 844 1,714 40,935 212 44 189 309

Total revenue 187,153 66,189 3,662,351 2,571,733 4,630,900 3,104,526 3,760,661 2,697,062 444,998 556,000 3,270,006 3,143,381 401,635 396,953 616,628 609,126 1,742,667 1,464,767 83,936 86,377 113,899 65,492Gains

Reversal of previous asset write-downs 122 2 116,320 35,701 158,868 90,420 175,474 36,466 2,010 149 65,328 47,898 518 623 3,285 60,737 109,022 137,198 94 - 1 -Foreign exchange gains - - - 1 - (19) - - - 0 - - - - - - - - - - - -Other gains - - 525 - 1 - 103 - - - 796 (18,372) - - - - - - - - - -

Total gains 122 2 116,845 35,702 158,869 90,401 175,577 36,466 2,010 149 66,124 29,526 518 623 3,285 60,737 109,022 137,198 94 - 1 -Total departmental income 187,275 66,191 3,779,196 2,607,435 4,789,769 3,194,927 3,936,238 2,733,528 447,008 556,149 3,336,130 3,172,907 402,153 397,576 619,913 669,863 1,851,689 1,601,965 84,030 86,377 113,900 65,492

Outcome 2 Output 2.1 Output 2.2 Total Outcome 22009 2008 2009 2008 2009 2008

Departmental expensesEmployee BenefitsSuppliersGrantsDepreciation and amortisationFinance costsWrite-down and impairment of assetsLosses from asset salesForeign exchange lossesOther expenses

Total departmental expenses 178,459 224,453 557,511 537,602 735,970 762,055Funded by:Revenue

$'000

42,837 47,816 195,813 209,204 238,650 257,020135,622

- - - - - -------

$'000

176,637

------

$'000

361,611

-----

87

$'000

328,398

------

$'000

497,233

-----

87

$'000

505,035

------

Revenues from Government 271,353 476,344 847,714 1,141,336 1,119,067 1,617,680Sale of goods and rendering of servicesRental Income - - - - - -Other revenue

Total revenue 276,651 487,742 847,865 1,142,076 1,124,516 1,629,818Gains

5,298

- - - - - -

11,398 151 740 5,449 12,138

Reversal of previous asset write-downsForeign exchange gains - - -- -Other gains

Total gains - - - - - -Total departmental income

- - - - - -

- - - - - -

276,651(98,192) (263,289) (290,354) (604,474) (388,546) (867,763)

487,742 847,865 1,142,076 1,124,516 1,629,818

Outcome 3 Output 3.1 Total Outcome 32009 2008 2009 2008$'000 $'000 $'000 $'000

Departmental expensesEmployee Benefits 2,365 1,882 2,365 1,882Suppliers 12,192 22,059 12,192 22,059Grants - - - -Depreciation and amortisation - - - -Finance costs - - - -Write-down and impairment of assets - - - -Losses from asset sales - - - -Foreign exchange losses - - - -Other expenses - - - -

Total departmental expenses 14,557 23,941 14,557 23,941Funded by:Revenue

Revenues from Government 12,863 35,483 12,863 35,483Sale of goods and rendering of services - 678 - 678Rental Income - - - -Other revenue - - - -

Total revenue 12,863 36,161 12,863 36,161Gains

Reversal of previous asset write-downs - - - -Foreign exchange gains - - - -Other gains - - - -

Total gains - - - -Total departmental income 12,863 36,161 12,863 36,161


Table 32B: Major Classes of Departmental Incomes and Expenses by Output group and Outputs

Output 2.1 Output 2.2

155,713 212,973 496,917 536,860 652,630 749,833

1,694 (12,220) 1,694 (12,220)



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Output 1.12 Output 1.13Output 1.12 Output 1.13 Total Outcome 1

2009 2008 2009 2008 2009 2008$'000 $'000 $'000 $'000 $'000 $'000

318,607 323,292 55,805 62,648 8,037,886 7,262,703396,835 3,052,669 203,792 208,767 8,348,687 7,891,764

- - - - 14,349 18,00046,400 130,566 143 106 3,907,639 3,657,849

4 15,560 - - 94,366 44,14678,444 811,720 254 - 1,345,808 1,952,353

(109) (450) - - 91,819 2,152456 - - - 434 -132 63 - - 25,061 54,815

840,769 4,333,419 259,994 271,521 21,866,049 20,883,782

735,810 3,743,337 227,537 234,547 19,136,378 18,040,1041,326 678 1 5 723,111 676,024

- - - - 9,083 7,07312,844 25,461 12 295 23,792 42,724

749,980 3,769,476 227,550 234,847 19,892,364 18,765,925

8,001 239,281 3,254 - 642,299 648,476- 1,095 - - - 1,077- 21,667 - - 1,424 3,295

8,001 262,043 3,254 - 643,723 652,848757,981 4,031,519 230,804 234,847 20,536,087 19,418,773

APPEND

IX 9 FINAN

CIAL TRANSPAREN

CY

362D

EFENCE AN

NU


LUM

E 1


Note 32C: Major Classes of Departmental Assets and Liabilities by Outcome

Outcome 1 Outcome 2 Outcome 3 Total

2009$'000

2008*$'000

2009$'000

2008*$'000

2009$'000

2008*$'000

2009$'000

2008*$'000

Departmental AssetsCash and cash equivalents 25,847 - 2,241 - - - 28,088 -Trade and other receivables 590,280 - 22,256 - 3 - 612,539 -Land and buildings 13,922,381 - - - - - 13,922,381 -Specialist military equipment 33,796,794 - - - - - 33,796,794 -Plant and equipment 1,102,356 - - - - - 1,102,356 -Infrastructure 5,052,145 - - - - - 5,052,145 -Intangibles 468,503 - - - - - 468,503 -Heritage and cultural assets 869,393 - - - - - 869,393 -Inventories 4,942,343 - - - - - 4,942,343 -Prepayments 529,578 - 104 - - - 529,682 -Assets held for saleTotal Departmental Assets

Depatmentral Liabilities

23,76861,323,388

--

-24,601

--

-3

--

23,76861,347,992

--

Suppliers 804,721 - 34,543 - 6 - 839,270 -Other payables 322,214 - - - - - 322,214 -Leases 870,169 - - - - - 870,169 -Employee provisions 1,937,067 - - - - - 1,937,067 -Restoration, decontamination and decomissioning 644,730 - - - - - 644,730 -Other provisionsTotal Departmental Liabilities

28,3404,607,241

--

-34,543

--

-6

--

28,3404,641,790

--

* The 2007-08 comparative figures have not been reported as Defence's Outcome structure changed on 1 July 2008, and the assets and liabilities are not reliably attributable to Outcome.



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Table 32D: Major Classes of Administered Income, Expenses, Assets and Liabilities by Outcome

Outcome 1 Total

2009 2008 2009 2008$'000 $'000 $'000 $'000

Administered ExpensesSubsidiesEmployee benefits 3,465,720 2,849,405 3,465,720 2,849,405SuppliersGrants - 26,800 - 26,800Foreign exchange lossesCAC Act body payment item - - - -Other expenses

Total Administered Expenses

35,302 11,284 35,302 11,284

- - - -

- - -

9 4,327 9 4,3273,501,031 2,891,816 3,501,031 2,891,816

Administered IncomeSale of goods and rendering of servicesFees and finesInterest

222,874

244

3,625-

124

222,874

244

3,625-

124DividendsMilitary superannuation contributionsOther revenueNet foreign exchange gains

Total Administered Income

72,723831,091

9,527671

917,152

134,263756,982

215-

895,209

72,723831,091

9,527671

917,152

134,263756,982

215-

895,209

Administered AssetsCash and cash equivalentsReceivablesInvestmentsPrepayments

Total Administered Assets

-59,448

1,882,38890,361

2,032,197

-55,306

1,767,82585,506

1,908,637

-59,448

1,882,38890,361

2,032,197

-55,306

1,767,82585,506

1,908,637

Administered LiabilitiesSubsidies - - - -Other payablesEmployee provisions

Total Administered Liabilities

38,44442,659,00042,697,444

25,24233,622,00033,647,242

38,44442,659,00042,697,444

25,24233,622,00033,647,242


APPENDIX 10DEFENCE ANNUAL REPORT 2007-08

ERRORS & OMISSIONS Page 130 Alternative Dispute ResolutionA paragraph and some text from the preceding paragraph were omitted on page 130. The second paragraph onwards after the ‘Alternative Dispute Resolution’ heading should read:

‘From 2006 to 2007, the use of Alternative Dispute Resolution interventions almost doubled, and a similar increase is expected for 2008–09. This reflects a greater awareness across Defence of the effectiveness of Alternative Dispute Resolution, increased access to skilled practitioners, successful outcomes, and an external assessment undertaken over the formative years of the program enabling better shaping of the product.

Mediation and workplace conferencing continue to be accessed as appropriate, and have been successful strategies for individuals and work groups in dispute over workplace issues. Conflict coaching provides individuals at all levels with opportunities to be guided through the causes of their conflict and to identify suitable responses and strategies to deal with that conflict.”’

Page 261 Defence Annual Report 2006-07A correction to the Defence Annual Report 2006-07 (Volume 1) was omitted from Appendix 12-Errors and Omissions of the Defence Annual Report 2007-08 (Volume 1). The correction is to page 261 of Appendix 10-Consultancies of the Defence Annual Report 2006-07 (Volume 1), Table A10.3.

The information in Table A10.3 regarding the number of contracts let and total contract value of Personnel Executive consultancies is incorrect. The line should read:

Group Number of contracts let Total contract value ($)Personnel Executive 5 323,741

SECTION 6INDEXES & GLOSSARY


LEGISLATIONThe following legislation referred to in this report can be found at www.comlaw.gov.au except where noted.

• Archives Act 1983

• Commonwealth Electoral Act 1918

• Commonwealth Procurement Guidelines www.finance.gov.au/procurement/procurement_guidelines.html

• Copyright Act 1968

• Defence Act 1903

• Defence Force (Home Loans Assistance) Act 1990

• Defence Force Discipline Act 1982

• Defence Legislation Amendment Act 2006

• Environment Protection and Biodiversity Conservation Act 1999

• Financial Management and Accountability Act 1997

• Freedom of Information Act 1982

• Intelligence Services Act 2001

• Military Rehabilitation and Compensation Act 2004

• Occupational Health and Safety (Commonwealth Employment) Act 1991

• Ombudsman Act 1976

• Public Service Act 1999

• Safety Rehabilitation and Compensation Act 1988

• Telecommunications Act 1997

• United Nations Safety of Life at Sea (SOLAS) Convention 1974 (as amended) and Navigation Act 1912 www.dfat.gov.au/security/safety_nuc_shipment.html

• Workplace Relations Act 1996.

http://www.comlaw.gov.au

http://www.finance.gov.au/procurement/procurement_guidelines.html

http://www.dfat.gov.au/security/safety_nuc_shipment.html


ACRONYMS & ABBREVIATIONS

AAASB Australian Accounting

Standards Board

ACT Australian Capital Territory

ADF Australian Defence Force

AFS Average Funded Strength

ANAO Australian National Audit Office

ANZAC Australian and New Zealand Army Corps

APEC Asia-Pacific Economic Cooperation

APS Australian Public Service

ASEAN Association of South East Asian Nations

CCDF Chief of the Defence Force

CEO Chief Executive Office

CFO Chief Financial Officer

COMSUPER Commonwealth Superannuation Administration

DDCP Defence Cooperation Program

DFAT Department of Foreign Affairs and Trade

DFRDB Defence Force Retirement and Death Benefits Scheme

DHA Defence Housing Australia

DIO Defence Intelligence Organisation

DIGO Defence Imagery and Geospatial Organisation

DMFP Defence Management Finance Plan

DMO Defence Materiel Organisation

DSA Defence Security Authority

DSD Defence Signals Directorate

DSTO Defence Science and Technology Organisation

EELF Enhanced Land Force

ERC Expenditure Review Committee

FFFG Guided Missile Frigate

FMS Foreign Military Sales

FPDA Five Power Defence Agreement

FTE-A full-time equivalent average

GGDP Gross Domestic Product

GSI General Stores Inventory

GST goods and services tax

HHMAS Her Majesty's Australian Ship

Hon Honourable

HQJOC Headquarters Joint Operations Command

II&S Intelligence and Security

ICT Information and Communication Technology

IGADF Inspector General of the ADF

ILS Integrated Logistics Support

IP International Policy

IRS Indigenous Recruitment Strategy

IRRS Indigenous Retention and Recruitment Strategy

IS&IP Intelligence, Security & International Policy

JJP Joint Project

LLEAP Living Environment and

Accommodation Precinct

ACRONYMS & ABBREVIATIONS


MMAC Materiel Audit Committee

MP Member of Parliament

MoU Memorandum of Understanding

MSBS Military Superannuation and Benefits Scheme

MYEFO Mid-Year Economic and Fiscal Outlook

PPNG Papua New Guinea

PNGDF Papua New Guinea Defence Force

PSPs Professional Service Providers

PWC Committee on Public Works

RRAAF Royal Australian Air Force

RAN Royal Australian Navy

SSAS Special Air Service Regiment

SES Senior Executive Service

UURD unit ready days

USAF United States Air Force

VVCDF Vice Chief of the Defence Force


GLOSSARYAccumulated Depreciation The aggregate depreciation recorded for a particular depreciating

asset.Additional estimates Where amounts appropriated at Budget time are required to

change, Parliament may make adjustments to portfolios through the Additional Estimates Acts.

Administered appropriation Revenue, expenses, assets and liabilities administered by an agency for the Commonwealth (such as taxes, benefits payments and public debt) that are not concerned with running the agency or its commercial activities.

Administered items Expenses, revenues, assets or liabilities managed by agencies on behalf of the Commonwealth. Agencies do not control administered items. Administered expenses include grants, subsidies and benefits. In many cases, administered expenses fund the delivery of third party outputs.

Agency Assets, liabilities, revenues and expenses that are controlled by Defence or a subsidiary. Includes officials allocated to the organisation.

Amortisation A term used interchangeably with depreciation, except that it applies to a non-current physical asset under finance lease, or a non-current intangible asset, over its limited useful life.

Appropriation An authorisation by Parliament to spend money from the Consolidated Revenue Fund (the principal working fund of the Commonwealth) for a particular purpose.

Annual appropriation Two appropriation Bills are introduced into Parliament in May and comprise the Budget for the financial year beginning 1 July. Further Bills are introduced later in the financial year as part of the additional estimates.

Assets Future economic benefits controlled by Defence as a result of past transactions or other past events. Assets are initially recognised at the cost of acquisition. Non-financial assets are subject to ongoing revaluation assessment.

Assets under construction Assets under construction by Defence for Defence, or for the use of another entity according to a construction contract where Defence controls the asset until completion, or assets under construction or otherwise being made ready by another entity for use by Defence.

Australian Accounting Standards

Specify techniques of accounting practice and the method of presenting financial information about a reporting entity.

Average funded strength A budgetary measure used to count the average number of ADF members paid on a full-time equivalent basis during a financial year.

Capability The combination of military equipment, personnel, logistics support, training, resources, etc. that provides Defence with the ability to achieve its operational aims.

Capability Manager A Capability Manager is responsible for raising, training and sustaining in-service capabilities through the coordination of fundamental inputs to capability. Capability Managers include the Service Chiefs, the Chief of Joint Operations and the Chief Information Officer.

GLOSSARY


Capital budget All proposed capital expenditure funded by appropriation for outcomes, by equity injections or loans and/or appropriations for administered capital, or by other sources.

Capital expenditure Expenditure by an agency on capital projects, for example purchasing a building.

Coalition Countries including Australia who provide troops, logistical support or assistance in Military Operations, peacekeeping or reconstruction efforts.

Combined exercise An exercise or activity involving one or more Services of the ADF with the forces of other countries.

Contractors Individuals with specialist skills contracted to fill a line position.Consolidated Revenue Fund

Section 81 of the Constitution stipulates that all revenue raised or money received by the Commonwealth forms the one consolidated revenue fund. The fund is not a bank account. The Official Public Account reflects most of the operations of the fund.

Corporate governance The process by which agencies are directed and controlled. It is generally understood to encompass authority, accountability, stewardship, leadership, direction and control.

Defence Capability Plan The Defence Capability Plan is a costed, detailed development plan for Australia’s military capabilities over a ten-year period. The plan is reviewed regularly to take account of changing strategic circumstances, new technologies and changed priorities, in the context of the overall Defence budget.

Defence information environment

Encompasses all of Defence’s computing and communication capabilities at all classification levels. It supports all Defence warfighting functions, including overseas deployed elements and connection to Coalition networks, as well as the day-to-day management functions.

Defence Management and Finance Plan

The Defence Management and Finance Plan provide Ministers and central agencies with a clear oversight of Defence planning and financing strategies. It describes the strategies agreed through the 2000 Defence White Paper and subsequent Strategic Review papers. As a compendium of information attached to Defence’s annual Portfolio Budget Submission, it is intended to help Ministers make informed strategic and budgetary decisions on Defence, by bringing into one document the expected financial position of the portfolio taking into account existing commitments and proposed new investments. The Plan also provides the Government with the information necessary to ensure that its investment in Defence is both affordable and sustainable.

Defence Management Review

A review commissioned in August 2006 by the Minister for Defence in consultation with the Secretary and the Chief of the Defence Force to examine organisational efficiency and effectiveness across the Defence organisation.

Defence Procurement Review

An independent review initiated by the Government in December 2002 to examine the procurement process for major acquisitions in Defence. The review was led by Mr Malcolm Kinnaird and is also known as the Kinnaird Review.

GLOSSARY


Inde

xes

& G

loss

ary

Departmental items Assets, liabilities, revenues and expenses that are controlled by the agency in providing its outputs. Departmental items would generally include computers, plant and equipment assets used by agencies in providing goods and services and most employee expenses, supplier costs and other administrative expenses incurred.

Depreciation Apportionment of an asset’s capital value as an expense over its estimated useful life to take account of normal usage, obsolescence, or the passage of time.

Discretionary grants Payments where the portfolio Minister and paying agency have discretion in determining whether or not a particular applicant should receive funding and may or may not impose conditions in return for the grant. There is a central discretionary grants register.

Employee Any Australian Public Service officer of Defence or serving Defence Force member who receives a salary or wage, along with other benefits, for the provision of services whether on a full-time, part-time, permanent, casual or temporary basis

Employee expenses Include, but are not limited to, benefits provided to employees in the form of salaries and wages, performance pay, senior officers’ allowances, leave, and superannuation, but does not include amounts paid or owed to employees as reimbursement of out-of-pocket expenses.

Equity injection An additional contribution, over and above the cost of outputs. Equity injections form part of the Commonwealth’s investment in Defence.

Expense Total value of all of the resources consumed in producing goods and services or the loss of future economic benefits in the form of reductions in assets or increases in liabilities of an entity.

Fair value The amount for which an asset could be exchanged, or a liability settled, between knowledgeable and willing parties in an arm’s length transaction. The fair value can be affected by the conditions of the sale, market conditions and the intentions of the asset holder.

Financial Management and Accountability Act 1997

The Act establishes the regulatory framework for financial management within Defence and other public sector agencies.

Force element A component of a unit, a unit or an association of units having common prime objectives and activities.

Force element group A grouping of force elements with an appropriate command and control structure for a specified role or roles (eg the Navy Submarine Group).

Forward estimates The level of proposed expenditure for future years, based on relevant demographic, economic and other future forecasting assumptions). The Government required forward estimates for the following three financial years to be published in each annual Federal Budget paper.

Garrison support services Includes a range of base support services such as ground maintenance, hospitality, training area management, base security, transport, air support and fire fighting and rescue services.

Group A high-level organisational grouping of functions and activities used by the Defence Executive as its primary management grouping (eg the Capability Development Group).

GLOSSARY


Hardened and Networked Army

The Army’s key initiative to modernise and meet future operations demands and requirements of the Government. It will increase the size and firepower of the land force, improve the protection provided to troops, and allow them to communicate better on the future battlefield.

Infrastructure Items owned, leased or otherwise under the control of Defence in support of activities on land and within buildings. Infrastructure includes items such as runways, roads, car parks, parade grounds, ovals, lighting, water, sewerage and other general service related items. It does not include land upon which, or within which, it is constructed or those fixed items integral to, and under, buildings.

Interoperability The ability of systems, units or forces to provide the services to, and accept services from, other systems, units or forces and to use the services so exchanged to enable them to operate effectively together.

Inventory Inventory is comprised of consumable stores and supplies, fuel and explosive ordnance used in the delivery of Defence services. These are items which are consumed in normal use, lose their identity during periods of use by incorporation into, or attachment upon, another assembly, as a result of wear and tear, cannot be reconditioned because their design does not make it possible or their specific values do not justify it.

Joint exercise An exercise involving two or more Services of the ADF.Liabilities Sacrifices of future economic benefits that Defence is presently

obliged to make to other entities as a result of past transactions or other past events.

Materiel Acquisition Agreements

Materiel Acquisition Agreements cover the Defence Materiel Organisation’s acquisition services to Defence for both major and minor capital equipment.

Materiel Sustainment Agreements

Materiel Sustainment Agreements are between the Capability Managers and the Chief Executive Officer of the Defence Materiel Organisation. These agreements cover the sustainment of current capability, including services such as repairs, maintenance, fuel and explosive ordnance.

Military response options A set of generic tasks that describe the range of military options the Government could consider as a basis for a response to a particular situation or contingency.

Network Centric Warfare The aim of Network Centric Warfare is to improve the ability of the ADF to collaborate internally with supporting agencies and with coalition partners across organisation and geographic boundaries. Network Centric Warfare would allow Defence to harness recent development in computing and communications technologies to enhance decision making and war fighting capability.

Operating result Equals revenue less expense.Operational tempo The rate at which the ADF is able to deliver its operations effects,

for example, the rate at which forces are dispatched and the time in which they are turned around for their next task. At the local level, this might translate to the crew of an aircraft spending a very small amount of time on the ground before it is re-tasked for its next mission. At the organisational level, this translates to available fighting forces spending very little time at home before they are deployed again for their next operation.

GLOSSARY


Inde

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& G

loss

ary

Outcomes The results that the Government seeks from Defence, and are achieved by the successful delivery of its outputs, to the standards set in the Portfolio Budget Statements.

Output The product or service produced by Defence on behalf of government for external organisations or individuals.

Output groups A logical aggregation of agency outputs, where useful, and based either on homogeneity, type of product, business line or beneficiary target group. Aggregation of outputs may also be needed for the provision of adequate information for performance monitoring, or based on a materiality test.

Permanent forces The permanent Navy, the regular Army and the permanent Air Force.

Platforms Refers to air, land, surface or sub-surface assets that are discrete and taskable elements within the ADF.

Portfolio additional estimates statements

Similar to the portfolio budget statements and prepared at Additional Estimates time to support and update on the Government’s original annual budget for Defence.

Portfolio budget statements The document presented by the Minister for Defence to Parliament to inform Senators and Members of the basis for the Defence budget appropriations in support of the provisions in Appropriations Bills 1 and 2. The statements summarise the Defence budget and provides detail of outcome performance forecasts and resources in order to justify expenditure for Defence.

Prescribed agency An agency established by regulation under the Financial Management and Accountability Act 1997. The Act provides financial management authority to, and requires accountability by the Chief Executive of an agency.

Price One of the three key efficiency indicators. The amount the government or the community pays for the delivery of agreed outputs.

Professional Service Providers

See contractors

Purchaser-provider arrangements

Arrangements under which the outputs of one agency are purchased by another agency to contribute to outcomes. Purchaser-provider arrangements can occur between Commonwealth agencies and state/territory government or private sector bodies.

Quality One of the three key efficiency indicators. Relates to the characteristics by which customers or stakeholders judge an organisation, product or service. Assessment of quality involves use of information gathered from interested parties to identify differences between user's expectations and experiences.

Quantity One of the three key efficiency indicators. Examples include: the size of an output; count or volume measures; how many or how much.

Readiness The readiness of forces to be committed to operations within a specified time, dependent on the availability and proficiency of personnel, equipment, facilities and consumables.

Reserves The Naval Reserve, the Army Reserve and the Air Force Reserve.

GLOSSARY


Revenues Inflows or other enhancements, or savings in outflows, of future economic benefits in the form of increases in assets or reductions in liabilities of Defence, other than those relating to contributions by the Commonwealth, that result in an increase in equity during the reporting period.

Risk management At the highest level, involves the identification and mitigation of those risks that have the potential to adversely affect the achievement of agreed output performance at the agreed output price.

Special account Balances existing within the Consolidated Revenue Fund, that are supported by standing appropriations (Financial Management and Accountability Act 1997, ss.20 and 21). Special accounts allow money in the Consolidated Revenue Fund to be acknowledged as set-aside (hypothecated) for a particular purpose. Amounts credited to a Special Account may only be spent for the purposes of the Special Account. Special Accounts can only be established by a written determination of the Finance Minister (s.20 of the Financial Management and Accountability Act 1997) or through an Act of Parliament (referred to in s.21 of the Financial Management and Accountability Act 1997).

Special Appropriations (including Standing Appropriations)

An amount of money appropriated by a particular Act of Parliament for a specific purpose and number of years. For special appropriations the authority to withdraw funds from the Consolidated Revenue Fund does not generally cease at the end of the financial year.Standing appropriations are a sub category consisting of ongoing special appropriations — the amount appropriated will depend on circumstances specified in the legislation.


Items of a specific military nature and that are not available though the normal external market in their current form to other than government military purchasers. It includes the prime military equipment plus the direct support items associated with the equipment.

Standard Defence Supply System (SDSS)

A key information system for the financial management of inventory, general stores, repairable items and other assets associated with Defence’s logistic capability.

System Program Office The office of the program manager and some of his or her key team members. It serves as the single point of contact with industry, government agencies, and other activities participating in the acquisition process of a given system.

Theatre The area in which military operations and activities take place.Two-pass approval process The process by which major capital investment proposals are

developed for consideration and approval by the Government.

GLOSSARY


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Unit ready days The number of days that a force element is available for tasking, by the Maritime commander, either outside of major maintenance and within planned readiness requirements, or in accordance with contracted availability. Planned unit ready days are determined for each Force Element Group by aggregating total days for the unit in commission, less all days when the unit is programmed to be in major maintenance and conducting associated pre-workup (preparations for initial operational training) or based on the total number of days the force element is contracted to be available to Defence. Contracted availability applies to the Armidale class patrol boats and may apply to other classes in the future.

Weighted average cost An inventory valuation method which considers the fluctuating prices and quantities of acquired goods in computing of the cost of inventory. The weighted average method takes the prices of units at the beginning inventory and the varying prices of purchases made and are weighted by the number of units to determine the weighted average cost per unit. It may be computed as the weighted average cost of all available goods present in a given period, or as a weighted moving average cost adjusted when new goods are delivered.

Write-downs The reduction in the value of assets.


COMPLIANCE INDEXThis index is prepared from the checklist of annual report requirements contained in attachment F to the Requiremnts for Annual Reports as approved by the Joint Committee of Public Accounts and Audit on 17 June 2009.

Description PageLetter of transmittal iTable of contents iiiIndex 378Glossary 369Contact officer(s) inside back coverInternet home page address and Internet address for report inside back coverReview by the SecretaryReview by departmental secretary 2Summary of significant issues and developments 2, 41, 79, 84, 89Overview of department’s performance and financial results 2, 21-34, Departmental overviewOverview description of department 37Role and functions 41Organisational structure 39Outcome and output structure 62Where outcome and output structures differ from PBS format, details of variation and reasons for change 62Portfolio structure 38Report on performanceReview of performance during the year in relation to outputs and contribution to outcomes 61-137Actual performance in relation to performance targets set out in PBS/ PAES 61-137Performance of purchaser/ provider arrangements 232Where performance targets differ from the PBS/ PAES, details of both former and new targets, and reasons for the change 61-137Narrative discussion and analysis of performance 61-137Discussion and analysis of the department’s financial performance 21-34Discussion of any significant changes from the prior year or from budget 21-34Summary resource tables by outcomes 69, 125, 133Management accountabilityCorporate governanceStatement of the main corporate governance practices in place 47Senior management committees and their roles 47Corporate and operational planning and associated performance reporting and review 41Approach adopted to identifying areas of significant financial or operational risk and arrangements in place to manage risks 53Agency heads are required to certify that their agency comply with the Commonwealth Fraud Control Guidelines. i

COMPLIANCE INDEX


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Policy and practices on the establishment and maintenance of appropriate ethical standards 54External scrutinySignificant developments in external scrutiny 56Judicial decisions and decisions of administrative tribunals 56

Reports by the Auditor-General, a Parliamentary Committee or the Commonwealth Ombudsman 57, 146, 150Management of human resourcesAssessment of effectiveness in managing and developing human resources to achieve departmental objectives 115Workforce planning, staff turnover and retention 203Impact and features of certified agreements and AWAs 214Occupational health and safety performance 222Statistics on staffing 195Certified agreements and AWAs 214Performance pay 214Assets managementAssessment of effectiveness of assets management 243PurchasingAssessment of purchasing against core policies and principles 232ConsultantsConsultancy services contracts 236Australian National Audit Office Access ClausesAbsence of provisions in contracts allowing access by the Auditor-General 235Exempt contractsContracts exempt from publication on AusTender 236Commonwealth Disability StrategyReport on performance in implementing the Commonwealth Disability Strategy 221Financial StatementsFinancial Statements 251Other InformationOccupational health and safety (section 74 of the Occupational Health and Safety Act 1991) 222Freedom of Information (subsection 8(1) of the Freedom of Information Act 1982) 151Advertising and Market Research (Section 311A of the Commonwealth Electoral Act 1918) 237Ecologically sustainable development and environmental performance (Section 516A of the Environment Protection and Biodiversity Conservation Act 1999) 185Discretionary Grants 245Correction of material errors in previous annual report 364

Description Page


INDEXAAboriginal and Torres Strait Islander

Network, 221Active Reserves, 195Adaptive Army, 80, 84, 101Adelaide class frigates, 76Administrative Inquiry Tracking

System, 161Adverse Administrative Action, 160Advertising & Market Research, 237Afghan National Army, 124Afghanistan, 91, 124, 128, 129, 130

Air Force KPIs, 86Intelligence, 90, 91

Afghanistan Task Force, 128African Union, 128AIR 5333, 33AIR 5349, 33Air Component Command, 129Air Force, 27, 30, 85, 86, 89Air Movements Group, 129Airborne Early Warning and Control

aircraft, 87Amphibious landing ships, 76Amphibious Watercraft

Replacement, 193ANAO access clauses, 235Anti Submarine capability, 109Anzac class frigates, 74, 76Approved Major Capital Facilities

Projects, 165APS

Conversion of contractor positions, 44

Defence Whistleblower scheme, 55Ethics awareness & fraud control, 54Separations, 212Staffing levels, 195Values, 41, 230Workforce overview, 28

Arabian Gulf, 129Arabian Sea, 129ARH, 82Army, 116, 220

Capabilities, 80, 82Grants, 246Workforce, 81

Army Training Continuum, 80, 81Asbestos, 226Asbestos Management, 226Asia Pacific Civil-Military Centre of

Excellence, 105Asia-Pacific region, 42Assistance to the Civil Community, 135Astute, 99, 126Attitude Survey, 161Attorney-General’s Department, 105audit, 39, 42, 43, 48, 50Audit and Risk Committee, 106Audit Division, 50Auditor-General’s Reports, 57, 150AusAID, 105AusTender, 236, 377Australian Command and Staff

College, 105Australian Defence Credit Union, 143Australian Defence Force Investigative

Service, 71Australian Defence Human Research

Ethics Committee, 152Australian Embassy in Baghdad, 124,

130Australian Exclusive Economic

Zone, 132Australian Federal Police, 105Australian Military Court, 71, 72, 159Australian National Audit Office, 50Australian Public Service (APS) Code

of Conduct, 230Australian Safety and Compensation

Council – Safe Work Australia Awards, 222

Australian Taxation Office, 119Australian workplace agreements, 214Authority and Accountability

Framework, 70Auxiliary minesweepers, 76Average Staffing Summary, 30


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BB300 82B300 King Air aircraft, 82, 86B737 BBJ, 87Bersama Shield, 86, 108Biodiversity Conservation

Program, 185Black Hawk helicopters, 82, 84Border Protection Command, 108, 132,

134, 135Border protection operations, 85Bradshaw Field Training Area, 153,

169, 174, 182, 184Budget, 62, 113, 125, 127, 131, 133,

136Audit, 19

Budget Additional Estimates, 148Budget Supplementary Estimates, 148Business Model, 72

,

CC-130 Hercules, 86, 87, 89, 126C-17 Globemaster III, 86, 87, 89Cadets, 106, 117

Review, 117Canada, 103Capabilities, 18, 27, 42, 43, 44, 45,

105, 111Capability and Investment

Committee, 49Capability Committee, 49Capability Development, 46Capability Development Group, 111,

238Capital receipts, 34CDF, 70, 75, 81, 86, 106, 109, 113, 115Centre for Defence Strategic

Studies, 105Chief Audit Executive, 39, 50Chief Executive Instructions, 113, 232Chief Executive of Defence, 243Chief Executive Officer, 38, 50Chief Finance Officer, 113Chief Finance Officer Group, 113Chief Information Officer, 49Chief Information Officer Group, 101Chief Military Judge, 38Chief of Air Force, 153Chief of Joint Operations, 108

Chief of the Defence Force, 38, 39, 47, 48, 51, 57, 58, 70, 75, 80, 81, 86, 94, 102, 105, 106, 109, 111, 113, 115, 152, 220, 227

Chief Security Officer, 91Chiefs of Service Committee, 48, 72Chinook helicopters, 82, 84Civil Community, 137Civilianisation, 44CL604 Challenger, 87Clearance Diving, 76, 108Climate Change, 186Cluster Munitions, 147Coastal mine hunters, 76Coastwatch, 108, 134COI, 51, 52Collins class submarines, 193Combat vehicles, 18Comcare, 56, 233Comcare investigation, 226Commissions of Inquiry, 51, 52Committee on Public Works

(PWC), 177Commonwealth Disability Strategy

framework, 221Commonwealth Procurement

Guidelines, 232, 236Commonwealth’s Competitive

Neutrality Guidelines, 119Community Consultation Panel, 20Compensation, 230Complaint handling and

resolution, 117, 226ComSuper, 119, 234Conduct of Administrative

Inquiries, 160Consultancies, 236Contaminated Sites, 187Contamination Remediation, 178Contractors, 29Contracts, 29, 30, 44, 188, 232, 235,

236, 364Cross-Portfolio Reports, 151

DData Centres, 102Defence Actual staffing, 195Defence Annual Report 200607, 364Defence Audit and Risk Committee, 48


Defence Capability and Investment Committee, 49

Defence Capability Committee, 49Defence Capability Plan, 19, 33, 98,

99, 111, 193, 194Defence Capability Strategy, 111Defence Collective Agreement, 115,

153, 154Defence Committee, 47, 49, 53Defence Cooperation Plan, 162, 163Defence Cooperation Program, 92,

124, 126, 162Defence Environment and Heritage

Panel, 191Defence Environmental Education

Strategy, 188Defence Environmental

Management, 185Defence Families of Australia, 152Defence Force Credit Union, 143Defence Force Discipline Act 1982, 159Defence Force Ombudsman, 227Defence Force Remuneration

Tribunal, 214Defence Force Retirement and Death

Benefits Scheme, 119, 234Defence Force Retirement and Death

Benefits Scheme Authority, 234Defence Forces Retirement Benefits

Scheme, 234Defence Home Ownership Assistance

Scheme, 94, 115, 140, 141, 143, 144Defence HomeOwner Scheme, 119,

140, 141Defence HomeOwnership Scheme, 141Defence Housing Australia, 34, 95, 119,

142, 233Defence ICT Strategy, 102Defence Imagery and Geospatial

Organisation, 90, 91, 92Defence Information and

Communication Technology Committee, 49

Defence Information Environment, 46, 49

Defence Intelligence Organisation, 90, 91, 92

Defence Legal, 158, 160, 230, 237Defence Materials Technology

Centre, 99

Defence Materiel Organisation, 18, 27, 28, 29, 33, 38, 44, 50, 54, 55, 57, 82, 232, 233, 243Executive, 50

Defence New Home Ownership Assistance Scheme, 119

Defence People Committee, 49Defence People Management

Framework, 115Defence Performance Report and

Scorecard, 48Defence Reconciliation Action

Plan, 220Defence referrals under the EPBC

Act, 190Defence reform program, 89Defence Reserves Support Council, 152Defence Science & Technology

Organisation, 98, 99Defence Security Authority, 53, 90, 91,

92Defence Service Homes Scheme, 141Defence Signals Directorate, 90, 91, 92Defence Strategic Logistics Plan, 106Defence Strategic Reform Advisory

Board, 43Defence Strategic Workforce Plan

2007-17, 116Defence Support Group, 94, 95, 115,

222, 232Defence Whistleblower scheme, 55Defence’s strategic direction, 41Department of Finance and

Deregulation, 230, 234Department of Foreign Affairs &

Trade, 105, 128, 233Department of the Environment,

Water, Heritage and the Arts, 187, 188, 190

Department of Veterans’ Affairs, 39, 119, 140, 141, 142, 143, 144

Departmental structure, 39Deployable geospatial support

team, 75, 77Deputy Secretary People Strategies

and Policy, 221, 222DHC-4 Caribou, 87DHOAS, 143, 144Diarchy, 47


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DIGO, 91, 92DIO, 91Director of Military Prosecutions, 38,

159Disability, 221Disability Action Plan, 221Discipline, 160Dispute Resolution, 229Diversity, 221DMO, 28, 33, 50, 54, 232Domestic counterterrorism, 72DSD, 91DSTO, 98, 99Dunt, Professor David, 105, 107

EEast Timor 89 90 91 92 95 124 126

127, 163Defence Force, 163

Emergency, 132flood, 86

Employer Support Payments Scheme, 106

Energy management, 186Enhanced Land Force, 80, 81, 84, 94,

190, 193Environment and Heritage Awards, 188Environmental Advisory

Committees, 153Environmental impact assessment, 190Environmental Management Plan -

Maritime Activities, 186Environmental Management

System, 189Equity & Diversity, 220Ethics awareness and fraud control, 54Exercises

ASWEX, 109Austhai, 109Boss Lift, 106Dugong, 108Kakadu, 108Mastex, 109Pitch Black 09, 86Red Flag, 109RIMPAC, 86, 108Singaroo, 108Stretch, 106Swift Eagle, 109Talisman Saber 2009, 101Tamex, 109

, , , , , , , ,

Explosive Ordnance, 108

FF/A-18 Hornet, 87F/A–18F Super Hornets, 89F-111, 87

Deseal/Reseal, 146Deseal/Reseal Inquiry, 147

F–35 Joint Strike Fighter, 18, 89Fairness & Resolution, 117, 229Families, 152, 247Federal Court Prosecution, 226Field Vehicle and Trailer Fleet, 111Financial Management and

Accountability Act 1997, 243Financial Management and Controls

Committee, 50Financial Statements, 251Five Power Defence

Arrangements, 108, 163FOI, 58Force 2030, 41, 42Force Element Group, 86Force Element Targets, 82

Armed Reconnaissance Helicopter, 82

Force Structure Review, 19Forces Command, 80Francis, Cadet Nathan, 56Freedom of Information, 58, 59, 151,

152, 154, 157, 236Future Submarine project, 111

GGap Year

Initiative, 203Members, 195

Gap Year initiative, 203Garrett, the Hon Peter, 178Gershon, Sir Peter, 101Global Security, 128, 130Golan Heights, 128Government intervention in

indigenous communities, 134, 135Graded Officer Pay Structure, 74Grants, 245, 246, 250

HHardened and Networked Army 81 94Hawaii, 108Hawk Lead-in Fighter, 87

, ,


Head Defence Legal, 160Headquarters Joint Operations

Command, 90, 92, 94, 98, 99, 138Project, 177

Health and safety management arrangements, 223

Heavy landing craft, 76Helicopter

Armed Reconnaissance, 82Heritage management, 186High Readiness Reserve capability, 46HMAS Arunta, 138HMAS Melbourne, 56HMAS Platypus, 178HMAS Stuart, 18HMAS Success, 79HMAS Sydney II, 51, 98Home ownership, 140, 141, 142, 143Hopkins, Corporal, 53House Committees, 149

Communications, 149Legal & Constitutional Affairs, 149

Human Resource Metrics System, 116Hydrographic Office, 157Hydrographic ships, 75, 77Hydroscheme, 75

IICT Strategy 102Indigenous, 221Indigenous affairs, 220Indigenous Contract Management

Diploma Course, 221Indigenous Employment Strategy, 221

APS, 221Indigenous Graduate Recruitment, 221Indigenous participation, 220Indonesia, 90, 108, 126Industry, 91Industry suppliers, 44Infrastructure, 188Infrastructure Division, 96Injury/Illness Prevention, 223Inquiries

ASEAN, 146Cyber Crime, 149F-111 Deseal/Reseal, 146Naval Shipbuilding, 148Papua New Guinea, 148Peacekeeping Operations, 148

,

Trade & investment relations with Asia, the Pacific and Latin America, 146

Whistleblowing, 149Inspector General Defence, 39Inspector General of the ADF, 38, 50,

158, 160, 161Intelligence, 39, 46, 90Intelligence and Security Group, 39,

70International Policy Division, 39, 70,

90, 91, 92International Stabilisation Force, 35,

126Inventory Assurance Program, 106Investigations by Comcare, 225Investigative Service, 105Iraq, 90, 91, 105, 124, 128Israel, 124

JJapan 90 108 109Jerusalem, 128Jervis Bay Marine Park, 153Joint and Coalition Force

Headquarters, 85Joint Committees, 146

Electoral Matters, 147Foreign Affairs, Defence &

Trade, 146Intelligence & Security, 147Public Accounts & Audit, 146Public Works, 148, 165Treaties, 147

Joint Counter Improvised Explosive Device Capability, 111, 193

Joint Force Capability, 105Joint Health Command, 105, 107Joint Logistics Command, 106Joint Operations Command, 108Joint Task Forces, 108, 135JP 2008, 33JP2080 – Upgrade Financial and

Personnel Systems, 103JSF, 89Judge Advocate General, 38

, , ,

KKiowa, 82Kokoda Foundation, 250


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LLanding Helicopter Dock ships, 79Laser airborne depth sounder

aircraft, 75, 77Latin America, 146Lebanon, 124, 128Legal Expenses, 237Logistics, 45, 106

MM113 Light Armoured Fighting

Vehicles, 33, 80Major acquisitions, 43Major Capital Equipment Program, 33,

193, 194Major Capital Facilities Program, 165Malaysia, 108, 109Maritime Patrol Aircraft Group, 129Materiel Acquisition Agreements, 232Materiel Sustainment Agreements, 232McCarthy, Signaller Sean Patrick, 52Medium capital facilities projects, 178Mentoring and Reconstruction Task

Force, 129Middle East, 81, 85, 86, 87, 95, 101,

124, 128, 129, 130Military Justice, 50, 71, 72, 158, 159,

161Military Discipline, 160Review, 50, 71, 148, 158, 160System, 50, 72, 158, 159

Military Superannuation and Benefits Board, 234

Military Superannuation and Benefits Scheme, 234

Minister for Defence, 20, 99, 102, 105, 106, 108, 111, 113, 115, 130, 147, 151, 193, 214, 220

Minister for Defence Science & Personnel, 99, 221

Minister for Finance and Deregulation, 193

Ministerial Advisory Panel, 20Ministers, 71, 72, 99, 102, 115Mission, 41Mortimer Review, 46, 148Mount Bundy Training Area, 153Movement of Controlled Waste, 188MRH-90 Multi Role Helicopter, 79, 82,

84

Multi Role Tanker Transport (KC-30A) aircraft, 87, 89

Multinational Force, 124

NNational Australia Bank 140 141 142

143National Environment Protection

Measures, 187National Health and Medical Research

Council, 152National Indigenous Cadetship

Project, 221National Parks and Wildlife

Service, 192National Security Committee of

Cabinet, 33, 71, 193National Support Tasks in

Australia, 134National Unexploded Ordnance

Office, 191National Workplace Relations

Committee, 153NATO, 129, 130Navy, 74, 75, 79, 86, 98, 108, 109, 116,

129, 134, 138, 195, 220New funding model, 18New Generation Navy, 74, 220New Zealand, 92, 108, 109, 126North Atlantic Treaty

Organisation, 128North Australia Exercise Area, 108Northern Indian Ocean, 126Notification and reporting of

incidents, 223

, , , ,

OOccupational Health and Safety 117

222Awards, 222Committee, 49, 222Management System, 222Strategy 2007-2012, 222

Occupational Health and Safety Management Information System, 223

Office of the Inspector General of the ADF, 50

Office of the Merit Protection Commissioner, 231

Office of the Secretary and CDF, 39, 70

, ,


Ombudsman reports, 57Operational Response Vessels, 138Operations, 85, 91, 106, 130

Catalyst, 86, 99, 128Joint Operations Command, 108Kruger, 130Outreach, 134Regional, 127Resolute, 86Slipper, 86, 99, 128, 129, 130Solania, 134, 135support, 91, 99, 103, 106Vic Fire Assist, 137

Output-Focused Budget Model, 46Ozone depleting substances, 188

PP-3 Orion, 85, 86, 87, 89, 109, 126, 134,

135Pacific, 146Pacific Patrol Boat Program, 162Pakistan, 92, 108Papua New Guinea, 108, 126, 134, 162Parliamentary Committees, 56, 146Parliamentary Secretaries, 71, 72Patrol boats, 76Payment of Accounts, 244PC-9, 86, 87People Strategies and Policy, 116People Strategies and Policy

Group, 115Permanent ADF staffing, 195Permanent Air Force, 89permanent employees, 195Permanent Force Average Funded

Strength, 27Permanent Forces, 143Philippines, 108Pollution, 187Portfolio Additional Estimates

Statements 2008-09, 170, 183, 203Portfolio Budget Statements

2008-09, 194Portfolio structure, 38Preparedness, Personnel and

Operating Costs, 46Prime Minister, 130Private financing arrangements, 177Private financing arrangements

(projects), 177

Procurement, 151, 155, 174, 177, 232, 236Non-equipment, 232

Program of Major Works, 176Project Single Living Environment and

Accommodation Precinct, 177Protected Mobility Vehicles, 80, 81Provost Marshal ADF, 159Public Affairs, 60

QQueensland, 134

RRAAF Association, 153RAMSI, 126RBS-70 missile system, 84Recruiting, 116, 220Recruitment and retention, 66, 115Red Flag 09, 86, 109Red Sea, 129Redress of Grievance, 226Reform, 39, 42, 43, 44, 49, 50, 66, 70,

72, 85, 89, 95, 101, 102, 107, 115, 117Reform of the ADF Investigative

Capability, 159Regional engagement, 85Registrar of the Australian Military

Court, 38Rehabilitation Program, 223Relocation Services Agreement, 233Remuneration, 214Replenishment Ship, 76Republic of Korea, 108Reserve Service Protection, 106Reserves, 28, 38, 46, 105, 106, 143, 195

High Readiness, 81Reserves Support Council, 152Reservists, 27, 28Resolute, 134Resource and Output Management

Accounting Network, 101Retention and Recruitment

program, 115Returned Services League of

Australia, 153Review of Actions, 227Risk management, 53, 70Rotary Wing Group, 129Royal Australian Air Force, 153


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Royal Australian Air Force Veterans’ Residences Trust, 153

Royal Australian Navy, 108, 138Royal Flying Doctor Service, 138Royal Malaysian, 109Royal Thai, 109

SSafety Rehabilitation and

Compensation Commission, 222, 226, 233

Sale of Other Property, Plant and Equipment, 34

Sale of specialist military equipment, 34

Satellite, 193Satellite Communication Systems, 111Savings, 43, 44, 45, 46Savings and efficiencies, 243Scholarship, 221Scholarships, 115Science and Technology, 46SEA 4000, 33Sea King helicopter, 75, 76, 79Seachange, 74Seahawk helicopter, 75, 76Search Task Group, 135Secretary, 38, 39, 43, 47, 48, 49, 50,

58, 60, 70, 71, 75, 81, 86, 90, 94, 102, 103, 106, 111, 113, 115

Secretary of Defence, 38, 151, 188Senate Committees, 148

Economics, 149Environment, Communications & the

Arts, 149Foreign Affairs, Defence &

Trade, 56, 148, 158Foreign Affairs, Defence & Trade

References, 72Senate Standing Committee on Foreign

Affairs Defence and Trade, 158Separation rates, 203Service Chiefs, 161, 227Service Police, 71Services, 38, 44Sher, Private Gregory Michael, 52Shoalwater Bay Training Area, 94, 153,

179, 183Sinai, 124Singapore, 90, 94, 108

Armed Forces, 94, 108

Single Living Environment and Accommodation Precinct, 177

Solomon Islands, 91, 95, 124, 126, 127South China Sea, 126South Pacific, 162South West Pacific, 89, 126South-East Asia, 162Special Forces, 80, 109Special Operations, 80, 81, 108, 129Special Operations Command, 80Special Operations Task Group, 129Squirrels, 76SRP, 43, 46, 72, 102Staffing (Actual), 195Star Ranks Remuneration

Arrangement, 115, 214Strategic Planning, 46Strategic Reform and Governance

Executive, 39, 43, 70Strategic Reform Program, 18, 19, 39,

42, 43, 46, 50, 66, 70, 72, 74, 80, 101, 102, 106, 107, 115, 232

Strategy Executive, 39, 70Street, Sir Laurence, 50, 71, 158, 160Street-Fisher review, 158, 159Structural changes, 39Submarine Workforce Sustainability

Review, 74Submarines, 18, 76, 79Sudan, 124, 128Super Hornet, 89, 94Superannuation, 119Superannuation and Housing Support

Services, 66, 119Sustainment, 44, 46Swan Island, 51Sydney Harbour Federation Trust, 178Synthetic greenhouse gases, 188Syria, 124

TTactical Information Exchange

Domain, 111Taliban, 129Thailand, 108Tiger Armed Reconnaissance

Helicopters, 84Till, Sergeant Brett Ian , 53Timor-Leste see East TimorTrade Training School, 129Treaties


French Republic, 147North Atlantic Treaty

Organisation, 147United Arab Emirates, 147United States, 147

UUnacceptable Behaviour, 228Unexploded Ordnance, 191United Kingdom, 103, 109United Nations, 41, 124, 126, 128, 130United Nations Headquarters, 128United Nations Mission in Sudan, 128United States, 18, 41, 60, 94, 98, 101,

103, 108, 109United States Air Force, 98

VValues, 41VCDF, 105, 106Vic Fires Assist, 135Vice Chief of the Defence Force, 105,

106, 107, 117, 160, 222, 226, 238, 240Victorian bushfires, 86, 94, 134Vietnam, 108

WWalterTurnbull, 50Water and waste management, 187Wedgetail, 89Whistleblowing, 149White Paper, 18, 19, 20, 33, 41, 42, 43,

44, 66, 72, 74, 79, 84, 89, 90, 94, 96, 99, 101, 111, 115, 116, 124, 194Air Force, 89Air Force implications, 18Anzac class frigates, 79ARH, 84

Wide Bay Training Area, 153Workforce, 203Workforce and Financial Management

Committee, 49Workforce and shared services, 44Workforce overview, 27Workforce reform, 44, 45

YYann Elies, 138


Notes

this report was developed by the Directorate of Ministerial and parliamentary Reporting with input and assistance from staff throughout the Department of Defence and the Defence Materiel organisation.

Annual Report Team Karen creet, cameron Gill, Romany Rzechowicz, Robert lester, Michael Robinson, Belinda Scott.

Internet the Department of Defence website is a comprehensive resource on matters of military security, capability and people issues.

Defence www.defence.gov.au Defence jobs www.defencejobs.gov.au Defence Honours and Awards www.defence.gov.au/medals

the online version of this report, which contains additional information, can be accessed at www.defence.gov.au/annualreports.

Contact comments and feedback about this report are welcome and should be directed to:

Director Ministerial and parliamentary Reporting Department of Defence Russell Offices R1-5-A036 Canberra ACT 2600

Telephone (02) 6265 6277 Fax (02) 6265 2923 email [email protected]

Concept and design Department of Defence

Editing, proofreading and typesetting Department of Defence

Printing Bluestar print Group

http://www.defence.gov.au

http://www.defencejobs.gov.au

http://www.defence.gov.au/medals
