MICHAEL KEATING. Contestability and Defence Advice

Major defence decisions have long been made with a minimum amount of consultation. That is certainly true of the recent decision to give the French Naval Group a monopoly over the design and build of Australia’s next submarine. The way this decision was made seems to reflect a long-standing view that civilians are not competent and cannot be allowed to question military expertise. This post suggests this is not good enough as many relevant considerations in defence planning and acquisitions range well beyond military expertise.

The first World War represented the most shocking and futile waste of life on a scale never previously experienced. At the end of that conflict, the French Prime Minister, Georges Clemenceau, concluded that war was too important to be left to the generals.

Yet on receiving a report warning of Australia’s looming capability gap for its submarines, and the risks that it might prove much longer, the immediate response by the responsible Minister, Christopher Pyne, was to criticise the authors as “armchair critics living in Sydney with no understanding of the tender process involved”. In other words, the authors who were outside the military establishment, could not be expected to provide a sound alternative view.

Readers of this blog can reach their own conclusions about the soundness or otherwise of this critique of the submarine acquisition as the report in question is being summarised on this blog (see first post on 2 October).  In brief, the report argues that:

  1. With a new unique design that is yet to be developed, let alone tested, there is a high probability that the period before Australia takes delivery of its new submarines may prove significantly longer than presently being planned for, and/or that the proposed fleet of these new submarines may have less capability than expected/needed.
  2. There is an alternative way of filling this capability gap that would be more effective and cost less, especially if the length of that gap continues for more than the decade presently envisaged for the life extension of the present Collins submarine fleet.

What concerns me in this article, however, is the apparent assumption that only the Department of Defence can provide useful advice about military matters, and specifically military equipment.  Furthermore, this is not a new situation; in my personal experience it has been going on for decades. In effect, when it comes to examining its expenditures, Defence has long been pretty much a closed shop, and the purpose of this article is to examine why this might be so, and whether it should continue.

My starting point is that all policy advice should be contestable. Frankly, the critical feature of policy advising is the multiplicity of objectives and the amount of uncertainty. There is a need for trade-offs between the different ends and means. Accordingly, no-one can truly be called an expert in all aspects of any policy field. Instead, as many different interests have to be satisfied, it is better that all are heard. It is also why in a democracy the final decisions are made by avowed non-experts.

This principle that policy advice should be contestable is now broadly accepted in other fields of policy. For example, doctors on their own do not determine health policy, although quite properly they do make a significant input. The same is true for economists and economic policy. So today, health, education, welfare, industry, economic and foreign policy advice are all contestable, with multiple sources of advice within government itself, as well as plenty of external policy advisers.

But Defence policy is apparently different. The culture seems to be that only those who are serving in the forces, or sometimes who have served, can really know. Defence has, however, made mistakes in the past, and why should we think that will not happen again in the future? For example, one of the most notorious stuff-ups, was the decision to acquire the custom-built Seasprite helicopter as the solution to our then perceived air-sea warfare needs, rather than purchase a proven off-the-shelf helicopter at a fixed price. The end-result in that case was that after spending $1.4 billion, the project was abandoned without one single helicopter ever having been built.

I mention this episode with the helicopters, however, not as a point of criticism. Rather the lesson I want to draw is that these decisions in Defence are inherently very difficult, and the risks are very high. Instead, of castigating any critics as not worthy of listening to, the defence of Australia would be better served by engaging in a respectful discussion to establish the real merits of the argument.

In the specific case of the submarine purchase, as the Insight Economics Report points out, there are many issues to be decided. These issues range well beyond the narrow technical attributes of the various platforms under consideration, and include consideration of:

  • The submarine’s expected role
  • The size, range, endurance, and crew size of the submarine
  • Its stealth as determined by how easy it will be to detect
  • The numbers of submarines versus the capability of each submarine and their individual cost

Complex trade-offs are inevitably involved between these different issues, and these trade-offs depend upon the priorities for the use of the submarines which should reflect:

  • what kind of war is the submarine most likely to be called upon
  • what will be the submarines’ role in this war
  • what other objectives are there with this decision to purchase new submarines, such as the possibility of building strategic relationships with allies
  • how does this purchase rate relative to other competing national and defence priorities

My contention is that the answer to many of these questions cannot be supplied only by those who have a knowledge of sailing submarines, or even Defence strategy more generally, although these people should, of course, make a significant input to the final decision.  But there are other sources of policy advice which should be consulted regarding the likely future strategic threats to Australia, the evaluation of the scientific and engineering issues, the competing priorities for expenditures, the industrial issues associated with a build in Australia, and above all the various risks involved.

I am happy to be proven wrong, but as I see it, the necessary engagement of other sources of advice is too rare in the case of Australia’s defence, and this seems to have been especially true of the decision to engage the French Naval Group to design Australia’s new submarine. In particular, the Insight Economics report has argued that there needs to be more consideration of the consequences for Australia’s submarine capability of the delay between the end-of-life for the present Collins Class submarine and the arrival of the new submarine capability, the risks of further delays in that timetable, and what to do if some part of this new capability proves to be impossible to deliver at an acceptable price.

Indeed, as reported by Insight Economics, the selection process for the new submarine seems to have been flawed at the outset. The decision to select a design partner rather than a submarine, meant that the processes established by the Kinnaird and Mortimer reports to safeguard future military acquisitions, were not relevant. Thus, there has been no competitive process to produce a project definition study and then offer a fixed price, so that the value for money of the different submarines on offer could be compared. Instead, Australia has effectively created a monopoly to which it has handed the power to largely determine these issues – the French Naval Group.

One is left wondering if the central agencies – the Prime Ministers Department, the Treasury and Finance Department – would have agreed to this decision-making process, but perhaps they had no opportunity to be involved. It appears that there was very little Cabinet consideration of this huge investment with Ministers being given less than a week over a long week-end to consider Defence’s proposal for these new submarines.

I would like to think that no other portfolio could get away with “ambushing” Cabinet in this way. Certainly, my memory as a former head of the Department of Finance is that expenditure proposals by all portfolios, other than Defence, got proper scrutiny. In addition, Finance was expected to scrutinise existing expenditures for their cost-effectiveness, and use this information to propose savings. But Defence always escaped this scrutiny. I suspect that was partly because the Defence budget was already pre-determined, and Finance would not have achieved any savings that would have accrued to the national budget. However, I also suspect that Ministers are wary about not following Defence advice: in other words, in this field and unlike any other policy fields, ministers feel that they must bow to military advice, as this advice is perceived to come from experts whom you contradict or ignore at your peril.  Furthermore, Defence is exceptionally hierarchical, and dissenting technical experts can readily be ignored, if it gets in the way of military opinion.

Frankly, as I have tried to show, the evidence strongly points to the range of Defence expertise being very limited relative to the breadth of the issues which should be addressed when considering the future defence of Australia. Indeed, the proper defence of Australia requires that this monopoly over defence advice is changed.

Michael Keating is a former Secretary of the Department of Finance and Prime Minister and Cabinet. In this capacity for eleven years he was a member and later Chairman of the most senior officials committee advising the Cabinet Committee on Defence and National Security.

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4 Responses to MICHAEL KEATING. Contestability and Defence Advice

  1. Andrew Farran says:

    It is to be hoped that these issues will be brought to a head following their airing which Minister Pyne has brought on himself.
    There are countless cans of worms here which have been glossed over all too often and for far too long.
    The decision making processes are certainly at fault in spite of earlier efforts to rectify them. In the end they beat even Arthur Tange who was not at his peak when he came to Defence.
    The problem is chronic and if the likes of Pyne can get away with ad hominem argument, then heaven help us. I don’t see that the necessary political strength of the right kind exists in this and any foreseeable Parliaments. They are too easily turned.
    If after a century the lessons of the First World War have not been learnt by now, will they ever be?
    The events and utterances of the past few weeks give no cause for comfort.

  2. The problem is not new, of course. Here at wikipedia
    https://en.wikipedia.org/wiki/General_Dynamics_F-111C#Hancock_study
    is some of the history of acquisition of the F-111C, the F-111 variant specifically for the RAAF, which an American systems analyst told me long ago was essentially the nuclear capable FB-111 of the US air force: always we have to have the most complicated, most expensive. Note from the link that the decision was by Menzies and was politically motivated — admittedly with wider perspective than Submarines Saving Private Pyne.

    In an approach to sensible decision making, three younger Australian defence civilians were sent to the US in the mid-60s to learn the systems analysis of the US Defense Department, as established by Robert McNamara. The late John Enfield told me of how eager they were, those three, to give their sensible proposed budget outline to new (and briefly) Defence Minister Gorton in 1971. Called to the secretary’s office to meet with the minister one evening, they began their presentation but then the minister said, no, that’s not the budget, I’ve talked to the service chiefs, this is the budget… and drew from his pocket a small piece of paper with three numbers on it.

    Sir Arthur Tange in my view sensibly but to much outrage from others gave all staff written guidance that he did not wish to see service personnel in uniform unless they had legitimate ceremonial purpose that day: he wanted argument on the basis of merit, not rank. But Tange also closed off from other departments, inventing code words to confine material to defence.

    The subsequent rot has at its core the decline in capacity for civilian and potentially contrary advice, against the weight of service advice, within the department . Plus the enthusiasms of Beazley, entrapped by the thrilling, and in the case of submarines, of course, Rudd. And now worse with national security central to electoral survival. The tragic deaths of servicemen has in the past decade and a half have been followed by political leaders ritually saying the strategy for which they died was right. It should be deeply offensive to link military performance by duty with policy merits.

    Once upon a time, people worried about the CIA backing of the Association for Cultural Freedom (of which the journal Quadrant remains), but the Australian-American Leadership Dialogue http://www.aald.org/people – a super-junket to bath in the light of American glory – is far more corrosive to independent thought on both sides of Australian politics.

  3. Julian says:

    Thank you Michael for your excellent survey.
    I believe you are correct when you say: “…the selection process for the new submarine seems to have been flawed at the outset.”
    However, for as long as the “South Australian connection” remains a live one and our Minister for Defence remains in Parliament, nothing will change, and so we all get shafted – once again.

  4. Saul Eslake says:

    Mike Keating makes a very important point here. It seems that whenever an issue can be categorized as a matter of “security”, everyone is expected to turn his or her brain off, and accept whatever the Government of the day decides (typically, the expenditure of more public money, or some further erosion of civil liberties or privacy) without further question or scrutiny. Indeed, it has long seemed to me that the best way of avoiding scrutiny of a government decision is to have it deemed a matter of “security”.

    It’s interesting how, today, the Government is convening a COAG meeting to give itself more scope for mass surveillance of individual citizens – without giving citizens any opportunity to express a view as to whether this is a trade-off between ‘security’ and ‘liberty’ which they wish to make – at the same time it is insisting that citizens be ‘given a say’ over whether same-sex couples can marry. Surely the balance between ‘security’ and ‘freedom’ is no less important an expression of ‘what sort of country we are’ than the definition of marriage.

    It’s also curious that the greatest expansion in the powers of Australian governments over their citizens (to monitor and intercept their communications, to subject them to other forms of mass surveillance, to arrest them without charge and detain them without trial or access to legal advice and representation) have been driven by politicians who claim to believe in ‘small government’.

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