MICHAEL KEATING. Contestability and Defence Advice

Oct 5, 2017

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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