Licking a bloated Defence into shape

The riots in Britain this week had the world's nastiest rulers - in places such as Iran and Zimbabwe - crowing in delight. Even in nicer places the disorder will have added to the perception of a rapidly weakening West.

The riots in Britain this week had the world's nastiest rulers - in places such as Iran and Zimbabwe - crowing in delight. Even in nicer places the disorder will have added to the perception of a rapidly weakening West.

The riots in Britain this week had the world's nastiest rulers - in places such as Iran and Zimbabwe - crowing in delight. Even in nicer places the disorder will have added to the perception of a rapidly weakening West.

This is before deep budget cuts by the British Prime Minister, David Cameron, have taken effect. As well as adding to domestic unrest, they will lead to a drastic cut in British power, with the armed forces facing a slashing of numbers and capabilities over the decade.

Was it a coincidence that the Argentine Defence Minister, Arturo Puricelli, has just announced that a new submarine for his country's navy would be fitted with nuclear propulsion, and that his President, Cristina Kirchner, has recently stepped up the rhetoric about the Falkland Islands?

In our part of the world, the much-studied balance of power between the US and China shifted a little when, in the mist-shrouded Yellow Sea, the Chinese navy's first aircraft carrier slipped out of the port of Dalian for its initial sea trials.

The ship itself doesn't tip the balance much. Bought as a rusting hulk from Ukraine by a Chinese company in 1998, ostensibly for use as a floating casino, and fitted out at Dalian to fly aircraft like the MiG-29, it is probably unreliable and vulnerable, but it's a test bed for a capability the Chinese will now work hard to master and put to use in a new generation of carriers that they will be able to build quicker than anyone else.

With the US and Europe under severe economic stress, weary of regime-changing and nation-building wars and facing a decade of recession at least, rising powers will be looking more hopefully at objectives they had previously been too weak to think about.

For Australia this fast-changing strategic picture places particular importance on getting defence planning right. The cost of making the wrong choices is rising the time for rectifying them shortening.

The defence establishment is embarked on spending more than $100 billion on equipment and capabilities, but the cost of new systems such as the Joint Strike Fighter or the envisaged Australian-designed successor submarines to the troubled Collins class will eat up huge chunks of that, pre-empting other choices if they fail to deliver on their promised performance.

The Defence Department that is supposed to manage all this has given every appearance of a monster steadily eating up its environment. Staff numbers have blown out beyond 20,000 over the past decade for a while the government's auditors failed to sign off fully on its accounts, and even a $26 billion-a-year budget-guaranteed 3 per cent real growth has never seemed enough.

Until recently it appeared that a highly competent departmental secretary, Ian Watt, and a Defence Minister prepared to tackle entrenched interests, Stephen Smith, were at last getting on top of Defence's problems.

A week ago, however, it was announced that Watt will be moved over to head the Department of Prime Minister and Cabinet, following the retirement of Terry Moran.

A former secretary of the Finance Department preceded by a no-nonsense reputation, Watt had gone through two budgets in Defence and delivered the hard-hitting review by an outside consultant, Paul Rizzo, into naval ship maintenance and Rufus Black's review of the tangled processes and accountability in Defence decision-making.

''He [Watt] was just getting to the point where he knew what was going on and could start pushing towards what the government wants,'' comments Mark Thomson, an expert on defence spending at the Australian Strategic Policy Institute in Canberra.

Start is the right word. After Smith announced at budget time this year that Defence civilian numbers would be cut by 1000 over the next three years, an analyst in the Parliamentary Library, Marty Harris, noted this does not mean an actual reduction from the present number of civilian staff but ''a reduction in the number of staff who would have been employed over the next three years''.

Defence had 21,331 civilian employees in June this year. In three years' time it will have 22,344 civilian staff. No wonder they felt bold enough this week to vote for their first protected industrial action in 20 years over their current pay negotiations.

Taking charge of the Defence bureaucracy and the armed forces at this delicate time are two new appointees, unusually both army generals. Lieutenant-General David Hurley has just become the Chief of the Australian Defence Force, replacing Air Chief Marshal Angus Houston.

Watt's replacement as Defence secretary is Duncan Lewis, a former commander of the special forces and Jakarta defence attache who retired as a major-general in 2005 to serve under John Howard, Kevin Rudd and Julia Gillard as national security adviser in the Prime Minister and Cabinet Department.

Lewis's appointment is the unusual one, being the first former professional military man in the job in recent times. While no one doubts his grasp of military issues and diplomacy, eyebrows were raised in Canberra at his lack of administrative experience for such a large department and huge budget.

Thomson thinks Lewis has demonstrated ability in two of the three functions he sees as crucial in the Defence secretary role: giving the government the ''big picture'' when a crisis breaks, and putting concerns at cabinet level.

As for running a large and complex department, working closely with Hurley in the top ''diarchy'' will be important for Lewis, who will also be given a powerful chief operating officer as a civilian lieutenant.

Lewis was the standout candidate, Thomson says. ''There's only one Ian Watt, that's the problem,'' he said. ''Once again, Defence has been unable to provide a candidate for secretary from within its own civilian ranks.'' He contrasts this with the strong internal succession lines in the federal Treasury.

From watching terrorism threats in his national security role, Lewis will now turn to monitoring the vast army of contractors feeding off the Defence budget, from lawnmowers at army bases to aerospace firms to ensuring the public gets value for the tax money it pays and that his former comrades get effective weapons to face emerging threats.

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