Australian Minister for Defence Joel Fitzgibbon this week announced more details of the Defence Strategic Reform Program. The program is a key element of the Government’s financial plan to fund the force structure, readiness, sustainment, personnel, infrastructure and other objectives outlined in the 2009 Defence White Paper, a statement said.
The government’s financial plan for Defence includes the Strategic Reform Program, other savings initiatives, the existing commitment to grow the defense budget by 3 per cent average real growth until 2017-18 followed by 2.2 percent average real growth to 2029-30, and a new indexation arrangement, the statement said.
The Strategic Reform Program and other initiatives will deliver savings of around US$15 billion over the decade, which includes approximately US$3.7 billion over the forward estimates. The success of this program will depend upon fundamental changes to policy, practices and culture across the department, the statement said.
Fitzgibbon said the Defence Strategic Reform Program would deliver significant savings to Defence and ensure the affordability of initiatives in the White Paper.
The Strategic Reform Program will change the way Defence does business, and will draw on detailed analysis of every aspect of Defence, including strategic planning, managing major cost pressures, capability, logistics and workforce management, amongst other areas, he said in a statement. Money saved through this Program will be reinvested into priority Defence programs and capability acquisitions. This reinvestment provides an enormous incentive for Defence to achieve the US$15 billion worth of savings. The program will also improve defense planning and accountability arrangements, while significantly enhancing productivity.
Defence will reform its costing methodology to more accurately forecast major acquisition costs, improve the governance and oversight of cost estimates, and implement more efficient business practices. `
In response to the Defence Procurement and Sustainment Review, the Government has also directed Defence to implement a 20-point plan to make Defence equipment acquisition and sustainment more business-like.
Key reforms to Defence business practices that will generate savings include: Reforms to the design of the military support backbone, including supply chain and inventory management and military equipment maintenance. These efficiencies will deliver savings of approximately US$1.5 billion in saving across the forward estimates and US$4.1 billion across the decade.
Additionally, savings will be realized by the creation of more efficient enterprise support functions, such as the information and communications technology infrastructure, reducing the use of contractors and providing more centralised support to the ADF; rebalancing the defense workforce; reducing input costs of doing business; and other actions.
“This savings program is achievable but requires a firm commitment to implementing these reforms. Defence must manage its budget better in the future and deliver improved taxpayer value for Defence dollars,” Fitzgibbon said.