Weighing above our punch? In defence of the Department
10 Jan 2014|

Once upon a time, in the early 1970s, the Departments of Defence, Navy, Army, Air Force and Supply employed over 51,000 civilians to support 122,000 military members (comprising 81,000 permanent ADF, 26,000 reservists, 12,000 National Servicemen, and 3,000 PNGDF).

Numbers fell over the next three decades as the five departments amalgamated; computers displaced clerical workers; construction and maintenance of military equipment were privatised to defence industry; support services, such as on-base catering, were rationalised and out-sourced; shared service arrangements were introduced to provide information technology, human resources and other administrative support across the department; and we moved to a Defence of Australia posture. Civilian staffing bottomed-out at around 16,000 in 2001–02, before starting to rise again, reaching 22,860 ongoing Australian Public Servants by mid-2012. Currently there are slightly fewer than 20,640 permanent APS employees (15,200 in the Department and 5,440 in DMO) compared to 80,840 ADF personnel (56,060 regulars and 24,780 reservists).

At first glance, it’s surprising Defence’s civilian workforce is larger than the Navy, RAAF, or NSW Police, prompting calls to trim the ‘bloated Defence bureaucracy’, move funds from ‘tail-to-teeth’, or give every ‘pen pusher and bean counter’ a rifle—thanks Dad! (Disclosure: the author is on leave from the Department.) Personnel costs have reached 42% of defence spending versus 35% operating costs and just 22% on equipment. A third each is traditionally considered organisationally healthier.

One of the Coalition’s 11 pre-election defence priorities was to reinvest resources from ‘the huge Defence bureaucracy’ in capability. Minister Johnston describes overstaffing as an ingredient of the ‘unsustainable mess’ he inherited, noting the DMO’s UK counterpart has been cut from 29,000 to 16,000 staff. Although the aspiration to increase defence spending to 2% of GDP within a decade was upgraded to a commitment just before the election, signs we face a decade of deficits may delay that avenue for increasing spending on equipment. The Commission of Audit is expected to include high-level recommendations to trim Defence, and a first-principles review will offer detailed suggestions to improve departmental processes and structure, ahead of the 2014 Budget and 2015 white paper.

But where are all these Defence public servants? And what do they do; are they really multiplying; and would targeting them yield lucrative savings? Answers to these questions could help ensure changes maximise efficiency and effectiveness while minimising organisational risk.

A popular image of hordes of over-promoted, self-serving, desk-jockeys rattling around Russell Hill’s ‘fort fumble’ fits a ‘lazy narrative’, whereby every defence bungle is attributed to an agency that can barely count its paperclips. In fact, the Department’s composition, duties, and capabilities are far more complex. Staff perform a wide range of tasks in every state, territory, and overseas (click to enlarge tables):

Defence civilian staff (ongoing) locations

Defence APS occupations by job family

While the largest single blocks shown above do work in policy, materiel and administrative roles in Canberra (security and intelligence roles are concentrated there too) they don’t comprise a majority of positions. And where administrative roles, such as inputting data or providing customer service to ADF clients, remain in the Department, it’s generally because reviews have assessed out-sourcing these functions would be more expensive and increase performance or reputation risks (the SAS pay scandal comes to mind).

Suggestions that the department expanded out of control merely due to an indulgence of bureaucracy’s inexorable drive to grow (Parkinson’s law) during the post-East Timor / 9-11 ‘national security decade’ don’t fully stack-up either (click to enlarge graph):

Numbers of personnel and staff

(Sources: ASPI, Defence Almanac 2011-12; Commonwealth of Australia, Defence Annual Report 2012-13; Commonwealth of Australia, PBS 2013-14 Defence Portfolio)

Around 1,000 of the approximately 4,000 more civilians on the books now than a decade ago are former military positions civilianised ‘to ensure that uniformed personnel aren’t doing jobs which can be performed equally by civilians at lower cost’. (Military members are 30% costlier on average, and more expensive than that at mid to higher levels.) Under its combined APS–ADF–contractor model, DMO can employ additional civilians (currently about 350) to backfill positions unable to be staffed by appropriately skilled and experienced ADF members. Smaller numbers are former contractors, such as medical experts, whose services turned out to be costlier and less successful when outsourced; staff reassigned from other agencies for security vetting roles transferred to Defence; and a handful of specialists engaged for ADF operations.

The majority of additional positions, though, relate to efforts toward the introduction of improved capabilities slated in the 2000, 2009 and 2013 white papers—especially the 2009 edition’s ambitious Force 2030 plan (with six additional large subs retained in the latest version)—combined with the APS’s closer integration into a more joint Defence Organisation.

In that context, Defence’s impulse to maintain existing activities when it takes on new duties stems more from a commitment to excel at tasks that seem important to those performing them (and government’s aversion to saying stop doing this when it says start doing that) than some malevolent APS urge to swamp and stymie ADF colleagues. Rank creep exists in Defence, as in other agencies: its Senior Executive Service (SES) cohort grew by 63% and Executive Level staff increased 104% from 2000–13. But with less than 1% SES, 32% EL1/2 middle-managers and 68% other APS, it’s unclear Defence has the ‘too many chiefs and not enough Indians’ of popular imagination to manage strategic complexity, 180 major equipment projects worth $150 billion and one of Australia’s largest workforces. (To the extent its management is ‘top-heavy’, the proliferation of Deputy Secretaries—13 now—seems more to blame than average classification levels. Each new Group produces ‘cascading hierarchies’ of staff and interests—blurring accountabilities, exacerbating ‘fiefdoms’, and generating internal paperwork.)

All this isn’t to suggest Defence’s civilians shouldn’t help rein-in spending. They’re already taking job cuts to deliver the previous government’s efficiency dividend and will be asked to do more. Nor would merely ‘salami slicing’ small numbers of bureaucrats achieve large savings. Yet given their contribution to capability—they no longer merely provide ‘back-end’ support to an ADF ‘front-end’—declaring open season on Defence’s civilian workforce, for example by halving it to save $1.1 billion annually (12,500 troops would also have to go to restore investment in equipment to a third of spending) could prove counterproductive. ASPI colleagues have proposed a range of organisational, output-focused, force-structure, commercial/industry and other strategies to wield the scalpel more surgically. Achieving lasting efficiencies and better performance will take more than just slashing staff.

Karl Claxton is an analyst at ASPI.