Why Peter Costello hates the Defence Department
by Graeme Dobell
17 September 2008 One of the ceaseless wars of Canberra is fought between the Defence Department and the hard men and women of Treasury and Finance. This seems a one-sided conflict because usually only the military report on the battle. The public servants are mute, and even Ministers seldom break cover — pouring scorn on the slouch hat is poor politics.
The uniformed warriors dominate the public version of the war with their depiction of the inefficiencies and frustrations caused by bureaucratic bean counters. If only all that arcane and penny-pinching pettifogging could be cleared away, the Canberra miasma would lift and the armed forces could get on with being active and decisive.
The contrary view doesn’t get much of run. The Auditor-General chimes in regularly on the shortcoming in buying specific bits of military kit. And when Allan Hawke was secretary of Defence he added one wonderful phrase to the language. The Department, he said, had developed a culture of 'learned helplessness'. ASPI’s Mark Thomson has performed a unique role this decade unveiling the mysteries of the Defence budget (and, I suspect, explaining a lot of things to Defence itself!).
To get a comprehensive official critique of the defence culture, though, you might have to go all the way back to Alan Wrigley’s 1990 report on The Defence Force and the Community. Wrigley spent 602 pages depicting the military as so inward looking they were cut off from the rest of Australia. Treasury and Finance cheered; Defence ensured that Wrigley sank without even an oil slick. None of the many reviews and reports that have followed have been quite as blunt.
Now enter Australia’s longest serving Treasurer. Peter Costello spends more than a page of his memoirs denouncing Defence as the despair of Cabinet's Expenditure Review Committee (ERC). Reflecting on his dozen years heading the ERC, the engine room of the budget, Costello writes that Defence planners had such a poor grip on their budget submissions they could not explain the details to their own ministers.
When I first became Treasurer, Defence would not even itemise its Budget submissions or state where the funds were being spent. It used to insist on a global budget which, if the Government agreed to it, would enable the department to allocate funds between projects as it saw fit.
In listing projects for capital acquisition, he says, Defence never allowed for depreciation or in some cases for repairs. The problem was compounded by the five Defence Ministers of the Howard era. 'They did not have time to really get on top of all the ins and outs.' The shuffles at the top mirrored the military custom of having officers change chairs every couple of years.
There is a high turnover of people in the various Defence hierarchies. All the services protect their own areas. Every step in achieving more efficiency involved a tussle over whether or not the central Government was entitled to a line-by-line disclosure of how Defence spent its budget.
Costello writes that his longevity meant that he had a better recall of the history of some acquisitions than those who turned up to make submissions.
They had to rely on the oral traditions passed down the chain of command. I was able to remind the Defence chiefs of previous undertakings they had given about containing costs.
The Finance Department will already be underlining and highlighting key phrases in the Balancing the Books chapter of the Costello memoirs. Lindsay Tanner may not have the Costello memory for problems and solutions in dealing with Defence. But the new Finance Minister gives every indication that he understands some of the budget ploys likely to trundle down Kings Avenue.