In 2005 the Government of the day announced a Defence Sustainability Initiative (DSI) and Defence Funding Package (DFP) to underpin the achievement and sustainability of its defence policy objectives. The DFP reflected a commitment to inject $4.6 billion over 10 years to develop military capability and organisational capacity in the NZDF. The objective of the DSI was to enable Defence to rebuild capacity and capability and to fulfil government’s goal of achieving a modern, sustainable defence force matched to New Zealand’s needs. The priorities for the DSI were the restoration of personnel numbers, delivery of projects on the Long-Term Development Plan (LTDP)2 and improvements in Defence’s organisational capabilities.
Deployment Capability
The NZDF retained and grew its ability to meet operational commitments at a level much higher than originally anticipated by the DSI. Deployment commitments at the commencement of the DSI represented 11.7% of the Regular Force (RF). The NZDF has retained, increased and sustained the ability to deploy personnel on operations beyond this level peaking at 17.2% of the Regular Force in 2007/2008 and averaging around 14% throughout the DSI period. The inherent trade-off between deployments and operational preparedness has slowed the recovery of corporate and military capability.
Personnel
The DSI intended to increase RF and NZDF Headquarters personnel numbers, correct shortages of critical trades and reduce attrition. In large part, this has been achieved. As at 30 June 2009, total RF numbers were below the DSI target of 9,859 by just 157, or 1.6%. Personnel levels within each Service were marginally below their DSI targets with Navy short by 91 (4%), Army by 52 (1%) and Air Force by only 14 (0.5%).
RF numbers have increased by over 400 from the last reporting year and recruiting success is now approaching 100% of targets. The RF annualised attrition at 11% is around a 3% reduction from the last reporting period. The reduction in attrition can in part be attributed to the military remuneration project under the DSI that aims to provide relativity with equivalent professions in the wider community. The impacts of the current fiscal environment, while difficult to quantify, should not be underestimated in achieving recruitment and retention targets.
Projections indicate attrition will continue to fall and with that a reasonable expectation that DSI targets will be reached. Indeed, with improved recruiting and lower attrition rates the emphasis within personnel planning has now shifted even more so to addressing the impact within critical trades.
The NZDF has equal employment opportunity policy and procedures in place to ensure fairness and equity of opportunity for employees. During the reporting period, all equity policies were reviewed and rewritten and equity awareness training was delivered to more than 500 military personnel and civilian staff.
Organisational Capability
The organisational capability of both the NZDF and the MoD is being strengthened through the achievement of projects within the DSI. Since the completion of the Defence Capability and Resourcing Review, the NZDF and MoD have implemented a range of initiatives to improve management processes and frameworks.
Within the NZDF, governance processes have been expanded and strengthened to include responsibilities for strategic planning and organisational support.
Under the DSI, the NZDF was expected to complete 16 projects to restore capability. At the time of writing, nine of the projects are complete, with the remaining seven substantially complete - pending the outcomes of Defence Review 2009.
Delivery of projects within the major capital plan continues to challenge the MoD and NZDF. Whilst addressed elsewhere within this report, delivery of Project Protector ships is pleasing and Air Force projects are progressing. Key achievements during the year included delivery of the Navy’s new inshore patrol vessels, the completion of the upgrade of the Air Force’s second Boeing 757-200 aircraft, and acquisition of night vision equipment, new weapon sights, combat service support equipment and a variety of communication equipment for the Army.
Work also commenced at Ohakea to provide facilities for the new helicopter fleets, and the Government decided to retain Whenuapai as an operational base. Funding for remedial work at Whenuapai has been provided with restoration of the runway and taxiways as the first priority. Work is also underway to upgrade and integrate Defence’s digital communications. In September 2008, Defence updated its LTDP, which identifies major capability requirements.
The emphasis has now shifted to the operational release of new capabilities, whilst at the same time sustaining deployments at the current level.
The NZDF and the MoD continue to work together to improve their capability selection and equipment acquisition systems. These include improving Defence’s CMF, implementing new government-wide capital asset management requirements, implementing the findings of the review of the safety and functionality of HMNZS Canterbury (the Coles Review), and collaborating with the Office of the Auditor-General to improve reporting on the progress of major defence acquisition projects.
An independent review of procurement (both capability and process) will be undertaken as part of Defence Review 2009.
Future of DSI
In a letter to the Minister of Defence in December 2008, the Minister of Finance reiterated the Government’s intention to unwind the previous Government’s unfunded commitments. This included the Defence Funding Package pre-commitments – both operating and capital. In particular, the Minister of Finance indicated his firm intention to remove the LTDP capital pre-commitment, and the planned future increases to the operating budget beyond 2009/10. The Defence White Paper will set the Government’s defence policy. Future capability development and resourcing commitments will await the outcome of that process.
The Minister of Defence agreed that these decisions effectively bring the DSI to an end as a distinct programme. Defence will continue with the acquisition and upgrading of major items of military equipment to which the Government is already contractually committed and continue with certain initiatives aimed at developing organisational and management capability.
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