De­fence sav­ings, but at what cost?

Kapi-Mana News - - OPINION -

Arare po­lit­i­cal event oc­curred last week – a min­is­ter say­ing that re­forms were go­ing well, and a se­nior of­fi­cial say­ing pub­licly that the same re­forms were prov­ing so dam­ag­ing to the or­gan­i­sa­tion that the next phase of the process should be halted.

First, the good news about what’s hap­pen­ing in de­fence.

A cost sav­ings drive was an­nounced in 2010, in the last De­fence White Pa­per.

It was to be achieved through a process of ‘‘ civil­ian­i­sa­tion’’, whereby those func­tions within the uni­formed staff (out­side the combat zone) that could be done by the pri­vate sec­tor, would be con­tracted out to them.

The Min­is­ter of De­fence is re­port­edly on the way to achiev­ing sav­ings of $142 mil­lion this year, and on tar­get for the over­all sav­ings of $355 mil­lion ex­pected by 2014-15.

Then last week, came the bad news. Rear Ad­mi­ral Jack Steer, who is the vice-chief of the de­fence force, ap­peared be­fore a se­lect com­mit­tee and de­scribed how his staff were suf­fer­ing from ‘‘change fa­tigue’’ af­ter about 300 re­dun­dan­cies among uni­formed staff, with one- third of them then re­hired in civil­ian roles.

‘‘It was dam­ag­ing,’’ Rear Ad­mi­ral Steer ex­plained, ‘‘be­cause our peo­ple felt we let them down, that we weren’t look­ing af­ter them, that we broke the so­cial con­tract.’’

The cur­rent at­tri­tion rate in the de­fence force is run­ning above av­er­age at 19 per cent – 685 roles were va­cated be­tween Au­gust 2011 and Jan­uary 2012 – and morale among staff is at its low­est ever recorded level.

Cer­tainly, from a cost ac­coun­tant’s point of view, the re­form process has been go­ing swim­mingly.

Yet in time, ‘‘ civil­ian­i­sa­tion’’ may be seen as a text­book base of short-term sav­ings over the longterm health of the or­gan­i­sa­tion.

It’s al­most a mantra that busi­ness can’t be done in a cli­mate where the rules keep on chang­ing, and where chief ex­ec­u­tives lack a firm foun­da­tion on which to base their de­ci­sions.

Some­how, this wis­dom is rarely ex­tended to the work force.

Be­ing treated as dis­pos­able is rarely a good mo­ti­va­tor for pro­duc­tiv­ity – and even less so, one would have thought, in a hi­er­ar­chi­cal or­gan­i­sa­tion based on trust and re­spect for those in com­mand. For now, ‘‘ no final de­ci­sions’’ have been made about whether the de­fence re­forms will con­tinue, ac­cord­ing to De­fence Min­is­ter Jonathan Cole­man.

While con­ced­ing at­tri­tion rates have been high, Cole­man re­port­edly said: ‘‘Over­all, I think it’s gone pretty well.’’

Whether the cost of train­ing new re­cruits to re­place the ex­pe­ri­ence be­ing lost will eat up the ap­par­ent sav­ings is still in ques- tion.

In the White Pa­per that launched this ex­er­cise, the po­ten­tial prob­lems were flagged, but not ex­plored.

At para­graph 6.49 for ex­am­ple, the White Pa­per warned about the need to re­tain enough in-house ex­per­tise to avoid de­fence be­ing ex­posed to price-goug­ing by con­trac­tors.

From the Auck­land ports to the de­fence force, the al­leged virtues of out­sourc­ing are now in ques­tion.

Rear Ad­mi­ral Steer gave the se­lect com­mit­tee ex­am­ples of staff pock­et­ing $ 50,000 re­dun­dancy pay­ments and be­ing im­me­di­ately re-hired to do the same job.

Un­til bu­reau­crats – and their mas­ters in cen­tral and lo­cal gov­ern­ment – re­alise the work force is not just dis­pos­able cost units, such ‘‘ trau­matic’’ episodes will keep oc­cur­ring.

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