The Defence department has stomped on a recommendation it should publicly report on cancelled, overbudget and overdue projects in a rare open spat between the Auditor-General and the department.
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The audit office urged Defence to report when major projects that are known to the public and industry are significantly altered, like the $1.3 billion allocated to develop SkyGuardian armed drones which was secretly scrapped by the previous government and omitted from the budget papers.
A new audit of Defence's management over $134 billion invested in major projects since 2016 also lifted the lid on a risk known inside the department, that government may have been given inaccurate and incomplete advice on project costs and progress.
Prime Minister Anthony Albanese and Defence Minister Richard Marles have both been critical of cost blowouts and projects behind schedule upon taking office midway through this year, promising the Defence Strategic Review will put a critical eye over the integrated investment program.
Two different master documents used by Defence, one a public document known as the 2016 integrated investment program and the other a classified internal spreadsheet, conflicted with each in around a third of projects, the audit found.
The "broadsheet" that earmarked expected costs against future budgets was a centralised classified spreadsheet that was manually updated until 2021. The version in January 2022 lists 729 acquisition projects.
Earlier versions of the broadsheet were subject to human data-entry error, unauthorised changes, and "cannot provide assurance" of accuracy, the department admitted to the auditors.
The department's own systems had no means of verifying if its 2016 integrated investment program contained "complete and accurate evidence" for internal checks, advice to government, or reported to the public. It also failed to retain documents about how it developed the document or its cost data.
Between the 2016 program document and the manually updated broadsheet, Defence could "provide no means to map between the two".
The audit office could identify only 67 per cent of the projects in the public document by the names in the broadsheet with broadly consistent cost data.
Defence agreed to recommendations that it now log the date on which each project in the program was authorised and by whom, improve how it manages data sources and entry for the broadsheet, and in future publications create clear traceability between the program document and the broadsheet.
However, it rejected a recommendation to inform the public when projects are cancelled, amalgamated, fallen behind schedule or changed in title, scope or cost, and make it easier to follow projects from earlier public editions to new ones.
Public reporting was sufficient, the department argued, and was limited in what it could reveal due to national security concerns as well as commercial concerns.
"Defence keeps the government, Parliament, the Australian public and industry informed on its capability program through a range of approaches," it wrote in response to the audit.
"These approaches include submissions to government, government committee hearings, audits and reviews by the ANAO, industry briefings and media releases. Any future public release of the Integrated Investment Program will be subject to consideration by government and will consider national security implications as well as commercial sensitivities."
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But the audit office said accuracy and completeness of information provided to the parliament, public and industry on major government investment programs was essential to supporting transparency, as well as the users of the information.
When investments continue over many years, progress reports should be mapped with previously released information, it said.
"Major investment programs such as Defence's Integrated Investment Program require governance and risk management arrangements commensurate with their cost, importance and program risk," the audit stated.
The audit office rarely makes recommendations that Commonwealth entities were unwilling to agree to, at least in part. This rejection is particularly notable due to the well-established relationship between Defence and the dedicated ANAO team that oversees the numerous audits of the portfolio.
The SkyGuardian armed drone project was secretly scrapped from the integrated investment program earlier this year to free up funds to pay for the cyber workforce boost known as Project Redspice. The cancelling of the $1.3 billion project was omitted from the budget papers, and only revealed through questions asked in Senate estimates.
Harley Dennett
Former federal politics bureau chief for the Canberra Times, via a career that's taken me from rural Victoria to Washington DC. Telling the stories of my local LGBTI community brought me to political journalism, where I've covered eight budgets, four national elections in two countries, Defence, public service and international governance.
Former federal politics bureau chief for the Canberra Times, via a career that's taken me from rural Victoria to Washington DC. Telling the stories of my local LGBTI community brought me to political journalism, where I've covered eight budgets, four national elections in two countries, Defence, public service and international governance.
