Senate Foreign Affairs, Defence and Trade Legislation Committee, , 8:11:55 to 8:16:46
Discussion on managing budget overprogramming and the transition of projects to the new Defense Delivery Agency (DDA) to ensure financial clarity.
Topics: Government spending, Procurement
Speakers: Meghan Quinn, David Shoebridge, Unknown Speaker
>> Um thanks, Chair. Uh now, I think um General Cole was asked some questions earlier about the review, but I might put them to you too, Secretary. Uh, I know that Senator Paterson asked you some questions about the article that appeared in the nightly last night and this morning regarding the review of defense spending. Um, and I don't intend to rehash all of those. Um, but I just might ask, is there any kind of formal review in place in relation to the overprogramming?
So we are working through our usual processes that we would do at this time of the year as part of the major economic and fiscal outlook. Um and as part of that we do look at what the rates of uh what's termed natural slippage in programs are and what where people are tracking against budgets so that we can adjust the budget over because we're within year and within year we're required to reduce over programming so that we meet our budget requirement by the end of the financial year. So from the start to the end, we need to make sure that we're actually meeting the overall appropriation uh for the whole of the defense budget. So every year there's a process of review as we go through the calendar months. Um we also uh also as part of the creation of the defense delivery agency, we are looking at individual projects and there'll be uh health check processes um part of the transfer to the delivery agency. we need to uh make sure that we're very clear about the financial transfers uh over to the balance sheet of the new agency. So that's an additional process that we're going through at this point in time. That's not specifically related to over programming as part of um budget analysis every year. So not so much as part of the midyear economic and fiscal update, but as part of every budget cycle there's a discussion around the levels of overprogramming in subsequent
So there's the standard annual review um to deal with potential overprogramming or
>> to to manage the budget within year. Yes.
>> Yeah. Then there's the budget preparations that are happening. >> Are they the same process or are they different processes?
>> Uh we use the information from projects uh for both purposes. Um there's continual assessment of of projects performance. Um so we we use the same information. Um they might have slightly different um some is targeted internally to what decisions that um we make within the department and some uh points to government in terms of decisions that governments may need to make.
>> Now is there any urgency or further activity being directed in the department in relation to those processes because it became apparent that you were significantly over budget.
Uh so no that there's been transparency around the um the the overprogramming uh was announced and and part of the government's uh process. So so there's not been any surprises or anything like that. So we're working through the process as we normally would.
>> Mhm. And the reporting suggests that this is a particularly thorough budget review with programs having a close degree of scrutiny because the budget impact of orcus is now being felt across the rest of defense. Is there any truth to that?
>> So that's not an act that's not a characterization I would use. I I would say that there's been a particular focus uh this year partly reflecting the movement to the delivery agency. Um but
>> we'll come to the health checks in a sec which I think might be different just
>> well not really. Um so there has been increased scrutiny on projects and projects delivery and the financial arrangements um as a result of needing to uh separate out the balance sheet between one entity into two. uh and so that covers uh all sorts of um con connections and that we need to create and separate. Um I would say that I bring a particular focus uh to budget management uh given my administrative responsibilities elsewhere uh and as a new secretary I've been asking a set of questions of staff across a range of responsibilities but including in in budget management.
>> All right. Um now you said that there was this thing called a health check being done in relation to different um programs. That's right. Can you explain what's different between the health check to the annual review in relation to potential overprogramming and budget control and the preparation for a budget