The PRWIRE Press Releases https:// 2003-07-03T14:04:00Z Defence no defence for results of auditor-general's report 2003-07-03T14:04:00Z defence-no-defence-for-results-of-auditor-general-s-report The NSW State and Regional Development premises at Grovenor Place was host to the Annual General Meeting of the Australian Industry Defence Network (AIDN) NSW branch late last month, during which a bold new vision to effect relationships with Canberra was outlined. Members gathered on the top floor, the expansive view over the harbour reflecting the broad changes indicated in the maiden speech of newly elected President, John Englaro. Nominated unopposed, Mr. Englaro fills the position vacated by the incumbent, Mr. Simon Letchford during whose term the membership of the NSW branch increased significantly and the fiscal viability of it secured through that growth. Having successfully achieved goals set in 2002 centered on membership with the local branch now representing over 70 organisations with a total annual turnover of some $400m and employing over 4,000 employees, the focus of the AIDN NSW branch has turned to policy and the need to gain a strong voice in Canberra for the SME sector. In his maiden address to members attending the AGM, Mr. Englaro made reference the recent findings of the Australian National Audit Office report regarding the Australia Industry Involvement Program (AII). AII is a key Defence initiative of major significance to SMEs doing or seeking work from Defence capital acquisition contracts. Outlined in the ANAO report this program created in 1986, Australian Industry Involvement (AII) is the program through which Defence gives effect to government policy on Australian industry. It has been the major mechanism through which Defence has sought to develop and enhance Australian Defence industry capabilities. According to the President of AIDN NSW, this program is the lifeblood of SMEs doing Defence related work and it should ensure that hundreds of millions of dollars per annum flow to Australian industry to develop and maintain core defence capabilities. In his address, Mr. Englaro outlined concern that the ANAO report found that the AII program implementation is incoherent with no evidence of systematic endeavor to gain synergies by linking the AII Plans of one capital equipment project with those of any other project and less than satisfactorily managed. Expenditure of billions of dollars of funding aimed at building Australian industry capabilities through the SME sector cannot be correctly accounted for, and results of the program, after running for over a decade, have been identified by the report as almost impossible to substantiate. With policy directions for Defence now trending away from relationships with SMEs toward contracting multi-national primes, Mr. Englaro is keen for AIDN to represent the interests of the SME sector in Canberra, to ensure that there is a viable and effectively managed AII Program. The focus needs to be not only on the Defence interpretation of value for money but also to take into account the need for a sustainable indigenous defence industry. The ANAO report further questions the reliability of Defence figures indicating how they were tracking against targets, saying the figures were "unreliable and unauditable", and the accounting and management information systems of Defence and contractors do not readily separate out the imported component of supplies obtained in Australia. As a result, figures purporting to show AII achieved against project expenditures or contracts signed are of limited and doubtful value." It appears that the people in Defence responsible for administering the AII Program need help, said Mr. Englaro after outlining how the Australian National Audit Office assessed the performance of Defence AII Program across four major capital equipment projects. They found that Defence in 2001-02 spent $320,000 in administering the AII Program of $AU2.5 billion capital equipment projects. This amounts to 0.0125% of the capital expenditure to ensure that the AII Programs are well conceived and that commitments made by Prime contractors are met. No wonder, with such limited funds allocated for the administration of the AII Program, Defence has no idea where the money allocated for AII has been spent or whether the Prime contractors have met their commitment to Defence and Australian Industry. Those responsible for the AII Program were to ensure that Defence is honouring its commitment to sustaining and developing a viable indigenous Defence Industry and the SMEs technology sector, said Mr. Englaro. At the same time, contracts are being increasingly awarded to multi-national primes who have no obligation or reason to engage the services of local sub-contractors and are more likely to feed the business back to their own economies and keep tight control on their Intellectual Property. Reading between the lines of these policy shifts, Australian industry interests appear to be of less significance to the policy makers. One thing is clear, said Mr. Englaro. To protect and represent the interests of our membership, we must have more effective lobbying in Canberra. AIDN needs to influence the thinking of the policy makers and those who implement them. The policy makers must recognize the fact that the SMEs represents around 90% of all businesses in Australia. As one of the largest Government agencies, Defence has a critical role to play in establishing Australias ability to have a self-sustaining Defence industry. An indigenous industry capable of providing high value services and technology developed in Australia by Australian businesses. There is a need to ask why The AII Program vision is not being implemented as originally conceived. It is either simply mis-management or a mnore concerning indication of a political willingness by the Federal Government to sell out of the Australian SME business to multinational interests. ENDS About AIDN AIDN NSW is the state branch of a national body representing state-based Defence & Industry Networks. The national organisation has been formally nominated as the 'peak organisation' to represent Defence SMEs to the Department of Defence. Recognised also by the Department of Industry, Science and Resources, AIDN is often called on to provide comment and input on major policy initiatives and issues relating to all levels of Defence procurement.