Reports and Publications

• Hunn Review
  • Contents
  • Executive Summary
  • Chapter 1
  • Chapter 2
  • Chapter 3
  • Chapter 4
  • Chapter 5
  • Chapter 6
  • Chapter 7
  • Chapter 8

Within this section

• Synthesis
• Background and Terms of Reference
• Scope of Review
• Organisational Issues
• Need for Structural and Procedural Transformation
• Authority of CDF and Roles of Chiefs of Staff
• Integration, Responsibility, Accountability
• Wider National Security Issues
• Parliament
• External Sources of Advice and Comment
• Future Action

Hunn Review: 30 September 2002

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Executive summary

Synthesis

1. This review confirms the Select Committee's conclusion that the current defence management system, set up under the Defence Act 1990, has not worked as well in practice as was hoped when it was first designed. Further, one of the key premises on which that Act was based has proved to be untenable and the system has been labouring under severe difficulties since its inception.
2. The essential purpose of the New Zealand Defence Force (NZDF) and Ministry of Defence (MoD) is to work together to ensure Government policy is realised through the deployment on operations, as and when required and within the limits of national resources, of adequately trained and equipped armed forces. Fundamental change is needed to reverse the policy of separation of civilian and military responsibility. The Secretary of Defence and the Chief of the Defence Force (CDF) should be given shared responsibility to manage an integrated defence process. This should be underpinned by a redefinition of the roles, responsibilities and relationships of all the agencies involved in New Zealand's national security.
3. The question of whether there should be two defence organisations or one, will depend both on the degree of integration required by Ministers and on whether they will be prepared to revise the Defence Act 1990. Since the problem is cultural and attitudinal as well as organisational and systemic, considerable progress towards the goal of an integrated system that encourages jointness and co-operation could be made without legislative change. It is the contention of the review, however, that the outcomes inferred by the TOR require the establishment of a single organisation.
4. In addition to structural deficiencies, there are other major organisational weaknesses in both the MoD and the NZDF that must be corrected.
5. At the strategic level, there needs to be:
   • permanent machinery to provide direction for national security, of which defence is only a part;
   • greater Ministerial involvement in providing oversight and direction, including regular meetings between the Minister, the Secretary of Defence, the CDF, the Joint Forces Commander, and the three Service Chiefs;
   • and integrated and shared partnership roles and responsibilities to provide the framework for jointness and co-operation.

Background and Terms of Reference

6. This review was initiated in August/September 2001, the final terms of reference being approved on 19 October 2001. An interim report was presented to the Minister of Defence on 22 December 2001, a working draft of the final report on 28 March 2002 and a draft Executive Summary in May 2002. The review was first envisaged in the 1999 interim report of the Foreign Affairs, Defence and Trade Select Committee of Parliament, then developed further in the Select Committee's 2000 final report and the Government's Defence Policy Framework of June 2000. The August 2001 report of the Controller and Auditor General on the acquisition of Army vehicles endorsed the need for such a review. All of these documents were to be taken into account.
7. Simultaneous with this review, two other inquiries were initiated -the first by the Judge Advocate General into an alleged inappropriate letter and e-mail, and the second, by the State Services Commissioner, into NZDF's standards of behaviour (the second is referred to as the Ansell/White Report). My TOR stipulated that both of these were also to be taken into account. The relevant issues from the second inquiry, which was completed in December 2001, have been addressed. When it became apparent that the first inquiry had been delayed to the point that its findings could not be considered, the Minister instructed by letter of 11 March 2002, that it should be removed from the TOR.

Scope of Review

8. This review is an investigation of structures, systems, processes, accountabilities, roles and relationships. It is concerned with the organisations responsible for the defence of New Zealand, not with the policies that drive them or with the performance of individual officials. The Minister has also directed that it should be forward-looking, not preoccupied with past sins of omission or commission. Consequently, this review does not address the question of accountability for failures in the current system whether these have arisen from system weakness or individual action (or inaction) .
9. Being an organisational assessment, this is essentially a document internal to Government in the sense that there has been no public consultation and the evidence for the findings has been drawn from a limited number of sources. In addition to the published material available, the review has drawn on official documents together with interviews of the Minister, some members of Parliament, and senior officials in the NZDF, the MoD, the Department of Prime Minister and Cabinet, the State Services Commission, the Treasury and the Ministry of Foreign Affairs and Trade. Written submissions were requested (and received) from all of the above officials.
10. The reviewer commissioned a number of papers that were written either within the NZDF and the MoD or by external individuals expert in their field. The reviewer also had the opportunity to discuss the Australian experience with the Secretary of Defence and CDF in Canberra. While all of this material has contributed immeasurably to this review, the findings are those of the reviewer.
11. The review has produced a considerable body of fact and comment, all of which should be considered by those responsible for advising the Government on any follow-up to this report. This summary merely records the main findings. Before doing so, the point should be made that the problems of dysfunction which are the subject of the two inquiries referred to above and which have given rise to some of the issues traversed in this review, are essentially confined to the Wellington-based defence system. Undoubtedly if these problems are not fixed they will affect morale and, ultimately, performance on operations. However, there has been no evidence to this review that our servicemen and women who are posted abroad, are any less capable, dedicated and courageous than their predecessors.

Organisational Issues

12. The principal thesis presented in this document is that key components of the defence arrangements established in 1990 have not worked as they were originally intended and should be radically redesigned. (This confirms the Select Committee's findings of 1999 and 2000). The reasons for this failure are complex and partly inherent in the profound differences between the military and civilian cultures that are responsible for our defence system. Any changes to the current system should be based on a reconsideration of all the factors impinging on defence policy and implementation and should incorporate much more than a single set of managerial concepts -as tended to be the case in 1989/90.
13. The legal and constitutional foundations of our defence system must be the starting point in considering future organisational arrangements. The principle that there should be civilian control of the military is deeply embedded in our Constitution. It is important to understand this means political, not bureaucratic, control, but there is little in the Constitution to suggest the manner in which this control is to be exercised other than the requirement that Parliamentary approval is needed for there to be a standing armed force in peace time. Nor does the military relationship with the Governor General as Commander-in-Chief of New Zealand differentiate them in any way from other servants of the Crown as owing loyalty to the Government of the day. In this respect, military and civilian obligations are identical (and in the course of this review there has been nothing to suggest that senior military officers think otherwise).
14. The current system is established in law by the Defence Act 1990. The review recommends that consideration be given to revising the Act. Some of the Government's senior advisers do not agree -they consider it is not necessary, perhaps not desirable, and that it is preferable to take immediate action to remedy the deficiencies and dysfunctionality which have become apparent in recent years. While agreeing that action is required (and indeed positive steps are already being taken), this review contends that the concepts underlying the existing legislation are so at odds with the effective defence system sought by the Executive and Parliament, it would be desirable to signal the break with current arrangements by passing a new Defence Act. At the same time it has to be conceded -paradoxically as it may seem -much of the change considered necessary could be achieved without revising the Act: while its underlying purpose was almost the opposite of what is suggested in this review, on the face of it the Act would not stand in the way of many of the suggested directions (although full integration, the review's preferred option, would not be possible). In fact, the problem may not be so much with the Defence Act which does not prevent separate responsibilities being exercised jointly, but the State Sector and Public Finance Acts that might.

14. The "two separate organisations" concept on which the current system is based, comprises an "independent" NZDF, responsible for its own finances and management, providing the operational defence arm. Alongside it, there is a "supervisory" Ministry of Defence responsible for advising Government on defence policy (on which it does not have a monopoly); for acquiring defence materiel after the decision to purchase has been made; and for assessing NZDF performance. Neither of these organisations has been working effectively. The NZDF has been given with internal dissension, the result of continuing inter-service rivalry, while the single Services have not yet adjusted fully to the new demands of Joint Operations -the concept has been well launched and substantial progress made, but a great deal of work remains to be done. There is no overall NZDF strategic vision to pull the strands together and although there has been significant improvement in financial management, internal management systems at HQ have been weakest in the areas where strength is vital to obtain cohesion - they have also reinforced, through separation and duplication, the single Service mentality.
15. The idea of controlling expenditure on major capital items, obtaining value for money, and achieving a better match between resources and commitments through the separation of policy and operations has not worked in practice. It is clear that the Ministry has struggled from the outset to fulfil its designated role. The inequalities in size, resources and span of responsibility between the two organisations; the difficulties over communications and information flows; the setting in concrete of the cultural divide; the Ministry's inability to recruit and retain high quality policy making and performance evaluation skills as well as its exclusion from key deployment and resource allocation decisions, have all contributed to this.
16. From the outset, also, there has been political discomfort with the tension and confrontation inherent in the contestability model adopted in 1989/1990. The model required Ministers to act as adjudicators, a role they appear to have found distasteful. The result has been two-fold -a whittling away of those Ministry functions which set it in judgement over the NZDF and attempts by Secretaries and CDFs to counteract the organisational separation through various procedural devices.
17. It is the contention of this review that the fundamental premise is wrong. The objective in contemplating a defence structure should be to meld the military and civilian contributions into a single stream of advice and operations, not to keep them in separate boxes. Whatever justification there may have been at the time, the situation has changed in the 12 years since the current system was introduced -responses to international security issues have developed, there is a growing emphasis on "jointness" and governance models have been reconsidered.
18. Contestability of advice/comment/analysis and healthy competition as between options is essential to produce good outcomes over the medium to long term but this should not be pursued at the expense of internal cohesion. Robust and relevant advice, effective and appropriate operations, value for the substantial amounts of money spent on defence and performance assessment of both outputs and operations which leads to continuous improvement, should all be seen as the product of the national security system as a whole. The organisational and procedural frameworks should be redesigned on this basis and not limited to a simple re-jigging of the NZDF and the Ministry of Defence.
19. To illustrate this point the review has attempted, by analysing the processes which contribute to the over-riding objective of the whole defence system i.e., the conversion of Government policy into successful operations in the field, to show the indivisibility and interdependence of the components -political and professional, military and civilian. Among other things it is considered this analysis demonstrates the:
    • necessity for close and constant Ministerial involvement;
    • importance of co-operative leadership and good information throughout the structure;
    • connection between policy and resource allocation;
    • essential linkage between the designers, purchasers and users of defence materiel;
    • need for all principal parties to be involved in decision-making;
    • requirement for an overall vision and system-wide planning mechanism; and
    • importance of output and outcome assessment in learning lessons for future decisions.

Need for Structural and Procedural Transformation

20. A number of structural options have been considered, e.g., models offered by the NZ Police Force, the NZ Fire Service, Crown Agencies, the Ministry of Health/District Health Board relationships, the Ministry of Foreign Affairs and Trade, and the defence establishments of Canada, the United States and the United Kingdom and Australia. While in the opinion of the reviewer, the last of these comes closest to what is required, the differences in size and resources argues for a tailor-made approach for New Zealand's defence organisation.
21. For this reason the text does not examine these other options, preferring to concentrate on "transformational" reforms which include the following features:
    • emphasis on clear processes and explicit outcomes to achieve the Government's defence objectives and in order to implement them, on the establishment of an integrated Defence Organisation working to a single vision and a common set of values. While these are of the greatest importance, structural change would be needed to enable them to be achieved
    • a national security governance structure to co-ordinate the formulation of Government policies and planning as well as the activities of all agencies concerned with the development of New Zealand's national security capability
    • new governance processes emphasising jointness and cooperation, centring on a Strategy Committee that brings together within a framework of Ministerial control, both senior military and civilian advisers and decision-makers. In support of this would be four subordinate committees (the Defence Policy Committee, the Defence Acquisition Management Board, the Defence Capabilities Committee, and the Chiefs of Staff Committee) responsible for managing co-ordinated inputs from across the organisation
    • increased Ministerial involvement through the chairmanship of the Strategy Committee (at least once a quarter), supplemented by the appointment to the Minister's Office of two advisers from the Defence Organisation -one military, one civilian
    • new concepts of shared, prime and sole accountability and responsibility for the Secretary and CDF based on equal partnership and participation in the strategic policy and management processes of an integrated Defence Organisation
    • new management and governance roles and responsibilities for the Chiefs of Staff and their current HQ NZDF-based staffs
    • a new organisational structure -the New Zealand Defence Organisation - with an integrated strategic staff at its centre, supported by a Joint Logistics Organisation, and re-focused acquisition and evaluation functions, which would:
      • bring together both civilian and military contributions to improve advice formulation and management decision-making;
      • model standards of behaviour based on partnership, participation and professionalism;
      • provide information access for the over-lapping and shared responsibilities and accountabilities of the Secretary and CDF;
      • reduce negative effects of vertical boundaries by integrating fragmented staffs into integrated and joint work structures;
      • develop an effective strategic joint culture and capability in the NZDF through the incorporation of single Service staffs into a joint-oriented Defence Strategic Staff, a joint Military Evaluations unit, and a Joint Logistics Organisation;
      • bring about, over time, a shift from an information-denial culture to an information-sharing/learning organisation culture; and
      • achieve resource savings in removing the requirement for duplicated overhead support activities, personnel and facilities, particularly in information technology, financial management and administrative support systems.

Authority of CDF and Roles of Chiefs of Staff

22. It would appear from the Ansell/White Inquiry that the balance of authority between the CDF and the Chiefs of Staff needs to be reconsidered to ensure the paramountcy of the CDF is not open to question. Ministers will need to consider whether in their view an amendment to the legislation is warranted. An alternative would be the use of the Ministerial directive power to eliminate any doubt as to both the authority of the CDF and the accepted procedure by which individual Chiefs of Staff have direct access to the Minister. The directive could also establish a procedure by means of which both the CDF and the Secretary of Defence are consulted prior to the appointment or removal of a Chief of Staff.
23. The conclusion reached in this review is that the establishment of the Joint Command and the move to joint organisations and ways of operating is not yet sufficiently reflected in new roles and responsibilities for the three Chiefs of Staff. The description of their roles as being to "raise, train and sustain" (or "maintain" in some versions) is more of a slogan than a clear definition of accountabilities and responsibilities. Further consideration needs to be given to the responsibilities and functions of the professional head of service role and the changed nature of the command roles of the Chiefs of Staff with the introduction of the Joint Forces Commander and responsibilities.
24. There needs to be a re-examination of whether Chiefs of Staff should still have delegated resource management responsibilities for NZDF outputs of front-line force elements maintained at states of readiness for operations as their "raise, train and sustain" roles are essentially concerned with the delivery of internal outputs. An expedient compromise was achieved when the Joint Force Headquarters was set up, the practical effect of which is that the component commanders under the Joint Force Commander are responsible and accountable to two masters for resource management -the Service Chiefs for force elements ready for operations, and the Joint Force Commander for force elements deployed on operations. The problems of aligning resource accountability and responsibility for outputs that are created by this approach, are a disincentive to evolving joint outputs. Equally, it reinforces the partition into single Service agencies, rather than fully joint agencies and adds another layer of management between the CDF and those actually responsible for delivering most of the external NZDF outputs.
25. The Defence Act requires CDF to command (i.e. issue lawful orders to) the NZDF through the Chiefs of Staff. The Act is quite specific in its reference to command, rather than to all functions. For example, the Act does not obligate CDF to delegate resource management responsibilities through the Chiefs of Staff. Yet, the chain of command passing through the Chiefs of Staff has been used as the reason why NZDF outputs (and their resources) must be attributed in effect by Service. It is not evident to the reviewer that the legal exercise of command through the Chiefs of Staff requires the Chiefs to have resource responsibility for external NZDF outputs -for example, the Joint Forces Commander is already responsible for one class of outputs. A more detailed legal analysis would need to be undertaken as part of any legislative revision.
26. Whatever adjustments are made to the roles and responsibilities at this second level, all three Chiefs of Staff and the Joint Commander should be closely involved both with the processes of policy formulation and capability development and the overall management of the armed forces. The Ansell/White suggestion concerning the appointment of the three Chiefs of Staff has already been anticipated by Government.

Integration, Responsibility, Accountability

27. If integration were the agreed option, a decision would be needed as to whether the objective would be achieved by the existing organisations acting in most respects as one (as is largely the case in Australia), or whether it would be preferable to entrench integration in law as well as in practice -the reviewer's preference is the latter. The issue is not merely one of revising the Defence Act. There is some question whether the single line accountability of the State Sector and Public Finance Acts would permit shared responsibility of a unified organisation even if the separate accountabilities of the two CE's were clearly defined, for example by means of output definition in two parts of a single vote. While the possibility of establishing one defence agency has been raised in the course of the review (and is favoured by the Select Committee), there are differences of opinion between those that consider a way could be found and those who consider the public sector legislation is clear as to what is, and is not, permissible and desirable.
28. A related issue is that of responsibility for resource allocation and resource management. While the Secretary has a role in advice to Ministers on capital purchases, his authority in the financial management area overall is not as extensive as that of his colleagues in other similar jurisdictions overseas. It is generally considered that improvements in resource management since the introduction of the 1990 legislation (and the 1989 Public Finance and 1993 Fiscal Responsibility Acts) have been such that it would be counterproductive (and at odds with the intention and letter of the Acts mentioned) to disturb the current arrangements.
29. In the view of the Select Committee, the "rebalancing" of status and authority between the CDF and the Secretary would involve designating the latter as responsible for resource management and long term resource planning, i.e., removing these functions from the CDF. It is suggested that in the light of the success of the current approach in providing incentives to achieve efficiencies, this would be a retrograde step. Nevertheless, the close linkage between effective policy advice and resource decisions should be recognised. The problem would not arise if the proposed integrated process model were adopted, since both the Secretary and the CDF (and their key staff officers) would participate in all major resource allocation and management decisions.
30. In the event that this is not agreed or is not possible within the current legislation, other measures could be considered such as arrangements whereby the Secretary and the CDF are directed by the Minister to consult on each other's output proposals before they are formalised each year, in consultation with the Treasury. In any event, it is the view of the reviewer that the current interpretation of the policy advice role of the Secretary should be expanded, so that he or she assesses and provides advice to the Minister (and to CDF) on the extent to which NZDF output proposals will deliver defence policy objectives. Given that such outputs also have a cumulative effect, and that increasingly, multi-year budgets for purchasing are being set, the Secretary should also review the effectiveness of these purchases in terms of their impact upon longer-term outcomes for New Zealand's national security.

Wider National Security Issues

31. The setting in which national and international security matters are considered, has been transformed since New Zealand set up its existing defence arrangements - a process which began with the ending of the Cold War and impacted on the public's consciousness with tragic intensity as a result of the events of 11 September 2001 and subsequently. The shift in New Zealand's defence policies since the Select Committee's Report is a manifestation of this process. But it is the contention of this review that we do not yet reflect fully in our machinery of government, the globalisation of security that has taken place. Terrorism, in all its forms; climatological, biological and health dangers; widespread economic and financial loss; racial and ethnic violence; and massive computer failures -none of these respect national boundaries, and all must be dealt with in an international framework that continues to evolve.
32. In the new environment, conflicts or potential conflicts fit less easily into the regional classifications of defence alliances and are more likely either to be localised at one end of the security spectrum or global at the other. This does not mean there is no longer a need for a conventional and professional armed force trained and prepared for combat -quite the contrary. But it does indicate the NZDF and the MoD should now be seen as part of a wider national security system and that this, in turn, should be a permanent feature of our institutional arrangements.
33. Consequently, the review recommends that consideration might be given to the development of our existing, largely ad hoc and informal national security framework into something more formal and permanent. Whether this takes the form of a National Security Council of Ministers with a permanent secretariat of officials seconded from relevant agencies, or some other form, the logical place for it would be - as it is now - in the Department of Prime Minister and Cabinet. The overall security of the nation is the Prime Minister's chief responsibility. The Minister of Defence has a more specific brief. It is suggested that the aim might be to provide a permanent forum within which defence issues could be considered continuously at a more strategic level and decisions made which ensure our defence capabilities are viewed in a wider context.

Parliament

34. The review was asked to consider the relationship between the Executive and Parliament in respect of defence issues. While there is no suggestion that the Executive is seeking any change to its decision-making authority in this area, there is concern in some quarters that information flows to Parliament could be improved. While the review has found there is some basis for this view, it is clear that it is essentially a political matter. Parliament will settle its own procedure and the Select Committee will determine the issues it wishes to consider. The nature of MMP politics, and the declared positions of some MPs that they would decline to be bound by any confidentiality understandings, would rule out the possibility of sharing classified information. Whatever scope there may be for improvement in the provision of information and exchange of viewpoints between Parliamentarians, Ministers and officials the matter is best pursued through the political channel.

External Sources of Advice and Comment

35. Finally the review was asked to consider whether there would be merit in more formal provision for external sources of advice. The review supports the Select Committee view that seeking contestability through the internal separation of civilian and military defence executives has proved to be unworkable in practice. The logic of integration is that contestability of ideas and advice, which is important for balanced policy development, should be a function both of honest and transparent information and discussion processes within the defence organisation itself, together with encouragement of debate within the wider community. The review questions whether a new institution should be set up as the sponsor of this debate, preferring a path of additional support for existing bodies.

Future Action

36. In accordance with the Minister's request, the emphasis of the review has been on drawing on lessons learned over the past decade, defining the questions that must now be decided and concentrating on possible approaches to a future defence management system and structure that will produce better results than, in the view of Ministers and Parliament, has been the case in recent years. It is suggested that this report, and its accompanying material should be referred to the Government's advisers for comment, to be followed by the development of a Cabinet paper or series of papers, to provide the basis for substantial change to the current system and structure.
37. I am aware that a series of improvements have already been initiated, following the appointment of the new CDF, and the appointments of his subordinate staff. These steps seem to be in the right direction, but in the opinion of the review, they have not yet addressed the major issues. The goal of this review has been to indicate that there is scope for agreement on a range of matters that will achieve the Government's objectives as implied in the TOR, regardless of whether or not Ministers decide it is desirable to review the Defence Act. It will be essential to ensure, however, that there is externally driven machinery to bring about the necessary change. The most effective means of delivering the desired results would be to establish a Ministerial Oversight Group, supported by a steering group of senior officials, specifically tasked with implementing Cabinet's decisions. The State Services Commissioner should review progress on a six-monthly basis.
38. The review accepts that the extent of change suggested could take time to agree and implement. It is essential that some actions be taken immediately. Accordingly, the review lists a range of practical measures which could be considered in advance of, but not as a substitute for, the suggestions for fundamental revision of the current structures and procedures.

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