The Department of Defence's job-for-life culture has received a massive shake up with the federal government's endorsement of a review to cut 1650 civilian public servants, abolish the Defence Materiel Organisation as a standalone agency and give managers greater workloads.
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Defence Minister Kevin Andrews says the public service workforce within defence will shrink "around about the order of 1000" people after a review found major in inefficiencies.
Voluntary redundancies have not been ruled out to achieve the workforce reduction which is part of "transformational change" set out in the First Principles review headed by former Rio Tinto Australia managing director David Peever.
On top of the civilian workforce reduction, another 1000 Australian Defence Force members doing public service jobs will move out of their existing jobs in the bureaucracy and back to navy, army, air force and joint operations positions.
The government will save money by only using ADF members for public service roles when critical and in doing so has listened to unions which argued uniformed personnel "driving desks, not tanks" was expensive.
The Defence Materiel Organisation, which oversees $12 billion of spending a year, will be absorbed into the department and become the capability acquisition and sustainment group.
Defence Minister Kevin Andrews said the review found a "proliferation of structures, processes and systems with unclear accountabilities, which in turn cause institutionalised waste, delayed decisions, flawed execution, duplication, over-escalation of issues for decision and low engagement levels amongst employees".
The government has accepted 75 of the 76 review recommendations, which will be implemented over the next two years.
To address concerns Defence is too top-heavy, one three-star general position will be abolished, along with six deputy positions in the upper reaches of the public service.
Defence will reduce the thick layer of middle managers – there are up to 12 layers of management between department secretary Dennis Richardson and his frontline staff.
Community and Public Sector Union national secretary Nadine Flood said her organisation's submission to the review to suggest no more cuts to the Defence workforce were ignored.
"It is deeply disappointing the minister is giving the green light to slashing another 1650 jobs," Ms Flood said.
"Last year the Abbott government cut 11,000 public sector jobs."
Ms Flood was pleased the review recognised cutting public service jobs should no longer be looked on as the primary savings method.
Professionals Australia ACT director David Smith, who represented engineers and technical staff, said the review lacked vital detail.
"There is recognition of the problems and risks associated with the Defence engineering and technical workforce but no recognition that this has been known for years or any real recommendations, with teeth, to address the deficiencies or mitigate the risks created by these deficiencies," Mr Smith said.
"Indeed the recommendation to 'ensure committed people with the right skills are in appropriate jobs to create the One Defence workforce' can't be implemented as the current job freeze has just turned into an ice cap."
The 1650 job cuts and 1000 ADF members sent back to the services will happen on top of a reduction to the civilian workforce of 3000 since 2012.
These figures did not take into account what might be recommended in the looming Force Structure Review and the 2015 Defence White Paper, although the First Principles review recommended it alone should be the road map for reform for the next five years with no other reviews in that period.
The government and department will spend the next three months planning how to make the changes and the reforms would be finished within two years.
At their conclusion the department's public service workforce will be between 17,000 and 18,000.
The review recognised the difficulties of reforming the organisation.
It said Defence staff were the most likely, out of all Commonwealth public servants, to have worked in one agency.
"It is a cradle to the grave model which is not without its benefits," the review said.
"However, on balance we would contend this insular approach and lack of diversity contributes to the inability of Defence to change."
The review recommends selling off more parts of the Defence real estate but Mr Andrews said a timeframe would not be placed on the sale of the 17 sites identified in the 2012 Future Defence Estate Report.
The report noted: "A conservative net present value estimate of the disposal of these sites over 30 years is $1.4 billion, including property sales of $570 million ... but this does not take into account future maintenance savings."
The "first principles" review is the most thorough in four decades and calls for a restructure of the department to cut waste and simplify processes.
The review effectively proposes the biggest overhaul of the department since former Defence department secretary Arthur Tange rationalised and brought the different Defence services under one banner.
On Wednesday there was some confusion about how many job cuts there would be with talk of 1650 and 1000 public service job losses but a department spokesperson later clarified it was 1650.
- with James Massola