Part 1: Introduction

New Zealand Defence Force: The civilianisation project.

In this Part, we discuss:

The place of the civilianisation project in the New Zealand Defence Force's drive to become more efficient

In 2010, the Government decided to give greater priority to using defence funds more efficiently.

In September 2010, the Government told NZDF to save money for redistribution within NZDF. Cabinet required NZDF to fulfil three conditions in saving the money:

  • save $350-400 million in annually recurring savings by 2014/15;
  • enhance frontline capabilities and activity; and
  • maintain specified outputs.

NZDF began several projects to save money for redistribution. The redistribution programme represented 16-18% of the overall defence budget of $2.25 billion for the 2010/11 financial year. We decided to look at the progress and achievements of one of those projects – the civilianisation project – which was initially expected to save 6.5-7.4% of the $350-400 million redistribution programme. The civilianisation project involved two main components:

  • discharging military staff and transferring them to civilian positions or replacing them with civilians who would cost less than the military staff they replaced; and
  • reducing the number of military staff in some ranks and trades.

It is important to remember that the civilianisation project included both components.

NZDF intended to use the annually recurring savings from civilianisation to increase the proportion of military staff in the front compared to the middle and back.1

NZDF decided to convert 1400 military positions into civilian positions in three stages, converting several hundred positions at each stage. After completion of the first stage, NZDF decided to modify the second stage and to not proceed with the third stage.

The scope of our audit

In carrying out our audit, we sought to assess how well NZDF had achieved the main objectives that it had set for the civilianisation project. These objectives were to change the balance of its workforce:

  • so that proportionally more military staff are in the front – a core objective of most defence forces is to spend more on the front than on the middle and back;
  • by converting 1400 military positions into civilian positions, saving $20.5 million a year, NZDF intended to redirect this money to the front;
  • without affecting outputs; and
  • by reducing the cost for each full-time equivalent staff member without affecting normal patterns of staff attrition.

How we carried out the audit

We used the objectives listed in paragraph 1.8 to assess how effectively NZDF managed the civilianisation project. To audit how NZDF performed in meeting these objectives, we:

  • looked at NZDF's extensive documents about civilianisation and its outcomes;
  • assessed the policies on which the civilianisation project was based;
  • analysed NZDF's financial data about the savings achieved;
  • interviewed staff at NZDF, the Ministry of Defence, and the State Services Commission; and
  • spoke with the principal author of Value For Money: Review of New Zealand Defence Force.2

The structure of this report

In the rest of this report, we discuss:

  • the timing, pace, and progress of the civilianisation project (Part 2);
  • the results of the civilianisation project (Part 3); and
  • our conclusions about the success of the civilianisation project (Part 4).

1: The New Zealand Defence Force classes all positions by whether they contribute to Output Delivery (front), Direct Support (middle), or Indirect Support (back). Output Delivery – referred to as front, frontline, or front end – means "deployable military capabilities". Direct Support includes functions such as logistics and training. Indirect Support includes administrative functions.

2: Ministry of Defence (August 2010). The Ministry of Defence commissioned this report to help to identify efficiencies and to provide assurances and options about cost effectiveness and sustainability.

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