Part 4: Our conclusions

4.1
The civilianisation project has saved money and NZDF will be able to redirect these savings to the front. However, the savings will be less than NZDF's target of $20.5 million a year. We estimate that savings will be $14.2 million a year: $11.5 million from the first stage of the civilianisation project and $2.7 million from using staff attrition and contracts finishing to convert military positions into civilian positions. However, NZDF expects to achieve the overall redistribution target of $350-400 million in annually recurring savings by 2014/15.

4.2
We question the appropriateness of the timing of advising the Government that NZDF would civilianise 1400 positions and reduce the number of military staff in the middle and back when NZDF had not worked out how many military staff it would need from 2015. Also, NZDF did not know how many civilian staff it needed and lacked a workforce strategy.

4.3
We are concerned that NZDF carried out this substantial change without knowing whether it could fulfil its role with 1400 fewer military staff. We note that the Force Structure Project concluded that NZDF needs more military staff than it had when it began the civilianisation project to meet operational requirements from 2015.

4.4
The civilianisation project documents refer to the need to minimise the negative effect of the project on military culture. However, NZDF chose a course that jeopardised aspects of military culture, such as the moral contract.

4.5
We consider that, in deciding to quickly implement the civilianisation project, NZDF did not fully consider the potential effect on military culture. We acknowledge that the issues that arose from the project have now been taken into account and the process for rebalancing the workforce has changed considerably. We consider that the effects should have been addressed much earlier, when those who had been asked to comment on the design of the project expressed concerns.

4.6
In our view, NZDF misjudged the cumulative effects of the changes and did not appreciate how the scale and pace of change would affect staff. NZDF has decided that, in general, further civilianisation will take place gradually, as people leave, by transfer, or for other reasons. NZDF considers that this should lessen the effect on morale and, therefore, attrition rates.

4.7
Overall, in our view, the civilianisation project has had limited success in terms of the targets aimed for by NZDF.