The Manchurian Distraction

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All of a sudden, Joel Fitzgibbon is in a lot of trouble.

The seemingly mild-mannered Defence Minister from the Hunter Valley is the subject of Kevin Rudd’s first real ministerial scandal, and he is as much to blame as his enemies in the bureaucracy. When you’re the subject of screaming front-page headlines that contain phrases like "spy scandal" and "Minister says sorry", it’s not a good time to be misleading people over who pays for your overseas trips.

Certainly, Fitzgibbon is the victim of some very dirty politics. It appears sources in his own Defence Department leaked details of an internal investigation into their Minister to Fairfax journalists. Fitzgibbon, the "unnamed sources" claimed, was a close family friend of a prominent Chinese businesswoman, who was also an ALP donor.

At first, the main issue appeared to be the illegal investigation of a minister by his own staff. Kevin Rudd was forced to defend the Defence Minster, and Fitzgibbon initially came out swinging, claiming he was the victim of his own determination to reform Defence. But by late Thursday evening, the imbroglio had intensified, as the media began to probe Fitzgibbon’s 20-year relationship with Helen Liu. Liu is also Fitzgibbon’s Canberra landlord, and the two have travelled to China together several times.

After first claiming he had exchanged only "small gifts" with Liu on birthdays, Fitzgibbon was later forced to admit he had failed to declare two trips to China paid for by Liu in 2002 and 2005. She also apparently gave him a suit.

Over the weekend, the Government regrouped. Acting PM Julia Gillard (who seems to be quite enjoying how much time Kevin Rudd spends on foreign tours) made a point of specifically defending Fitzgibbon on the weekend news. The message was carefully calibrated. Yes, Fitzgibbon had stuffed up. No, the Government won’t sack him.

"It’s a lapse in judgement," Gillard told ABC TV. "Joel acknowledged that. It’s something he should have recalled — it’s something he should have made proper disclosure of at the time."

Gillard also took the time to sink the boot into Malcolm Turnbull, suggesting that the attacks on Fitzgibbon were "really cheap politics flowing from the Opposition here, from Malcolm Turnbull personally, and from his shadow treasurer Joe Hockey".

Indeed, the Opposition’s attack on the Rudd Government had widened from its justifiable points about Fitzgibbon to a genuinely xenophobic attack on the Government’s engagement with China. Last Friday, Turnbull made the ridiculous accusation that Kevin Rudd is some kind of "roving ambassador" for Beijing. On Monday, his Deputy Julie Bishop was ineffectually waffling the same line. It’s an unedifying attack from an increasingly desperate Opposition, but it may well generate some short-term traction.

Perhaps in order to nip it in the bud, Finance Minister Lindsay Tanner got in on the act too, pointing out that Helen Liu had also met with then-prime minster John Howard, and accusing the Opposition of "trying to stir up some Yellow Peril sentiments". Turnbull took the bait, calling Tanner’s remarks "contemptible".

Tanner’s comments were certainly unnecessary, and by using such a provocative phrase it might even be argued he has further fanned the very controversy he was accusing Malcolm Turnbull of igniting. But the Government’s counterattack over the weekend has also cleverly shifted the focus away from Fitzgibbon’s performance, which was the Opposition’s original target. The imbroglio is now so confused that many of the substantive points raised by the incipient "spy scandal" have been lost in the clamour.

The real issue, as I explained when I examined the issue in early March, is the Defence Department itself.

Australia’s Defence bureaucracy is complex, opaque and often ungovernable. Fitzgibbon is merely the latest in a long line of Defence Ministers who have struggled to manage, or even come to grips with, the Commonwealth’s largest portfolio. A succession of Defence Secretaries have suffered similarly, in part because of the unwieldy structure of the portfolio.

Australia’s defence apparatus has a unique "diarchy" structure, whereby the white-collar Defence staff and the uniformed ADF both report directly to the Minster. The Minister is also in charge of the organisationally separate, but still enormous, Defence Materiel Organisation (responsible for a long parade of over-budget defence acquisitions), the vast payroll and landlord responsibilities of the Defence Department, not to mention the uniformed members of the Australian Defence Force itself. To make matters worse, ADF chief Angus Houston has apparently got used to reporting directly to the Prime Minister, effectively bypassing his responsible Minster. It’s an unholy mess.

No wonder most agree that the command structure of Defence, the DMO and the ADF all require substantial reform. But the challenge this poses is immense.

Take the bottomless money pit of the defence budget. Despite the commitment by both John Howard and Kevin Rudd’s governments to increasing defence spending by 3 per cent a year in real terms for at least the next decade, Defence has some pressing long-term budgetary issues. A series of hugely expensive purchases committed to by the Howard government left Defence with a long list of acquisitions it won’t be able to afford.

The Australian Strategic Policy Institutes’s Mark Thomson points out that "the present Defence Capability Plan covers the period 2006 to 2016 and lists 100 project phases valued at around $51 billion in total". He adds that "over the past two years around $7.4 billion worth of investment has been deferred" and that there is an additional $4.3 to $6.4 billion worth of projects listed in the Defence Capability Plan still awaiting approval. All this for a department that can’t manage to pay its SAS soldiers properly.

Fitzgibbon made a positive start, but appears to have run into much the same problems that plagued many of his predecessors. Unfortunately, while his strategic reform goals were worthy, his tactics have been suspect. Fighting a media war with your own department is not necessarily an effective way to implement reform, and it almost always guarantees damaging leaks. The ADF has a very distinct culture, one that many politicians don’t easily understand. Add to this a byzantine bureaucracy, a disgruntled domestic defence industry upset at losing junior minister Greg Combet to other duties, junior staffers leaking espionage reports — and of course Fitzgibbon’s own "lapse in judgment" — and its no wonder many believe Fitzgibbon should be moved on.

But with this latest manoeuvre, those inside Defence who are busy intriguing to have Fitzgibbon replaced may have shot themselves in the foot. Rudd, Gillard and the Government’s senior strategists appear to have decided that a full-frontal attack of this nature on a senior minister simply cannot be indulged. The Government will now try to stare down internal critics of defence reform, all the while working the levers to ensure it gets what it wants. And what it wants will almost certainly include big budget savings. The fat years for Defence are now over — and not before time.

In the meantime, Joel Fitzgibbon will stay on as Minister. He should use his second chance to open up his portfolio to more scrutiny. When a department begins to spy on its own minister, its time for more transparency, openness and accountability. There has been precious little in Defence for far too long.

Ben Eltham

Ben Eltham is New Matilda's National Affairs Correspondent.

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