Background

This audit was undertaken in response to a recommendation made by the Joint Standing Committee on Foreign Affairs, Defence and Trade (JSCFADT) in their September 2002 report Review of Foreign Affairs, Trade and Defence Annual Reports, 2000–2001 that the Auditor-General should consider conducting a performance audit focusing on Defence's transition management programs.¹

From a permanent force of 51 791 members, 5107 personnel, comprising 962 Officers and 4145 ‘other ranks', left the Australian Defence Force (ADF)² in 2002–03. Separating personnel tended to be those with less than eight years, or more than 18 years, of service.³ The ADF considers it has an obligation to assist personnel to make the transition from military to civilian life, regardless of whether the means of separation is voluntary or involuntary.

Defence and the Department of Veterans' Affairs (DVA) are responsible for assisting personnel leaving the ADF prepare for their transition to civilian life, and for providing assistance in the areas of an individual's career, education, housing, medical needs, compensation and veterans' entitlements. Under the Defence Business Model, the Defence Personnel Executive (DPE)⁴ has allocated responsibility for the delivery of products and services associated with military personnel administration, of which transition management is one aspect, to the Corporate Services and Infrastructure Group (CSIG).⁵ Star ranked Officers, who have a rank of Commodore/Brigadier/Air Commodore or above, are provided with additional transition assistance by the Directorate of Senior Officer Management.

As individuals who leave the ADF because they have been found to be no longer medically fit for service are unlikely to have planned for their separation, Defence considers that they require additional assistance in preparing to transition from military to civilian life. The Transition Management Service (TMS), provided by DVA on behalf of Defence, offers this assistance. The TMS commenced operation as a trial in Adelaide in November 2000 and was rolled out nationally in March 2001. A Service Level Agreement between the two Departments for the provision of the TMS was signed in March 2003. The TMS Service Level Agreement establishes that, for the period starting 1 July 2003 to 31 December 2005, $650 000 will be paid annually to DVA by Defence.⁶

Major areas of transition assistance utilised by ADF personnel during 2002–03 were ADF Transition Seminars, attended by 4122 individuals; career assistance components of the Career Transition Assistance Scheme (CTAS), used by 2224 individuals; and the TMS, accessed by 1197 individuals.⁷ The number of users of programs to assist separating personnel, and expenditure on these programs for 2002–03, are outlined in Table 1.

The CTAS complements the Defence Assisted Study Scheme (DASS), as under both schemes ADF personnel can access training for career transition. CTAS is a tiered scheme, based on years of service and type of separation from the ADF, which provides opportunities for individuals to undertake training to better market their military skills and experience in the civilian marketplace. The DASS provides an avenue for individuals to undertake re-training in the years prior to separation.

Personnel separating from the ADF are generally eligible for a removal to wherever they wish to live in Australia. The major component of transition assistance expenditure for 2002–03 was for allowances associated with these removals, which amounted to $12.46 million. Two-thirds of this removal expenditure was paid to service providers and one-third to separating or former ADF personnel. Removal allowances were used by 42 per cent of personnel separating during 2002–03.

Defence and DVA are jointly conducting a pilot project in Townsville to determine if ADF personnel, who are separating for other than medical reasons, require additional assistance to transition to civilian life. The Defence Transition Scheme (DTS), which commenced in November 2003, comprises the preparation of individually tailored Transition Action Plans and the Stepping Out Program. The Transition Action Plans are intended to assist individuals identify information and services available to support their transition. The Stepping Out Program is run by the Vietnam Veterans Counselling Service and provides specific introductory education focussing on the physical and mental effects of transition and how these can be managed.

Table 1 Use and cost of transition assistance provided to separating ADF personnel 2002–03

Note:   1) Individuals attending ADF Transition Seminars included personnel about to separate from the ADF,those contemplating separation at some time in the future, and spouses of ADF personnel.

2) The cost to Defence of removal allowances is understated, as temporary accommodation allowance for separating personnel, which is one component of the removal allowance available to personnel, could not be distinguished from the cost of temporary accommodation allowance for all posting travel.

3) From 1 July 2003, the fee paid by Defence to DVA for the delivery of the TMS has decreased to $650 000, based on the management of 600 cases annually.

4) Data on the Defence HomeOwner Scheme is not presented in this Table as individuals who had utilised the Scheme following their separation from the ADF could not be distinguished from other users of the Scheme.

5) The costs reported in this Table cover only the direct dollar costs of transition programs. Costs associated with the attendance of participants in CTAS activities, for example, have not been included.

Source: ANAO analysis of Defence and DVA data.

Audit approach

The objective of the audit was to provide assurance to Parliament that adequate and appropriate transition assistance is available to personnel leaving the ADF. The ANAO examined: the range of transition assistance provided to separating ADF personnel; the extent to which this assistance is utilised; the cost to Defence of providing transition assistance; and the relevant responsibilities of those who deliver transition assistance. The ANAO did not audit: compensation available to ADF personnel under the Safety Rehabilitation and Compensation Act 1988 and the Veterans' Entitlements Act 1986; access to a superannuation Service or invalidity pension under the Defence Force Retirement and Death Benefits Act 1973 and the Military Superannuation Benefits Act 1991; or the separation administrative process.

Key audit findings

Transition assistance provided by Defence (Chapter 2)

The ANAO found that ADF personnel are advised to begin preparing for transition to civilian life at least three years before their intended separation date. Defence encourages personnel to: attend ADF Transition Seminars; read the ADF Transition Handbook; access the Defence internet and intranet sites; and consult their Unit/Ship Resettlement Officer, Transition Co-ordinators and Resettlement Officers, to obtain information about transition assistance and issues individuals may need to consider in their move from military to civilian life.

The ANAO found that, during 2002–03, less than one per cent of the ADF utilised DASS to undertake courses to assist in their future transition to a new career following separation from the ADF, 80 per cent of those doing so being ‘other ranks'. Reimbursements paid to individuals completing courses totalled some $155 000 in 2002–03, which was 38 per cent of the estimated cost to Defence had individuals been eligible for the maximum reimbursement. In comparison, 44 per cent of those leaving the ADF during 2002–03 utilised CTAS.

The ANAO found that individuals did not use all of the elements of CTAS to which they were entitled. Results from the 2002 ADF Exit Survey indicate that 85 per cent of those individuals who reported using the CTAS generally found the training undertaken to be beneficial in their transition to the civilian workforce. As a result of changes made to the DASS and CTAS in January 2004, ADF personnel are now eligible to access a wider range of benefits and, in some cases, to access benefits for which they were not previously eligible.

Separating personnel represented nine per cent of all ADF removals during 2002–03. As well as assisting individuals to relocate within Australia, Defence provides individuals with some assistance to purchase a new home, by extending the period eligible individuals can access home loan schemes past their separation date. Data obtained by the ANAO indicates that less than 10 per cent of personnel leaving the ADF chose to use these schemes following their separation.

The ANAO was unable to find any aggregate reporting to senior Defence management on the transition assistance provided to separating ADF personnel. Such reporting could usefully encompass information on: the usage rates of transition assistance programs; the extent to which eligible personnel are accessing these programs; satisfaction with the programs offered; and the cost of the programs.

Transition assistance provided by DVA (Chapter 3)

For 2002–03, 12 per cent of those leaving the ADF did so because it was determined they were no longer medically fit for service. The TMS assists such personnel, and those who may be deemed to be medically unfit for service, identify assistance they are eligible to receive and make the transition to civilian life. The ANAO observed variations in how personnel are informed of the TMS by their Career Management Agency, and the information they are given about the TMS. Defence and DVA advised the ANAO during the course of the audit that they will work together to standardise the information provided to personnel about the TMS.

The ANAO found that 96 per cent of individuals commencing use of TMS during 2002–03, did so by self-referral or following the TMS receiving notification that the individual's case was to be considered by a Medical Employment Classification Review Board (MECRB). The TMS assists individuals by preparing Discharge Impact Statements and Transition Action Plans.⁸ Discharge Impact Statements were prepared for 726 personnel during 2002–03,⁹ with many of these cases yet to be considered by a MECRB during this time. The ANAO found that, of those individuals whose case was considered by a MECRB during 2002–03, two-thirds utilised services provided by the TMS. More than half of these individuals had both a Discharge Impact Statement and a Transition Action Plan prepared.

The ANAO found the Transition Action Plans trialled during the DTS pilot may be of benefit to personnel separating from the ADF with short notice. The Stepping Out Program was found by the ANAO to provide wider guidance to personnel on the effects of transition than currently occurs. The agreement between Defence and DVA for the conduct of the DTS outlines a basis for evaluation of the pilot and establishes that a business process review is to commence by September 2004. In conducting the evaluation, the ANAO considers Defence would benefit from explicitly comparing the services offered in the pilot to those offered in the general ADF transition process provided by Transition Centres, to assess value for money aspects.

Overall audit conclusion

Assistance provided by Defence to personnel moving from military to civilian life is broadly designed to assist individuals in finding and obtaining a civilian career and to relocate to a new location within Australia, if required. The ANAO considers that, overall, Defence provides an effective package of transition assistance to personnel leaving the ADF. The ANAO observes that not all personnel choose to utilise this assistance, or use all of the benefits to which they are entitled.

The ANAO found there are appropriate mechanisms in place to clearly communicate information about transition assistance programs to ADF personnel who are planning their separation. The cost to Defence of providing transition assistance in 2002–03 amounted to almost $20 million. Of this, half of the total cost was for payments to course and service providers; one-third was in the form of payments to separating or former ADF personnel; one-sixth was for Defence administrative costs; with the remainder paid to DVA for the provision of the TMS.

Of those personnel using the TMS in 2002–03, one-third had been informed there was a possibility they may be medically discharged but were yet to have their case considered by a MECRB. As production of a Transition Action Plan may now commence at any stage after initial contact between the TMS and an individual, the ANAO considers that potential medical dischargees may now be better able to access transition assistance programs.

The ANAO made two recommendations to improve Defence's management of transition assistance relating to: internal monitoring and reporting on the provision of transition assistance to separating ADF personnel; and evaluation of the DTS pilot in Townsville prior to any national roll-out.

Response to the report

Defence and DVA agreed with both recommendations. DVA advised the ANAO that:

DVA notes the overall conclusions and also notes that with the introduction of TMS potential medical dischargees are now better informed about, and better able to access, the full range of transition assistance programs available.

Footnotes

1 Joint Standing Committee on Foreign Affairs, Defence and Trade, Review of Foreign Affairs, Trade and Defence Annual Reports, 2000–2001, Canberra, 2002, p.68.

2 The ADF comprises the three Services: Navy, Army and Air Force. The ADF, together with the Department of Defence, comprises ‘Defence'. .

3 During 2002–03, nearly 60 per cent of the ADF had completed less than eight years of service.

4 DPE provides policies and services that attract, recruit, develop, retain and transition the right people. It does this through the provision of workforce planning, recruitment, psychology services and personnel research.

5 CSIG provides infrastructure, information systems and support services to the Defence organisation.

6 This figure consists of an annual fixed cost payment of $200 000 and a variable cost payment of $750 per case based on 600 cases annually, resulting in a monthly payment of $ 54 167.

7 This comprises 284 continuing TMS cases and 913 commencing TMS cases in 2002-03.

8 Discharge Impact Statements are one of several documents to be considered in the decision-making process as to whether the individual should be medically discharged.

9 The remaining 471 users of the TMS had either commenced initial contact with the TMS and were yet to access available services or had commenced usage during 2001–02 and had progressed to preparation of a Transition Action Plan.