One of the nation’s most senior public servants has called for an overhaul of the way his department is funded to watch over Australia’s sea borders while being accused by MPs of both major parties of overseeing endemic underperformance with a fleet of “flying Corollas with a new paint job”.
In an at-times robust discussion in the parliament’s public accounts committee, Home Affairs Department secretary Mike Pezzullo on Friday said he faced a “devil’s choice” over extending a contract for offshore civil maritime surveillance or leaving the nation’s borders unprotected.
Senior public servant Mike Pezzullo says the way Home Affairs is funded needs to change.Credit:Alex Ellinghausen
But he came under fire from both former defence minister Linda Reynolds and the Labor chair of the committee, Julian Hill, for his oversight of the department and its handling of multibillion-dollar contracts that have been criticised by the independent Australian National Audit Office.
Pezzullo last faced the public accounts committee, which examines major spending by all departments, in 2016. The committee’s original focus was on an auditor-general’s report on a contract signed between Home Affairs and aviation company Surveillance Australia to supply 10 aircraft to patrol the country’s coastal and sea border areas.
The $2.6 billion contract, not put to tender since it was first awarded in 2006, was extended for six years in 2021 despite the auditor-general finding just months earlier that it had “not been effective”, with surveillance services not provided as required under the contract.
Pezzullo said a “market sweep” had been conducted in 2021 to see if there were other companies able to take on the contract to carry out offshore surveillance but this found only Surveillance Australia was in a position to continue the work.
He said the key problem was while the government provided recurrent funding, Home Affairs needed a budget that also provided locked-in capital works funding.
While the Defence Department knew it had a certain amount of funding for capital projects, the same was not made available to Home Affairs, which Pezzullo said had its own small airforce, small navy and a series of detention centres.
Pezzullo, who signalled he had sought funding from the previous government for capital upgrades including for offshore surveillance, said the situation had to change.
“I don’t think it’s acceptable. And I think government policy in this area should be revisited,” he said.
Pezzullo said a long-term capital budget would enable the department to upgrade surveillance as new technology such as unmanned drones or even balloons became available.
He likened the aircraft used under the current contract to passenger vehicles.
“When you recapitalise the fleet, just like if you’ve got a fleet of 10 Corollas but you decide that the proper capability’s 15 BMWs, you can’t do a like-for-like without a recapitalisation,” he said.
But Pezzullo came under sustained questioning from both Reynolds and Hill over his tenure as the head of a department which, along with Defence, has been found wanting by the auditor-general’s office.
Reynolds said the “endemic underperformance” of the department was not just around aircraft surveillance, saying there had been ongoing problems across a number of areas.
Former defence minister Linda Reynolds says the Home Affairs Department has a history of endemic underperformance in contract management.Credit:Alex Ellinghausen
She said she was surprised by Pezzullo’s defence, which seemed to be that the department’s problems were the fault of previous ministers or the auditor-general rather than a failing of the department.
“Have you ever thought it might be true?” she said.
Hill said the whole management of the Surveillance Australia contract, including the decision to extend it for six years rather than a shorter timeframe, showed the department was “over the barrel” in any negotiations.
He said the deal had left the nation’s borders being protected by “flying Corollas with a new paint job” at a huge cost to taxpayers.
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