The Auditor General has issued a highly critical report on Defence Force cuts, saying they have led to a drop in morale and capability and will fall short of the savings it promised to the Government.
The Government told the Defence Force in 2010 to reduce costs so money could be redistributed within the military.
The civilianisation project was one of several the defence force initiated in response.
It has been held up by the government as an example for other government agencies to follow. But Auditor General Lyn Provost said today it had achieved only "limited success" and the way the Defence Force went about it had caused the loss of more military staff than planned.
"It will not achieve the NZDF"s target of converting 1400 military positions and saving $20.5 million a year by 2014/15. Instead, 600 military positions will be converted and we estimate savings of $14.2 million a year by 2014/15.
"In addition a drop in morale and increase in staff attrition has led to reduced NZDF capability."
Her report was critical of NZDF on numerous fronts - including the fact it told the Government it would convert 1400 military positions into civilian jobs without actually knowing how many military positions it would need from 2015. After an investigation, NZDF discovered that while some ranks and trades had surplus military staff, it was going to need more military staff overall.
"NZDF should have found out how many and what kind of military staff it would need before telling the Government that it would convert 1400 military positions into civilian positions," Ms Provost said.
She also questioned NZDF's estimate of savings of $20 million a year.
"My staff estimate that the civilianisation project will save $14.2 million a year by 2014/15. Therefore, savings are less than planned. Also, most of the savings from the civilianisation project are not from converting military positions to civilian positions."
Despite that NZDF was standing by its commitment to the Government that it would achieve $350-$400 million in savings each year.
But in the meantime it had lost far more military staff than intended.
"The loss of so many military staff (which can be attributed in part to the civilianisation project), has made it more difficult for NZDF to do its job," Ms Provost said.
"Converting 1400 military positions into civilian positions would always be difficult. Discharging military staff has to be carried out with great care to avoid damaging the bonds of camaraderie, integrity, and commitment that are part of NZDF culture
"Instead, NZDF chose a course that led to a drop in morale and an increase in attrition resulting in reduced capability. NZDF now needs to recover from the damage caused by the civilianisation project."
She was critical of the speed at which NZDF went about the savings and said it did not fully consider the project's potential effect on staff, or address the significant risks of the process.
But NZDF appeared to have learnt from its mistakes.
"My staff saw much evidence in reviews and in briefings to Cabinet and the Minister of Defence that NZDF recognises that it made mistakes during the civilianisation project. NZDF has decided that further conversion of military positions to civilian positions will, in general, take place gradually, as staff leave particular positions. NZDF has a focus on rebuilding morale and restoring mutual trust with military staff.
"I commend NZDF's honesty and willingness to adapt in learning lessons from the civilianisation project."
- Manawatu Standard
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