17 August 2001

"Phil Goff's has completely missed the point about the purchase of the LAV IIIs. It is not about who signed off the purchase, it is about the poor quality of advice given to successive Ministers of Defence," National's Defence spokesperson Max Bradford said today.

"The army withheld important information from the then-Government when it recommended the purchase in 1998/99. I would expect Mr Goff and Mark Burton to be as concerned, as we are, about the vehicles because they got the same inadequate advice as we did. Since then the costs have exploded.

"The altered answers to questions released yesterday simply prove how important an inquiry is into the advice that successive Ministers were given by the army over the capabilities of the vehicles.

"The Auditor General's report on the process of approval is unlikely to determine if the right advice was given on whether the vehicles are right for the job. I have offered the Auditor-General access to all the files and advice I received as Minister, and urged the Government to conduct a full inquiry into the purchase, both during my time as Minister and subsequently.

"It is little wonder Helen Clark disbanded the Air Force Skyhawks and put 700 air force men and women out of a job. She needed the money to pay for nearly ¾ of a billion dollars of army personnel carriers, which obviously aren't suitable for peacekeeping tasks in our region. This has the makings of a major scandal.

"The LAVs can't turn in a tight circle in the terrain common in the Asia-Pacific region the army will work in, but it seems this wasn't pointed out by the army. The costs have grown outlandishly from $212m to $658m, but did Ministers receive advice or warning about this?

"It is clear poor advice was given about the LAVs capabilities for the job they are required to do. That is why a full inquiry is needed, and I don't believe the Auditor-General's inquiry commissioned by the Ministry will do the job," Max Bradford said.

Ends

Attached : Mr Bradford's letter of 3 July 2001 to The Auditor-General:

3 July 2001

Mr David McDonald
The Controller & Auditor-General
Audit New Zealand
Private Box 3928
WELLINGTON

Dear Mr McDonald

Audit Office Investigation on Army LAV 3 Purchase

The Foreign Affairs, Defence & Trade Select Committee, of which I am a member, has been advised that your office is undertaking an investigation on certain aspects of the Army's LAV 3 APC purchase. The audit was commissioned by Mr Graham Fortune, Secretary of the Ministry of Defence.

The Select Committee received a short briefing on the investigation two weeks ago.

I am writing to you to invite the Audit Office to undertake a thorough investigation on this matter. The investigation needs to stretch back into the period of the last government when the Government was advised, through me, to approve the purchase of up to 102 light armoured vehicles at a cost of $212 million.

The Committee has been advised that this cost has escalated to $658 million, a figure which does not, we understand, include key support equipment such as recovery vehicles and tankerage. There are also unhealthy rumours that vehicles, when equipped with a turret, will not fit within the RNZAF C130 Hercules aircraft. The veracity of these rumours needs to be checked.

I am particularly disturbed, as a former Minister of Defence, that there is such a significant gap between the $212m recommendation I received from the NZDF and the (perhaps) final cost of $658m. This cannot be explained away simply by the significant exchange rate devaluation since the Labour/Alliance Government took office.

Accordingly, I wish to urge you to include, as part of your investigation, the adequacy of the evaluation process that led to the APC recommendation to the last Government.

I am sure the Select Committee, as well as the Secretary of Defence, would want to know all of the details of what was included in the cost estimate; how much support was provided for; what cost estimates were included to justify the recommendation suggesting that somewhere between 80 and 102 vehicles could be purchased and the robustness of the Army's ordering, estimation and procurement processes.

As the former Minister I have no objection to you seeking, and gaining, access to the relevant Cabinet material to assist with your investigation and, consistent with the new Public Audit Act, to undertake a full investigation of the processes that led, first to the original recommendation and second, to the significantly different recommendations to the present Government regarding the cost of the APCs.

I appreciate these are matters which may be additional to the Secretary of Defence's terms of reference. Accordingly, I have copied this letter to him and you may care to discuss with Mr Fortune whether he is prepared to allow the terms of reference to be extended as appropriate.

I look forward to your response to this matter.

Yours sincerely

Hon Max Bradford
National Opposition Spokesperson
For Defence

Cc Hon Mark Burton, Minister of Defence
Mr Graham Fortune, Secretary of Defence
Mr Graham Kelly MP, Chair,
Foreign Affairs, Defence & Trade Select Committee

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