I had hoped that Paul Barratt as a former head of the Australian Department of Defence would comment on this one. However, while he has tweeted on it, he has so far not said anything substantive.
The Australian Navy faces a problem, quite a large one. Maintenance on its main transport ships was so neglected that it is now too expensive to fix them, so that they have to be taken out of service. While the Minister is, rightly, blaming the Defence organisation, the Navy's problems are a symptom of a bigger issue.
Let me illustrate with two Australian examples.
When funds for social housing were reduced, Housing NSW diverted funds from maintenance to new supply. That was fine, it maintained its performance measures for new housing stock. Then, suddenly, the maintenance backlog go so large and so urgent that the Department had to seek special funding.
Or take the University of New England. There funding cut-backs led the University to divert money from building maintenance to other activities. The university now faces a a huge bill for back maintenance for its residential colleges that it has no way of funding.
These are public sector examples, but I am sure that you can think of private sector equivalents. The electricity industry comes to mind.
As managers at whatever level, we all face immediate short term performance demands. We also face budget constraints and cut backs. The problem with periodic maintenance is that is is one of those areas that is easy to cut back, to defer to meet an immediate need. Gain now, pay later.
I mention this one now because it seems to have become something of a pattern over the last ten years.
Changing hats and looking at it from the perspective of an investor whether private or business, it creates another uncertainty in judging immediate business performance that has to be properly investigated.