11 Sep 2019
It’s going to cost us to point in the right direction
You’d think that $40bn a year on defence (2 per cent of gross domestic product) and megaprojects giving the military what it has always wanted — frigates, submarines, strike fighters, infantry fighting vehicles and the electronic systems to lace them all together — meant defence spending and force structure were off the Morrison government’s to-do list. The 2016 defence white paper is the plan and it just needs to be implemented.
But no. As Harold Macmillan supposedly said, grand plans are changed by “events, dear boy, events”. And it’s events that demand a defence rethink.
Event one is the realisation that $40bn a year is not enough to deliver, operate and maintain the force the Australian Defence Force is getting. That’s for three reasons, as Marcus Hellyer’s Cost of Defence analysis for the Australian Strategic Policy Institute shows. It’s partly because the huge ship and submarine building projects have sucked much more money than expected (at least $10bn) out of the next 10 years.
Also, the cost of operating and maintaining all the systems Defence already has is larger and growing faster than allowed for in the white paper. And the cost of the men and women in the military and the Defence Department to deliver, support and operate the force was also underdone.
...defence plan is not deliverable with only 2 per cent of GDP...
So, the government’s defence plan is not deliverable with only 2 per cent of GDP.
And there have been other unfortunate events since 2016.
Australia is “stepping up” in the South Pacific, with the first package of initiatives costing more than $2bn. Defence is involved with a new humanitarian assistance ship to be built, crewed and operated, a big new joint naval base project with Papua New Guinea and the US on Manus Island, a training facility in Fiji and a deeper, more frequent tempo of military engagement with PNG and South Pacific forces.
The costs for Defence’s bit are magically being absorbed into the budget, putting more unaffordability into the mix. That’s not sustainable without hard choices, particularly with further steps such as opening ADF recruitment to Pacific Islanders, which would be a smart strategic, people-to-people and ADF capability move.
And there’s more. Events in Southeast Asia, such as the probable Chinese military naval basing out of Cambodia and the growing sense of coercion by the Chinese state within the Association of Southeast Asian Nations, means a Southeast Asian step-up is badly needed to build and reinforce security partnerships. Scott Morrison’s visit to Vietnam indicates this. That will take people, money and machines - and cost money.
On top of all this is a combination of technological change and a need to be able to operate more independently of our US ally. It has become glaringly obvious that small numbers of exquisitely complex, capable, manned platforms to which we have committed will be vulnerable unless complemented by large volumes of cheap, disposable, replaceable semi-autonomous and autonomous systems: unmanned systems in the air, on land, in the sea and under the sea. But the Defence integrated investment plan treats these new technologies as speculative hobbies that may prove disruptive sometime later on.
They have done so already and they will continue to. Sticking with the all-in bet the white paper places on small numbers of complex, manned systems is a broken strategy that risks the ADF being the obsolete Kodak of militaries. But, luckily, the complementary technology that will protect and empower the ADF’s small number of big platforms is relatively cheap and likely deliverable by Australian industry. And it can be funded by doing what Defence is meant to be doing, which is seeing the megaprojects not only as frigate or submarine projects but, in the case of frigates, also a surface warfare program that includes the ships and complementary surface warfare autonomous systems within the $35bn program budget.
That also would mean the $79bn for the submarines becomes $79bn for undersea warfare capabilities, which includes submarines but carves out $5bn over the program life for armed and unarmed unmanned underwater vehicles. It’ll be bad news for BAE and for France’s Naval Group that all the $35bn and $79bn won’t go to nine frigates and 12 submarines, but it will be good news for the men and women of Australia’s military who may be sent to fight any wars in the future.
The same also applies to the army’s multi-billion-dollar Land 400 project to buy 450 infantry fighting vehicles, with a wedge of $1bn being carved out to acquire unmanned systems relevant to land warfare. That will mean fewer or less expensive vehicles but more overall land capability.
The larger defence budget problems can be partially addressed by cancelling some projects that the new strategic and technological environment has made vulnerable or less relevant. You also might help control costs by extending the army’s Tiger helicopter and investing in some much cheaper drones to operate with it. That would avoid spending billions to replace it early in its operational life while adding to overall combat power.
The ugly fact facing the government is that, even with these steps, the defence budget committed to in 2016 will not secure Australia in the strategic environment of renewed great power competition, technological change and a more assertive China.
This term of government is the time to face this reality, even with the emerging global economic headwinds and competing priorities for money wafting their way towards the Treasurer’s and Prime Minister’s desks.