defence
16 Mar 2010
Our Arms Budget Has No Legs
Forget cliches about welfare profligacy, when it comes to overspending and bureaucratic bungling, the Defence Department has no rivals, writes Ben Eltham
It’s time the Australian Government admitted that it simply can’t manage large defence acquisitions.
Consider by contrast Kevin Rudd’s new health reform plan, which is at least in part, an exercise in fiscal discipline. The current health system represents an "unsustainable funding model" according to the Government’s National Health and Hospitals Network policy document. But if health funding is unsustainable, what are we to make of the nation’s defence budget?
The Defence Department is already the largest employer in the country. It spends $26 billion a year, most of it on wages for soldiers and operations in places like Afghanistan but some of it on embarrassing items such as Chesterfield sofas, oil paintings and "stuff", according to a recent Fairfax investigation.
The waste and mismanagement in Defence seems to occur in every corner of the establishment. Some of it would shock Captain Yossarian from Joseph Heller’s Catch-22. According to Fairfax’s Linton Besser, Defence spent $1.4 billion on travel, accommodation and conferences in the past four years alone.
Just yesterday, the Australian Financial Review reported that the Australian Defence Force buys $30 million worth of ammunition from two factories managed by giant French defence corporation Thales and that it pays an additional $100 million to Thales simply to keep the factories open.
The Australian National Audit Office found that "Defence pays a premium for retention of the indigenous manufacturing capability, which now provides only 13 items of the approximately 830 EO line items in the ADF [ammunition] inventory." Unfortunately, much of the ADF’s ammunition is useless: $1.2 billion worth is "other than serviceable", according to the Audit Office.
So profligate has Defence become that the Defence Minister John Faulkner has ordered an investigation. "Financial control is critical. All of these issues, if not dealt with already, should be and will be examined,” he told the Sydney Morning Herald. Of course, as Jim Hacker discovered in Yes, Minister, launching an efficiency drive is one thing; getting the department to actually deliver efficiencies is another. Departmental bureaucrats are past masters at hiding money by feather-bedding, by over-servicing or simply by concealing it in opaque accounts.
The Government may struggle to find its proposed $20 billion in proposed savings over the next 10 years. "Find" is the key word here, because Defence’s accounts are a mess.
Last year on budget night the Department could not even provide its Portfolio Budget Statement — the master budget document for the entire department for the year. It did eventually appear on the Defence website months later.
As the Australian Strategic Policy Institute noted at the time in its budget analysis: "As the first budget after a new Defence White Paper, there is a glaring absence of substantive information on funding, investment and reform. The best that can be said is that the budget is consistent with a White Paper that’s silent on when anything will occur or what things will cost."
If the top-level numbers are rubbery, the day-to-day accounts are in trouble too.
Defence has real trouble paying its staff correctly. The department’s payroll facilities are so antiquated that soldiers serving in Afghanistan are regularly overpaid and then forced to pay back "debts" they didn’t know they’d incurred. Like Heller’s "IBM computer with a sense of humour", Defence’s payroll facilities don’t discriminate: the situation is so bad that in February, the Chief of the Army himself, Lieutanant General Ken Gillespie, admitted that he too had been a victim of the overgenerous payroll system.
Of course, a billion here or there pales into insignificance when we look forward to the really big-ticket weapons systems Australia has committed to buy, including the $16–18 billion purchase of a new fleet of F-35 Joint Strike Fighters.
There’s no doubt that Australia’s current fighter fleet, of legacy F/A-18 Hornets, is reaching the end of its life. The problem is that its replacement, the F-35, is not ready. Worse, the JSF program is in deep trouble, and has been almost since it began flight-testing. Touted as a "fifth-generation", truly stealthy multi-role fighter, the JSF was in fact designed as a semi-stealthy ground attack plane and therefore suffers from a number of design compromises. With only one engine, it is underpowered, and it lacks the range or payload of Australia’s retiring F-111s.
At every step of its development, the JSF has turned out to be heavier, less capable and more expensive than promised. The latest reports have seen its projected cost double to $113 million (from $50 million) triggering an embarrassing notification to Congress by Pentagon officials under the terms of a US law, in which defence projects must justify themselves if they run more than 25 per cent over-budget. The JSF is running 60–90 per cent over-budget.
And the fighter jet we will acquire will be, according to Australia’s most respected independent air power analysts — Air Power Australia’s Carlo Kopp and Peter Goon — markedly inferior to the new generation of Russian fighter jets currently being developed.
If you think the JSF is in trouble, spare a thought for Australia’s submarine fleet, which now spends more time high and dry than it does in silent service beneath the waves. Australia’s Collins Class submarines are reputedly very quiet and highly capable boats. It’s just that they don’t work very well, constantly requiring major repairs and refits. Only two submarines are currently serviceable, and two of them are so sick they will be out of action for a combined total of nine years. The Collins boats top a list of 10 "projects of concern" worth more than $7.5 billion.
But despite the acknowledged problems with our current fleet, Defence planners and the government still want to push ahead and build a new generation of submarines for the Navy, potentially costing more than $20 billion. It’s a mind-boggling figure, particularly when the Collins boats clearly establish the risk that they may not even be serviceable. As ASPI’s Andrew Davies told the ABC, "There’s certainly a lot of things to worry about when planning a future submarine project because you’d have to say at the moment the Collins fleet is in a shambolic state."
But "shambolic" is par for the course for Defence and planners will push ahead anyway. Kevin Rudd, for one, is thought to be a strong supporter of the push for new submarines. After all, his government will be long gone by the time the first boat pushes out into the water — sometime after 2025. Expect the Defence acquisition scandals to keep coming: bungling big purchases is what the department does best.
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Is no-one looking at this from an alternative view?
The F/A-18 force is reaching the end of its life… Why does it need to be replaced at all?
“To protect Australia’s airspace” say the defenders. But from WHO?
The F-35 does not have the range or payload of the F-111… When has the range or the payload of the F-111 ever been used, except to blow up the odd North Korean drug freighter?
Who exactly is going to invade? PNG? Fiji? Tonga? NZ???
And the submarine force….I mean “farce.” Submarines can be used for shipping denial (once again, who are we at war with??) or for intelligence gathering. That’s a very expensive and ineffective intelligence system there…
New Zealand seems to get by quite well by without strutting around the world, with their collective wangs hanging out, telling everyone how tough they are… They neither have nor need any strike capability, and we don’t need it either. The RAAF humanitarian mission should come first, with the capability or the Hercules force being first on scene at natural and humanitarian disasters. Lets concentrate on this instead of throwing the next 20 years worth of Health, Welfare or education Education budgets at hardware Australia doesn’t need, to defend against a threat that does not exist, or to project power onto an imaginary boogeyman.
Jonnyboy55
Hear, hear meh!!
When the ADF issued a tender recently for a new eHealth solution for defence force personnel, the initial rumours were that the contract was going to be worth several hundred million dollars … for 40,000 patients! The very fact that the only serious bidders will be IBM, Accenture, CSC and HP/EDS tells you just how idiotic Defence procurement has become. These outfits don’t have any proven eHealth solutions - but they sure know how to submit big invoices to the Department of Defence!
Every taxpayer should be recoiling in horror!
Jonnyboy55 - the tax payer is precisely the problem. They have never cared to look too closely at defense, or ask the obvious big questions about what why and how. A lot of folk will tell you we spend so much on defense, and with American contractors, so Uncle Sam will come to our rescue come the yellow hordes descend on our blond and febrile rumps. And that’s about it.
It’s roundly considered political suicide in Australia to question big ticket defense spending. There’s no mileage, only the promise of a pummeling by the tabloids for being soft. So it won’t happen. The military know it, the contractors know it, and the media know it. Very little of Fairfax’s confected outrage has been about the big picture, because, wouldn’t you know it, Defense is a huge spend on advertising.
But on hospitals, schools, and roads: everyone’s an expert.
Hey this is’nt funny!
Maybe if the gov’t made Medicare in charge of defence and Defence in charge of health and education we would have a more desirable outcome.
The way medicare penny pinches the public’s health claims, and the lousy allocation of resources for tertiary education by successive governements, could be directed towards defence spending and the defence dollar go towards health and education.
Our soldiers could go to university and get student loans they would have to pay back, while our uni grads could get a blank cheque to study, and maybe have botox and any other Prescribed medication or cosmetic procedure on the house.
Wars could be run like uni courses.
if a war is’nt won after a certain time period, the combatant would have to “show cause” why they should’nt be outed from the battlefield.
“mature age” soldiers could come to the table and participate in peace talks. And they would not be allowed toilet or tea breaks until a peace deal was struck.
The warring parties should also be encouraged to make love not war and the resulting maternity leave cases would cost the armies so much they could’nt affford to have any more wars.
This just needs some bipartisan cooperation from the gov’t. and opposition .
OK Messrs Rudd and Abbott, it’s over to you.
Ha ha Oli
The biggest problem is that government is stuck in the 1800’s when it comes to defence. We have all this “stuff” for a just-in-case scenario that is not likely to happen. Although, I’m ASIO (or some other secret org) will tell us that we are “constantly under threat.”
Even back in medieval England there was no permanent “defence force”, knights of the realm simply recruited “volunteers” on the way to a battle. That was probably more efficient that what we have today.
By the way, this is the stuff we have knowledge about - imagine that actual can of worms that exists. Also imagine what we could do with all those funds, solar power and water tanks for every household in the country! Free health care for all!
Be the change you want to see
www.adambutler.com.au
I know a few civilians that worked for defence. One who was in procurement says they changed the rules some years back and the system became less accountable and another who is a computer boffin who after creating custom programs and fitting out a new recruitment centre office with new top of the line gear, found out that it was a waste of time because they decided to outsource recruitment a couple of weeks after the job was finished. I’m sure the hardware was still useful but the custom programs were definitely a waste of time.
Successive LibLab Australian governments squandering $26 billion a year of tax revenue opportunity on US wars is ‘all the way with LBJ’ history repeated. Korea, Vietnam, Kuwait Oil, Afghanistan, Iraq Oil invasions all were to support US strategic interests.
Australia’s $16–18 billion purchase of a new fleet of F-35 Joint Strike Fighters (JSF) is ‘all the way with LBJ’ history repeated.
A quick visit to http://www.newaustralia.net/defence_airforce.html will confirm that the JSF is a sure fire extravagant overrated dud and only about political chronistic bum licking of the US. JSF depedency will send a message to would be Australian fighter pilots that they will be sitting ducks against everything else up there, so why bother enlisting?
Forget the millions squandered on Insulation. In Defence we are talking billions, so ‘millions’ are the new pennies.
LibLab shared ideology is that all government expenditure must be increased year on year without question, underscored by misguided economic druids evaneglising mass immigration.
But no LibLab policy, white paper can justify to the Australian people why most goes to being all the way with LBJ. In our region Australian Defence can’t even get contained peacekeeping in neighbouring East Timor or the Solomons right.
Where’s Australia’ long range defence strategy? Where is the independent strategic regional thinking? Where is the budget alignment to strategy and the performance criteria?
With so many pressing domestic matters - health, education, and infrastructure over 30 years behind immigration demand, it is time the the bottomless accountable bucket they call ‘Defence’ be accountable and specific to Australia’s immediate region, not to some nostalgic LBJ calling.
(ex-military, ex-pilot)
@JohnMarlowe, you got it!
I was on the periphery of the procurement of the Leopard Tank, and we (Army) did well to get this vehicle, unlike its replacement crock M1. However, as an example not one person ever asked the searching question; “Why do we need a tank?”
For a tank is needed, primarily, only to kill another tank, and who do we know can place tanks across Australian beaches other than the USA? They are the only nation in the world with such a military logistic force.
So why do we buy tanks? Your guess is as good as mine, outside of a general’s bragging right when visiting the Pentagon over a gin and tonic?
Defence has been a mystery bag for decades, we are not well served by our admirals, generals, air marshals, and it would appear that our parliament is incapable of imposing discipline upon them.
ex Sapper in the days of “All the way with LBJ…”
========================================
“Who will fix global warming? A Banker? A Lawyer?
A scientist like an engineer? Yup!”
BECOME AN ENGINEER!
@Sapper_K9
Thanks for the feedback.
Ben Eltham,
You have a feature in the making, about the military hardware industry and how it improperly lobbies government and gets its quota sales to Defence procurement, irrespective of trategic need, use by date, but if it is US-made then government funding is made to happen.
Australia’s Defence is woefully incompetent
Read the following:
http://www.smh.com.au/national/the-wrong-stuff-20100308-psw6.html
http://www.smh.com.au/articles/2004/04/30/1083224588611.html
http://www.defence.gov.au/whitepaper/
http://www.thalesgroup.com/Markets/Defence/Portfolio/
http://blogs.crikey.com.au/planetalking/2010/03/12/memo-defence-come-clean-now-on-jsf-debacle/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CrikeyBlogs+(Crikey+Blogs)
http://rspas.anu.edu.au/ir/Oceanic/OCISPapers/Radford_Loyalty.pdf
http://www.abc.net.au/news/stories/2010/03/09/2841073.htm
http://www.theage.com.au/national/new-submarine-fleet-to-cost-36-billion…
http://www.theaustralian.com.au/news/nation/engine-problems-cripple-coll…
http://www.abc.net.au/4corners/content/2007/20071029_hornets/interviews….
Plus according to the article ‘The myth of the Howard government’s defence competence’ by James Sinnamon
http://webdiary.com.au/cms/?q=node/2200
“The Abrams is too heavy for use on Australian bridges and roads. It cannot be airlifted by any of the ADF’s transport planes and cannot even be loaded onto any of the Navy’s six heavy landing craft, let alone its smaller LCM8 landing craft, so they are entirely unsuited to the defence of the Australian continent and could only conceivably be used as part of joint combat operations with the US.
The Abrams’ reputation for indestructibility has been laid to rest by the experience of Iraq where its armour has been penetrated with surprising ease by low-tech bombs and rocket propelled grenades used by Iraqi insurgents. At least 80 have so far been destroyed.
The Collins class submarine combat system
In 2001 the tendering rules for the contract to supply a combat system for the Collins class submarine were changed to make the prime criterion ‘interoperability’ with the US.
Additionally, in a number of smaller acquisitions, domestic Australian suppliers have been systematically discriminated against.
The Government refused the Army’s request to purchase the Australian manufactured Aerosonde Unmanned Aerial Vehicle (UAV) used successfully for surveillance in the Solomons in July 2003. Instead of purchasing this proven and relatively cheap technology, the Government opened a tendering process for the supply of a more expensive high-tech version, then cut short the tendering process, instead opting only to field test two systems - both from the US.
According to a report “Auditor lashes $2.1bn frigate upgrade” in The Australian newspaper of 1 Nov 2007, the privatisation of the Australian Defence Industries in 1999 appears to have led to a delay, so far, of four and a half years in the upgrade of six frigates and a $275 million cost blowout. In spite of the blowout, the navy will only be getting four frigate upgrades instead of six. Other projects which have incurred cost blowouts include the navy’s Seasprite helicopter, the army’s M113 personnel carrier upgrade, the RAAF’s Wedgetail surveillance planes and the Tiger reconaissance helicopter. Total cost blowouts for Australia’s Defence Materiel Organisation (DMO) are running at $13 billion according to Labor’s defence spokesman Joel Fitzgibbon.
An earlier and tragic consequence of outsourcing of defence force responsibilities to private companies was the HMAS Westralia disaster in 1998 in which four sailors were killed in a fire caused by the faulty installation of hoses by poorly trained private contractors.
Australian taxpayers have also yet to learn the costs of the Howard Government’s propensity to sell defence force buildings, including housing for defence personnel, to private investors and then to lease them back.”