29 Aug 2013

The Great Australian Defence Fantasy

By Ben Eltham

Kevin Rudd and Tony Abbott have promised to spend up on the military. But how can an Australian government afford to move a navy base and buy more planes without raising taxes, asks Ben Eltham

Surprisingly, defence policy has emerged as an issue in this election campaign. Whether that leads to better and more realistic defence policy, however, remains open  to question.

Two key talking points have developed. The first is over Tony Abbott’s promise to lift defence spending to 2 per cent of Australia’s gross domestic product. The second is Kevin Rudd’s commitment to move the Navy’s main base from Garden Island in Sydney Harbour north to Brisbane.

The military is a bit hard up at present, despite the billions of dollars spent annually. Many grand plans and strategies have been announced in Labor’s six years of government, but the scale of ambition has not been matched by the size of the investment. At around $25 billion, or 1.6 per cent of GDP currently, Australia’s military spending is modest on any historical or international comparison.

Of course, you might argue that’s appropriate, given the peaceful times we live in. Australia’s strategic environment is pretty friendly, our relations with our near-neighbours warm. On this analysis, maybe Australia can get along quite comfortably with a small, cheap defence force.

That’s not what the major parties are arguing. Both want to beef up Australia’s military capability with the acquisition of planes, ships and submarines. This will be expensive. The boffins at the Australian Strategic Policy Institute estimate Australia’s defence funding will need to increase significantly simply to cover the existing military, let alone to add new weapons. According to ASPI’s Andrew Davies and Mark Thomson, “there isn’t the money to cover future plans, and probably not enough for sustainment of the capabilities either on the books now or about to be delivered.”

The shortfall between the plans outlined in the 2009 White Paper and the budget reality since could be as much as $33 billion. And that’s before we talk about the planned acquisitions, such as new submarines. “There are at least four $10 billion plus projects on the books at the moment,” they point out.

In other words, defence is going to need a lot more money in future budgets, or many of the unaffordable purchases on order will have to be cancelled or scaled down. This may be why Tony Abbott has decided to commit to the 2 per cent of GDP figure, as the extra money that promise entails would go a long way to meeting the shortfall.

But gee, it’s a lot of money. The Government’s commitment to defence spending over the next six years of the federal budget is $220 billion – already a tough ask, as Labor has a history of not meeting its defence spending promises. In recent budgets, Labor has regularly cut spending to help make up the deficit. Thomson calculates Abbott will need to spend more like $255 billion to reach the magical 2 per cent line. Defence spending would have to grow by 5 per cent a year. By 2022, the defence budget would be $50 billion a year. Given the Coalition’s ambitious spending plans in areas like paid parental leave, that’s an assumption that borders on the heroic.

You can see why the admirals are none too keen on moving the main naval base in Sydney Harbour to Brisbane. The picturesque base at Garden Island contains the Navy’s key Pacific Ocean operations centre, called Fleet Base East. It also has the nation’s largest dry dock for ship repair, plus all the associated machinery and facilities. Moving all this to a new location at the mouth of the Brisbane River might cost $6 billion. It might cost more. That’s a lot of money for an arm of the military that didn’t have the maintenance budget to get a supply ship in the water during Cyclone Yasi.

The strategic reasoning behind Rudd’s idea to move the base north is sound. All around the world, navies have been closing their bases in big cities and moving their facilities farther afield to cheaper and more secure locations. The bulk of the Army is based in northern Australia, so moving Naval assets closer to the troops will improve amphibious operations and disaster response times.

If the ADF was rolling cash, the move would be a no-brainer. But it’s not. And there’s the rub. Could that money be better spent elsewhere in the defence portfolio? Most experts would agree that it could.

The base move is hardly the most pressing issue facing the Navy. The Air Warfare Destroyer project is said to be in trouble, with more delays and cost blow-outs expected on a project that is already budgeted at $8 billion. The Navy’s Collins class submarines are increasingly rickety as they get older; four of the six are generally out of action at any one time. The hard-working patrol boat fleet, which spends most of its time in the Indian Ocean intercepting asylum seekers, also needs to be replaced. New frigates are on the drawing boards. And then there are the various cultural issues to do with sexual harassment of women in the military.

Moving the fleet base will also move jobs away from Sydney – a point not lost on New South Wales Premier Barry O’Farrell, who ambushed the Prime Minister’s media call yesterday in protest. It might win Labor some votes in the marginal Brisbane seat of Bonner, however, which seems to be about as far as Labor’s calculations have extended.

In fact, both Labor and the Coalition’s announcements show the ongoing unreality of Australia’s defence debate. The key fact underlying this charade is that Australian governments are simply unwilling to spend the vast sums of money required to realise the dreams of the ADF top brass on Russell Hill. Politicians like to issue shiny white papers full of glossy photos and impressive spreadsheets. But when it comes to funding those visions, all too often the money doesn’t materialise on budget night.

In a way, defence is the perfect encapsulation of the wider fiscal denial gripping both major parties this election campaign. The illusion is simply that Australia can have it all.

Australia’s budget deficit is modest, but our reality deficit is much larger. With one of the lowest levels of taxation in the OECD, Australia does not raise enough revenue to pay for the government services we currently provide. Both major parties want to add new benefits and services, like paid parental leave and disability insurance. Both parties also want to spend more on infrastructure, on education, and on defence.

Neither major party is willing to raise tax levels. What happens when reality collides with these fantasies? Something similar to what we’ve seen in recent years in Defence. Cuts are made; purchases put off; services slashed. Capability degenerates. Australia can certainly afford a bigger military and a more generous welfare state. We’ll just have to pay more tax. Don’t expect any politician to tell you that during this election campaign. 

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This user is a New Matilda supporter. douglas jones
Posted Thursday, August 29, 2013 - 15:09

Does not all the way with LBJ still apply -  has our warrior, man of steel was it lost his role as follower? No wheat deals to hand round?

Seriously taxes do need to rise if we are to counter climate change surely a more immediate and probably bigger challenge than fighting wars?

Though having said that, the USA has world ambitions remaining whatever a countries occupants desire. Even aerial protection seems antiquated via drones preceded of course by due process. Due process for the right wing extreme being different from statute law, even from often vocalised belief in innocence until proved otherwise by ones peers, more a political entry card to society than anything else ! They also have funded politicians, neocons and the defence industry's role as Keynes pump primer which together with our follower attitude and amongst these the belligerant civilian politician and defence person. matching those in USA, probably not in the shorter term

Yes we must raise taxes there is the extra AGFP funding needed for the next wave of refugees produced by war......naturally most of these want a better life including freedom from mayhem but not having experienced such trauma the insularity of Australia wioll prevail. We might with sea rise, loss of food producing land need to mount defence on our shores; We might indeed see children overboard; I derive my comment from those of the coalition.


Posted Thursday, August 29, 2013 - 16:00

@Douglas Jones. Enjoyed your post.

What concerns me most is the outcome of the election and it's possible dire consequences.

I shudder to think that an acolyte of Howard has his hands on the tiller. It is like having Count Dracula as head of the bloodbank. Remember the illegal invasion of Iraq based on a Howard lie?

Tony Abbott was there and he learned from the "master manipulator" (sic). What do we know about this guy?

Let’s refresh our memory!

Rupert Murdoch wants him. Gina Rinehart wants him. The miners want him. Big business wants him. Most of the media want him. But does the public want him? By September 8 we will know if the voters really did want him, whether they have been persuaded by the continual media promotion of Tony Abbott and his Coalition, and the incessant denigration of Kevin Rudd and Labor.

Find out what the public can expect from a person with his “credentials” (sic) ! 


This user is a New Matilda supporter. Venise Alstergren
Posted Friday, August 30, 2013 - 14:28

Where, why and how would Australia need submarines? Hell, we can't even search the surface of the sea with conventional shipping, let alone sending subs vast distances on and under the sea.


(Don't forget about all those seaworthy, fine and streamlined Indonesian fishing boats the Rabbott intends to buy??!!  Let's turn them into surface vessels.)


Or we could let Defense die a natural death.  The only raison d'Etre for having troops of any sort at all, is to send them to fight and die in one of America's losing wars.

Posted Sunday, September 1, 2013 - 07:58

 Australia has operated submarines for many years and done so very successfully. We live on the world's largest island, so most people would agree this makes up a major part of our defence.

dr greg
Posted Monday, September 2, 2013 - 08:30

An argument could be made that we actually do need a bigger navy, ever noticed the extent of our coastline? Why we maintain such a large army is the issue, after all, where would we fight a ground war in the near future? The only deployment available is at the behest of the  US. Our airforce is in the toilet because some Howard govt boofhead decided without any due process to buy 'off the plan' a US fighter which has turned out to be a shitbox, so all that money's gone for nothing...any way you look at it, we need MORE BOATS.

Posted Monday, September 2, 2013 - 16:30

It is a shame that the policy writers can't make a winner out of Defence.

Admittedly several overseas tours of duty raise a lot of criticism as noted above.

The ADF doesn't have a command vessel.

NSW Wales needs work in traditional industries like engineering.

The World's largest island should at least be a player in the shipbuilding industry.

If we had to buy Garden Island then looking elsewhere might make sense, But we already own it. Mind you it wouldn't hurt to spend some money on upgrade and put more of its facilities to use.

Its not necessarily a raise tax issue, if they looked at the situation from an integrated point of view they could do something about several things that drain the budget.

However as obvious as that is you run into a solid brick wall if you try to suggest it, I think both parties are way out of touch.

Hopefully its not going to be a 2 mouse click parliament-put some independents in the Senate that have enough nouse to operate on all the issues-this one in particular.