The Great Australian Defence Fantasy


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. 

Ben Eltham is New Matilda's National Affairs Correspondent.