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Thursday 17 Aug 2017 | 03:32 | SYDNEY
Thursday 17 Aug 2017 | 03:32 | SYDNEY

Defence budget day: A different trajectory

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12 May 2009 15:39

The Defence White Paper released on 2 May promises that Defence will deliver $20.6 billion in savings over the next decade. That’s close to saving the equivalent of one year’s budget over the next ten years. Tonight’s Australian budget will be the first indication of whether Defence can stay on a diet.

Many of the big spending equipment promises in the White Paper are over the horizon. We will have gone through a few more elections and even a few more five-yearly White Papers before those equipment mountains start to rear out of the mist.

Saving that $20.6 billion, though, is a task that starts now. The Defence Secretary, Nick Warner, says the cash clawback will involve ‘very fundamental changes to the way Defence does its business. These are real savings.’ Warner damns similar exercises under the Howard Government as, ‘slash and burn. It wasn't reform. It was just a driven savings program.’ 

                         

This time, he says, it’ll be different because Defence has designed its own diet and the budget will outline a ‘phased approach’ to the savings: ‘There is a ramp-up. We have time to build the reform program, build the savings program and time to get this right.’ Projected gross savings over the next four years will be $5 billion, building to gross savings over the decade of $20.6 billion.  

Defence aims to strip $4.4 billion out of maintenance. Non-equipment procurement, including travel, is to deliver another $4.4 billion. Better systems for payroll system, human resources and finance should save $1.4 billion over ten years. Building an integrated and flexible workforce is to save $1.9 billion.

Public servants are to take over from people in uniform or contractors. ‘Contractors cost us about 15 to 40 per cent more than public servants. ADF members cost us 30 per cent more than public servants,’ Warner says.  ‘At the end of this 10 year process there'll be 3000 more ADF than there are now and there'll be 300 more civilian staff than there are now.’

When you say it like this, it all sounds believable. And coming from Nick Warner, you want to believe it. The problem is that Defence has not stuck to its diet (or lived within its means) for a long time. For proof of Defences binge habits, turn to the jaundiced words of Australia’s longest-serving Treasurer, Peter Costello. In his biography, Costello devoted a page to berating Defence’s spending habits. My column on that was headed: Why Peter Costello hates the Defence Department.

The ex-Treasurer is back at the same topic in Peter Hartcher’s new book.* As well as talking about his frustration with Howard, Costello returns to his frustration at not being able to keep Defence to the targets in its capability plans. Costello says Howard was so keen on the military that Defence enjoyed a form of carte blanche: ‘Certainly, if they ever wanted to increase their bid, they were given every encouragement to do so. I spent a lot of time wrestling with the Defence Department. Not because I cut their budget – we were increasing their budget – but because I wanted to make them accountable.’

The figures tell the story. Howard promised Defence a 3 per cent real annual increase. Across the life of the Howard Government, that would have lifted the military budget by 38.4 per cent. Instead, what Defence actually got under Howard was a rise of 107 per cent.

Costello talks about making Defence ‘accountable.’ From today, that will mean seeing if Defence can stick to a spending trajectory that is still rising, but not as steeply.

* I loved Peter’s yarn about John Howard dropping off to sleep at the advertising campaign meeting called to deal with the voters’ perception that the PM was ‘too old, too tired’. Also, a wonderful Hartcher backhander in the Acknowledgements: ‘And for our Federal parliamentarians, who make impossibly large personal sacrifices for middling money and even less credit, the country owes you a debt of gratitude. Well, most of you.’

Photo by Flickr users DavidErickson and photographi.esc, used under a Creative Commons license.

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