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Saturday 19 Aug 2017 | 04:13 | SYDNEY
Saturday 19 Aug 2017 | 04:13 | SYDNEY

Defence: More tight budgets ahead



16 May 2012 12:32

Derek Woolner is a Visiting Fellow at the Strategic and Defence Studies Centre, ANU.

Let's hope someone tells China that Australia does not intend to nuke it, at least not for another decade or two. Sam probably thought his post had placed some qualifications on the extent to which China's military capabilities could be used to justify the numbers of strike aircraft or submarines that the Australian Defence Force should acquire.

Apparently a theme that won't die without a stake through its heart, the growth of China's military power has emerged again in conversation about the two very large LHD amphibious transports under construction for the RAN, particularly in the latest posts from Jim Molan and Hugh White.

Undoubtedly, the rising power of China is a central issue in developing Australian strategic policy but it is not the only concern in planning capability development for the ADF. With the decision to bring forward the next Defence White Paper to 2013, the Government has reopened thinking on the entire question of what the ADF should do and how it should be able to do it.

It's not surprising this will be no purely logical investigation. In the Prime Ministerial and Ministerial comments announcing the decision, the clear implication is that the historically dominant factor in force structure development has returned; that is, finance or the limitations on it.

The 2012-13 Defence budget identifies $5.5 billion to be removed from allocations over the next four years but this is, in fact, only the minor part of a consistent defunding that is now years old. Mark Thompson of the Australian Strategic Policy Institute estimates that this has reduced earlier proposals for expenditure on the defence function by some $18 billion.

It's wishful to suppose that this is purely due to the current government and expect a quick return to anything like the 3% rate of real growth provided during the Howard years. The Commonwealth's revenue base has been substantially undermined not simply by the global financial crisis but by erosion of direct taxes following concerted income tax reductions and by structural change affecting the return from indirect taxation.

Perhaps the forthcoming White Paper should begin by asking how much taxation the Australian public is prepared to pay. The general answer appears to be 'even less', which would be unhelpful. So, despite what specific policies the Coalition parties might carry into government (and, so far, they have few) the years of big spending on defence are over for the foreseeable future.

This means that questions on the type and amounts of equipment the ADF should get will need to be decided with a very sharp and expertly applied logic. Bids for new equipment will be in a desperate competition for funds and ruthless prioritisation should be applied.

It should not be assumed that capabilities in the ADF inventory would have the protection of being, to use Jim's words, difficult to un-buy. Even amid the largess of the early years of Howard's increased defence funding, it was still found necessary to mothball some recently delivered naval vessels. The same pattern is now being repeated with the planned withdrawal of elements of the Army's tank force.

The trouble is that using military power can be very expensive if done properly. Even Hugh's modest stabilisation forces can come to quickly cost more than $1 billion a year to deploy. Trying to avoid the full extent of these costs eventually brings the distortions of false economy, as was revealed when the ADF's deployed logistics capability was shown to be totally inadequate for the East Timor operation.

False economies have been a problem for the RAN over recent years, responsible for the poor sustainability of several classes of its vessels. The 2012-13 budget and Forward Estimates reorganise $2.9 billion and reallocate it to higher priority tasks. Of this, a third is to improve the maintenance of naval vessels. The idea of the 'clockwork' Navy, which can simply be wound up and put in the water, has been exposed as starkly as that of the Army without deployable field support.

As the largest vessels ever operated by the RAN, the LHDs will be expensive to operate and that cost will have to be justified by its contribution to the goals of strategic policy. The ships may not be endangered for some time but, if costly to operate, wouldn't be the first RAN flat top mothballed in a secluded cove in Sydney Harbour.

Of course the rise of China will be a central consideration of the forthcoming White Paper. But it will not, by a long way, be the sole focus of the capability development section of that document. Planning to allow the ADF to perform the range of functions with funding much reduced is going to be challenging. Expect to see the LHD debate replicated in many other areas.


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