Towards realistic defence spending

Two themes are commonplace in Australian defence debate, these being a supposed absence of strategy and the magnitude of defence budgeting.

There are assorted definitions of strategy with the most appropriate regarding defence arguably being:

...the science and art of employing the political, economic, psychological, and military forces of a nation or group of nations to afford the maximum support to adopted policies in peace or war' (my underlining).

A somewhat collegiate defence commentariat focuses much on whether Australia's interests might be aligned more with the US desire to maintain 'primacy' in SE Asia or be mainly centred on the South West Pacific region. DWP2009, Chapter 6.38 crystallises policy that had bipartisan support from the major political parties:

...Our strategic interests and defence posture suggest a primary focus for the ADF on tasks in our geographical vicinity. To guide defence planning, the Government has decided that the ADF's primary operational environment extends from the eastern Indian Ocean to the island states of Polynesia, and from the equator to the Southern Ocean...

Prior to PNG independence in 1975, Australia was significantly involved in building that nation over about 70 years. The Australian military also provided other regional support including extensive mapping of much of the northern archipelago. All of that activity gave awareness of what military capabilities were suitable for operations in the regional wet tropics largely characterised by high mountainous rugged jungle terrain with similarities to the operating environment experienced during Vietnam involvement.

Post-Vietnam War, Australian military capacity declined until about Year 2000 and the Howard Government subsequently ordained a mythical futuristic Force 2030 vision (later endorsed by former Prime Minister Rudd) resulting in multiple dubious merit and somewhat unproven hardware acquisitions. Optimisation of some proven platforms in service that were well-suited for regional operating requirements to continually maintain adequate and credible defence capabilities has hitherto been scorned, despite availability of ongoing modest cost manufacturer upgrade programs. Multiple platforms that have been/will be shed are now being enhanced by other nations for continued operational employment. Tens of billions of taxpayer dollars have been/are being squandered so any arguments for increasing defence expenditure are unpalatable.

Relating defence budgeting to GDP is just economic deception because that criterion is not a measure of government spending potential. Defence cannot expect privileged treatment above other national economic imperatives, except perhaps in a major conflict situation, so should be paid for progressively and not funded by debt. Projecting defence outlays for 10 years to principally benefit mostly foreign-parented defence industry is inappropriate considering unpredictable world economic influences over such time-scale. Funding should be related to projected government income/revenue within the more reasonably foreseeable 4 year budgetary forward estimates process, as previously implemented by former Minister for Defence Joel Fitzgibbon but later rescinded by Parliamentary Secretary for Defence Procurement, Greg Combet.

Defence outlay for 2010-11 approximated 7.4 percent of revenue and may be about 7.1 for 2012-13 based on the latest Treasury data-if revenue shrinks further, the percentage defence spend will rise relatively. Despite soaring operating costs (largely driven by multiple inappropriate hardware acquisitions), the present level of defence funding should be about adequate; if essential economies are forced upon an apparently dysfunctional defence organisation, especially the increasingly bloated Public Service component.

Bipartisan political pegging of defence expenditure between 7 and 7.5 percent of federal revenue, with preservation of any underspend in a 'Defence Reserve Fund', would force more disciplined management of military capacity. A portion of annual defence funding should logically be quarantined for hardware acquisitions envisaged downstream, plus some of any automatic boosting due to increases in federal revenue.

This approach would warrant recasting of capabilities determination toward what would be affordable and inject seemingly absent accountability into the process. Maximization of taxpayer investment in proven assets in service through progressive enhancement would be engendered and the folly of being early customers for unproven hardware like Wedgetail, KC-30, Tiger, MRH90, JSF deterred. Retention and cost-effective upgrading of some hardware being forfeited (Iroquois, C-130H, Blackhawk, Seahawk, P-3C) would be appropriate.

The New Zealanders have been much wiser enhancing C-130H and P-3C to extend time in service. They are also acquiring reconfigured former RAN SH-2G Seasprites at rockbottom price. The question arises why did Australia not pursue this attractive option and also optimise Seahawks instead of acquiring the hugely expensive MH-60R?

The Kiwis have arguably erred though in being conned into the very costly NH90, which will require RAAF C-17 airlift. Like Australia, they really need to retain the incomparable Iroquois utility helo which is easily C-130 deployable for regional support requirements. The A109 also being acquired for the RNZAF does not have equatable capability with the Iroquois for battlefield utility support roles.

The Hotel model Iroquois, which Australia is more or less giving away, can be totally refurbished and upgraded through an ongoing Bell Helicopter Huey II program for just $2million per airframe, including a modern glass cockpit and communications. It is being operated by the USAF and multiple other agencies, including in Afghanistan. Its enhanced performance beats all competitors for hot and high operations throughout Australia's neighbouring archipelago with easy sustainability in remote areas and low operating cost.

Intent to manage Australia's military capabilities planning cost-effectively seems totally lacking in Canberra, including among serving and former military leaders.