Watching China’s military parade this week, it was easy to be enthralled by the sight of all those weapons of war – nuclear missiles! drones! gyrocopters! – before being hit with a sense of dread at the thought of them being used.
And a briefing last week by the man in charge of buying Australia’s military kit offers some stark statistics about the spending challenge confronting the Morrison government amid a regional arms race.
A slide show in Defence Department deputy secretary Tony Fraser’s presentation to defence industry insiders put China’s annual military budget at $US177 billion ($262 billion), compared with America’s $US686 billion.
Australia is spending $38.7 billion on defence ($US26.2 billion based on the exchange rate when Fraser prepared his figures).
China rolled out impressive new hardware this week. AP
But Australia has a relatively gold-plated military. Canberra spends $US453,000 for each soldier, sailor, and air force member compared with $US504,000 in the US (which takes on the lion’s share of global policing and defence research and development), $US320,000 in Britain and $US179,000 in New Zealand.
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China spends $US87,000 for each of its troops.
Australia’s high base presents a budgetary challenge for the Morrison government as it nears its target of spending the equivalent of 2 per cent of gross domestic product on defence in 2020-21.
And the Australian Strategic Policy Institute’s analysis of the defence budget shows it is on track to go beyond 2 per cent, hitting 2.21 per cent in 2022-23.
In dollar terms, a report by the Parliamentary Budget Office last week forecast defence spending to effectively double to $71 billion over the next decade.
For all the talk of a demographic time bomb caused by the ageing population, the PBO says defence is the second biggest contributor to growth in government spending, behind the National Disability Insurance Scheme.
Two per cent gained currency in Australia only as a way for the Coalition to attack the Gillard government.
During his recent visit to the US, Scott Morrison made much of how Australia was spending 2 per cent on defence as evidence Canberra was pulling its weight in the alliance.
But the 2 per cent target has always been arbitrary in an Australian context. It is the benchmark set for NATO members but the security situation confronting western Europe is vastly different, giving the main potential adversary, Russia, has a much smaller economy than the rest of Europe combined and NATO operates under the principle of collective defence – an attack on one nation is an attack on all.
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The lone common element is that the US underpins security arrangements.
Two per cent gained currency in Australia only as a way for the Coalition to attack the Gillard government for letting defence spending slide when budget revenue got wiped out by the global financial crisis – remember that it was almost treasonous how Labor had allowed it to fall to the lowest level since 1938, the year before World War II broke out?
But asked whether the Morrison government would hold defence spending at 2 per cent or set a new, higher target, Defence Minister Linda Reynolds deflected questions to one of her department’s army of spin doctors, who issued a suitably vague statement.
The statement said only spending in the first budget year was formally appropriated but the Defence Department’s funding plan (outlined in the 2016 white paper) had been deliberately constructed to provide money to the military when required to meet its capability needs.
In other words, Defence has a road map for the funding it says it needs until the mid-2020s but it is not baked into legislation.
That does give the government some flexibility to pare back defence spending if the budget situation deteriorates.
But it is much more likely the government will go well beyond 2 per cent, because of a range of factors, such as the shiny new toys entering service or those that are on order.
While there is a good understanding of the acquisition costs – such as $50 billion for submarines – these new assets will also drive structural increases in defence spending.
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For example, a doubling in the submarine fleet will mean doubling crew numbers.
Furthermore, the sophisticated hardware is increasingly expensive to operate. According to ASPI’s budget brief, the cost of a flying hour for a new F-35 Joint Strike Fighter is $41,800, double that of the classic F/A-18 Hornet, which is being retired.
The army’s Vietnam War-era M113 armoured personnel carriers were like tractors that needed little more than a diesel mechanic to keep them running, one defence industry source told this column. But their eventual replacement will contain a host of computer systems that need to be maintained.
A frequent criticism of the 2016 white paper and its associated integrated investment plan is it leans towards manned platforms at the expense of drone technology, which is cheaper to operate over the long term.
The strategic underpinnings in the 2016 white paper are also starting to show their age. It failed to anticipate the alliance disruption the election of Donald Trump has caused, while China’s resolve has only hardened.
Congested and contested
As one senior commander put it recently, the waters where Australia operates are becoming “more congested and more contested”.
That has necessitated an uptick in operations. While the government boasts about the the Pacific Step-up, which includes a hefty military component, no extra money was allocated for this venture, forcing Defence to juggle its budget and redeploy resources from elsewhere.
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If every time Beijing shows interest in establishing a base somewhere in the Pacific, Australia’s response is to swoop in over the top with an offer of greater military assistance, it is going to become an expensive exercise.
Reynolds is tight-lipped on whether the government will soon commission a fresh white paper (previous versions have been released between three and seven years apart) but AFR Weekend can reveal the department is currently conducting a “fundamental review of our planning against changes in the strategic environment, technology and threats over the 2020 to 2040 timeframe”.
Bureaucrats plan to present the review to government next year but it is not clear how much, if any of it, will be made public.
One thing seems obvious: the government has to start conditioning Australians that the military will soak up more taxpayer dollars.
Just don’t expect a parade to see what it is being spent on.
ShareLicense articleRead MoreDefence spendingADFLinda ReynoldsAndrew Tillett writes on politics, foreign affairs, defence and security from the Canberra press gallery. Connect with Andrew on Facebook and Twitter. Email Andrew at [email protected] Viewed In PoliticsScott Morrison must turn power into prosperityGrowing alarm Aussie firms are missing out on submarine workLetters: Directors’ duties are not a doddleUnchecked globalism a threat to Australia’s sovereignty: MorrisonLabor finally remembers that it is the economy, stupidLatest StoriesDefence spendingChina puts a rocket up Australia’s defence dollar challenge
Australia was once an underspender on defence. But acute strategic challenges may push us over the key 2 per cent benchmark.
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