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The Vice Chief of the Defence Force, Air Marshal Mark Binskin AO, delivered a thought-provoking speech entitled ‘The ADF as as a foundation for Australian prosperity’ ^[2] to an ASPI dinner last night, and here are three reflections from ASPI analysts.

Peter Jennings:

Air Marshal Mark Binskin, the Vice Chief of the Defence Force, gave an interesting speech emphasising the ADF’s role in contributing to regional stability. There is no doubt that Defence is shaping for a closer focus on the Asia-Pacific after the drawdown in Afghanistan. The ADF ‘is not just an insurance policy’ Binskin said; it can build and deepen relations, respond to disasters and stabilise trouble spots.

Some implications flow from this approach. Based on the principle that governments fund things that do useful jobs, Defence has an obvious interest to set out the case for how it continues to promote regional stability. In doing so, Defence needs to rethink the current modest levels of funding for its Defence Cooperation Program, a core part of how the ADF engages with regional militaries via joint exercises, training and officer exchanges, and provide a dramatic step-up in funding for engagement. Notwithstanding pressures to cut civilian numbers, the International Policy Division should receive a staffing boost. IP currently stands at around 120 people—it was closer to 160 in the ‘peaceful’ 1990s. Resources need to go to the emerging priority areas.

Most critically Defence needs to set out some detailed thinking about how it will go about deepening relations with key friends and allies. Defence Minister Stephen Smith’s announcement in Japan that the two countries will agree a framework for defence technological cooperation ^[3] is an important pointer to the future of that relationship. Given the important position Australia has in Japan’s defence thinking (an entire chapter was dedicated to Australia in the most recent white paper ^[4]), it seems there is willingness on both sides for deeper defence cooperation. Binskin also highlighted the level of Indonesian involvement (for the first time, in fact) at the recent Exercise Pitch Black 2012 ^[5], a multinational air power exercise. Funding for defence cooperation with Papua New Guinea sharply increased in the last budget. These are but a few of the big changes taking place so there’s a positive story to tell about Defence’s own repositioning towards Asia.

This points to the reality that the next Defence white paper needs to have a stronger focus on posture—that is, what it does with the capabilities it actually has, rather than planning for the capabilities it doesn’t have and, on current funding plans, will get less of over a longer period.

In many respects, the planning for a reinvigorated defence engagement strategy on the region will suffice for a potentially missing chapter to the long-awaited Australia in the Asian Century White Paper, where Defence was inexplicably marginalised in the development of the report.

Andrew Davies:

During his speech to ASPI last night, Air Marshal Mark Binskin referred several times to the return on investment that Australia gets from the money it spends on its defence forces. At these functions I usually try to let the Q&A be between our speaker and our members and guests, but I couldn’t let that one go, so I asked—slightly tongue in cheek—what the rate of return is, and followed up with a more serious question of how you’d measure the value for money.

VCDF responded that it’s not possible to quantify the value, but gave a very good example of how having high-end military capabilities can act to develop stronger ties between nations. He cited the support that Australia was able to give to Japan in the wake of the earthquake and tsunami. Our C-17 airlifters were able to deliver outsize equipment vital for the relief effort and deploy search and rescue teams within a day or two of the event—and made us one of very few nations that could make a contribution of that sort. In Binskin’s view, it’s no coincidence that Australia–Japan relations are warmer now than ever, and are marked by a growing willingness to cooperate in areas such as military technology exchange.

There’s no reason to doubt that interpretation, and we’ve seen a similar sincere gratitude come though in ASPI’s discussions with Japanese officials, think tanks and academics since then. So I’m happy to concede that he’s right on that point. But I’m less convinced about the inability to quantify the return on investment in military capabilities. If that was really true, how could governments ever decide where to make marginal investments?

In his thoughts above, Peter Jennings makes a case for expanding the size of International Policy Division within Defence, to further boost the ability of the Department to support defence cooperation and regional engagement. But the question to be asked is whether that investment is the best one that can be made with the extra funds? Would a similar expansion in DFAT to boost their regional engagement program be more or less effective? Of course, these aren’t binary choices, and the right answer might be a bit more of both—but the question of marginal investment always needs to be thought through.

Consider a hypothetical in which the government has $100 million unallocated in its budget deliberations. If it was looking to boost its regional diplomatic/engagement effort, it might choose between supplementing Defence ($24.2 billion in the 2012–13 appropriations) and DFAT ($1.45 billion). The extra money would constitute a 7% boost for DFAT, but less than half a percent to Defence. It might still be the case that Defence offered the best return—but it’s far from clear, and in the absence of metrics that allow an estimate to be made, it would come down to a judgement call. And of course that all presupposes that boosting diplomacy is preferable by some measure to increased expenditure on health or education.

Other government portfolios are subject to at least some analysis of the value the country gets back. As a couple of examples, education programs can be benchmarked via productivity measures, and the cost of preventative health programs can be weighed against the reduced demand for health services later. Mark Thomson sketched some ideas for how we might do a cost-benefit analysis for Defence expenditure a few weeks ago and argued that Defence shouldn’t be exempt from the same scrutiny as other aspects of government spending ^[6]. Having thought through the VCDF’s speech, I’m coming around to Mark’s point of view.

Natalie Sambhi:

Following the theme of regional engagement that both my colleagues raise above, in listening to Air Marshal Mark Binskin’s speech I was interested in how Australia might expand this engagement in future. Of note was this quote from VCDF:

Australia’s changing strategic circumstances means that in the coming years, the ADF needs to build a defence capability that can support our national security interests in a neighbourhood that is growing more capable, more confident and more outward looking.  At the same time, we need to accommodate constraints on the resources we have available to do this and live within our means.

Parts of our region might be growing more capable, more confident and more outward looking but, as I recently argued ^[7], that’s not something that Australia has to necessarily grow anxious about. Recognising the potential of regional partners, particularly Indonesia, is one way to maximise our capabilities in context of changing strategic circumstances and future budgetary constraints.

Indeed VCDF underscored the return on investment (however quantified, see Andrew Davies’ section above) of ‘credible high-end capabilities’ by assisting Australia’s regional influence. During question time, Binskin gave the example of Indonesia’s participation in Exercise Pitch Black 2012. He noted that only when other nations sent their high-end capabilities (in Indonesia’s case, their Sukhoi Su-30 and Su-27 fighter jets) do we start to see the levels of trust required for deep cooperation.

Looked at that way, it pays to reframe the discussion of the modernisation of regional militaries less in terms of an erosion of Australia’s technological edge and more in terms of an opportunity for deeper regional engagement and strategic complementarity.

Peter Jennings ^[8] is executive director of the Australian Strategic Policy Institute, Andrew Davies ^[9] is senior analyst for defence capability at ASPI and executive editor of The Strategist, and Natalie Sambhi ^[10] is an analyst at ASPI and editor of The Strategist.