{"id":36627,"date":"2018-01-02T06:00:53","date_gmt":"2018-01-01T19:00:53","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=36627"},"modified":"2018-01-03T09:02:09","modified_gmt":"2018-01-02T22:02:09","slug":"national-archives-releases-part-2-tantalising-totem-2-gdp-defence","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/national-archives-releases-part-2-tantalising-totem-2-gdp-defence\/","title":{"rendered":"The National Archives releases (part 2): the tantalising totem of 2% of GDP on defence"},"content":{"rendered":"
<\/figure>\n

Come back with me to a wonderful time when the Cold War had been won and Australia was cashing in the peace dividend. Spend money on the military? Naaah! Squeeze \u2019em.<\/p>\n

The release by the National Archives of the 1994 and 1995 cabinet records<\/a> of the Keating Labor government is our annual compare and contrast moment. This is defence, so, as always, start with the money. The archives show that the \u2018peace dividend\u2019 moment in the mid-1990s was when Canberra really started to argue about what\u2019s since become a totemic issue: whether Defence should get 2% of GDP.<\/p>\n

Labor Defence Minister Robert Ray, preparing for the 1994\u201395 budget, sketched out the tight years Defence would face as it headed down<\/em> towards that 2% figure.<\/p>\n

Defence guidance was reduced in real terms by 0.75% or $71m in the 1993\u201394 Budget, compared with the funding provided in 1992\u201393. In addition, Defence guidance is to be reduced by a further 0.5% in each of the following three years\u00a0\u2026 On current projections, these reductions will result in Defence outlays declining from 2.4% to 2.0% of GDP by 1996\u201397.<\/p>\n

Cabinet\u2019s 1994 budget decision embraced the Defence squeeze: a repeated cut of 0.5% over three financial years, and \u2018zero per cent real growth after that\u2019. Behold the dawn of what\u2019s become a magic and maddening figure: 2% of the Oz economic pie. The argument seems to have gone on for decades\u2014because it has! The fight still rages.\u00a0Here\u2019s ASPI\u2019s Mark Thomson\u2014we value him as our Mr 98% because he has to follow that other 2%\u2014with recent musings on the\u00a0status of the totem<\/a>, in the\u00a02017 budget<\/a>\u00a0(we\u2019re now on track to reach 1.9% of\u00a0GDP, though from below this time).<\/p>\n

The trouble with a peace dividend is you can cash it in only once\u2014just like that proverbial government dollar that is spent only once.<\/p>\n

As the Labor government finalised the 1994 defence white paper, it confronted a set of conflicts between its strategic vision (diminishing US influence and rising Asian powers), the equipment shopping list, and the money squeeze.<\/p>\n

The Keating government wanted to buy more defence with less money. Labor ran head-on into the law\/lore laid down by the defence mandarin Arthur Tange (as oft cited by Paul Dibb): \u2018Strategy without money is not strategy.\u2019<\/p>\n

In October 1994, Ray\u2019s cabinet submission on the white paper, Defending Australia<\/em>, flagged the need to start finding additional dollars quickly if the spend wasn\u2019t to keep falling below 2% (an extra $320 million in 1996\u201397 and even more for 1997\u201398: $830 million).<\/p>\n

Cabinet squibbed it, deciding that \u2018defence funding [will] be sustained at approximately 2% of GDP to fulfil the objectives set out in Defending Australia<\/em>\u2019. That squib phrase \u2018at approximately\u2019 has launched a thousand arguments.<\/p>\n

The Defence line, in Ray\u2019s submission, was about both history and need:<\/p>\n

Since the 1987 White Paper, defence spending as a share of Government outlays has fallen from 9% to 8%. In 1986\u201387, defence spending was 2.6% of GDP. In 1994\u201395 it is estimated at 2.1%. On present planning, defence spending in real terms will fall by 0.5% in each of the next two years and remain steady thereafter. On that basis, by 1996\u201397 defence spending in real terms will have fallen below 2% of GDP for the first time since the 1930s. The average annual level of defence spending over the past thirty years has been 2.4% of GDP.<\/p>\n

The comment to cabinet from the prime minister\u2019s department was masterly squib-speak. PM&C vaguely liked the 2% idea\u2014but not yet, and with plenty of provisos. It agreed that a benchmark figure of \u2018around 2% of GDP\u2019 had \u2018some merit as a sign of the Government\u2019s commitment to Defence over the medium term\u2019. But qualifications on such a commitment included specific defence needs, strategic and economic circumstances, and the rate of economic growth. And PM&C \u2018does not consider that the argumentation in the white paper [is] sufficiently strong as to justify a commitment now to a return to real growth in the defence budget in the forward estimate period\u2019.<\/p>\n

No squibs from Treasury. It attacked. Treasury stated that it was<\/p>\n

opposed to setting future defence funding at some arbitrary percentage of Australia\u2019s GDP. Such a way of determining defence spending has no relation to our capacity for such spending or our need for such spending. Expenditure on defence outlays should be directly related to Australia\u2019s defence capability requirements. The Defence white paper does not identify any particular deficiencies in current capabilities which warrant a real increase in spending at this time.<\/p>\n

The 2% totem has been a tough task ever since.<\/p>\n","protected":false},"excerpt":{"rendered":"

Come back with me to a wonderful time when the Cold War had been won and Australia was cashing in the peace dividend. Spend money on the military? Naaah! Squeeze \u2019em. The release by the …<\/p>\n","protected":false},"author":79,"featured_media":36630,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[22,1823,338,2109],"class_list":["post-36627","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-australia-defence-economics","tag-defence-budget","tag-defence-policy","tag-national-archives"],"acf":[],"yoast_head":"\nThe National Archives releases (part 2): the tantalising totem of 2% of GDP on defence | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/national-archives-releases-part-2-tantalising-totem-2-gdp-defence\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The National Archives releases (part 2): the tantalising totem of 2% of GDP on defence | The Strategist\" \/>\n<meta property=\"og:description\" content=\"Come back with me to a wonderful time when the Cold War had been won and Australia was cashing in the peace dividend. 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