{"id":69272,"date":"2021-12-10T15:20:08","date_gmt":"2021-12-10T04:20:08","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=69272"},"modified":"2021-12-10T15:20:08","modified_gmt":"2021-12-10T04:20:08","slug":"dumping-the-adfs-mrh-90-helicopters-is-the-right-call-but-why-now","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/dumping-the-adfs-mrh-90-helicopters-is-the-right-call-but-why-now\/","title":{"rendered":"Dumping the ADF\u2019s MRH-90 helicopters is the right call, but why now?"},"content":{"rendered":"
<\/figure>\n

The sad saga of the MRH-90 Taipan helicopter has been running for a long time<\/a>. Back when I worked in the Department of Defence, we used to occupy ourselves from time to time calculating how much money the taxpayer would save in the long run if we just walked away from the MRH-90 utility helicopter and bought Black Hawk helicopters instead. The answer was a lot. And the sooner you did it, the more you\u2019d save, by avoiding sinking more acquisition dollars into the MRH-90 and realising the substantially lower operating costs of the Black Hawk. But even though those numbers were shared with Defence\u2019s senior decision-makers, the department couldn\u2019t bring itself to take that step.<\/p>\n

Now, however, after almost the entire $3.7 billion acquisition budget has been spent, the government has announced what should have been done long ago: it will retire the MRH-90 fleet early<\/a> and acquire a new fleet of Black Hawks. That\u2019s a good call. While on paper the MRH-90 has more capacity than the Black Hawk, in real life that\u2019s irrelevant if the helicopter isn\u2019t flying.<\/p>\n

So, what\u2019s changed? At some level it\u2019s about China, just as everything in defence and strategic policy today is about China, but not in the way you might expect. Neither the MRH-90 nor the Black Hawk will have a deterrent effect in the way nuclear-powered submarines or long-range strike missiles will.<\/p>\n

The first way that it\u2019s indirectly about China is that Defence Minister Peter Dutton is trying to impart a sense of urgency to Defence\u2019s lethargic acquisition system to meet Australia\u2019s deteriorating strategic environment. He has also said he\u2019s going to hold industry to account for underdelivery. The MRH-90 project has been going since 2004 and still hasn\u2019t delivered what it was meant to. The days when projects could noodle along because we had all the time in the world are gone.<\/p>\n

The second way is that the new strategic climate means there\u2019s more willingness to accept the poor optics of retiring a $3.5 billion investment early\u2014just as the government was willing to accept what will likely be a sunk cost of more than $3 billion once all is said and done in the cancelled Attack-class program.<\/p>\n

The third way is that Defence is suddenly rich in cash\u2014and that\u2019s also because of China. A key reason that the government and Defence hadn\u2019t replaced the MRH-90 is that, even though there would have been long-term savings through the lower operating cost of the Black Hawk, there would have been a big short-term acquisition cost. A private company could manage that by borrowing and paying it back with the operating savings (or the revenue raised by operating the new asset). Defence can\u2019t do that; each year it has to live within its means. Buying a replacement for the MRH-90 would have meant deferring or cancelling another priority. And with Defence\u2019s acquisition program historically oversubscribed, that would have had a ripple effect of further delays on other programs.<\/p>\n

Now Defence has the opposite problem: it\u2019s got too much cash. That\u2019s partly due to the government increasing the defence budget (again, largely due to China), with much of that flowing into the acquisition budget. That steep increase combined with the impact of Covid-19 on industry and supply chains meant that last year Defence underspent its acquisition budget by around $1 billion. That\u2019s likely to occur again this year, with further increases built into the budget and the pandemic lingering.<\/p>\n

But the cash bounty is also due to the cancellation of the Attack class in favour of nuclear-powered submarines (and that\u2019s definitely about China). Defence was planning to spend about $1 billion this year on the Attack class. That was to grow over the next few years to $1.5 billion and potentially $2 billion a year. While SSNs will cost more overall than the Attack class, little SSN-related spending will occur in the next few years. In the public sector it\u2019s \u2018use it or lose it\u2019. In short, Defence now has the cash to get Black Hawks.<\/p>\n

And there\u2019s potentially other sources of cash to put towards them. One problem with the MRH-90 was the restriction on its ability to perform the special forces role, pushing Defence to investigate a dedicated fleet of light helicopters specifically for special forces. That requirement may now be redundant if the new Black Hawks can do that job.<\/p>\n

What does the decision to buy off-the-shelf American helicopters mean for Australian industry, particularly coming hard on the heels of the cancellation of the Attack class which left a lot of Australian companies high and dry? I don\u2019t think it means the government is walking away from Australian defence industry, but its sense of urgency is shifting its policy. Since the Coalition was elected in 2013, the industry pendulum has swung from the \u2018Abbottist\u2019 view that the defence budget is not an industry support program and we should go to the global market for capability to an unstated policy that everything that can be done in Australia will be done in Australia.<\/p>\n

The pendulum is swinging back a little. The Howard government\u2019s original decision to buy the MRH-90 went against Defence\u2019s preference for the Black Hawk and was made due to the jobs involved in local assembly. But it\u2019s been another case that shows that assembling systems designed overseas with largely overseas components doesn\u2019t necessarily deliver better capability or make the system any easier to sustain. The reassessment of the balance of priorities between local jobs and capability is also being driven by the new realism created by China\u2019s behaviour. Hopefully, we\u2019ll reach that happy middle ground where the government will support Australian defence industry when it makes sense to do so but continue to buy off the shelf overseas when there\u2019s the need and the opportunity to acquire capability quickly.<\/p>\n

It\u2019s possible that the Black Hawk decision will be the first of several in which Defence puts its embarrassment of riches to use in making some rapid off-the-shelf purchases overseas. And as we all know, the real money for local industry comes through sustaining those systems for the decades they\u2019re in service.<\/p>\n

A final note. While it may be tempting to hang on to the MRH-90 in some kind of disaster-relief or bushfire-fighting role, that siren song must be avoided. The MRH-90 has been costing $35,000 per hour to operate. Last financial year that ballooned to $50,000 and it was probably the final straw. Even if that could be halved by stripping out military capabilities, it would still be orders of magnitude more than a civilian firefighting or emergency services helicopter. Despite the sunk cost, trying to repurpose the MRH-90 will merely extend the drain on resources. We\u2019ve made the decision; walk away, don\u2019t look back.<\/p>\n","protected":false},"excerpt":{"rendered":"

The sad saga of the MRH-90 Taipan helicopter has been running for a long time. Back when I worked in the Department of Defence, we used to occupy ourselves from time to time calculating how …<\/p>\n","protected":false},"author":767,"featured_media":69279,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[488,52,2425,38,853],"class_list":["post-69272","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-australian-army","tag-china","tag-defence-capability","tag-department-of-defence","tag-helicopter"],"acf":[],"yoast_head":"\nDumping the ADF\u2019s MRH-90 helicopters is the right call, but why now? | 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\/dumping-the-adfs-mrh-90-helicopters-is-the-right-call-but-why-now\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Dumping the ADF\u2019s MRH-90 helicopters is the right call, but why now? | The Strategist\" \/>\n<meta property=\"og:description\" content=\"The sad saga of the MRH-90 Taipan helicopter has been running for a long time. 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