{"id":73065,"date":"2022-06-08T06:00:22","date_gmt":"2022-06-07T20:00:22","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=73065"},"modified":"2022-06-07T16:19:54","modified_gmt":"2022-06-07T06:19:54","slug":"the-cost-of-australias-defence-hard-choices-for-the-new-government","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/the-cost-of-australias-defence-hard-choices-for-the-new-government\/","title":{"rendered":"The cost of Australia\u2019s defence: hard choices for the new government"},"content":{"rendered":"
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In March, shortly before federal election, the Coalition government released a defence budget that continued its record of delivering the funding it promised in the 2016 defence white paper and 2020 defence strategic update.<\/p>\n

For 2022\u201323, the consolidated defence funding line (including both the Department of Defence and the Australian Signals Directorate) is $48.6\u00a0billion, which is 2.11% of GDP based on the budget papers\u2019 estimates of GDP. That funding represents a very substantial nominal growth of 7.4% compared with 2021\u201322. It\u2019s the 10th straight year of real growth, but with inflation running hot, it\u2019s hard to determine a precise percentage. We\u2019ve estimated it at 3.8% based on the budget papers, but if inflation stays around 5%, the real growth figure will be less. That will hurt Defence. Just as inflation eats into Australian families\u2019 budgets, it\u2019s eroding Defence\u2019s buying power.<\/p>\n

As I explain in The cost of Defence: ASPI defence budget brief 2022\u20132023<\/em><\/a>, released today, despite disruptions to supply chains, Defence and its industry partners have achieved significant increases in acquisition spending. While Defence may have fallen short of its acquisition spending target in 2021\u201322, it still achieved a $2.1\u00a0billion increase on the previous year, which was itself a $1.5\u00a0billion increase on the prior year. That\u2019s translating into growing local spending, in both absolute and relative terms compared to overseas spending. I\u2019ve written previously<\/a> that the Australian defence industry will need to eat a very large elephant as Defence\u2019s acquisition and sustainment budgets grow. So far, it\u2019s demonstrating that it has the appetite to do that.<\/p>\n

Capability continues to be delivered across all domains. There\u2019s no doubt that the Australian Defence Force is getting better. But we\u2019re seeing the realisation of risks inherent in an acquisition program built around megaprojects. Such projects take years or decades to design and deliver, while spending huge sums for little benefit in the short term. When they encounter problems, those problems are big.<\/p>\n

The cancelled Attack-class submarine program has cost more than $4\u00a0billion and delivered nothing. The Hunter frigate program continues to experience delays and won\u2019t get a vessel into service for over a decade. The Boxer combat reconnaissance vehicle project has spent close to $2\u00a0billion, but only 25\u00a0training vehicles have so far been delivered. While the nuclear-powered attack submarine program has the potential to deliver a huge step-up in undersea warfare capability, it\u2019s the mother of all megaprojects and has a risk profile to match.<\/p>\n

As the megaprojects ramp up (with more than $20\u00a0billion in infantry fighting vehicles potentially added to the list of committed funds), their cashflow requirement will increase, tying the government\u2019s hands at a time of rapidly growing strategic uncertainty and evaporating warning time.<\/p>\n

The new government will have some significant issues to address. Perhaps the biggest one is the size of the defence budget. The incoming government has said that it supports the current level of funding. While that continues to grow in real terms, it was originally developed in 2015 and hasn\u2019t changed since then, despite the significant worsening of our strategic circumstances. Russia\u2019s illegal and unjustifiable invasion of Ukraine has reminded us that war has not gone away and remains a tool of authoritarian states. China\u2019s influence in our near region is growing and could result in a permanent Chinese military presence. The US is looking to its allies and partners to do more, as they must.<\/p>\n

As always, the government will need to adjudicate between competing priorities for funding. At a time when Australians are dealing with the rising cost of living, spikes in energy prices and the grinding pressure of housing affordability, it may be tempting to reduce defence spending. However, the government should be aware of the results of doing so.<\/p>\n

The budget is already full, with no pots of unallocated cash. Any short-term windfall delivered by the cancellation of the Attack-class submarine is already gone\u2014as the cancellation of the SkyGuardian armed uncrewed aerial vehicle to help deliver a $9.9\u00a0billion offset for the REDSPICE cyber program reveals. So even holding the defence budget strictly at 2% of GDP will result in substantial, multibillion-dollar reductions to the funding line in the 2020 defence strategic update, inevitably leading to cuts in capability.<\/p>\n

It\u2019s not clear that the strategic update\u2019s funding line is even sufficient to deliver the current investment plan. That program includes platforms far larger or more numerous than those they\u2019re replacing as well as entirely new capabilities, all requiring a much larger workforce. Many capabilities have ended up costing more than was originally budgeted for in Defence\u2019s investment plan. The nuclear-powered submarine program will cost significantly more than the Attack class; it\u2019s anybody\u2019s guess how much more. So the first order of business should be for the government to understand the affordability of the current plan.<\/p>\n

Then it will need to assure itself that the planned force structure is aligned with what the government thinks the ADF should be doing. It\u2019s easy to make a case for the tactical utility of any capability, but how does it fit into the overall strategy? The government will need to make decisions about which sovereign capabilities it needs to hold and which capabilities it can rely on allies and partners. And the nub of our current security challenge is that the former are growing while the latter are shrinking.<\/p>\n

A further challenge that the government will need to consider is Defence\u2019s people problem. The number of contractors in Defence\u2019s external workforce continues to grow at significant cost, but Defence can\u2019t deliver its ambitious capability program without them. Is that growth the best option available to Defence or simply the only one? Moreover, the investment program will require 20,000 more uniformed personnel to operate the capabilities Defence is acquiring. With the ADF averaging net annual growth of only 300 people, is that target attainable? And, if it\u2019s not, is the future force structure viable?<\/p>\n

In these testing times, the government needs to seize every opportunity available to it to increase capability rapidly, even if that means overruling Defence\u2019s long-term vision for the future force. That means doing more with what we\u2019re already getting, such as increasing the lethality of the offshore patrol vessels that are soon to enter service.<\/p>\n

There are encouraging signs that Defence is engaging more actively with \u2018the small, the smart and the many\u2019; that is, cheaper, disposable, highly autonomous systems that can be produced rapidly by Australian industry. Investing more heavily in such systems is a crucial hedging strategy against the risk inherent in the megaprojects; plus, such systems will figure heavily in future warfare, whatever may become of the megaprojects.<\/p>\n

Similarly, the new AUKUS partnership\u2019s advanced technologies programs and the sovereign guided weapons enterprise offer the prospect of delivering meaningful capabilities soon. Yet we\u2019re two years into the guided weapons enterprise and still have heard nothing about which weapons will be produced and how it will be done. We can\u2019t apply the kinds of timelines and processes that have been features of the megaprojects to these lines of effort.<\/p>\n

Overall, the government has its work cut out for it. Whatever path it chooses, it will need to bring the Australian public along on the journey. To do that, the government will need to reset the conversation about the defence budget and how it\u2019s spent. That will require a commitment to transparency, accountability and sharing information. That means accepting the risk that bad news will get out along with the good, but an informed public is fundamental to democracy.<\/p>\n","protected":false},"excerpt":{"rendered":"

In March, shortly before federal election, the Coalition government released a defence budget that continued its record of delivering the funding it promised in the 2016 defence white paper and 2020 defence strategic update. For …<\/p>\n","protected":false},"author":767,"featured_media":73070,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[44,17,120,1823,26],"class_list":["post-73065","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-australian-defence-force","tag-australia","tag-budget","tag-defence-budget","tag-defence-spending"],"acf":[],"yoast_head":"\nThe cost of Australia\u2019s defence: hard choices for the new government | 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\/the-cost-of-australias-defence-hard-choices-for-the-new-government\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The cost of Australia\u2019s defence: hard choices for the new government | The Strategist\" \/>\n<meta property=\"og:description\" content=\"In March, shortly before federal election, the Coalition government released a defence budget that continued its record of delivering the funding it promised in the 2016 defence white paper and 2020 defence strategic update. 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