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Two per cent of GDP on defence expenditure has long been held up as sacrosanct, something that has become equal part political football, equal part reassurance that Australia is playing by a set of rules drawn up by NATO. However, as both debate and the Indo-Pacific heat up, is it time to revisit the nation’s defence expenditure?
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We can all agree that home and contents insurance is a necessary evil; it is one of those things that is better to have and not need, than need and not have. A nation’s armed forces, its capabilities and supporting strategic policy and sovereign industries all serve the same purpose.
As Australia’s regional balance of power continues to evolve, is it time to begin a new discussion?
With Australia edging ever closer to the elusive 2 per cent of GDP on defence expenditure amid the largest peacetime rearmament program in the nation’s history, much concern has been placed on the nation’s capacity to finance the next-generation capabilities and mega projects over the long term.
The election of the Coalition in 2013 saw a major shake-up in the way defence was approached by government. Following what the Coalition describes as six years of neglect under the tumultuous Rudd/Gillard/Rudd governments, the newly formed government sought to create an environment of stability and consistency for defence with a number of key policy objectives.
Central to this was the commitment to return Australia’s defence expenditure to 2 per cent of GDP following what both Prime Minister Scott Morrison and now former defence minister Christopher Pyne explained as a 10 per cent reduction in real terms in the last year (FY2012-13) of the previous government – resulting in defence investment falling to its lowest levels since 1938.
While Australia’s defence expenditure looks set to increase to $38.7 billion in 2019-20, it is a case of business as usual for defence and industry, with the Coalition’s budget announcement signalling the government’s continued commitment to supporting the capability and development of Australia’s sovereign defence industry capabilities.
The Coalition remains committed to continuing the delivery of a number of key projects identified as part of the government’s 2016 Defence White Paper, which focused on delivering a series of major capability upgrades and modernisation programs across the Australian Defence Force, including:
- The delivery of the first unit as part of the $5.2 billion LAND 400 Phase 2 program for Boxer combat reconnaissance vehicles;
- Industry partners presented their bids as part of the $10-15 billion LAND 400 Phase 3 Armoured Fighting Vehicle program;
- Construction progress for the $35 billion SEA 5000 Hunter Class guided missile frigate program;
- Construction commencement and milestones at the $535 million SEA 5000 Shipyard facility at Osborne, South Australia;
- The continued arrival of Australia’s Lockheed Martin F-35A Joint Strike Fighters;
- Signing the Strategic Partnership Agreement for the $50 billion SEA 1000 Attack Class future submarine program; and
- Committing to the acquisition of 30 self-propelled howitzers and 15 support vehicles to be built and maintained at a specialised facility in Geelong.
Further supporting these milestones, the government has confirmed over the next decade to 2028-29 that it will invest more than $200 billion in defence capabilities.
Despite this seemingly unprecedented period of modernisation and recapitalisation within the ADF, Michael Shoebridge of the Australian Strategic Policy Institute (ASPI) has long identified the challenges facing both the ADF and Australia as a whole when it comes to funding the “future force” of the ADF, drawing on support from his ASPI colleague and Defence economist Marcus Hellyer.
“You’d think that $40 billion a year on defence (2 per cent of gross domestic product) and mega-projects giving the military what it has always wanted – frigates, submarines, strike fighters, infantry fighting vehicles and the electronic systems to lace them all together – meant defence spending and force structure were off the Morrison government’s to-do list. The 2016 Defence White Paper is the plan and it just needs to be implemented,” Shoebridge explained.
Growing regional and global challenges
Across the Indo-Pacific, competing economic, political and strategic interests, designs and ambitions are beginning to clash – driven by an unprecedented economic transformation, propelling once developing nations onto the world stage; the region, the globe and its established powers are having to adjust to a dramatically different global power paradigm.
From the South China Sea to the increasing hostilities between India, Pakistan and China in the Kashmir region of the Himalayas, the Indo-Pacific’s changing paradigm, combined with the growing economic, political and strategic competition between the US and China, continued sabre rattling and challenges to regional and global energy supplies travelling via the Persian Gulf and an increasingly resurgent Russia all serve to challenge the global and regional order.
For Australia, a nation that has long sought to balance the paradigms of strategic independence and strategic dependence – dependent on strategic relationships with global great powers, beginning with the British Empire and now the US – and a rising economic dependence on the developing nations of the Indo-Pacific who are now emerging as some of the world’s largest economic, political and strategic powers.
The comments made by the likes of Shoebridge and Hellyer are further compounded by comments made by former South Australian governor and retired Rear Admiral Kevin Scarce who recently hit out at the status quo during a speech in Adelaide, describing the whirlpool of geopolitical, strategic and economic competition:
“These issues are fast-moving and complex... Yet, our leaders both political and military seem outwardly reluctant to engage in fulsome public debate.”
Scarce is clear in articulating his concerns about the rising global and regional powerhouse, China, believing that while it does not pose a territorial threat to Australia, its growing influence, ambitions and increasing assertiveness are key factors that need to be included in the nation’s broader public debate and policy calculations.
2 per cent in an era of great power competition
China’s rise is but part of the new regional and global paradigm Australia finds itself increasingly dependent upon – the relative instability of the US, the cornerstone of the post-Second World War economic, political and strategic order, leads to troubling results for Australia.
“It will simply not be sufficient to assume that US diplomatic and military strength will always come to our aid,” Scarce said – this echoes growing concern about both the capacity and the intention of the US to serve as the strategic linchpin for the Indo-Pacific.
Andrew Davies of ASPI highlighted the importance of recognising the limitation of US power in a recent piece, saying, “The assumption of continued US primacy that permeated DWP 2016 looked heroic at the time. It seems almost foolishly misplaced now.”
This is reinforced by executive director of ASPI, Peter Jennings, posing the critical question in late 2018: “What’s the plan for Australia’s defence if it turns out that Trump’s America First approach is here to stay and alliances fall into mistrustful neglect?”
It is becoming abundantly clear that Australia’s dogmatic insistence of sticking to the sacred 2 per cent of GDP expenditure on the nation’s defence is rapidly becoming woefully insufficient, particularly in a period of increased great power competition.
Standing up capability now before it’s needed
Nevertheless, many within the political, strategic and public policy communities continue to dally around the edges of the debate, largely referring any meaningful conversation, debate or broader discussion to the same basket they forward all challenges Australia faces: the too hard basket.
It is time for Australia’s policy leaders and public to be reminded that developing Defence capability, particularly in the era of high technology cannot be done over night, particularly in the event of conflict with a peer or near-peer competitor – standing up capability now, before it is needed is far cheaper and safer then being backed into a corner.
By way of reference, Australia at the end of the Second World War had a population of approximately 7.5 million and yet was able to contribute 724,000 Army personnel, 400,000 of which served outside of Australia, 39,650 Naval personnel serving on nearly 350 vessels, including 150 major surface and submarine combatants – supported by nearly 200 auxiliary craft and nearly 152,000 Air Force personnel operating nearly 6,000 aircraft (then the fourth-largest air force in the world).
It is clear that Australia doesn’t have a money or a population issue, we have a political will issue, one that distinguished commentators like Rear Admiral (Ret'd) Kevin Scarce, Peter Jennings and Dr Malcolm Davis of ASPI have some way sought to bring to the public forum.
Your thoughts
Australia’s security and prosperity are directly influenced by the stability and prosperity of the Indo-Pacific, meaning Australia must be directly engaged as both a benefactor and leader in all matters related to strategic, economic and political security, serving as a complementary force to the role played by the US.
Australia cannot simply rely on the US, or Japan, or the UK, or France to guarantee the economic, political and strategic interests of the nation. China is already actively undermining the regional order through its provocative actions in the South China Sea and its rapid military build-up.
To assume that Australia will remain immune to any hostilities that break out in the region is naive at best and criminally negligent at worst. As a nation, Australia cannot turn a blind eye to its own geopolitical, economic and strategic backyard, both at a traditional and asymmetric level, lest we see a repeat of Imperial Japan or the Iranian Revolution arrive on our doorstep.
It is clear from history that appeasement does not work, so it is time to avoid repeating the mistakes of our past and be fully prepared to meet any challenge.
There is an old Latin adage that perfectly describes Australia’s predicament and should serve as sage advice: “Si vis pacem, para bellum” – “If you want peace, prepare for war”.
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