Senator David Johnston

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Doorstop - Budget Estimates

June 1, 2012

SUBJECT: Defence budget cuts, nuclear submarines


David Johnston: This week has seen a number of commentators outline what the current state of the Defence budget really means. Since the 2009 White Paper we have seen somewhere between 21 and 25 billion dollars taken out of the budget. This is a very serious blow this week has seen the Defence chiefs very bravely face up to these cuts.

Clearly the plans as to where the cuts are going to be applied are not completed, they are desperately seeking to minimise the effect on capability. The point I want to make about this is Ms Gillard and Mr Swan keep telling us we have one of the best economies in the world it is clear that this economy apparently, under Labor, can not afford for us to defend ourselves.

That is a very serious problem for all Australians, particularly while we have men and women on the front line in Afghanistan fighting. As Major General Cantwell said last night ‘this is a shocker’. The mismanagement, the negligence of this Government has now spread to capability in the defence force. The commentators are very very clear, Mark Thomson, Andrew Davies from ASPI say that our budgetary position and our strategic position is in a mess. And I am quoting their words ‘it is in a mess’.

Yesterday the Defence Minister for the first time acknowledged that Australian defence industry is doing it tough – where on earth has he been? I have a parade of Australian industry coming through my office on a weekly basis saying that in 2009 they were promised some salad days with defence planning and defence work, there has been nothing of the sort. This government has deceived them, they are left holding the can with a large number of employees, plans that have fallen by the wayside – yet the Minister continues to say that last year he had a record number of project approvals.

He has done nothing more or less than buy aircraft and ships from overseas. The point all of this is that this is one of the primary responsibilities of the Australian Commonwealth Government – they have dropped the ball, they are letting us down and the state of the budget is of serious concern for all of us. The neglect and mismanagement of this government is now as I say, spreading to capability.

Journalist: Just to clarify would the Coalition increase the Defence budget if it were to come to power?

David Johnston: That is a really important question, remember the Budget that we have just been through the process of is a prediction. This government with its treasury and finance departments has never once come close to one of its predications. We have a cigarette paper thin budget surplus, $1.5 billion dollars out of a gross turnover of around about $500 billion.

This defence budget at 13/14 is going to be 1.49% of GDP. That is the lowest it has been since 1937. Heaven only knows what an Abbott Government will confront in terms of a budget position when we come to power. It is going to take us a long long time, as Major General Cantwell said yesterday, it is going to take a long long time for us to get back to a position of strength. If there is one single extraordinary unforseen event like a cyclone or tsunami, we are in a lot of trouble.

Journalist: So sorry, is that a yes or a no that you would increase the defence budget?

David Johnston: We would look to increase the defence budget as soon as we could put a handle on the mess that these people are going to leave us. And it is clear that they are going to leave a very big mess.

Journalist: How does your criticism of capability square though when your colleagues like Joe Hockey have criticised the size of DMO for having too many public servants and suggests that that might be ripe for cutting.

David Johnston: I agree with him. Can I say that 22,000 public servants in defence running 59,000 uniforms is utterly unsustainable. This Minister will not take the tough decisions. He is not believable on any score, he should be looking at these 22,000 people, heaven only knows what they all do, they have been completely quarantined. The uniforms are carrying the burden, Australian defence industry is carrying this burden. It is a disgrace.

Journalist: Senator, Mr Smith acknowledged that SME’s were doing it tough, but not because of his budget cuts, it was all to do with the US government and the JSF.

David Johnston: Look this minister and this government are not believable on anything they say. There is always a spin. He has gone out and purchased ships and planes straight of the shelf. In 2009 they all told us there was going to be 3% increase in the budget. They told us that the Strategic Reform Program was going to return the savings of $20 billion over 10 years to capability. Everybody has been deceived, we now know it, can see it and we can poke at it, it is alive. The thing is these guys say should not be believed in any shape or form, this government is unbelievable.

Journalist: Haven’t they been buying more and more off the shelf because so many of the major projects that have been bought or commissioned in Australia have gone so badly wrong? The M113 project for example.

David Johnston: The M113 has been running for 20 years. The reason this Minister has bought material off the shelf is because he has had underspends because he has not been administering the portfolio properly. So what does he do? He goes out and buys, for $1.404 billion dollars C27J battlefield lift aircraft. We haven’t had them for 3 years, and I don’t think anybody has missed them, but he is spending the money.

Heaven only knows why. He has been forced to buy amphibious ships because he didn’t realise they were rusting. These are problems that he has made through neglect, through not understanding the portfolio. We saw all of the matters at ADFA, he convened a report that cleared the ADFA staff, yet he is not prepared to accept it, because politically he sees some down side in having to say sorry.

Well can I tell you these guys are not believable, the black hole we will be confronting is huge, defence capability and defence budgets have been treated like an ATM by this government. It is not sustainable, there is going to be a serious problem and I am putting my hand up to say we are going to confront some very difficult decisions and some very strong and problematic capability issues into the future because of the neglect of this government.

Journalist: Wouldn’t one of those decisions be submarines? It has been reported that a Coalition government would consider buying nuclear powered submarines, is that still the case?

David Johnston: I don’t believe it is. But remember this minister does not brief anybody on what the current state of our capability is. I have a staff of one in my office, for me to deal with what is a $40 billion dollar project is simply ridiculous, but can I say this – the Collins Class is running at almost one billion dollars a year in terms of the cost of ownership, that is unsustainable.

What is the Minister doing about it? We have seen plans, we have heard of projections, we’ve got all sorts of things that have not materialised while the money keeps slipping through the bottom of the bucket. He is all talk and no action. Submarines are very important as strategic deterrents for us. What has he done about it? Commissioned another $214 million dollar report. What has he done for the last three years? Nothing, now this is a problem that we are going to have to clean up and fix up. But heaven only knows how because I will need to best advice from the very good people over at Russell as to how we are going to fix this mess that he is going to leave us.

Journalist: But are nuclear submarines an option under a Coalition government?

David Johnston: I have just come back from Plymouth in the United Kingdom where I was looking at the Trafalgar/Upholder Class sustainment which are both nuclear class submarines. The problem there is that before you even think about a nuclear submarine you need about $2 or $3 billion dollars worth of infrastructure. Now I don’t think nuclear submarines are on the table, the white paper that has now had the shortest shelf life in our history said no nuclear submarines. I think we are at that point, he is bringing forward a new white paper because he is panicking, heaven only knows what that is going to say, but from my point of view I don’t think nuclear submarines are on the agenda because of cost and because I don’t think anyone is going to give us the technology in the short term.

Journalist: There are reports this morning of an overhaul of military police – would you support them?

David Johnston: Look military justice has been a running sore of a problem for as long as I have been a Senator which is 10 years. Anything that fixes up ADFIS, military police and the way we do our business has got to be a positive thing.

Thank you all for coming.

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183 Great Eastern Highway
BELMONT WA 6104
Phone:  (08) 9478 2088
Fax:  (08) 9478 1746


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