Matter of Public Interest - Defence funding
August 15, 2012
Senator JOHNSTON (Western Australia) (12:57): I rise to speak today about the current state of the Defence portfolio and Defence funding following this year's Commonwealth budget. As we now know, our Navy is in considerable difficulty, with two significant and damning reports recently handed down. The Rizzo and Coles reviews have detailed gross technical and cultural failures within Navy. Indeed, the Minister for Defence himself has been publicly critical of defence following his discovery in 2011 that we had no functional amphibious sea-lift capability. We have seen dramatically low ebbs in vessel availability with HMAS Success, HMAS Sirius and HMAS Tobruk all having extended, serious maintenance issues. Both HMAS Manoora and HMAS Kanimbla failed to be sustainable across the gap to the arrival of the new LHDs. Our newest ship, HMAS Choules—barely in our ownership for six months—has had a serious transformer failure and will apparently be out of action for five months. Submarine costs are running at a little less than $1 billion per annum for an availability of two or three boats—but usually less—at any given time. Of course, this hides the fact that we rarely have any submarines ready for real operations. Two minehunters have been permanently laid up. Turning to Army, it has a very high operational tempo with one active combat deployment in Afghanistan and two other deployments in East Timor and the Solomon Islands, albeit that both are winding down.
On our northern maritime frontier, we have a continuing crisis of illegal entry vessels, with as many as 80 boats bringing more than 7,000 people into our sovereign waters this year alone. Since November 2007, at the end of the Howard government's reign, we have had 380 boats deliver around 22,000 people. Finally—and thankfully—the Prime Minister has done a backflip and agreed to adopt the coalition's policy of offshore processing on Nauru. Our Armidale patrol boats, which have been the principal taxi service for this ingress of people, have been functioning at an extreme operational tempo. There are significant mechanical wear-and-tear issues for our 14 Armidale class patrol boats. In Air Force, we have been confronted by the ageing of our 71 FA18 classic Hornets, with something less than 40 in a state of readiness; add to that our 24 fourth-generation FA18 Super Hornets with just over half that number online. May I say thank you to Brendan Nelson for buying those aircraft—they have proved to be lifesavers. On average, we have less than 50 fighter aircraft to call upon at any given time. Our primary airborne maritime surveillance platform, the P3 Orion, was first flown in 1959. It is a long-range patrol aircraft, of which we have about a dozen available. This aircraft is vitally and crucially important to us in our maritime environment, but it is getting very, very old.
We are currently exporting, particularly from Queensland, the Northern Territory and Western Australia, massive quantities of LNG, coal and minerals, particularly to East Asia. The investment horizon is significant, with literally hundreds of billions of dollars being invested in offshore oil and gas platforms and LNG trains. All of this economic activity, which is vital to all of us, is premised entirely on maritime security.
Against this backdrop, we are told by the government that there is a changing strategic environment such that the 2009 white paper, barely three years old, requires an urgent and complete rewrite in 2013. In the face of these, and many more, significant issues for Defence, this government has decided that of all the portfolios comprising Commonwealth outputs only one, Defence, is to make a contribution to this year's first and only attempt at a budget surplus by this government. Some commentators gloss over this serious situation by saying, 'Well, it is only $5.5 billion over four years.' May I say this is both naive and derelict. Since 2009, there has been between $21 billion and $25 billion ripped out of the Defence portfolio in the circumstances described by ASPI's Mark Thomson in his recent Defence budget analysis. This plundering has taken the disguised form of direct cuts, deferrals, cancellations, underspends and hand-backs.
So inept has Labor's management of this portfolio been that in 2012 it actually handed back $1.5 billion from its capital acquisitions while ships and submarines, to name but a few, are in disrepair and are unserviceable. All the while, each of the three indifferent Labor Defence ministers has promised that there would be an increase in the government's commitment to Defence funding in line with the fraud of the 2009 white paper. And so it was that in May 2009 Australians received from Labor the much-heralded Defence white paper, the plan for the future. The then minister had refused to confirm any projects, programs or spending for almost a year, stating time and again that all would be revealed in the white paper. This was a document that set out a clear and bold plan for Defence funding and for capability acquisitions out to 2030. It promised annual funding growth at three per cent indexed to 2.5 per cent, with a Strategic Reform Program delivering $20 billion worth of savings over 10 years, with those savings to be returned to capability acquisitions. The document also set out some $275 billion of acquisitions. The document was the culmination of extensive Australia-wide consultation, with a travelling road show consulting and promoting the process in true Labor style. We all now know it was all hat and no cowboy. The coalition, despite many reservations, gave the government bipartisan support.
We actually believed what Messrs Rudd and Fitzgibbon said. We were so wrong: this leopard did not change its spots. Labor's defence plan was, we now know, just another great lie. Admittedly we were suspicious when, of the 150 or so pages, there were only 1½ pages devoted to the costings to support this Walt Disney Christmas catalogue. We did, however, see the document as an opportunity to provide Defence and the Australian defence industry, on a bipartisan basis, resourcing and growth, above politics, and a chance to eliminate the money and policy ebbs and flows of different colours of governments and of different colours of ministers.
With this budget and the full disclosure of the government's great lie, Labor's disdain for Defence is there for all of us to see. Mismanagement and deception has now effectively taken Defence back to square one. In the three years following the white paper, the resourcing of Defence has been under attack with these spin doctor ministers telling us that the initial decline was all part of the plan and would ramp up in 2013-14. We now know that the only plan the government really had was the clever and deliberate ransacking of the Defence vote. At the time of the 2000 Defence white paper, defence funding as a share of GDP stood at 1.74 per cent. The frugal diligence of the Howard government saw that share rise to a peak of 1.94 per cent in 2009-10. Since then it has been leeched down by this government to 1.56 per cent this coming year and will be 1.49 per cent of GDP in 2013-14. This level of Defence funding, or lack thereof, has not been seen in Australia since 1937. By way of comparative GDP references, the US spends 4.8 per cent; the UK, 2.6 per cent; South Korea, 2.7 per cent; and Singapore, 3.77 per cent.
Labor has now taken us to a point where, in order to get back to the position we were in when the 2009 white paper was delivered, we now require an investment by way of an increase in funding of around six per cent for five years to raise the curve just to get back on track to the 2009 plan. This government and these ministers have looked the Australian people in the eye and dudded them in precisely the same way that they have on the carbon tax and in just the same way they did to veterans with respect to the promise to index their DFRDB.
So what is wrong with Defence suffering a substantially reduced budget to fund a surplus? The answer is absolutely simple: like the white paper promises, this surplus is a fake, a fraud and a con. Let us look at Labor's record. In 2008 they delivered a deficit of $27 billion. In 2009 they delivered a deficit of $54.7 billion. In 2010 they delivered a deficit of $47.7 billion. In 2011-12, the just gone financial year, the estimate was $23 billion, but the deficit will actually be somewhere north of $40 billion. If the government is to be believed, it will be Labor's first budget surplus since 1989-90 and the greatest financial fiscal turnaround since records began. They are, with a straight face, saying that they will find, this financial year, $46.5 billion. So this is the phoney political imperative and the spin seeking to justify the effective trashing of Defence funding, particularly in terms of its capital account. The main point is that Defence is the main source of funds for this ALP spendathon, be it surplus or be it deficit. The Australian Strategic Policy Institute analysis of the 2012-13 Defence budget revealed the following:
Next year the defence budget will fall in real terms by 10.5%, the largest year-on-year reductions since the end of the Korean conflict in 1953. As a result, defence spending as a share of GDP will fall to 1.56%, the smallest figure recorded by Australia since the eve of WWII in 1938.
So where does all of this leave us? The good people at ASPI—Australian Strategic Policy Institute, a government funded think tank—are not given to exaggeration or histrionics, but their assessment is indeed sobering. In ASPI's celebrated evaluation entitled The cost of Defence: ASPI Defence budget brief 2012-2013, Dr Mark Thomson said:
The plans set out in 2009— The white paper— are in disarray; investment is badly stalled, and the defence budget is an unsustainable mess. Not only are cost pressures breaking out, but personnel and operating costs now dwarf capital investment.
This government and this minister have delivered to us a portfolio whose finances are now an 'unsustainable mess'. The consequences of this 'pink batt' calibre of public administration personally delivered by this Defence minister is that, firstly, we will be returned to the position we had in the years shortly before responding to the events in East Timor in 1999. Many people have very short memories as to the difficulties we encountered in mounting and sustaining that operation—difficulties and a lack of readiness which had their genesis in the mismanagement and neglect of the Hawke-Keating years. That is where we are almost certainly headed with this incompetent minister and this incompetent government. Secondly, the other important consideration is the way we treat our people. Men and women in uniform are being asked not only to contribute their service and commitment to our country; they are also being imposed upon to do so in circumstances where their terms and conditions of service are being eroded and undermined.
The consequences of Defence finances being in an 'unsustainable mess' see our people losing their flights home to see family, having their military superannuation devalued, reservists having their hours cut or cancelled altogether, soldiers short on ammunition being required to shout 'bang bang' in training exercises, and so on. And there they are up in the Timor Sea rescuing boat after boat, saving the lives of countless women and children, diving into the water or being blown up and burnt on these illegal entry vessels. And there they are in villages in Afghanistan providing protection to defenceless people, protecting schools and women and children, and being blown up by improvised explosive devices for their trouble. And there they are in their aircraft for 13 or 14 hours in the Southern Ocean providing assistance to people in distress in one of the most treacherous and remote regions of the world.
That no other portfolio has had to stump up to facilitate this government's feigned and fake budget surplus underlines the fact that Labor has no regard for the men and women doing our bidding as soldiers, sailors and airmen. I know that General Cantwell was of this view when he said the Defence minister clearly did not respect his troops, and he was absolutely right. The arrogance of this minister sees him dismissing the concerns of respected US strategist Richard Armitage—rare criticism from a senior US strategist—former Chief of Army Peter Leahy, Major General Jim Molan, Major General John Cantwell and Lieutenant General Peter Cosgrove, former CDF. All have criticised this government's handling of this portfolio. Add to this the views of Dr Mark Thomson and this minister's capacity has alarm bells ringing loudly.
The 'unstainable mess' that Defence has become will not be fixed overnight or even in months; but, given the opportunity, the coalition will bring diligence and respect into the equation along with an admiration and regard for service men and women—in stark contrast to this incompetent government and its spin doctor ministers. As soon as the coalition can repair this unholy, unsustainable mess of Defence, we will deliver it and return to three per cent real growth. Let us be clear about the difference: we will deliver it.