To raise defence spending, Australia needs a new electorate

In defence, as in life, there are no free lunches. This is so especially in an age of defence inflation, as the price of weapons systems spirals almost out of control. But even if the relationship between government and industry were perfectly efficient, defence would still cost serious dollars.


In decades past, this did not seem to matter much. Australia lived in a relatively benign environment. America underwrote the security of the Asia-Pacific. Washington’s primacy was unchallenged. Australia could keep its defence spending low as a percentage of GDP, banking on its alliance with an overdog and the stability of the American-led order in Asia. Defence priorities were so low that the Hawke government commissioned frigates that were left to be equipped with weapons later.


Now, the region is more fearful and more uncertain. Countries like Indonesia, China, the Philippines and Singapore invest serious money in modernising and expanding their defence forces. This money flows from a cocktail of nationalism and fear. They want a commercial peace. But they also want a military insurance that is increasingly expensive. The nuclear ambitious and crisis diplomacy of ‘Rogue states’ such as North Korea also drives fears, as do the spirals of insecurity that such states could trigger.


Looking out on this world, critics accuse the Gillard government of pursuing security on the cheap. They point the finger at the latest White Paper  as a sign of Canberra’s unwillingness to invest. The Paper backs away from the earlier investment envisaged in the 2009 Paper and de-emphasises being militarily prepared for a clash with China, preferring conciliation and diplomacy. The government promises world class hi-tech defence forces. According to executive director of the Australia Strategic Policy Institute, Peter Jennings, it is unclear how these programmes can be afforded. Defence spending is at 1.56 per cent of GDP, the lowest since 1937.


The easy response is to insist that we spend more. At a minimum, Australia’s strategic priority is to be sufficiently well armed to be able to inflict heavy costs on any would-be aggressor. Australia may never be a giant in Asia. It would never be able to go the matt and win outright against a giant. But as Professor Ross Babbage once put it, it can be a Beowulf, with the capacity to rip the arm off a giant. Combined with prudent diplomacy, this would hopefully make any attack on Australia or its maritime approaches unattractive.


The aspiration to do this would mean investing in hi-tech planes such F/A 18 Super Hornets or the F-35 Joint Strike Fighter, stealthy and long-range submarines, and an army large enough to make any invader drive up the forces it puts at risk. According to standard estimates, this would mean raising defence spending to 3-4% of GDP.


To be sure, there are things that matter apart from money. Better doctrine, greater efficiency and more coordination of government departments are all very well. But deterring and responding to major threats will take more dollars than the current budget allows.


The harder question is where do we get the money? Any government today recognises that there is little public appetite for increased defence spending. According to the Australian Strategic Policy Institute, the proportion of Australians willing to spend more on defence has dropped from its climax of 60% in 2001 down to 45% in 2010. Anxiety in the years immediately after 9/11 led to a brief demand for more spending. But the jihadist wave seems spent. While few (10%) wish to reduce defence spending, only 15% believe ‘much more’ should be spent, and a rise to 3-4% of GDP would be much more.


For the minority of Australians who do want more defence spending, its not clear where they believe that should come from.


From public services, such as health, education or transport, where public demand is increasing? What about taxation? Offering better defence at the price of more taxes would be a courageous step, which is a Westminster euphemism for political death. The Liberal-National coalition, one of the most vocal critics of the Gillard defence policy, does not boast of many tax enthusiasts. More borrowing and higher deficits? That would also be hard. In Australian politics at present, one of the battlegrounds is the issue of fiscal prudence and budget surpluses.


Given the limited domestic demand for more defence spending, what should Canberra do? It could continue to fudge the issue, keeping spending low, postponing funding decisions about new programmes, hedge between conciliating China and aligning with America, and muddle through.


Unfortunately, this approach offers the worst of all worlds. It would make the country more vulnerable to any predators, and has already begun alienating its major ally while irritating Beijing. That path could lead to a dangerous, gradual isolation. It would disqualify Australia from the ranks of ‘Middle Powers’ that the government thinks we have joined.


Alternatively, Canberra could take a clearer decision and adjust its policy to the reality of limited defence budgets. It could consciously choose to accept the risk of under-investing. Like many European states, it could abandon talk of being a Middle Power, and rely on its alliance with America and hope that unlikely but worse case scenarios do not happen. This would lower expectations and save money. But by increasing reliance on diplomacy and allies and abandoning self-reliance, this would place Australia’s security -and destiny- dangerously in others’ hands.


Or the government, and the political class, could try to change opinion. It could encourage the people to want more defence spending, increased over time, and to be willing to pay for it.  This would require bold leadership and an unusual level of cross-party consensus. It would mean following the spirit of Edmund Burke, offering the electorate their judgement rather than their obedience.


The one option Canberra does not have is the only certain way to revive Australia’s defences- dissolving the electorate, and appointing another.

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