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May 4, 2012

Austerity drives cutbacks in military spending, here and abroad

Yesterday's defence spending cutbacks won't have much impact from the critical perspective of industry policy.

Call it the austerity dividend. After years of reflexive increases in military spending in the cause of prosecuting the War on Terror, the military-industrial complex has finally met its match, in the shape of fiscal discipline. The government has delayed spending on the ever more ridiculous JSF program and dumped plans to purchase self-propelled artillery. It’s also brought the next Defence white paper forward. The last one, released in 2009, was delayed by months by military and bureaucratic intransigence.

Australia isn’t the only country cutting or delaying big military acquisitions — it’s happening right around the world. The global military spend in 2011, $US1.74 trillion, increased by its smallest amount since 1998, just 0.3%. The US, the UK, Brazil, India, France and Germany all cut spending because of budget pressures. Only the kleptocratic dictatorships of Russia and China lifted spending.

The most amusing coverage of the government’s decisions came from a froth-mouthed Greg “I never met a dictator I didn’t like” Sheridan, who declared it “the worst day for Australia’s national security since the fall of Saigon in 1975”. Why Sheridan (“George W. Bush may well be judged, ultimately, a great president”) stopped at Saigon isn’t clear; what prevented him from declaring it our blackest day since Gallipoli?

More sensible coverage in The Australian was to be obtained from Brendan Nicholson, the paper’s well-respected defence editor, who thought the delay of the long-delayed and wildly over budget JSF and the bring-forward of the white paper sensible ideas.

Recall that there was a time when Defence was immune from budget pressures. It was the only portfolio protected from budget cuts in the early Howard years. And Kevin Rudd committed to increase defence spending by 3% a year until 2018. In the post-GFC era of low-revenue growth, that’s no longer the case, at least for major acquisitions.

In considering all this, it’s worthwhile remember that Defence spending is only partly about defending Australia (or as is more often the case, launching unprovoked invasions of poorer countries at the behest of our imperial overlords). Like everywhere else in the world, Defence spending is also a critical tool of industry policy, designed to pump billions of dollars into manufacturing and generate, where possible, precious export dollars. That’s one of the reasons the War on Terror, as originally conceived, was intended never to be won, as that would remove a justification for permanently higher defence and security spending — and thus why policymakers throughout the West were never particularly concerned that the primary impact of the War on Terror was simply to produce entirely new generations of enemies from communities terrorised by Western military forces.

Now, austerity is driving cutbacks in military spending across the West, to the chagrin of the defence and security commentariat, many of whom made their livings within the industry or continue to do so. Their standard argument, predictably, is that lower defence spending will make us all less secure. That of course depends on accepting the assumption that increased military and security spending has made us more secure — and there is no evidence that that is the case.

The JSF is a US project — well, debacle, more accurately — and the self-propelled artillery were likely to have been purchased from an offshore supplier, though the possibility of modifications being undertaken here by a company such as Tenix. The cutbacks, therefore, won’t have a massive effect from an industry point of view.

The biggest industry policy aspect of our current defence planning is the new submarine project, to which the government will devote more than $200 million to studying. There is intense pressure from local industry for the submarines to be built here, when they will be far cheaper to purchase offshore. Australia can produce high-quality smaller defence projects, such as the successful Bushmaster vehicles produces by Thales, but we know what happens when we try defence mega projects — look no further than the Collins class submarine. The best fiscal outcome for Australia would be to take advantage of the extensive assistance other governments afford their defence industries and obtain a new fleet from an overseas manufacturer.

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15 thoughts on “Austerity drives cutbacks in military spending, here and abroad

  1. Bill Hilliger

    Reference cuts to the military; for-gone military costs: 1 jet fighter = 1 hospital one submarine = many schools. Nowadays, who is our perceived enemy for which we need to be armed to the teeth? Not China, Japan, India, Indonesia, Vietnam, we trade with them all. Oh yes could our real but friendly ememy be the US afterall they sell us expensive military hardware to keep us safe from American perceived enemies, however they will not tell us who those enemies are. There is a line in a Ry Cooder song “whatever makes you rich; keeps us poor”. This certainly is true of the US arms trade with Australia we keep the American (corporations) rich whist keeping us poor. The last American perceived enemy was Vietnam – remember if we lost the war there they would march through south east Asia and make us all subject to a Communist doctrine. We lost the war however the predicted end to our freedom loving lifestyle did not end.

  2. jeffb

    Two quick points Bernard, what is the point in buying submarines if they don’t meet the operational requirements? The best ‘fiscal outcome’ in this case is far from a good outcome for anyone involved except the foreign supplier, the best ‘fiscal outcome’ would end up a complete waste of money with submarines that can’t do the work required of them.

    We may well need foreign assistance, likely from the USA, Japan or European companies such as HDW, to get our industry up to speed in order to produce submarines again. I find it hard to fault that due to the current circumstances we find ourselves in, the submarine industry was completely neglected after the Collins build was complete with the Howard government just using it as a way to attack Labor, which brings me to the second point.

    The Collins class are widely regarded as one of the best diesel-electric submarines in the world. No ifs or buts. Yes they have had significant problems, some caused by the foreign designer, some by our lack of planning, some by long-standing political interference. That has little to do with the capabilities the Collins class offer us today, regardless of how many uninformed articles the media publishes.

    If we “look no further than the Collins class submarine” you will clearly see that we are quite capable of this project.

  3. Bill Hilliger

    As for the war on terror? Terror, for the US is the best bogey-man enemy the US can foist on any nation that dependant on, and buys military hardware from the US. Why? because unlike Communism which has largely given over to some type of hybrid communist capitalism (we here in Australia seen to like, ask Clive, Twiggy and Gina) the terrorist bogey-man will never go away. These days any organisation or nation that disagrees with the American perspective on democracy “freedom loving people” is immediately branded a terrorist group or evil nations i.e. Iran, North Korea. And “psst China” for as long as they have a trade advantage over the US and will not increase the exchange rate of the yuan against the US $; get the picture? In short there will always be terrorists for as long as the US believes they have a monopoly on good, fair, honesty, and human rights in a nation where povery is unknown and universal health care – we see it in the movies all the time.

  4. Mike Flanagan

    Yes many of us can recall the peril of ‘the yellow hordes’ mantra of the
    conservatives and military/industrial profiteers.
    By the time they get the JSF to fly in a straight line our mining
    fraternity will have exhausted the supplies they are exploiting, that
    this piece of military hardware is intended to defend.
    Before the likes of Sheridan continues to make a fool of himself and his
    employer he should take the time to read some of Eisenhower’s
    warnings in the ’50 of the corruptness and our failure to recognise the
    threats posed by our dependence on the military/industrial
    economic drivers.
    If we spent half the world’s military budget on our greatest threat,
    GHG, we would probably resolve the problem with the alacrity it needs.

  5. robinw

    re JeffB.

    I remember during a joint exercise with the US Navy where a Collins submarine slipped right into the middle of their fleet undetected and basically said ‘boo’ to them to their chagrin and embarrassment. There has been too much spin and not enough fact about this sub (which admittedly did require the initial services of a specialist US engineer to make it quiet) and I think it’s time we stopped being the classic Aussie knocker about our own capabilities, both in engineering and seamanship.

    The Collins is world class and we should be proud of that. The only thing we shouldn’t be proud about is the number that are currently out of action or with diminished numbers of crew, something I hope this current government will fix in time (the last one did four fifths of five eighths about that situation).

    And while it is often stated that it would be cheaper to buy a sub ‘off the shelf’, we won’t get the value of having home grown nautical architects, draughtsmen, engineers, managers and technicians with those types of skills which can then be more easily transferred to similar situations within our country should the need arise. In other words we diminish our intellectual capital by ‘buying off the shelf’ for let us not forget, we are an island nation.

  6. Omar Khayyam

    Here’s an idea, don’t buy the bloody submarines at all.
    By the time the purchase or “build” has finally taken place, they’ll be obsolete.
    And what the hell is ‘self propelled artillery’? Isn’t that what a tank is?
    I think anybody involved with the pukrchase of this JSF nonsense is due for a serious investigation. Its a big diddle!

  7. David Allen

    Even if the navy could put the 6 Collins class in the water they couldn’t crew them.

    I imagine the new subs will be crewed by foreigners on 457 visas.

  8. jeffb

    Omar and David, you should read up on the plan before criticising it. Heres a video where the head of the program explains it in some detail, about 20ish minutes in length, shouldn’t take you long to watch it before you can get back to some other uniformed argument.

  9. Mike Flanagan

    Thanks for your first hand comfirmation of the US experience of the
    capability of the Collins and crew. I had read it and the constant press
    reports of the subs technical failure had made me be sceptical of the

  10. greenfiend

    If only the americans had collins class submarines…

    Could have stopped those planes flying into the WTC!