By cutting public service jobs then outsourcing to contractors, the cost of defence staffing has doubled. With problems from planning through to delivery, the billions being spent are not giving taxpayers value for money. By Brian Toohey.

Defence spending booms as efficiency dives

Defence Minister Peter Dutton on HMAS Leeuwin earlier this year.
Defence Minister Peter Dutton on HMAS Leeuwin earlier this year.
Credit: Shane Cameron / Department of Defence

Spending money on defence is easy. Saving money is harder. Successive governments have cut public service numbers in the defence workforce to reduce expenditure, but Scott Morrison’s government has lost patience with that attempt. On Thursday the prime minister announced that his government would spend an additional $38 billion to boost the number of permanent military personnel by 30 per cent, to 80,000, by 2040, and the overall workforce, including public servants, to 101,000.

He said that would be an increase of 18,500 over the baseline growth set out in the 2020 Force Structure Plan. The bulk of the increase is due to occur on the military side, but there will also be an increase in public service numbers.

A leading defence analyst, Marcus Hellyer, says the Morrison government spent the earlier savings from cutting public servants on a costly increase in its contractor workforce. Hellyer says the big problem with the earlier cuts lay with the decision to make Defence a “smart buyer” – using contractors instead of public servants to manage the huge acquisition program now under way. Hellyer calculated that the 6800 contractors cost more than double what was previously paid for the work done by public servants.

In February, he noted “the de-skilling of the public service and outsourcing of core capabilities” had begun to bottom out, with funding for an additional 540 public servants granted over two years for implementing crucial new programs.

Not every public servant lost status during the cutbacks. Apart from a secretary, Defence now has eight deputy secretaries plus an associate secretary who is above them. In 1975, there were only two deputy secretaries and no associate secretary, although there were many more staff in the department than today. Reductions in the headcount were mainly achieved by cutting junior staff until the total was down to 16,405.

The Morrison government is committed to spending $575 billion on Defence over the decade ending 2029-30. The money will boost annual spending to $73.76 billion by then, compared with $42.16 million in 2000-21.

The latest announcement that the government will increase spending by an additional $38 billion on the Defence workforce does not include even bigger spending for weaponry and facilities by then.

Such a strong increase prompts the question of whether the nation is getting a commensurate increase in defence capability and has the right type of weapons.

Sweden makes particularly efficient use of its $9 billion defence budget compared with Australia’s $42 billion. The Swedish defence attaché in Canberra, Carolin Skoog, says there are 131 people in its Ministry of Defence. These people are responsible for Sweden’s defence policy, with support agencies and departments instructed to implement and follow up.

Although not strictly comparable to Australia’s Defence Department, which employs more than 16,000 public servants, Sweden keeps its personnel numbers down. There are 5000 full-time personnel in its Air Force, which has 80 to 100 outstanding Gripen fighters – more than the number of Australia’s American-made fighters. Both organisations operate other planes, but Australia’s air force has more than 15,000 full-time members. Sweden’s defence force totals upward of 24,100 full-time members, plus part-time soldiers, reservists and 20,030 contracted Home Guard members who are integrated into the armed forces. Sweden also designs, builds and operates its own high-quality submarines.

Announcing his Strategic Update in 2020, Prime Minister Scott Morrison said he wanted to buy “longer-range strike weapons” and become “more self-reliant”. The latter is almost impossible when the government buys United States equipment without access to the computer source code to fully operate it, let alone change the code.

Acquiring costly long-range strike weapons would let Australia attack targets thousands of kilometres away with destructive precision. In Morrison’s view, this will deter China from attacking Australia. The eight nuclear submarines Morrison wants reflect his idea of how to deter China from a long distance. These submarines certainly can fire long-range cruise missiles from well clear of China’s coast, but not until a future prime minister eventually receives them. By then, the world could look very different.

Morrison explicitly stated that “maintaining a highly capable but largely defensive force will not equip us to deter attacks”. This view is strongly contested among analysts. The Lowy Institute’s Sam Roggeveen explains that long-range strike weapons “could provoke a counter-reaction that ultimately makes Australia less safe”. Because China will have a lot more long-range weapons, Roggeveen says: “Its ability to strike back would dwarf ours.”

Australia’s acquisition of long-range weapons could also alarm an increasingly powerful Indonesia. It has announced it is buying 36 fighter planes from the US. These are a version of its advanced F-15EX, which has far superior speed, payload and combat radius to Australia’s troubled F-35A fighters. Whether the US will sell something close to its best F-15 is not clear. Indonesia is also getting 46 long-range French Rafale multirole fighters.

A prominent strategic thinker, Hugh White, wants to focus on being able to stop hostile forces entering the approaches to Australia. Because White and many others regard the 10,000-tonne anti-submarine frigates Australia is buying as too easy to sink, he wants the nation to buy large numbers of medium-size, stealthy submarines powered by batteries or fuel cells. Fewer would be needed if Australia also bought underwater drones to help.

White considers big nuclear-powered submarines unsuitable for operating in the archipelago to Australia’s north. The Australian Strategic Policy Institute estimates the planned eight nuclear submarines would cost between $116 billion and $171 billion, depending on the assumptions.

The government has also overreached by ordering seven big, long-range Triton drones for a staggering project cost of $7 billion. Much of the data they will collect can already be gathered by other facilities and drones. The Tritons have a severe drawback, too – they can’t carry weapons. This matters because the number of expensive armed maritime patrol aircraft has been cut from 18 to 12. Australia is getting 12 highly effective Sky Guardian drones that can carry guided bombs, missiles and a wide range of sensors for up to 40 hours. The total project cost is about $2.4 billion.

Another version, the Sea Guardian, can attack surface ships and drop torpedoes to sink submarines, as well as deliver humanitarian aid and perform air-sea rescue operations. Buying 12 Sea Guardians in addition, and cancelling the Triton order, would make better sense. Another drone, called Loyal Wingman, could help compensate for the shortcomings of the F-35’s range, if not its other flaws. If the government were really a “smart buyer”, they would’ve got a refund on the F-35 long ago. The plane is still not finally operational, despite John Howard choosing it in 2001.

After Defence Minister Peter Dutton told the National Press Club last November that China did not want to occupy Australia, it’s not clear what sort of threat it poses. Despite repeated claims about Chinese aggression, China has not killed anyone in the South China Sea or around Taiwan.

If China were really the predominant threat, spending a lot of money on the army would not normally be a top priority compared with the air force and navy. Few suggest Australia should participate in a heavily contested invasion of the Chinese land mass, especially after the US has abandoned the idea of waging a land war in Asia. Even if an invading army got a toehold, it could get bogged down in an endless guerilla war. But Dutton endorsed the army’s practising of amphibious landings at last year’s Talisman Sabre exercise off the central Queensland coast.

He is also spending more than $40 billion on new tanks and armoured vehicles, not counting new land-based missiles, helicopters, field guns, self-propelled howitzers and more. One of Dutton’s more contentious decisions was buying 75 new Abrams tanks from the US. Many observers say tanks are too heavy to be used in the South Pacific Islands, where bridges are often too weak to carry them.

Dutton told the media he understands the arguments against buying more tanks. However, he said, it’s impossible to predict the future, “but the ADF needs to prepare for as many contingencies as possible within a finite budget”. Dutton asked what would be the requirements if in 30 years’ time we were to join in a strikeback against ISIL or al-Qaeda. He said, “It would likely involve tanks.”

Why not fighter planes, drones, special forces or a successful deradicalisation campaign earlier? And why would tanks be more useful in 30 years than they were in the war in Afghanistan that was just lost after 20 years?

Although he mentioned finite budgets, Dutton sounds like he would be keen to use taxpayer funds to buy some of everything at each arms fair around the world.

This article was first published in the print edition of The Saturday Paper on March 12, 2022 as "Buyer’s remorse".

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