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We're freeloading and we should be ashamed


It was a great victory for the anti-war Left in Australia when the Gillard government agreed to allow the US military to station 2500 marines in the Northern Territory. It meant Gillard, her Treasurer Wayne Swan and Defence Minister Steve Smith could safely set about gutting the defence budget and Australia’s military preparedness.

Well, not safely, but they could start raking billions out of our comparatively modest defense outlays while managing the strategic and political difficulties this might otherwise create by drawing on the credit line they’d just given themselves by letting the US Marine Corps invest here.

OK, enough troll bait. Allow me to explain.

The money we allocate to defence, as a proportion of GDP, is about to crash to its lowest level since 1938, when a conservative government was responsible for exposing the Commonwealth to annihilation in the world war that would shortly begin.

Australia will still spend an enormous wad of the folding stuff on defence in the future, of course. But arguments it might be better spent on education or health or welfare, for instance, should be put into the context of the comparative amounts we already spend on those policy areas. Combined, at a shade over $211.5 billion, they make the defence budget at $21.2 billion look like chump change. Individually, too. Our welfare spend ($129.9 billion) alone is somewhat more than five times greater than defence. Health ($58.8 billion) is just under three times larger. While the long suffering pointy-heads of edumucation ($29.8 billion) have to make do with only eight or nine billion dollars more than the generals and admirals. 

Whether we have the ratio of spending between the three social policy areas right, is a whole 'nother blog topic. (Although I'd suggest that education probably deserves to dig a little deeper into the ol' national lolly bag). Defence, however, gets by on peanuts, relatively speaking. One tenth of the spending on social policy.

A Gillard-led government is always going to regard defence as an after-thought, even though it has committed forces to a hot war in Afghanistan. Pretty much every other alternative administration, whether Labor led by Rudd, or a coalition led by Abbott, Turnbull or (in my hopes and moist and fervent dreams) Clive 'Tyrannosaurus Max' Palmer would not degrade the national defence as the PM has done.

It is not simply a matter of re-allocating funds. The war fighting skills of the ADF are  built over many years, and paid for not just in tax revenue, but by the loss of life and limb. To run them down invites a much greater demand for blood and treasure in the future.

The Defence Minister Stephen Smith is being entirely disingenuous insisting that our cuts are not 'on the agenda' at the upcoming AUSMIN talks with the US. Those agenda items, actual dot points on a piece of paper, have to be agreed to by both sides. So he is probably correct to assure us that the cuts 'won't be on the agenda'. But you can bet all of your walking around money that Hillary Clinton and her colleagues will be making their displeasure with Smith and Gillard brutally plain. Not in public, where it will be all smoochies and hand-holding, but in private, where they can speak their mind without embarrassing their so-called allies.

Dr Kurt Campbell, the Assistant Secretary of State for East Asian and Pacific Affairs, told Fairfax last week: ''I know this is one of the topics we are going to be addressing at the AUSMIN in Perth next week".

In classical power realist terms, Australia secured for itself a considerable benefit by convincing its ally to base the better part of a Marine Expeditionary Unit here. It then did that ally a grave disservice by cutting from its budget the money it would have spent to achieve the same benefit on its own.

It's freeloading in American parlance, bludging in ours, and it's a disgrace.


  • But JB, we NEEEEED to get back into surplus. Haven't you heard? The public debt is over $250 Billion!! That's over 15% of GDP!! If we were a household earning $100k per annum that would be like having a MASSIVE debt of over FIFTEEN GRAND! Oh the humanity!

    Oh and the US debt of over $15,000,000,000,000 is nothing when you have reserve currency status and an economy the size of theirs. I mean really, that's only around 100% of US GDP. Hardly worth worrying about such a trifling amount, really!

    Date and time
    November 13, 2012, 7:33AM
    • That would be the best analogy I have yet seen by a country fkn mile my good man!

      HOME, working, kinda, its the gods birthday!, so it shall be modest
      Date and time
      November 13, 2012, 7:58AM
    • Abe - agree with your sentiment re australia's debt and love the 15k reference.

      But the US debt position is much worse. This stuff is hard to work out (deliberately?). I think their true position is:

      $17 trillion federal debt
      $15 trillion state and local (counties) debt
      $15 trillion individual debt

      So it would take them 3 years of work to pay off what they already owe (and not eat of course). Or just keep printing money and inflate it away.

      Or default - won't the Chinese just love having their $2 trillion T-bonds not pay interest.
      According to Niall Ferguson (Ascent of Money) this is the tried true way for over 400 years with only the UK ever having not defaulted (and only once).

      Date and time
      November 13, 2012, 8:29AM
    • Whilst 15% debt of GDP does not seem a concern, it is when you consider that this has been done in a short period of 5 years during times where the mining boom has meant the government has received record tax receipts! When you buy a house it is an asset that will hopefully appreciate in value. The debt compiled has been wasted on a range of things and I hate to think what the interest owing on £250 billion would buy. Having lived in the UK for 12 years, Australia is mirroring what happened to GB a sudden downturn can mean this 250 billion can balloon to be uncontrollable.

      £250 billion works out to be roughly $12,000 dollars in tax per Australian. Not all Aussies pay tax such as children, unemployed so the real figure is higher.

      I would be a lot happier if this 250 billion had been spent on long term infrastructure of value which very little has been. E.g. High speed broadband for Hospitals and educational institutions makes sense and is of great value. Businesses who need it will pay for it. But very few people (if any) need an optical fiber line into their home.

      Date and time
      November 13, 2012, 10:27AM
    • @jc37 "Whilst 15% debt of GDP does not seem a concern, it is when you consider that this has been done in a short period of 5 years during times where the mining boom has meant the government has received record tax receipts"

      If only that were true. Tax receipts are not at records levels. They are low and getting lower as a share of GDP.

      Ignorance is bliss.

      Date and time
      November 13, 2012, 10:41AM
    • According to the CIA world factbook, its more like 27%.....
      2004 2005 2006 2008 2009 2010 2011
      17.4 16.1 14.1 13.9 22.1 22.4 26.8

      Notice the difference over the past 8 years? Also it doesn't take into account our trade deficit either

      Our real growth rate has fallen - so tax receipts are falling

      Date and time
      November 13, 2012, 11:06AM
    • You can blame Costello for ensuring that the crooksters who swindled most of my life savings, are not paying tax on it to substitute for the tax that I would have been paying if I still had the money.

      Date and time
      November 13, 2012, 11:14AM
    • "Having lived in the UK for 12 years, Australia is mirroring what happened to GB a sudden downturn can mean this 250 billion can balloon to be uncontrollable."

      Maybe you've been living under a rock somewhere, so I'll take the time to spell out the fookin obvious.

      The world got into the state it's in fiscally BECAUSE OF a sudden downturn called the GFC. And while it's true that mining's doing fairly well at the moment, every other non-mining sector is in the shitter. And mining pays fook all in federal taxes, and isn't a particularly big employer, being a very capital intensive industry.

      Date and time
      November 13, 2012, 11:14AM
    • Wow, I cannot believe how some people can be so blase about over $250bn of debt (assuming this is the correct number given that state debt of a similar level is not included). Given that the money was wasted by Labor and not invested in infrastructure and that Labor cannot even balance the budget when Australia was enjoying its best ever terms of trade, how do you think the debt will be repaid? In the meantime, just think of the billions of interest that need to be paid i.e. how much better use the billions could be put to e.g. hospitals. Sure, let's not even think about the debt until it gets to the level of Grecian standards!

      Date and time
      November 13, 2012, 11:41AM
    • I believe that the government are on to a winner here. If we eliminate all defence spending ($21.2 billion) then we could use $20 billion of that to fully fund the NDIS, dental, and other such committments and have $1.2 billion in change that could be used for the surplus. New Zealand relies on us for defence and we can do same with the US.

      West Footscray
      Date and time
      November 13, 2012, 11:43AM

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