Army's aim can't be secured
Date: November 5 2012
Derek Woolner Even if funding is restored to the Australian Defence Force, the Chief of Army's aspirations are doomed, DEREK WOOLNER writes
Last week the Chief of Army used a presentation at the University of Canberra to criticise the government's slashing of the defence budget because of its consequences for his service.
The bad news, not just for the army but for Australia's current defence policy, is that even if funding were restored to former levels, the army's plans cannot now be achieved. Neither can those of the navy or the air force.
If there was any thought the pending 2013 Defence white paper was called forth to justify government parsimony, it can be abandoned. Current policy, that of the 2009 white paper, is by now increasingly incoherent and desperately needs an injection of both financial and strategic reality.
The view of Lieutenant General David Morrison, is that while the army is better equipped than ever before, continued funding cuts will threaten plans for its development out to 2030.
These will see the army reorganised around three combat brigades to facilitate rapid overseas deployments and develop the ability to take on what General Morrison describes as ''credible peer competition''.
They will also redevelop Australia's amphibious warfare capability around two Canberra class LHDs (amphibious ships capable of using helicopters and landing craft launched from a flooded dock in the vessel's stern). General Morrison made his views clear when addressing an international audience of senior military officers on the concept of a maritime strategy as the basis of future Australian defence policy.
One thing that the Chief of Army means by a ''maritime'' strategy is a focus on moving land forces around archipelagic areas.
His interest is not surprising. The focus of strategic debate has swung towards Asia or, rather, the uncertain impact on the security environment of the economic rise of China, India and other Asian nations.
The US Administration has underlined the shift with its ''pivot'' in the distribution of American forces towards Asia.
The problem for the Australian Army is that the subject of strategic concerns in Asia are overwhelmingly maritime - from the Japanese, Chinese and South Korean dispute over the Senkaku Islands to the territorial claims in the South China Sea.
After a decade in the Middle East, the army may be worried it seems irrelevant in the new strategic setting. It is reminding everyone that its most recent history of overseas operational deployments began with an amphibious operation to support the transition of East Timor to independence.
General Morrison's concern is the defence budget's deficiencies will lead to a decline in army capabilities he likens to the situation after Vietnam. This, he thinks, was due to a national rejection of defence preparedness.
The truth is more sobering. Neglected in the later 1950s, then fatally reorganised around pentropic divisions, the army was swollen by the introduction of selective conscription. It contracted again when the nation rejected conscription.
Developing the army as a fully professional force was the policy of successive governments. That it did not happen was not due to lack of intent.
In 1980, following the Soviet invasion of Afghanistan, then prime minister Malcolm Fraser feared an outbreak of general conflict and announced defence funding would increase by 6 per cent a year in real terms.
That this objective was not achieved had nothing to do with diminishing the importance of defence. It was the outcome of a period of economic turbulence, stretching from the ''oil shock'' of the early 1970s through stagflation, wages breakout, currency and balance-of-payments crises to Paul Keating's ''banana republic'' statement; all of which reduced finances and brought sharp contractions in defence funding.
Disruption to defence planning was inevitable. The army lost 30 per cent of its deployable force, with two regular battalions disbanded. Sustained underfunding put the army into a spiral of deficiencies. To support the Timor deployment, it was forced to ''borrow'' 4,000 flack jackets from the US and this was but a minor incapacity.
Yet it was not just the army that suffered during this period. The navy lost its ability to operate fixed-wing aircraft at sea and also its air warfare destroyers. The air force was unable to move into airborne early warning or to replace its ageing aerial refuelling fleet.
When dispatched to support the coalition air offensive against the Taliban in 2001, the RAAF's last surviving tanker was among the oldest Boeing 707s still flying.
Now economic circumstances are again turbulent and the fallout from the global financial crisis is far from resolved.
Even though Australia has performed well compared to the rest of the world, local economic complications are significant. Because of structural changes in the revenue base, Commonwealth government income is lower as a proportion of GDP than during Keating's ''recession we had to have'' in the early 1990s.
There seems to be little prospect of a reversal of recent reductions in the defence budget.
Yet, even were defence finance to be increased, the existing developmental plans of the ADF could not be realised.
This is because defence has been unable to spend the additional funding it received from 2001, particularly that for the acquisition of military capital equipment.
Mark Thomson of the Australian Strategic Policy Institute has calculated that over two decades since 1990-91, defence has underspent on capital acquisition projects by an annual average of 12.9 per cent. More critically, as the finance available for defence acquisition has increased, performance in meeting target expenditures has declined.
In 2010-11, acquisition of capital projects was more than 25 per cent less than projected in the budget.
This incapacity has existed throughout the period of increased defence funding following the 2000 white paper. By the 2009 white paper some $4.4 billion in defence acquisition projects had been deferred. Budgetary projections show increased expenditure in future years to bring programs back on target. These increases have not been realised. Indeed, with most of the $5.5 billion of ''savings'' in 2012-13 coming from the deferral of capital projects, the situation has worsened.
Defence faces an insurmountable wall of financial obligations obstructing the equipment program envisaged in the 2009 white paper. Recently, defence confirmed that the current value of unfunded liabilities to implement that document's capital equipment program, to be financed over the period to 2030, has reached about $200 billion.
The problem is that, with current expenditure on equipment, it would take more than 30 years to roll out the program. Mark Thomson calculates that, on historical performance, a 5 per cent annual increase in acquisition expenditure is the best that can be hoped for.
At this point it becomes apparent the ADF risks losing capabilities as it did in the 1980s when ageing equipment went un-replaced. Furthermore, some projects will be delayed for so long their relevance will need re-examination.
So, despite the Chief of Army's best intentions, the plans for his service's development to 2030 will not be realised. They cannot be sustained at the cost of expenditure on the other Services because, as General Morrison espouses, the vision of the army's operations in 2030 requires strong support from both the navy and air force.
These are the problems the Defence white paper coming next year must face. Current plans are unachievable and need to be replaced. The ability of the defence organisation to deliver results needs to be reconsidered.
Strategic policy will have to balance the government's objectives for the ADF with strategic and organisational realities. Then it might be time to worry whether the government is being too restrictive with defence finance.
Derek Woolner is a visiting fellow at the Strategic and Defence Studies Centre at the ANU.