Budget overview

In the lead up to the 2012 / 13 budget, Treasurer Wayne Swan insisted that it would be a tough one because of the need to achieve a surplus. Defence has made a major contribution to achieving that goal.

12th Jun 2012

 Defence budget

 Budget overview

Byline: Kym Bergmann / Canberra

In the lead up to the 2012 / 13 budget, Treasurer Wayne Swan insisted that it would be a tough one because of the need to achieve a surplus. Defence has made a major contribution to achieving that goal. With a total allocation of $24.2 billion dollars, this is a reduction of 10.6% from the current financial year. As several analysts have pointed out, this cut means that spending on Defence has dramatically shrunk to its lowest share of gross domestic product since 1953.

Unfortunately, this reduction seems more linked to internal political imperatives rather than a response to altered strategic circumstances. The opposite would seem to be the case, with steady increases in military growth throughout our area of direct interest. What has altered in the community is the diminishing sense of anxiety about national security issues during the previous decade – and that has allowed the Government to make these sorts of cuts without fear of a voter backlash.

Even before the attacks of September 11, 2001, Australians were reminded of the possibility of regional instability with the circumstances surrounding the independence of East Timor in 1999 and Australia’s military intervention. Then in short order came the invasion of Afghanistan, the Bali bombings, the invasion of Iraq and in the same year an Australian deployment to the Solomon Islands. The war on terror seemed to many to be a direct threat to the Australian way of life and against this background the idea of a guaranteed increase in Defence spending until at least 2028 had bipartisan support. In fact, to not support these increases one risked receiving the label “soft on national security”, with its connotations of treason.

Things have calmed down since then. People are used to being groped, scanned and x-rayed at airports, those traveling by air to Australia have been habituated to the use of plastic knives and their inability to carry their duty free fluids – alcoholic or otherwise – on board. Little is heard of East Timor; the Solomons are unthreatening to our way of life. Even Afghanistan is there in the background, but the death of Osama bin Laden combined with the relatively low-key nature of Australian operations means that the conflict is rarely page one material.

It is likely that this new mood will be reflected in the 2013 Defence White Paper.

A cynic might argue that if ever there was a good time to cut back on Defence, it is now. Unfortunately, the Government is only focussed on the hardware side of things and has not made any structural changes to the way the Department is operating. An overview of staffing numbers says it all.

Even with Australia withdrawing from Afghanistan in 2013 and so reducing our tempo of operations, total numbers of Defence personnel – uniformed and civilian – will continue their inexorable increase in numbers. From 102, 017 in 2012/13 they will continue to grow to 103, 055 by 2015/16. The budget papers refer to cutbacks in the numbers of civilians – which sounds impressive until one realizes that the reductions are either in the form of not recruiting as many new people as previously predicted or quickly reversing any real reductions.

The Defence Materiel Organisation is a case in point. At the moment, the number of civilians employed in DMO is 5,993, which next year is predicted to fall to 5,544 – a drop of 450, or around 10%. However, from that base numbers once again steadily increase so that by the end of the forward estimates period in 2015/16 the number of staff will be back up to 5,899 – not much short of where it is today. While a short-term reduction is taking place, this does not seem to be at the expense of senior officers or civilians because of course they are not going to make themselves redundant – unless there is a suitably generous package.

The cutbacks in materiel are dealt with separately in this edition, especially the cancellation of self-propelled howitzers for the Army. We have touched on the Joint Strike Fighter in the editorial, noting that Australia’s purchase has been delayed, not cancelled. The Minister seems now relaxed about the possibility of a gap in air combat capability, because despite a two year delay in JSF numbers we are not – as previously indicated – going to buy more Super Hornets. This sudden lack of anxiety is interesting given that Australia’s strategic circumstances have not altered that much. But as we have pointed out, perceptions have.

None of the savings measures will reduce the level of support given to service personnel in the field. They are rightly well looked after and that will continue to be the case. Operations in Afghanistan will be funded to the tune of $1.4 billion; East Timor will cost $88 million and the Solomon Islands deployment a further $43 million.


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