Defence White Paper contains a few surprises

Defence White Paper contains a few surprises

25th Feb 2016


Even though most of the White Paper - released in Canberra today - is fairly predictable, there are some surprises. There will be an extra future frigate, so that eight ANZACs will be replaced by nine much larger vessels; the Army will receive a rocket artillery system and ground based anti-ship missiles; Special Forces will receive their own light helicopters and the RAAF will eventually receive a further two KC-30A multi role tanker transports taking the total fleet to nine.

 

To achieve this the Defence budget will grow to 2% of GDP – another slight surprise because many analysts were expecting the Government to move away from a formula based on a percentage and instead to design spending to meet the exact needs of the ADF, which might actually be higher or lower than 2%. Numbers of military personnel will grow by 5,000 to 62,400. There will be a slight increase in supporting APS numbers to 18,200 that is 1,200 more than present.

 

The Government has finally committed to purchasing 12 new submarines following earlier speculation that the number might be reduced to 8. However, much of the associated commentary by both the Prime Minister and the Minister for Defence that the purchase price will be $50 billion seems ridiculously high and it will be fascinating to know what sorts of weird assumptions have been made. Builders of submarines have come up with a figure of $20 billion and it seems bizarre that the Department has come up with a number so much higher than that stated by the experts who actually construct the things. By way of comparison, a USN Virginia Class submarine – nuclear powered and twice the size of what Australia will get – cost around $2.7 billion a pop, or $34 billion for 12. The Royal Navy’s 7,000 tonne nuclear powered ‘Astute’ Class submarines are about $2 billion each.

 

As well as good news for the ADF, with more people and more modern, networked equipment, it is also good news (finally) for Australian defence industry, which suffered terribly from the cuts inflicted by the deficit fetishism of the former Labor Government. While we will continue to import most of our defence hardware – typically from the United States – Australia should now have a viable naval shipbuilding sector, with rolling construction programs for frigates and submarines.

 

However, there does need to be one note of caution: future Governments will not necessarily feel committed to this ambitious plan, particularly if a very sharp economic downturn takes place, such as the one that occurred in 2008.

APDR at a glance