Derek Woolner, Gary Brown, Dr Gary Klintworth
Foreign Affairs, Defence and Trade Group
15 August 2000
Contents
Major Issues
Introduction
Part 1: Australia's Strategic Environment and
Defence Planning
by Gary Klintworth
Summary of the Strategic
Environment
Part 2: The Choices We Must Make; Options for
Defence Policy
by Gary Brown
Review Force Structure Broad
Options
The Review Options Analysed
Constraints on Australia's Choices
The Range of Choice
Part 3: The Defence Budget and What the ADF
Might Do With It
by Derek Woolner
The Central Issue of Money
The Cost of Continuing With Existing
Expectations
Roles and Force Structure Developments for the
ADF
Issues in Considering Appropriate Military
Technologies
Some Avenues to Redevelop ADF
Capabilities
Some Major Themes in the Future of the
ADF
Conclusion
Endnotes
Appendix 1-Rate of Change in the Defence
Budget-Government Projection and Actual Outcome
Appendix 2-Nature of Equipment Programs Involved
in Block Obsolescence
Glossary
ADF
|
Australian Defence Force
|
AEW&C
|
Airborne Early Warning and Control
(aircraft)
|
ANZUS
|
Australia, New Zealand and United States
(defence alliance)
|
APEC
|
Asia Pacific Economic Cooperation
|
ARF
|
ASEAN Regional Forum
|
ASEAN
|
Association of South East Asian Nations
|
ASP97
|
Australia's Strategic Policy 1997 (Ministerial
Paper)
|
CDF
|
Chief of the Defence Force
|
CDR
|
Closer Defence Relations Agreement (between
Australia and New Zealand)
|
CWC
|
Chemical Weapons Convention
|
DA94
|
Defending Australia 1994 (Defence White
Paper)
|
DFAT
|
(Australian) Department of Foreign Affairs, and
Trade
|
DIO
|
Defence Intelligence Organisation
|
DoD
|
(US) Department of Defence
|
DRP
|
Defence Reform Program
|
EMP
|
Electromagnetic Pulse (weapon)
|
GDP
|
Gross Domestic Product
|
IMF
|
International Monetary Fund
|
INTERFET
|
International Force East Timor
|
MIRV
|
Multiple Independently-Targeted Re-entry
Vehicle
|
MOOTW
|
Military Operations Other Than War
|
MTCR
|
Missile Technology Control Regime
|
NMD
|
National Missile Defence
|
NPOC
|
Net Personnel and Operating Costs
|
NPT
|
Non Proliferation Treaty
|
PLA
|
Peoples Liberation Army (of the PRC)
|
PNG
|
Papua New Guinea
|
PRC
|
Peoples Republic of China
|
RAAF
|
Royal Australian Air Force
|
RAN
|
Royal Australian Navy
|
RMA
|
Revolution in Military Affairs
|
ROC
|
Republic of China (also known as Taiwan)
|
TMD
|
Theatre Missile Defence
|
UN
|
United Nations Organisation
|
USN
|
United States Navy
|
WTO
|
World Trade Organisation
|
Major Issues
On 27 June 2000 the Government released its
defence policy discussion paper, Defence Review 2000: Our
Future Defence Force, (hereafter the Review) and
invited public comment and input.
Over recent years, problems in the management of
Australian defence, coupled with the stresses of the recent
deployment to East Timor, have indicated that the Australian
defence establishment and force structure cannot avoid change.
Essentially this is so because the costs of sustaining the
Australian Defence Force (ADF) as currently structured exceeds
available resources and it is likely that it will continue to do
so.
In concert with significant global and regional
strategic change in the decade since the end of the Cold War, these
pressures imply that readjustment of national security policy,
force structure or the defence budget-or, more likely, all three of
these-is now necessary. The Government's Review document
is the first phase of this process.
It is dangerously easy, in considering issues
raised in the Review, to allow financial considerations to
dominate. This paper suggests that the root cause lies in policy,
and that any effective corrective action must likewise begin
(though not end) with policy.
It is the broad defence policy settings which
have been in place since the end of the Vietnam War which have
generated the demands on the ADF and budget which have now reached
a sticking point. Because of policy settings, Defence has been
under-funded for wage increases over the last decade. The bulk of
increased wage costs have been met by diverting funds from other
areas of the budget. This process has been exhausted and, if it
were to continue, would lead to a situation where Defence would be
unable to purchase any equipment at all by about 2009.
In addition, Defence is working its way through
a budget crisis caused by an over commitment to equipment programs
in 1997-98. The extent by which the cost of these programs exceeds
projected finances at current budget levels is so great that they
will take around ten years to absorb, thus restricting options for
commencing new programs
In essence, either policy needs to be adjusted
to less ambitious and more sustainable settings, or substantial
extra resources must be allocated to defence on an ongoing basis.
The latter course will involve either cuts in other areas of
Government spending, or tax increases, or some mix of the two.
Moreover, whatever budgetary measures are announced, history does
not fill one with confidence that long term funding will be
sustained.
On the other hand, adjusting policy to less
demanding settings will involve rethinking many hitherto sacrosanct
aspects of defence policy. The rapidly rising costs of maintaining
forces closely interoperable with the world's only superpower, and
the quantity and quality of some ADF weapons and platforms, are
only two of the issues that are raised by such an approach.
The difficulty of revising policy settings is
complicated by the lack of any clear indications of direct military
threat to Australia or its vital interests. The issue here is that
there is nothing in the strategic environment to alter the
judgement that Australia faces no immediate threat of hostile
military action and there is nothing that seems capable of changing
this assessment for the foreseeable future. Thus, the argument that
Australia should increase its defence budget simply on grounds that
the region is fluid, unstable and unpredictable, and therefore
threatening, is difficult to sustain.
Nonetheless the general contention of the
Review, that it should not be assumed that major war is a
thing of the past, is difficult to contest. It can be assumed then,
that government will wish to continue to operate an ADF with a
reasonable range of military capabilities, even if financial
pressures force some change to policy settings and, consequently to
ADF force structure.
In deciding directions without overwhelming
strategic guidelines, a number of high level national policy
imperatives are likely to be more important in deciding the nature
of the ADF than will be most of the issues identified by the
Review. Among these are a conviction that Australian
forces will not be deployed overseas without the permission of the
host country or support of a significant regional coalition. This
will rule out the possibility that an ADF structured for regional
involvement would include a marine corps for seizing hostile
coastline. Similarly, a priority to reduce the risk of sustaining
Australian casualties overseas is likely to support the maintenance
of conventional military ground forces, making unlikely the
adoption of New Zealand's approach of optimising them for
peacekeeping operations by an Australian government aware of the
latter's different strategic environment.
In such circumstances, it is likely to be
lessons drawn from recent experience that influences the future
development of the ADF more than any 'purer' analytical process.
The two most salient experiences appear to be those of East Timor
and the increasingly sophisticated, largely aerial, campaigns from
the Gulf War operations in 1991 to the 1999 bombing of Serbia and
Kosovo. These examples have significance for differing reasons.
The former arose without the development of
traditional national military threats, yet was seen to involve
significant Australian issues and was very taxing to an ADF which
had been built-up somewhat beyond its normal peace time levels. The
second has been used as a means of forcing recalcitrant states to
conform to international morés in a situation of less than
conventional war. Of most importance in the long run is that many
of its technologies are becoming more easily accessible and have,
indeed, been practised in part by teenage computer hackers. Growing
ubiquity renders this development relevant regardless of the
strategic environment.
The critical issue in this scenario is managing
the development of military capabilities which are almost
schizophrenically opposed. The experience of the Timor deployment
emphasised the need for a larger personnel base sufficient to
sustain operations over several years, the critical nature of
logistics support and the operational advantages of the potential
to use more advanced miliary capabilities. The aerial campaigns
introduced war fighting concepts built around advanced levels of
technology, bound together by information technology and
increasingly targeted more at an opponent's support, information
and management infrastructure than military forces. The trend of
these latter concepts might lead to development of components of
the ADF that have little to do with force structure as it is
recognised today and which conceive of themselves operating in
cyberspace rather than in any particular theatre of operations.
That leaves the issue of whether the 'middle' of
the current ADF force structure will be squeezed out when financial
limits are reached. This is the issue of the extent to which the
ADF can afford to reduce its more conventional military
capabilities based on vessels, aircraft and vehicles. There is
little clear guidance on this and few opportunities to get an
effective balance of decisions across the range of capabilities.
Nevertheless, the financial analysis indicates that it is in this
area where decisions will have the most significant impact.
The one unifying issue in such developments is
the central importance of personnel to building the future
capabilities of the ADF. Whether it is sustaining sufficient
numbers to achieve objectives or developing the intellectual
capabilities to meet the challenges of new technologies,
recruiting, retaining and effectively using Service personnel will
become a central test of defence policy over the next two
decades.
In the immediate future, paying for personnel
will be the dominant issue of Defence financial management. The
mechanics of the problem are such that defence labour costs are
only marginally responsive to management strategies. Therefore the
defence budget will have to rise in real terms by about one per
cent immediately, rising to two per cent by 2020, simply to pay the
full cost of prospective Defence wage rises. Similar unfunded
pressures on operational costs of defence equipment will add, on
average, a further $75 million each year. Thus discrete and
sustained increases in the budget will be required simply to allow
the ADF to continue as it currently exists.
Enabling Australia's defence to maintain its
capacity to deal with the range of options that it has in the past
will cost even more. To replace major equipments that are due to be
retired over the next 20 years will cost between $80 billion and
$110 billion. Increasing the defence budget to accommodate these
pressures would, on average, require rates of budget growth of
between 4 and 4.5 per cent and 2 to almost 3 per cent for the high
and low examples, respectively. Additional expenditure per annum
would range around $500 million or $300 million and produce defence
budgets of just under $23 billion and $18.4 billion respectively at
the end of 20 years.
However, only by pursuing the most expensive of
options should it be necessary to devote significantly more of
Australia's Gross Domestic Product (GDP) to defence than is the
case at present.
Even so, the thrust of defence management over
the last few decades will have to be stood on its head. Whereas it
was the policy to constrain personnel and operational costs in
order to free funding for equipment, the opposite is likely to be
necessary in the early 21st century. Most of the discretion in
formulating defence budgets will be exercised over the capital
components of expenditure. Consequently, it appears wise to assume
that some reduction of roles and consequent changes to the force
structure of the ADF will result whatever the financial pressures.
A worse outcome would be to presume that no changes will be
necessary and to have the ADF forced into an ad hoc
reduction of roles because inadequate funding has made it
unavoidable.
Introduction
On 27 June 2000 the Government released its
defence policy discussion paper, Defence Review 2000: Our
Future Defence Force, and invited public comment and
input.
To receive this input the Government has
appointed a Community Consultation Team, consisting of the Hon.
Andrew Peacock (former Minister for Foreign Affairs and recently
Ambassador to the United States of America), Dr David MacGibbon
(former Liberal Senator for Queensland), Mr Stephen Loosley (former
Labor Senator for NSW), and Major General Adrian Clunies Ross
(retired). The team will visit capital cities and regional centres
during July and August, listening to community feedback and will
then report back to the Government.
Over recent years a number of well-publicised
and costly errors in the management of major defence projects,
coupled with the stresses of the recent deployment to East Timor,
have brought home the fact that the days of the present Australian
defence establishment and force structure are probably numbered.
Essentially this is so because the costs of sustaining that
structure have exceeded available resources and will continue to do
so.
In concert with significant global and regional
strategic change in the decade since the end of the Cold War, these
pressures imply that readjustment of national security policy,
force structure or the defence budget-or, more likely, all three of
these-is now necessary. The Government's Review document
is the first phase of this process.
In this paper, we attempt to set out the
principal policy, strategic, force structure and funding issues
identified by the Review and offer some comment on the
implications of the choices identified by its authors. The purpose
of this paper is not to propose particular choices or solutions,
but rather to make available to Senators and Members some
background analysis indicating the nature of the choices now
confronting Australia. When the Government releases a formal White
Paper policy statement, an analysis of the policy and other
settings it seeks to put in place will be provided.
This paper has three principal sections: the
strategic background; the nature of the choices Australia must
make; and the financial and operational issues arising. Although
the Review raises issues which involve discussion of a
very wide range of influences and pressures on defence policy, this
paper maintains a focus on the more conventional issues of
state-based strategic developments, military combat capabilities
and near term issues of defence management.
Part 1: Australia's Strategic
Environment and Defence Planning
by Gary Klintworth
The Defence Review 2000 (hereafter the
Review) states that Australia is located in an
extraordinarily dynamic, complex and unpredictable
region.(1)
If the term 'security' is broadly defined, there
are indeed many trends and developments that make the Asia Pacific
region seem complex and unpredictable. They include the recent
financial crisis, the spread of technology, the impact of the
information revolution, rapid political change and differences over
democratic values. Some countries have coped quite well. For
others, such as Indonesia, change has generated considerable
domestic turbulence with religious strife in Ambon and the threat
of separatism in Aceh and West Papua. Australia has to think about
how it might cope with a spillover of Indonesian refugees as well
as adapting to a new style of Indonesian politics and dealing with
militia remnants in East Timor. There are also uncertainties about
economic and social stability in Papua New Guinea and elsewhere in
the South Pacific. Local unrest might damage Australian commercial
interests and/or threaten Australian nationals. At some stage,
Australia may need to take account of non-mainstream security
concerns that could arise, for instance, from regional shortages of
fresh water, energy, or food.(2) Other transnational
issues which might have some effect on regional security include
environmental degradation, overpopulation, climate change and
illegal activities such as piracy, and drug and people smuggling.
It is conceivable that the government might allocate the Australian
Defence Force (ADF) a role to deal with the consequences of such
developments and to do so, it might have to fund new ADF
capabilities.
There may be other reasons why Australia should
increase its defence budget. For instance, for political reasons we
might want to demonstrate our credentials as 'a credible US ally',
able to deploy forces in support of the US in contingencies, such
as the Persian Gulf or the Korean peninsula.(3) In this
context, Australia might want to keep in technological step with
the US, as suggested by US Secretary of Defense William
Cohen.(4) Australia might wish to have sufficient forces
to be able to respond to calls from the UN for regional
peacekeeping, as in East Timor. It might simply aim to have a
well-rounded defence force that provides a suitable level of
deterrence to Australia's neighbours.
But for the foreseeable future, the argument
that Australia should increase its defence budget because the
region is fluid, unstable and unpredictable and therefore
threatening, is difficult to sustain. Judged by the yardstick of
their capacity to generate credible military threats against core
Australian security interests, there are no regional issues that
presently qualify.(5) On the contrary, Australia's
strategic environment is relatively benign. As the Review
observes, no country has the intent or capability to use armed
force against Australia and 'we do not expect to be attacked by
anyone', now or in the reasonably foreseeable future.(6)
There are no armed forces, and especially no air and naval forces
nearly as capable as Australia's within operational
range.(7) Australia has no territorial disputes with any
neighbour. It has a security treaty with the world's only
superpower, the US, and through the Washington hub, it has security
links with Japan and South Korea. Australia is not 'now more alone
than we have been probably since the 1930s', as some have
argued.(8) Australia, on the contrary, has a reassuring
network of bilateral defence relationships with other countries in
the region. This was amply demonstrated in the Australian-led
peacekeeping missions in Cambodia and East Timor.
Australia has a Closer Defence Relations (CDR)
agreement and close geographic, historical, economic and cultural
ties with New Zealand. Australia is effectively allied with
Singapore, Malaysia, and the United Kingdom through the Five Powers
Defence Agreement. As the Defence Department noted in its
Australia's Strategic Policy 1997, Malaysia and Singapore
are Australia's closest defence partners in Southeast Asia.
Australia has also developed what Australian defence officials have
described as 'a robust defence relationship' with China.
Ministerial talks, naval ship visits, a strategic dialogue and
college and intelligence exchanges between Australia and China have
become a matter of routine.(9)
The Review argues, nonetheless, that
'there is little point in basing our long term defence planning on
specific predictions about the strategic future of Asia' because
'we simply do not know what is going to happen' (emphasis
added).(10) Implicit in this statement is that Australia
therefore needs to plan for the worst. Any list of worst-case
scenarios in the region might include some or all of the
following:
-
- the break-up of Indonesia
-
- Islamic fundamentalism in Southeast Asia
-
- an ongoing insurgency in East Timor
-
- the collapse of law and order in Papua New Guinea
-
- domestic upheaval in China
-
- escalating tension in the Taiwan Straits
-
- a possible Sino-US conflict
-
- a new Cold War in Asia
-
- a great power missile/anti-missile arms race
-
- increased tension in Sino-Japanese relations
-
- naval conflict in the South China Sea
-
- a regional proliferation of weapons of mass destruction
-
- renewed conflict in the Korean peninsula, and
-
- the threat of an India-Pakistan nuclear exchange.
Meanwhile, the Review asserts elsewhere
that Australia's 'strategic planning will need to take account of
the expectation that Asia's economies will continue to grow
strongly', the corollary being increased spending on defence and an
enhancement of regional defence capabilities.(11) In
other words, the Review is prepared to predict that
defence budgets in the region will continue to expand, but it is
not prepared to make long term predictions about other important
trends and developments in the region.
Predicting Asia's Strategic
Future
There will always be uncertainties in trying to
predict strategic change but it is not an impossible
task.(12) The US Department of Defence routinely makes
assessments about the likely strategic environment in the Asia
Pacific region in ten or twenty years time.(13) The
Australian Government has intelligence agencies that employ
hundreds of professional analysts. They have access to voluminous
classified and unclassified information and the resources of the US
intelligence community. It ought to be their business to make
insightful strategic assessments that will give early warning of
any significant deterioration in Australia's strategic environment.
It is within their competence to make specific predictions as well
as strategic assessments about Australia's security outlook. They
have done so in the past and if they are unable to do so now, then
it would appear that something is seriously amiss with Australia's
intelligence and early warning capabilities.
There are, meanwhile, important regional trends
that could have a positive bearing on Asia's strategic future and
Australia's security. One is the spread of democracy. Another is
the consolidation of Western style market capitalism. Both
developments can generate destabilising social and political
change.
But taking a broad view-apart from closed
societies like North Korea, Laos, Burma and perhaps Vietnam-few
governments in the Asia Pacific region are in a position to ignore
domestic and international public opinion.(14) They have
become increasingly sensitive about their domestic legitimacy and
international image. Democratic values and institutions are
well-established in Taiwan, South Korea, the Philippines and
Thailand.
Even in China, economic liberalisation and the
spread of information is gradually transforming social and
political values in that country. Of course, there are no iron-clad
guarantees, but the record, including Taiwan's, shows a strong link
between trade interaction, economic liberalisation and
democratisation.(15) China has been operating a
market-based economy for two decades and is now experimenting with
political reform, beginning with local level elections that affect
an estimated 600 million people in 900 000 villages across the
country. Entry into the World Trade Organisation (WTO) will add to
the pressure for democratisation in China. As a member of the WTO,
China will be obliged to reduce censorship and open its door even
wider to Western liberal values and the rule of law. Without ruling
out the risk of transitional instability, China's political system
is likely to evolve in a positive way.
North Korea has a long way to go but it too is
on the threshold of open door economic reform policies similar to
those pioneered by China twenty-five years ago. India is a
democracy. Although democracy will remain fragile until Indonesia
wins the loyalty of its regions, completes the reconstruction of
its political institutions and reconciles its armed forces to a
withdrawal from politics, Indonesia nonetheless has become the
world's third largest democracy.(16)
Another positive development is the growing
habit of economic cooperation, defence transparency, security
dialogue and the practice of common security. The regional security
dialogue process has become institutionalised. Senior defence and
intelligence officials from virtually every country in the Pacific
community are talking to each other more frequently and more
frankly than ever before. China for example, has bilateral defence
intelligence exchanges with Australia, Japan, the US, Russia, South
Korea, Singapore, Thailand, the Philippines, Malaysia and
Indonesia. These developments have enhanced regional trust,
transparency and stability. Most governments in the region realise
that regional cooperation on trade, banking and investment, science
and technology, transport and communications, energy and the
environment, disaster relief, crime, drugs and refugees is in their
own self-interest.
According to Professor Stuart Harris,
regionalism in the Asia Pacific region has been strengthened by the
Asian financial crisis and the major achievements of regional
multilateralism-normative frameworks for economic and security
relations-have come through unscathed. There is moreover, a
continued regional priority on economic growth, open liberal
economic development and the settlement of disputes by peaceful
means.(17) In a similar vein, US Secretary of State
Madeleine Albright observed that after the Asian financial crisis,
regional governments in Southeast Asia have shown a deeper
understanding and commitment to financial transparency, political
openness and democratic principles and that this augured well for
Association of South East Asian Nations (ASEAN) ability, as a
group, to work together effectively on security
issues.(18)
Cooperativeness on regional security is
reflected in the continuing ASEAN Regional Forum (ARF) process, and
North Korea's participation in that forum. More tangible examples
include the regionally-based peacekeeping coalitions that operated
successfully in Cambodia in 1992 and East Timor in
1999.(19) Australia's intelligence agencies should be
able to make a reasonable prediction as to whether or not these
trends are likely to continue, thereby enhancing regional stability
and security.
South China
Sea
The benefits of the new regionalism are evident
with regard to disputed claims to island and maritime territory in
the South China Sea. The South China Sea is often cited as one of
the region's critical flashpoints because of the ASEAN fear that
China might again resort to the use of force to assert its claims
against smaller neighbours like Vietnam and the
Philippines.(20) It should be noted, however, that China
has acted with relative restraint given the strength of its claims
in international law. For example, compared to Vietnam, China has a
superior legal claim to the Paracel Islands and compared to the
Philippines, it has a better claim to the various Spratly
Islands.(21) Nonetheless, influenced by the diplomacy of
Asian regionalism, China's hitherto inflexible attitude has changed
significantly over the last decade. China has declared that it
respects the right of free navigation through the South China Sea's
crucial shipping lanes.(22) It is an active participant
in South China Sea working groups and has co-hosted some
meetings.(23) It is also prepared to discuss a code of
conduct in the South China Sea in a multilateral
forum.(24) On 16 May 2000, China and the Philippines
pledged to settle their territorial disputes in the Spratly Islands
in the South China Sea by peaceful means in accordance with
international law, including the UN Convention on the Law of the
Sea.(25)
Ongoing low-intensity small scale incidents or
activities in the South China Sea, such as the sinking of a fishing
boat, acts of piracy and out of area naval exercises are
foreseeable, but such matters do not affect Australia or its
military security. On the other hand, they do provide good reasons
and an opportunity for more pro-active Australian diplomacy.
Economic Growth
The Review barely acknowledges the
positives for regional security that can flow from the economic
well-being and the growing interdependence of regional economies.
Instead, the Review asserts that the region's economic
growth will pose new security challenges that could directly affect
Australia's strategic interests.(26)
Economic growth is critical for impoverished
countries like Vietnam, the Philippines, Indonesia and North Korea.
It alleviates the risk of social unrest and uncontrolled population
flows. Economic development in large, overpopulated,
under-resourced countries like China and India contributes to
regional stability. In China's case, the alternative is social
fragmentation. Regional economic growth and interdependence gives
member countries a stake in regional stability, in expanding trade
and in the development of regional economic and security
organisations like Asia Pacific Economic Cooperation (APEC) and
ARF.
Fortunately, it appears that East Asia's
economic recovery is well underway with growth set to lead the
world, during the next two years at least. The latest economic
growth figures for China give an annual rate of 8.2 per
cent.(27) The World Bank report, East Asia Recovery
and Beyond, forecasts GDP growth could easily range from five
to seven per cent in Korea, Malaysia and Thailand, and even four to
six per cent in Indonesia and the Philippines.(28) If
these figures are sustained, there will be important social and
political spin-offs that will have a positive influence on
Australia's security environment. They suggest that earlier gloomy
forecasts that a collapse of economic prosperity in Asia threatened
the very basis of political stability in the region were
overblown.(29)
Papua New Guinea has usually been listed as one
of the fragile countries in the so-called arc of instability on
Australia's doorstep. However, there are signs of a recovery with
projected GDP growth rates of 4.5 per cent in 2000, up from 3.8 per
cent in 1999.(30) Prime Minister Sir Mekere Morauta's
efforts to stabilise the economy and eliminate public corruption
have been given ticks of approval from the World Bank, the IMF, the
Asian Development Bank and the European Union.(31) The
new government has been welcomed by Australia and greeted with
relief by the international business community. Many problems
associated with good governance and financial management
remain.(32) But even if Papua New Guinea remains a
basket case for Australian economic aid, that is a matter that is
arguably of no great consequence for Australia's military security
or strategic interests.
Defence Budgets
The Review claims that as defence
budgets of countries in the region start to increase, Australia's
relative military capability might come under pressure. It proposes
that Australia should increase its defence budget so as to maintain
its relative military strength.(33) The logic of this is
to commit Australia to a cycle of increased defence expenditure in
an effort to keep ahead of certain countries in the region, and the
region in general.
However, in the long term, such a goal will be
difficult to maintain given the size of Australia and the
population, resources and/or economic potential of Australia's
neighbours.(34) In 1995, Japan, China and South Korea
had economies that were larger than Australia's.(35) By
1999, the list had expanded to include India. By 2010 it will also
include Taiwan.(36)
Besides, without differentiating between
particular countries in the region, it is too much of a
generalisation to say that defence budgets in the region are
increasing, and that if they continue to increase, this will put
pressure on Australia's relative military strength.(37)
Increases in the defence budget of some countries could have
positive benefits for Australia. Other countries are too far away
to be a military security concern to Australia.
Japan's poor economic performance over the last
few years has meant a continued tight rein on its defence budget.
In 1998, the budget declined slightly in real terms with no
increase for 1999. According to the Defence Intelligence
Organisation's (DIO) Defence Economic Trends in the Asia
Pacific Region, this is the first time there has been no
growth in the Japanese defence budget since the creation of the
Japanese Self Defence Force in 1954. Even if Japan's defence budget
increased, it is difficult to see how this would put negative
pressure on Australia's relative military capability. Indeed, an
increased defence effort by Japan would be welcomed by the United
States, Australia's alliance partner.
India has increased its defence budget to pay
for a nuclear capability and is acquiring a number of MiG-29s and
Su-27 fighter aircraft.(38) But India is a country with
a population of one billion. Its security pre-occupations are
Pakistan, the subcontinent generally and China. It has no dispute
with Australia. According to the DIO's Defence Economic Trends
1999, p. 28, India's defence budget grew in real terms by 16.6
per cent in 1997, 2.2 per cent in 1998, and 3.2 per cent in 1999.
At the same time however, measured as a percentage of GDP (and
accepting that this is crude indicator of a country's defence
effort), India's defence expenditure declined from 2.2 per cent to
2.1 per cent in the period 1997-99. At 2.1 per cent of GDP, India's
expenditure is on a par with the 2.2 per cent for Malaysia, the 2.7
per cent for the United Kingdom and the 2.9 per cent spent by the
United States. Measured in terms of 1995 US$, India's defence
expenditure in 1999 was US$9.9 billion. By comparison, Australia's
defence expenditure (again in 1995 US$) was US$7.5 billion or 1.8
per cent of GDP.(39)
Indonesia's Defence Budget and
the Technology Edge Issue
Indonesia's size and proximity makes it a key
determinant of Australia's military security outlook. It is however
unable to afford the development of a force projection capability
that might affect Australia. Its national security policy is
defensive and its defence budget is comparatively modest. In
current straitened economic circumstances, Indonesia cannot afford
to increase its defence budget or modernise its armed
forces.(40) The Indonesian Defence Minister Juwono
Sudarsono told Australian officials that for the next five to ten
years, Indonesia will not have any major acquisition and
modernisation plan, particularly in the technology-heavy services
like the airforce and the navy. So, said Mr Sudarsono, in a
changing strategic climate, Indonesia would be relying on
Australia's strength.(41) In other words, for the
foreseeable future, Australia should have little fear of losing its
military technology edge to Indonesia.
Ironically, in its 1997 assessment,
Australia's Strategic Policy 1997, (ASP97), the
Defence Department noted that Indonesia's armed forces were modest
and that even if its air and maritime capabilities were being
developed, this was in Australia's interest because it would allow
Indonesia to better defend its archipelago and thus prevent any
third power from mounting attacks on Australia from or through the
archipelago.
Even if Indonesia finds itself able to increase
its defence budget by 2005 or 2010, will this put pressure on
Australia's relative military capability, as the Review
suggests, or will it enhance Australia's security, as posited in
the 1994 Defence White Paper Defending Australia (DA 94)
and again in ASP97?(42)
It would be a matter of great concern to
Australia if Indonesia broke up or became 'a rudderless
hulk'.(43) A break down in law and order and refugee
outflows would put pressure on Australia to respond. However, if
this resulted, for instance in demands on the time and resources of
the ADF for humanitarian aid and logistics assistance, say, in the
Moluccas, any Australian response would be made to satisfy a
diplomatic request. It would not be a matter of Australia's
military security being threatened.
The Rest of the
Region
The Review fails to discriminate
between countries in the region of security importance to
Australia, such as Indonesia, and those which are not. With the
recent exception of India, few of the other countries in
Australia's area of strategic interest are significantly increasing
defence expenditure. Defence budgets have generally stabilised or
have declined slightly in real terms.(44) The
governments of North Korea and South Korea are under pressure to
reduce defence expenditure and spend more on social welfare. In
Southeast Asia-with the exception of Singapore-defence budgets are
down. (45)Most countries continue to be constrained by
scarce resources and the aftermath of the Asian financial crisis.
Pakistan, beset with domestic economic and political problems, has
been unable to keep up the pace. In 1999, perhaps because it has
developed a basic but credible nuclear deterrent capability,
Pakistan spent less on defence overall than it did in 1990.
But even if there are increases in regional
defence budgets, and even if Australia's military lead in certain
areas is overtaken, it is difficult to envisage countries like the
Philippines, Thailand, Malaysia, South Korea, Japan, Singapore or
Taiwan threatening to undermine Australia's security. On the
contrary, if those particular countries acquire more modern defence
capabilities, then cumulatively this circumstance will make it much
more difficult for any aggressor state to threaten Australia, its
neighbours or the region in general. This is precisely the point
made by the previous Defence Minister Ian McLaughlin. In December
1996, he spoke strongly of the defence benefits flowing to
Australia as a result of countries in Southeast Asia improving
their defence capabilities. He said that Australia's security would
be better assured by a network of Southeast Asian countries that
were able to defend themselves.(46)
Great Power Balance
What of the great powers in general? Is there
likely to be a shift in the great power balance that is
disadvantageous to Australia's security? On the one hand, the
Review claims that 'we simply do not know what is going to
happen' yet on the same page, it observes that there is every
reason to be confident about the US role, in concert with Japan, as
regional stabiliser.(47)
The US is an ally of Australia's. It is likely
to remain the dominant economic, cultural and military power in the
Asia Pacific region for the next 20 to 30 years at least. It has
strong alliances with South Korea, Japan and Australia. China and
North Korea would agree that there are regional security benefits
in a continued US military presence in South Korea and
Japan.(48)
Japan is unlikely to threaten Australia. It has
learned a lesson from World War II and its neighbours are well able
to defend themselves. Japan understands its vulnerability to modern
war and is likely to remain tied to the US alliance system
indefinitely. That suits most countries in the region.
It is misleading to assert that there is a
struggle for power in North Asia between China, the US and
Japan.(49) Few strategic analysts would suggests there
is any likelihood of great power rivalry between the US and Japan
(although many Chinese strategists would like to see such a
scenario unfold).
China
What about China?
It is true, as the DFAT White Paper In the
National Interest noted in 1997, that how a new China manages
its economic growth and pursues its international objectives over
the next 10 to 15 years, and how the US and Japan respond, is a
crucial question.(50) The Defence Review 2000
makes the same point.(51)
But China may never become a great power that
can compete with the US. It is struggling to narrow the gap between
scarce, finite resources and a population of over 1.2 billion that
is increasing by the size of Australia's population every year.
China needs the continued support and cooperation of the Asia
Pacific community, especially the United States, Japan and Taiwan,
if its ambitious modernisation plans are to succeed. That is,
China's survival over the next twenty years requires a peaceful
environment, low defence expenditure, increasing inflows of foreign
capital and technology, reliable access to global markets and raw
materials, and a good credit rating with global financial
institutions.
China's response during the recent East Asian
financial crisis, its willingness to agree to a code of conduct in
the South China Sea, its cooperation with the US in easing tension
in the Korean peninsula and its record in supporting global
objectives in the area of arms control suggest that China has just
as much interest as any other great power in maintaining peace,
stability and predictability in the Asia Pacific region and the
global community.
If Australia is unsure of its ability to make
long term judgements about China's future, we might note the
comments made by US Secretary of State, Madeleine Albright. She
said that China is becoming a responsible power that is
increasingly part of a rules based world order, including the WTO;
that it has made 'systematic improvements' in complying with
various arms control regimes, such as Non Proliferation Treaty
(NPT), Chemical Weapons Convention (CWC) and Missile Technology
Control Regime (MTCR) and that it has made 'remarkable strides
toward greater openness'.(52)
China's Defence
Budget
One of the pieces of evidence used to support
forecasts about China's emergence as a great power threat is its
defence budget. However, defence modernisation has been China's
lowest national priority since 1980, and this remains the case
today.
According to China's official figures, Beijing
spent US$11.3 billion on defence in 1999, an increase of 14.4 per
cent over 1998, although as a percentage of GDP, China's defence
expenditure declined from 1.6 per cent in 1990 to 1.2 per cent in
1999 (compared to Australia's 1.8 per cent of GDP in 1999). Most of
the increase in China's defence budget in the last three years
(14.4 per cent in 1999, 9.7 per cent in 1998 and 13.8 per cent in
1997) is due to significantly improved pay and pension packages for
personnel and compensation for the PLA's retreat from business
enterprises. PLA officers at the colonel level, for example, are
now entitled to a lump sum payment on retirement of about US$25
000.
Most analysts agree, however, that China's real
defence budget is much higher than the official figures indicate.
But even if it was doubled, it is a relatively modest amount for a
country with the largest population and the second or third largest
economy in the world. If China's official defence budget for 1999
is tripled to US$ 34 billion, it is still considerably less
than the US$ 52 billion that Japan spent on defence in the
same year.
Whatever the figure may be, China is a long way
from developing significant force projection capability despite
China's acquisition of relatively modern Russian fighter aircraft,
such as the Su-27 and the Su-30 and the purchase of a few Russian
naval platforms such as the Sovremenny-class destroyer and
Kilo-class submarines. Little attempt is made to put these
purchases into the perspective of China's strategic, demographic
and economic circumstances, its social transformation, the domestic
impact of its compliance with rules on entry to organisations like
the WTO, its reliance on access to the US market (40 per cent) and
its growing economic interdependencies.(53)
Taiwan
Strait
According to a June 2000 US Department of
Defence report, China will not begin to gather the forces or the
capabilities necessary to successfully capture Taiwan until at
least 2020.(54) In our view, Chinese society will then
be quite different from what it is today and it will by then have
come to terms with Taiwan. China is increasing the number of short
range missiles that it could use to attack Taiwanese defence
facilities. However, Taiwan's defences are also being constantly
honed with sophisticated anti-missile technologies developed
indigenously or purchased from the US under the terms of the 1979
Taiwan Relations Act. (Taiwan is the fourth largest buyer of US
military equipment after Saudi Arabia, Israel and Greece). At the
end of the day, it is American military power that has and will
continue to deter China and steer it towards a peaceful settlement
of the Taiwan issue.
Despite the appearance of sabre rattling in the
Taiwan Strait in 1995-96 and more recent reminders of China's
preparedness to use force, conflict in the Taiwan Strait is
unlikely. US Seventh Fleet Commander Admiral Thomas Fargo stated
that China is not poised to strike Taiwan and nor would such an
attack succeed.(55) China does not have the capability
to invade Taiwan and it is not building the fleet of amphibious
ships that might be required to support such an undertaking. The
pragmatism of Taiwan's President Chen Shui-bian and China's Jiang
Zemin suggests that the risk of conflict in the Taiwan Strait is
receding. China's Defence Minister Chi Haotian told US Secretary of
Defense William Cohen that although China reserved the right to use
force, it did not intend to attack Taiwan.(56)
There are moreover important signs of goodwill
and a willingness by both sides to find a compromise. Vice Premier
Qian Qichen (who manages Taiwan policy) has stated that the term
'one China' did not have to be defined as the Peoples Republic of
China (PRC) or the Republic of China (ROC), a concession that comes
close to President Chen's offer to talk on the basis of 'one China,
different definitions'.(57) If Taiwan accepts the
principle of 'one China' in one form or another, Beijing is willing
to give Taiwan significant concessions, such as the right to choose
the name, capital, flag and anthem of a new China, to keep its own
armed forces and to be otherwise free to run its own affairs. Once
the dispute is resolved, it will remove the biggest irritant in the
development of a more cooperative Sino-US
relationship.(58)
In any event, China is not now and will not be
in a position to challenge US military supremacy in the Asia
Pacific region, even looking out twenty or thirty years. China's
navy and airforce is and will be no match for Japan's. Even if
China acquires all the Sukhoi aircraft that it has contracted to
assemble over the next ten years, it will still be outnumbered and
outclassed by Taiwan's more modern airforce. According to an
authoritative RAND study, the Chinese airforce does not constitute
a credible offensive threat to the US or its Asian allies, a
situation that will not change dramatically over the next ten
years. If anything, according to the report, China's airforce
capabilities, relative to its neighbours, is likely to diminish
over the next ten years.(59) Admiral Dennis C. Blair, US
Navy Commander in Chief, US Pacific Command made a similar
observation. He said that notwithstanding an increased Peoples
Liberation Army (PLA) defence budget and an accelerated pace of
modernisation, Taiwan's military would maintain its qualitative
edge and no decisive change to the military balance in the Taiwan
Strait was expected over the next several years at
least.(60)
Sino-US Relations
Meanwhile, China-US relations are back on track
after being derailed by the May 1999 Belgrade embassy bombing.
There has been a resumption of military to military relations and
arms control talks. As US Undersecretary of State for Security and
Arms Control, John Holum observed in Beijing, there are more areas
of agreement than disagreement between China and the US,
particularly on broad policy directions.(61) According
to US Secretary for Defense William Cohen, the United States and
China have a framework that allows the two countries to work
together productively.(62) Forecasts of great power
instability because of rivalry between China and the US need to be
tempered by the superiority of US military and economic power and
China's reliance on the US as a market and source of technology.
China may not always like the way a superpower US does business but
it needs the support and cooperation of the US if it is to have a
decent chance of modernisation and development.
Of course, much more work will have to be done
on Sino-US relations if Washington proceeds to develop a national
missile defence system National Missile Defence (NMD).
The US development of anti-missile defences (TMD
or Theatre Missile Defence and NMD) may seem to be only
experimental and inherently defensive(63) but for China,
a TMD system in Northeast Asia that includes Taiwan is seen in a
very negative light.(64) Moreover, an NMD that preserves
US strategic superiority is perceived in Beijing to be particularly
worrisome.(65) Without astute diplomacy and credible
assurances on the limits of NMD-and the US is trying hard in this
regard(66)-a US decision to go ahead may force China to
increase its defence budget and modernize, multiply and add
multiple warheads (MIRV) to its strategic weapons. This could
contribute to a negative spiral of distrust and a missile and
anti-missile arms race, with adverse implications for arms control
in East Asia and ripple effects in South Asia as well as Europe.
China would probably feel bound to abandon its promise of no first
use of nuclear weapons. China's fragile commitment to support arms
control regimes such as MTCR might also weaken.
A second uncertainty arises from the US
political process. If the presidential campaign rhetoric can be
believed, a Republican President George Bush is likely to be more
assertive in pursuing US values and confronting China on the Taiwan
issue.(67) Advisers to Bush, such as Richard Armitage
and Paul Wolfowitz might demand a stronger alliance commitment from
Australia in the event of increased tension in the Taiwan Straits
or elsewhere in the region.(68) Assuming that US
presidential campaign rhetoric translates into US policy and China
and the US are unable to avoid a collision over Taiwan, and
assuming further that Australia would wish to become involved, the
high-intensity nature of likely operations in the Taiwan Strait
could place very costly demands on the Australian defence budget.
However, the common interests of China and the US in conflict
avoidance and strategic and economic cooperation should
prevail.
South
Asia
There are no immediately obvious reasons for
suggesting that India presents a threat to Australia or its
strategic interests, now or in the reasonably foreseeable future
Australia-India ties are on the mend after India's nuclear tests in
May 1998. We have many common interests, including the Indian
Ocean, language, cricket, membership of the British Commonwealth,
concern about Fiji and democratic institutions. India is
Australia's 12th largest export market and 24th largest source of
imports. Australia and India have differences, notably on the issue
of India's development of nuclear weapons, but there are no grounds
for suggesting that India might threaten Australia directly or
indirectly. The rivalry between India and Pakistan might be
regretted, but it is not a matter that should affect the Australian
defence budget.
The Korean Peninsula
The Korean peninsula is often cited as one of
the critical security flashpoints that impinges on Australia's
strategic environment.(69) This is presumably because of
the commitment Australia made in a 16 nation declaration on 27 July
1953 to the effect that it would return to Korea in the event of
another armed attack from the North and because of Australia's
obligations under ANZUS. But any careful analysis of developments
in the Korean peninsula over the last decade would lead to the
conclusion that there is a steadily decreasing risks of serious
conflict there.
The summit meeting between North Korea's Kim
Jong-il and South Korea's Kim Dae Jung on 12-15 June is a positive
development for the security of the Asia Pacific region. It is an
excellent example of how a cooperative approach to regional
diplomacy by China and the US, in coordination with interested
parties like Japan and Australia, can achieve a remarkably good
outcome.
Significantly, the US State Department now
judges that North Korea has indeed made a decision to reach out and
engage the rest of the world, that it was behaving in a very
useful, constructive and business-like manner and that North Korean
President Kim Jung-il is a leader with courage and
vision.(70)
Of course, fundamental differences and distrust
remains deeply embedded in the psyches of both North Korea and
South Korea. But it is fair to say that stability in Northeast Asia
has been significantly enhanced. The four big powers with a stake
in the region have demonstrated a new style of cooperative
diplomacy. The collaboration between China, the US, Japan, and to a
lesser extent Russia in opening the door to North Korea reflects a
shared great power interest in reducing tension and building trust
and common security in the peninsula.
The South
Pacific
Stability in the South Pacific is generally
regarded as a matter that falls within Australia's area of
responsibility, and thus, the Australia defence forces are often
involved in a low level role, for example, peacekeeping and
training. There is some social and consequent political instability
in the South Pacific, most recently in the Solomon Islands and Fiji
and such matters are always of concern to Australia as a near
neighbour. Internal political instability may occur in the future
in Vanuatu and New Caledonia. Australia might be called upon to
assist the civil power and may become involved in negotiating a
peace settlement, as in Bougainville. But it is difficult to accept
the proposition that these developments contribute to an 'arc of
instability' of military significance that threatens Australia's
security.(71) As the Secretary of the Department of
Foreign Affairs and Trade, Dr Ashton Calvert observed, it was not
Australia's role, nor was it in Australia's interests to step in
and run any South Pacific country whenever there was any trouble
there.(72) The Solomon Islands has a population of
400 000 (about the same size as Canberra) and does not rate a
mention in the International Institute of Strategic Studies'
Military Balance 1999-2000. Fiji has a population of
800 000, an armed force totalling 3500, twelve 81 mm mortars,
four 25 pounder ceremonial guns, a few small coastal patrol boats
and no airforce. As the Defence Department noted in its
ASP97, there is no evidence that any foreign government is
seeking improper influence over any of the countries of the
Southwest Pacific, and nor is there much reason for them to do so
in the future.(73)
Summary of the Strategic
Environment
There have been and will be significant changes
in the Asia Pacific region but they do not undermine the security
and stability of Asia's strategic future nor do they adversely
affect Australia's strategic outlook. In our view, the strategic
trend is in the opposite direction. If there is any change
forthcoming, our intelligence agencies should be skilled enough to
give us ample warning time. Whilst agreeing with the
Review that it should not be assumed that major war is a
thing of the past, Australia's defence planners should be
reasonably confident that in the Asia Pacific region, a major war
is not likely for the foreseeable future. The issue for government
defence policy is that there is nothing in the strategic
environment to alter the judgement that Australia faces no
immediate threat of hostile military action and there is nothing
that seems capable of changing this assessment for the foreseeable
future.
Part 2: The Choices We Must Make;
Options for Defence Policy
by Gary Brown
Chapter 7 of the Review discusses the
question: what sort of force will Australia need for the future? It
offers three options:
-
- forces for defeating attacks on Australia
-
- forces structured for regional security
-
- military operations other than war.
Below we set out in summary the
Review's analysis of what these options imply.
Review Force Structure Broad
Options
Defeating
Attacks on Australia
The Review suggests(74) that
a force capable of defeating attacks on Australia could be funded
inside the present defence budget. Such a force would, the paper
suggests, emphasise air defence and maritime strike capabilities,
so as to deny use of the approaches to Australia to an enemy.
The paper suggests that though this approach
'would be likely to place some limits on Australia's options to
pursue its regional strategic interests' it would still be true
that air combat capabilities and submarines would be 'valuable
contributions to regional coalitions'.
Perhaps the most striking feature of the
Review discussion on this option is that the role of land
forces is barely mentioned.
Forces
Structured for Regional Security
A policy which emphasised Australian
contributions to regional security 'would be a legitimate
alternative if the risk of direct attack on Australian territory by
sophisticated forces were considered less likely'. This option
'would involve capabilities that might not be a high priority for a
force primarily designed to defeat attacks on
Australia'.(75)
Possible approaches to this include designing
land forces for participation in higher-intensity conflict, or to
emphasise maritime forces capable of operating in the region.
A key issue in this is
interoperability. This means the ability to operate in
concert and close cooperation with military forces from other
states. At its highest level, interoperability (especially with the
United States) implies very high levels of technology.
Interoperability is further discussed at pp.19-20, below.
Forces for
Operations Other Than War
In recent times the ADF has not been required to
fight foreign aggressors. In the decade since the end of the Cold
War Australia has found that the principal requirement has been for
forces capable of non-belligerent operations in places like
Somalia, Cambodia, Bougainville and most recently East Timor. These
are 'military operations other than war' Military Operations Other
Than War (MOOTW).
MOOTW can support our security by defusing,
containing or helping to resolve regional conflicts. Even where
success is incomplete-as in Cambodia-such operations can at least
remove potential triggers for armed conflict. There are also
international relations gains in performing a role as a 'good
citizen'.
The Review notes(76) that we
could not maintain existing levels of military capability
and add emphasis to MOOTW inside the present defence
budget. We could, however, emphasise MOOTW at the expense of other
capabilities 'if it was assessed that the need for combat forces
was very low and that alliances would provide an adequate guarantee
of our security'. It further notes that in effect this is what New
Zealand has done over the last decade.
The
Review Options Analysed
Are Options
Really Mutually Exclusive?
Perhaps the most notable point to be made about
the Review options is the emphasis on mutual exclusivity.
Although not complete, the paper does tend to imply that the
choices it presents are alternatives, and that the choice of one
excludes the others.
In one sense this is true: granting that there
is a realistic ceiling above which the defence budget will not rise
short of clear emergency, financial considerations inevitably
constrain choices among options. But the Review often
conveys the impression that there are constraints in any event.
It is arguable, however, that the choices set
out Chapter 7 of the paper represent not so much mutually exclusive
alternatives as they do a continuum or spectrum of choice, ranging
from what might be called the 'New Zealand option' at the lower end
to the 'full-on regional and alliance option' at the other. In this
interpretation there is more range of choice than there is if one
thinks only about choices between three broad options.
For example, an ADF primarily structured for
regional deployment and operations would necessarily contain within
itself capabilities relevant to MOOTW. At the other end of the
spectrum, a MOOTW-oriented ADF would of its nature possess some
capacity for overseas deployment, albeit not into high-intensity
theatres. The troops sent to Timor, for example, had to be capable
of fighting infantry actions up to at least company, if not
battalion, level, so as to meet the threat posed by pro-Indonesian
militias.
Constraints on Australia's
Choices
The lack of mutual exclusivity does not,
however, imply that Australia has unlimited choice between force
structure alternatives. Several important structural factors
constrain our choices. These include: the existing and committed
ADF structure (i.e. what we have and what we are already committed
to acquire), the finite size of the defence budget and the need for
some level of interoperability with other armed forces.
What We
Have
As the Review says, 'Governments do not
have the luxury of starting with a blank sheet of
paper'.(77) The force-in-being (what we have) plus what
we are already legally bound to acquire (legally enforceable
contractual obligations) represent a more-or-less fixed starting
point. Over time we can vary the force structure, but government
cannot simply decree, for instance, that as from tomorrow morning
or even next year, the ADF will be structured for coalition warfare
in Northeast Asia.
Ironically, however, the problem of block
obsolescence (discussed elsewhere in this paper) does widen the
range of choice more than might usually be the case. Because so
many key ADF weapons and platforms are approaching the end of their
service lives in a relatively short time frame, Australia does in
fact have the block obsolescence opportunity as well as the
problem.
The Defence
Budget
The history of Australian defence budgeting
strongly suggests that forward plans predicated on sustained real
funding increases over lengthy periods are unlikely to be
realisable. In the last quarter-century Governments of both
persuasions have announced forward defence funding programs (see
Appendix 1), most of which have not survived beyond year
one.(78) In recent years the budget has remained at less
than two per cent of GDP and-a better measure of its national
priority-has fallen from 8.9 per cent of government spending in
1990 to an estimated 7.1 per cent for the year
2000.(79)
The problems confronting the Australian defence
budget have been analysed in detail elsewhere,(80)
suffice it to note here that it seems improbable that the ADF as
presently structured can be sustained inside present funding
levels. It will therefore be necessary either to increase defence
expenditure (which, given that the Government will not wish to
increasing its total spending as a proportion of GDP, means either
cutting Government outlays in non-defence sectors, or raising
taxes, or some combination of these) or to restructure the ADF so
that it can operate on present funding scales. These are the
alternatives recognised by the Review.(81)
The Interoperability Issue
The Review suggests that
interoperability is a key priority. As noted above, this means the
ability to operate in concert and close cooperation with military
forces from other states. At its highest level (with the United
States), interoperability implies very high levels of technology
based on the US concept of a technology driven Revolution in
Military Affairs (RMA).
If interoperability is being used as an argument
to maintain the Australia-US alliance, then perhaps that term needs
to be explored more directly and in more detail. There is merit in
Australia's armed forces being interoperable with the US in certain
areas such as 'knowledge flow within the strategic, operational and
tactical battlespace', that is, knowledge connectivity, as distinct
from weapons platforms.(82) On the other hand, there is
the argument, made by the former Chief of the Defence Force,
General John Baker, at the public forum on the Review,
Parliament House, Canberra, 30 June 2000, that full battlefield
interoperability with US armed forces need not be a key issue for
the ADF. He noted that in conflicts such as Korea, Vietnam and the
Gulf War, the Australian contribution to US-led coalitions was
diplomatically significant but was not of any consequence in
determining military outcomes. Thus, how to operate at the high end
of the interoperability spectrum may not be an issue for the ADF.
General Baker's observation, if taken on board in the forthcoming
White Paper, may relieve at least some of the budget pressure by
reducing requirements for US high-technology RMA equipments.
The ADF's pursuit of interoperability at lower
levels-e.g., communications and mutual understanding of doctrine
and procedures-is a different issue. This does not downgrade the US
alliance, because there are other ways of maintaining the
US-Australia alliance besides high-tech interoperability. Australia
has value as a middle power of some substance and influence in the
region, as demonstrated in East Timor. Australia has the same
values, language and cultural origins as the US. As Madeleine
Albright stated in a meeting with Ministers Alexander Downer and
John Moore, 'the US and Australia may be geographically distant,
but as defenders of political and economic freedom and advocates of
the rule of law, we are inseparable'.(83) In praising
Australia's role in East Timor, she said the US was 'proud and
grateful' to have Australia as an ally. This had nothing to do with
the issue of interoperability of Australian and US armed forces but
was because Australia had taken the lead in settling the East Timor
issue.
Just as importantly, the concept of
interoperability has value in the context of Australia working with
countries with different or lower levels of defence technology than
Australia's. For example, Australia found itself working
successfully in peacekeeping coalitions in Cambodia and East Timor
with the armed forces of regional countries such as the
Philippines, China and Pakistan. Thus, instead of aiming for an
edge that keeps up with US high technology but contributes to
regional arms envy, we could seek technologies 'downwardly
compatible' with regional levels. This would contribute to
interoperability with our neighbours and reduce the envy factor in
regional arms technology. One could also note that unless it is to
price itself out of effective alliance relationships, the US too
should be considering this option, because few states can afford to
develop or acquire the top-end RMA technologies now entering US
service. It is noteworthy that in its 1998 Strategic Defence
Review the British Government, while recognising its need for
interoperability with the US, noted that the 'pace of technological
advance ... makes it unlikely that every opportunity can be
exploited. Hard choices will be required to cope with the wide
range of possibilities within a limited budget'.(84)
The Range of
Choice
Notwithstanding the considerable publicity given
to the defence budget and its present (very real) difficulties, and
the issue of interoperability, it is arguable that of these
constraints the other-what we have now or are committed to-is the
more potent. This is so because governments have it within their
power to vary defence funding (at the usual economic and political
costs), and to choose a level of interoperability, but are much
more limited when it comes to the existing ADF force structure.
Force Structure Changes
Slowly
The ADF as it is today is the result of
decisions taken as long ago as the mid-1960s, when the F-111 was
ordered. There is a large credibility investment in the broad force
structure which has evolved since that time. Indeed, in all that
time there have really been only two major force structure
variations-the decision to drop fixed-wing aircraft carriers and
naval aircraft, taken almost twenty years ago, and the sharp
reduction in Regular Army numbers which began in the late eighties.
Aside from that, the force structure, though fine-tuned and
modernised, has not really altered.
Yet the Review makes it abundantly
clear that this broad force structure is not sustainable inside the
present budget, while other analysis shows that failing sustained
real increases some capabilities will have to be
dropped.(85) But dropping (or adding) significant
capabilities to military force structures can only be achieved
inside a coherent and internally consistent policy framework.
There is thus a risk in consideration of the
defence funding problem that it will be allowed to drive decisions,
whereas in fact the first thing requiring change will be policy.
Policy, once in place, can then drive force structure decisions in
concert, of course, with budgetary considerations.
Choices Come Down to
Policy
Therefore the range of choice for Australia is
fundamentally not one of funding, or even force structure per
se, but of policy. The policies of the previous three or even
four decades have been the underlying determinant of today's force
structure, and certainly underlie the present funding crisis. This
is clear, because less financially demanding policies would not
have generated the wide range of perceived requirements the ADF is
currently seeking to meet.
In essence, to date Australia has sought what
might be called a comprehensive level of security against
a wide range of potential threats-it seeks not to identify
particular threats but particular types of threat, and be
secure against all these. We therefore maintain capabilities for
land, sea and air war-fighting, and the force structure reflects
this. But it is doubtful, even given some funding increase, if we
can continue to seek so high a level of security. It is, moreover,
questionable whether the strategic environment in which we now live
requires such a level.
The Review states:
There are no armed forces, and especially no
naval and air forces, nearly as capable as ours within operational
range of our shores. There is no reason to expect that to
change.(86)
We need to decide what weight we should give to
the remote possibility that our strategic circumstances could
change for the worse.(87)
The Review also notes(88)
that 'unexpected demands can arise with little warning', but
(though the Review does not) it should further be noted
that in general the severity of such demands is inversely
proportional to their probability-that is, the more challenging the
unexpected scenario, the less probable it is. This is so because
posing serious security challenges requires major resources,
whereas minor threats can be mounted with fewer resources at short
notice.
It is also relevant to note that in March last
year, when questioned by the Parliamentary Public Accounts
Committee about the decline in available submarines due to ongoing
problems with the new Collins class, the then Deputy Chief
of Navy commented:
We know we are down to one fully operational
submarine. We have some operational capability in the other
Collins class which are in service and commissioned at the
moment, so it is better than just a single submarine capability
that we have at the moment. When we were looking at that over the
last two years we addressed that as being satisfactory, or
acceptable, I suppose, would be a better word, in our current
strategic circumstances.(89)
As has been argued elsewhere(90)
there is a distinction which needs to be drawn between
international and regional developments which have the potential to
pose military threats to Australian security interests,
and those which pose problems without implying any
increase in threat. Many of the issues in our region-e.g., the
destabilisation in Indonesia and the recent attempted coup and
subsequent hostage crisis in Fiji-represent problems but do not
appear to pose threats.
This is an issue which Australian policymakers,
drawing up the forthcoming White Paper, will need to take on board.
Failure to do so-in other words, a continued quest for
unrealistically high levels of military security-will undoubtedly
maintain the impossible pressures which existing policies have
imposed on the defence vote. In short, if Australia is to bring the
demands on its defence vote under control, the starting point of
the process needs to be at the level of strategic assessment and
strategic policy.
Part 3: The Defence Budget and What the
ADF Might Do With It
by Derek Woolner
The Central Issue of
Money
The Review places more emphasis on
considerations of cost driving policy decisions than any other
defence policy document for quite some time. Past white papers have
always had a chapter on the resource impact of their policy
directions but these were about what the policy decisions would
cost to implement. Reflecting its role as a consultation document,
the Review approaches the issue of costs from the
perspective of what amount Australian's are willing to pay for the
nation's defence.
There is good reason for this. Australia's
strategic situation has seen various developments over the decade
since the end of the Cold War but none have changed the long
persisting situation that Australia faces no discernible military
threat to its national security. There remains a situation where
Australia has no dominant circumstance that it must organise its
defence forces to counteract.
Budget Reductions and Management
Efficiencies
The significant changes for Australian defence
policy since the end of the Cold War have all been driven by money.
Since 1987, when defence expenditure was reduced in response to the
fiscal imperatives highlighted by (then) Treasurer Keating's
'banana republic' remarks, outlay on defence has reduced by about
2.3 per cent. In that period outlay on defence has declined as a
proportion of GDP from around 2.5 to 1.8 per cent.
The defence policy debate is being driven by the
increasing difficulty of implementing policy from within the
current budgetary limits. Defence is presently dealing with a
budget crisis caused by over commitment to new equipment programs
and its Secretary recently described the Department's financial
situation as 'parlôus'.(91) The crux of the issues
addressed by the Review is that this situation and other
problems within the system cannot be materially improved in the
next two decades unless some significant decisions are taken.
Throughout most of the 1990s Defence has
conducted a series of efficiency campaigns to try to counteract the
effects of reduced spending on the maintenance of ADF capabilities.
The latest of these was the Defence Reform Program (DRP), initiated
in 1997. Between 1991 and about 2003-04 these campaigns will have
released around $1.5 billion to be redirected to the development of
military capabilities. However necessary these processes may have
been to offset the consequences of falling budgets, they have not
been sufficient to ensure the development of ADF capabilities in
the early 21st century. The great majority of the savings have gone
back to paying Defence civilian and ADF salaries.(92)
Little of the savings has been available for the procurement of new
equipment, and only slightly more for increased operational
readiness. The main benefit of the efficiency programs has been to
divert Service personnel from support activities and thus increase
the numbers in combat and combat related units.
Expenditure on Recurrent
Activities
At the same time, the extent of ADF operations
has increased over the last decade or more. As the Review
demonstrates, the number and extent of overseas deployments by ADF
units has been substantially greater since 1987 than in the
previous 15 years.(93) Although the defence budget has
usually been supplemented to cover the cost of these
deployments,(94) they have resulted in growing pressure
on the ADF and, as demonstrated in the almost $3.7 billion
estimated cost of the deployment to East Timor,(95) a
real cost to the nation.
Over the past three decades balancing the
defence budget has often been achieved by reducing the amount spent
on the operational budget. The increasing amount being spent on
deployment of the ADF and in preparing it for deployment (such as
readying the second brigade group for action at short notice in
March 1999) makes this option less available today. Many of the
efficiency programs of the last decade have made savings of up to
30 per cent by outsourcing functions and reducing defence
personnel. However, the process has transferred some defence
expenditure to the operational budget, which would not be a problem
except that, as noted above, most of the savings than should have
been transferred have remained in the personnel component of the
budget. Instead of further savings being available from the
operational budget, Defence must find more from within other areas
of the existing budget to pay for the increasing costs of operating
current and currently planned capabilities (see below).
Expenditure on Defence
Equipment
The cost of replacing equipment has been a
continuing problem in defence management over the last three
decades. It is one which becomes increasingly more difficult in
those cases where it is judged that advanced levels of technology
are required, thus driving up costs. Where keeping abreast of the
latest technological developments is desired, the rate of increase
in the cost of new defence equipment can equate to as much as 5 per
cent per annum.(96)
At the moment, the Department of Defence is
working its way through a budget crisis caused by the approval of
equipment programs in 1997-98 which far exceed in value the finance
Defence has now or in the immediate future for this component of
the budget.(97) The extent by which the cost of these
programs exceeds projected finances at current budget levels is so
great that they will take around ten years to absorb, thus
restricting options for commencing new programs.(98) One
of the outcomes of the Review process might be clearer
strategic guidelines and financial planning to help avoid such
occurrences in the future.
However, the nature of the problem of funding
defence equipment will only get worse over the next two decades. In
an occurrence referred to as 'block obsolescence', significant
items of equipment, from which derive important ADF capabilities,
will leave service between about 2007 and 2020 (see Appendix 2). If
the capacity to achieve broadly similar outcomes is not provided to
the ADF in their place, there will be important things which the
ADF will cease to be able to do. The Review estimates the cost of
equipment programs through to 2020 to total between $80 billion and
$110 billion which is as much as 50 per cent higher than the amount
which would be made available from the defence budget at current
levels.(99)
The Big Issue-Paying for
Personnel
Worrying about what equipment to buy for the ADF
in the future may become academic. Whether Defence will have any
money at all to spend on equipment in 10 years or so is a real
question under current financial guidelines because finding funds
to pay for increases in personnel salaries threatens to drain all
other areas of the budget. Hence the most significant cost pressure
facing defence is paying for its personnel.
This is the result of the incompatibility of two
policies. One is the expectation that the ADF should continue to
provide government with a range of defence capabilities meeting
current expectations for national security, regional involvement
and alliance cooperation. The other is that Commonwealth agencies
should provide most of the increases in the salaries of their
personnel from within existing budgets.
Since the introduction of this policy in the
early 1990s defence personnel costs have grown by an average of
four per cent per annum whilst the contribution from Treasury in
each budget has averaged only 1.5 per cent. Thus, Defence has had
to transfer funding from other areas of the budget to ensure that
Service and civilian pay rates kept abreast of community
standards.(100) It is this process which has meant that
most of the savings made from the management efficiency programs
since 1991 have gone back to personnel costs.(101)
This situation will only get worse. The DRP is
nearing completion and there is no prospect of a similarly radical
process to further reduce personnel numbers to any significant
degree. Future increases in defence personnel costs can only be
funded from other areas of the budget which are, as shown above,
under unsupportable strain. Figure 1 illustrates the consequences.
If the pattern of salaries growth and budgetary compensation were
to continue over the next two decades as it has for the last, by
2020 Defence would be required to divert almost $4 billion to
personnel costs from other areas of the budget.
Figure 1:
Effects of Increase in Personnel Costs and Level of Budget
Compensation

Source: Derek Woolner, 'Pressures on Defence
Policy: the Defence Budget Crisis', Department of the Parliamentary
Library, April 2000.
The End of Defence As We Know
It
The consequence of this would be to shut down
most other areas of defence activity. Figure 2 illustrates this
outcome. If the current budgetary and policy settings were to stay
in place till 2020, no funds for defence equipment procurement
would be available after 2009. By 2020 almost half of all other
defence functions would be without funding. Meaningful defence
capability would have long ceased to exist.
Figure 2:
Imaginary Defence Budget

Source: Derek Woolner, Pressures on Defence
Policy: The Defence Budget Crisis', Department of the Parliamentary
Library, April 2000.
These are the dynamics behind the
Review process. Australia cannot continue with a defence
force of the same size, doing what it has in the past, at the same
cost. Although scope may exist for improved Defence management, any
further major savings in the costs of defence would probably
require significant changes in defence policy. Conversely,
providing the ADF with the personnel and equipment it requires to
maintain its current roles and posture in the region will be
expensive. Hence the Review's emphasis on the choices that
need to be taken on the future nature of Australian defence.
The Cost of Continuing With Existing
Expectations
Financial Parameters of Current
Policy
One of the options for dealing with this policy
dilemma is to pay the cost of continuing with policy settings
similar to those at present. Just what these might be would depend
on a range of decisions but the parameters of cost for this range
are generally known. By examining the nature of these cost
parameters it is possible to identify the crucial issues and policy
choices which might be available to government.
One choice might involve sustaining ADF numbers
at the level of 53 500(102) indicated following the
Prime Minister's statement on the East Timor deployment of November
1999.(103) Alternatively, it might be possible to meet
current policy objectives with a ceiling of 48 000
personnel(104) as indicated by the Chief of the Defence
Force (CDF) on the eve of the launch of the Review.
Although other combinations of force numbers might be considered,
this paper examines the financial consequences of these two options
as they sufficiently indicate the issues involved.
Sustaining current policy settings would also
involve purchasing new equipment and paying the cost of operating
it. The Review gives the cost of the capital expenditure
required to retain current ADF roles at between $80 billion to $110
billion over the next 20 years. If any thing, the estimation of
cost allocation in this area is more difficult to predict than in
others. Already, in the five months since the Secretary of Defence
revealed the predicted costs of future capital requirements, their
impact has been recalculated as rising from being 40 per cent above
the guidance for new investment(105) to 50 per cent.
It might be assumed that costs in other areas of
defence expenditure could be held at about the levels before the
deployment to East Timor(106) (that is, broadly
manageable at current prices). However, over recent years Defence
has badly managed the costs involved in running Service equipment.
These, referred to as Net Personnel and Operating Costs (NPOC) have
now accumulated to such a degree that meeting the predicted
requirement over the next 10 years will take an amount equivalent
to the savings of the DRP,(107) some $760 million.
The Nature of the Significant Cost
Pressures
In reality, the first part of any real increase
in the defence budget will go, directly or otherwise, to meet the
full costs of personnel. Initially, a one per cent real increase
will be required, equivalent to around $130 million at 1999-2000
costs.(108) By the end of the period a two per cent real
increase will be required to keep pace with labour costs. By then
an additional $3.5 to $3.9 billion will be needed to cover fully
the costs of an ADF of between 48 000 billion and 53 500
billion.
As well as these personnel options, Figure 3
looks at a 'high' and a 'low' total budget option.(109)
On average, these require rates of growth of between 4 and 4.5 per
cent and 2 to almost 3 per cent for the high and low examples,
respectively. Additional expenditure per annum would range around
$500 million or $300 million and produce defence budgets of just
under $23 billion and $18.4 billion respectively at the end of 20
years.
The Minister has been quoted as wishing to
increase the defence expenditure by $1.5 billion in the 2001-02
budget.(110) This is more than is necessary for the
initial phase of building to a level of funding sufficient to
sustain current policy settings. It may be, however, that the
additional billion dollars will be used to facilitate some of the
equipment programs which have been under review because of the
current budget difficulties.
Figure 3: Growth
Options for Defence Budget and Personnel Costs

Source: Foreign Affairs, Defence and Trade
Group, Information and Research Services, Department of the
Parliamentary Library, August 2000.
The factor to note in the growth of defence
personnel costs is that significant reductions in numbers only
slightly reduces the extent of their impact on the budget over
time. A reduction of over 10 per cent in ADF personnel (from
53 500 to 48 000) and of 2000 civilians reduces the
personnel costs that Defence must find from elsewhere in its budget
by only about $409 million by 2020, down from the $3.9 billion
shortfall which will have accumulated with an ADF of 53 500.
Nonetheless at a shortfall still exceeding $3.5 billion,
maintaining current defence policy settings will not be made
significantly more affordable by reducing ADF numbers.
There may be some management initiatives which
might reduce defence labour costs, such as simplification of the
rank structure, lowering remuneration profiles through increased
turnover, and further reduction of uniformed involvement in
non-operational Defence activities.(111) However, as
long as the surplus of defence wage rises has to be drawn from
other areas of the budget, defence labour costs will be only
marginally responsive to management strategies. In terms of policy
options, the conjunction of these factors would seem to suggest an
investigation of the advantages of casual and part time staff; in
ADF terms, the roles of the Reserve Forces.
Figure 4: Value
of Annual Cost Increases for Defence Budget
Options

Source: Foreign Affairs, Defence and Trade
Group, Information and Research Services, Department of the
Parliamentary Library, August 2000.
If defence labour costs are significant because
of their relative insensitivity to the size of the Force and their
under funding is remorseless undermining current defence policy,
capital costs are important for the opposite reasons. As Figure 4
demonstrates, decisions on capital spending can have significant
effects on the size of any budget increase needed to maintain
policy settings. In fact, if it were possible to contain the
capital expenditure program over the next 20 years at the lower
levels indicated by the Review, at around $80 billion, a
comparatively minor average annual increase in this component of
the budget might maintain current policy settings. The required
increase is slightly less than the currently estimated annual
average increase in NPOC costs.
This analysis provides us with an idea of where
the most crucial management decisions of the next two decades will
lie. It will be in debate over capital equipment programs that the
critical decisions for the future management of Defence will be
made and in the effectiveness of those decisions where the future
capability of the ADF will be determined. Hence it will be in this
area that innovative management techniques for provision of capital
requirements (such as the Private Finance
Initiative(112)) should have greatest strategic
importance. The prominence of the ongoing cost penalty for the
former mismanagement of NPOC suggests that attention to reduction
of operational costs will be an issue in the development of new
equipment programs. Again, commercial options such as those
developed under the existing Commercial Support Program should have
similar strategic importance.
In considering various budget options it is
important to note that increased expenditure on defence will
generally not result in a higher proportion of Gross Domestic
Product being allocated to the function. If the Treasury's long
term average rate of growth of GDP (of 3.5 per cent) holds true
over the next two decades, only in the extreme case would defence
spending be at a rate of real increase higher than that of GDP.
However, it is not likely that cost pressures
will lessen if the nation wants the ADF to continue its present
role into the 21st century. The record of the past indicates that
it is unwise to assume a sufficient and sufficiently sustained
increase in funding will be maintained over the next 20 years to
meet these demands. Nonetheless, sustained real increases in
spending to meet increases in personnel costs appears to be
unavoidable.
If so, the thrust of defence management over the
last few decades will have to be stood on its head. Whereas it was
the policy to constrain personnel and operational costs in order to
free funding for equipment,(113) the opposite is likely
to be necessary in the early 21st century. Most of the discretion
in formulating defence budgets will be exercised over the capital
components of expenditure. It appears wiser to assume that some
reduction of roles and consequent changes to the force structure of
the ADF will result. A worse outcome would be to presume that no
changes will be necessary and to have the ADF forced into an ad
hoc reduction of roles because inadequate funding has made it
unavoidable.
Roles and Force Structure Developments
for the ADF
Some Limitations in the
Review's Approach
The Review provides limited help in
deciding where priorities could be fixed in identifying role and
force structure changes for the ADF. This is not surprising.
Departmental strategic evaluations have been able to identify
priorities in broad roles for the ADF but, with the exception of
the Dibb Review,(114) have been unable to provide focus
sufficient to translate these into specific force structure
recommendations. Little has changed in Australia's strategic
environment that has direct relevance to the conventional military
roles and structure of the ADF since the last evaluation, ASP97.
Nor has the development of non-military threats to security
proceeded sufficiently to make inevitable a response in defence
policy. It cannot be expected that the Review could be any
more specific than its predecessors.
Instead, it outlines the three broad roles for
the ADF described above. These capture the dichotomies of the
strategic debate over the last few years but do not help when
trying to identify priorities in the future development of the ADF.
As explained above, the range of ADF capabilities implied by this
approach are not exclusive but are better seen as a continuum or
spectrum of choice. In some cases the spread of the spectrum can be
quite broad. For instance, equipment as sophisticated as aerial
electronic 'eavesdropping' (signals intelligence) contributed to
the success of INTERFET forces in East Timor.(115)
There may be differences in numbers in
inventory, associated systems and states of readiness dictated by
decisions relating to the three 'choices' of role the ADF might
perform. However, without more precise consideration of the issues
involved, there are more powerful policy drivers indicating that
these are more likely to remain at the level of balance within,
rather than fundamental differences of, force structure.
National Level Policies
Have a Significant Impact
In contrast, it is likely to be policy
assumptions at a much higher level of generality that have more
significant influence on the force structure of the ADF. For
instance, it appears that Australia has operated for most of its
history under an implicit policy that it will not deploy forces
overseas without the approval of regional countries or as part of a
much larger coalition (reinforced by the Government's studious
effort to gain Indonesian permission to deploy INTERFET to East
Timor). Hence there has never been any significant claim that the
ADF should contain, for instance, a marine corps capable of seizing
defended coastline.(116)
Consequently, ADF amphibious troop lift
capabilities will be of much the same nature if based on
requirements for the defence of the nation, involvement in the
region, or for peacekeeping. Their size and nature will be
determined more by questions of logistics requirements and the
likely availability of suitable commercial transport when
required(117) than by the issue of the combat power they
will have to be able to project over a beachhead. That the former
approach has been followed by the ADF over recent decades has
helped moderate cost pressures in the defence budget.
The same assumptions about the nature of
Australia's deployment of forces outside the country would also
have implications for other areas of the ADF. For instance, it
would imply that an aircraft carrier would have a comparatively low
priority in force structure development.
Similarly, there appears to be an implicit
policy that Australian land forces will be used overseas under
conditions that minimise casualties. This is part common sense and
part wariness of the possible political costs of adverse media
coverage. It is also in part recognition of the decisive effects of
focusing overwhelming force on an opponent's weakness, which has
been part of Australia's military tradition since Monash
demonstrated the combined effects of (then) modern military
technologies to overthrow the meat grinder tactics of trench
warfare.(118)
These factors imply that, even were government
to identify peacekeeping as a major role for the ADF, on current
political settings any Australian government would be unlikely to
follow New Zealand policy and restructure the ADF as predominantly
a peacekeeping force. This is not to say that Australia will deploy
only conventionally armed forces overseas (unarmed ADF and
Australian civilian peacekeepers have taken significant risks to
help Bougainville return to peace) but that few governments would
wish to be unready to support the objectives of a peacekeeping
deployment should it face more violent resistance to its mandate
than expected. It should be noted that such a conclusion would have
important consequences for Navy and Air Force, as well as Army.
These higher level national security policies
are essentially political in nature. It is proper that they be so
because they should be the means of passing national strategic
objectives down to the defence planning process. Nor should it be
forgotten that the immediate objectives of campaigns appear to be
becoming more overtly political, attempting to force hostile
governments to change policy instead of political ends being
realised at the end of a process of defeating the enemy's military
forces.(119)
At least two implications of this trend for the
development of the ADF seem noteworthy. The first is that many of
the possible deployments of the ADF in support of regional security
(especially those further away from Australia) would be made for
political objectives which could be achieved by a selection of
forces within a broad range of ADF units. It is difficult to see
many examples of this type needing to be the focus of specific
force structure development (see p.20 above).
The second is that advances in
technology(120) are quickly making it possible to fight
campaigns that can be planned to produce the political effects
desired without necessarily engaging opposing forces. Such concepts
remain controversial and it can be claimed that, even where
more-or-less successful, enforcement of the political outcome
requires (as in Kosevo) the deployment of conventional ground
forces.
Nonetheless, the functioning of nations is
becoming increasingly dependent on electronic systems. Hence the
scope for crippling their political and economic structures through
information or cyber warfare, or the use of Elecromagnetic Pulse
(EMP) weapons such as the E-bomb (sufficiently simple to be
constructed by a terrorist group),(121) probably will
come quickly to assume at least as great importance as current
conventional military capabilities. ADF consideration of such
issues seems unavoidable, if only to develop defensive strategies.
Were Australia to adopt such an approach, the capabilities required
would be seen as operating largely in cyberspace. The issue of
which of the three broad roles outlined in the Review
should influence future ADF structure would be irrelevant.
Regional Military
Capabilities
The Review sharpens its argument about
the importance of the defence policy decisions facing the nation
with reference to the development of advanced military capabilities
in the region based on increasing access to modern defence
technologies. These are said to be important because they indicate
a trend which might mean that the ADF could loose the technological
superiority it has held in most areas compared to regional forces
and on which concepts of its military effectiveness are
based.(122) However, it is not simple to convert these
observations into prescriptions for the development of the ADF. In
general, the Review's focus on regional technological
developments per se is too undifferentiated to be
useful.
In fact, the technologies identified as entering
regional inventories are not by themselves military capabilities.
To constitute a real threat to the ADF's ability to achieve
strategic goals, the technologies purchased by regional countries
must first be 'absorbed' by their host Service. This involves not
only effective training, logistics support and maintenance, but the
integration of the technologies into systems of intelligence and
command and control which can use them to effect. Although the nub
of the development of effective capabilities, command and control
systems also introduce critical vulnerabilities in human and
electronic systems and provide a focus where forces can be attacked
to great effect.
The Review does little to quantify the
effective levels of military capability in the
region.(123) This is not insignificant because the
ability of a force to deliver effective military power can be of
far different proportion to its equipment inventory. For instance,
much has been made from time to time of the Chinese airforce's
number and type of aircraft. In contrast, (then) US Assistant
Secretary of State for Defense, Joseph Nye, argued that the Chinese
airforce possessed limited military capability and its
effectiveness could be more accurately compared to an airforce like
Malaysia's than to that of a major power.(124) The
Review provides few perspectives of this sort.
In any case all developments of military
capability need not be treated as constituting a threat to
Australia and therefore requiring a counter in ADF force structure.
As noted above recent Ministers have acknowledged that much of what
must realistically be seen as measured development of capability in
Southeast Asian armed forces has contributed positively to regional
and therefore, Australian security. Action to counter such
developments is not required.
Instead, a case could be made that strategic
advantage can be gained by selectively supporting the armed forces
of many regional neighbours to develop their technological base
into effective military capabilities.(125) This approach
might pro-actively shape Australia's strategic environment by
supporting the development of military competence that could
contribute to effective mutual regional security. The important
decisions in such a case would relate to the maintenance of the
appropriate areas of technology where the level of ADF capability
would sustain it as a regional leader.
The issue of the weight that should be given to
interoperability with allied forces as a factor in developing ADF
capabilities would then relate not as much to the more expensive
developments of US armed forces as to the steps needed to allow the
ADF to cooperate more effectively with regional forces. The recent
remarks of the Indonesian Defence Minister, Juwono Sudarsono,
citied above, indicate some degree of similar thinking even amongst
one of the countries that might be thought to be least likely to
accept such a role.
Issues in Considering Appropriate
Military Technologies
An opportunity to clarify the issues involved in
dealing with emerging military capabilities is missed because the
Review fails to indicate that the links between strategic
objectives, potentially hostile capabilities and ADF force
structure development are not necessarily linear. That is, the
counter to technological developments are not necessarily
one-on-one iterations of the opposed technology. On a basic level,
an increase in, say, anti-shipping missiles in the region says
little about the structure of the RAN. A wide range of vessels is
able to accommodate anti-missile defence systems and, in any case,
efficiency will dictate that the weapons used to destroy them are
standardised across the Service.
Recently, the Minister commented that
expenditure on new equipment over the next 20 years would not reach
the maximum of $110 billion forecast by the Review. This was
because he discounted the need for the ADF to introduce the most
advanced of technologies. He named the F-22 and Joint Strike
Fighter tactical combat aircraft, the American Aegis class
air warfare destroyer and the Apache anti-tank helicopter as being
in this category.(126) In fact, USAF testimony to the US
Congress demonstrates that new fighter aircraft designs less costly
than the F-22 are capable of performance superior to the Russian
Sukhoi 20/30 series tactical aircraft(127) about which,
as mentioned above, much has been made as a regional 'threat'.
While the Minister's statement might be thought
to be an intervention in the public consultation process initiated
by the Review, his comments are a reminder of the
importance of decisions on capital equipment programs to the future
manageability of the portfolio. Furthermore, he was underlining a
reality not sufficiently explained by the Review. This is
that a force does not need a direct, or equivalent answer to enemy
technology to be able to develop capabilities sufficient to achieve
strategic goals.
For instance, in the decisive naval battles
across the mid-Pacific in the Second World War, US Navy aircraft
carrier forces were protected by a fighter aircraft that was
extensively outclassed by its renowned opponent, the Japanese A6M2
Zero-Sen. Yet by dint of superior tactics, which reflected the
skill and professionalism of the USN, the Grumman Wildcat achieved
kill to loss ratios of 5:1 in aerial combat during some of the most
desperate battles of the Pacific war, including the Battle of the
Coral Sea.(128) In most of those battles American forces
were able to position themselves to advantage because of the
superior intelligence they gained through 'cracking' Japanese naval
radio code. The Review could be more forthcoming on the
issue of professional skill being the key to turning technology
into capability.(129)
Although this example may seem archaic, current
advances in technology actually extend the options for a well
trained professional force to defeat individually superior
equipments. Command and control systems, computer capacity and
systems which combine these elements with surveillance capability,
such as Airborne Early Warning and Control aircraft (AEW&C),
assist combat platforms to perform more capably in concert than as
individual units.(130)
Significantly, the more effective counter to
emerging capabilities in the region may already exist, or be
developed more appropriately, in other areas of the ADF. Thus, to
continue the analogy, development by some regional forces of the
capability to effectively use anti-shipping missiles does not
necessarily imply an Australian need for air warfare destroyers.
Study may show that the desired effect-preventing the use of aerial
weapons against Australian vessels-may be better achieved by other
than new naval weapons systems. Alternative approaches might
include
-
- developing strike options to destroy an enemy's capability to
deploy the weapons
-
- developing alternative operational concepts to avoid exposing
RAN ships to the danger of aerial attack
-
- developing coalition arrangements that add to allied
capabilities to provide cover against hostile air attack, or
-
- mobilising international fora such as the IMF or UN to dissuade
a government from using such weapons.
It seems probable that, reasonably soon,
affordable technologies will make it easier to prevent the
effective use of aerial threats against shipping by destroying an
opposing force's ability to command and control its units. It might
then be found to be cheaper and more effective to adopt such an
approach than to develop naval vessels to directly defend shipping
against missile attack. In this case the appropriate capability
would include long range strike forces operating beyond the Timor
Sea, which is currently seen as the focus of the defence of
Australia strategy. Yet these new capabilities may include
electronic systems firmly rooted in Australia's south. Should such
an approach prove feasible for a country of Australia's restricted
resources, the concept of defence of Australia will become blurred
with that of involvement in regional security and the question of
the nature of an opponent's military weaponry less important than
his means of targeting and commanding it.
Some Avenues to Redevelop
ADF Capabilities
In light of the issues outlined above it can be
seen that, in practice, consideration of the appropriate force
structure for the ADF must be far more closely focused on the
particular than is allowed for by the structure and purpose of the
Review. Earlier, we outlined the restrictions on
government's ability to change the ADF's force structure. As we
said, the effect of this is that significant change to the force
structure is made more difficult (and has, over the past two
decades, in reality only occurred under financial pressure). Change
will usually only occur when:
-
- the opportunity arises with the approaching decommissioning of
equipments or units
-
- funding for an alternative approach can be secured
-
- the defence organisation can sustain enough cohesion to resist
arguments to replace the aging equipments with something similar,
and
-
- this position can be sustained for time sufficient to emplace
an alternative vision.
Outside time of great national danger, this
conjunction has rarely occurred.
The Review could not have been expected
to broach these issues but, without a knowledge of them the public
will find it difficult to argue for particular changes within the
financial constraints. An approach suggested by the direction of
technological development is to focus less on the equipments
involved and more on the underlying elements of capability. Two
particular approaches not developed at any length by the
Review are likely to be crucial in how effectively we are
able to develop ADF capabilities within the constraints of the
likely future budget.
Developing Symbiotic
Effects
One is the symbiotic benefits of complementary
technologies in developing capabilities. This is the nub of
approaches to achieving military objectives grouped around the
concepts under the banner of the RMA. An outgrowth of the
increasing capacities of sensors, information technologies and
communications, the result is to lessen the importance of platform
(aircraft, ships, vehicles) performance in military capability and
increases the advantage of the force best able to organise its
constituent elements to act in the most cohesive manner.
Where the issue is one of financial necessity
forcing priorities to be allocated amongst competing equipment
programs, the concept of planning the overall capability of the
system rather than the more traditional selection of individual
types of equipment, may offer benefits. An example may be the
greater effectiveness of tactical aircraft operations coordinated
by intelligence and command systems such as AEW&C aircraft,
drones or satellites. Since Israel pioneered these tactics in the
early 1980s, and with confirmation since in the Gulf War and Balkan
conflicts, it has been apparent that forces with such capabilities
are superior to those without. The significant point is that it is
the capability of the system, not that of the individual components
which is important. Thus it appears to be possible to have the
better air warfare capability without necessarily having the better
aircraft.
As explained above, government does not have the
luxury of developing an ideal force structure from scratch. In
practice some elements of a capability system will already be in
place, some be approaching selection and others still under
research. For instance, by around 2005, the ADF will have AEW&C
aircraft in service, be approaching selection of a new fighter
aircraft and studying the issue of what to do when the F-111 is
retired. The tendency at present is for each Service capability
developer to argue for the best feasible equipment solution as each
selection process proceeds. In future, the only way that the ADF
may be able to preserve a capability might be to compromise the
performance of some components (say, fighter aircraft) in order to
develop an optimum affordable capability (say, AEW&C aircraft,
satellite communications, fewer new fighters or refurbished F-18s
and cruise missiles).
This is a narrow explanation of the concept but,
in practice, a symbiotic approach to force structure development
should take a holistic approach to achieving the ADF's strategic
objectives. Such concepts are not new issues to the ADF or Defence.
Their outline was developed in ASP97 under the rubric of the
'Knowledge Edge'.(131) The essential issue in achieving
the symbiotic approach is, as explained above, whether Defence
management can hold together the conjunction of events that could
make it happen.
The Capability of
Personnel
The Review makes no extensive reference
to the role of ADF personnel in the development of Australian
military capability. In contrast, the US DoD's Joint Vision
2020 develops an assessment that the military edge of American
forces will only be maintained into the future by the skills of
their personnel.(132) Many areas of business are
recognising that the knowledge of their staff is significant in
retaining market position. Likewise, it seems likely that attaining
strategic objectives will depend increasingly on the skills of
personnel to exploit the advantages offered by the information
technology revolution. Policy areas in Defence are aware of these
developments and recently a position of Chief Knowledge Officer was
established and filled by Air Vice-Marshall Peter Nicholson, an
officer who has long understood the importance of personnel skills
in the future development of military capability.(133)
However, the position does not sit in the Defence Personnel
Executive which, at the least, poses some dangers that the message
will not reach the higher Defence management.
Certainly, ongoing problems of recruitment,
retention and shortage of specialists has raised personnel planning
to the level of a strategic issue. This is because these problems
appear to be a long term challenge to the maintenance of ADF
capabilities.(134) Whether the viability of ADF
capability development will depend on linking personnel
requirements with new capital programs has become an issue. It is
one which may require a change to the balance between capital and
personnel spending in the procurement, as well as the in-service
life phase of defence capabilities.
For instance, a recent report found that there
were only some 40 pilots available to crew the RAAF's F/A-18
squadrons.(135) This is not a unique occurrence but the
situation has worsened in that the traditional means of overcoming
the problem, paying a bonus to pilots who undertake to remain in
the Service, has been abandoned as ineffective.(136)
There is some evidence to suggest that recruitment and retention of
personnel in critical areas has emerged as an ongoing
problem.(137) This circumstance is ironic where, for
instance, new generations of fighter aircraft have been designed
for sequential operations by two or three pilots. In this case it
becomes an issue whether the acquisition strategy for the new
fighter aircraft should also include a strategy, funded as part of
the procurement program if necessary, to supply the pilots needed
to ensure that an aircraft's high use potential remains a viable
military capability.
It is only after work of this nature has been
done that it will be possible to get a more accurate idea of the
full cost of developing the ADF's military capabilities for the
21st century as they come to depend increasingly on the knowledge
of its personnel. That assessment can then include costed
evaluation of options for the most effective use of reserve forces
and hence scope to reduce budget pressures caused by increasing
personnel costs. For instance, alternative approaches might include
evaluation of paying the airlines for the use of their ex-RAAF
pilots for sufficient time to retain capability on military
aircraft, against that of training greater numbers of new
aircrew.
The Crucial Area for Budget
Management
In the past the Defence capability development
process has delivered effective systems of equipment and weapons
which have kept the capabilities of the ADF in the forefront of the
regions' defence forces. It hasn't needed to be particularly good
at most of the approaches discussed above. Yet in handling the
financial challenges of the next 20 years, mastering more
sophisticated force development processes will be as important to
the ADF as might be the impact of strategic developments.
This is not a trivial issue. Managing the cost
of its capital program will be the best tool that Defence will have
to control its budget over the next 20 years. If Australia's
strategic policy objectives could be achieved, for instance,
without the purchase of air defence destroyers, somewhere perhaps
between $5 billion and $8 billion would be saved or
redirected to other capability development. If the new fighter
project could be brought in for around $10 billion rather than
the $20 billion high-end estimate, the problem of coping with
block obsolescence would be made easier at a stroke.
Some of the latter is likely to be necessary.
The $80 billion-$110 billion projected for capital
equipment purchases over the next 20 years is very replacement
oriented. It has been derived by looking at what the ADF already
does and has to do it with, rather than foreseeing what it might be
required to develop in future. The calculations leave little for
the development of new or under strength capabilities nor for
responding to developing technologies or strategic circumstances.
It would be unwise to assume that that some significant new
developments in the ADF's capabilities will not be required at some
time during the next two decades.
Some Major Themes in the Future
of the ADF
Despite the best efforts of the Review,
the dilemma of Australian defence planning remains-the strategic
environment can provide only a limited guide to the capabilities
that the ADF should have. There is thus little help to be had when
financial strictures demand a tighter selection among ADF
capabilities than has been required in the past.
Despite a lack of analytical purity, it appears
a better course to look at lessons from recent experience which do
indicate the issues to be addressed in the future development of
Australia's defence capabilities. The deployment to Timor arose
without the development of traditional national military threats,
yet was seen to involve significant Australian issues and was very
taxing to an ADF which had been built-up somewhat beyond its normal
peace time levels. Many of the technologies underpinning modern
high-technology warfare are becoming more easily accessible and
have, indeed, been practised in part by teenage computer hackers.
Growing ubiquity renders this development relevant regardless of
the strategic environment.
Nevertheless, one issue stands out as important
whichever route the ADF should adopt. It is the importance of
personnel issues in determining the future nature of the ADF. At
its most brutal this concerns the dilemma posed by the financial
grip of personnel cost increases. Either these are funded or so
much of defence finance will be diverted from other areas that the
ADF will inevitably lose capabilities. Either these are funded or
personnel numbers will have to be reduced to such an extent that
the ADF will inevitably lose capabilities.
At another level is a different conundrum. It
seems likely that attaining strategic objectives will depend
increasingly on the skills of personnel to either (often both)
apply a sensitive understanding to the political realities of the
situation in a foreign land and exploit the advantages offered by
the information technology revolution. Attracting and retaining the
type of people needed for this seems likely to be difficult.
At the same time the East Timor experience seems
to argue that there are minimums of military personnel strength,
certainly as far as ground forces and their supporting elements are
concerned, required to achieve fairly simple strategic objectives.
Circumstances like those surrounding the Timor deployment can arise
at short notice. Further, as the events showed, Australia's
involvement in such operations may not be as discretionary as once
thought. Whether Service numbers should be maintained at around
their current level (perhaps with various mixes of Permanent and
Reserve numbers) is a major policy issue.
The experience of high-technology warfare
development from the Gulf War to the Balkans, is changing strategic
thought and will change the nature of many future campaigns. There
are indications of significant improvements in military
effectiveness but also of high cost. It seems wise that elements of
the ADF should be developed to take advantage of the most relevant
of these developments, at least to the extent of proficiency in
their use, developing offensive and defensive doctrine and planning
a capacity to expand to an operational capability if or when
required. The issue in this case will be how far along this course
will be sufficient.
That leaves the problem of the 'middle' of the
current ADF force structure being squeezed out when financial
limits are reached. This is the issue of the extent to which the
ADF can afford to reduce its more conventional military
capabilities based on vessels, aircraft and vehicles. There is
little clear guidance on this and few opportunities to get an
effective balance of decisions across the range of capabilities.
Nevertheless, the financial analysis indicates that it is in this
area where decisions will have the most significant impact.
Accordingly, one might expect the greatest attention to be focused
here whenever the budget is under pressure. Consequently, it will
probably in this area that we will see the hardest fought decisions
on the future shape and capacity of the ADF.
Conclusion
It is dangerously easy in considering issues
raised in the Review to allow financial considerations to
dominate. This paper suggests that the root cause lies in policy,
and that any effective corrective action must likewise begin
(though not end) with policy.
In essence, either policy needs to be adjusted
to less ambitious and more sustainable settings, or substantial
extra resources must be allocated to defence on an ongoing basis.
The latter course will involve either cuts in other areas of
Government spending, or tax increases, or some mix of the two. On
the other hand, adjusting policy to less demanding settings will
involve rethinking many hitherto sacrosanct aspects of defence
policy.
The difficulty of revising policy settings is
complicated by the lack of any clear indications of direct military
threat to Australia or its vital interests in current or likely
future strategic circumstances. It can be assumed, however, that
any government will wish to continue to operate an ADF with a
reasonable range of military capabilities, even if financial
pressures force some change to policy settings and, consequently to
ADF force structure.
Regardless of the policies adopted and
consequent changes to the ADF, the issue likely to dominate will
not be so much that of equipment but the central importance of
personnel to building the future capabilities of the ADF. Whether
it is sustaining sufficient numbers to achieve objectives or
developing the intellectual capabilities to meet the challenges of
new technologies, recruiting, retaining and effectively using
Service personnel will become a central objective of defence policy
over the next two decades.
Similarly, paying for personnel will require the
defence budget to increase in real terms by about one per cent
immediately, rising to two per cent by 2020, simply to pay the full
cost of prospective Defence wage rises. Similar unfunded pressures
on operational costs of defence equipment will add to the discrete
and sustained increases in the budget that will be required simply
to allow the ADF to continue as it is currently exists. It will
cost even more to maintain the ADF's current range of capabilities.
However, only by pursuing the most expensive of options should it
be necessary to devote significantly more of Australia's GDP to
defence than is the case at present.
Endnotes
-
- Defence Review 2000-Our Future Defence Force,
Department of Defence, Canberra, June 2000, pp. 10, 18. (Hereafter
cited as Review.)
- See Alan Dupont, 'Beware of the growing thirst', The
Australian, 1 August 2000, p. 13.
- 'Boost defence or risk US alliance: report', Australian
Financial Review, 24 May 2000, p. 1.
- For example, Paul Dibb, quoted in 'US fears drop in defence
spending', The Australian, 17 July 2000, pp. 1, 2.
- Gary Brown, Military Threats Versus
Security Problems: Australia's Emerging Strategic
Environment, Research Paper no. 1 1999-2000, Information
and Research Services, Department of the Parliamentary Library, 24
August 1999, p. 27.
- Review, Department of Defence, Canberra, June 2000, p.
viii.
- Review, p. 18.
- Quoted by Peter Hartcher, 'Trapped between two kingdoms',
The Australian Financial Review, 4 January 2000, p.
11.
- Gary Klintworth, 'China's PLA consolidates a beachhead in
Australia', Jane's Intelligence Review', June 1999, pp.
38-39.
- Review, p. 10.
- Review, p. 14.
- op. cit., p. 2.
- Vince Crawley, 'Vision 2020: US military cannot rely on
technological advantage', Defense News, 26 June 2000, p.
48. According to this report, US Joint Chiefs of Staff predicted
that by 2020, the US would have to rely on flexible thinking and
superior people skills. It would be unable to count on maintaining
its edge in military technology because the information revolution
and access to the global commercial industrial base meant potential
adversaries would have much the same technology as the US.
- Alexander Downer, 'Three ways to answer outraged cries to do
something', Sydney Morning Herald, 18 July 2000, p. 17.
- Condoleezza Rice, 'Promoting the National Interest',
Foreign Affairs, vol. 79, no. 1, January-February 2000,
pp. 45, 55.
- Stephen Sherlock, 'After the elections, after East Timor:
What's next for Indonesia?' in Australia's Asia Pacific
Neighbourhood-Challenge and Change, Department of
Parliamentary Library, Parliament House, Canberra 1999, pp.
169-203.
- Stuart Harris, The Asian regional response to its economic
crisis and the global implications, WP 4/1999, Department of
International Relations, RSPAS, ANU, December 1999. See also
Anthony Milner, 'Neighbours must be our priority', The
Australian, 1 August 2000.
- 'Albright remarks to sixth ASEAN Regional Forum', USIA
Washington File EPF102, 26 July 1999. See also the remarks of US
Assistant Secretary of State for East Asia, Stanley Roth, at the
Australian Press Club, Canberra, 26 August 1999, USIA Washington
File, EPF203, 31 August 1999.
- In Cambodia, the Australian-led peacekeeping forces included
contributions from Malaysia, Pakistan, China, Japan, Indonesia and
Malaysia. In East Timor, the Australian-led force included
contributions from China, Thailand, the Philippines, Malaysia and
South Korea.
- For example, Paul Dibb, 'Crunch Time for Defence', The
Australian Financial Review, 16 September 1999, p. 18.
- Greg Austin, China's Ocean Frontiers, Allen &
Unwin, Canberra 1998 and John Zeng, 'China and the South China
Sea', Asia Pacific Defence Reporter, XXI(10/11),
July-August 1995, p. 10.
- Far Eastern Economic Review, 10 June 1999, pp. 28-30
- Remarks, US Assistant Secretary of State for East Asia, Stanley
Roth, at the Australian Press Club, Canberra, 26 August 1999, USIA
Washington File, EPF203, 31 August 1999.
- 'Spokesman agrees to ASEAN Talks on South China Sea Code',
Zhongguo Xinwen She, Beijing, 25 November 1999.
- Jiang Zemin, Estrada hold talks on ties, South China Sea etc',
Xinhua, Beijing, 16 May 2000.
- Review, p. 10-11.
- Michael Dwyer, 'Economy in China grows', The Australian
Financial Review, 19 July 2000, p. 12.
- 'Demand has tigers roaring again, for now', The
Australian, 15 June 2000.
- Paul Dibb, David D. Hale and Peter Prince, 'The Strategic
Implications of Asia's Economic Crisis', Survival, vol.
40, no. 2, Summer, 1998, p. 15.
- 'Vote of Confidence', Far Eastern Economic Review, 6
July 2000, p. 78.
- 'PNG has come a long way in a year', Courier Mail, 5
July 2000, p. 19.
- Bill Standish, 'Papua New Guinea 1999: Crises of Governance',
in Australia's Asia Pacific Neighbourhood-Challenge and
Change', Department of Parliamentary Library, Canberra 1999,
pp. 229-88.
- Review, p. 14.
- Alan Dupont, 'Look forward to variations', The
Australian, 28 June 2000, p. 13.
- In the National Interest, Australia's Foreign and
Trade Policy, White Paper, Commonwealth of Australia, Canberra,
1997, p. 22.
- IMF figures, based on current growth rates.
- Review, p. 14.
- 'Disquiet at China, India arms spending', Australian
Financial Review, 14 July 2000, p. 22.
- Defence Economic Trends 1999, DIO, Department of
Defence, Canberra, 1999, p. 21.
- Bob Lowry, 'Indonesian Armed Forces (Tentara Nasional
Indonesia-TNI)', in Australia's Asia Pacific
Neighbourhood-Challenge and Change', Department of
Parliamentary Library, Canberra 1999, pp. 57-89.
- 'Jakarta backs Canberra's defence upgrade', The
Australian, 13 July 2000, p. 1.
- This contradiction was noted by one of the present writers in
1995. See Gary Brown, 'DA 94: Weaknesses and Revealing
Contradictions', in Jenelle Bonnor and Gary Brown, Security for
the Twenty-First Century, Australia's 1994 Defence White
Paper, Australian Defence Studies Centre, Canberra, 1995, p.
107, at pp. 110-1.
- Michael Maher, Fred Brenchley and Max Walsh, 'Breakaway
Nation', The Bulletin, 1 August 2000, pp. 24-30.
- Defence Economic Trends in the Asia Pacific Region,
DIO, Department of Defence, Canberra, 1999.
- ibid.
- The Hon. Ian McLachlan, 'Defence Policy and Regional
Co-operation with Asia', Canberra, 3 December 1996, p. 2.
- Review, p.10.
- Professor Chenghu Zhu, Institute for Strategic Studies, PLA
National Defense University, Interview, Canberra, 5 July 2000. See
also Gary Klintworth, The Korean Leadership Summit,
Research Note no. 34, Information and Research Services, Department
of the Parliamentary Library, 27 June 2000.
- Paul Dibb, 'Crunch time for defence', The Australian
Financial Review, 16 September 1999, p. 18.
- In the National Interest, Australia's Foreign and
Trade Policy, White Paper, Commonwealth of Australia, Canberra,
1997, p. 27.
- Review, p. 10.
- 'Albright Press Conference', USIS, Beijing, EPF401, 22 June
2000.
- In 1998, the US took 40 per cent of China's exports. Most of
China's US$154 billion in foreign exchange reserves, the second
highest in the world, is derived from trade with the US. In the
late 1970s China's trade accounted for about 13 per cent of GDP,
one of the lowest ratios in the world. Since then, China's trade
has surged to more than 30 per cent of GDP, which is similar to
other large developing countries, China 2020: Development
challenges in the new century, World Bank, Washington, 1997,
p. 84.
- US Secretary of Defense, Annual Report to US Congress on
the Military Power of the PRC, June 2000.
- 'Military might focused on Taiwan', China Post,
Taipei, 19 May 2000.
- 'China turns benign', Australian Financial Review, p.
2, 13 July 2000; 'Missile shield would spark arms race, Chinese
tell US', The Australian, 14 July 2000, p. 8.
- 'Beijing's goodwill conducive to resuming cross-strait
dialogue', China News Agency, Taipei, 14 July 2000.
- Gary Klintworth, China and Taiwan: Negotiations the Only
Way, forthcoming Current Issues Brief, Parliament Library,
Canberra, August 2000.
- Kenneth W. Allen, Glenn Krumel and Jonathon D. Pollack,
China's Airforce Enters the 21st Century, RAND
Corporation, Santa Monica, 1995.
- Admiral Dennis C. Blair, US Navy Commander in Chief, US Pacific
Command, Statement to the House International Relations Committee,
Subcommittee on Asia and the Pacific, Washington, 8 March 2000
(http:/www.house.gov).
- 'US Says First Arms Talks with China since Embassy Bombing
Constructive', AFP, Beijing, 9 July 2000. See also US
Secretary of Defense, William Cohen, 'Speech to Chinese National
Defense University', Beijing, 13 July 2000, USIA, Washington File,
EPF409, 13 July 2000.
- US Secretary of Defense, William Cohen, 'Briefing on Talks with
Chinese President', Beijing, USIA Washington File, EPF408, 13 July
2000.
- Alexander Downer, quoted in Robert Garran, 'Downer backs US
missiles', The Australian, 19 July 2000, p. 2.
- 'PRC arms control official warns against bringing Taiwan into
TMD', Wen Wei Po, Hong Kong, 11 July 2000.
- 'Text of Jiang-Putin Joint Statement on antimissile issue',
Xinhua, Beijing, 18 July 2000.
- US Secretary of Defence William S. Cohen, 'Statement on NMD
before Senate Armed Services', USIA Washington, EPF206, 25 July
2000.
- Bruce C. Wolpe, 'The security question that haunts us', The
Age, 19 July 2000, p. 15.
- Rowan Callick, 'Australia must be prepared for the "inevitable"
battle', The Australian Financial Review, 11 October 1999,
p. 12.
- Dr Allen Hawke, Secretary, Department of Defence, 'Money
matters', Speech at RUSI, Melbourne, 27 April 2000.
- 'Special State Department Briefing', USIS EPF502, 9 June 2000.
- Tony Kevin, 'Defence at what cost?', The Canberra
Times, 3 June 2000, p. 12.
- Dr Ashton Calvert, Secretary of the Department of Foreign
Affairs and Trade, speaking at the National Press Club, Canberra, 3
August 2000. See report, The Canberra Times, 4 August
2000, p. 2.
- Australia's Strategic Policy, Department of Defence,
Canberra, 1997, p. 13.
- Review, p. 59.
- ibid., p. 61.
- ibid., p. 62.
- ibid., p. 57.
- Allan Shephard, Trends in Australian Defence: A Resources
Survey, ADSC 1999, pp. 157-8.
- Australia, Defence Intelligence Organisation, Defence
Economic Trends in the Asia Pacific 1999, Table 1 (from the
DIO Website: http://www.defence.gov.au/dio/index.html).
- Derek Woolner, Pressures on Defence Policy:
The Defence Budget Crisis, Research Paper no. 20 1999-2000
Information and Research Services, Department of the Parliamentary
Library, 11 April 2000.
- Review, p. 56.
- 'DOD launches annual look at emerging military technologies',
USIA Washington File, EPF509, 7 July 2000.
- Madeleine Albright, US Secretary of State, Remarks following
Australia-US Ministerial meeting, Washington, USIA Washington File,
EPF401, 4 November 1999.
- UK Ministry of Defence, Strategic Defence Review, Cm
3999, July 1998, essay 3: 'The impact of Technology', para 5. From
http://www.mod.uk/index.php3?page=526.
- Primarily the Woolner paper cited above.
- Review, p. 18.
- ibid., p. 19.
- ibid., p. 33.
- Parliament of Australia, Joint Committee of Public Accounts and
Audit, Hansard, 22 March 1999, p.147 (proof edition). The
speaker was Rear Admiral C. J. Oxenbould.
- Gary Brown, Military Threats versus Security Problems:
Australia's Emerging Strategic Environment, Research Paper no.
1 1999-2000, Information and Research Services, Department of the
Parliamentary Library 24 August 1999.
- Dr Allan Hawke, What's the matter-A Due Diligence
Review, Address to the Defence Watch Seminar, Canberra, 17
February 2000, p. 3.
- Derek Woolner, Pressures on Defence Policy: the Defence
Budget Crisis, Research Paper no.20 1999-2000, Information and
Research Services, Department of the Parliamentary Library,
11 April 2000, pp. 10-12, available at: http://www.aph.gov.au/library/pubs/rp/1999-2000/2000rp20.htm
- Review, p. 6.
- For a discussion of procedures adopted by government for
organising the defence budget see, Gary Brown and Derek Woolner,
Should the Defence Budget be Cut? Arguments for and
Against, Current Issues Brief no.6 1996-97, Information and
Research Services, Parliamentary Library, 9 September 1996,
p.4ff. Available at: http://www.aph.gov.au/library/pubs/cib/1996-97/97cib6.htm
- The Hon. J. W. Howard, MP, Statement on East Timor,
Table 'East Timor Budgetary Costs', 23 November 1999.
- Dr Allan Hawke, 'Defence-the State of the Nation', Journal
of the United Services Institute of Australia, Canberra, June
2000, p. 31.
- Dr Allan Hawke has said that the current situation of the
defence budget is a consequence of the approval of equipment
programs worth $7 billion in the 1997-98 Budget context. These were
approved in the expectation that the DRP would release funds for
investment in equipment but a subsequent decision to reverse
reductions in personnel had led to the savings on efficiencies
being spent on wages (Senate, Proof Committee Hansard, Foreign
Affairs, Defence and Trade Legislation Committee, 'Consideration of
Budget Estimates', 29 May 2000, p. 28). In fact, a trend to
over-commitment in capital programs dating back to 1988-89 was
clearly discernible by 1997 (Derek Woolner, 'Paying for it all?' in
Hugh Smith, ed., From Tail to Teeth Implications of the Defence
Efficiency Review, Australian Defence Studies Centre,
Canberra, 1997, pp. 39-40). Details of Defence capital equipment
programs currently under development are available on the Defence
Acquisition Organisation website at:http://www.defence.gov.au/index.html
- Woolner, op. cit., p. 13-16.
- Review, p. 54.
- Woolner, op. cit., pp. 17-18.
- ibid., p. 12.
- ibid., p. 18.
- The Hon J W Howard, MP, Statement on East Timor, pp.
6-7.
- 'Defence numbers to drop to 48 000', Canberra
Times, 27 June 2000.
- Dr Allan Hawke, 'Defence-the State of the Nation', p. 30.
- In contrast, an alternative argument can be made for
operational costs increasing after Timor, in part as a reaction
from experience during that deployment indicating that expenditures
in this area had been held at a level that was unsafely small, see
Woolner, op.cit., p. 20.
- Australian National Audit Office (ANAO), Management of
Major Equipment Acquisition Projects, Audit Report no.13
1999-2000, Canberra, October 1999, p. 160, available at: http://www.anao.gov.au/rptsfull_00/audrpt13/rpt13-00.pdf
- The budgetary calculations in this paper are been done on the
basis of the 1999-2000 Budget of May 1999. This was prepared before
the impact of the Timor deployment and thus represents a more
normal distribution of funding and a better basis for projecting
trends of current policy settings out to 2020.
- The 'high' cost option is based on an ADF of 53 500 and a
capital equipment program of $110 billion. The low cost option
is for 48 000 personnel and a $80 billion capital program. The
former is a worst case scenario which assumes the other capital
costs-such as for facilities will have to be met else where, the
latter that all capital costs can be met within the $80 billion
allocation. Both cases allow for increases in NPOC as calculated by
the ANAO. The earlier years of both examples are distorted by this
feature and the non-wages costs of build up of ADF numbers and, in
the latter case, their reduction.
- Ian McPhedran, 'Bargain Buys only, top brass ordered',
Courier Mail, 1 July 2000.
- Mark Drummond, 'There are ways out of the Defence Dilemma',
Canberra Times, 9 May 2000.
- The PFI is a mechanism for government procurement of capital
items whilst deferring and spreading costs over the life of the
investment. It may include approaches such as leasing equipment or
purchasing the services based on use of the equipment, with the
supplier responsible for day-to-day operations. This approach has
been most extensively developed in the United Kingdom, where the
Ministry of Defence has formulated a set of guidelines for its use.
- Woolner, op. cit., p. 7.
- Paul Dibb, Review of Australia's defence capabilities,
AGPS, Canberra, 1986.
- Peter La Franchi, 'Spies over the Pacific', Flight
International, 16-22 May 2000, p. 30.
- The Review notes this fact (p. 27) but in a way which
does not highlight the underlying importance of higher level
government policy in defining priorities for the ADF.
- The RAN commissioned commercial vessels into service to meet
logistics requirements of Australia's involvement in both the
Vietnam conflict and the UN missions in East Timor.
- General Sir John Monash, as commander of the Australian Corps,
oversaw the implementation of an operational concept that combined
the effects of artillery, tanks and aircraft to support infantry
operations. There is dispute about the extent of his personal
contribution to this concept (for a brief account see, Peter
Dennis, et al. The Oxford Companion to Australian Military
History, Oxford University Press, Melbourne,1995, p. 406.).
However, his name is popularly linked to an approach that is seen,
in its application in battles such as Hamel and Amiens, as
typically 'Australian'. The tradition has a link to current defence
policy in the recognition that, Australia, with a comparatively
small population base, will generally focus on intelligent use of
technology to achieve military objectives. In general, however, the
basis of this approach to war is classic, perhaps most economically
expressed by Confederate American Civil War cavalry leader, Nathan
Forrest, 'I gets there firstest with the mostest'.
- Thus the objectives of the American-led UN contingent in the
Gulf War of 1991 were to remove Iraqi forces from Kuwait, not to
destroy them or overthrow Sadam Hussain and those of NATO forces in
the Balkans in 1999 were to force President Milosovic to stop the
operations of Serbian forces in Kosovo. This in part reflects the
changing nature of warfare at the close of the 20th century and the
recognition that the correct strategic goals will determine whether
the outcome of conflict actually improves the security environment.
For instance, after the First World War the Armistice with Germany,
followed by a punitive peace treaty did not improve the security
situation in Europe whereas the total defeat of German forces
followed by a Marshall Plan to rebuild it and the rest of Europe
did (assisted by the threat of Soviet expansion). Sadam Hussain was
not overthrown at the end of the Gulf War because of fears that
this might destabilise the Middle East and thus worsen, instead of
improve, the security environment.
- These are broadly linked to advances in surveillance systems,
information technology, communications and targeting devices that
have produced changes in the potential of military operations so
significant as to be dubbed the Revolution in Military Affairs.
- EMP weapons are intended to degrade or destroy electronic
circuits by overwhelming them with pulses of magnetic energy. See
Ian Sample, 'Just a normal town', New Scientist, 1 July
2000, pp. 20-24.
- Review, p. 14.
- The Review observes that military capabilities are
more than pieces of equipment and discusses some of the issues in
their development in the ADF (p. 27) and makes the same point with
regard to regional defence forces (p. 28). It even states that some
of the equipment in regional forces is not maintained or operated
to the standards of the ADF but (perhaps not surprisingly) does not
go on to assess how regional capabilities therefore compare with
those of the ADF. It concludes with the statement; 'We cannot rely
on better-trained people to make up for lower-quality equipment'.
This is something with which this paper does not entirely agree.
- John Zeng, 'China: a status quo power with an obsolete air
force', Asia Pacific Defence Reporter, January-February
1996, p. 6.
- Derek Woolner, 'Back to Asia: Developments that Shape the
Future Australian Defence Force', in Ian McLachlan et al,
Australia's Strategic dilemmas: options for the future,
Australian Defence Studies Centre, Canberra, 1997.
- Ian McPhedran, 'Bargain buys only, top brass ordered'.
- Bruce Rolffsen, 'US Air Force: No Other Can Match F-22',
Defense News, 16 August 1999, p. 18.
- William Green, Famous Fighters of the Second World
War, Macdonald, London, 1962, p. 48.
- Review, p.47 and p. 55.
- The Review touches on these issues (pp.16-17) and
notes that this is an area 'where our comparative advantage over
potential adversaries is likely to last the longest'. It does not
draw out the implications for alternative approaches to the
development of ADF force structure.
- Department of Defence, Australia's Strategic Policy
1997 p. 56-60, available at: http://www.dod.gov.au/index.html
under 'Other Items'.
- Joint Chiefs of Staff, Joint Vision 2020, US
Government Printing Office, Washington, June 2000.
- See, for instance, Peter Nicholson, Air Vice-Marshal,
'Operating the RAAF Beyond 2000', in Alan Stephens ed, New Era
Security, Air Power Studies Centre, Canberra, 1996.
- See, ANAO, Retention of Military Personnel, Audit
Report no.35 1999-2000, Canberra, April 2000, available at:
http://www.anao.gov.au/rptsfull_00/audrpt35/rpt35-00.pdf
- ANAO, Tactical Fighter Operations, Audit Report no 40
1999-2000, Canberra, April 2000, p. 44, available at: http://www.anao.gov.au/rptsfull_00/audrpt40/rpt40-00.pdf.
Fighter pilots cost about $9 million to train and the ANAO found
that the RAAF lacked a cohesive plan to overcome its shortage.
- Ian McPhedran, '$25 million pilot loyalty scheme scrapped',
Herald Sun, 8 May 2000.
- Woolner, op.cit., p. 17.
Appendix 1-Rate of Change in the Defence
Budget-Government Projection and Actual Outcome
Financial Year
|
Real Change
(%)
|
Projected Change
(%)
|
1976-77
|
5.2
|
5.2
|
1977-78
|
0.0
|
3.0
|
1978-79
|
1.0
|
2.6
|
1879-80
|
3.0
|
5.5
|
1980-81
|
5.6
|
5.3
|
1981-82
|
-1.7
|
4.3
|
1982-83
|
4.6
|
na
|
1983-84
|
4.1
|
4.5
|
1984-85
|
2.8
|
4.5
|
1985-86
|
2.9
|
3.8
|
1986-87
|
-0.4
|
3.0
|
1987-88
|
-1.1
|
1.0
|
1988-89
|
0.5
|
1.0
|
1989-90
|
0.0
|
2.0
|
1990-91
|
0.0
|
1.0
|
1991-92
|
0.0
|
0.0
|
1992-93
|
0.0
|
-0.5
|
1993-94
|
-0.8
|
-0.5
|
1994-95
|
-0.5
|
-0.5
|
1995-96
|
-0.5
|
-0.5
|
1996-97
|
-0.5
|
-0.5
|
1997-98
|
0.0
|
0.0
|
1998-99
|
0.0
|
0.0
|
1999-00
|
0.0
|
0.0
|
2000-01
|
0.0
|
0.0
|
Source: Derek Woolner, Affordable Self
Reliance? Past Patterns in Defence Finance and Prospects after the
1994 White Paper, Research Paper no. 16 1994-95, Information
and Research Services, Department of the Parliamentary Library, 7
December 1994. Attachment 2.
Data for 1993-94 to 1997-98 from Defence
Annual Report '97-'98, p. 22. Subsequent data from relevant
Portfolio Budget Statement.
Appendix 2-Nature of Equipment Programs Involved in Block
Obsolescence
Description
|
Estimated Year of Decision
|
Estimated Year of Withdrawal
|
F/A-18 Fighter Aircraft(1)
|
2007
|
2015
|
Guided Missile Frigate
|
2008
|
2013-20
|
M113 APC(2)
|
2014
|
2020
|
Leopard Tank
|
2014
|
2020
|
F111 Strike Aircraft
|
2010
|
2017-20
|
Air to Air Refueling Capability-B707
|
2001
|
2005
|
C-130H Hercules Aircraft
|
2003
|
2008
|
HMAS MANOORA & KANIMBLA
|
2008
|
2015
|
HMAS WESTRALIA
|
2004
|
2008
|
HMAS SUCCESS
|
2010
|
2016
|
PC3 Orion Maritime Patrol Aircraft
|
2008
|
2016
|
Military Satellite Comms-Ground
Infrastructure
|
2014
|
2017
|
Military Satellite Communications
|
2006
|
2009
|
Small Arms Replacement (Steyr, Minimi)
|
2016
|
2020
|
HMAS TOBRUK
|
2003
|
2010
|
8 tonne Mack and 4 tonne (4x4) Unimog
trucks(3)
|
2008
|
2015
|
Perentie 2 tonne (6x6) and 1 tonne (4x4)
Vehicles(3)
|
2008
|
2015
|
High Grade Cryptographic Equipment
(Speakeasy)
|
2005
|
2008
|
105mm Howitzer (Hamel Gun)
|
2005
|
2010
|
155mm Howitzer (M198)
|
2005
|
2010
|
Very Low Level Air Defence (RBS
70)(4)
|
2010
|
2015
|
Land Radios (RAVEN, WAGTAIL)
|
2003
|
2007
|
Seaking Helicopter
|
2003
|
2008
|
Caribou Aircraft
|
2003
|
2010
|
Patrol Boat
|
2000
|
2005
|
Landing Craft Heavy
|
2003
|
2008-10
|
Rapier Ground Based Air Defence Weapon
System
|
2004
|
2010
|
-
- Assumes an upgrade to extend the life of the F/A-18 is approved
in 2003.
- Assumes an upgrade to extend the life of the M113 is approved
in 2000.
- Assumes that upgrades to extend the life of the trucks and
Landrovers are approved in the period 2003-2006.
- Assumes an upgrade to extend the life of the RBS 70 is approved
in 2001.
Source: Foreign Affairs, Defence and
Trade Legislation Committee, Additional Information Received
Additional Supplementary Estimates 1999-2000, Volume 3, May
2000, pp. 10-11.