The 2009 Defence White Paper recognised that ‘total
self-sufficiency in defence industry capabilities would be impractical for a
nation of Australia’s size’ and is not necessary under the Government’s defence
policy.[513]
Nonetheless, similar to previous white paper statements, the Government was
committed to maintaining specific industry capabilities in Australia that
aligned with strategic interests. As such, the Priority Industry Capabilities
(PICs) were announced to define ‘those industry capabilities which would confer
an essential strategic capability advantage by being resident within Australia,
and which, if not available, would significantly undermine defence
self-reliance and ADF operational capability’.[514]
The Government asserted that it was ‘prepared to intervene in the market to
ensure that PICs remain healthy and available’.[515]
Specifically, the Government would only provide support ‘where market failures
would be so detrimental to our strategic interest as to justify such
intervention’. These factors, which would prompt support from the Government, included:
While the 2009 Defence White Paper did not identify the
specific capabilities that would attract PIC level support, the Government
sought to monitor capabilities such as:
- ‘high-end’ system and ‘systems of systems’ integration
capabilities, including for electronic warfare development, the protection of
networks and computers, including in the field of cyber defence, communications
security testing services and through-life support of cryptographic equipment,
and system life cycle management capabilities to maintain and extend the
service life of ADF systems
-
naval shipbuilding, including specialist design and engineering
services; warship repair, maintenance and upgrade capabilities, and essential
facilities; submarine design and construction, repair, maintenance, upgrade and
overhaul capabilities; selected development, production, upgrade and
through-life support of underwater acoustic technologies and systems
-
development, repair and precision machining of composite and
exotic materials, signature management capabilities and coatings, and
anti-tampering capabilities
-
the ability to produce selected ballistic munitions and
explosives; repair, maintain, test and evaluate guided weapons; repair,
maintain and upgrade capabilities in relation to infantry weapons, small arms
and remote weapons stations on combat vehicles
-
through-life and real-time support of mission and safety critical
software; system assurance capabilities for both ICT hardware and software; the
repair and maintenance of specialist AEW&C systems; the development and
through-life support of JORN and phased-array radars; secure test facilities
and test ranges; the development and support of targeting and precision
navigation capabilities
- development of capabilities in the field in terms of combat
clothing and personal load carriage equipment
- repair and maintenance of armoured vehicles and
- the repair, maintenance and upgrade of rotary and fixed-wing
aircraft.[517]
The Government provided industry with broad information
about PIC support in a brochure released shortly after the white paper was
handed down.[518]
In addition to the PIC program, the 2009 Defence White Paper promised that
local industry would be promoted in global supply chains; the Skilling
Australia’s Defence Industry (SADI) program would be enhanced by expanding the
number of skilled workers and developing career pathways; Australia’s skill
base would be improved in the fields of engineering and system integration; and
where required ‘rebalance offshore and local procurement activities’.[519]
Defence Capability Plan 2009
The 2009 DCP contained around 110 project proposals and
phases worth approximately $60 billion. Despite the DCP reflecting the
ambitions of the 2009 Defence White Paper, which had an outlook to 2030, the
DCP’s outlook was significantly reduced to 2013, in contrast to the ten-year
outlook of previous DCPs. However, the Government believed that industry
preferred more up-to-date information and therefore promised to update the DCP electronically
every six months; a promise they almost fulfilled with five revised DCPs and
one Defence Capability Guide being published from 2009 to 2012.[520]
The format of the 2009 DCP was very similar to previous DCPs
except that the planned schedule highlights now distinguished date ranges for
First Pass and Second Pass approvals.[521]
Funding for the 2009 Defence White Paper contained the
following components:
- ‘3 per cent real growth in the defence budget to 2017–18’
- ‘2.2 per cent real growth in the defence budget from 2018–19 to
2030’
- ‘2.5 per cent fixed indexation to the defence budget from 2009–10
to 2030’
-
reinvestment by Defence of the savings from its ‘Strategic Reform
Program back into priority defence capabilities as agreed by the Government’
and
- ‘shortfalls against the white paper funding plan to be offset by
Defence’.[522]
The Strategic Reform Program (SRP) was based on
recommendations from the Pappas Review (see discussion above) and formed a
central part of the Government’s financial plan for defence in the 2009 Defence
White Paper. The SRP aimed to generate $20 billion over ten years through the
application of efficiencies and savings.[523]
The $20 billion of extra revenue created by the SRP was to be reinvested in defence,
and therefore help fund the major capital equipment proposals contained in the
2009 Defence White Paper.[524]
At the time of the 2009 Budget release, the Defence Minister
claimed the ‘new funding model’ detailed in the 2009 Defence White Paper ‘fully
covers off the capability and other funding requirements set out in the Defence
White Paper’.[525]
As with other white papers, the fulfilment of plans beyond the three-year
election cycle might depend on a new government’s attitude. In any event, even
a re-elected government might face new challenges, requiring a reassessment of
key capability programs. Yet the 2009 Defence White Paper declared ‘for the
first time, an Australian Government has committed to funding a Defence White
Paper for the life of the White Paper’.[526]
In practice, the 2009 Defence White Paper funding model began to unravel in
less than two weeks. The 2009–10 Budget, released on 12 May 2009 (just ten days
after the 2009 Defence White Paper), indicated that the 2.5 per cent fixed
indexation would be postponed—it would be ‘calculated from 2009–10 but applied
from 2013–14’.[527]
In effect, the 2009–10 Budget removed an estimated $8.8 billion from the first
six years of the life of the 2009 Defence White Paper.[528]
According to ASPI analysts, because the 2009 Defence White
Paper:
... fails to provide any concrete milestones for when things
will be delivered over the next decade, the available funds can be spent at a
leisurely pace and we will be none the wiser. With no tangible targets to be
met prior to 2030, the question of having enough money is hypothetical.[529]
Opposition Leader Malcolm Turnbull dismissed the funding arrangements
as ‘back of the envelope calculations’.[530]
Mark Thomson (ASPI) assessed that maintaining the Australian
defence inventory had required an ‘average annual growth above inflation of
around 2.6%’.[531]
On that basis, the reduction to 2.2 per cent real growth in the defence budget
from 2018–19 to 2030, promised in the 2009 Defence White Paper, would be
inadequate.
Independent of the budget allocations, there was the
question of whether the Department of Defence had the capacity to make the
level of savings envisaged in the SRP. As Paul Barratt, a former
Secretary of the Department of Defence, concluded—’Defence
savings: the impossible dream’.[532]
By the time the 2012–13 Budget was handed down:
$10.6 billion worth of promised funding from the first five
years of [the] White Paper ha[d] been deferred to parts unknown in the future,
$10 billion in savings (above and beyond those promised by the SRP) have been
cut from funding promised between 2011 and 2021, and another $2.5 billion of
new initiatives over the decade have been imposed upon Defence without funding
or offsets. [533]
Thomson had predicted back in 2009 that the budget
allocation did not match the ambitions of the 2009 Defence White Paper.[534] ASPI
tried to estimate the overall costs:
-
the new funding model adds in excess of $10.5 billion over the
decade, including $5.3 billion in the first four years
-
$8.8 billion has been deferred within the decade, including $6.8
billion in indexation from the first six years and $2 billion in savings
from the first four years and
-
the eighth, ninth and tenth years receive some deferred funds,
with the remainder pushed beyond the decade.[535]
The Senate Foreign Affairs, Defence and Trade Committee
inquiry into procurement procedures for defence capital projects commented in
its final report that detailed funding figures for the 2009 Defence White Paper
were lacking and that when ‘questioned at Senate Estimates in
June 2009, the then CDF, Air Chief Marshal Angus Houston, stated that it would
cost somewhere between $245 and $275 billion (in 2009–10 budget dollars) to realise
Force 2030’.[536]
One conclusion that might be drawn about the 2009 Defence
White Paper is that its lack of funding detail, barring the vision for 2030,
was a logical implication of the promise of five-yearly white papers. Possibly,
the 2009 Defence White Paper was seen by the Rudd Government as setting a broad
framework, with the details of how this was to be fulfilled, to be refined
every five years. However, if that was the intention, it was not specifically
stated.
As it turned out, the financial underpinning of the program,
immediately weakened by revisions in the subsequent federal budget, could not
survive the competing pressures originating in the repercussions of the global
financial crisis.
The 2009 Defence White Paper was in many ways an ambitious
document. It attempted to establish, to some degree, the Government’s
expectations of what the ADF should look like in 2030 while acknowledging how
much, in broad terms, such a force would cost. However, within a few years it
would become clear that the Government was unable to meet the necessary funding
commitments and by 2012, Thomson declared the ‘2009 defence white paper is dead’.[537]
Another area about which the 2009 Defence White Paper was
perhaps more ambitious than its predecessor concerned the SRP. The 2000 Defence
White Paper noted that Defence had been subject to efficiency savings leading
up to the white paper’s release; producing around $1.2 billion in 2000–01. A
further $200 million of efficiency savings per year to 2003–04 was expected.[538] On the
other hand, the 2009 Defence White Paper efficiency measures—$20 billion in
savings over ten years to be reinvested in defence—had not been met. ASPI
claimed that by May 2012, the original targets for the SRP had ‘been abandoned’
and in 2011–12, Defence had been compelled to return some of its SRP related
savings to the Government, rather than have them reinvested in defence as
originally intended.[539]
[427].
T Thomas, ‘Define,
re-state and refine—inside the 2007 defence update‘, Australian Defence
Business Review, June-July 2007, p. 13, accessed 13 January 2015.
[428].
Australian Labor Party, Labor’s
plan for defence, ALP policy document, Election 2007, p. 2, accessed 13
January 2015.
[429].
Australian Government, Defending
Australia in the Asia Pacific century: force 2030, op. cit., accessed
13 January 2015; J Fitzgibbon (Minister for Defence), The
2009 defence white paper: the most comprehensive white paper of the modern era,
media release, 2 May 2009, accessed 13 January 2015; and G Dobell, ‘The
white paper and media management‘, Lowy Institute for International Policy,
blog, 6 May 2009, accessed 13 January 2015.
[430].
D Johnston (Shadow Minister for Defence), Defence
white paper, media release, 2 May 2009, accessed 13 January 2015.
[431].
Department of Defence, 2008
audit of the defence budget (report prepared for the Minister for
Defence by G Pappas), April 2009, accessed 13 January 2015.
[432].
J Faulkner (Minister for Defence), Defence
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[433].
2009 Defence White Paper, op. cit., p. 137; Department of Defence, 2008
audit of the defence budget, op. cit., p. 7.
[434].
Australian Government, Response
to the defence budget audit, Department of Defence, November 2009,
accessed 13 January 2015; Australian Government, The strategic
reform program: delivering force 2030, Department of Defence, 2009,
accessed 13 January 2015.
[435].
J Fitzgibbon (Minister for Defence), New
defence white paper, media release, 22 February 2008, accessed 13
January 2015.
[436].
J Fitzgibbon (Minister for Defence), Defence
Minister launches discussion paper and community consultation program,
media release, 5 June 2008, accessed 13 January 2015; Department of Defence, Key
questions for defence in the 21st century: a defence policy discussion paper,
Canberra, 2008, accessed 13 January 2015.
[437].
Department of Defence, Looking
over the horizon: Australians consider defence, Defence
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2015.
[438].
Ibid., p. ix and 1.
[439].
Ibid., p. 4.
[440].
2009 Defence White Paper, op. cit., p. 18.
[441].
J Fitzgibbon (Minister for Defence), Review
of Australia’s air combat capability, media release, 18 February
2008, accessed 13 January 2015.
[442].
J Fitzgibbon (Minister for Defence), Poor
air power planning exposed but Super Hornet to stay, media release, 17
March 2008, accessed 13 January 2015.
[443].
2009 Defence White Paper, op. cit., p. 78.
[444].
Department of Defence, Defence annual report 2007–08, op. cit., p.
7.
[445].
Senate Standing Committee on Foreign Affairs, Defence and Trade, Official
committee Hansard, 4 June 2008, p. 110, accessed 13 January 2015.
[446].
2009 Defence White Paper, op. cit., p. 58.
[447].
Malcolm Kinnaird headed the Howard Government’s review into Defence
procurement. Kinnaird presented the final report to Government in August 2003
making ten recommendations that emphasised the need for reform, including the
DMO becoming ‘more business like’. M Kinnaird, Defence:
procurement review 2003, Department of Defence, 15 August 2003,
accessed 13 January 2015; G Combet (Parliamentary Secretary for Defence
Procurement), Defence
procurement and sustainment review, media release, 7 May 2008, accessed
13 January 2015.
[448].
Defence Procurement and Sustainment Review, Going
to the next level: the report of the defence procurement and sustainment review,
(Mortimer Review), Department of Defence, 18 September 2008, accessed 13
January 2015.
[449].
Australian Government, The response
to the report of the defence procurement and sustainment review
(Mortimer Review), Department of Defence, 2008, accessed 13 January 2015.
[450].
2009 Defence White Paper, op. cit., pp. 125–126.
[451].
A Houston (Chief of the Defence Force) and N Warner (Secretary of
Defence), Round
table discussion for the Federal Government’s defence white paper,
Department of Defence, Canberra, transcript, 7 May 2009, accessed 13 January
2015.
[452].
Department of Defence, Defence
annual report 2007–2008, DoD, Canberra, 2008, p. 2, accessed 13 January
2015; N Warner (Secretary of the Department of Defence), 256,800
paper hand towels: mending defence’s broken backbone, Lowy Institute
for International Policy, speech, 10 June 2008, accessed 13 January 2015.
[453].
Australian Labor Party, Labor’s plan for defence, op. cit., pp. 2
and 7.
[454].
J Fitzgibbon (Minister for Defence), Budget
2009–10: defence budget overview, media release, 12 May 2009, accessed
13 January 2015.
[455].
Ibid.
[456].
Department of Defence, 2009 Defence White Paper, op. cit.,
pp. 11–12.
[457].
Ibid., p. 16; T Thomas, ‘2009/10
defence budget analysis‘, Australian Defence
Business Review, 13 May 2009, accessed 13 January 2015.
[458].
Department of Defence, 2009 Defence White Paper, ibid., pp.
9 and 34; 2007 Defence Update, op. cit., p. 19.
[459]. Department of Defence, Defence annual report
2008–2009, DoD, vol. 1, Canberra, 2009, p. 27; 2000 Defence White
Paper, op. cit., p. xii, accessed 13 January 2015.
[460].
Department of Defence, Defence annual report 1999–2000, op. cit.,
pp. 81–85; Department of Defence, Defence annual report 2008–09, ibid.,
p. 2.
[461].
ANAO, The Super Seasprite, op. cit., p. 14; Department of Defence, Defence
annual report 2008–09, ibid., p. 42; ANAO, 2008–2009
major projects report: Defence Materiel Organisation: Department of Defence, Audit report, 13,
2008–09, ANAO, Barton, ACT, 2009, pp. 71–74, accessed 13 January 2015.
[462].
2000 Defence White Paper, op. cit., p. 48; 2009 Defence White Paper, op.
cit., p. 53.
[463].
2009 Defence White Paper, ibid., p. 56.
[464].
Ibid., p. 34.
[465].
Ibid., p. 34.
[466].
M Thomson, The cost of defence 2009–2010, op. cit., p. 1.
[467].
M Turnbull (Leader of the Opposition), Power
balance in Asia: the Coalition perspective, Lowy institute of
International Policy, speech, 1 May 2009, accessed 13 January 2015.
[468].
Ibid.
[469].
2009 Defence White Paper, op. cit., pp. 93 and 96.
[470].
Ibid., p. 50.
[471].
R Lyon and A Davies, ‘Assessing
the defence white paper 2009‘, Policy Analysis, Australian Strategic
Policy Institute, 7 May 2009, p. 2, accessed 13 January 2015.
[472].
2009 Defence White Paper, op. cit., p. 94.
[473].
Ibid., p. 94.
[474].
2009 Defence White Paper, op. cit., p. 93.
[475].
Ibid., p. 95.
[476].
Ibid., p. 97.
[477].
Ibid., p. 98.
[478].
Ibid., p. 98.
[479].
Ibid., p. 44.
[480].
Strategic objectives in 2000 were to ensure the defence of Australia and
its direct approaches; foster the security of our immediate neighbourhood; work
with others to promote stability and cooperation in South East Asia; contribute
in appropriate ways to maintaining strategic stability in the wider Asia-Pacific
region; and contribute to the efforts of the international community,
especially the United Nations, to uphold global security. Cited in 2000 Defence
White Paper, op. cit., p. x.
[481].
R Lyon and A Davies, ‘Assessing
the defence white paper 2009‘, op. cit., p. 2.
[482].
2009 Defence White Paper, op. cit., pp. 9 and 83.
[483].
Ibid., p. 9.
[484].
Ibid., p. 85.
[485].
Ibid., p. 83; Australian Government, ‘Cyber Security Operations Centre‘,
Department of Defence, website, accessed 13 January 2015.
[486].
J Franzi, Managing
cyber security in an increasingly interconnected world, Department of
Defence, speech, 5 May 2014, accessed 13 January 2015.
[487].
2009 Defence White Paper, op. cit., p. 46.
[488].
Ibid., p. 47.
[489].
Ibid., p. 48.
[490].
Ibid., p. 13.
[491].
Ibid., p. 60.
[492].
Ibid., pp. 60 and 64.
[493].
Ibid., p. 64.
[494].
Ibid., pp. 64 and 72.
[495].
S Smith (Minister for Defence) and J Clare (Minister for Defence
Materiel), New
naval combat helicopters, media release, 16 June 2011, accessed 13
January 2015; Department of Defence, MH-60R
in-service ceremony, media release, 25 January 2014, accessed 13
January 2015.
[496].
2009 Defence White Paper, op. cit., p.73.
[497].
Ibid., pp. 63 and 71.
[498].
Ibid., p. 72.
[499].
Ibid., p. 75.
[500].
ANAO, Multi-role
helicopter program, Audit report, 52, 2013–14, ANAO, Barton, 2014,
accessed 13 January 2015.
[501].
RAN, ‘MRH90 Taipan:
multi role helicopter‘, RAN website, accessed 13 January 2015; The
Auditor-General, 2013–14 major projects report: Defence Materiel
Organisation, op. cit., p. 218.
[502].
S Smith (Minister for Defence) and J Clare (Minister for Defence
Materiel), 19
new Howitzer guns for the Army, media release, 16 October 2012,
accessed 13 January 2015.
[503].
2009 Defence White Paper, op. cit., pp. 76–77.
[504].
Ibid., p. 78.
[505].
Ibid., p. 79.
[506].
Ibid., pp. 78–80.
[507].
Auditor-General, 2013–14 major projects report: Defence Materiel
Organisation, op. cit., p. 206; K Andrews (Minister for Defence), Wedgetail
aircraft achieves final operational capability, media release, 26 May
2015, accessed 13 January 2015.
[508].
Ibid., pp. 79–80.
[509].
Ibid., p. 79.
[510].
2009 Defence White Paper, op. cit., pp. 125–130.
[511].
Ibid., p. 125.
[512].
Ibid., pp. 127–128.
[513].
Ibid., p. 128.
[514].
Ibid., p. 128
[515].
Ibid.
[516].
Ibid.
[517].
Ibid., p. 129.
[518].
Department of Defence, Priority
industry capabilities: fact sheet, July 2009, accessed 13 January 2015.
[519].
Ibid., pp. 129–130.
[520].
Department of Defence, Defence
capability plan 2009, Canberra, 2009, pp. iii–iv; J Faulkner (Minister
for Defence) and G Combet (Parliamentary Secretary for Defence Procurement), Defence
capability plan 2009: supporting Australian defence industry, media
release, 1 July 2009, accessed 13 January 2015.Parliamentary Library
Catalogue, ‘Defence
capability plan: project update summary’, [Library catalogue].
[521].
First Pass approval allocates funds from the Capital Investment Program to
enable the options endorsed by Government to be investigated in further detail
while Second Pass is the point at which the Government will endorse a specific
capability solution and approve acquisition funding. Department of Defence, Defence
capability development handbook 2014, 24 June 2014, p. 10, accessed 13
January 2015; ibid.
[522].
The non-farm GDP implicit price deflator had been abandoned because it was
subject to ‘substantial fluctuations’. Instead, the white paper allocated fixed
indexation set at 2.5 per cent, the target consumer price inflation of the Government
and Reserve Bank. Cited in 2009 Defence White Paper, op. cit., pp. 137–138.
[523].
J Fitzgibbon (Minister for Defence), Budget 2009–10: defence budget
overview, op. cit.
[524].
Ibid.
[525].
Ibid.
[526].
2009 Defence White Paper, op. cit., p. 137.
[527].
Budget
review 2009–10, Research paper, 33, 2008–09, Parliamentary Library,
Canberra, 2009, accessed 13 January 2015.
[528].
M Thomson, The cost of defence: ASPI defence budget brief 2009–2010,
op. cit., p. vi.
[529].
Ibid., p. 104.
[530].
M Turnbull, cited in J Gordon, ‘Defence
plan holds financial “time bombs”, Rudd warned‘, Sunday Age, 3 May
2009, accessed 13 January 2015.
[531].
M Thomson, The cost of defence: ASPI defence budget brief 2009–2010,
op. cit., p. 103.
[532].
P Barratt, ‘Defence
savings: the impossible dream‘, Australian Observer blog, 16 September
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project rapped‘, Sunday Telegraph, 3 May 2009, accessed 13 January
2015.
[533].
M Thomson, The cost of defence:
ASPI defence budget brief 2012–2013, Australian Strategic Policy
Institute, Canberra, 2012, p. 112, accessed 13 January 2015.
[534].
M Thomson, The cost of defence: ASPI defence budget brief 2009–2010,
op. cit., pp. 101–103.
[535].
Ibid., pp. 101–102.
[536].
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procedures for defence capital projects: final report, The Senate,
Canberra, August 2012, accessed 13 January 2015.
[537].
B Nicholson, ‘Budget
2012: military suffers the biggest blow‘, The Australian, 9
May 2012, p. 8, accessed 13 January 2015.
[538].
2000 Defence White Paper, op. cit., p. 121.
[539].
S Smith (Minister for Defence) and J Clare (Minister for Defence
Materiel), Budget
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