Home' Asia Pacific Defence Reporter : APDR June 2017 Contents CONCLUSION
After several years of modest growth in Defence
expenditure that had the initial aim of repairing the
damage done by the previous Labor Government,
Australia is now seeing a major expansion in the capital
equipment part of the budget. Most analysts believe
that a more robust ADF is entirely appropriate given
increasing strategic uncertainty in the region. Some
of the causes of this are well known, such as the
growth of China, the potential danger of North Korean
aggression and a high degree of uncertainty about the
foreign policy means and objectives of the erratic Trump
administration. The rise of India – by now possibly the
world’s most populous nation – might also have as yet
unforseen regional consequences.
Less widely recognised factors include a growing
threat of fundamentalism in Indonesia and the very
real possibility of Papua New Guinea joining the list
of failed states. The outlook for Indonesia is especially
concerning. For decades most of us thought that
Jakarta would continue to have a relatively benign view
of Australia, if not a particularly friendly one. Indonesia
remains largely inwardly focussed as the Government
grapples with domestic issues of delivering adequate
education, health care, infrastructure and security in a
country spread across 17,000 islands with a population
of 263 million – and growing.
However, there are worrying trends of increasing
fundamentalism, a sign of which is the recent jailing
of former Chinese Christian Jakarta Governor Basuki
Tjahaja Purnama – better known as Ahok – for what
many saw as a petty and fabricated charge of blasphemy.
Such a conviction – let alone jailing – would have been
considered virtually impossible even five years ago.
If this trend towards extremism continues – a very
unlikely development, it must be said – then Indonesia’s
previously generous attitude towards Australia will no
longer be guaranteed.
So while there is the need for a stronger military
as a hedge against regional instability and conflict,
managing the ramp-up is going to be no easy task.
Defence expenditure has jumped by 6.7% over 2016
– 17, and from now on the hardware part of the budget
will be a disproportionate beneficiary. Some of this will
be absorbed in the big Navy and Army procurements
SEA 5000, SEA 1180 and LAND 400. SEA 1000
does not feature immediately because of the ridiculously
glacial mobilisation phase. Substantial funds are already
flowing for the purchase of F-35 fighters. However,
given that there is a bipartisan commitment to keeping
Defence at 2% of GDP, as the economy grows so too
will military spending.
Defence will cope partially with this by moving
to a ‘Smart Buyer’ format, with a faster pace for
project approvals and contract award. Industry will be
tested, but with excess capacity available following
the slowdown in the resources boom and the end of
the passenger car industry – and a large immigration
program – should be able to cope, providing good
quality managers remain in place.
As Mark Thomson from the Australian Strategic
Policy Institute summarises:
There are two risks to defence funding. On the
supply side, current and future governments are likely
to find it hard to placate a fractious electorate that
evinces little interest in national security. With an
election in 2019 and a planned return to surplus the
year after, the test will come soon enough.
On the demand side, the risk is that the planned
growth in capital investment will outstrip the capacity of
Defence and industry to deliver. As the current raft of
large off-the-shelf foreign purchases gives way to even
larger domestic naval construction programs, the risk of
underspending will grow. Back in the 2000s, anything
more than a 5% per annum increase in equipment
purchases proved unsustainable. Unfortunately, nothing
encourages governments to withdraw funding more
than handing back money.
32 Asia Pacific Defence Reporter JUNE 2017
DEFENCE BUDGET 2017-18
Three C-27J Spartan aircraft from No 35 Squadron on the flight line after flying a mission together.
Credit: CoA / Glenn Lyons
An Armed Reconnaissance Helicopter-Tiger flys alongside a taxiing P-8A Poseidon. Credit: CoA / Veronica O’Hara
29/05/2017 3:09 PM
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