Gary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Defence Materiel) Share this | Link to this | Hansard source

I rise tonight to talk about the parlous situation of the defence budget of Australia. It does not need an alarmist to look at the situation of Australia's funding of its defence needs and come to the conclusion that we have a serious problem in this country sustaining a capability to deal with any challenges that Australia might face in the defence space in the immediate future.

The Labor Party came to power in 2007 promising big things for defence. It commissioned almost immediately a white paper designed to reinvigorate Australia's investment in its Defence Force, which it claimed had been neglected. In due course, in 2009, the white paper was duly published and this white paper was a blueprint for a massive purchase of hardware and other resources for the Australian Defence Force: a $275 billion shopping list with an almost complete renewal of the platforms used by defence proposed over a 20 year period. So Force 2030 was inaugurated with much optimism.

We can debate whether the purchasers and the platforms proposed at that time were the best ones but we cannot debate the fact that the mission was a grand one. Unfortunately, almost immediately this vision began to unravel. At every budget subsequent to the launch of the white paper in 2009 the Labor Party began to cut the size of the budget, and this was on top of the Strategic Reform Program, which had parallel savings being made in defence supposedly to be redirected towards better investment in equipment while that white paper program was being implemented. Something in the order of $15 billion to $20 billion has been cut from the defence budget in the intervening years since the launch of the white paper. In 2012 the largest cuts to defence were experienced. The 2012 budget delivered cuts of $5 ½ billion in Australia's defence spending. I ask the Senate to bear in mind that this falls against the background of a white paper which was put together the global financial crisis at a time when Labor knew that there were going to be big challenges in being able to fund this program; but Mr Rudd decided that it was imperative that Australia launch this major new program to reinvest in the Defence Force. Yet at every subsequent opportunity at every budget delivered since that time sustained cuts have been made to that defence budget such that serious doubt is now being entertained by every serious observer of Australia's defence capability as to whether Australia will be in a position to be able to deliver that. Dr Mark Thomson, in his 2012-13 Australian Strategic Policy Institute Defence Analysis, said:

The plans set out in 2009 are in disarray; investment is badly stalled, and the defence budget is an unsustainable mess.

So three years after launching this bold new vision it is, in the words of one of the more credible observers of the defence arrangements, 'an unsustainable mess'.

We have seen defence's share of gross domestic product fall to its lowest level in Australia since 1938, so in 74 years it is the lowest level of investment in defence. Defence spending has dropped as a percentage of gross domestic product from 1.74 per cent in 2009 to 1.56 per cent this financial year and it will drop further in 2013-14 to 1.49 per cent. Things like the ADF Gap Year program have had to be cancelled as a result of the way in which the government has proceeded to attack the defence budget. This was a program which was able to offer people a new way of understanding what life in the ADF might be like and which was particularly effective in attracting more women to the Australian Defence Force.

Major capital acquisitions in defence are being cut by 20 per cent over the next two years, a $2 billion cut over that period of time. The consequences for particular areas of defence purchasing are very clear. The most serious perhaps of these is the decision to defer for a further period of time a decision which ought to have been made at least a year ago, being the decision on what to do to replace the Collins-class submarines. Labor has wasted four years sitting on its hands, unable to make the key decisions that will bring that particular capability into being.

The 2009 white paper outlined plans for 12 conventional submarines at a cost it has been estimated subsequently at $36 billion. But Labor's latest decision has not been to proceed with that particular concrete decision about what to purchase and when but simply to commission further studies. One gets the overpowering impression that the Labor Party would rather leave that decision for another government to make after the next federal election.

The joint strike fighter purchases have been pushed back. The decision to purchase self-propelled artillery, one that was described in the government's own white paper of 2009 as the preferred option for sound reasons of capability protection and cost, has been dumped. At least $11 million of taxpayers' investment in that program to secure that new capability has simply been flushed down the toilet. The Chief of the Defence Force made it clear that it had to be sacrificed for reasons of money and not for any tactical or strategic reasons. The Armidale-class boats have experienced such heavy use in Australia's northern waters that they are being significantly compromised and Navy's patrol boats will not be returned to full capability until July 2013 because of that very heavy use.

In light of all of that, unsurprisingly, earlier this year a few days before the federal budget the government announced under cover of other developments that it was going to replace the vision of the 2009 white paper with a further white paper to be produced—surprise, surprise!—after the next federal election. It was an admission that the vision of 2009 was totally and utterly dead.

That is bad enough for the future of the Defence Force. It is had a resonance in morale in the Defence Force. It has also had a very serious resonance in defence industry in Australia, an industry which ought to have been growing in the last four or five years in the light of the government's plans to expand but in fact has been contracting. A paper leaked from the Department of Innovation, Industry, Science and Research a few weeks ago talked about the devastating effect of delayed decisions on defence acquisition. At said that a significant number of defence firms, small to medium enterprises in Australia, are not sustainable and there is a risk that many of these clients will not survive let alone drive innovation and become globally competitive. Business advisers have provided varying forecasts for their clients' futures ranging from concerned that only 50 per cent will survive long-term and only 20 per cent will be profitable.

Given the size of the challenge Australia took on in 2009, to declare, as the government's advisers have, that up to half of the small to medium enterprises working in the sector are at risk of failing is an absolute and utter disgrace.

This government has trashed defence spending; it has trashed defence capability. Few observers of our Defence Force cite a serious capacity for the Defence Force to meet the kinds of challenges that we have met in recent years in places such as the Solomon Islands and East Timor. That is a parlous and unacceptable state of affairs which must be laid squarely at the feet of successive ministers for defence in this government and governments under this Prime Minister and the previous one who simply were not interested enough in defence to secure Australia's Defence Force into the future.