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Thursday, 3 November 1983
Page: 2265

Mr SCHOLES (Minister for Defence) —by leave-Mr Speaker, the Government is anxious to provide the Parliament and the public with detailed information on its defence programs and projects for 1983-84. I have, therefore, prepared a comprehensive statement on this year's defence budget which I will table. In the time allotted to me today I wish to highlight the more important sections of that statement and re-affirm the Government's commitment to develop and maintain an effective Defence Force. To complement this statement, I will also table the annual report of the Department of Defence.

The fundamental concern of defence policy, from which all other defence effort must derive, is the security of the nation, its independence and its interests, from military threat. We are favourably situated, remote from centres of security crisis. Successive governments have judged that the prospect of military threat to Australia is presently slight and that we would have several years of warning of unfavourable military developments. We have rejected the planning of our defence effort against some imagined threat, and to a uniform level of preparedness. To do so would mean vast increases in our defence budget that would have to come from reductions in other areas of our national expenditure and that would not now be justified. Nevertheless, the Government has not shirked its responsibility to provide what is necessary, even in these difficult economic times, for our fundamental defence needs. To make every dollar work best for the security of the nation, the Government insists on the need for discrimination and selectivity in our defence expenditure. It will need the support of the Australian people in this task, and it recognises its duty to explain its assessments to the people.


Australia needs a well-equipped, highly trained and mobile Defence Force to ensure the security of Australia's territory, its economic zones and its areas of vital interests. The Defence Force should be able to:

1. provide a deterrent by making a major attack on Australia extremely costly and hazardous;

2. respond rapidly to lower level military emergencies within Australia's area of interest;

3. meet international peacekeeping needs from existing defence capacity;

4. maintain surveillance over the Australian coastline and maritime zone; and

5. assist civilian authorities in natural and man-made disasters and, when requested, in the maintenance of civil order.

The Strategic Basis

The Government, in its recent review of the strategic basis on which our defence policy will be based, has surveyed the external factors bearing on our national security and the other more enduring factors that are fundamental to any military contingency. The Government's stance in regard to the relations between the two super powers has been frequently expressed by the Prime Minister (Mr Hawke) and the Minister for Foreign Affairs (Mr Hayden) and is unequivocal. We are part of a community of nations with common ideals of open democratic government. That is not a matter of political posture or rhetoric. It reflects the deep-seated political and social values of the nation.


The Government is committed to world disarmament and to support the reduction of international tension and instability. Although the risk of nuclear war is considered remote, the catastrophic results of such a conflict call on every country to support actions and procedures designed to lessen that risk. This Government is particularly concerned to do so. The Foreign Minister has already reported to the Parliament on the outcome of the ANZUS Council meeting which we both attended in Washington last July. I will not reiterate the Government's conclusions today.

The Government has taken the firm view that not everything Australia does in the defence field with the United States of America, or with New Zealand, should be seen as part of the ANZUS relationship. The Government has repeatedly demonstrated its belief in the abiding importance to Australia of strategic developments in South East Asia. Our concerns there are, where possible, to help reduce the tensions that promote uncertainty and increased involvement in the region by external powers. We recognise their potential for affecting our immediate neighbourhood, and ultimately Australia itself. The defence co- operation programs we operate with our friends in the ASEAN group, Papua New Guinea and several south-west Pacific governments also testify to our abiding strategic interest in these regions. They are a valuable link to these nations' defence communities and not a means of influencing the internal policies of their governments.

The Government has affirmed the priority for national defence within our region . There is no contradiction between its judgment that the nation presently faces no prospect of military threat and its commitment to the maintenance of a capable defence force. We must first ensure that we can deal with the limited defence demands that could arise with least warning. Nevertheless, we cannot neglect insurance against graver, but on present assessments more distant and less likely, contingencies.

The Forward Defence Program

We have inherited a five year defence program that is heavy with long term financial commitments. Some difficult decisions must be made in the years before us. The cost of defence equipment-aircraft, ships, tanks and guns-has grown faster than has the national income, and there is pressure to add weapons systems of kinds that we do not yet have. It is easy to think of defence planning only in terms of the more conspicious equipment items, but only about one quarter of the defence outlay is spent on new capital equipment and facilities. More than a quarter of the expenditure goes into paying for the day to day running of what we have: fuel, ammunition, spares and repairs, personnel postings and general administrative costs. About half of all defence expenditure goes in manpower. Where there are force structure adjustments there will sometimes be corresponding needs to adjust manpower. The Government understands all too well the personal anxiety this can cause. I have made it clear, in the case of the personnel made redundant by the decisions on the aircraft carrier and fixed wing aviation, that their well-being will be at the forefront of the Government's concerns in this difficult transition.

The Defence Budget 1983-84

In developing a defence budget for 1983-84, the Government aimed to hold course until it was able to assess Australia's strategic situation and its consequences for defence policies and forward planning. The defence allocation of $5,280m represents an increase of 10.4 per cent over the outlay in 1982-83, or about 4 per cent in real terms. This is a major achievement by the Government in the face of daunting budgetary difficulties. The Opposition will no doubt claim that it would have provided substantially more, but this is no more than the rhetoric of opposition-not matched by its performance in office. Moreover its leaders are at the same time proposing that the projected deficit of $8.4 billion be cut by more than $2 billion. Before dealing with the effects of the budget on defence capabilities, I want to outline in broad terms the way in which resources have been allocated.

Budget Categories

The Government sees a strengthening of long term defence investment as appropriate to Australia's security outlook. The proportion of defence expenditure for capital equipment and facilities has increased from 21.8 per cent last year to 25.9 per cent this year. I am particularly pleased to announce that, as well as meeting the rising costs of major equipment proposals, the Government has been able to devote a substantial part of this increase to new service houses. Manpower costs have taken up around 50 per cent of defence expenditure over many years. The proportion this year has fallen to 46.6 per cent, primarily because most of the real growth in the Budget has been directed to capital investment.

In 1983-84, average Defence Force personnel numbers are planned to reduce by about one per cent, mainly as a consequence of the decisions on the aircraft carrier and naval fixed wing aircraft. Civilian personnel numbers this year will also be reduced slightly. The Government plans during this year to hold the strength of the Army Reserve at 30,000, the level set by the previous Government . There will be small increases in the Naval Reserve and the Air Force Reserve over the year. The total provision for running costs will rise by some 2 per cent in real terms, to make up 26.6 per cent of defence expenditure. The growth of expenditure on defence capital facilities is being sustained and indeed accelerated this year, lifting it from 4.4 per cent to 5 per cent of defence expenditure. This is in accordance with the Government's emphasis on long term capital investment in defence, but it also makes a valuable shorter term contribution to employment.

Finally, in the outline of the Budget by broad category, the Government has sustained the allocation of about one per cent of defence funds to the defence co-operation programs with a number of our friendly neighbours. Within the above broad functional categories, an outlay of some $380m has been provided for the Department of Defence Support, an increase of $57m on 1982-83. The Minister for Defence Support (Mr Howe) will be making a separate statement dealing with matters under his administration.

Defence Capabilities

The foregoing outlines how expenditure has been allocated by functional category. In my tabled statement I set out in some detail what the Government's defence budget, and some related policy decisions, will do to support and develop the nation's defence capabilities both in the Defence Force and supporting civilian organisations. I will refer to only a few matters in the time available to me today.

Maritime Defence

The Government's decision not to acquire an aircraft carrier represents a major adjustment to Australia's Defence Force structure. The Government concluded that an aircraft carrier of a kind we could afford and the kinds of aircraft that could operate from it were not an adequate answer to Australia's maritime needs. The Government holds the view that our essential maritime needs can be met by capabilities already available or planned for the Defence Force. There are many important tasks for Navy to do that would have continued to suffer had it still focussed as much of its effort on the carrier as in the past.

The decision to phase out fixed wing aircraft from the Navy was a logical consequence of the carrier decision. In future, the Fleet Air Arm will be an all -hellicopter force and enhancement of this aspect of maritime operations is one of the highest new equipment priorities for the Defence Force. The third of our United States-built FFG guided missile frigates, HMAS Sydney, should arrive in Australia in March 1984, and the fourth and last of the US-built ships, HMAS Darwin, should be accepted from the ship builders later that year and join the fleet in mid-1985. As I announced on 12 October last, the Government has decided in principle to proceed with construction of two FFG-class frigates at Williamstown Naval Dockyard. The first ship is expected to be delivered in about 1991. As well as acquiring the six new FFG-class frigates Navy's surface naval capability will be enhanced by continuing the program to upgrade the six destroyer escorts and three guided missile destroyers in our naval dockyards. Four more Fremantle-class patrol boats will join the fleet during 1983-84.

From January 1984, the Government will begin to implement the long-awaited naval home porting in Western Australia when HMAS Stuart berths at the naval base, HMAS Stirling.

Land Defence

There has been a tendency over the years for the Army to be seen by some commentators as the least advanced element of the Australian Defence Force, because its equipment is less conspicuous and less costly than the ships and aircraft of the other Services. Yet, consistent with the Government's strategic perceptions and priorities, it expects the Army of the future to be a leaner, more mobile, better co-ordinated, and harder-hitting force. Already we have the Operational Deployment Force, based on an air-portable brigade able to be deployed at very short notice and backed by other formations tasked and equipped to develop the skills of more substantial conventional warfare.

In the field of mobility, a new range of four and eight tonne off-road capable trucks is being delivered from Australian factories. Three Australian companies have recently submitted proposals for new light armoured fighting vehicles for the early 1990s. New utility helicopters will be needed for the Army to retain and strengthen its ability to operate effectively in our remoter areas. Several important radio communications programs are already under way. Army's hitting power will be improved by the introduction of a number of equipments and weapons for which substantial sums have been provided this year. These include the acquisition of mortar locating radars, Milan anti-armour missile systems and 155mm howitzers. Preparations are proceeding for the manufacture of a 105mm light field gun. Army will be introducing a range of advanced electronic warfare systems. New man portable anti-aircraft missile systems and general purpose machine guns are to be purchased.

Air Defence

The introduction of the FA18 tactical fighter into the RAAF is by far the largest single Defence project ever managed in Australia. It will be the dominant work load of the Australian aircraft industry for some years, and it will be important too for the building industry because of the redevelopment of the RAAF base Williamtown New South Wales and, possibly a major new fighter base at Tindal, near Katherine in the Northern Territory. The first Australian assembled FA18 is planned to be delivered early in 1985. The Government has approved the purchase of short-range Sidewinder missiles and all-weather medium range Sparrow missiles for the FA18, and an initial purchase of 20mm gun ammunition while plans are prepared to manufacture it in Australia. After the FA18 has entered service, it is intended that the two Boeing 707 aircraft recently purchased, and the two already operated by the RAAF, be adapted for use as in-flight refuelling tankers.

Expenditure this year to maintain and upgrade the capability of the two squadrons of F111 strike aircraft will be substantial. This includes an all- weather targeting system with which the F111 will be able to employ a range of precision guided weapons. The design and development will continue in Australia of a new basic training aircraft which is expected to fly first early in 1985. The Government has approved the purchase of a further six Squirrel light helicopters for search and rescue work in support of flying operations. Aircraft of the RAAF will now conduct the fleet support operations, including simulated air attack and defence, previously provided by the Fleet Air Arm. The Government is pleased that this will help strengthen operational co-operation and training between our air and naval forces. Time prevents me from dealing adequately with a number of activities including the defence co-operation programs, the Defence Science and Technology Organisation, the Natural Disasters Organisation, and defence problems for industry. All of these are dealt with in my tabled statement.

Defence Force Pay and Conditions

I wish to comment only briefly on two issues which are of particular current interest. These relate to Defence Force conditions of service and to the Army Cadet Corps. I have dealt with these issues and others more fully in my tabled statement and in separate announcements over the past few weeks. At present, the Committee of Reference for Defence Force Pay can deal only with matters referred to it by the Minister, and its reports are subject to ministerial approval before they become operative. Appeals must go to the Minister. It is the Government's intention that the Minister's right to veto should be removed in respect to pay and related matters. The present Committee of Reference will be replaced by a Defence Force tribunal which will have power to act independently in the area of pay fixing. A Defence Force advocate will present the Defence Force case in hearings before the tribunal.

The Government has made special provision under the existing Defence Force retirement and death benefits scheme to reduce significantly the impact of the decision to tax lump sums received on retirement. The aim is to ensure that the actual sum available to retiring service personnel under the new arrangements will remain as near as possible to the present amount. I confirm again that it is the policy of the Government that no already established Defence Force entitlement will be removed or diminished by retrospective legislative action.

In relation to the Army Cadet Corps, some manning savings will be made in Army by reducing the number of regular personnel allocated to the Australian Cadet Corps, which is to be restructured along the lines of the Navy and Air Force cadet schemes. It will be based in Army Reserve depots instead of in schools and Army Reserve units will foster the new cadet corps. This will open up opportunities for young people who do not attend schools with cadet units. Emphasis will continue to be placed on the community orientation of the Cadet Corps and on adventure-type activities rather than on purely military training. Despite misinformed comment to the contrary, defence funding for cadets will not cease. Support for camps and uniforms will continue.

Defence Management

Finally, I deal briefly with two organisational matters which are of some interest. The Department of Defence has come under considerable criticism for its management of certain major equipment acquisitions. Some of this criticism has been based on shortcomings in earlier years that have subsequently been the subject of very positive management action. Some critics have said that Defence should move more quickly to acquire new equipment, while others have called for a more deliberate process that would give more opportunities for Australian industry. But among the 150 or so new Defence equipment acquisitions worth nearly $7000m now being managed, some criticism is no doubt valid and the Government is giving this subject the attention it deserves.

The Utz Defence Review Committee only last year looked at the management arrangements for capital equipment procurement in Defence and accepted the view that this very important function was unduly fragmented in Defence. I expect to receive proposals soon to streamline Defence procurement procedures and to bring together the procurement functions now undertaken by the single Services.

Defence Review Committee

More generally, I am considering the Defence Review Committee's report on the higher defence machinery, and I propose soon to report to Cabinet. At this stage , I want to make only four points. Firstly, the Committee found that the fundamental concept of the defence re-organisation introduced by the Whitlam Government in the 1970s-of a single Department of Defence-had been widely accepted and was supported at the highest levels. It brought with it substantial improvements in the development and conduct of defence policy. Secondly, the Committee favoured strengthening the concept of a single senior military commander, which now stands in law, responsible to the Minister for Defence for the command of the Defence Force and for providing him with the highest military advice. Thirdly, the Committee contributed most valuably in clarifying the separate roles of the Defence Force and the Department of Defence, and the distribution of authority and responsibility between them.

Finally, in considering the suitability of the defence organisation for a defence emergency or war, the Committee dismissed the simplistic notion that Australian defence planning today can be based on one specific, and by frequent implication massive, contingency. It accepted that there would be a good deal of continuity between the defence organisations in peacetime and wartime and that considerations of adaptability and versatility, based on considerations of circumstances and timing, should shape the development of Australia's higher defence machinery. The Government embraces these judgments wholeheartedly. I present the following paper:

Defence Budget-Ministerial Statement, 3 November 1983.

I table the annual report of the Department of Defence and the expanded statement which I alluded to at the start of my statement and ask that it be distributed to honourable members.

Motion (by Mr Howe) proposed:

That the House take note of the papers.

Mr Sinclair —The arrangement was that two statements would be made, so I will seek to adjourn the debate on that understanding. Equally, I would not want to preclude the Minister who is about to speak from responding, should he so wish, to anything that we might say during what I hope will be cognate debate. I move:

That the debate be now adjourned.

Question resolved in the affirmative.