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Transcript of doorstops interview: 7 February 2013: Defence funding, Coalition commitments, military superannuation



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Doorstop - Australia's defence ranking February 7, 2013

RE: Defence funding, Coalition commitments, military superannuation

Senator Johnston: Today I want to raise a very important issue with you all - that is that the Minister on several

occasions in recent weeks has refused to rule out further cuts to the Defence budget in May’s upcoming budget. As

you all know my leader Tony Abbott has committed the Coalition to no further cuts in Defence - he did that last

Thursday at the National press club. This is a very very serious issue for Defence. The feedback I am getting from

Russell is that things are very very difficult at the moment. I am calling on the Minister to confirm from a perspective

of national security - and for the good men and women in the Defence force to give them some certainty - and say

that there will be no further cuts to the Defence budget.

No other portfolio, notwithstanding what he says, no other portfolio has had to endure this level of stringency. $25

billion has come out of the defence budget over the last four years, which is a 10.5% cut. The last budget saw the

biggest cut we have had since the Korean War. The Minister pretends this is a problem that has been spread across

other portfolios; this is untrue spin.

He says he has done these cuts and carried them out because the US and the British have carried out similar cuts -

what a ridiculous comparison. US share of GDP in Defence is 4.7%, the Brits spend 2.6% on Defence - the proper

measure of expenditure in Defence in comparable economies and countries is a measure of GDP.

The Minister likes to say that we are, and has said without correction, we are the second biggest per capita spender

on Defence after the United States. This is an outrageous misrepresentation of the facts. The documents we are

giving you today indicate that we are number 14 per capita, and in terms of GDP at 1.9% we are 65th in the world. In

the national security statement by the Prime Minister, and often in representations by this Minister, they represent

that the 11/12 budget had $26 billion worth of expenditure - you will see that it is $22.9 million of actual expenditure.

This coming financial year (13/14) will take us back in terms of a share in GDP to 1937 levels - that is 1.49% of

Australia’s Gross Domestic Product will be spent on Defence.

I am concerned; I think the situation is dangerous. The Prime Minister has indicated that we are moving to a state on

state focus - not a non-state actor terrorist focus - the one thing, the ultimate deterrent in state on state situations, is

the Australian Defence Force. And whilst the Prime Minister is making that transition, that re-focus, this Government

is slashing Defence’s capacity to do the job that they are pointing out needs to be done. I am alert to that problem,

and I think the public is alert to that problem, and I am calling on the Minister to set the record straight and to clarify

the position, right now, that there will be no further cuts in Defence.

Journalist: Can you commit a Coalition Government to increasing Defence spending?

Senator Johnston: What we have done firstly is to commit to no further cuts. That is a significant step, let’s be really

real and frank about this - we have got one more budget to come, we have a Minister who categorically refuses to

rule out cuts - to close the books this side of the next budget would be negligent, reckless in the extreme, and I won’t

do it.

What I will do is say look at our track record. We aspired to 2% and delivered it under Howard, we left at 1.9%, and

our aspiration is as set out in the 2009 White Paper. Remember, Defence have a $200 billion unfunded future liability

on the 2009 White Paper, remember ASPI’s comments “this budget is an unsustainable mess”. For me to commit to

time frames and dollars is ridiculous, and I won’t do it.

But the fact is that I am saying we have been successful in this point, in getting the Coalition to say no further cuts.

Now the next step for us it analyse how bad the situation really is, we need to know how bad it is and once we have

scoped that you will be the first to know what our plan is to get us back to real growth at 3%, indexed at 2.5%,

pursuant to the 2009 White Paper. Moving towards 2% of GDP, which everybody in the know seems to say is right for

Australia, and I agree with them.

Journalist: Senator, Tony Abbott stated quite clearly last year that the aspiration was 3% growth - does that

aspiration still stand?

Senator Johnston: Yes it does. Absolutely it does, we believe that 2% of GDP is the place to be and we want to get

there with 3% real growth at 2.5%. Just when that is going to happen is the issue - we do not know given the

Minister’s refusal to rule out any further cuts. He took $1.6 billion out of the Defence budget in MYEFO. This is just

treating Defence like an ATM, it is trashing the Defence budget. How can we possibly do any proper planning? I know

when I look at the faces during Senate estimates that they are exasperated because the Minister continues to stick

his sticky fingers into their cash and rip it out.

Journalist: So where does the figure of $22 billion come from? The ASPI budget brief says $24 billion?

Senator Johnston: The 22 billion - actual expenditure - is set out in the papers you will see today, which the library

has confirmed, SIPRI has done the figures and you will see that we are 65th in terms of GDP and 14th in terms of per

capita expenditure.

Journalist: So ASPI is wrong?

Senator Johnston: I think there might be some accounting issues and with the benefit of hindsight have affected

those matters.

Journalist: There is no solace in the leaked Defence White Paper for defence either is there?

Senator Johnston: Absolutely not, heaven only knows the new Secretary has enough problems on his plate, but to

deal with the fact that the White Paper is apparently being leaked months ahead of schedule says that the whole

thing is a shambles.

Journalist: Aren’t you adding to the unfunded liability attributable to Defence with the promise to index Defence

superannuation?

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Senator Johnston: No. In the out years it comes to something like $98 million.

Journalist: Surely it is going to flow onto other superannuation and PSS as well?

Senator Johnston: Well not in the out years. That is a matter for future reference, but at this stage the actual cost of

that promise in the out years is about $98 million. And a point I should make about that is that these are people who

have served their country. To put them and keep them on CPI is a bit rich, I have got to tell you, when everyone else

is on MTAWE. CPI barely moves, so what we have done is duded them, and I don’t think that is right.

Journalist: But surely there is going to be pressure to flow that on to people on PSS and MSBS as well.

Senator Johnston: Well of course we have a future fund that we set out to deal with that, and if it was properly run it

will deal with that. But of course we have a problem with the way the government takes money and robs Peter to pay

Paul - we won’t do that.

ENDS

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