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Speech to the Lowy Institute, Sydney

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Speech to the Lowy Institute, Sydney April 29, 2013

Defence, from a public policy perspective is not a portfolio which tangibly impacts Australians in their day to day lives,

other than in times of crisis, and thankfully so.

This is not to say that the mums and dads and families of service personnel and those actually in Defence are ever

shy about offering their opinions or advice to politicians on matters within the portfolio which they feel strongly about.

Unfortunately, what gets all the media attention are head lining scandals, failed projects, SAS pay and so on, all

where Defence is a soft target.

In Defence we have done a countless number of media interviews, issued over 200 media statements and asked

close to 2,000 questions over the past four years. Despite quoting credible informed commentators such as Lowy,

ASPI and even a US Deputy Secretary for the Asia Pacific desk, our perspective on accountability, resourcing and

Ministerial performance is apparently perceived as being “political”.

So our concerns are discounted as being simply what oppositions say.

That is not a criticism, but rather a statement about advocacy for oppositions generally across most portfolios.

The issue here is that in Defence the seriousness and complexity of the situation is often lost in the politics or the 10

second grab.

Having said this, don’t just listen to politicians like me, let’s look at what others have and continue to objectively say

about the current state of Defence in Australia.

Duncan Lewis, former Secretary for Defence has said:

“As things stand I don’t think we are structured or postured appropriately to meet our likely strategic circumstances in


Soon after that “courageous” statement he is appointed to a diplomatic posting.

Current Chief of Army has said:

“Further funding cuts to Defence would risk soldiers’ lives.”

Former Chief of Army Peter Leahy said:

“The Gillard Government has cut so much money out of defence that it risks placing the lives of soldiers, sailors and

airmen in danger. The Minister owes them more than simply a statement of ‘do the same with less’, they will be

wondering how they will achieve these tasks when the Minister has, over the last few years, ripped huge sums of

money out of the budget. The planners might even wonder why they are even drafting a new White Paper.”

Former CDF Peter Cosgrove has said:

“I do worry that we are developing some gaps in our defence structure that will be very tough to claw back later on.’

Former US Secretary of State Richard Armitage said:

“Throughout the US system there is continuing substantial appreciation for Australia’s efforts in Afghanistan, and for

the commitment to the US alliance, but there is also a sense of disappointment and even shock at the extent of

Australia’s Defence budget cuts and the consequent decline in our military capabilities they will bring about.”

But even more significant are the words of strategists Professor Ross Babbage and Dr Mark Thomson.

Babbage said in discussing the 2011 budget said:

“The Government has made a deliberate decision in this budget that Australia will not have the key defence

capabilities required to defend the country in a serious crisis until about 2035”.

Thomson said following the 2012 budget:

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

In December last year he followed up to say:

“What was a mess is now becoming a crisis.”

“Defence planning is a mess and it needs immediate attention.”

Dr Thomson is clearly one of the most respected independent commentators on Defence in Australia.

Even a former Labor Defence Minister Joel Fitzgibbon said:

Page 1 of 4 Speech to the Lowy Institute, Sydney > David Johnston, Liberal Senator for Western ...


“If the Government was serious about security in the region the new white paper should talk about spending 2 per

cent of GDP on Defence.”

So today we are on the eve of another White Paper expediently brought forward to sometime later this week to

disguise the fraud and failure of the 2009 White Paper.

Given what has gone before, any digestion of this document will of necessity require a very large dose of cynicism.

The important point to be made is that the 09 White Paper had some important redeeming features. It sought to spell

out - post the GFC a financial path to readiness and acquisitions out to 2030.

The financial foundations were highly suspect and obviously shaky but with bi-partisan support the politics of

resourcing in defence was taken out of the equation and gave the portfolio a clear and apparently reliable way


We saw that as really important at the time and continue to believe it was the way to go.

With the benefit of hindsight this document was nothing more or less than an elaborate confidence trick.

A media splash with absolutely no substance.

At Senate estimates in June 2009, just two months after the White Paper was published, the then Chief of Defence

conceded, after much determined coaxing on my part I might add, that the value of the capability acquisitions within

the White Paper was between $245 and $275 billion.

This kind of money makes the NBN look like small change.

Then in Question on Notice asked of the Defence Minister on the 28th of May 2012, the Minister confirmed that due

to currency appreciations the value of such capability acquisitions was now between $200 and $230 billion, and that

for the first time conceded that the current value of the unfunded capabilities was $200 billion. Previously the

Government had always said that the 2009 DWP was fully funded by 3% real growth out to 2017/18 and 2.2% out to


The Minister was critical of me for pointing this out and said that the claim of a $200 billion unfunded liability was

absurd. The problem that the Minister has is that he provided and signed off on this question admitting for the first

time the $200 billion unfunded liability.

In other words, virtually nothing contained within the 2009 white paper has been fulfilled or more crucially, funded into

the future.

We now know that, that document was completely bereft of funding commitment by Labor.

I return to the words of former CDF Cosgrove - these wasted years of budgetary deprivation and capability deficit will

be very difficult to redeem.

I maintain that for every year of atrophy there is an exponential consequence, and for each year lost there are several

years spent catching up.

The taxpayer loses substantially in the long run with technology and cost moving on.

I don’t think this Minister gets that.

The planned 3% real growth is a fiction. The Strategic Reform Program designed to return savings to Defence, can

now be seen as an exercise in double dealing given the size of the cuts to successive defence budgets completely

swamped those savings.

It was a meaningless and expensive exercise.

So where are we now? Let me paint the shocking picture.

The usual and universal measurement of comparative defence funding is a nation’s percentage of Gross Domestic

Product. The GDP trend line for Australia is down with this year at 1.56% - next year it drops to 1.49%. The last time

we last spent so little on defending ourselves was in 1937. In defending the indefensible, the Minister likes to argue

that the average spend on Defence over the last seven years is 1.7%. I fail to see how that helps his argument; over

the period of the last Coalition Government the average was closer to 1.9%! It is in this context that we express real

difficulty in believing or accepting anything this Minister or this Government says or might say about Defence funding

when the new White Paper is delivered in June.

I’m now going to outline some of the practical day to day consequences where these cuts have really bitten.

They are starkly revealed in two commissioned reports, the Rizzo Report into ship repair and management practices,

and the Coles Review into Collins Class sustainment. We have seen the deferral of several major Defence projects,

because the Government simply does not have the money to even commence them. Now I pause to note, that all

major projects currently coming to fruition such as the Air Warfare Destroyer - projects this Government seeks to

claim as their own - were all Howard Government projects.

Robert Hill and Brendan Nelson, as Howard Government Defence Ministers both understood the pipeline and

importance of a plausible and definitive DCP.

I point to the following as indicative of a portfolio in crisis.

- Firstly the requirement of itself, to bring forward the White Paper (Force 2030 had the shortest shelf life in our


- The failure to fix our Collins class submarine fleet, at times over the life of this current government we have had

periods when no submarines were fully operational;

- The failure to actually make any meaningful decision with respect to the 12 new submarines, considered by the

National Security Committee in 2008 and announced in May 2009;

- The loss of our amphibious ship capability - this was planned to be somewhat restored through the acquisition of

HMAS Choules, however, as I am sure you are fully aware this ship has been a permanent fixture tied up at Garden

Island for the past 9 months;

- The failure to stay on schedule in the Joint Strike Fighter program (we have purchased just two out of the planned


Page 2 of 4 Speech to the Lowy Institute, Sydney > David Johnston, Liberal Senator for Western ...


- The dubious and expensive two year re-base lining of the Air Warfare Destroyer program;

- The failure to replace HMAS Success requiring the assistance of the Spanish Navy’s Replenishment ship


- The cancellation of the Self Propelled Howitzer acquisition, a vital component of Plan Beersheba, this Government’s

own plan for a modern Army;

- The drought of work for Australia’s once vibrant defence industry and the consequent loss of 5,000 jobs; and

- The severe reduction in monthly and annual Reservist days.

This is by no means an exhaustive list.

We have observed our national net debt blow out to $165.3billion with nothing invested in Defence.

In fact, the opposite has occurred with more than $25 billion taken from the Defence portfolio. The legacy of this

misguided management leaves us weakened over time with considerable difficulty just planning the remediation.No

other portfolio has endured such a financial assault.

The first step for the Coalition’s plan is to commit to no further cuts, and that is exactly what Tony Abbott has done.

We have resolved to cauterise the haemorrhage and then move to begin the repair. I could stand here today and tell

you we will immediately return to a 3% real growth rate with an expenditure of 2% of GDP, however, that would be

less than honest because I simply don’t know the extent of the carnage that has been wreaked upon the Defence

Budget - categorised by others more knowledgeable than I as ‘an unsustainable mess’.

Our aspiration is that as soon as we have come to terms and corrected the current fiscal situation we will return to the

aspiration of 2% of GDP and 3% real growth in the Defence Budget. My mantra is to under promise and over deliver!

What gives me hope, however, is that despite this administrative and fiscal mayhem, our people in Defence continue

to perform to a really high level.

Our Special Forces and the members of our mentoring task forces in many rotations have displayed exceptional and

high level competence and professionalism in carrying a significant and important burden in Afghanistan.

Our sailors have developed specialist interdiction skills on our northern approaches, in the Gulf and in counter piracy.

We have had more than 38,000 people on 641 boats since 2007. In managing this Navy has performed miracles,

often at high personal risk.

Natural disasters in Pakistan, Japan and even recently in Bundaberg has seen out fixed and rotary wing pilots

perform above and beyond their duty.

Personnel have done all this in spite of this Government’s actions, not because of it.

Our Departmental officers should also come in for special mention for the disciplined and professional manner in

which they have gone about the task of managing these huge assaults upon their budgets and planning. I am given

to understand that such financial assaults have often been unannounced and unforseen.

Whilst these episodes and the performance of our people give us cause for confidence as to our readiness and

capacity, the problem for us, as Parliamentarians, with the ultimate resourcing responsibility in Defence, is how to

measure and benchmark readiness and capability across all of the vital capabilities Defence deliver.

In the US, Congress is clearly the ultimate arbiter with the Government Accountability Office reporting directly to it

and individual Congress members and Senators. That coupled with a powerful Test and Evaluation Authority and a

congressional Committee secretariat that often has or has access to several hundred skilled informed personnel,

means that accountability is the order of the day every day in Defence in the US.

I recently questioned officers of the Australian National Audit Office as to whether they could or would brief the

Senate’s Foreign Affairs, Defence and Trade Committee when matters came to light during investigations of project

and performance in Defence, as opposed to waiting for the subsequent tabling of their report. Such investigations

often last several years.

When I asked why the Parliament had to wait to be informed after the fact, I was told that adverse findings required

the response of Departmental officials as a matter of ‘natural justice’.

In other words, when there is a problem, the Parliament comes second in terms of being fully informed. In speaking

with officers of the US Government Accountability Office last May, I found that they keep Congress informed almost


Further to this, as we have seen with respect to a number of important capabilities we have not been vigilant in

maintaining a meaningful database allowing for the development of a reliable measurement of our comparative


The Coles reports into the Collins class submarine, outline as a central theme, that we cannot begin the task of

remediation until we understand the precise level of our non performance. This issue is alive across each of the

services, is cloaked in secrecy - that is, the information is classified and not to be discussed in public, and is in some

capabilities nothing to be proud of.

I should point out that where the Opposition shadows require a briefing for precisely the reason that the information

should not be in the public domain, it is the Ministers prerogative to grant or refuse such a request. In my case I have

sought several briefings on Afghanistan, request to meet with the troops in Uruzgan Province, briefings on submarine

availability, and the progress of the new submarine. In the vast majority of cases, the requests are either completely

ignored or refused.

The partisan and tribal nature of politics and in particular this Government, means that the Opposition and in many

cases the Parliament is deliberately kept in the dark as to the truth of matters. Historically, this has not always been

the case.

There are a very significant number of challenges just over the horizon in this portfolio most of which this Minister and

this Government have sought to avoid. I will set them out briefly:

- Submarines, both Collins remediation and the new replacement - very little of substance has been resolved or

actioned. We are very likely confronting a capability gap with Collins sustainment running at almost a billion dollars

every year.

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- Navy generally, replenishment ships, amphibious ships, landing craft and LHDs all have their unique and special

problems as underlined by Rizzo, which will be both logistically and financially debilitating. The events surrounding

Cyclone Yasi when the Commonwealth was unable to provide any seaworthy amphibious ship assistance to North

Queensland because the Minister was to that point oblivious to his Navy’s incapacity, continues gives no comfort to


- The costs associated with the withdrawal from Afghanistan are likely to be substantial with a major knock-on in the

diminishment of training and logistic support that is currently funded in a ‘no win - no loss’ manner which will put

further and significant pressure on the Defence Budget.

- PTSD, this is a really significant issue that must be given serious and focused attention. I have been told that this is

going to be the no 1 challenge to Army in the future and I am personally committed to the long term welfare of these

people and their families.

- Personnel generally, and particularly in Navy with AWD and LHD coming, we have a huge recruitment and manning


- The JSF is a regionally dominant 5th generation air combat capability which is going to be expensive (not

inordinately so) and complex. It is a vital major project for Australia and a great feather in Robert Hill’s cap for having

this strategic foresight more than ten years ago.

- Australian Defence industry has been mauled by a phoney White Paper and is losing highly trained and technically

skilled workers to other industries, and is begging for certainty and a feasible plan that they can invest in. The

Coalition recognises the need for a Defence Capability Plan that is feasible, funded and commercially viable.

What we seek to inject into the management of this portfolio can be broadly described as a comprehensive

understanding of what is necessary to firstly stabilise the outlook, and then commence the careful and prudent

reinvestment in an overall rebuilding program.

I remind everyone that the Coalition has a strong and proud track record in Defence. We get it.

As I have said, the road back begins with a commitment to no further Defence budget cuts.

It is important to align our policy to strategic thinking and ensure our aspirations align with the available funding.

Put simply, to map out a funded plan without the spin and chaos we have witnessed in recent years.

I don’t believe for one moment that rebuilding Defence will be easy - but it will be done.

Recently the Government has attempted to shore up its national security credentials with the Prime Minister’s first

and only statement on the subject where she said:

“ will be an era in which the behaviour of states, not non-state actors will be the most important driver and shaper

of Australia’s national security thinking.”

The recent events in Boston and Canada indicate the folly of over confidence with respect to such matters.

If the Prime Minister is correct and the behaviour of states is the dominant focus of our strategic outlook then logically

we will be even more dependent upon a defence force that can fight and win.

Our own counter-terrorism Ambassador has sagely reminded us recently that we should always consider ourselves at

Sept 10.

With 23 million people we are dependent upon trade. Our economic security is entirely premised upon maritime

security for our exports. Minerals, coal, oil and LNG, and the sale of these commodities is what pays the bills,

provides employment and powers our economy. Importantly, we must continue to be a reliable supplier of vital

resources and energy to the economies in our neighbourhood. Despite such importance there are virtually no

permanent defence assets or capability between Perth and Darwin.

A boat recently arriving undetected and unannounced into the inner harbour in Geraldton in Western Australia, has

been shrugged off as trivial, by a cavalier government who still, incredibly, blame the opposition for such a national

security failure. Having commissioned a force posture review from Alan Hawke and Rick Smith, the Government’s

reluctance to do anything in response, highlights the arrogant and dismissive mind set abroad in Canberra -particularly to the security of WA and the Northern Territory. My call is for more delivery and much less spin.

Unfortunately the Defence Minister is still heading in the other direction and has pointedly refused to rule out more

cuts to Defence in next months budget.

I see the Prime Minister traipsing across the country promising roads, education funding, NDIS plans, and massive

financial give always with not a cent to our national security. In fact there have been cuts to ASIO, ASIS, ONA, AFP,

DSD, DIGO, Customs, and all agencies directly and indirectly related to our security. Last year alone these cuts were

more than $100 million.

This is just plainly irresponsible and dangerous.

I began today by setting out what others are saying about the state of Defence in Australia under this Defence


But I want to end with what my own humble view is on the state of Australia’s defence in 2013.

In the ten years I have been working on Defence issues in the Australian Senate in both Government and Opposition,

I can honestly say I have never seen so many senior and well respected people come out and want to have a say,

and be so damming and critical of the current Defence Minister and this Government.

I really believe it has reached crisis point and Ross Babbage is probably right when he says that the current state of

Defence in Australia would be best served by buying a big box of white flags.



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