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Wednesday, 9 October 1991
Page: 1570


Mr LANGMORE(5.21 p.m.) —-I regret to say that the speech of the honourable member for Macquarie (Mr Webster) is entirely inconsistent because his Leader, the Leader of the Opposition (Dr Hewson), at the time of his response to the Budget suggested that the Budget should have been balanced. That would have meant that $4.7 billion--$4,700m--had to be taken out of expenditure. If honourable members opposite were going to take $4,700m out of total expenditure, where were they going to get additional funds for defence? They could have been taken only from other areas of economic and social expenditure--other very high priority areas which could not possibly have coped with further cuts. What he was just saying was really, I am afraid, cloud-cuckoo-land.

At this moment we have opportunities that have not been available to the world for nearly a century. The twentieth century has been dominated by war--the First and Second World Wars, innumerable regional wars, including the Vietnam and Gulf wars, and, for the last 40 years, the Cold War. The Cold War in particular has justified the maintenance of massive and previously unprecedented levels of military power. Now the Cold War is over, its end having been symbolised by the signing last November in Paris of the Treaty on Conventional Armed Forces in Europe, negotiated by the 22 NATO and Warsaw Pact countries. The recent reciprocal unilateral announcements of reductions in nuclear weapons and demobilisation of nuclear bombers and other weapons systems by Presidents Bush and Gorbachev are the most vivid illustration of the end of the Cold War.

These potent examples all demonstrate clearly that the world has a better chance of substantially and sustainably reducing wasteful military spending than at any other time during the twentieth century. Such a reduction in military spending would allow all countries to concentrate increased resources on top priority economic and social development.

Major structural shifts in policy commonly occur in postwar periods. For example, between 1945 and 1946, US defence spending fell by almost 27 per cent of GNP--approximately a quarter. The end of the Cold War offers the same type of opportunity. The bipolar world of the Cold War has become a multipolar world in which the United States is now the sole superpower. The US therefore has the responsibility for leading the development of a demilitarised global security system. President Bush demonstrated acceptance of that responsibility with his recent announcements. Everyone concerned about the reduction of military tension must praise his initiative wholeheartedly. Likewise, we must welcome President Gorbachev's far reaching response.

One of the central reasons for welcoming these dramatic changes is that wasteful military expenditure can now be reduced. The central rationale for cutting military outlays is their opportunity cost--that is, the opportunities for alternative consumption and investment forgone. Military expenditure is wasteful consumption; every dollar spent on military activity is a dollar which cannot be spent elsewhere. In the context of a given Budget stance, military spending is most obviously in conflict with other forms of public consumption. This choice is between defence and such things as education and health, social security and aid to developing countries, national parks and the arts.

The long term effects are even more serious when public investment is reduced to make way for defence. Cancellation of or delays to improvements in the public infrastructure reduce national productivity, so slowing economic growth as well as reducing convenience and safety. At a time when, in all industrialised and developing countries, schools and universities, health centres and hospitals are being deprived of urgently needed funds, when there is a housing shortage, when urgently needed improvements to road and rail systems are being delayed by funding restraints and when overseas aid has stagnated or been cut, a continuing high level of defence spending would be impossible to justify, particularly since the international strategic environment has become more benign than at any time for a century.

There are also important secondary reasons why cuts in military spending should be maximised. For all but the major arms exporters, military spending involves a net loss of foreign exchange. As well, military expenditure tends to stimulate inflation, and the experience of the Korean and Vietnam wars illustrates that vividly. Military research and development diverts scientists and engineers from far more productive civilian activities. Further, military outlays stimulate growth of employment by less than equivalent outlays on such activities as education and health. In sum, military expenditure retards economic development.

There will, of course, be many difficulties in achieving major defence cuts. The first is simply in enabling key decision makers and the wider public to recognise the extent of feasible reductions in defence outlays. Massive military expenditure in peacetime is no longer perceived as an aberration. Most people have forgotten the tiny size of standing armies before World War I. In the United States military spending was less than 1 1/2 per cent of GNP whereas it was over 6 per cent for most of the 1980s. An important task is therefore to work out both visionary and feasible targets. Is a general target of halving defence outlays during the next five years, on a reciprocal global scale, too ambitious?

The beneficiaries of defence cuts far outnumber the losers. Those who benefit directly from defence cuts include everyone in the community who wants more jobs, the business people who want infrastructure improvements, the educationalists who want improved schools and universities, the health workers, the construction industry, the scientists, the social security beneficiaries, the poorly housed, and us, the politicians who represent this great majority of the population. Recognition of the fact that the beneficiaries of defence cuts far outnumber the losers makes disarmament much more likely.

The environment for defence cuts would be enhanced by regional security agreements. The Conference on Security and Cooperation in Europe offers an effective precedent to other regions such as our own on the Pacific Rim. Similarly, the United Nations has a vital role in increasing local security. That role was enhanced during the Gulf war. The implications of that enhanced role must now be worked out.

In conclusion, there is an unprecedented window of opportunity now for achieving major reductions in military expenditure. Such reductions would liberate human and financial resources for desperately needed economic and social development both here and overseas. They would also contribute to reducing the threat to the natural environment from war, which was so tragically demonstrated during the Gulf war. The next year will be crucial in determining whether there is a structural shift towards lower military expenditure in all countries. The signs are encouraging. Everyone can contribute to promoting attitudes and information which make such a structural shift politically feasible. Major defence cuts will increase economic, environmental and strategic security.