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Thursday, 22 September 1983
Page: 1220

Mr JACOBI(9.16) —I wish to speak to the estimates for the Department of Defence. This Government takes its defence responsibilities seriously, as the 4 per cent real increase in the defence budget illustrates. There has been criticism by honourable members opposite of that figure, criticism based on the use of the implicit deflator for defence which is different from the non-farm deflator used for other government expenditures. Let me stress that the implicit deflator for defence has been arrived at in exactly the same way as it was arrived at by the previous Government. In fact, this year it is a lot closer to the general non-farm deflator used for the rest of the Budget than it was the last year under the previous Government. The Government is using an inflation rate this year of about 7.5 per cent, while the implicit defence deflator is around 6 per cent. Last year the Liberal Government expected an inflation rate of 11 per cent when it brought down the 1982-83 Budget. Yet the figure it used was around 7 per cent-almost 4 per cent less. That shows clearly how groundless the criticism is.

When it comes to defence budgets this Government has a different approach from that of its predecessor. We do not make grand speeches or set up fancy five-year programs for defence. Some of those programs were good assessments of Australia' s defence needs. Some of the speeches were eloquent and that was about all. For instance, the previous Government announced the new defence program in February 1980 in response to the Soviet invasion of Afganistan. Amongst the projects the previous Government promised in that program, which were abandoned two years later, were a second underway replenishment ship, 10 more patrol boats, and the update of the Mirage aircraft's avionics. The previous Government promised that expenditure on capital-type equipment would rise from around 15 per cent to 25 per cent over a five-year program. That promise went by the board. The very next year the percentage of the defence budget spent on capital-type equipment actually fell dramatically from 15.5 per cent in 1980-81 to around 11 per cent in 1981-82.

The effect of these sorts of grand promises and even grander delays is that this Government has no financial room to manoeuvre. There is no room in the defence budget for new initiatives or new equipment. This year capital-type equipment will take almost 20 per cent of the total defence budget and outstanding obligations, mainly for capital-type equipment carried over from last year, are a little over $5 billion. Faced with the situation which allows no major new equipment purchases or other initiatives, the Government is using the period to review Defence Force structures, our strategic situation and the system of determining Defence Force wages and conditions. We will not do what the previous Government did when it began to feel the pinch of the capital equipment bill which it had built up by constant deferrals. That Government first made the Defence Force and the Department of Defence absorb the cost of pay increases and then denied pay increases to the forces. In 1981 the Liberal Government circulated a seven-page document to the Department and the Services outlining how the cost increases would be absorbed.

Let us look at the cynical approach of the previous Minister. How did he go about implementing these deferrals and expenditure cuts? Let us see how he put them in place. Discretionary expenditure was to be deferred until further notice . No new commitments or expenditures were to be made except where necessary for essential operational activities and where payments were required, as distinct from permitted, to be made by legislation. Contractual commitments in respect of major equipment acquisitions were not to be entered into and increased wage and salary expenditures were to be absorbed by eliminating overtime. These guidelines spoke of a test of essentiality. They went on to state:

Even where the test of essentiality is met the scope of activities and functions is to be reduced wherever possible.

They continued:

Only the minimum level of training and exercising necessary to avoid long term degradation of the Defence Force is to continue at this stage.

The next time wage and salary increases were likely honourable members opposite decided not to try to absorb them in the rest of the defence budget. But that was not good enough in 1982. Instead, the Minister ignored the issue altogether. The Committee of Reference on Defence Force Pay in its fourth report on the Adequacy of Defence Force Pay in August 1982 implored the then Minister to give it a reference to be completed by the end of 1982. The Committee said:

With respect, such a review will be essential not only upon economic grounds but as an indication of the efficiency and worth of the pay system instituted for Members of the Defence Force.

With all due respect, what was the then Government's response to that plea? It indicated just what little worth that Government attached to the system of Defence Force pay determinations. The former Government refused to release the report for months and responded to it only in November. At the time it said:

Recommendations dealing with future reviews of Defence Force remuneration were still under consideration.

That consideration continued until the very day on which the pay freeze was announced. The ease with which the then Minister ignored the recommendation of the Committee of Reference on Defence Force Pay illustrates why the Labor Party has put such a high priority on changing the pay determining scheme. This Government is in the process of bringing forward legislative changes to make the Committee of Reference a tribunal with an independent right of operation which is able to meet at its own discretion rather than having to meet following a reference from the Minister. Under our legislation the Committee will be able to make determinations with the same legal weight as those of the wage fixing authorities or other sections of the Public Service; that is, its determinations will be able to be rejected only by the Parliament rather than just ignored by the Minister. A position for a professional advocate for the Services will be created to put the Services viewpoint to the tribunal. The former Government had more than adequate scope and time with which to do that. This will ensure that there will be no easy way out of pay rises. That is all one could expect, I suppose, from a party which even now, in Opposition, is doing all it can to undermine Service morale. There are difficult decisions to be made in the defence area, and we will face them. For instance, the former Government could not make the decision not to buy the carrier despite advice to that effect from the highest level of defence advisers in the Services and in the Department. It delayed taking the matter to Cabinet despite having this advice to hand, and now that this Government has accepted this body of professional advice, the Opposition misrepresents it on every occasion. Honourable members opposite stand indicted for what they are.

Mr Spender —Not true.

Mr JACOBI —It is true. The Opposition ignores the firm commitment of the Defence Minister (Mr Scholes) and the Prime Minister (Mr Hawke) to an anti-submarine warfare carrier alone and their stern warnings that the Harrier aircraft are far in the future if indeed they will ever be acquired. Mr Killen decided that the fixed wing of the Fleet Air Arm would no longer be needed but to hear the Opposition now, with all due deference, one would think they were offering us the USS Nimitz.

I conclude on this note: This Government is not interested in cheap tricks and conspicuous pieces of equipment to grab some free publicity. We are interested in making the Defence Forces effective and efficient and equipped with weapons and back-up items which will ensure the future security of Australia. Unlike our predecessors we are not afraid to say to the people that an aircraft carrier is not needed. The people recognise the truth of what we have said. Our opponents held out false hopes to those who wanted the ship. They waited until after the election until they really made a decision on the matter. By dropping the carrier, we have saved precious resources in the five-year defence program which can now be allocated to things that really matter, such as the new submarine and follow-on destroyer, minehunters, the F18 fighter project and the Jindalee radar project. We ought not forget that it was the Whitlam Labor Government in 1974 that authorised the first early experiments on this project, which promises to give Australia an unmatched long range surveillance system. The Government supports the middle way. We do not support foolish isolationism, neutrality or subservience to anybody. This is the only policy for Australia. I believe that it is the only firm policy for the Labor Government, and it will institute it.