29 February 2016
by Andrew Davies

Defence white paper: Follow the money to figure out the policy

Prime Minister Malcolm Turnbull and Defence Minister Marise Payne at the launch of the white paper designed to build a defence of Australia "based in south-east Asia and the Pacific".

There's a minor industry among academics who parse the bureaucratically stiff sentences in Defence white papers looking for indications of exactly how the government thinks about various issues. I prefer to follow the advice of Sir Arthur Tange, the father of the modern defence bureaucracy, who said "if you're not talking dollars, you're not talking policy". So to see what the story of the White Paper is, we need to follow the money.

When we do, the first point is that there's lots of it. Given the ever-more-pessimistic projections of future revenue, the government must have been tempted to back away from the 2 per cent of GDP spending promise made by the Abbott government. But it has stuck to the promise, and the resulting $30 billion boost across the next decade provides for an expansion of defence capability almost across the board. In fact, the funding profile in this white paper shows that the 2 per cent of GDP will be reached in 2020-21, three years earlier than the Abbott promise.

That's not the good news it seems to be (assuming you think that Defence spending is good news). The Turnbull government isn't stumping up more cash. Instead, it's a reflection that Treasury's GDP projections are lower now than when the Abbott government was doing the sums: we'll all be less well off in the early 2020s than previously thought, except that Defence is getting a larger share of a smaller pie.

That all goes to show that the 2 per cent figure, which has been something of a talisman for defence spending for the past few years, actually makes no sense. It'd be better to see a defence force designed around strategic goals rather than to an arbitrary spending figure. But for now that's what we have, so let's see what the spending priorities show us about the government's thinking.

Overall, the extra money will see a modest expansion in the size of the Australian Defence Force, including 2500 or so new military positions on top of present plans. But it will also fund a significant increase in the capability of the forces. The next generation of ships, submarines, aircraft and vehicles will be more sophisticated (so more expensive) than their predecessors. The headline big ticket items are the ships and submarines. Navy's nine new frigates and 12 new submarines top the price list at a combined cost of over $80 billion for design and construction, and probably half as much again for operation over the next four or five decades. That's a lot of money by anyone's standard, and it shows that the government is thinking hard about maritime security.

We don't have to look far for an explanation. As is the nature of official documents, the white paper is mostly measured in its discussion of other countries. To a greater extent than its predecessors, it singles China out for criticism, implicitly through a large number of references to growing Chinese military power and then explicitly when discussing tensions in the South China Sea: "Australia is particularly concerned by the unprecedented pace and scale of China's land reclamation activities".

The white paper's increase in capability and capacity will allow the ADF to do more of everything it currently does, and to do it in more challenging environments. But the maritime contest developing in the South China Sea is probably the best indicator of where Australia sees its interests most seriously under challenge. (The strongest competition for that title would come from cybersecurity, also a big recipient of new funding.) Simply put, the United States-led security order we've been comfortable within our part of the world is coming under serious challenge for the first time in decades. China is flexing its muscles and shoving its way towards the head of the pack.

While it's a cliché that appears in every analysis of Asia-Pacific security, China is our largest trading partner, so Australia could reasonably opt to tread carefully for fear of upsetting Beijing (as the white paper has). Instead, the white paper nailed our colours firmly to the mast – we're on the side of the established order and are prepared to muscle up to help defend it.

Most of the new equipment flagged in the White Paper will plug seamlessly into American coalition operations – as the RAAF has already demonstrated over Iraq and Syria – setting us up to be able to reinforce and support any American forces in the region.

It remains to be seen who Australia will partner with to build the future submarines, but Japan is still a strong contender. And the white paper is positive towards Japan in many ways, often singling it out for special mention alongside the United States as an important security partner. Japan is the most capable US ally in the Asia-Pacific region, so it makes good sense for us to look for them to take a bigger role in regional security, but that won't please Beijing. All in all, Thursday's white paper is a strong indicator that Australia has made its "China choice" – and come down on the side of the United States and the security model it promotes.