A central bank concept for defence
12 Apr 2024|

Australia’s military weakness in an increasingly threatening regional environment requires that serious consideration be given to setting up a defence strategy and procurement body that operates with the same independence as the central bank. 

The board of the Reserve Bank of Australia gained independence in setting monetary policy in 1996 because the government of the day recognised that adjustment of interest rates should be free from political temptations. National defence, even more important than monetary policy, should similarly be kept at a distance from politicians who have their eyes on electoral prospects. Moreover, the country needs an organisation for defence strategy and acquisition that is more streamlined than the military establishment constituted by the Department of Defence and armed services.  

The strategy and procurement body should issue public advice on how much money should be spent on defence. Then, after the government decides on an amount, the same independent organisation should decide how the funds are spent, listening to but not taking instructions from the armed services. And it should execute programs with a leaner staff than the current procurement organisation, the department’s Capability Acquisition and Sustainment Group. 

The capability of the Australian Defence Force is inadequate for facing the rising challenge presented by China. The late senator and general Jim Molan said in 2021: We lack self-reliance in strategic industry, spare parts and reserves, and we lack resilience if things don’t immediately go our way. Even in five years, the ADF will not be strong enough, big enough nor able to fight for long enough against a peer opponent.’ 

Consider the deterioration in our circumstances, especially China’s gain in military strength in the Indo-Pacific relative to the United States. This means it is risky to rely on our traditional policy of sticking close to a great and powerful friend in the expectation that it will rescue us if we get into serious trouble. We must be ready to defend ourselves. 

But experience suggests that neither the armed services nor the defence bureaucracy is capable of the rapid changes in thinking and action that are needed. And governments are not sufficiently focused on defence, as illustrated by slowness in submarine acquisition. A process to introduce new submarines first emerged in the 2009 defence white paper but is not now expected to get even one replacement boat into the navy’s hands before 2032. 

It is inconceivable that an independent and focused panel of experts would have allowed that program to drift so long. 

In another example, a project to build missiles in Australia was announced in 2020 but won’t make anything until 2025, and then only in what looks like pilot production. Acquisition of Hunterclass frigates, meanwhile, is running years behind schedule, in part because of a confused process that the department itself has admitted to. 

If an independent strategy and acquisition body spent the defence budget, the process would be freed of such political considerations as feeding money into marginal electorates. Politicians would be deprived of opportunities to make grand acquisition announcements that they need not actually put into effect or might execute only slowly. 

For example, the former government decided to build warships at a slow but steady pace in Adelaide, and now the current government wants to do so in Perth as well. The policy ensures that shipyards provide steady employment, to the satisfaction of local votersand also that the fleet will not be expanded as quickly as it might have been with a crash building program. An independent strategy and acquisition body might well have chosen to move faster. 

Before the introduction of the 2020 defence strategic update, the defence establishment worked on the premise that Australia would have a 10-year window in which to prepare itself for a significant military threat. The situation has now changed dramatically, and we cannot continue with the processes and organisations that have repeatedly delivered mediocre performance or outright failure. A radical overhaul of the system is needed.