Defence White Paper 2016: from page to photo op (part 2)
20 Apr 2016|

In part one I explained how money and organisational issues could affect the implementation of the Defence White Paper in the near term. But even if Defence’s internal arrangements were ticking over smoothly, there’ll be a handbrake on project approvals for months to come due to the looming federal election. Even if the Turnbull government is returned, there’s invariably a hiatus in project approvals that extends either side of the formal caretaker period. A change of government would be more disruptive (and we’d have yet another new Defence Minister).

Both major parties were supportive of the DWP’s major themes and force structure proposals. But an election campaign (formal or ersatz) is an environment in which factors other than the efficient acquisition of defence capability could become decisive. There’s a tendency for defence industry policy to become a proxy national industry policy in any case, and the politics of South Australia in particular has already affected naval projects. The ambitious aim of cutting steel on the Offshore Patrol Vessels in 2018 and the Future Frigates in 2020 to lessen the impact of the ‘valley of death’ in the shipyards will mean that Navy’s requirements and the designs will have to be locked down in the next year or two. That’s a big ask. If we rush, we’ll likely pay the price later.

And politics might limit government’s options when decisions come along. For example, the three bidders in the Competitive Evaluation Process for the future submarines have provided data for an all-local build and a ‘hybrid’ build (some boats built offshore, the rest here). Even if the latter was to offer advantages in cost or schedule, the forthcoming election campaign will likely demand a commitment to an entirely local build regardless.

It’s understandable that political parties will try to get secondary benefits (and photo ops) from defence expenditure, but the additional costs of inefficient procurement can be substantial. The national benefits are also small, due to the small size of the defence industrial sector. For example, compare a projected 2,500 shipyard jobs to the nearly 12 million people in the national labour force.

At least the scale of DWP 2016 spending might be within the capacity of local industry to deliver, as the end of the mining boom has freed up resources. The dollar is lower than it was during the mining boom, which will help reduce the cost of local work relative to overseas labour. But given the developmental nature of many of the biggest projects, schedules are likely to be a problem even if costs aren’t. The most successful big ticket projects in the past fifteen years in terms of cost and schedule performance have been off-the-shelf purchases.

Finally, even if everything the government or industry has a degree of control over runs perfectly, externalities can intervene, for better or worse. DWP 2000 didn’t foresee negative events such as 9/11 and the subsequent wars in Afghanistan and Iraq. Likewise, it didn’t take as rosy a view of Indonesia’s trajectory as turned out to be the case immediately after the East Timor intervention.

DWP 2000 also made some calls on technology that were sound enough at the time but wouldn’t be what we’d do today if we started from scratch. An example of that is the CEA active phased array radar on the upgraded Anzac frigates, compared to the passive phased array AN/SPY-1 radar on the air warfare destroyers. While the latter will give service for years to come, active phased array is the future. New technologies will continue to emerge, and we might or might not be able to incorporate them into our plans.

Lest this all sound too gloomy, we should note that, despite all of the problems in procurement over the past 16 years and the setbacks that were the false promises and reduced defence budgets of the 2009 and 2013 White Papers, the ADF today is considerably more capable than it was when DWP 2000 was released. The Air Force has Super Hornets and Growlers to augment the classic Hornets, and the C-17 fleet gives an unprecedented global airlift capability. Navy’s Anzac frigates are probably the most capable vessels of their size anywhere, and the LHDs and HMAS Choules are C-17s of the sea. Army is larger, more mobile and better protected than it was before.

In all likelihood, the ADF of 2030 and beyond will be considerably more capable than today’s incarnation. Not all of the acquisitions proposed in the DWP will happen, and some things that aren’t in there will happen. We’ll get some of the project plans wrong, and some of the acquisition processes will go astray. Eventually most of the problems will be sorted out, with varying degrees of efficiency. But a more capable ADF shouldn’t be our only goal; any inefficiency has an opportunity cost to the Australian people.