The recent announcement that the government would seek a continuous ship-building program in South Australia has attracted endorsement (from Warren King) and criticism (from Nic Stuart and Hugh White among others). But in this post I’d like to say something about how governments make decisions when big pots of money are involved. Anyone who believes that those decisions are guided by a single imperative—to build a submarine, for example—needs to get with the program.
Go back and have a look at the decisions surrounding the Collins-class submarines. The government certainly wanted new submarines. But it didn’t just want that. It also wanted the bulk of the monies to be spent in Australia, solid job outcomes for Australian workers, technology transfer to Australian firms, and that favourable political outcome it believed should be the proper return on good policy-making. In short, it wanted to hit five birds with one stone. Some people even think it did manage to hit four of them—no mean feat, though perhaps an outcome not to the immediate satisfaction of those who wanted good new submarines.
The current wave of naval procurement faces similar pressures: anytime a government’s spending some tens of billions of dollars on something, it will want to achieve multiple goals from that spending. We elect governments precisely in order to take those decisions. Otherwise, we’d just let a group of strategic, defence and naval experts decide what to buy and how to buy it.
Does this mean the government can decide whatever it wants without criticism? Of course not. But it’s not an especially telling blow to criticise a government for wanting to achieve multiple objectives in relation to a major procurement program. Defence issues in general aren’t ‘above politics’. Yes, we want to get the decision ‘right’—in the sense that we want to procure effective military equipment efficiently. But we want similar effective, efficient outcomes in other portfolios—health and education, for example—and none of those is above politics.
One part of getting the decision right when five birds are involved is to make sure all of the birds are worth hitting. If we’re talking about five plump pheasants to grace Australia’s dinner table, that’s one thing. Five sparrows constitute a more meagre repast. So how do we maximise our return in relation to the money spent?
If we just wanted to inject government monies into the economy, we needn’t build ships at all. Governments could just hand out money. But we want ships and submarines to be part of the outcome—indeed, they’re the raison d’être of the program. So the costs we accept to get those ships and submarines (one of the birds) can be higher if they give us four more birds as well. But not grossly higher. Nor should we accept a submarine markedly inferior in its capabilities just to get the other four birds. The question of what’s an acceptable level of variation in cost and capability might well produce multiple answers across the electorate—though probably with less spread than some might imagine. The government ultimately has to defend its decisions before that electorate. Still, I can’t recall any Australian government being voted out of office because of poor defence procurement decisions.
So, is there a model of defence procurement that steers us through the issues to ensure an optimal outcome? Not that I know. Lauren Holland has previously written of three procurement models that turn respectively upon strategic analysis, technological momentum and political support. The five-birds option would seem to fit best in the political support model. And what’s the danger with that? Well, in Holland’s words, the principal danger is that ‘too many sets of interests must be met by a single weapons system’. For a country like Australia, which runs few major procurement programs, that’s a real hazard.
Around the world, Defence Procurement regularly finds itself the stablemate of Political Dealing. And the quality of political decision-making is mixed. The Brits slumped into an orphan Chevaline program for their nuclear forces; the US Congress regularly changes procurement to keep open industrial facilities in key districts; the Kiwis have mixed-and-matched forces to ensure they stay on good terms with a range of countries. But politicians aren’t just responsible for all the poor decisions; they’re responsible for all the good ones as well, including those taken against the advice of their public servants.
Purists might wish those decisions were taken differently. But wishes build no submarines. As Paul Keating once observed (though not in relation to his federal colleagues) it’s dangerous to stand between a politician and a bucket of money. I suspect the Australian government has now passed the point where it’s willing to focus on only one bird. We should do what we can to make sure the five birds—perhaps four birds, since voters might have an interest in responsive government but don’t have a direct interest in the government holding its marginal seats—are as plump as possible. That’s what will determine whether the decision’s a good or bad one.