Marcus Hellyer provides a measured and considered analysis of the spending and force structure proposals associated with Australia’s 2020 Defence Strategic Update and 2020 Force Structure Plan. The article considers the proposed funding model, tests the connections between the strategic drivers identified and the capabilities proposed for acquisition, and identifies some of the risks that could affect the successful delivery of the proposed capabilities.
Author: Marcus Hellyer | ASPI Strategist | 12 Aug 2020
Hellyer notes that the proposed growth in spending on which the ‘funding model’ is based ‘continues the pattern of the 2016 white paper’ with the capital component expected to grow to 40% of the total Defence budget. ‘By the end of the decade, if that planned increase is achieved, the acquisition component of the budget will have grown by 148%.’
That said, the article canvasses some of the risks associated with ‘the design of the plan itself and in delivering it’, asking the questions:
- Is this the right force for Australia’s deteriorating circumstances? ‘Despite the recognition that Australia can’t rely on warning time, much of the planned force is still a long way off.’
- Will the envisaged force be able to do all the tasks expected of it? ‘The force envisaged is growing increasingly broad, with many new capabilities in the plan… but virtually none are being retired or cancelled…and the range of tasks that the force is being asked to do isn’t being reduced.’
- Why is the force ‘still largely being built around traditional, conventional capabilities such as expensive, multirole, manned platforms’? If Australia ‘can’t match major-power adversaries and [therefore] need[s] to develop capabilities to deter them through strike, cyber and area-denial systems’, shouldn’t the proposed force reflect ‘the need for asymmetric operational concepts and capabilities’?
- Is the proposed balance between acquisition, sustainment and personnel funding right? ‘Acquisition’s share of the budget is growing rapidly. Personnel’s share is also growing but more slowly, and will decline as a percentage of the overall budget. Certainly, increased capital spending is necessary, but is a 40% acquisition/26% personnel balance feasible in the long term? There’s no point acquiring equipment you can’t crew.’
Hellyer also covers the broader risks which could affect the feasibility of delivery of the Plan’s proposed capabilities:
- Sustaining successive governments’ commmitment to higher levels of Defence spending. ‘[I]t’s going to take sustained resolve by this and future governments to keep increasing defence funding over the decade. Should that resolve waver and a government revert to something like 2% of GDP, that would be a huge hit to the defence budget of potentially $5–10 billion per year.’
- The affordability of acquiring and sustaining the force. ‘The defence budget is growing substantially, but so is the list of capabilities Defence is acquiring and sustaining. Moreover, the acquisition cost of military capabilities grows much faster than inflation… The sustainment cost of key future capabilities is likely to be several times greater in real terms than the systems they’re replacing.’
- Australian industry’s ability to scale up to deliver the force. ‘The local share of Defence’s capital equipment spend has consistently hovered around one-third of the total. Last year, that was around $2.6 billion. As the capital budget rapidly grows over the decade, local acquisition spending will have to grow to more than $7 billion per year just to maintain that one-third share.’
- The trap of preferring industrial outcomes to military capability. Slowing down construction and delivery of platforms in order to ensure continuous-build programs drives up costs and delays the delivery of capability, Hellyer suggests – an approach that is not suited to an environment where Australia ‘can no longer rely on warning time to be able to gradually adjust military capability’.
Read the full article (external link to ASPI Strategist)
Related articles by Marcus Hellyer
Is the money for Defence’s new force structure old or new? (ASPI Strategist, published 2 Jul 2020
Australia’s defence budget in the age of Covid-19: Unsustainable sustainment? (ASPI Strategist, published 23 June 2020)