Making ends meet

“The past five years have been nothing less than a series of significant financial setbacks for Defence,” he said. “Our task is to firstly steady the ship and provide a plausible funding envelope. ” But “steadying the ship” needs to be understood as more than just a new White Paper and cuts to Defence’s civilian workforce. A first-principles reform to Defence is a daunting task, and one that is unlikely to be completely resolved in the timeframes the new government has set: 18 months to a new White Paper, at least that long for a new Defence Capability Plan, second quarter 2014 for a shipbuilding plan and up to a decade before funding returns to a figurehead level of two per cent of GDP.

For defence industry, the wait for a new White Paper could be an indication that decision paralysis in the Defence portfolio is a bipartisan ailment. What’s more, the wait for a new DCP on the back of five years of unsubstantiated funding promises may mean the small to medium enterprises that make up Australian defence industry may not survive the resource winter.

There are a plethora of capability decisions that are currently at critical: F-35s, future submarines, maritime surveillance, military vehicles and a wealth of shipbuilding projects facing labour difficulties.

Many, in fact, have surpassed their responsible decision point.

Any further delay to some of these decisions will have a significant impact on the capability options available and Australian industry’s ability to contribute to those projects.

The defence budget is traditionally divided up into thirds – operating costs, capital spending, and personnel costs. While operating costs are fairly stable, capital spending has taken a hit in the last few years.

Personnel costs, however, have risen significantly, up to around 42 per cent of the total defence budget.

Any further delay to some of these decisions will have a significant impact on the capability options available.

The mood at Russell offices is undoubtedly tense as Defence public servants look down the Abbott government’s barrel. Military members, on the other hand, have the certainty of the government’s commitment to quarantine uniform personnel from cuts. Still, it seems ridiculous to attempt significant and lasting reform to Defence resourcing and spending while segregating one-half of your main expenditure.

Defence has spent the last five years as a political yo-yo, having been sacked, razed and burned to meet the former government’s political aspirations, while maintaining the pace of overseas operations. The great hope for those of us who work in and watch the defence sector is that the next three years will go some way to rebalance the load.

In the myth, Hercules succeeded in cleaning the stables in a single day. Let’s hope Senator Johnston can clean up the “unsustainable mess” facing Defence in short order, and that the pledge to greater Defence resourcing is anything but myth. Defence, its supporting industry and peripheries need something to believe in.