• Will defence spending be the vaccine to wider economy that Australia needs?
Getty Images
    Will defence spending be the vaccine to wider economy that Australia needs? Getty Images

As reported yesterday, Defence has done well from the Budget this year. The headline figures are healthy and will continue to be so over the forward estimates period. Indeed, they have to be if the July 2020 Force Structure Review (FSR) is to be delivered. Even with a high level of expected over programming in both the FSR and forward estimates, the Department’s biggest problem will be getting the money out the door fast enough. Not a bad problem to have in the current environment but even good problems are still problems.

I would urge readers to have a closer look at both the Top 30 acquisition and sustainment programs in the Portfolio Budget Statements (PBS), pages 113 and 123 respectively. The progress of these programs will make or break how Defence performs as a whole on the capability front. Both these lists do not include any of the major ICT or infrastructure programs that Defence has on the books. Given that they are key enablers to what Defence is trying to achieve, their omission is glaring.

Once again, the PBS is also the best public source of program names and numbers with their dollar values. Where for art thou publicly updated Integrated Investment Program (IIP)? 

Once again, Defence is running with rivers of gold, and will struggle to get money out the door fast enough to deliver on the ambitious plans set by government. The policy document update of July this year has been funded to the hilt and beyond. But the government has also hit a trillion dollars in debt this year. This is a level of debt not previously seen in our nation.

It does pay, however, to remember that Australia as a nation has traditionally held a large amount of government debt since federation. Reforms of the 1980s and 1990s saw much of this this national debt move from government to households, a trend not seen in many other comparable OECD nations.

The political pot of gold at the end of the rainbow of a surplus equating to good financial governance is mythical at best and anything can be truthful when numbers are portrayed in different contexts.

COVID led spending will echo for decades to come as well. How long and deep these affects will linger remains to be seen. It has also provided the opportunity to refocus on how businesses operate and why they do what they do. Some businesses have gone through a decade worth of IT upgrades to enable remote working in months rather than years. 

Defence has some mega programs on the books that will take up a significant chunk of funding for acquisition and then sustainment for generations; think JSF, Land 400 vehicles and the Attack and Hunter classes.

Once again, these big sexy platforms are at the centre of a lot of planning. It is good to see a range of enabling programs and technologies like space and cyber alongside a R&D focus also coming to the fore not just in policy but also in dollars. The raft of reforms that have been coming out of government in 2020 is to be expected. The First Principles Review (FPR) has been out for five years now; the moratorium on reviews and reforms is well and truly done despite implementation from the last set of reforms still percolating through the organisation.

The Budget also had a focus on vaccines in the COVID era that now defines so much of our lives. I draw the comparison that Defence spending is being used as an economic vaccine for the nation; a chance to grow and invest and also protect what is already in place. As to how long and how effective the vaccine is remains to be seen.

comments powered by Disqus