Reader response: defence is not an insurance problem

I want to decline Paul Monk’s offer to see Australian defence policy as an insurance policy. I think there are three good reasons for doing so.

The first has to do with the nature of military force. An insurance policy pays out only if disaster strikes; otherwise the ‘premium’ is essentially a donation to the insurance company’s profits. But an extant military capability pays out even in peacetime. Indeed, the best theorists of the use of force—people like Robert Art, for example—will tell you that force is principally used gravitationally rather than directly. That is to say, it is used more as a ‘shaper’ of events, than as an instrument of conflict. It ‘pays out’ every day, exactly the way nuclear weapons did during the Cold War, for example.

The second has to do with methodological utility. I honestly don’t see the gain in seeing defence as an insurance policy. Paul’s second paragraph suggests that the 2009 Defence White Paper was wrong to see China as a threat and to devise a future ADF around that perception. But why couldn’t the authors of that White Paper just say they were taking out insurance against a rising China? They might fairly describe their efforts in just such a fashion. So how does seeing defence as ‘insurance’ help? How does it give us better outcomes? Read more

Reader response: white papers and self-sufficiency

There’s one consistent thread to Australian Defence White Papers that didn’t really come out in Peter Jennings’ article—the notion of self-reliance. Of course, we didn’t come to that notion by accident—it was pretty much forced onto us through the British policy of no commitments east of the Suez and the 1969 United States ‘Guam Doctrine’, leaving us little option but to be prepared to act alone.  But it’s been a consistent message in Australian strategic policy since 1972:

1972 – self-reliance in situations of less than global or major international concern,

1976 – face a range of other situations that we should expect to handle more independently,

1987 – defend ourselves with our own resources,

1994 – defend our country without depending on help from other countries combat forces,

2000 – defend Australia without relying on the combat forces of other countries, and

2009 – manage strategic risk.

One of the things that comes with a well-developed sense of self-reliance is the notion of being a ‘middle power’. In the context of the US alliance, then PM Rudd was at pains to tell the Brookings Institute in 2008 that we have the world’s 15th largest economy with the 11th largest military budget. But there’s more to it than those bare numbers and the notion of middle power is elusive; the common theme associated with traditional major powers has been their nuclear status and/or power projection capability. By relying on the United States deterrence umbrella rather than pursuing any nuclear ambitions and lacking a strong expeditionary capability, the notion of Australia as a middle power seems somewhat presumptuous—which begs the question as to what the White Paper discussions of self-reliance actually mean.

Lieutenant Colonel Scott Tatnell is a serving member of the Australian Defence Force.

Graph of the week: In defence of defence cuts

If, as the saying has it, the exchange rate between words and pictures really is 1000 to 1, that’s too good a deal to pass up. Each week The Strategist will bring you some graphs that tell a story of their own. The first one:

In defence of defence cuts

Given the outcry at the news that this year’s defence budget was the lowest proportion of GDP since 1938, you’d be forgiven for thinking that Australia was wide open to military exploitation.

In the interest of perspective, here’s a graph (click to enlarge) that shows Australia’s spending on defence compared to the five biggest spending ASEAN countries (Source: DIO Defence economic trends in the Asia-Pacific 2011). Australia is spending nearly as much as the five put together—and has been doing so for over a decade. That buys a lot of extra military capability.

Graph showing proportion of defence spending for Southeast Asia

To head off the objection that the real ‘future adversary’ is somewhat further north than the ASEAN five, here’s the same graph (click to enlarge) for defence spending of the major players in North Asian security (Source: DIO Defence economic trends in the Asia-Pacific 2011). If the ANZUS Treaty is all it’s cracked up to be, there’s not too much to worry about.

Graph showing proportion of total defence spending in North Asia

Of course, the 2013 Defence White Paper has to worry about the future, not the past, and the trends there are not quite so reassuring from a western military muscle point of view. And, as Mark Thomson and I argued previously, local challenges to established powers become credible long before global ones. But it’s taking a long bow to suggest that a one year downturn in Australian defence spending is a national security catastrophe.

Andrew Davies is senior analyst for defence capability at ASPI and executive editor of The Strategist.

Think of insurance rather than threat

When the subject of defence spending surfaces in public debate, there are inevitable and regrettable exchanges about whether Australia faces a ‘threat’ that justifies the expenditure. This is understandable, given the psychology of warfare, but unfortunate from the point of view of clear thinking about defence spending and the purposes for which sophisticated and expensive platforms are usually purchased. Public debate would be raised to a more responsible and constructive level if, instead of focusing on ‘threats’, we thought in terms of insurance cover and premiums.

Discussion of ‘threats’ (of coercion or intrusion) easily becomes distracted by hyperbole at one extreme and lazy scepticism at the other. We’re currently having, for example, a debate about whether China represents a ‘threat’. The 2009 White Paper suggested that its authors believed China to be a looming threat and that we should beef up our armed forces accordingly. The new White Paper would do better to cast national security thinking in terms of insurance policies. This might encourage analytical thinking about what kinds of insurance the country would be wise to take out and what level of premium it would need to invest in order to have good insurance cover. The question of whether or how health insurance should be funded is a huge one across the Western world in our time and not a bad analogy for thinking about national security, since both are becoming increasingly unaffordable given long standing assumptions. Read more

Guns or butter?

How much money can Australia afford to spend on defence in the long-term? The conventional wisdom is that Australia faces daunting fiscal pressures in the decades ahead due to its ageing population and the rising cost of health care and other social services. As argued in successive Intergenerational Reports produced by the Treasury, on current policy settings Australia will slip into steadily increasing deficits around 2030 (see below, click to enlarge).

Projections of federal budget surplus or deficit as percentage of GDP from 2009 to 2049It looks dire, but it’s actually a very poor argument for constraining defence spending. To start with, Treasury’s modelling is based on the arbitrary assumption that federal tax revenues will remain a fixed percentage of GDP. The reality is that Australia’s tax-to-GDP ratio including all levels of government (which is what matters economically) of 27.1% is low by international standards (source: OECD tax database). In fact, in 1965 Australia’s tax-to-GDP ratio was just below 21% but it has risen roughly in tandem with the growth of our economy since then. It would not be an economic catastrophe if taxes were to rise, especially if we adopted reforms that made our tax system more efficient. Read more

The uses and abuses of defence white papers

Defence white papers are usually hailed as definitive statements of policy, and we can expect the 2013 one to be no exception. The phrase has an air of the laboratory about it—of boffins toiling to frame the unimpeachable results of evidence-based policymaking.

The idea of white papers as policy icons was never more on display than in the 2009 version. Nostalgia buffs can review the 83 media statements released on 2 May that year, where we were told the document was ‘the most comprehensive statement on defence ever produced’.

The reality is a bit different. White papers are political documents, produced for and owned (at least temporarily) by governments and designed for purposes beyond detailing high-minded policy. The impetus to produce them has often been the unwelcome arrival of a strategic shock, and they’re most commonly abandoned after a change of Prime Minister.

The 1976 white paper modestly started a journey to that elusive goal of ‘defence self-reliance’. It was a reaction to the Vietnam rout a year earlier and the knowledge that we’d need to do more to look after our own security. The paper’s spending projections were overturned in 1980 when a spooked Fraser government promised to boost spending after the Soviet invasion of Afghanistan—a promise that never materialised. Read more

Welcome to The Strategist

Over the past 11 years, ASPI has been proud to produce fresh ideas and analysis on Australia’s most important long-term strategic and defence issues.

ASPI’s well-established publication lines have served us well, and we’ll continue to produce a range of quality long form publications. But, like the rest of the publishing world, our audience is increasingly looking for new ways to access our products. We’re already on Twitter and Facebook, and they are opportunities for a greater two-way dialogue than ASPI has had in the past, as well as a way to promote collegiality amongst the wider strategy and defence community.

Building on that foundation, we’re pleased to welcome you to our new blog, The Strategist. With input from ASPI researchers and contributors from around the world, The Strategist will host material to stimulate thinking and discussion about the critical strategic choices which our country will face over the coming years.

You’ll find shorter items here than in our ongoing lines, but there’ll be the same mix of informed opinion and qualitative and quantitative analysis for which we are known, including commentary and discussion, graphs, maps and book reviews.

The biggest game in town, at least as far as defence and strategy is concerned, is the planning and development of the 2013 Defence White Paper. We hope that The Strategist will be the ‘go to’ place for discussion of the White Paper and how it will tackle Australia’s security challenges in the Asian Century.

Our blog editorial team is the Executive Editor, Dr Andrew Davies, senior analyst specialising in defence capability, and Editor, Natalie Sambhi, analyst, the newest member of ASPI’s staff.

We hope you enjoy reading our blog as much as we enjoy putting it together. Of course, we’re open to input from our readership—over time we’re confident that The Strategist will present a wide range of views and perspectives.