Defence Force is receiving less ‘core funding’, new budget analysis suggests
ASPI’s Jennifer Parker describes key findings of the latest ASPI Defence Budget Brief to the ABC News.
Impactful mateship: Strengthening the US–Australia defence relationship through enhanced mutual understanding
AUKUS, and the Australian Government’s release of the 2023 report of the Defence Strategic Review (DSR), reinforce to Canberra and Washington DC that there’s an urgent need to continue strengthening the US–Australia alliance. Those efforts underpin allied cooperation within the Indo-Pacific, which is an increasingly complex security environment.
This report highlights 9 opportunities for both US and Australian defence decision-makers at a vital time in the relationship as it develops in complexity and builds towards the ambitions of AUKUS over the coming decade.
A series of ‘quick wins’ for the US DoD are recommended, including arranging more training for inbound DoD personnel and conducting allied-centric training for relevant US-based action officers and planners at US headquarters. US DoD Funding should be provided for US action officers to visit Australia to build rapport with their counterparts and facilitate appreciation for the relationship in person. Broadly, US professional military education at every level should incorporate Australian Defence-centric views when appropriate, and the DoD can better leverage its US liaison network throughout Australia earlier in planning and when considering new initiatives.
Recommended quick wins for Australian Defence to include further leveraging of US-based Australian Defence personnel and encouraging greater transparency with US counterparts regarding capacity. Enhanced transparency would provide maximum clarity on capacity challenges at all echelons, especially regarding the potential impacts of a future crisis within the Indo-Pacific. It’s also recommended that Australian Defence provide greater clarity regarding sovereignty and security concerns for the US DoD.
Finally, this report also makes a major long-term recommendation that will require more resourcing, coordination and focus from US and Australian defence decision-makers, and that’s to establish and empower a US Forces Australia headquarters (USFOR-A) to synergise US DoD efforts with the Australian defence establishment. It’s inevitable that the US–Australia defence relationship will grow in scope and complexity. That will quickly outgrow and challenge the current coordination structure, which was built and implemented decades ago. This report also notes that there are lessons to be learned from the US–Japan bilateral coordination mechanisms, especially in the light of the US–Japan–Australia defence relationship, as it is set to grow in importance in the coming years.
Smooth sailing? Australia, New Zealand and the United States partnering in–and with–the Pacific islands
Australia, New Zealand and the United States should help create an ASEAN-style forum for Pacific island nations to discuss security and manage geopolitical challenges.
The call for a dialogue, modelled on the ASEAN regional forum, is one of several recommendations to improve security partnerships and coordination in the region, reducing the risk that the three countries trip over one another and lose sight of the Pacific’s own priorities as they deepen their Pacific ties out of strategic necessity amid China’s growing interest.
While focussing on those three countries, this report stresses that wider partnerships should be considered, including with France, India, Japan, South Korea, the United Kingdom and European Union.
The report states that the three countries will have to get used to greater Chinese involvement in the Pacific, even if they don’t accept it, much less like it.
Ukraine claims to have shot down Russian hypersonic missiles
ASPI’s Jennifer Parker on ABC News Radio: To the war in Ukraine now, where Kyiv says its shot down six of Russia’s highly feared hypersonic missiles. Moscow has boasted its, so-called ‘Khinzhal’ or ‘dagger’ missiles are all-but-unstoppable.
Featured:
Jennifer Parker, Deputy Director of Defense within the Defense Strategy and National Security branch at Australian Strategic Policy Institute
Volodymyr Zelenskyy, Ukrainian President
Igor Konashenkov, Russian Defence ministry spokesman
Escalation risks in the Indo-Pacific: A review for practitioners
The outbreak of war in the Indo-Pacific is a real possibility. Increased competition, a growing trust deficit between global and regional powers and potential miscalculations heighten the risk. There needs to be a more engaged Australian discussion on conflict-escalation risks and how they might be managed.
Policymakers and leaders need to understand escalation risks as they manage Australia’s relationship with the US, China, North Korea and Australia’s key regional defence partners over coming decades. In rhetoric and in action, Australia also needs to be attentive to how the acquisition and employment of our own new capabilities—strike missiles, evolving cyber capabilities and nuclear-propelled submarines—affect strategic stability dynamics in a fast-changing world.
Multiple factors mean that there are all-too-imaginable possibilities for inadvertent and accidental escalation around flashpoints like the Korean peninsula, Taiwan, and in the East and South China Seas. Moreover, the maritime nature of the Western Pacific as a military theatre, combined with emerging technologies like hypersonics, means that decision makers could face very strong pressures toward pre-emption in a crisis. Put more simply, the fear-driven pressure to ‘shoot first’ could be very strong and very dangerous.
Managing these risks has clearly been made a priority by the Australian government – with senior ministers frequently talking about ‘guardrails’ – and the report suggests some options for doing so.
Be’er Sheva Dialogue 2022 – Proceedings and Outcomes
The Eighth annual Be’er Sheva Dialogue was held in Canberra on 21 November 2022. We kindly thank the Australia Israel Jewish Affairs Council (AIJAC), the Pratt Foundation and the Embassy of Israel in Australia for their support and partnership in the development of this year’s Dialogue.
The Dialogue is named in honour of the Battle of Beersheba (1917), with the 2022 Dialogue marking the 105th anniversary of the battle. Since its inception in 2015, the Dialogue has brought together defence officials, senior parliamentarians and analysts from both Australia and Israel to discuss areas of shared strategic interests and challenges, as well as the potential for collaboration.
Discussions during the Dialogue affirmed the significant potential for growth in the security relationship, especially military to military cooperation and sharing experiences and perspectives of defence industry. A recurring message during the Dialogue was that Israel’s experience with respect to sovereign development of defence and security capabilities and enhancement of weapon systems could be a valuable one for Australia to learn. This was highlighted by the Deputy Prime Minister and Defence Minister the Hon Richard Marles MP in opening the Dialogue:
Australia looks to Israel as an example of a nation which has been a leader in defence strategic thinking—be it in regard to its defence industry capabilities (and the innovation system, economy and workforce built around that) or in regard to its deep cultural relationship with science and technology. As we look forward, we need to think about how we can continue to deepen our bilateral relationship, which also extends to the relationship between our militaries and defence industries.
v
The Be’er Sheva Dialogue remains an invaluable forum for having these candid and constructive debates.
We look forward to the 2023 Be’er Sheva Dialogue in Israel.
‘Impactful projection’: long-range strike options for Australia
Executive Summary
The Australian Government has stated that the ADF requires greater long-range strike capability. This was first stated by the previous government in its 2020 Defence Strategic Update (DSU), which emphasised the need for ‘self-reliant deterrent effects’. The present government has endorsed that assessment: Deputy Prime Minister and Defence Minister Richard Marles has stated that ‘the ADF must augment its self-reliance to deploy and deliver combat power through impactful materiel and enhanced strike capability—including over longer distances.’ He’s coined the term ‘impactful projection’ to describe the intended effect of this capability, which is to place ‘a very large question mark in the adversary’s mind.’
The term may be new, but the concept is not. To us, it’s a restating of the concept of deterrence by denial; that is, having sufficiently robust capabilities to convince an adversary that the cost of acting militarily against us isn’t worth any gains that might be made.
But the need for the ADF to have those kinds of capabilities has become much more urgent. As the 2020 DSU noted, we no longer have 10 years of warning time of conventional conflict involving Australia. Moreover, this is not just the prospect of conflict far from Australia’s shores. People’s Liberation Army (PLA) force-projection capabilities have grown dramatically in the past two decades and include long-range conventional ballistic missiles, bombers and advanced surface combatants that have already transited through Australian waters.
The ‘worst case’ scenario for Australia’s military strategy has always been the prospect of an adversary establishing a presence in our near region from which it can target Australia or isolate us from our partners and allies. PLA strike capabilities in the archipelago to our north or the Southwest Pacific, whether on ships and submarines or land-based missiles and aircraft, would be that worst case. That could occur as China sought to ‘horizontally escalate’ a conflict with the US to stretch its military resources. So, an enhanced ADF long-range strike capability is not primarily about a conflict off Taiwan or in the South China Sea.
Unfortunately, the ADF’s strike cupboard is rather bare. Defence is acquiring more modern maritime strike and land-attack missiles for its existing platforms. But, even if equipped with better weapons, strike systems built around fighter planes or surface combatants are unlikely to have the ‘affordable mass’ or range needed to deter or defeat a major power’s attempts to project force against Australia.
There’s no doubt that the Defence Strategic Review (DSR) commissioned by the Albanese government is considering new strike options. According to the review’s terms of reference, those capabilities need to be delivered by 2032–33. In this report, we consider options to increase the ADF’s strike power in that time frame.
We start with the US Air Force’s B-21 Raider bomber, which was recently rolled out in California. The B-21 has become a topical issue here but so far there’s been little reliable information to inform the public discussion. This report is a first step in investigating the public data that is currently available on the B-21, while also analysing the B-21’s suitability for Australia’s needs.
As an extremely stealthy bomber that can deliver large amounts of ordnance across our near region, the B-21 is the ‘gold standard’ in strike capability. It could potentially be delivered by 2032–33. But that capability comes at great cost. We estimate the total acquisition cost for a squadron of 12 aircraft to be in the order of $25–28 billion and have a sustainment cost that would put it among the ADF’s most expensive current capabilities (but be significantly less than nuclear-powered submarines).
But that cost is potentially offset by a number of factors. A single B-21 can deliver the same effect as many F-35As. Moreover, B-21s would not require the ‘overhead’ of supporting capabilities such as air-to-air refuellers when operating in our region. Moreover, the B-21 can prosecute targets from secure air bases in Australia’s south, where it has access to workforce, fuel and munitions.
Of course, there are other options for long-range strike. These have their own constellations of cost, capability and risk. Long-range missiles, including hypersonics, have also received much recent attention. But they may be deceptively expensive; the further we want a missile to fly, the more expensive it is, and none of its exquisite components are reusable. Moreover, history suggests that very large numbers of missiles will be needed to defeat an adversary—more than we’re ever likely to be able to afford or stockpile.
Any assessment of capability options needs to be informed by robust cost–benefit analysis. The B-21 certainly has a high sticker price, but if, by virtue of its stealth, it can employ cheaper, short-range weapons, then in the long run it may be more affordable and deliver greater effects than long-range missiles alone. It was analysis of this kind that persuaded the USAF to go down the path of a new bomber. Of course, such exercises are assumption-rich activities, and all assumptions need to be rigorously tested; what’s valid for the US might not be for Australia.
Then there are several options that fall under the heading of the ‘Goldilocks’ bomber: a strike system that doesn’t have the eye-watering cost of the B-21 but still delivers a meaningful capability enhancement. One option is provided by ‘palletised munitions’ dropped from military cargo aircraft. There are two attributes of this approach that have appeal in Australia’s circumstances. The first is that many of the components, such as the missiles and aircraft, are already in ADF inventory or are being acquired. The second is that airlifters can operate from the short and unprepared airfields found in our region. More strike aircraft operating from more locations enhances the survivability of our strike system and complicates the adversary’s operating picture.
Another Goldilocks approach is potentially provided by autonomous, uncrewed systems. They will still need to be large to provide the range needed for impactful projection. However, it’s possible to discern what the solution could look like; for example, a larger version of the Ghost Bat that can deliver ordnance across our near region. At some point, the future of strike will involve larger crewed and uncrewed systems supported by large numbers of ‘the small, the smart and the many’—cheap, disposable systems that Australian industry can responsively produce in mass. The key question is: can that be done within the DSR’s 2032–33 target time frame?
There is potentially a way for Australia to have its cake and eat it too: by hosting USAF B-21s. Under the Enhanced Air Cooperation stream of the US Force Posture Initiative, USAF B-1, B-2 and B-52 aircraft visit northern Australia. In future, having our major ally rotate B-21s through northern Australia could obviate the requirement for Australia to have this kind of long-range strike capability in its own order of battle. Ultimately, the issue comes down to how much independent, sovereign strike capability the Australian Government requires. And any sovereign Australian capability adds to the overall alliance pool, which is the core concept underpinning AUKUS.
This report also examines some of the main arguments against the B-21. While all of them need to be considered seriously, we would also note that the world has changed. The September 2021 AUKUS announcement under which Australia will acquire a nuclear-powered submarine capability demonstrates that. Things that were previously inconceivable are now happening, so we shouldn’t dismiss the B-21 out of hand. Our recommendation is that the Australian Government should engage with the US Government to gain access to the information on the B-21 program so they can make an informed decision on its viability for Australia.
This analysis will form part of wider ASPI program of work looking at the strategic and capability questions that Australia is grappling with, including deterrence and long-range strike.
‘With a little help from my friends’: Capitalising on opportunity at AUSMIN 2022
The annual Australia-US Ministerial Consultations have been the primary forum for bilateral engagement since 1985. The Australian Minister for Defence and Minister for Foreign Affairs will meet with their American counterparts in Washington in 2022, in the 71st year of the alliance, and it’s arguably never been so important.
The Australian Strategic Policy Institute is proud to release ‘With a little help from my friends’: Capitalising on opportunity at AUSMIN 2022, a report featuring chapters from our defence, cyber and foreign policy experts to inform and guide the Australian approach to the 2022 AUSMIN consultations.
In this report, ASPI harnesses its broad and deep policy expertise to provide AUSMIN’s principals with tangible policy recommendations to take to the US. The following chapters describe Australia’s most pressing strategic challenges. The authors offer policy recommendations for enhancing Australian and US collaboration to promote security and economic prosperity.
The collection of essays covers topics and challenges that the US and Australia must tackle together: defence capability, foreign affairs, climate change, foreign interference, rare earths, cyber, technology, the Pacific, space, integrated deterrence and coercive diplomacy. In each instance, there are opportunities for concrete, practical policy steps to ensure cohesion and stability.”
The cost of Defence ASPI defence budget brief October 2022-2023
Executive summary
Shortly before the recent election, the previous government released a defence budget that continued its record of delivering the funding it promised in the 2016 Defence White Paper (DWP) and subsequent 2020 Defence Strategic Update (DSU).
The Albanese government’s first budget was not designed to focus on Australia’s security situation or defence spending. Tasked with sharing Australia’s difficult economic situation with the Australian public, the budget has more immediate fish to fry.
For those Australians who want to see increased defence spending, this was not going to be that budget as it would have directly undercut existing defence reviews due within months. Certainly, the Prime Minister has stated that the government will do whatever is necessary to ensure Australia has the defence force it needs in these strategically uncertain times.
But this budget gives no indication of how much the government is willing to spend to do that. With the Defence Strategic Review (DSR) under Stephen Smith and Angus Houston conducting its work and not due to report until March next year, the government has stuck with the existing funding line it inherited from its predecessor. That’s an artefact of the 2016 Defence White Paper—a document developed in a different era and quickly overtaken by events.
So Defence is in a holding pattern while the government keeps its powder dry and waits for Smith and Houston (noting their interim report has recently been handed to the government). No doubt it has had conversations with the DSR leads indicating its comfort zone for additional spending, but that hasn’t been made public.
What we can say from the information set out in this budget is that any increase to defence spending will require difficult reprioritisation. While the government received a revenue windfall this year due to high commodity prices, those are forecast to return to normal. And with the government committing to deliver the tax cuts agreed by its predecessor, its income is under further pressure. At the same time, it’s facing five growing spending pressures: interest on the growing debt, the National Disability Insurance Scheme, health care, aged care, and defence—and that’s before any increase to the existing defence funding line. The result is a forecast for deficit spending for the next 10 years.
That’s not a good situation for the DSR leads. They’re tasked with delivering new military acquisitions faster in the next decade, but the existing acquisition plan is probably already unaffordable (without increased spending), with many entirely new capabilities or expensive replacement projects. And with nuclear-powered submarines and frigates on the untouchable list, the challenge of delivering more sooner gets even harder, as those two programs will consume tens of billions of dollars over the coming decade even before they deliver their first vessels.
Moreover, inflation is rapidly eroding Defence’s buying power by billions of dollars every year. By the end of the forward estimates, Defence may have lost around $18 billion in buying power even if inflation rapidly returns to the Reserve Bank of Australia’s target rate. That’s the budget papers’ predictions, but those predictions haven’t been very accurate in recent years.
This year, despite nominal growth of over 7% in defence spending, real growth is under 1% once inflation is taken into account (although, with inflation difficult to predict, it’s also difficult to reliably quantify real growth). It’s hard to see Defence affording its ambitious acquisition program with a budget that’s essentially static in real terms.
Inflation is also driving nominal GDP growth at a predicted 8% this year. That means that defence spending is falling as a percentage of GDP for the second year in a row despite the government delivering the funding set out in the 2016 Defence White Paper and 2020 Defence Strategic Update. Predicted defence spending has also fallen significantly just since the March budget, from 2.11% to 1.96%, despite the funding line remaining fundamentally unchanged.
In summary, there is no pot of gold available to cover increased defence spending. That doesn’t mean the government can’t or won’t increase defence spending, but any increase will require either higher taxes (which appears unlikely, since the government is proceeding with its predecessor’s planned tax cuts), greater borrowing (accelerating the vicious cycle of debts and deficits), or cuts to other priorities that have constituencies of their own.
When we look at Defence’s big three areas of spending—capital acquisitions, people and sustainment—there have been no significant changes since the March budget. With the Australian dollar at a 20-year low against the US dollar, the Defence budget has received a large automatic top-up to maintain its purchasing, but there’s no adjustment to compensate for inflation.
There are a few changes to spending, but they’re broadly consistent with what we would see in a mid-year budget update. For those who follow capability, the top 30 acquisition projects and sustainment products hold some interesting information, but the lists are quite consistent with previous plans. We’ll have to wait for the outcomes of the DSR to see anything new.
Similarly there’s been no adjustment to Defence’s personnel allocation since March. But that still means the ADF needs to find roughly 13,000 more people this decade to operate the capabilities on its shopping list, even though it’s only managed to grow by an average of 300 per year since the 2016 White Paper. Smith and Houston may need to consider whether it makes sense to acquire capabilities that the ADF can’t crew, or at least how the ADF can maximise its combat power without many additional people. Of course, another HR strategy is one based on ‘if you build it, they will come.’
The situation is also difficult with Defence’s civilian and external workforce. To deliver its ambitious capability program, Defence has relied on growing numbers of contractors. They’ve helped Defence spend record amounts in its acquisition programs in recent years, despite the impact of Covid-19; however, they come at a cost. That growth may be over; in the October budget, the government is seeking $144.6 million in ‘savings from external labour and savings from advertising, travel and legal expenses’. That’s not a large percentage of Defence’s total budget but, if it means the organisation can’t hire the people it needs to manage the acquisition program, it’s hard to see how Defence will deliver more capability sooner.
Overall, while there were no surprises, the October budget hasn’t made the job any easier for Smith and Houston.
Deciding the future: the Australian Army and the infantry fighting vehicle
Introduction
The aim of this report is to inform government decision-makers and the public on the ability of Project LAND 400 Phase 3—the infantry fighting vehicle (IFV) acquisition—to meet the needs of Australia. I examine a number of factors that provide context for the government’s upcoming decision, whenever that may take place. Those include how IFVs fit into the Australian strategic environment, the ease with which the ADF can deploy them, their vulnerability to threats, and the ongoing utility of armour in the light of lessons unfolding from the ongoing Russian–Ukrainian War.
To set the information into a useful context, this report explains the nature of contemporary land warfare and speculates how the Australian Army is likely to fight in a future conflict. To further assist those making the IFV decision, this report offers a number of scenarios that outline potential operations that the government may direct the ADF to undertake. It also identifies current gaps in ADF capability that will need remediation if the IFV is to achieve its potential, as well as the other opportunities that might not be taken up because of the focus on this investment.
The report’s analysis results in some key questions for decision-makers to consider as they decide on the infantry fighting vehicle acquisition:
- Does the government believe that its IFV investment will deliver an appropriate balance of protection, lethality and mobility (both tactical and operational)?
- Does the government agree with the requirement for an infantry vehicle with STANAG 4569 Level 6 force protection and equipped with an active protection system?
- Is the government confident that the number of the IFVs obtained will generate a deployable and sustainable force that represents a sufficient return on the investment?
- Does the government accept that the IFV options under consideration will enable the ADF to offset existing gaps in capability and allow it to conduct operations in a contested maritime environment, including sea and airlift, long-range fires and logistics?
- Is the government confident that the Army’s combined arms system is deployable in contested environments, particularly in a maritime scenario?
- Does the government believe that the IFV will provide utility in the range of contingencies that the government envisages the ADF will need to meet?
- Does the government agree that the IFV will contribute to the requirement that the ADF be able to shape, deter and respond to threats as mandated in the 2020 Defence Strategic Update (DSU)?