On 27 March 1918, near Franvillers, Major General John Monash stood on the heights overlooking the Somme Valley. He was alone, except for a single staff officer. In the distance he could see the German Army advancing behind a thin screen of retreating British troops. Since the commencement of their Michael Offensive on the 21st,the Germans had swept all before them. To reach Franvillers Monash had to force himself through refugees fleeing the Germans, and the detritus of the British Third and Fifth Armies retreating from the calamity that had befallen them.

Monash wasn’t alone for long. Soon the soldiers of his 3rd Division of the Australian Imperial Force began to arrive. As the battalions exited their battered transports, Monash directed them down into the valley of the Somme. Their orders were simple: stop the Germans. They were alone and no reserves were available. If they failed, the critical rail junction of Amiens would be lost and the Anglo–Franco front split.

This event demonstrates just how far Australian soldiers had progressed since the landings at Gallipoli nearly three years earlier. The image of the digger that Australia celebrates is that of an enthusiastic but amateur soldier who, despite his bravery, failed to achieve his objective. The green troops who stormed ashore at Gallipoli were little more than an armed mob in uniform, deficient in military skills and led by inexperienced and sometimes inept officers. In our celebration of Australian martial spirit and national identity, what is overlooked is that bravery is poor compensation for skill.

By contrast, those who strode down towards the Somme on that fateful morning in 1918 did so with grim purpose. There was no enthusiasm in their step, just determined resolve. They understood what was at stake and only wanted to get on with the job. These were veteran troops at the peak of their craft, led by skilled officers and guided by efficient staffs. They knew the business of war. At the risk of offending Australian sensibilities, they were professionals.

And they did the job which Monash had entrusted to them. The Germans probed the still forming Australian positions and the diggers responded with well-aimed rifle and machine gun fire that left the ground thick with the enemy’s dead and wounded. A further German push two days later met the same fate. The German advance had been halted.

What was the difference between the amateurs of Gallipoli and the veterans of the Somme? When Monash took over the 3rd Division in 1916 he implemented a vigorous training program and drove his men hard. From individual to section training up to unit and formation manoeuvre, Monash drilled his men. He was an innovative leader who sought out advantage where he could find it, but there was more at work. His men had been through the cauldron of battle many times; by now they knew their job. Leaders had been tested and those not capable removed. War’s ruthlessness had done its work in bringing the most competent to the fore.

There are lessons here. First, there are no natural soldiers. Rather, soldiers are made and they must be made well, and Monash knew this. Second, it’s better to achieve military excellence for possible wars before war comes. If not, excellence may be achieved but only after the spilling of much blood and the loss of soldiers for little purpose, the fate that befell those poor souls serving in the 8th Division of the Second Australian Imperial Force in Malaya in the Second World War, for example.

In peace, training must be ruthless and the inefficient rooted out. The mind must also be trained and investment made in educating leaders in military history, the theory of war and strategy. As I suggest in Forging Australian Land Power: A Primer, civilian decision makers must make a similar investment in military learning. No training and education can replace the experience of battle but it can narrow the gap between peace and war. And the narrower the gap, the better the preparation, the more likely it is that Australian soldiers will achieve their mission and at a cost that is acceptable to the nation.

As we again prepare as a nation to celebrate the ANZACs of yore, as our threat environment shifts to a more challenging one, and as international tensions rise and climate change destabilises the environment in which we live, it’s worth again remembering the words of Vegetius: ‘if you want peace, prepare for war.’ Or, to paraphrase Monash’s final lines from his volume on the Australian victories in France: Australian liberties can only be preserved by an army of trained and ready soldiers.

The Turnbull government’s new Defence White Paper promises to increase defence spending to 2% of GDP by 2020–21—three years earlier than Tony Abbott promised. Better still, they’ve provided an explicit table of Defence funding across the forthcoming decade (see DWP p.180). Not since the early 2000s has a government been this willing to open up its books and be held to account. It was a commendable step.

Looking closely at the numbers, an interesting picture emerges; it appears as though the early attainment of 2% of GDP is an artefact of declining nominal GDP expectations. That’s not to take anything away from the government—they unambiguously made good on their promise—but if the numbers are out there, they deserve to be analysed and understood.

In the table below, the nominal (including inflation) funding figures from the DWP are given, along with the annual year-on-year nominal growth rate. In the lower part of the table, the funding is presented in real 2015–16 dollars assuming 2.5% inflation.

Two things surprised me about the figures. First, the growth rates were somewhat below what I’d anticipated. Second, the early attainment of 2% of GDP seemed an unlikely concession from the taxpayer’s guardians in Treasury and Finance. So I looked up the explicit GDP figures from the 2015–16 mid-year update to see what’s going on. It turns out that projected nominal GDP growth is now significantly slower than previously assumed, which explains both the slower growth in defence spending and the earlier attainment of the percent GDP target.

The easiest way to see this is to take the nominal defence spending figures from the DWP and calculate the share of GDP as in successive Treasury projections. This is done in the table below. Because treasury only gives numbers four years out (i.e. out to 2018–19 in the latest update), the latter years have to be estimated by assuming some rate of nominal GDP growth. The key is to realise that the rate of GDP growth assumed by the government was small enough for defence funding to reach 2% of GDP in 2020–21. A little arithmetic shows that nominal GDP growth has to be less than 5.2% for defence spending to reach 2% of GDP in 2020–21. In comparison, the 2013 National Commission of Audit assumed nominal GDP growth of around 5.7% around that time (which is the figure I’ve previously used for modelling purposes).  Half a percent can make a big difference once the magic of compounding kicks in.

The deterioration in nominal GDP growth has, in effect, made the attainment of spending 2% of GDP easier and brought it forward by three years. One way to see this is to look at successive Treasury projections of GDP and calculate the share of GDP that today’s DWP funding would represent. This is also done in the table below. In each case, the growth in GDP after the last available year in the Treasury papers has been projected out using the (manifestly modest) 5.2% discussed above. In the earlier budgets, the rate of GDP growth in the latter years would have been higher, meaning that the GDP share of defence spending would have been lower still.

Three points are noteworthy:

First, changing expectations of GDP growth can have a significant impact on the measured GDP share of defence spending. 

Second, recalling that the original promise was to reach 2% of GDP in 2023–24, it looks as though funding in the DWP was conceived on the basis of the 2014 Budget’s projections of GDP growth. That conjecture is consistent with the timing of the WP process. (The overshoot can probably be accounted for by the deterioration in the Australian dollar).

Third, the accelerated attainment of the magic 2% figure reflects falling nominal GDP rather than a more ambitious approach to equipping and expanding the ADF.

If nothing else, the foregoing analysis highlights the shortcomings of GDP share as a planning basis. Fortunately, the DWP dispenses with the 2% target and instead fixes defence funding in dollar terms for the next decade (and with adjustments for foreign exchange risk). This severing of the link with GDP is sensible and pragmatic. Nonetheless, I fear that the 2% target will continue to haunt the discussion of defence funding for years to come.   

I think the Option J scenario has finally reached some equilibrium – competitive evaluation it is. But I do wonder at suggestions that we should do a hybrid build or build overseas and then fit out in Australia. Both ideas seem to come from people who have never built a submarine and have little idea as to how it’s done. Both options would significantly increase total cost to Australia and risks.

Modern submarine construction techniques (of which Collins was an early example) involve the assembly of major sections of the internals on ‘platforms’ (deck sections), with suitable shock- and noise-mountings in place, then sliding those into open hull sections (like an oven tray) before finally (and as late as practical in the construction) assembling the hull sections into the pressure hull. This has the additional benefit of allowing these platforms to be fabricated at other sites—as was done for Collins with Forgacs Engineering in Newcastle and Perry Engineering in Adelaide manufacturing platforms. Read more