This version: 22 September 2000
Defence policy: One clear objective
Australian Research Council Senior Fellow
Department of Economics
Faculty of Economics and Commerce
Australian National University
Submission to Defence Review 2000
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Defence policy: One clear objective
The crucial problem in Australian defence policy is a lack of clarity regarding objectives. The Defence Review 2000 sets out a number of possible objectives which are implicitly given roughly comparable weight. These are:
_Defeating attacks on Australia
_International coalition operations
_Military operations other than war
It should be evident that among these objectives, the defence of Australia against foreign invasion is overwhelmingly more significant than any of the others. It would be perfectly reasonable for Australia to abstain entirely from any military activity other than self-defence and many countries in fact do so. By contrast, defence of the national territory is a core function of government.
Hence, the appropriate starting point for analysis is the explicit recognition that the defence of Australia is the core function of the defence forces. The purpose of this submission is to argue that defence policy issues can and should be clarified by the explicit adoption of a single core objective, that of national self-defence, with other possible uses of defence forces being regarded as peripheral
The paper is organised as follows. The first section is a discussion of relative importance of the defence and other objectives, aimed at justifying the claim that the defence of Australia against foreign invasion is overwhelmingly more significant than other possible defence objectives. Hence, it is argued, the appropriate approach to defence planning is based on a distinction between core and peripheral objectives. mplications for defence expenditure are then discussed.
The relative importance of the defence and other objectives
The argument for a single clear objective in defence policy is based on the claim that our interest in self-defence completely dominates any strategic interest we might have in influencing developments outside Australia, except insofar as the latter interests indirectly affect the likelihood of a future armed attack on Australia.
It would be absurd to place a dollar value on the defence of Australia against future invasion. Nevertheless, it is clear that should such an invasion be attempted, we would be compelled to resist it even it the cost of great loss of life and economic deprivation. While the phrase to the last man and the last shilling is no doubt a rhetorical exaggeration, it would be reasonable to say that a successful armed invasion would be worse than the permanent loss of 80 per cent of our national wealth. Hence, even protection against invasion events of quite low probability (say, less than 1 per cent over the next thirty years) justifies substantial expenditure, such as the current 1.9 per cent of GDP.
By contrast, it is difficult to see how any of the indirect strategic interests discussed in the White Paper would justify the annual expenditure of even one per cent of GDP. it is worth considering a number of such interests separately, including
(i) Australia's interest in international security against aggression
(ii) Australia's interest in regional security and stability
(iii) Protection of Australian citizens and property overseas
(iv) Participation in coalition operations
(v) Domestic objectives including industry policy, disaster relief and youth training and employment
Undoubtedly, Australia has an interest in the peace and prosperity of the world as a whole, and should therefore contribute to international efforts in this direction, such as United Nations peacelkeeping operations. But there is no reason to suppose that our contribution to our international obligations should be primarily military. Since our total commitment to civilian foreign aid, including our special obligations to PNG is less than 0.4 per cent of GDP, no substantial portion of our defence expenditure can be justified by such considerations.
Very similar comments apply to contributions to regional security and stability. Regional security in the present and foreseeable future must be distinguished from the situation during World War II and the Cold War when regional security referred to collective defensive against an actual or potential aggressor seeking to conquer the entire region. In the present context, disruptions such as those currently taking place in Indonesia and Fiji affect our interests as a trading partner and raise humitarian concerns, but raise no threat of a region-wide military conflict, let alone an invasion of Australia. Hence, military assistance in the maintenance of stability must be tested for cost-effectivness against civilian aid.
It is clearly desirable, where possible, to protect Australian citizens and property overseas from civil disturbances, terrorism, crime and other threats. However, by far the greatest threats of this kind to Australian citizens come from the actions of criminals and others operating in Australia. Moreover, our primary responsibility is to ensure that people in Australia, whether or not they are Australian citizens, are safe from such threats, rather than intervening to ensure that foreign jurisdictions fulfil their corresponding obligations.
The term coalition operations applies in essence to participation in operations, possibly undertaken to enforce resolutions of the United Nations, but under the direct military command of the United States. Examples of coalition operations in which Australia has previously participated include the Korean, Vietnam and Gulf wars. Possible future contingencies include a renewed Korean conflict, a military confrontation between China and Taiwan, or action against a state of concern which might arise following the rise of a dictatorial and potentially aggressive government somewhere in the region.
It is important to observe that the primary importance of Australian contributions to recent coalition operations has been as a symbolic gesture of support for the United States. In military terms, the Australian commitment made little or no difference to the outcome of, for example, the Gulf War. It follows that, where participation in coalition operations is in our national interest, it is the fact of a commitment rather than the particular forces committed that will be of most importance. Hence, the appropriate policy is to structure our forces for the core objective of national defence and then to make whatever commitment is feasible in the circumstances of a particular operation.
While most US-led coalition operations in the recent past have merited at least symbolic support, it is important to maintain independence to decline to participate in operations where US and Australian strategic interests differ or where US policy is driven by domestic policy concerns rather than a correct perception of strategic interests. An example of the former case would be armed US intervention in a conflict between China and Taiwan. Although it would be necessary to make an assessment at the time, it would seem unlikely that intervention in such a conflict, other than to encourage a peaceful resolution, would be in Australias interests. An example of the latter case is the proposed Nuclear Missile Defence system. Expert opinion is almost unanimous that the system will be technically unworkable and will provoke a hostile response from China, but US policy on the topic is driven by the unwillingness of political leaders to state the facts to the US public. Australia should follow the example of the United States European allies and decline to provide any support to the system.
Finally, while the activities defence forces may yield domestic spinoffs of various kinds, it would be a serious mistake to distort defence policy in the pursuit of such objectives. The way in which such spinoff benefits can be addressed is discussed below.
Defence planning - core and peripheral objectives
A good deal of recent literature on public administration has dealt with the problems that arise when public sector organisations operate with ill-defined and diffuse objectives. Although it is not always feasible, the most appropriate response in many cases is to define a core objective for the organisation, then to deal with peripheral objectives on a primarily commercial basis.
The core objective
The detailed design of a defence against an armed attack on Australia is appropriately left to experts. Nevertheless, some observations may be made with respect to the threats against which it is appropriate to prepare, and the force structure that is implied.
The Defence White Paper discusses both developments in South-East Asia and developments in continental Asia (notably China and India) with the implication that Australian defence policy should respond to both. It is clear that developments in South-East Asia could pose a military threat to Australia over the next thirty years. The most obvious possibility is the accession of a hostile government in Indonesia or a breakup of the present Indonesian state resulting in some hostile successor state.
On the other hand, there is little justification for a military response to developments in continental Asia. While defence policy must deal in low-probability contingencies, the prospect that China or India would seek to attack Australia (except as a response to Australian involvement in an Asian war) seems exceptionally remote. Neither China and India has ever made any territorial claim which could affect Australia and both have pressing concerns close to home. Although both countries are building up military capacities, and are likely to have increased economic capacity to finance military spending, neither shows any sign of developing the kind of long-range capacity that would be needed to mount an attack on Australia. Moreover, since both India and China are nuclear powers, it is even more implausible that hostile action on their part would take the form of a conventional attack to which Australian defence forces could respond. To the extent that any defence response to developments in China and India is merited it should take the form of civil defence preparations against nuclear attack.
Turning to the implications of a core defence mission for the structure of the defence force, there appears to be general agreement that the highest priority must be placed on the maintenance of air superiority and that the lowest priority should be allocated to the surface navy. In the absence of air superiority naval forces are largely useless for defensive purposes, while in the presence of air superiority they are largely redundant. The traditional role of naval forces has been to project power in aggressive or forward defensive operations. Such operations should play no role in Australian defence policy.
As far as the army is concerned it is necessary to maintain a force sufficient to respond to any successful landing of hostile forces in Australia and also to operate against hostile forces in the immediate region. Given the low probability that such attackers would deploy armoured forces the current force structure designed to respond to lightly and moderately armed adversaries seems appropriate.
Finally, it is worth considering the balance between current and future capabilities. The White Paper indicates a balance in which about two-thirds of resources are allocated to current capabilities and one-third to future capabilities. However, it also indicates that there is no foreseeable prospect of an armed attack on Australia in the near future, and that our armed forces are substantially superior to those of any other country in the region. This suggests that it would be appropriate to shift the balance of expenditure towards future capabilities.
Given a force structure designed to provide the most cost-effective possible defence against armed invasion or attack, the allocation of resources to peripheral objectives should be assessed through a comparison of benefits and avoidable costs. Avoidable cost is the cost associated with meeting the peripheral objective that would not be incurred as part of the core objective.
The concept of avoidable cost may be illustrated by considering the case of international peacekeeping operations. The avoidable cost of such operations includes the cost of maintaining forces in the field rather than in barracks, and additional payments to troops on active service, but it does not include the basic wages of the troops or the cost of equipment that would have been used in any case. Any benefits accruing to the core defence objective, such as training benefits, should be offset against avoidable cost.
The balance between benefits and avoidable costs may be achieved by requiring external funding for peripheral objectives. For example, if increased costs of domestic defence procurement are justified on industry policy grounds, the defence budget should be based on least-cost procurement with the avoidable costs of domestic procuremen being funded by subsidies from an industry department. Similarly, the use of defence forces to achieve foreign policy objectives should be funded by the Department of Foreign Affairs and Trade, which would have an incentive to ensure that the same objectives could not be met at lower cost, for example through civilian aid.
Although similar arrangements have been applied to other government agencies, it seems doubtful that such a radical reform would be applied to the defence forces. Hence, it will be necessary to design internal budgeting procedures to implement an appropriate distinction between core and peripheral objectives.
The approach recommended here would entail a gradual reduction in the capacity to pursue peripheral objectives. Nevertheless, the need to maintain significant armed forces even during periods like the present, when there is no threat of invasion in the near future, implies that there will be frequently be a capacity to allocate defence force resources to peripheral objectives at low avoidable cost. Thus, for example, it should be possible to make contributions to international peacekeeping forces on appropriate occasions.
Implications for Defence Expenditure
As Defence Review 2000 makes clear, the maintenance of a multi-objective defence force would require a substantial increase in expenditure. On the other hand, current expenditure is more than sufficient to achieve the core objective of defending Australia for the immediate future. Even if, as projected, the costs of defence technology rise over time, it should be possible to reorient expenditure to the core defence objective at the expense of a gradual diminution of capacity to pursue peripheral objectives. The observation that:
If it was decided that Defence should take a narrower focus on maintaining the capabilities needed only to defeat credible attacks on our territory, then it is possible that these limited goals could be achieved from within the current level of funding (Defence Review 2000)
should form the basis of defence planning.
The core defence budget should be maintained as a constant proportion of GDP, while peripheral objectives should be funded from appropriate non-defence sources.
There is a chronic gap between the objectives governments wish to pursue and the revenue resources available to pursue those objectives. If growing needs in new areas are to be met, it will frequently necessary to sacrifice lower-priority objectives that may have been affordable in the past. In all areas of public expenditure, it is necessary to distinguish between core and peripheral objectives and to set expenditure priorities accordingly.
Australia is in no position to undertake greatly increased defence expenditure in order to pursue objectives unrelated to the core function of defending Australia against armed attack. Future defence policy should be based on this single clear objective.