“I am pleased that such a strong stand was taken and expressed in the communique on the Viet Nam issue.”
“The US Alliance will not determine Defence Department recommendations.” Dr Dennis Richardson
In the face of reservations expressed in the public domain in March, Defence Department Chief, Dr Dennis Richardson, and Air Marshall Leo Davis sought to clarify issues relating to the $74 billion submarine and stealth fighter planned acquisitions.
To counter adverse statements on Australia’s submarine program, Dr Dennis Richardson, Defence Department Chief, stated “The US alliance will not determine the Department’s recommendation on who will build the new submarines”. (P. Kelly, The Australian, 30 March) Background to this comment is the:
- future of the South Australia’s ship building industry
- the ferocious bidding war between Japanese, French and German companies
- the increasing Chinese-American arm wrestling
- a suspicion Japan has a foot in the door.
Apparently there has never been a public rational explanation why former Prime Minister Abbott mused a preference for Japanese technology . There lurks a suspicion that the ‘pivot to Asia’ and the United States desire to bolster Japan was in the mix.
Dr Richardson attempted to quash the notion that Japan is the front runner. It might be that Prime Minister Turnbull is close-hauled into a head wind over this issue. ‘The National Interest’ mentioned long term strategic benefits to the United States if an interoperable Japanese and Australian submarine fleet, equipped with American combat systems, patrolled South East Asian waters. Such an arrangement would benefit Japan as well.
A measure of the growing sensitivity of the submarine issue and its importance to the United States and Japan that Australia fall in line with the Japanese construction option was a statement by Admiral Swift, US Pacific Fleet Commander, during a recent visit to Australia. He opined “The US was agnostic on Australia’s choice. Australia, using Japanese boats, would not help the United States” (Opinion, 30 March). Why the clarification?
The point about this statement is that it appears not to be in line with the US military build up in Australia and the US ‘pivot to Asia’. For example:
- Completion of the Alice Springs-Darwin railway by Halliburton, a military contractor for the United States.
- The increasing build up of US military around Darwin.
- Last year’s denial that B1 bombers would be based in the Top End and now the announcement of their deployment.
- The planned construction of a heavy lift military harbour east of Darwin.
There will be observers who will doubt the the face value of Dr Richardson’s and Admiral Swift’s statements as they fly in the face of what would be best for American interests in the north-west Pacific. Problems with the Japanese submarines (March Blog) make for thoughtful reading when technically compared to the European submarines.
In conjunction with comment by Dr Richardson, the statement by Air Marshall Leo Davis exposes a depressing information paucity on the issues facing the US F35 stealth fighter and the Japanese Sorya class submarine. There appear to be problems ‘as langs my arm’ with the battle readiness of this fighter and with the submarine. However, the public only hear of problems when experts, freed of Government constraint, openly discuss issues. Official response is to dismiss information without clarification. It is significant Air Marshall Davis did hedge his confidence in the F35 with the proviso that in case of continuing problems the fall back position was to obtain more Super Hornets. (ABC RN, 16 March)
Summarising published costs for the 12 submarines and 72* stealth fighters:
- Submarines——–$50 billion (Budget Papers, May 2015)
- Stealth Fighters—$24* billion (SMH, November 2015)
- Total—————-$74** billion
- *$100 million more if Canada pulls out (SMH, November, 2015)
- **$7 billion per year plus interest over 10 years?
Japan-United States Strategic Alliance
The Council on Foreign Relations, Washington, (S Smith, April 2015) has written a piece that is directly relevant to Australia.
America has cut some $500 billion from its military budget and it is looking to its allies in Asia for greater input and Japan will be very important in this new strategy. The objective is to consolidate and amalgamate American and Japanese facilities. Joint military exercises have shown improvement must be made in command and communication systems which, among other priorities, will ensure the protection of sea lanes one thousand miles from any coastline. Cooperative military research and development must be continued.
There are significant tensions over the American military base in Okinawa and there are plans for its relocation – where? Australia? Perhaps the Ghan would achieve its intended use at last!! The Okinawa military base, 450 sq. kms, was established after WW11. Hostility and unrest by the local people have increased to the point where a relocation of military assets is contemplated. In 1997 lease payments to the Japanese government were $4.9 billion.The 3rd Marine Expeditionary Force of 25,000 men is based on Okinawa. With the build up of American military in Northern Australia it is possible this Force could be transferred to Australia. The Ghan would provide a link to southern ports and social problems would not be expected in Australia. (Understanding Military Bases in Okinawa, Centre of Asian Studies, June 2015)
It is recognised that Japan and the United States must collocate (become habitually juxtaposed) in their alliance by:
- ensuring interoperability, essential for alliance missions
- encouraging cost cutting by use of the same equipment
- ensuring seamless joint management.
Japan’s role in American Asian strategy.
With the United States emphasis now on South East Asia, the alliance with Japan will be deepened in the following ways:
- Priorities and resources (submarines and stealth fighters) will become more closely integrated
- There must be honest dialogue on alliance roles, missions and capabilities
- Japan will depend on the United States for its national defence.
The significance of the above is that this philosophy applies to Australia.
In the light of the forgoing, the use of the term agnostic – a person who believes that nothing is known or can be known (Oxford Dictionary) – by Admiral Swift is inappropriate and an obfuscation of American alliance policy. Japanese built submarines for Australia would satisfy requirements for interoperability, cost cutting and efficient joint management. Despite Dr Richardson’s assertion “the US alliance will not determine Department recommendations on submarine construction”, the decision may have already been made in Washington and discussed in muted terms in the Prime Minister’s office. Agnostic was a very carefully chosen word, very political.
Australian Budget Implications
Over a period of ten years, possibly commencing in 2020, Australia will be required to find $7 billion a year plus interest to fund submarines and stealth fighters.
Currently and into the near future, the fiscal prognosis for Australia is not uplifting. Summarised are some salient points:
- For nearly ten years there has been an inability to match spending and revenue
- Gross debt in 2008 was $59 billion, 5% of GDP
- Gross debt in 2015 was $430 billion, 26% of GDP
- This excludes $275 billion of debt owed by State governments, local authorities and public companies
- A serious storm cloud is the household debt to income which in 2015 was 154% (1983 – 37%), and this at a time when interest rates have never been lower
- In short, Australia has an unacceptable public and private debt.
The grim conclusion by Christopher Joyce (Financial Review, May 2015) is that Australian fiscal and monetary policy is almost a spent force and there are virtually no levers to combat a real downturn when interest rates rise.
The May 2015 Budget produced the worst cumulative deficit over the past fifty years. (FR, 12 May 2015) The budget slipped into deficit in 2009 (see graph) such that by 2015 the shortfall between spending and earning had risen to 19.5% of GDP. This deficit is forecast to continue rising.
In summary: (www.budget.gov.au/2015-16)
- GDP 2014 – $1455 billion
- Estimated Revenue 2015-16 – $405 billion
- Estimated Expenditure 2015-16 – $434 billion
- Estimated deficit 2015-16 – $29 billion
- Debt plus deficit 2015-16 – $667 billion
Since Defence and Education are such contentious issues, it is instructive to recognise the Federal government budget for each. Both are driven by flash points: for Defence it is the increasing menace from the north since Australia is part of the Chinese Dream; for Education, it is Australia’s woeful position on the OECD education table where it is ranked 14th below Poland and Vietnam with our ASEAN neighbours ranked above us. (SMH, March 2015)
Some details of the 2015-16 Commonwealth budget 12 May:
Department of Defence Ministers ($ billion rounded)
- Routine costs————-$31.9
- Specified equipment—-$5.0
- Operations support—–$0.8
- Operation Okra (Iraq)–$0.4
- Submarines (future) —-$50.0
- Stealth fighters———-$—-
Department of Education and Training ($ billion rounded)
- Students First———–$15.7
- Disability education—-$1.3
- Teaching institute——$0.17
- Trade support———–$0.66
- Aboriginal help———-$0.01
A remarkable and unintended result. How will the $50 billion submarine purchase be funded?