Defence Funding and Capability Planning by Hugh White

[Music] oh well thanks Thomas a great pleasure to be here and to take part in what it's a really great project and if I may say because my situation is a little different from those who have spoken before I think it is a great pleasure to discuss these issues in front of John Howard himself I was a Commonwealth official for the period we're talking about and much of the opportunity I had to learn about the things I'm going to speak about came about because of the opportunities that mr. Howard and his government gave me to work on some very interesting issues I've got a slightly different time period from others tom has been kind enough to let me go back to 1996 in the election and through to 2000 and in order to discuss defense policy in that time I need to need to ask you to exercise some imagination and to go back to an era in which national security was not a phrase that was used by every Australian political leader every half hour it was part of the deal of course but it had nothing like the prominence in our national political conversation that it's had roughly speaking since 9/11 and part of that is also ask you to go back and imagine a time in which John Howard's political leadership was not largely defined by his role as a national security leader because it seems to me that if you look at the way in which John Howard's political leadership evolved after his team or after Tampa and after 9/11 national security and then in the end and the leadership on national security became absolutely central to the way in which she conceived and exercised his leadership nationally and was seen by the country as a leader and national security leadership is different from other kinds of political leadership it works in different ways or different expectations now we're back in the period we're talking about up until up until 1999 at least John Hale was not seen primarily as a national security leader and it didn't have anything like the priority the prominence that it has had in his son-in in the later parts of his prime ministership it's also worth bearing in mind that by the time he became prime minister in 1996 the politics of national circuit had changed very significantly because and I'm not entirely impartial on this issue because I work for the other side he succeeded that the hawke-keating years in which labor had one let's say at last established its credentials in national security it was no longer an issue that the coalition that the conservative side of politics owned as of right labor had established itself as a responsible and effective management manager of the Alliance and Washington accepted that it had established itself as an effective articulator and implementer of defense policy a concept of Defense of Australia self-reliance a framework of alliance as a clear well understood policy construct and it had shown itself willing to deploy the ADF on operations which we now sort of take for granted but it's worth remembering that even as late as 1990 1991 when the decision was made to deploy forces to what became Operation Desert Storm the shadow of Vietnam still loomed very large over the thought of using the ADF in operations and it was labor that had moved past that and of course in particular the person most closely identified with Labor's achievements in this was Kim Beazley who John Howard faces leader of the opposition so this was not a policy area in which John Howard could naturally assume he owned it nor was it how its natural area of strength as he became prime minister he had not established his credentials as a national leader as a political leader on the basis of his of his work in national security or foreign affairs unlike for example his predecessors as as as Liberal leader Malcolm Fraser and Andrew peacock both were people with very strong credentials in the Foreign Affairs and national security area John Hale was known for his work in on economic policy and that's what that was whether it was credentials but he was also of course a traditionalist and that meant amongst other things having a traditional visceral instinctive enthusiasm for defense and enthusiasm for the Alliance or for alliances I gotta say though I think it seemed to me at the time that his enthusiasm for the Alliance's did not it was not based on the kind of very emotional love of America that you saw with many figures on the labor side including people like Beasley whose enthusiasm for the Alliance was was partly reflection of it and a love of America as a as a political system and as a society in fact I detected in Howard early on something of the coolness towards the United States of the true Empire Loyalists of people who fitted well I'm speaking of my parents generation I know that I know this attitude that I know this attitude that sir somehow viola that the Americans was just a little bit wouldn't quite ask though a little bit brash and of course you know it's early days this was reinforced by the fact that the American president he was dealing with it was one William Jefferson Clinton for whom I would say was not a marriage made in heaven not very similar kinds of politicians or people and I think it's fair to say that how it came into office with no very big policy agenda in defense he accepted the construct of defense policy which had evolved back through the Fraser years from 1976 whitepaper through the defense policy processes of the labor which were based on one fundamental principle that is the purposes for which Australia's defence capabilities were designed and built was a direct defence of Australian territory independently from the sorts of attacks that we might face from our immediate neighbors Indonesia long story as to why that was our posture but that would that was that was the basic foundation of Australian Defence policy that was what we were designing and building our armed forces to do forces designed for that could be used for other purposes and were but there were designs solely for that task and we would accept limits on what we could do elsewhere limits what we could do beyond the defense of Australia in the Middle East or in the immediate neighbourhood or that were imposed by the scale of forces and the nature of forces that we designed for that narrow purpose and it's it seemed to seem to me at the time I think it's borne out by the record that that the Howard government in its first term accepted that framework so when as you did and very spectacularly he exempted defense from the very stringent budget cuts are imposed on every other portfolio around Canberra in those first couple of budgets that was not an expression of a very specific policy idea that Australia had strategic challenges it needed to meet and we needed more defence capability to do it it was more I think an expression of a general attitude that the fence was very important and needed to be nurtured nurtured yes but not coddled because the other thing was very distinctive about how it approached a defensive policy early on was that he and his colleagues including his first ministry and mcLaughlin were tough on defense the kind of I'm going to allow myself to say indulgence of defense that we saw once defense and the ADF in particular and the army in particular had reasserted its place in Australian national life after East Timor that kind of indulgence of Defence was not there in those early years the most important thing that Howard government did in its first couple of years was the defense efficiency review which was a very significant run-through of defence I was there at the time I felt it and and it was accompanied by a certain skeptics skepticism about military advice and official advice I might say but but there was no there was no sense in which Howard in those early days was soft on defense so there's a sense there of conservatism and tradition and stability but there were big shifts underway nonetheless four big things were underway in the mid nineties which were undermining a foundation of the defence policy which Howard inherited and to which he was called upon to respond it's a big subject but those four bigs you first of all the transformation of the southwest Pacific from an area in which we broadly believed it was all going well to an era in which we broadly understood that it was not going at all well it's a bigger focus on what was required of Australian policy and what was potentially required to Australian Defense Forces in supporting Australia's interest in the southwest Pacific the second was the global trend towards more active use of Armed Forces to intervene in trouble spots the whole peacekeeping thing Australia had been involved in Namibia Iraq of course in 1991 Somalia Rwanda Cambodia Manor so then Western Sahara this was a big pattern and it was becoming a big part of the way we thought about the role of armed forces that was the second thing and that was global not just in our region the third was of was a long-term shift in the balance of technological advantage away from Australia as the capabilities in our region improved the defense posture which had been developed in the 70s and 80s in the post-vietnam era very heavily presupposed a continuing version of Hilaire Belloc film famous line that always remember that we have got the maxim gun and they have not we presuppose that we would have decisively better military technologies than other countries in our region indefinitely and in the mid nineties that was starting to become clear that just wasn't true and fourthly a kind of a shadow no more than a shadow a distinct sense by the time you get to 1996 and 1997 that Asia is changing because of the rise of China already in the mid 90s we understood that China's rise was changing the way Asia worked was changing the direct the relationships between major powers and raised the prospect that Australia could need could find itself either by itself or in support of the United States in a conflict with major power which had seemed unthinkable in the decades after Vietnam all of those four trends tested the way we thought about defense of Australia as a foundation for our policy tested the judgments we made about the kinds of capabilities we need and in particular tested the assumption that the forces we developed for the defence of Australia would be enough to do whatever else we would need to do there were questions about whether those four changes might require us to build forces that could do more things beyond the defense of Australia then had been contemplated the second big shift that was underway was much more close to home so to speak but very real and that is that the defense budget was going down a whole defense spending in Australia had been static in real terms for a decade by 1996 the good news was we had the the the neither government took a peace dividend out of us which happened almost every other Western military after the end of the Cold War the bad news is that while the defense budget was flat in real terms the costs of delivering the capabilities we were delivering was going up if I remember the number correctly over that decade by an average of two point six five percent in real terms so budget was stable and our costs were increasing therefore our outputs were decreasing and that was producing a long-term decline in capability and although things like the defense efficiency review were designed to remedy that by getting more capability for every dollar the easy reforms had already been done so those two factors required the Howard government in those early years to go about a much more radical rethink about defence policy then I think they had come into office expecting to do there was a need for a new approach both to the way in which we defined what we wanted our armed forces to do and how much we were willing to spend on it the first step of that was a major policy document which I think has misses partly pride of authorship which I think has a less significant place in the history of Australian Defence policy than it is Irv's and that is the 1997 a strategic policy review which was the companion document to the foreign policy white paper that Michael mentioned and they were prepared together and published within a few days of one another and we're very much intended and presented as a pair and the strategic policy review very much driven by ian mclaughlin as Minister set out a wider concept of Australia strategic interests and objectives in fact it was the first point in which the concentric model of Australia's strategic interest in objectives which has been the foundation of articulations of Australian Defence policy of a since it was the first point of which that was really clearly set out and it abandoned the assumption that whatever capabilities we develop for the defence of Australia was going to be good enough to do those other things that were identified in that concentric model of interest in objectives it said we need to do more than just assume that we need to make sure we are developing capabilities that can do more than just defend Australia it was a actually a in terms of the conceptual foundation to defence policy it was a very radical departure from what had gone before and it was recognized that that conceptual point needed to be reflected in a comprehensive policy which had dollars attached and so in the 1998 election there was a specific election commitment to produce a defence white paper in the second term of government after the 98 election the need for that was highlighted especially by two events which Michael touched on the first but both related to Australia's immediate neighbourhood partly because of what happened after 9/11 John Howard's reputation if I can put it this way as a foreign policy and strategic policy practitioner tends to focus a lot on his willingness to go to other parts of the world like the Middle East but I must say what struck me at the time and I think what is clear from the record as it stands today is that the real Howard doctrine of that stage at least was a was a very strong commitment to Australia's role of leadership in the immediate neighbourhood he had a very clear sense I think if I might be so bold in going back to the World War 2 experience of the islands as that generation called them that this was a part of the world that Australia could never take its eye off right at the beginning he and he drove we officials to take a much more active approach to what we could be doing about Bougainville and and drove us through the process which eventually resulted in us deploying a substantial he's monitoring group to the to the peace process in Bougainville and of course the sound line crisis that Michael mentioned the thing that really struck me was how quickly and deeply how it understood why the sand line crisis which was a pretty wacky affair in its way he saw clearly through all the muddled what was at stake for us and was prepared to go a long way further than I think we ever did I had the sense he was prepared to go a very long way to make sure that Australia's interests were served and that of course provided the framework in which he was in prepared to make such a big commitments to East Timor and later of course to Ramsey there was a very consistent pattern and it was that sense that we didn't necessarily have enough in the ADF to do what we might need to do in the immediate neighborhood which even before East Timor more than anything else I think drove so of those four shifts I mentioned it was the first one of those that more than anything else drove the need to do a substantial rethink of our defence policy and that was what brought us of course to the 2000 white paper as I say the commitment to do a white paper in 2000 was made in the 1998 election before East Timor occurred and and I believe whatever it happened in East Timor we still would have had the white paper that we had in 2000 and it still would have been pretty much the same white paper it made it that what had happened in East Timor the profile that gave to the ADF the way it made it vivid to people both around the cabinet table in amongst our colleagues in other departments of state including the Treasury and Department of Finance amongst others members of parliament and of course in the public why the ADF was important it made it easier to do what was done in the white paper I don't think it fundamentally changed the outcome and the heart of the what of the 2000 white paper was very simple there were the question that we posed the government was do you want to be able to undertake a broader range of operations with the ADF beyond those conceived in the traditional do a white do a policy that you inherited from labor if so are you prepared to do more spend more to acquire those capabilities and we we had two hints on that the first was Howard's long-term commitment to sustaining defense spending at two percent of GDP there's nothing magic of course about the number of two percent of GDP but about how it had a fairly long standing commitment to that he'd used that phrase publicly and because the economy in those days was growing at about three percent per annum we had about three percent per annum real growth to play with so there was something to work with there we weren't starting with a blank sheet of paper but but we were never going to see a sustained increase in defense spending of the sort that would be I thought at least at the time required to meet the more demanding strategic circumstances we were facing if we just bargained on that we had to present an argument as to why that was necessary and the argument was reasonably straightforward if we wanted the ADF to be able to meet those not those increasing strategic demands that I meant that I mentioned we were going to we're going to have to develop it in two new directions the first was an increased capacity to deploy and sustain relatively large light land forces beyond the continent within our immediate neighborhood for protracted operations and the sorts of things that we did in East Timor eventually ended up doing in Ramsey could well have ended up doing in the PNG had Sandline crisis played out the other way and the second was we needed to develop our higher end capabilities particularly air and maritime capabilities to operate beyond the defence of the narrow defence of Australia to operate more effectively in coalition with our allies in in the wider region and to increase the capability levels to keep up with the increasing technological sophistication of capabilities around the region and so the capacity to meet to meet those sorts of demands in future was going to depend on our on the government's willingness to spend the money required cut a long story short after acquiring a very complex comprehensive process of policy analysis a Howard government Howard himself agreed to something which had never been done before in peacetime and that is to commit to sustain the increases in defense spending of 10 percent of 3 percent per annum over 10 years and it was a it was not just the 3 percent number oh that was nice it was the 10 years that really made the difference and that did that was a big decision and it you we can say quite precisely it gave us the ADF we had today it has a couple of specific points as well as significant expansion of the army was part of that a decision to move to the 5th generation Joint Strike Fighter was part of that the decision to make a major investment in the long term naval capability including submarine and surface ship capability was part of that and because of the way defense projects work a lot of the things that we're dealing with today have their origins in that set of decisions that were made back in 2000 of course that was all before 9/11 and it was and the the way in which 9/11 impacted on that and changed the focus is in a sense a subject for another talk perhaps the next time but that might not be my turn but there's a couple of points to make the first is that despite the extraordinary importance at the war on terror and particularly to come home to Iraq and in Afghanistan has had for Australia's approach the Alliance the way we see ourselves in the world and so far and so on militarily the impact at least on terms of our capability rather than the experiences of the members of the ATF has not been that greater and and that's because the actual scale of capabilities that Australia has deployed - those operations has been relatively small and hasn't fundamentally departed from the construct that was developed in the late 90s to meet the challenges that I suppose that I set out but politically it made a big impact because that 911 was the point at which national security became right to the heart of the national conversation as someone who'd spent quite a lot of their career tried to persuade my colleagues in the treasurer's office to put just a sentence on defense in the budget speech Peter Costello 2002 budget speech in which the first half of the entire budget speech was devoted to talking about national security before he even started talking about the economy that was the sign of a fundamental change in a way Australia thought about its situation I don't think was just 9/11 by the way I think that did reflect cumulative reflection - and the effects of other things including his team or itself but that changes the national conversation about national security and ways that I don't think have yet been reversed but I'd also make the point but I think the war on terror the invasion of Iraq the commitment to Afghanistan the way that's encouraged us to think about our situation and to a certainty of the ways encouraged us to think about the u.s. alliance has got in the way of responding to the fundamental challenges which the Howard government was really reacting to in night between those years between 1996 and 2000 what's happening in our immediate neighborhood in the southwest Pacific remains an absolutely central issue for Australia and one which has the potential to make huge demands on the ADF and I'm far from satisfied that the force we have today can meet it and what's happening in our wider region with the rise of China with China's challenge to the us-led order which has been the foundation of Australia's security since the Second World War that's a really big story and we're just at the beginning of that one thank you very much [Applause] you know some time for questions if you'd just like to raise your head wait till the microphone comes to tell us your name and then we look forward to your question can you hear me yes sorry Terry wheeler I want to I thought there was a fantastic presentation in congratulations to you and congratulations to the role that you paid particularly in relation to the 2000 white paper I just want to fill in a couple of the blanks you mentioned defense of Australia these team all demonstrated to Australians that the concept of defence of Australia failed and the previous white papers failed and the reason why I say that was just an appeal capability perspective we didn't have any way of you know landing a large force we had no you know amphibious capability so what would we do we leased a ferry we painted it gray we didn't have the the protection of those ships in you know capable destroyers so we had to literally borrow an American one and we had logistical problems that were not adequately provided for in previous white papers and what the importance of the 2000 defense white paper it ruled a line and said enough is enough and you know what we got out of the defense that that 2000 white paper and congratulations for the role that you played in that was you know these magnificent capabilities in the landing helicopter dock at last a capability that could land a significant expeditionary force you know and this is a capability that is the biggest naval vessel Australia has ever possessed we got the air warfare destroyer which the first of which was only commissioned a month ago which is the most potent naval capability Australia has ever possessed and that is the cause of the 2000 white paper and the other great thing about the 2000 white paper was that it was delivered when the hope HMAS Hobart was commissioned last month it it marked here was a white paper that was delivered how many other white papers you know that government's deliver were not actually delivered this one was and this was - in an enormous credit - to mr. Howard and look like acknowledge the important role that that you played in in the 2000 white paper and there's one other if we look at this period involved yes okay well the question is this don't you think that the most important capability decision that mr. Howard took in between 1997 and 2001 was to finally turn the dud subs of the Cullen's class submarine into the most capable conventional submarine in the world by providing it with the combat system of the u.s. virginia-class well let in that oh well thank you for your kind observations but I'm going to be ungracious enough to disagree with you on a couple of points look we could spend all night talking about East Timor but I just want to make this point I don't agree that East Timor showed that the policy that we had adopted up until then failed we achieved our operational objectives and we've achieved our strategic objectives in East Timor that's the test now we could easily have failed we would have failed had Indonesia or T&I not the same thing had opposed us and that was not a hypothetical possibility but no conceivable Australian force structure built under any conceivable Australian Defence policy at any credible level of defence spending would have given us the capacity to defeat a T&I on East Timor had they chose to chosen to oppose us so I believe the capabilities we actually had on the day allowed us to do what it was we set out to do and had the circumstances been different than nothing we would have had would have made much difference on the on the capability trajectory I'm myself and not as it happens the LH DS I'd liked it but well though I'm glad not to claim credit for the LHC's the there was money in the 2000 white paper for a substantial amphibious capability it was not at that stage identified in the form of 2 27,000 tons ships I personally think that's a profoundly mistaken decision those ships are bigger than we need and we don't have nearly enough of them I would myself have gone for 5 ships much closer to about a 10,000 ton class because it gives you a lot more concurrency which i think is more important and I would certainly agree that one of the most I mean I actually think that a lot of important decisions made in the lead-up to the 2000 white paper there's a very strong commitment to an effective air-to-air refueling capability was really critical the decision to go ahead with enable an early warning capability and the quality of that capability was really critical I think both of those are really fundamental to our air capability and I do think the work that the Howard government put in in getting the columns right was right I'm not myself a great fan of the of the virginia-class combat system particularly not on a conventional boat it uses too many too many megawatts for my tastes but I agree that that was a very important thing to do other questions I know that if the microphone would have come to Rick Smith he'd probably want to ask you about the impact of the National Security Committee of cabinet and how that made things different we're probably well actually this is not something a lot I likely do I slightly disagree with my boss there about the role of the National Security Committee it's it's it's it's sorry sorry looks like one of the really significant innovations for Howard government was very early on Howard started using the national security committee of cabinet not just to deal as it had under the Hawke and Keating years with matters of very high classification intelligence issues but as a real national security committee and that did work very well and and I agree with Michael that it made a significant difference to the way in which national security questions themselves were managed and for example a way in which we've managed the 2000 white paper process that could not have been done if we hadn't had the national security committee of cabinet very with with real commitment to its functioning from the prime minister providing a forum in which we could spend a long time days and days talking through the decisions that had to be made it was less of a innovation in the actual in actual crisis management because the Hawke and Keating government's in crisis management mode for example in relation to Iraq 1990-91 what become Operation Desert Storm but did not use this the Sante cabinet system but it functioned in a more informal way with meetings in the prime minister's office now it was basically the same group of people but instead of meeting on one side of that corridor they were meeting on the other my own experience of watching both the work is that I think in some ways the less formal meeting was more effective I don't know what the Rick would agree with that I felt the less formal meetings were more effective because they were quicker and in a crisis one of the things goes wrong is you can spend too much time sitting in a room chewing things over when what you really want to do is to get decision and get out the door and start implementing so but personally I think the National Security Committee was more important as a long-term policy forum than as a cross and we could also want me to be even-handed to ask you a similar question so when I asked Michael Wesley my office in this building was once the office of David Fairburn who's the minister of defense since him 40 years ago there have been 20 defense ministers yes there were five defence ministers in the Howard government you spoke warmly of Ian McLaughlin but the end of the period that you reviewed they'd been three would you care to comment on the contrast between having one in defect and having five in defense and to make it a shorter answer you may need care to talk about the first three look I agree with Michael's basic point that it I don't think is anything wrong with having me having ministers in their job for a long time it's a it's a tough gig there's a lot to learn and in some ways you might say in defense in particular is a lot to learn you know I think labor benefited enormously from the fact that they had Kim in the job for what six years and in Robert way in the job for seven years I'll both very effective ministers anyway but I think that made a huge difference and I think the one of the deficiencies we've had in the quality of Defence policy in recent years I'm even gonna say longer than that has been that we've seen people going out of the portfolio too often but I would just make two further points the two ministers that I worked for as an official under John Howard Ian McLaughlin and John Moore I both found in their very different ways very different personalities they were both very effective ministers and I must say I found them very very good to work very good to work with and it might be worth saying particularly ours I found that very good to work with considering the fact that they'd look took one look at me and said this bloke used to be a Beasley in a hawk staffer and they and I still found them extremely good to work for so I think either of them had they give been given longer in the portfolio would weigh more heavily in the history of Australian Defence policy than they do last chance any questions before we finish now please join with me in thanking you for

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Length: 35min 4sec (2104 seconds)

Published: Mon Jan 21 2019