Announcements about the new submarines, just before a budget, need to be very carefully worded to avoid misunderstandings and to make it harder for those keen on deliberate misinterpretation or polemical misrepresentation.
Letter to The Australian Financial Review
Tuesday, 26 April 2016
(published Wednesday, 27 April 2016)
Before the 2014 budget inept timing and wording announcing the purchase of more joint-strike fighters caused many Australians to believe, incorrectly, that this future aircraft buy caused the large expenditure cuts in that budget.
Even leading economic commentators, who should have known better, reinforced this confusion by claiming that pension and health cuts were due to the new fighters.
We need to clearly avoid such confusion in announcements this week about new submarines
Politicians are naturally prone to quote large sums when announcing re-equipment of our defence force, but this is invariably spent over many future budgets and the larger the sum cited the longer the term involved.
Through-life operating costs over several decades are also often included in initial announcements, particularly when electoral advantage is sought in marginal electorates or beleaguered state economies.
But investment in new ADF equipment is already programmed into future defence portfolio allocations.
It is not funded by diverting expenditure from other portfolios — even though defence investment has often been diverted elsewhere for political expediency.
Kept in perspective, annual investment in re-equipping the ADF is around 4-6 weeks of social security spending alone. Annual equipment maintenance costs are very similar.
Finally, most economists and other commentators tend to ignore that defence is the only major area of government expenditure that is wholly funded federally, is the portfolio most often subject to arbitrary and substantial cuts budget by budget, and therefore prone to needing periodic catch-up investment to replace very old equipment.
Simplistic comparisons with federal expenditure on social security, health and education, for example, are always grossly inaccurate as total national spending on the latter compared to defence is around 7.5:1, 5.5:1 and 4:1 respectively and growing at much faster rates (when defence grows at all in real terms).