Defence budget reaches all-time high

Out of $20.6 billion of savings in defence plans for the next decade, almost a
quarter is an artefact of accounting and it's uncertain how much of the rest can be
actually achieved, a defence analyst says.
Australian Strategic Policy Institute (ASPI) budget analyst Mark Thomson said the
$20.6 billion of savings and efficiencies in the Strategic Reform Program (SRP) were
central to delivering on the 2009 Defence White Paper.
Launching the annual ASPI budget review, he said close examination of the proposed
savings revealed a worrying picture.
"Around $4.6 billion of the claimed amount is an artefact of accounting, involving
the reallocation of funds within Defence's budget that had nothing to do with
reduced costs or efficiency," he said."
"Of the remaining $16 billion of savings, of which around $4 billion is yet to be
explained in any detail, there are also worrying signs."
Dr Thomson said Defence was backpedalling fast in a couple of areas.
Over the past year, the number of military positions to be cut had been revised down
from 1700 to 860 and the number of civilian positions from 3000 to 1700.
Dr Thomson said after removing the $4.6 billion accounting artefact, it was hard to
say whether the remaining $16 billion of savings was achievable.
He said progress was being made in reducing the costs of sustaining defence
equipment, but it would be more difficult in non-specialist defence areas such as
base support and maintenance.
"When Defence contracted for those services ... they went to the market and got a
competitive price to begin with," he said.
Dr Thomson said the SRP appeared to be making only limited in-roads into the
significant growth in the number of uniformed and civilian executives and middle
management.
He said if the SRP really was the major public sector reform the government said it
was, it needed to be open to scrutiny, starting with re-baselining to remove the
fanciful accounting tricks.
"It discredits both defence and the government to exaggerate the amount of savings
to be delivered," he said.
"It is a matter of public and parliamentary interest to see whether the savings are
being delivered and perhaps more importantly, to understand the impact on
capability."
Despite the perennial debate about the defence budget and procurement issues and
much else, Dr Thomson said Defence was actually in better shape than at any time
since the Vietnam war.
He said new equipment had entered service over the past decade while in the next few
years, the Australian Defence Force would see important boosts to capability
provided by new combat aircraft and warships.
"There is absolutely no question that the organisation is now more combat ready than
it has been at any time since Vietnam," he said.
"We have had a decade of continuous operations where a generation of young officers,
young NCOs, young privates have gone through and done the job for real, and now they
are coming back and teaching the next generation."