Ten days before the budget, Rudd stood in front of a frigate (where else?) to release the defence white paper, which he claimed was “the most comprehensive of the modern era”.

He had a much bigger and grander vision for defence than his predecessors, which he backed up by promising to spend a lot more money: a more generous indexation arrangement, plus extension of the commitment to real annual growth of 3 per cent out to 2017-18, then 2.2 per cent real until 2030. The cost would be covered by $20 billion in internal savings.

Just 10 days later, Wayne Swan stood up in Parliament (why not in front of a bank or the Mint – have his spin doctors no imagination?) to deliver the budget and promptly reneged on the deal.

Phew, had me there for awhile.

The gap between Rudd’s bellicose announcement and Swan’s budgetary reality is too short to allow an interpretation that the Government changed it’s mind. Still, I am relieved that it was all a bit of spin to disguise the fact that the defence budget has been effectively cut, again according to think tank analysis quoted by Gittins:

“As best we can estimate (the budget papers do not disclose the total size or timing of the deferrals), around $8.8 billion of funding has been taken from the first six years of the defence budget. Of this amount, some money is returned in the last three years of the forthcoming decade and some is deferred into the next decade. We cannot say how much falls into each category.”

As spin goes, it’s breathtaking stuff. But, it’s better than the madness of contributing to an arms race.

The BBC points out that the strategic hysteria underpinning the white paper and the crazy buildup are consistent with other aspects of what is emerging as Fortress Australia. 

The ABC reports that the forthcoming Budget (May 12) will detail how this wild extravaganza will be paid for. The same report also carries comment from a bevy of top Australian defence experts (Dibb, Lyon, Dupont) questioning the need for the nation’s biggest buildup in 60 years and the capacity to pay for it.

Opposition Leader, Malcolm Turnbull has pointed out that so far we only have the sketchiest of ideas of how all this will be paid for:

This is a massive increase in expenditure, and yet in 140 pages we only have this — 1⅓ pages, back-of-the-envelope calculations on how it is going to be paid for.

Particularly, dubious is the notion that major savings (20 billion) will be found within Defence itself. Most people who know anything about how the Defence Department operates find this simply risible. Rudd, a man who believes that a management review will solve any problem, said yesterday:

What we have done is engaged with Defence in an enormous internal review of Defence procurement systems and also of savings potential within the portfolio.

We therefore are confident that within Defence’s leadership these efficiencies … will be made.

Hugh White a former Deputy Secretary of the Defence Department is also dubious:

To achieve those savings, Defence will have to be driven harder than it has ever been driven before.

There’s a lot of waste and inefficiency in Defence. [The savings] can be done but only by really fundamentally changing the way Defence operates.

The lacklustre, and politically damaged, Defence Minister Joel Fitzgibbon, already at odds with his Department on a range of issues, is clearly not got the clout for that job.

Meanwhile the Defence industry is wetting itself with excitement:

The chief executive of the Australian Defence Association, Neil James, said the expenditure – up to $300 billion over the next three decades – was not huge.

Mr James said the gloomy budget situation facing the Government and the global economic recession would have no impact on the expenditure.

Most of the major spending in the white paper doesn’t start until 2015 and we’ll be well beyond the global crisis by then.

The chief executive of the Australian Industry Group, Heather Ridout, said defence contractors in Australia would expect the Government to deliver on its commitment that 60 to 70 per cent of new defence expenditure would be met within Australia.

See also the Public Opinion blog for more on reaction to this stunningly stupid policy.

The Lowy Institute Interpreter blog has yet to provide any comment or reaction.

• Stupid strategy. The China-rising argument is fallacious. Thus the whole white paper is deeply flawed. The US, as the paper admits, will remain the dominant military power in the world for at least the next few decades. Essentially, China has no interest in destabilising the region, on which it is reliant for maintaining its economic growth. That’s why the White Paper places so much emphasis on a ‘miscalculation’ and the possibility of the unexpected happening. There is simply no logical argument you can make as to why China, increasingly enmeshed in regional and global markets, would want to plunge itself into an economic collapse by provoking military instability. Of course, the kind of ‘great power’ chatter is much loved in defence circles (for instance, see Lowy’s Interpreter blog) because it sounds oh so serious but when you peel away the facade the intellectual rigour just isn’t there. Joel Fitzgibbon clearly doesn’t have the capacity to see through the drivel, but we might have hoped that Kevin Rudd could do better. 
• It is electorally cynical. This decision will re-make some of the basic architecture of Australian politics. It turns the ALP into the party of war hawks, outspending the conservatives on defence. The ALP’s poll-driven strategists no doubt hope that making John Howard look like a dove will help reverse the traditional electoral advantage conservatives have held on defence and national security and make sure that the 2001 (Tampa) election will not be repeated. In its better times the ALP has been the party of international co-operation and peace, now it’s funding a potentially dangerous arms build-up. That’s profoundly sad, in my view.
• It is unaffordable. Here’s the kicker – we don’t have the money. I know that in ‘these troubling economic times’ it has become a bit unfashionable to ask how things will be paid for but there you have it. Some realities are unavoidable. Where precisely is this $100 billion going to come from? Will it mean a smaller increase for pensioners? Fewer hospitals, schools, roads? Higher taxes, slugs on superannuation, higher HECS payments? Probably, all of the above and much more. It will be a dead weight, a constraint, in federal budgetary deliberations for the next decade. Year after, an extra $10 billion will have to be found. And, of course, that’s assuming that the Department of Defence manages the acquisitions effectively. Excuse me while I guffaw. $10 billion each year could quickly become $15 billion and then $20 billion.

I don’t think the proposition of probable threat from China’s emergence is well-established at all.

Hugh White asserts that because China will become the world’s largest economy that this will lead automatically and fairly soon (20 to 30 years) to a fundamental change in Asia with America declining and China rising and that this will lead to strategic competition, instability, and possible (military) threats for Australia.

The need for far greater expenditure on defence is premised on the rise of China’s economy. But that rise is not an independent variable. The GFC has shown very clearly that China’s growth is dependent, to a very significant extent, on the US, as well as the rest of the world (including a continued flow of resources from Australia). That dependence has probably been revealed to be greater than even the Chinese realised.

To consider defence strategy in the absence of a deep understanding of international economics is to operate in a parallel universe in my estimation. The Chinese GDP growth rate should not just be used as a naive justification for huge increases in defence expenditure.

Why would China provoke the sort of high-level militarty conflict that would render its economy a basketcase, result in internal unrest and undermine the authority of the CCCP?

Hugh White, himself, admits that China isn’t, and won’t, pursue a Stalinist policy. It’s foreign policy has been about accomodation, and it is in China’s interests to press its claims as it grows but not at the expense of damaging disruption to the international system that underpins its remarkable growth. It’s OK to respond that the future may not look like the past, and to point to the possibility of discontinuities, but that is not strategic thinking. It is difficult to engage in a debate where the proponents can argue from any scenario they like. We do better to argue from the basis of estabilished possibilities and probabilities. 

Further, it is disingenuous to compare China and the US as if they were the only two economies on the block. Hugh White dismisses India because it is behind China. But so what, it is still the case that India will become increasingly significant over the next few decades as well. Japan is still a major economy and will remain so. Other countries in the region are also growing. China faces a much more complex world than just some major power competition with the US as if no one else matters. This complexitiy is a major constraint on China and therefore a major reason why we should discount the idea of China’s rise destabilising the Asian region.

If you look at China’s growth, and the economic development of the Asian region in recent decades, the forces seem to be towards greater economic integration and interdependence not towards disintegration and conflict. There’s no reason not to think this pattern won’t continue. Certainly not in Hugh White’s paper.

The most likely ‘discontinuity’ (if such a phrase makes any sense) is that economic concerns trump military objectives making a repeat of ‘the great Asian power invades Darwin scenario’ very, very unlikely indeed. China will using its growing influence to aid its development not destroy it. Our defence planning should reflect these economic realities, not lessons drawn from great power struggles of nineteenth and early twentieth century Europe.

We got lucky on that occasion, but should a similar situation arise in a few decades time, without a more self-reliant strategic posture — something at least approximating Hugh’s proposal (i.e. spend vast buckets of money on defence)— there is little reason to expect an equally serendipitous result.

Yes, folks. Another Asian power is on the rise and is challenging the West once again. Of course, it’s not certain that China will attack Australia (or our vital strategic interests in the region) but, hey, it’s possible and we need to be prepared  (i.e. spend vast buckets of money on defence). Of course, in this argumant every qualification, caveat etc is granted. Sure, it’s unlikely (but it did happen before), sure it’s improbable, sure it’s hard to imagine why China would want to destroy its main export markets and key sources of minerals and energy and so on. But great powers do what great powers must and that is turn economic power into military power and use both to exert their influence. That’s the way of it. So just in case we need to be prepared this time  (i.e. spend vast buckets of money on defence).

It’s all a bit self-serving. And basing your whole strategy on a just-in-case proposition is not a rigorous intellectual or strategic approach.

I bet the government will stick with the old maritime denial strategy (navy patrols of our northern waters) and a good dose of expeditionary activity. It’s more of the same, and it’s not exciting policy.

But it is sane. Planning for a world war is madness.

Update: Lowy’s blogger has condemned me, my response is here.

The tiny coterie of regular readers of this blog will know I’m no fan of the ruling regime in China. I am a strident critic of China’s human rights record and its colonial repression of Tibet. However, the recent foray of senior Opposition politicians into the realms of fear and smear is an egregious throwback to ‘White Australia’ thinking, much like Howard demonized Muslims to build populist support for his border control regime.

The Howard govt routinely avoided raising human rights issues with China in any meaningful way on its watch, treading the well-worn diplomatic path of annual bilateral dialogue on human rights that did not advance any of the key areas of concern one iota.

So, concerns over human rights have nothing to do with this attack on the Rudd government’s links with China. Rudd has been labeled the ‘Manchurian Candidate’ and representing China’s interests in the context of the G20. This is pretty low stuff; in fact, it is plumbing a barrel well scraped by Howard et al.