On the new Defence White Paper

Once again, government spending on Defence is increasing by leaps and bounds, without any rational cost/benefit analysis. Yep, even Prime Minister John Key admitted this week that “the country can be confident it does not face a military threat in the foreseeable future” – but alas, there’s no peace dividend in that equation. Regardless of the lack of any rationally foreseeable external threat to this country or to the South Pacific, we are planning to spend $20 billion over the next 15 years on kitting out Defence with a new generation of top shelf equipment.

Because? Well, basically because there are always other things we can find to do with some of this great stuff, once we’ve bought it. Such as better maritime surveillance of our fishing stock. Or disaster relief. Or conservation work. Incredibly, even our ability to rescue rich people from cruise ships seems to have been part of the rationale for the $20 billion spend-up :

Para 3.23 : …New Zealand’s popularity as a cruise destination, for example has seen a five fold growth in the last ten years. Higher activity levels indicate a greater likelihood of maritime incidents occurring, including search and rescue incidents, to which the Defence Force may be called on to respond.

In any other area of government spending, those sort of ‘add-on’ roles (fisheries surveillance, conservation, humanitarian disaster relief) etc would be contracted out separately to civilians, at a fraction of the cost. (The likes of the SAS would probably be privatized, and hired out at a premium to some wealthy Emirate.) Different rules tend to apply though, when it comes to Defence. Only occasionally does reality intrude, as when New Zealand disposed of its air strike capacity – an extravagance so absurd it finally got axed by the Clark government. And a very good thing, too. Otherwise, New Zealand would be looking down the barrel this week at a multi-billion price tag for a squadron of those glitch-plagued and wildly expensive F-35s, in addition to the $20 billion that’s actually being contemplated.

The air strike capacity aside, the configuration of the big ticket items in Defence hasn’t changed in any significant way since the Cold War days of the 1980s. For example : we’re still bankrolling our capacity to putter around the globe flying the New Zealand flag in frigates, even though such vessels can be readily taken out these days by a missile mounted on a truck. Similarly, we’re set to replace the P-3K2 Orions, whose original purpose was to detect Soviet submarines supposedly lurking in the South Pacific. As taxpayers, we’re being expected to simply pick up the tab for the Defence forces, before any serious evaluation of its optimal configuration, or current relative worth.

Relative worth. That’s the real sticking point here. This week’s $20 billion spend-up is not occurring in a social or economic vacuum. To state the bleedingly obvious : this country faces more pressing threats to its social wellbeing than deterring Somali pirates, or flying the flag in international convoys, or helping out with cruise ship rescues. Moreover, there have to be cheaper ways of keeping an eye on illegal fishing boats – eg, with drones? – and of assisting Pacific communities hit by cyclones. Its an expensive stand-by, between cyclones.

Currently, the New Zealand population is ageing, while the health system is being systematically denied the proportion of GDP required to meet the existing levels of unmet need, let alone what’s coming down the pike. There are shortfalls everywhere in society – in the operational resources for schools, in special needs education, in mental health, in student allowances and student debt relief, in housing the homeless etc etc.

Regardless, the Key government plans on pouring vast amounts into providing Defence with top shelf gear – and that’s despite the projected lack of any external security threat to New Zealand (or to the South Pacific) over the entire 25 year lifetimes of the equipment in question. The cost involved will be massive. $20 billion comes out at roughly $1.3 billion a year, every year, until 2030. How, reporter Richard Harman asked Prime Minister John Key at this week’s Defence White Paper press conference, are you going to make a fiscal accommodation for that?

Well, Key replied, the Defence spend will have to go through the normal Budget process, and some savings will be possible through depreciation. “But over time, future Budgets will have to make bigger allowances both in capital and operating expenses for Defence’s new capabilities that reflect the fact we want to keep Defence at arguably no less than 1% of GDP in terms of spending…”

Right. Depreciation aside, $1.3 billion is roughly the size of the entire annual discretionary spend set aside in recent Budgets, to help meet sudden shortfalls in areas such as Health. From now on though, Defence will soak up that capacity. It will be (almost) like having a Canterbury Finance bailout each year, every year, from now until 2030. Moreover, by ensuring that Defence receives a fixed proportion of GDP, Key is effectively future-proofing this spend against any competing calls on the money in question.

Again, it seems utterly bizarre to elevate Defence in this fashion. Only a fortnight ago at the Budget lockup, I queried Finance Minister Bill English on why spending on Health has been allowed to decline as a percentage of GDP every year since 2010. In reply, English said that measuring Vote Health as a proportion of GDP was just not something he accepted as being a relevant measure. Hmmm. So…how come that fixed ratio of GDP is absolutely crucial in Defence, while being not valid at all when it comes to spending on public health? As things stand, doctors and nurses are being expected to do a whole lot more, but with a steadily receding proportion of the country’s wealth.

Even by the usual Defence standards, yesterday’s White Paper document was remarkably light on specifics. Not even ballpark estimates were given for instance, on the likely delivery dates for the gear in question, although – later – Defence Minister Gerry Brownlee did signal that the frigate replacements would not be decided on until the mid 2020s, and would not be delivered until towards the end of that decade. Similarly, the White Paper offered no clues on how the $20 billion is likely to be carved up between the costs of replacing (a) the frigates (b) the Boeing 757 “strategic airlift” plane (c) the Hercules C-130 “tactical airlift” planes (d) the P-3K2 Orion surveillance planes or (e) the dive ship and hydrographic vessels. Not to mention the new ice-strengthened Offshore Patrol Vessel.

The Army ? While there is talk in the White Paper of upgrading (or replacing) the Army’s Light Armoured Vehicles and smaller patrol vehicles, the Army’s share of the spend envisaged by the White Paper is small potatoes. Which is interesting. Since WWII, almost all the world’s major military conflicts – the Falklands excepted – have occurred on land. So have most of this country’s peacekeeping efforts. Yet for all the spin surrounding this White Paper about the economies to be wrung from not defining roles in isolation, this spend-up is vastly weighted towards furnishing single items in the Navy ,and the Air Force.

Moving right along…the White Paper raised more questions than answers over its intention to fund Defence with an enhanced capacity to deter cyber threats. No light was shed on what ratio of this investment will be allocated to protecting our battlefield command and control communications – as opposed to say, deterring cyber threats from unfriendly states, or hacking into them in unison with our Five Eyes partners. And just how will this cyber work be divvied up between Defence and the security agencies, both here and abroad ? No clues in the White Paper on that mystery, either.

Finally, should the public be regarding that $20 billion as a fixed upper amount? To use the ancient parlance, is this $20 billion a fiscal envelope that cannot be expanded? Or, once it gets down to the contract and delivery phase will there be the usual budgetary creep for which Defence is notorious ? Will the subsequent project over-runs be tolerated by government, and more funds allocated? Since the public will be picking up the tab, I think we deserve to be warned beforehand as to whether the bucks really stop at $20 billion.

The geo-political thinking behind this White Paper is also pretty fascinating. Throughout this decade, there have been question marks over the US commitment in Asia – and that’s even before you factor in what a possible Trump administration might have in mind. Of late, there have also been concerns voiced about China’s increase in defence spending, and regarding its aggressive actions over some hotly disputed territories in the South China Sea.

That Chinese military build-up needs to be kept in some perspective.

The United States spent $596 billion on arms last year – which was in fact, a decline of 2.4 per cent on its 2014 figures. And yes, China’s outlay on weaponry did rise by 7.4 per cent last year. However, despite the alarm bells now being rung in Washington and Canberra about China’s military intentions, that Chinese spend of $215 billion in 2015 was still little more than a third of what the US spent on armaments last year, during one of America’s more thrifty periods.

Here in 2016, New Zealand finds itself in the embarrassing position of feeling obliged to shuttle back and forth between placating our closest defence partner (Australia) and our prime trading partner (China). Here’s a concrete, but complex, example of what these vigorous exercises in fence straddling can entail. In its military role alongside our defence partners, the P-3K2 Orion surveillance replacement would be functioning as a complement to the Aussie submarine fleet that’s now been for renewal in the wake of Australia’s own Defence White Paper, released in February.

The rise of China is being seen by defence analysts across the Tasman as the motivation for Australia’s own massive re-armament drive. The new submarines are the sharp end of that new Aussie defence posture. That’s why Australia’s choice of the French as a co-partner in their submarine build was so significant. Firstly, Australia was trying to placate China by not choosing Japan ( China’s long time regional rival) as its submarine construction partner. More importantly, the Aussies were reportedly wanting to tap France’s expertise in submarine nuclear propulsion, something to which Australia appears likely to switch (from diesel power) before the submarines are finally delivered.

Why is that switch deemed to be necessary ? Because nuclear propulsion would deliver a long range, long term submersion that makes sense only if those new Aussie subs are intended to serve as an offensive delivery platform from offshore.

Against say, China, for instance.

In general, a nuclear-powered submarine is noisier than a conventional one but can cruise underwater much longer without refuelling or surfacing. A nuclear submarine would allow Australia to reach China, the northern Pacific or the western edge of the Indian Ocean, the [Australian Financial Review] newspaper reported.

Lets leave aside for a moment, the ticklish issue of whether New Zealand would soon be forced – under our anti-nuclear legislation – to deny port access to the submarines of our Anzac buddies. That possible problem lies off somewhere in the future. Right now, if New Zealand’s purchase of new maritime surveillance aircraft is viewed by China as being complicit with Australia’s far more aggressive defence posture….then its pretty hard to see how this is consistent with the charm offensive that we are otherwise pursuing with Beijing, on the trade and tourism fronts. The unfortunate fact is that our defence counterparts in Canberra are far more tightly locked into the US defence axis than we are. If our own Defence bods can’t put more daylight between themselves and their former Anzac allies, this will become ever more problematic for us, as time goes by.

Of late, Defence Minister Gerry Brownlee has certainly been doing his level best to re-assure the Chinese that we’re really, really friendly, and very, very understanding. Last September at a function held at China’s National Defence University, Defence Minister Gerry Brownlee told us – and the Chinese – how he regarded the threat profile facing the Asia-Pacific region. Short version : there isn’t one.

For starters, Brownlee saw China as posing no military threat whatsoever now, or in the future: “ We do not expect the South Pacific will face an external military threat. ” Brownlee also called China a “strategic partner” and lavishly praised our “Five Year Engagement Plan with the Peoples’ Liberation Army.” In that same speech, Brownlee tiptoed around the South China Sea issue, calling on “all claimant states to take steps to reduce tensions” within the framework of international law. No blame being levelled there, no sides taken. Interestingly, Brownlee also said : “We do not see our defence relationships with the United States and China as mutually exclusive.” Meaning…don’t count New Zealand anymore as being (only) in the Western military club, alongside the Americans and Australians.

The Chinese, it seems, are now being viewed by the Key government as being our military allies, as well as our partners in trade. As Brownlee put it this week at the White Paper press conference, the old paradigms no longer apply : “Those old type allegiances, alliances, you know a good guy, a bad guy – I don’t think they’re as clearly stated [now] as they were.”

Right. And during the same press conference this week, Brownlee made further friendly overtures towards the Chinese. The current tensions in the South China Sea would not result in military conflict, Brownlee said. All the countries involved, he believed, had far too many trade and economic interests at stake for things to ever come to that. Still, as I pointed out to him, China has already signalled that it will reject the likely outcome of the pending international arbitration that New Zealand has been urging China to respect. In that eventuality, what options would be left for New Zealand to pursue?

“In the end, the world has to deal with this,” Brownlee replied. “Because it {the Chinese reclamation project on the disputed islands] exists. Two years ago, there wasn’t 3,000 acres on top of those atolls. There weren’t (inaudible) and there weren’t other installations. They’re there now. At some point, there has to be some understanding that they’re not going to go away. So we’ve got to work more constructively to understand what their view of those installations is going to be.” In the end, Brownlee concluded, “it is more of an ASEAN problem than one for us.” Provided of course, our goods and our trade can remain unaffected.

So, was he really saying that China – by dint of putting those installations onto the disputed territories – has created a fait accompli, and a reality with which the international community will somehow have to find a way of co-existing? “Well, it doesn’t matter what I say.” Brownlee replied. “They’re there…You can’t ignore them. We have to have a clear understanding of what’s going to happen on those islands in future. One of the most important things is to provide encouragement for China to desist from further reclamations in future, and further exacerbation of the situation.“ Discussions were proceeding with the six nations involved, amid urgent discussions about the rights of free passage and overflight. “ And we’re part of that.”

So, what is really going on here ? Plainly, the government is giving one message to the public when it seeks to talk up the ‘ need’ for massive hikes in Defence spending, and quite another when it is talking down such matters, when it is engaged in trade and diplomacy. The tensions in the South China Sea – and keeping our sealanes open for our trade – are being touted as the military rationales for our Defence spend, with a side helping from the bogey men of Daesh.

Simultaneously though, the government is claiming that the current regional disputes (in Asia and the South Pacific) will never result in military conflict, and that China poses absolutely no threat to us, or to the region. That’s aside from whether the costs involved “in keeping the sealanes open” stand up to any rational cost/benefit analysis – which they don’t. Nor BTW, in the same spirit of ‘whack-a- mole’ militaristic arguments, nor does the jump to an alleged need to combat piracy on the high seas. That doesn’t make very much economic sense, either.

Ultimately, it is difficult to justify a massive spending commitment to counter a threat that simultaneously, the Key government claims doesn’t exist at all. It looks more like a Defence bureaucracy seeking to perpetuate itself – by relying on WWII or Cold war precedents that no longer hold water – than a case based on genuine relative worth. Unfortunately though, the scale of Defence funding that’s now in train will have dire consequences in the real world, by squeezing out other options. Social needs in this country will continue to present themselves every day – but the funds required to meet them will have gone missing in action.

Footnote : New Zealand is at something of a crossroads in the evolution of its foreign policy. Trade, defence and foreign policy no longer line up neatly in a row, in close harmony with our friends in Washington and Canberra. Since the turn of the century, New Zealand has been steering an ostensibly independent foreign policy course, although only within the constraints of our Five Eyes membership. Of late, the shows of independence from the Washington line have been fashioned to try and score trade favours from China.

Defence has had to be dragged reluctantly into going along with this allegedly more ambiguous posture. Doubtless, it would prefer to be a paid up, dutiful member of the good old US/UK/OZ club once again. It feels more comfortable there. For its pains though, Defence is still getting $20 billion of money from the nation’s taxpayers – who are supposed to be grateful if the NZ Defence Force then finds anything useful to do with all of that shiny new gear. But the public health system? Alas, it will have no such luck.

Songs about (and by) lads in uniform

Of all the songs about running away to find a new life alongside other manly chaps, it is still hard to beat the ridiculous, campy high spirits of the “ Goodbye” song from the White Horse Inn operetta. For those who do know this song, this version contains a rarely heard (for good reason, as it turns out) second verse that dares to tackle the vexed question of whether a waiter can still be a man. Take it away, my good fellow…

10 Comments on On the new Defence White Paper

  1. Diplomacy does not require weaponry.

    With all the govt propaganda about investing in weaponry and war not in people with excuses trying to validate the (insane)$20 billion increase in military defense spending while the Crown NZ govt is clearly seen cutting health and vital social needs =breaching social contract with the people of NZ.

  2. Manufacture arms, identify scarey stranger risks, emasculate the UN, kill people elsewhere and claim this defends your home – the very successful military strategy adopted by the Western allies (including NZ) in the second half of the 20th century. Great for keeping Govts in power at home, the economy ticking over and giving the boys a playground.
    Now other power blocs can do it too – and the frontiers include the Pacific. Our home.

  3. Whats always missing in the western press is:

    1. That the other nations in the south china sea dispute are also reclaiming land and building on disputed islands.
    2.that the laws of the sea that america wants china to ahere to have never been ratified by the us ~ america considers itself above them
    3. that america is surrounding china with immense amounts of weaponry ~ offensive weaponry and yet somehow has westerners talking about chinese aggression.

    propoganda of empire is alive and well

  4. All of you are complete idiots, if you did the math you’d see this is less than normal. This is to be spent in 15 years… Well in 2012 the defence budget was about 3 billion… So in 15 years that’s going to equal a lot more than 20 billion. Another thing, saying its pointless because New Zealand’s currently not under threat is the stupidest thing I’ve ever heard. Its the same as insurance, you don’t always need it but when you do you’re glad you had it.

  5. All I can say is thank you Gordon, again, for your comprehensive, thorough and thoughtful analysis of the White Paper.

  6. Just a small logic challenge from your piece – the first third of your article is devoted to Defence spending being held steady around 1% of GDP… so how can you claim in your concluding paragraphs to a “massive” spend-up programme… could it be the hard truth is that Government is replacing some really aged large military platforms, with similar but modern versions over the next 15 years, managing to spend about what they have spent on Defence in recent times…? So in fact, no extraordinary spend up, but perhaps the absolute minimum to maintain a pretty modest defence force by global standards, which seems to deliver extraordinary utility to NZ – supporting fisheries, Customs, Police, DoC, Antartic NZ, not to mention cyclones in the Pacific (almost annual now), Christchurch earthquakes… the list goes on…

  7. We don’t have the gold standard in healthcare -we are missing the mark.
    Problem with the above warmongers and their current dysfunction in collective thinking is that seeks to rationalizes the $20 billion dollar investment in war and weaponry while people go without shelter, good food, heating and health.
    A govt mind that has become a “war machine” prioritizing $20 billion in an “austerity” economy for defending against imaginary enemies, wartoys, killing and invasions.

    Then these same twisted minds talk about the “inhumanity” of not taking double the number of refugees, refugees that this type of investment in war & crazy thinking creates.
    They don’t think to stop actively invading nations or ending the perpetual BS ” war on terror” which is creating so many refugees.

  8. @Pete
    There’s no logical challenge here. If you hold a percentage constant while the entity that it a ratio of is substantially expanding, then you can have massive increases in Defence spending while the ratio remains at 1%. That’s the basis of my beef over Defence vs Health spending. The spin is that the gross amounts dedicated to Health are increasing, but the ratio to GDP has been declining substantially since 2010 within a context of vast amounts of unmet health need – and a forecast of even greater need, given the ageing population. So….the government is preparing for Defence need to meet a non-existent threat – or one where secondary issues are found for the gear in question – while not meeting the real, present and looming dangers in Health.

  9. P.S. Secondary “uses” – and not “secondary issues” – is what I meant to say.

  10. And finally @ The person who has logic (above)
    Obviously, the $20 billion is new money, minus deprecation savings. Surely, for a self-labelled logician, it should have been obvious that you couldn’t buy that array of extremely extensive new gear out of the existing Defence budget, while maintaining existing services. Also, if we’re using household analogies, this spend up is like putting the paying of the house insurance ahead of feeding your family.

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