Jittery defence industry warns against cost-cutting
Andrew Tillett Political correspondent
Opposition defence spokesman Andrew Hastie has warned the government against cannibalising existing military capabilities to pay for new weapons, as the head of the Defence Force confirmed the military was pursuing efficiencies.
The Australian Financial Review revealed on Tuesday the Defence Department had ordered managers to find savings of 10 to 15 per cent from running and maintenance costs for major weapons platforms, including warships and aircraft.
Chief of the Defence Force Angus Campbell says the military is looking for efficiencies. Rhett Wyman
The across-the-board cost-cutting is aimed at freeing up billions of dollars as the government prepares to fund the recommendations of the Defence Strategic Review, which will be released later this month. The government must also find an initial $3 billion for nuclear-powered submarines under the AUKUS agreement.
Defence insiders are worried the savings drive could lead to larger maintenance bills and reduced availability of war-fighting assets in the future at a time of rising regional tensions with China.
Mr Hastie said the Coalition had requested a briefing on defence funding and urged the government to be transparent about which capabilities were being cut to offset the cost of AUKUS.
“We don’t want to see any capabilities in Defence cannibalised,” he said.
Chief of the Defence Force Angus Campbell said he would not confirm or deny the Financial Review report but acknowledged the Defence Department was always looking to spend taxpayers’ money carefully.
“I will emphasise that we are an accountable instrument of government, accountable in part for the expenditure that we utilise each year from the nation’s treasure,” he told the Lowy Institute.
“And so we are always looking for how to do things more efficiently, and how to be more effective in the way that we do them.
Work for local companies
“I’m in one way pleased that there’s a report expressing that kind of approach because that’s the kind of approach we should always have.
“And the way that technology changes, the way that our security requirements change, we must not stand still.”
The Australian Industry and Defence Network, which represents small and medium homegrown defence companies, warned against reducing work available to local businesses.
“Sustainment programs are the backbone of Australian industry and it is these types of activities that Australian industry is more than capable of undertaking,” the network’s chief executive, Brent Clark, said.
“Without these sustainment programs Australian industry will have difficulty in developing and maintaining the workforce and maintaining their skill levels in order to ensure that Australian industry can deliver complex programs such as the nuclear submarines.
“If these persistent rumours that the government will seek to achieve savings through sustainment in order to deliver their requirements through the DSR are true, Australian industry will be placed in a compromised position.
“There is little point in having state-of-the-art military equipment that cannot be used due to sustainment cutbacks.”
Mr Hastie said Australia should heed naval history lessons about neglecting existing equipment to pay for acquisitions.
“The creation of the Fleet Air Arm and acquisition of two aircraft carriers in 1947 came at a cost to our maritime capability for the following three decades,” he said.
“Funding new capabilities must not compromise existing ones. Throughout the entire DSR process, defence industry has been left in the dark. The opposition is calling on the government to be honest about the consequences of the DSR and provide clarity for defence industry.”
Andrew Tillett writes on politics, foreign affairs, defence and security from the Canberra press gallery.