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The profits of arms manufacturers are sacrosanct

On Q&A last night, Christopher Pyne and Anthony Albanese were asked, if we must “live within our means”, why is defence spending quarantined from the cuts that every other sector is experiencing?

The smiling joking duo went immediately into their harmonised response. They are on a “unity ticket” when it comes to national security. Investment in defence materiel will provide “jobs and growth” and promote “innovation and technology.”

Albanese added that the defence forces play a vital role in dealing with natural disasters like floods and bushfires.

There is some truth in what they say – and a whole lot of crap!

There was a time when they were on a “unity ticket” for education funding, but that is now derided as an unaffordable pie-in-the-sky promise despite the overwhelming evidence showing the economic and social benefits of a healthy, well-educated population and skilled workforce.

Yet the $195 billion (and counting) to be spent on defence materiel over the next decade is “an affordable and balanced plan.”

There was a time when scientists at the CSIRO and researchers at our universities were regarded as crucial to our push for innovation and new technology. They were the ones protecting us from climate change, making breakthroughs in health, developing communications and new industries like renewable energy. They were the ones working out how to feed and fuel future generations.

Now, if they want funding, they better have a military application for their research or find entrepreneurs and venture capitalists who are interested in making a quick fortune from commercialising their discoveries.

We are not equipping our armed forces to help rebuild after natural disasters. We are putting them on a war time footing by hugely increasing their strike force capability. The following figures come from the 2016 Integrated Investment Program which shows some of the proposed capital expenditure out to 2035:

Maritime & Anti-Submarine Warfare >$151.35 billion

Strike & Air Combat $55.66 billion

Land Combat & Amphibious Warfare $76.38 billion

Intelligence, Surveillance, Reconnaissance, Electronic Warfare, Space & Cyber $26.794 billion

Key Enablers $43.16 billion

Air & Sea Lift $16.78 billion

Some of the big ticket items include:

Future Submarine Program – Evaluation, Design & Construction (>$50bn)

Future Submarine Program–Weapons & Systems ($5bn-$6bn)

Future Frigate Program – Evaluation, Design & Construction (>$30bn)

Future Frigate Program–Weapons ($3bn-$4bn)

Hobart Class Air Warfare Destroyer (3 ships) ($9.1bn)

Maritime Anti-Ship Missiles & Deployable Land-based Capability ($4bn-$5bn)

Destroyer Program–Combat System ($4bn-$5bn)

Offshore Patrol Vessel – Evaluation, Design & Construction ($3bn-$4bn)

Lead-in Fighter Training System ($4bn-$5bn)

Joint Strike Fighter Acquisition Stage One (72 aircraft)($15.3bn)

Air Combat Capability Air-to-Air Weapons & Countermeasures ($3bn-$4bn)

Air Combat Capability – Fourth Squadron ($6bn-$7bn)

Armed Reconnaissance Helicopter Replacement ($5bn to $6bn)

Armoured Vehicles–Combat Reconnaissance Vehicle ($4bn-$5bn)

Armoured Vehicles–Infantry Fighting Vehicle ($10bn -$15bn)

While a few thousand ship builders might keep their jobs, and some Australian steel might be used, these are not nation building investments and the vast majority of these hundreds of billions in expenditure will go to foreign arms manufacturers.

It would have cost a lot less to support the car industry and provide employment for tens, or even hundreds of thousands of people in Australia.

Imagine how many people would be employed if we chose, instead, to invest in FttP NBN and building a high speed rail line from Melbourne to Brisbane. Think of the productivity improvements that these two projects would provide.

Imagine the benefits if we invested just a fraction of this money in health, education and affordable housing and lifting people out of poverty.

Imagine being able to give security to those people who rely on a pension and hope to those people who want to work.

Imagine if we actually helped rebuild countries instead of bombing them, if we helped provide fresh water, if we built schools and hospitals instead of submarines and fighter jets.

We are building 12 subs, China has 70. At the same time we are investing heavily in anti-submarine attack vessels which I am sure other people have too. The vast majority of our military hardware is only used for war games including with China who, it is to be remembered, now own our northernmost port.

The Darwin deal will provide Chinese shipping and naval vessels with facilitated access to Australia, the Indian Ocean and the South Pacific, as well as to Indonesia and PNG over the coming century.

Geoff Wade wrote of his concerns on the Drum.

Those who believe that Chinese economic investment abroad is unconnected with PRC strategic aspirations need only look at the sorts of major infrastructure investments that Chinese firms have made in Australia – China Merchants’ century-long lease of the port of Newcastle (proximate to RAAF Base Williamtown), Landbridge’s century-long lease of the port of Darwin (proximate to RAAF Base Darwin, HMAS Coonawarra and to Larrakeyah Barracks), the new links between Qinzhou and the port of Townsville (proximate to RAAF Base Townsville), and a China-connected firm buying the plot of land next to ASIO headquarters in Canberra.

In addition, we have SOE State Grid controlling Australian energy networks and hoping to gain control of NSW electricity network assets which also carry top-secret ADF communications. Next on the PRC acquisition list will likely be the port of Fremantle (proximate to RAAF Base Pearce and HMAS Stirling). China’s accessing of CYBINT, SIGINT and HUMINT intelligence through these new access points would present ongoing security concerns for Australia.

It seems our trade and investment negotiators have different goals to our defence forces.

And as one hand works against the other, our society pays the price to make foreign arms manufacturers rub their hands in glee.


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  1. Keitha Granville

    A poster from quite while ago springs to mind (words to this effect)

    Wouldn’t it be good if education was fully funded and the military had to have a cake stall to buy weapons.

    Amen to that

  2. Kaye Lee

    Keitha, I love it 🙂

  3. auntyuta

    Yes, amen to that! 🙂

  4. Miriam English

    This makes me incandescent with rage. Damn! Damn! Damn!

    This must be stopped. Unfortunately it looks like getting Labor elected isn’t going to help. The two big parties are colluding: we don’t matter at all; overseas arms manufacturers do.

    I wonder how much the two big parties are getting from the military-industrial complex for this obscene favor.

    Anthony Albanese clearly shows his true colors. How putrescently corrupt of him.

  5. Miriam English

    It occurs to me that this might have been the end-game after all. Extract as much money as possible from social programs so that it can be shipped off to arms manufacturers for useless, outdated, ineffective crap. Screw the population. They’re peasants that don’t matter. Anyway, Rupert can keep them chasing their tails.

    Hmmm… I predict that if Labor win the election they’ll turn around and say, “Sorry, we can’t afford the education and Medicare we promised because we’re committed to paying all these important overseas arms manufacturers for their buggy crap.”

    The weird part? Hi-tech war no longer works. It hasn’t since the most technologically advanced country on Earth failed to defeat a bunch of Vietnamese peasants. Iraq was a broken country crippled by many years of embargoes when the USA, along with some of the other wealthiest countries (including, to our eternal shame, Australia), attacked with full technological fury. That war looks like it will never be won. The hopelessly poverty-stricken tribal people of Afghanistan were attacked relentlessly for many years by the West, before finally retreating, having realised it is another war impossible to win. Daesh (ISIS), a pack of primitive idiots running around the countryside hurting people and creating hate and opposition wherever they go turn out to be impossible for the West to vanquish (if indeed the West is actually trying to).

    So in this era in which big war no longer works, why the hell are we buying into it???

    A much smarter move would be the Switzerland strategy. Make yourself indispensable to any potential opponent, so that they have far more to gain by your intact existence than any attack would deliver.

    But no. These living fossils are so outmoded in their thinking it is a wonder they can breathe while speaking.

  6. Jack Russell

    If we are the strategic interest of both America and China, then why?

    It’s definitely not for our benefit as it’s costing us untold billions, garnered from the austerity being forced on the Australian population, and the firesale of our public assets, to the detriment of our economy.

    Quite apart from military profiteering and the wealth of our country being sequestered by global corporations, why are we being singled out for this particular attention by these two giants?

    Is it merely location, location, location? Why would we willingly beggar ourselves for that?

  7. Klaus

    Vote Green

  8. z

    in history, Australia never ever face invasion (apart from WWII Darwin bombing) of any sort and will not in predictable future, no real threat of any kind against Australia national security for now and for future

  9. Kaye Lee

    Jack Russell,

    Read the rest of Geoff Wade’s article. I don’t know whether I agree or not but it makes for interesting reading as do some of his links.'s-expansion/6967640

    This is one of his links about Chinese objectives

  10. Klaus

    Correct z. And the clumsy Submarines, costing 50 billion plus (and it is questionable what will be build here or when the jobs flow) will be outdated by the time they get into the water. It is so sad that Labor doesn’t have the balls to stand up and half the military budget. I know how the LNP would jump at that, screaming from the top of their lungs how Labor jeopardizes every Australian Citizen, how Terror will be rampant domestically. Not sure whether Submarines or F35s will work against domestic Terror.

    Bill should half the military budget, half the AFP, half the Border Force (beter still dismantle it and put the Immigration back in (take their weapons)). I could go on and on.

    Australia is not sovereign. It is visually beholden to the UK, economically beholden to China and militarily beholden to the US. No sovereignty left.

  11. Athena

    Good article, Kaye.

    Nick Xenophon asked why Australian paper isn’t being used for ballot papers. Instead masses of it is being imported from China. The reply was that the government doesn’t want to risk upsetting the Chinese because TPP. All this talk of innovation is a load of hot air. The TPP excuse is going to be trotted out time and time again, no matter which one of them forms government.

  12. Kaye Lee

    Funny you should mention that Athena. Because of ChAFTA, Chinese paper and packaging imports have had their tariff reduced to zero while Australian paper and packaging exports will still face tariffs. 15.000 jobs are at risk.

    The Ai Group estimates that the local industry can expect to face almost $1billion of Chinese imports over the next four years.

    “Given these statistics it is difficult to understand why our negotiators accepted such an unbalanced deal,” it said. “With the anticipated lost tariff revenue we are effectively providing the Chinese packaging industry with a $58 million subsidy over the next four years.”

    The Ai Group submission warns that Australian paper and packaging companies could “make the strategic decision to move manufacturing to China, as this is the business model currently being rewarded under ChAFTA.”

  13. Matters Not

    We are building 12 subs, China has 70

    When our 12 subs finally arrive (not that 12 ever will) China will have many, many more. It’s an ‘arms race’ we will never win and shouldn’t even try.

    If the Chinese attack us we should simply give them a 1 300 number with a recorded message – We surrender!

    But why would China attack when it’s so much cheaper to buy. Besides why damage the ‘goods’.

    As for Albo, he does himself one hell of a dis-service with his ‘singing and dancing’ routine in the company of Pyne. Where have all the ‘haters’ (people of passion) gone?

    As for the unbalanced deal? We were the desperate ones. Thanks to Abbott.

  14. Athena

    Thanks for the link Kaye. Nothing surprises me about either of the major parties any more. What did Australia get out of the TPP? We won’t have to replace the front door because the Chinese will be able to walk straight in rather than be forced to kick it down? Anyone who thinks that either of them is interested in supporting Australian industries and jobs is dreaming.

  15. Jack Russell

    Thanks Kaye.

    Had a quick look but will need more time to absorb it (going out shortly). From what I did see, my first thought was America won’t like any of it, which leads to another scenario to think about as well.

    I hope my brain doesn’t explode. 🙂

  16. Buff McMenis

    $370.124! That’s THREE HUNDRED AND SEVENTY BILLION, ONE HUNDRED AND TWENTY-FOUR MILLION DOLLARS!! That’s a lot of money! Just think what schools research, farmers, pensioners, manufacturing, renewables, Health, Education, Asylum Seekers, Immigration, Scientific Research, the Arts, etc. could do with all that!

  17. Roger Sharpe

    Have you considered the arms companies don’t want wars to be won?

  18. Kaye Lee

    Never fear MN, while we are waiting twenty years for the new submarines, we are spending billions on new stuff for the old submarines.

    Collins Submarine – Sonar Replacement ($750m-$1bn)
    Collins–Satellite Communication ($750m-$1bn)
    Collins Class Submarine Sensor & Communication Enhancements ($400m-$500m)
    Submarine Escape & Abandonment System ($400m-$500m)

    As if in twenty years this technology will even be relevant. I keep asking what exactly our submarines are going to do. Apparently they do “surveillance” which one would have thought could have been better done by satellites, radar and drones.

  19. Steve Laing -

    Labor is taking a bi-partisan approach purely to avoid being wedged by the LNP. This expenditure on weaponry is truly wasteful, but Turnbull seems dead-set on it, apparently another example of trickle-down, but this time of innovation rather than prosperity. And again, entirely bogus. But it gives more insight into how ridiculous the political narrative has become. We spend vast amounts on issues which have been blown up out of all proportion. We are in spending like we are in an arms race, but one we cannot win (indeed if we are in one, we have clearly already lost – I wouldn’t be betting against China in a manufacturing war any time soon), and the wastage to incarcerate a few hundred/thousand refugees is equally obscene.

    But the LNP will keep blowing that whistle, and Labor will keep barking at the moon to try and appear that they are equally concerned despite the LNP plans being utterly illogical, and far beyond our means. Unfortunately all that this means is that the Libs have got to become more and more extreme to try and wedge Labor. Which means more money on weapons and security, and worse conditions for refugees. A never ending spiral downwards.

  20. jim

    Right I’,m voting LIBERAL

  21. jimhaz

    The Greeks were still spending big on military even after the GFC.

    The secrecy in which military contracts are arranged certainly leaves plenty of scope for bribery or other forms of skulduggery.
    Or maybe countries going broke like to spend up big on defence!

    Or maybe we don’t actually have any sovereignty…we do what we are told by the old school powers.

    Looking at the dud Free Trade agreements and everything else we do to please the US and UK, I’m inclined to think this last option is most likely.

    “Just under 15% of Germany’s total arms exports are made to Greece, its biggest market in Europe,” Papadimoulis said, reeling off figures from a scruffy armchair in his party’s parliamentary office. “Greece has paid over €2bn (£1.6bn) for submarines that proved to be faulty and which it doesn’t even need.

    “The problem is that unlike Britain, for example, Greece has never had a transparent and democratic defence procurement strategy. Instead, everything is veiled in secrecy and people like me have to go to Sipri to find out information that in other countries would be readily available.”

    “Speculation is rife that international aid was dependent on Greece following through on agreements to buy military hardware from Germany and France”

  22. jimhaz

    We need these subs to patrol our beaches…..for sharks

  23. FreeThinker

    A total failure of imagination from both major parties.
    One of the best strategies national defence lies in education of youth, and forms of ‘ soft diplomacy ‘ .

    Imagine if we set fully funded goal targets by 2025 – 2030 of having fostered :

    150,000 additional fluent Australian-born Mandarin speakers coming through the school system

    150,000 fluent Australian-born Bahasa Indonesia speakers coming through the school system

    10-fold funded increase in short term residential placements for secondary school students in south east Asian countries to strengthen understanding of cultures and to improved language of than English learning

    10 fold funded increase in short term placements for Australian secondary school students from south east asian countries

    Significant funded increase in reciprocal international exchanges for undergraduate students between Australia and South East Asian nations, for periods of one or two semesters

    A significant increase in Australia’s international aid reaching up to 0.8 of GDP by 2025

    Fully funded implementation of Gonski ongoing

    Closure of the off-shore detention centres.

    Could go on, but just those developments would not even be equivalent to 5 or 6 submarines which will be outdated by the time they are built.

  24. Kaye Lee

    Also from the ASPI link, which is very informative if you are really interested…….

    “After managing a 10.7% real increase in spending in 2014-15 and (most of) a 5.7% increase this year, defence funding growth in 2016-17 has had to be deferred because Defence is unable to accommodate the boost. The last time a sustained increase in defence spending was attempted was following the 2000 White Paper. In the years that followed, spending was repeatedly deferred because the money simply couldn’t be spent. Between 2000 and 2008, Defence underspent its budget on four occasions and close to $1 billion worth of unspent funds (very quietly) accumulated in DMO’s intra-government account. Over the same period, net deferrals of capital investment reached $7.9 billion, with an average project delay in excess of 4 years.

    Few things would encourage a government to abandon its commitment more than Defence being unable to spend the money it already has. As occurred following the 2000 White Paper, we could see a situation where falling confidence in Defence’s ability to spend results in large deferrals.”

  25. jim

    Liberals cut pay and pensions across all defense personal even removing assistance to the war orphans education funding.Alp took funding for Vietnam vets personal to a record high $12.5 billion thats been unmatched by the Liberals. Who spends more on personal (humans) and who spends more on hardware?. guess.

  26. Kaye Lee

    In 2004 the World Bank’s Integrity Unit blacklisted Thales from any of the World Bank’s projects for one year because of its fraudulent practices in a US$6.9 million contract for the supply and maintenance of motorcycles in Cambodia.

    2011: The French state and defence electronics group Thales will have to pay a record fine of 630 million euros ($920.2 million) for bribes in the 1991 sale of frigates to Taiwan, a court ruled on Thursday.

    2014: ◾Zuma used the code words “Eiffel Tower” to accept a R500000-a-year bribe from Thales in return for political protection in the arms deal probe and to secure future business;
    ◾Thales gave former ANC treasurer Mendi Msimang a cheque for €1-million (about R14-million at today’s rates) in April 2006 to be paid from a secret Dubai account into an “ANC-aligned trust” shortly before the company was due to stand trial for corruption with Zuma;

    2016: A judge will probe whether Bernard Baiocco, former president of French defence group Thales International Asia, paid illegal kickbacks to Mr Najib via an associate of the prime minister to win a 2002 contract for two submarines

    Top 20 suppliers to DMO in 2014-15: Number 1, with 1,075 contracts worth $1,014 million….Thales.

    Table 9.6

    As a major player in the defence sector in both France and Australia, Thales is delighted that DCNS has been selected, after an international competitive evaluation process, as the international partner of the Australian Ministry of Defence for the renewal of its submarine fleet (SEA 1000 programme).

    Thales is DCNS’s main shareholder (35%)

  27. Miriam English

    No wonder Christopher Pyne and Anthony Albanese were all smiles. I wonder how much they were bought for.

  28. Phil

    Forensic reporting here thanks Kaye Lee – brilliant work – so damned informative.

    Likely that a majority of Australians don’t give enough weight to the reality that Australia is a vassal state to the USA – we are subservient to US foreign policy in our region. As a vassal of the USA, Australia is permitted to elect any government it chooses, provided it chooses one that pays due homage to US interests. If any one thinks Australian foreign policy and weapons procurement is not first fully vetted thence if found suited to US interests in the region, approved, then they live in fairy land. The USA will not tolerate a genuine leftist government anywhere on the planet, evidence the leftists dominoes falling in South American governments toppled with the assistance of covert powers of the CIA.

    Gough Whitlam threatened to close Pine Gap and it was the last threat he ever made toward US goals of hegemony in SE Asia. The official story of his sacking is a fairy tale – unoffically it has the fingerprints of foreign states all over it.

    Australian electoral finance laws are so utterly permissive as to facilitate vast sums to be transferred to the coffers of right wing political parties election war chests with the sole intent of securing legislation supporting furtherance of US military and corporate interests in our country and region. The US Republicans and their vast military complex have a vested interest in Australia staying well to the right of the political spectrum and they mean it!!. Hillary Clinton is a hawke and if elected will act in similar form.

    The ALP, although differing from the LNP in areas of minor relevance to the US military machine, is well aware of the risks it takes if it moves too far left – hence we have two right leaning parties to choose from – one rabidly right, the other moderately so. The Australian Greens will never take government in their current form – the USA will not tolerate a vassal so bold – our future is really quite simple to see when viewed this way.

    What to do about it? That is the big question. China is a major player on the US-Australian geopolitical game board. The USA especially its operatives in the CIA and NSA will continue to work forcefully behind the long established political veil no matter who wins government in July.

    Twenty three million little Aussies have no real say in the bigger and very dangerous game being played out between a declining global behemoth and a rising global super power – we simply don’t rate other than as a strategic land mass.

    Diplomacy is therefor Australia’s most important and essential role in the years ahead. To date the LNP has shown abysmal talent in the field of foreign diplomacy – absolutely abysmal.

    Although Shorten has not been tested in the wider foreign affairs field, his temperament and finely honed negotiating skills are critical assets. I’m putting my faith in Shorten as a better prospect for steering Australia through the difficult minefields ahead as the US and China stalk each other with us in the middle.

  29. Athena

    I second that, very good work Kaye. I’m amazed at how you manage to remember all this stuff at the right time and manage to find it all when you need it.

  30. Kyran

    Any agreement to spend to a commitment of GDP without adequate oversight is, obviously, fraught with danger. Our % of GDP for education appears to be about 5% (2012, the most recent figures I could find). Health was at 9.2% in 2000 and appears to be 9.4% ever since.
    Whilst they are big numbers in terms of GDP, the hue and outcry against any increase is in defiance (or ignorance) of the oversight those two sectors are subjected to. The ‘military’ get 2%, with no oversight.
    To add insult to injury, these guru’s offer no security to Australians. Only their overlords. The Australian CEO for DCNS is Sean Costello. Ex chief of staff for a defence miniature who boasted his department couldn’t build a canoe (whilst sophie was on the board of the canoe builders, ASC P/L).
    Putting that aside for a minute, we have allowed the Chinese to invest in ports closely aligned with military bases. Has anyone else read John Marsden’s “Tomorrow” series?
    Putting that aside for a minute, the ABC are reporting the ‘State Owned Enterprises’ (SOE’s) in China have undermined 60% of the capital held in Chinese banks, alleging a $1.7 trillion debt bomb. Does anybody know if we got cash up front for their investments? Under the circumstances, I wouldn’t take a bank cheque.
    Putting that aside for a minute, there is an American tourist resort situated about 1,500 kilometres south of Darwin (thanks, Phil). This resort has CIA, NSA and NRO oversight, all of whom are, apparently, American tourists. Pine Gap is regarded as one of the most significant eavesdropping facilities on the planet. It oversees “Echelon”, also known as “the Five Eyes”, the five eyes being UK, USA, Australia, Canada and New Zealand. Given its charter, it couldn’t find MH370. Maybe they should have called it Cyclops.
    Putting that aside for a minute, Snowden warned of a new program given to surveillance, operated largely out of Pine Gap. The PRISM surveillance program required metadata and was incepted in 2007. Our metadata laws have been amended, ever so steadfastly, since then.
    “It seems our trade and investment negotiators have different goals to our defence forces.”
    With respect, I disagree. They have the same goals. They are just working out which dead cat to throw out to make it acceptable.
    Always grateful, Ms Lee. Take care

  31. Matthew Oborne

    Simply put are they building up a powerful lobby donor group????

  32. marki

    you ready to start a party?

  33. Miriam English

    Matthew Oborne, more likely they are being built up (bribed) by a powerful lobby donor group.

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