In 2002 the Howard Government made the decision to purchase up to 100 Joint Strike Fighters (JSF) from the United States of America, making it the largest single defence purchase in the history of Australia. Now, a decade on, the JSF program is struggling to deal with major flaws in capabilities and the project is at least 5 years behind schedule. And to top it all off, the original cost of the jet has gone from $40 million each to almost $130 billion dollars per aircraft.
The troubled JSF program was the subject of a Four Corners documentary on Monday night which shows that the problems surrounding the construction of the plane are continuing. When it all boils down, the same questions are being asked about the program that have been for years now. But the questions become even more relevant with every mishap and every delay in the delivery of the Joint Strike Fighter.
The overriding question is: Should we have purchased the fighter jet when we did? But the situation involving the procurement of the JSF is far more complex. Another important question is: Should we have put the purchase of new aircraft out to tender? The final very important question is: Would a tender process have improved the situation?
There is absolutely no question that the decision is a budgetary disaster, with the cost per aircraft ballooning by about $90 billion dollars. We have had to purchase 24 Super Hornets as interim aircraft while we await the delivery of the F-35. Due to domestic budgetary constraints we have delayed delivery of twelve of the aircraft, but those delays will be trumped by the design delays.
In short, the government should not have made the F-35 procurement decision when they did. The decision to purchase was made too early and, according to a former Defence official interviewed by Four Corners, based on a reportedly persuasive conversation former ADF Chief Angus Houston had with a defence official from the United States of America. The government should have waited until there was more concrete information on the aircraft. Word of mouth is not particularly strong grounds for making decisions about buying new military capabilities.
The question of a tender process is both simple and complex. It is simple in the sense that a tender process would have been the most prudent option for what was the most significant single defence purchase made by an Australian government.
A formal tender process would have given Australia options, even if the JSF still turned out to be the most sought after option after competitive bidding. More importantly, there would have been greater oversight of the decision-making process. Competitive bidding would have also driven down cost somewhat and that would have been helpful given the cost blowout over the last decade.
But the shambles that is the F-35 purchase might not have been avoided under a competitive bidding regime. What we are dealing with is, above all, a manufacturing and design problem. There is absolutely no guarantee that competition in the bidding process would have meant the absence of flaws in the aircraft’s design. In fact, we can be certain that a bidding process would have had no impact on the design of the plane.
The distinct lack of process is striking when it comes to the Joint Strike Fighter. Even without knowing what the documentary revealed, we should acknowledge there have been problems with the procurement of the JSF. We should have started a tender process leading up to the 2002 decision which still could have been made. We would have saved some money, but could have easily encountered the same problems unless we had bought an aircraft already under production.
The funny thing is, for all the extra money and time, we should still end up with a very advanced air capability at the end of the drawn out process – providing the technology is not superseded.
It is a regular feature of Australian politics that in the days and weeks leading up to the delivery of the budget by the Treasurer of the day budget leaks and rumour generally abound from the Australian political centre that is Canberra. This year however, announcements of budget items seem to have outdone the whisperings about possible spending allocations and cuts that followers of politics are used to leading up to that Tuesday in May when the Treasurer steps up to the despatch box to inform the country of their governments fiscal priorities.
There has been, for some days now a rumour abounding in Canberra and fuelled by the heightened interest of politicians in ensuring it does not occur, that the Gillard Government is set to announce cuts to the foreign aid budget.
This follows a promise by Labor, under former Prime Minister, now humble backbencher, Kevin Rudd that the Labor Government he once led, would increase foreign aid spending to a total of 0.5% of Gross National Income (GNI) by financial year 2015-16.
The belief around Canberra and the aid sector seems to be that the government are set to scrap their commitment to head toward spending on foreign aid of 0.5% of GNI.
The rumour mill surrounding this has almost exploded from being overworked and it would appear, with the strength of the political backlash to the simple report of this possible move that there has to be a real element of truth in it, without any real details having been leaked on the matter. So this item, almost alone in specific and credible rumours will be one to keep an ear out for confirmation of or otherwise from 7:30pm next Tuesday, May 8th.
But for this one real virulent rumour there have been more confirmations of and half announcements of both cuts and new spending to be allocated in what the Labor Government hopes will be a budget that returns to surplus in 2012-13.
Aged care is set to be overhauled in the 2012-13 budget to be delivered by Treasurer Wayne Swan on Tuesday. Back in April it was announced that the government would commence, on the 1st of July 2012 a ten year plan costing $3.7 billion to transform the way aged care is delivered, allowing more people to seek care in their own homes and making the cost of aged care homes easier to bear for the most financially vulnerable.
The Australian Government, via Prime Minister Julia Gillard on Monday at the NDIS rally in Sydney half announced that there would be an allocation of funds toward starting the National Disability Insurance Scheme a year earlier, commencing at 4 different launch sites from July next year.
But it was only a partial announcement from the PM, albeit a very welcome development for Australian’s with a serious and permanent disability and their families and carers. Prime Minister Gillard announced that next year these 4 launch sites would assist an initial 10,000 Australians with a disability and double the next year to provide help to another 10,000 people.
What this announcement lacked was detail, including most importantly, the estimated cost of the program rollout, but also what parts of Australia would be given the opportunity to be covered by the Medicare-like framework. The PM said we must wait until the budget for the details, a real tease, if not a hope building one in this important area of government policy.
In a budget where the expectations were for savage spending cuts, a new spending initiative is a very interesting element in the budgetary discussion which is ramping up five days from its announcement.
Today too, the government have announced $214 million toward the planning of 12 new submarines to replace the Collins Class fleet which had their troubles, particularly in the initial stages of development and operation.
Again though, for these not insignificant spending allocations, the Labor Party have also flagged ahead of May 8, areas where they will seek to slash or defer public spending.
The government today also announced in the area of defence spending that there will be both cuts and the deferral of spending in the area of purchasing defence materiel.
It was announced today that the planned requisition of self-propelled artillery will be scrapped altogether and this alone would save the budget bottom line a total of $250 million dollars.
The trouble-plagued delivery of the F35 Joint Strike Fighter (JSF) will be delayed two years from the previously expected date of receipt, moving our acquisition of this defence capability into line with that of the US. In doing this $1.6 billion will be saved from the budget from this measure by itself.
In announcing the cuts to defence spending, both the Prime Minister and the Minister for Defence, Stephen Smith assured Australia that defence cuts would not impinge on or include cuts to spending related to our operations in Afghanistan and elsewhere overseas.
The leaks and rumour mill have been almost non-existent over the budget-planning period and look set to remain minimal with only three full working days left before the final announcement of spending priorities occurs in Canberra. This could be put down to the poll woes that have faced the government for a prolonged period of time, trying to get some messages out early to cloud what is supposed to be a difficult budget, according to the warnings repeatedly given, no matter how unbelievable.
Nevertheless it has been an interesting exercise to observe the seemingly comparative lack of rumours as we hurtle toward the 2012-13 budget.