Defence spending keeps Canberra and US in step, with or without Trump

Great. Just what the world needs — another US secretary of state preaching the virtues of “freedom” while pressing for a coalition of the willing against an authoritarian power.

Fifteen years ago it was Condoleezza Rice talking up the need to confront Saddam Hussein. Now it’s Mike Pompeo building the rage against China.

“This isn’t about picking America versus China. This is about choosing freedom and democracy against tyranny and [an] authoritarian regime,” Pompeo asserted at last week’s AUSMIN consultations in Washington.

This time Australia wouldn’t be agreeing, at least in public. Foreign Minister Marise Payne made a polite nod to “our shared values”, but there was a limit. Australia would be making “our own decisions, our own judgments in the Australian national interest”.

Payne’s response has been spun as heralding independence day. In truth analysts had warned it was essential for Australia to be seen to differ from the United States, because China was making hay by painting Australia as a US lackey. It was in fact good for the alliance to do just what Payne did.

And anyway, how hard is it to differ from the evangelical Christian Pompeo, who has raged against China over religious freedom, human rights abuses and the country’s “bankrupt totalitarian ideology”, even calling on democracies to band together to “induce change” in the Chinese Communist Party.

Democracy. Freedom. Regime change. It didn’t work in the Middle East, so what are the chances with China?

And how to take Pompeo seriously while the American project is crumbling? The pandemic might or might not finish off US President Donald Trump, who is less than 100 days out from an election, but the post-mortem on American democracy is already underway.

The New York Times columnist Paul Krugman has written of how the “cult of selfishness” is killing America. His colleague Thomas Friedman observed that there is “a lot of hot, molten anxiety building up beneath our economy, society, schools and city streets — just waiting to blow the top off our country”.

“How did we get so inept?” he asked.

So how does Australia react, with a lunatic would-be dictator in the White House planning to subvert the popular vote on one side, and a belligerent anti-democratic force called China on the other?

Australia might have begged to differ on America’s most extreme posturing, but the two countries are united on one thing: however devastated the American and Australian economies are, military spending must go up and up — to the benefit of defence contractors and security consultants on both sides of the Pacific.

Defence budget bonanza

At the beginning of July the Morrison government announced a bonanza in defence dollars: over the next decade $575 billion will go to defence, including $270 billion on military hardware. US Defense Secretary Mark Esper commended Australia for upping its military firepower — $70 billion more than was anticipated in 2016. It was a “bold new strategy”, he said, one that put Australia “at the forefront as a really, extremely capable partner to the United States”.

Australia’s former ambassador to the United States Joe Hockey has spotted an opportunity and last month added two new senior hires from the Australian military and US security to join his consultancy, Bondi Partners.

“Australia now has a massive acquisition program involving mainly US military hardware and software,” Hockey observed.

“Australian companies will find they will not be able to operate in either Australia or the US without having some strategic advice in cybersecurity and intelligence.”

The boost in defence spending could not have come at a better time, with COVID-19 ravaging businesses around the world.

Of the top 10 defence contractors in Australia measured by turnover last year, seven are US- or foreign-owned. Leading the list is BAE Systems Australia, a wholly owned subsidiary of UK headquartered BAE. Last year BAE Systems Australia had a turnover of $1.2 billion.

Last week as politicians bickered over the hundreds of dollars involved in keeping JobSeeker viable for a person without work, BAE casually announced it was getting $30 million more for “ongoing sustainment of the Collins Class periscopes”.

Inq’s investigation demonstrates how enmeshed US and other foreign-owned arms manufacturers have become in Australian politics and policymaking bodies.

The Australian Strategic Policy Institute (ASPI) has become a powerful voice in the policy debate on Australia’s defence strategy. As cyber attacks on Australia have intensified, ASPI has advocated calling out China as the source. The institute’s executive director Peter Jennings has labelled China “the biggest strategic challenge to democracy since the fall of the Soviet Union”.

ASPI holds itself out to be independent, yet is is very much a creature of the defence establishment.

It operates with agreed funding of $4 million a year from the Defence Department.

Since it was established by the Howard government in 2002, ASPI has increasingly drawn in funding from other sources. These include defence contractors BAE, Lendlease Building Pty Ltd, Lockheed Martin, Northrop Grumman, Raytheon, Saab Australia, Senetas Corporation Limited and Thales. (ASPI has also received other funding from the Embassy of Japan, the Taipei Economic and Cultural Office and the US State Department, adding to a perception that it is structurally anti-China.)

ASPI’s governing council, which sets overall research directions, is appointed by the Defence Department.

Its current members include former Howard government defence minister Brendan Nelson, who at the same time is president of Boeing Australia, Australia’s fourth-largest defence contractor. He came to the role after running the Australian War Memorial where he courted the financial support of the major arms manufacturers, including Boeing, Thales, Lockheed Martin and BAE.

Two other former defence ministers, David Johnston and Robert Hill, have also recently been on the ASPI council. At the same time as serving on the ASPI council Johnston was on the board of Saab Technologies Australia. Hill also served on the board of German-owned armoured vehicle manufacturer, Rheinmetall Australia, which was ranked number six of Australian defence contractors with a turnover of $650 million last year.

The United States Studies Centre (USSC), operating from the University of Sydney, has also been advocating a suite of actions in relation to China covering state-based disinformation and cyber threats, deterrence and defence and defence industry and commercial collaboration.

The USSC operates with the backing of the Australian government and the American Australia Association, a privately funded not-for-profit organisation established by Sir Keith Murdoch, father of Rupert. Its official partners include weapons manufacturers Northrop Grumman and Thales. The two companies support the centre’s foreign policy and defence research program, along with funding from the Australian government.

The centre’s politically conservative board includes former South Australian Liberal premier John Olsen, Sydney barrister Louise Clegg (wife of federal minister Angus Taylor) and — again — Brendan Nelson, as head of Boeing Australia. 

Please PM, can I be defence minister?

Nelson isn’t the only one to have cashed in on his time in office. Inq‘s inquiries show that there is a club of five former Liberal defence ministers stretching back to 2001 who have capitalised on their defence connections after leaving the job.

The most recent example is Christopher Pyne, who took a job as a defence consultant with Ernst & Young (EY) nine days after leaving parliament in 2019.

Then came the trio of Johnston, Nelson and Hill. And before them was Peter Reith, who completed his parliamentary career as defence minister in 2001 before stepping into a paid role with the Tenix Group, now owned by BAE Systems Australia.

While the path from defence minister to defence industry is well-worn, the current Defence Minister Linda Reynolds has moved in the opposite direction.

Reynolds was a strategy director at Raytheon Australia before being elected to the Senate in 2014. Raytheon is also a major donor to the Liberal party.

On the Labor side, one-time defence minister Kim “Bomber” Beazley (known as a military hardware enthusiast) briefly joined the board of Lockheed Martin after finishing up as Australia’s ambassador to the United States in 2016. He was succeeded by former Howard government minister Amanda Vanstone in 2018.

“The prevalence of the ministerial revolving-door in Australia is currently legal, but should not be,” University of Melbourne politics lecturer George Rennie told Inq. 

“This is especially true of defence ministers, where it is increasingly normal for a minister to approve billion-dollar projects, only to then work for the same companies that profit from those contracts after leaving politics,” Rennie said.

“If nothing else, these conflicts of interest are a big part of the rapid erosion of public trust in democracy.”

The network of relationships crisscrossing politics, policy-making bodies and think tanks also gives weapons manufacturers huge scope to influence the nation’s decision-making on how it deals with China.

Next: The business case…