MATCHING DEFENCE POLICY TO SPENDING

There's been a sudden, dramatic change to Australia's defence policy. 

In the past we've focussed on objectives first, and then insisted we'll find the money to fund these. Next years Defence White Paper will make it clear that that formulation has changed.

The number one priority is to keep defence spending constrained to less than two percent of GDP. This means abandoning the objective of acting as an "independent middle-power", as this column seeks to explain . . .

Tonight's budget is going to have to slash away at government programs across the board if it's going to meet Wayne Swan's objective of returning to surplus. When every other department is undergoing cuts, it's difficult to explain why the military should be sheltered. Obviously defence must take its share of the pain. But what's caused startled gasps this time is exactly where the cuts have been targeted: submarines and strike-aircraft. The point is that these weapons systems are absolutely critical to Kevin Rudd's vision of Australia as an 'independent middle-power'. That idea's now been jettisoned. 

This wasn't simply to ''get Kevin''. He'd implied that we could walk a middle course between China's rise and America's declining hegemony, but this cost money. The desire to share the table with the grown-ups didn't come cheap. We had to accept a concomitant requirement to possess forces that demonstrate we actually could act independently, if we chose to do so.

Instead, Julia Gillard's re-framed the issue. She understood that we don't want to put up the ante to play in the big league. And that's what inviting US Marines to Darwin is all about. We've accepted we're a minor player. What makes Gillard's choice surprising is that the move is fundamentally at odds with everything Labor has stood for over the past half-century; ever since Gough Whitlam went to Beijing while the Vietnam War was continuing. Nevertheless, this shift is sensible and will be welcomed by many people. Those on the left will have more money for social programs, those on the right will be happy about our re-alignment with Washington. But don't mistake the scale of the earthquake.

The surprise is that it's taken Gillard - a one-time euro-communist - to move us radically into America's orbit. This is as significant as when, during the darkest days of World War II, John Curtin announced ''Australia looks to America'' to provide its security. The details and rationale of her thinking will come with next years Defence White Paper, but just understand that she's overturned some fundamental strategic shibboleths.

Bombers and subs offered us the ability to strike back, hard, at any aggressor. It was no accident that both of these weapons systems were capable (with enough lead-time and in an emergency) of carrying (very small) nuclear warheads. Last week Defence Minister Stephen Smith announced, effectively, that we are no longer willing to spend the money required to achieve this ambition. Don't believe the noise about how the submarine program hasn't been put off - it has. Time constraints, and the new design work that was announced last week, has the same effect as abandoning the project. That time can never be recovered and will mean other 'solutions' need to be embraced. There will be no 'son of Collins". These two weapons systems were the skeleton on which the remainder of our force-structure hangs. Abandon these and there's still a great deal of muscle remaining, but it's strength that can only operate under the protection of a US umbrella. This also makes sense of the decision to base US Marines in Darwin and integrate a significant number of American officers into our amphibious force. We're recognising that the US provides the basis of our security and there's no political desire to pay the price of the alternative. 

Tonight's budget puts a numerical figure on the savings made from abandoning self-sufficiency. The key figure is the projected spending on defence as a proportion of GDP.

Successive White Papers have insisted that the cost of maintaining the sort of forces required to guarantee the ability to operate independently can be (roughly) quantified. That price is at least 2.5 per cent of GDP. Anything less is risible. But we've walked firmly away from spending this amount and the new White Paper will recognise this as its starting point. No government's managed anything like it since the early '70s. Tonight's budget will confirm that money allocated to defence has, yet again, slipped significantly below 2 per cent. More importantly, it dispatches significant purchases we'd need to buy to meet that objective off into the never-never, with no guarantees for the future. We will never catch up.

Although nobody's saying it officially yet, only one conclusion is possible. Our objective has changed. It's now, simply, to ''make a significant contribution to the alliance and act unilaterally where necessary in the Pacific''. That latter bit is what our huge new amphibious expeditionary force is for. We are turning away from Asia (except in so far as we can assist the Americans) and looking east.

At the sharp end this means we won't be buying enough Joint Strike Fighters to guarantee our ability to ''rip an arm off'' any adversary. And additionally, because of the long lead times necessary to build rather than assemble our own submarines, we are also making a clear choice not to maintain a submarine specifically built for our requirements. Instead we'll purchase a sub from a Baltic country or, perhaps better still, lease a decommissioned US boat.

After tonight there will be, however, only one sensible way of marrying up our planned force structure and ability to use force. The government has, very quietly but definitively, already taken a decision to radically challenge our conception of our place in the world. In particular, it has abandoned any pretence that Australia can ever again be a ''middle power''. The reason is simple: we're not prepared to pay for it.

Viewed like this it's suddenly possible to relax. We've become like New Zealand. Our neighbour spends far less than we do on defence, because they quite rightly think that geography means any country that wants to get at them has to go through us first. They benefit from a physical strategic dividend. We're hoping to take advantage of a cultural one. Getting to know China is, apparently, all a bit too hard. Nobody can be bothered learning those pesky character thingummies that they use to write, and as for the culture, well, it's far easier to watch repeats of the Simpsons than attempt to understand what Confucius might have meant. Kevin Rudd's engagement with China was complex and dual in nature, but that's all been overturned now. We may be quite happy to sell them minerals, but we're firmly lodged in the American camp. Culturally and now strategically, as well.