Senator REYNOLDS (Western Australia) (21:50): I rise tonight to speak on the topic of Australian Defence Force pay. I can assure you that I am not here tonight to fix the bayonets and charge; instead, I offer a different and very personal perspective gained through my military service and experience in government. Chris Richardson of Deloitte Access Economics was quoted into today’s Financial Review as saying, ‘currently, good politics has good policy over a barrel’, and I agree. Sadly, military service is all too easily politicised through simplistic and patriotic rhetoric, and in this debate it has been caught up in the good politics, not the good policy. The easiest thing for me to do this evening would be either to say nothing at all or to join in the cacophony, but neither option is the right thing to do.

Few, if any, service personnel enlist for the salary. It is always—always—about serving our nation. This point has quietly and persistently been put to me by servicemen and servicewomen since this issue arose. That said, I am the first person to acknowledge that our men and women in uniform do exceptional and often dangerous work on our behalf, and that they and their families make sacrifices that most other Australians are never called upon to do. Their remuneration and employment benefits must therefore reflect their service. This is why, over the past decade, ADF wage rises have outpaced inflation by almost 10 per cent. But, importantly and critically, they were done at a time when the nation could afford it. Chris Richardson also noted today:

… a temporary boom has come and gone, and a sustainable path for our national social compact requires some tough decisions.

The government’s decision on defence pay is one of those tough decisions. This is what good government looks like. This is not an easy decision but it is the right one for Australia in its current fiscal environment. As the Prime Minister said today:

… what’s possible with a $20 billion surplus is not always possible with a $40 billion deficit.

Most, if not all, Australians would acknowledge that we do have a social contract with our service personnel. While not explicit, it is implicit in the range of extra support provided to our service personnel over and above what most other working Australians receive. Therefore, any genuine public policy debate on this issue must also address the question: what is the nature of the social contract with our service personnel and what is our responsibility in return for their service? But when answering this question, benefits such as housing, medical, dental, superannuation and a wide range of other service- and employment-specific allowances must also be taken into the equation. The assistant defence minister, Stuart Robert, recently clearly outlined the complete remuneration package of an army private, and I commend that to anybody interested in the facts. As the Army Adjutant General responsible to the Chief of Army for the assurance of the safety and security of his personnel, I understand that any social contract extends to the quality of equipment and training provided to defence personnel to ensure they are as safe as possible in very dangerous environments and that they are supported by the most capable military systems we can afford.

Today, the Prime Minister announced that the government will not be going ahead with the changes to the allowances of defence personnel. I support that decision, but, again, it is $17 million that will not be available for other purposes within the defence budget, and the question is: where and whom will it come from? Sir Robert Menzies said over 50 years ago:

… the ALP can easily make a series of brand new offers without saying where the new hundreds of millions are to come from; though they will, of course, come from you. For governments have no money to spend except that which has been earned and paid over, by tax or loan, by the men and women of Australia.

Fast forward to today, and from those opposite we still hear expenditure recommendations but no accompanying saving measures. Here are some of the very inconvenient facts they studiously avoid in this place. Labor and the Greens left Australia with an accumulated debt of $123 billion, with $667 billion in projected future taxpayer

debt. This financial year the federal budget’s projected spending is nearly $415 billion. However, this year’s projected revenue is in the region of $385 billion, leaving a deficit which is greater than this year’s entire defence budget of $24 billion. As all Australians with loans know, debt does not improve with time, nor magically disappear. So not only is there the interest of $1 billion per month that Australian taxpayers currently pay but the principal of at least $123 billion also has to be paid back. Not once have I heard anyone opposite acknowledge that this debt has to be paid back or come up with a single credible policy to address it.

When the coalition came into power it found a defence budget that could only be described as a shambles. In fact, Dr Mark Thompson of the Australian Strategic Policy Institute said in 2012:

… investment is badly stalled, and the defence budget is an unsustainable mess. Not only are cost pressures breaking out, but personnel and operating costs now dwarf capital investment.

Put simply, the defence budget is a mess. Nowhere was Labor’s budgetary deception greater than their supposed grand compact with defence personnel—the Strategic Reform Program in 2009, which they promised would deliver Force 2030. In fact, Labor ministers promised on no less than 38 occasions that they were committed to average real growth of three per cent to 2017-18 and 2.2 per cent from 2018 to 2030.

The cruellest hoax of all that they perpetrated on defence personnel was a promise that if Defence made the SRP savings of $20 billion, it would be invested to deliver Force 2030. It was not easy but it was done by Defence. What happened? Instead of this rolled-gold absolute promise, $16 billion was cut from the defence budget—

10.5 per cent in 2012-13 alone. The share of GDP spent on defence fell to 1.56 per cent—its lowest level since 1938. Their promised 12 new submarines were one of the many programs unfunded by Labor. In fact, under them 119 projects were delayed, 43 projects were degraded and eight projects were cancelled. A complete 10- year defence capability plan has not been released since 2009, and by the time of the so-called white paper in 2013, all pretence of funding for defence had disappeared. I was the director of Strategic Reform Program for Army in 2009 and 2010, so no matter how often the Labor Party denies they betrayed defence personnel in the worst possible way I know it was true, because I experienced it firsthand. But do not take just my word for it. The secretary of Defence, Dennis Richardson, said last year:

No sooner had— SRP—

been announced and ‘sold’ within the Department— I might say in good faith on Defence’s side—

when broader fiscal measures not only led to a moving of the goal posts but to their cutting down for use as firewood.

Those are the secretary of defence’s own words.

This government is committed to delivering an ADF, but one that is costed, affordable and sustainable. We are starting the process of delivering vital capabilities that will ensure that not only can the ADF do what we ask of it but it does it with the best possible equipment and capability supporting it. There is no-one who wants to see the ADF re-equipped with the best available, affordable capability more than me; however, I realise that it has to be funded and paid for. It is my wish and my hope that we do continue to re-equip our service personnel and that they can receive a pay increase when once again the country can afford to pay for it.’