Guns over Butter: Why Is Defense Exempt From Budget Cuts
When a country decides to invest in arms, rather than in education, housing, the environment, and health services for its people, it is depriving a whole nation of happiness
Oscar Arias Sanchez, Nobel Peace Prize Winner
Since the publication of the federal budget, projected cuts to key social sectors have generated strong public reactions. The government’s unhealthy obsession with the debt has resulted in cuts to essential social services. These cuts are designed to take Australia out of its godforsaken debt, and return the economy to surplus.
Amongst these cuts, however, was one mysterious exemption. While the axe fell hard on education and health, government spending on defense was not touched. All other major sectors have been subjected to significant reductions in future funding, yet defense was left alone. As a matter of fact, defense spending increased. Total government expenditure on defense increased by some 6.1% (a total of $2.3 billion), raising total annual expenditure to $29.3 billion.
The ‘Guns Versus Butter’ model is a macroeconomic theory, which evolved in the 20th century. The theory simplifies government spending into two fundamental sectors: defense (the military) and consumer spending (civilian goods and services). The theory is effective if proportional spending reflects respective internal and external threats. As demonstrated by federal budget, the government has prioritized guns over butter. But without any obvious external threat, why?
Quite simply, to ‘sure up’ the US alliance. Following prior US concerns over the Gillard government’s reduction in proportional defense spending, the Coalition set a new spending target. Treasurer Joe Hockey outlined the government’s intention to raise defense spending to 2% of GDP (from a current rate of 1.6%). As reported in The Lowy Interpreter, this figure is seen as a ‘minimum buy-in’ to ensure the US stays on in ANZUS. 2% is a minimum standard figure maintained by NATO member countries.
While securing the US alliance is important for national security, alliance maintenance should not come at the cost of social services. Using the language of ‘Guns versus Butter’, spending must address threats, both internal and external. If Australia faced genuine external threats, increased defense spending would indeed be justified. In this circumstance however, resources have been provided to satisfy some arbitrary spending target. Rather than addressing a threat, government’s allocation of funds in this budget has actually created a threat. Proposed cuts to social services and education endanger internal stability, and consequently represent the biggest threat to the nation.
While health and education must account for every cent, defense gets a blank cheque. With regular audits and spending reviews in social sectors, defence faces little scrutiny and is largely immune from cuts. Spending has ballooned out of control on various defense projects, exemplified by the $12 billion purchase of 58 F35 Joint Strike Fighter aircraft earlier this year.
The defense budget is the elephant in the room. Like every other sector, it must be held to account for it’s spending. If the government genuinely wanted to return the budget to surplus, they would cut spending in biggest sector. Either that or drop this empty budget surplus rhetoric.
Statistics from http://www.lowyinterpreter.org/post/2014/05/06/Defence-budget-2-target-essential-for-Australias-alliance.aspx?COLLCC=1599160109&
By Dominic Sciberras