One of the challenges facing those who attempt to scrutinise the performance of the Australian Department of Defence is the general lack of transparency. Since Defence isn’t required to release many kinds of information, it simply doesn’t. This is compounded by the fact that much of what Defence does release is simply opaque or even meaningless.
We have an example of the latest statistics released by Defence Export Controls, the part of the Department responsible for issuing export permits to companies wanting to sell military and dual-use items overseas.
The export controls regime may itself be robust, but it’s hard to tell considering Defence doesn’t release information on who sold what to whom. And the data we do get is decidedly fuzzy. So when Defence releases a figure for the annual value of export permits, it bears little resemblance to reality. That’s because its figures are based on permits, not actual contracts or exports. Moreover, the companies applying for permits are not obliged to include a dollar value and whatever value they should assign is self-assessed (although on average over 90% have included a value over the past six years).
DEC itself notes that, ‘the statistics do not equate to actual exports as there is no obligation to conduct or report on an activity under permit.’ It’s unlikely that Defence even knows what actually gets exported.
DEC’s numbers also bear little resemblance to the data published by the Australian Bureau of Statistics (Table 12b) or the ABS numbers adjusted by the Department of Foreign Affairs and Trade, which are generally at least an order of magnitude lower. Granted, those figures don’t tell the whole story about Australian defence exports as they focus on weapons and munitions and don’t include all items with military utility or ‘soft’ exports like services.
In 2020-21, for example, DEC’s figure was $2,726 million while the ABS and DFAT had $165 million and $138 million respectively. So they are not even close.
But what is truly extraordinary is the trajectory of DEC’s numbers. From 2014-15 to 2021-22, the annual value of exports averaged $3.4 billion with some rather large swings ranging from $1.1 billion to $5.8 billion.
That shot up dramatically to $15.9 billion in 2022-23. That was a three-fold increase. One might see that as an indication of the success of AUKUS, except that the new export controls regime that removes the need for export permits for trade between the three AUKUS partners had not yet taken effect. Plus it’s hard to find any public information such as media releases by the Government or industry that could account for such a large number. In the absence of any explanatory narrative from Defence, who knows?
But that jump was trivial compared to the herculean leap in 2023-24 where the declared value of export permits was an astronomical $103.1 billion. Such a number is fundamentally implausible. The ABS and DFAT numbers are $417 million and $267 million respectively, so not even $1 billion, let alone anywhere close to $100 billion.
If Australian defence industry were achieving exports of that scale it would put Australia in the top handful of exporters, and we’d see evidence of it in the form of factories springing up and unprecedented numbers of workers being hired. But all the evidence is to the contrary, with companies both big and small noting that acquisition funding is drying up as AUKUS submarines eat everybody’s lunch.
Interestingly applications for export permits have not changed significantly, staying close to the historical average of 3,726.
We should acknowledge that a number attached to a DEC application refers to the total expected value of the export, rather than an in-year figure, and some applications are for on-going permits with no specific timeframe. So it’s possible that a company expected to export a billion dollars in equipment a year for 10 years declared $10 billion. Alternatively, since Defence also needs a permit to return equipment to an overseas manufacturer for repairs, it might have declared a very large number for the return of F-35A components for the next 35 years. In the absence of any explanation, we just don’t know.
And that’s the essence of the problem—we just don’t know what Defence is doing. The amount of relevant data that Defence releases is decreasing, such as schedule information on major equipment projects that would allow the Australian National Audit Office to assess Defence’s performance on delivery of military capability. The Secretary of Defence’s justification was that Australia’s strategic circumstances have markedly changed.’ One might have thought that made it even more necessary for the Department of Defence to demonstrate it was delivering the military capabilities needed to defence Australia.
As we see with the DEC statistics, what makes it into the public domain is nonsensical and simply thrown out there with no explanation that would allow the Parliament or public to make sense of it. That seems to be how the Government and Department of Defence like it.
The data:
As a reference, here is a table comparing different sources of data on Australian defence exports. The figures from the Stockholm International Peace Research Institute (SIPRI) are not dollars but Trend Indicator Values (TIVs), so they only show relative changes, not absolute ones. Those numbers don’t show a change in trajectory even remotely comparable to DEC’s numbers.
Source: Defence Export Controls; ABS (Table 12b); DFAT; SIPRI.
For those who prefer a more visual representation of the same data showing the discrepancies between the sources, here it is. Compared to DEC’s massive $103 billion, the others are barely visible.
Figure 1: Value of Australian defence exports, 2014-14 to 2023-24 (A$m, except for SIPRI TIVs)
