SECTION 6 – THE COST OF WAR
Introduction
The 2003-04 ASPI Budget Brief included a full analysis of the cost of all deployments
since 1999-00. Since then, rather than repeat that extensive discussion, we’ve
maintained a shorter format. This Section includes an explanation of how Defence is
funded for deployments, updated tables of historical deployment costs, a summary of
the cost of the Iraq and other recent operations, and an assessment of the impact on
peacetime rates-of-effort of recent operations.
What do we mean by the cost of a war?
As a rule, Defence is supplemented for the net additional cost of any major military
operation. This makes good sense because, in principle at least, it ensures that
Defence does not have to compromise peacetime training to fund operations and
avoids them having to maintain a contingency reserve to cover unanticipated costs.
Figure 6.1 shows how the net additional cost of an operation is calculated. In the past,
Defence only disclosed the aggregate net additional operating cost, the total value of
new capital investment and the amount recovered from third parties. However, they
now sometimes provide itemised lists of the individual costs incurred in an operation
although offsets remain undisclosed.
Figure 6.1 Calculating the ‘Net Additional Cost of War’
Net
Additional
Cost of
War
=
Net
Additional
Operating
Cost
+
Net
Additional
Capital
Investment
Where:
Net
Additional
Operating
Cost
=
Additional
costs above
normal
peacetime
expenditure
-
Offsetting
savings due
to cancelled
peacetime
activities
-
Costs
recovered
from
rd
3 parties
Net additional operating costs include the additional cost of personnel allowances,
shipping & travel, repair & maintenance, health & inoculations, ammunition,
contracted support, fuel, inventory, consumables etc. Offsetting savings include
money saved from foregone activities like the cancelled Exercise Crocodile 99 &
Avalon Air Show in 1999/00 due to the deployment of Australian Forces to East
Timor. Those costs recovered from 3rd parties include the partial recouping of costs
from the UN when participating in a UN peacekeeping operation.
Net additional capital investment usually represents the accelerated filling of
capability gaps specific to the operation. Recent examples include the purchase of
additional equipment for the AP-3C maritime patrol aircraft for Iraq, and the rapid
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acquisition of the Javelin missile for Afghanistan. The capital cost sometimes also
includes modifications to platforms and additional inventory purchases.
Finally, it’s worth being specific about what is not included. The net additional cost
of an operation does not include pay and allowances that would normally be incurred,
nor does it include the cost of operating platforms within the planned peacetime rate
of effort (nor does it cover the costs outside of Defence incurred by the AFP, DFAT
or others involved in operations). Thus, aside from additional items like new
equipment, ammunition, transport and contracted services, the net additional cost is
the marginal cost of increased ADF activity due to an operation.
What’s the big picture?
Figure 6.2 shows the net additional supplementation received by Defence for
deployments from 1998-99 through 2007-08.
Figure 6.2: The net additional cost of ADF operations.
800
The Cost of War
Tsunami Relief
Solomon Islands
Iraq
Afghanistan
East Timor
Minor Operations
700
$ million (current year)
600
500
400
300
200
100
0
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Source: Defence Annual Reports and Budget Papers
Minor operations include Bougainville which cost $91 million between 1998 and
2003 (of which $43.3 million was absorbed by Defence), Border Protection which
cost $98.3 million between 2001 and 2006. And in the future: support to both the
2007 APEC Conference ($20 million) and the 2006 Commonwealth Games ($13
million). We have not included the $175 million spent between 2001 and 2006 on
increased security at Defence facilities. Although this was previously called
‘Operation Safebase’, it is wrong to describe it as an ADF operation.
Figure 6.2 also excludes the ‘force generation’ costs nominally associated with
expanding the ADF by 3,555 troops for East Timor in late 1999. This roughly $400–
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$500 million per annum was permanently included into the Defence funding base at
the time of the 2000 White Paper. In the figure, Afghanistan includes the
Multinational Interception Force (MNIF) which became part of the Iraq operation in
March 2003.
Overall, the cost of deployments will rise a little in 2005-06 as Iraq expands and other
operations draw down.
New money for operations in the 2005-06 Budget
The PBS explains the additional supplementation that’s been provided to cover the net
additional cost of operational deployments [PBS pages 39 to 43]. The key elements
are:
Iraq
The Government has made financial provision to retain an expanded ADF
contribution to Coalition operation in Iraq until the end of the forthcoming financial
year. This should not be taken as implying anything final about the likely length of
deployment.
Table 6.1 shows the cost of the Iraq deployment in terms of pre-existing and expanded
(Al Muthanna province) commitments. The spending past 2005-06 represents the
repatriation and repair of personnel and equipment following the budgeted end of the
operation. The deployment to Al Muthanna will provide protection for Japanese
reconstruction efforts as well as training for the Iraqi army in the province.
Table 6.1: Actual and planned ADF spending on Iraq as at May 2005.
Iraq Continuation
Al Muthanna Task Group
Total
2002-03
2003-04
2004-05
2005-06
2006-07
2008-09
Total
285.3
240.6
247.9
203.7
24.9
-
-
-
24.8
198.8
12.5
3.9
240.0
-
-
272.7
402.5
37.4
3.9
1,242.4
1,002.4
Source: 2005-06 PBS
Table 6.2 lists the various components that make up the continuing and expanded
deployment to Iraq along with the budgeted spending on each for 2005-06. It is
immediately apparent that the cost of the 450 strong Al Muthanna Task Group is
much more expensive on a per-capita basis – roughly twice as expensive as the
remainder of the (nonetheless also equipment intensive) Iraq deployment.
Probably the main reason for this will be the significant set-up costs associated with
the Al Muthanna Task Group including the costs of survivability enhancements to 40
ASLAV and 10 Bushmaster vehicles, additional strategic lift costs associated with the
deployment of the vehicles and 450 personnel plus sustainment flights, and the rapid
acquisition of personal protective equipment for the deployed troops. Related to this is
the significant capital investment slice of the Task Group cost; $58.4 million over
three years.
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Table 6.2 ADF contribution to Iraq as at May 2005.
Component
Personnel
Naval Frigate (HMAS Darwin in May 2005) conducting maritime
interception operations in the northern Persian Gulf.
220
2 x C-130 Hercules providing intra-theatre transport in the Middle East.
160
RAAF Air Traffic Controllers
6
Security Detachment including Australian Light Armoured Vehicles and
an explosive ordnance detachment in Baghdad.
120
2 x AP-3C Maritime Patrol Aircraft supporting Iraq rehabilitation and
operations against terrorism.
160
Multinational HQ staff
90
ADF Medical Team in Baghdad
20
Australian Army Training Team providing logistics training to the Iraqi
Armed Forces
54
Unknown
90
Al Muthanna Task Group providing security to Japanese reconstruction
efforts in Iraq in the Al Muthanna province including 40 ASLAV vehicles.
450
1,370
Total
Source: Defence web-site and PBS.
Tsunami and Earthquake relief
In the wake of the 2004 Boxing Day Tsunami, the ADF commenced a humanitarian
assistance mission called Operation Sumatra Assist. According to a media release on
the 2nd of January 2005 the operations entailed a large number of assets including:
·
·
·
·
·
·
·
·
·
·
8 C-130 Hercules (7 Australian & 1 New Zealand)
1 Boeing 707 1 Beech 350 King Air
2 C-130 Hercules based in Darwin for on-going air lift
An advance assessment/planning team in Sumatra
An advance medical team Water Purification Plant
HMAS Kanimbla
· 2 Sea King Helicopters
· 2 Landing Craft
· Primary medical team and care facility
· 100 Engineers and engineering equipment
· Communications
4 UH-1H Iroquois helicopters
Field Hospital
Headquarters staff (Sumatra)
Hundreds of personnel supporting the operation from within Australia.
The ADF contribution to the relief effort achieved: 1200 tonnes of humanitarian aid
distributed by air; 70 aero-medical evacuations; 2530 people transported by air; 3700
medical treatments (AFH); 4.7 million litres of clean water produced; 9000 cubic
metres of debris cleared; 1000m of road cleared; 1700 large drains cleared and 6 large
fishing boats salvaged.
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Operation Sumatra Assist concluded on 24 March 2005. However, only 5 days later
an earthquake struck the region and Operation Sumatra Assist II commenced. It
involved a range of ADF assets including:
·
·
·
2 C-130 Hercules
aero-medical evacuation team
HMAS Kanimbla
· 2 Sea King Helicopters
· 2 Landing Craft
· Primary medical team and care facility
· 100 Engineers and engineering equipment
· Communications
Tragically, 9 ADF personnel were lost on the 2nd of April on Nias Island when a Sea
King helicopter from HMAS Kanimbla crashed. The operations continued
nonetheless and achieved: 133T Rice delivered; 5000LT water provided; 570 patients
treated ashore by medical staff; 13 Surgical and further treatments conducted on board
HMAS KANIMBLA; 7 Sea King aero-medical evacuations; Lahewa town water
pump and generator repaired and over 138 tonnes of stores moved by C130 Hercules.
On the 13th of April it was announced that the mission was complete and deployed
ADF elements would return home.
Border Protection
The elevated ADF contribution to coastal surveillance will be extended through 200506 at a cost of $16.4 million.
East Timor
The UN East Timor peacekeeping operation will end in May 2005.
2006 Commonwealth Games
A total of $13 million has been provided over three years as part of the whole-ofgovernment support being provided to the 2006 Commonwealth games in Melbourne.
2007 Asia Pacific Economic Cooperation forum
A total of $20 million over two years has been provided for ‘counter-terrorism,
security and ceremonial capabilities’ in support of the 2007 Asia Pacific Economic
Cooperation forum in Sydney in 2007.
Impact of operations on peacetime rates of effort
The impact of deployments on planned peacetime rates of effort is often counterintuitive because rates-of-effort sometimes fall due to disruption caused. For example,
despite getting $14 million for increased P-3C operating costs due to the Iraq
deployment during 2002-03, the fleet fell short of its planned rate of effort by 15% in
that year. Table 6.3 lists the rate of effort for key platforms employed in recent
operations.
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In 2003-04, the C-130 rate of effort fell short by around 7% due to the disruption
cause by operations, and the AP-3C rate of effort was more than 15% below target for
a variety of reason including high preparedness and op-tempo. Army’s Chinook and
Kiowa helicopters fell below target by 31% and 12% respectively due to extended
personnel leave following operational deployment and additional maintenance due to
operational conditions in the case of the Chinook (sand in the engines). Although the
Blackhawks were deployed to East Timor during 2003-04, the resulting shortfall in
flying hours reflects ongoing maintenance problems.
Table 6.3: Impact of Deployments on Key Flying Hour Rates
Platform
Budgeted Peacetime
Rate of Effort
(flying hours)
% Difference
Actual
Rate of Effort
(flying hours)
1999-00 (period including East Timor INTERFET operation)
Blackhawk
9,260
8,179
-11.67%
Kiowa
8,985
8,379
-6.74%
C-130
16,762
13,144
-21.58%
5,080
4,356
-14.25%
Caribou
2001-02 (period including War on Terror & Border Protection operations)
C-130
14,000
13,102
-6.4%
F/A-18
13,000
11,287
-13.2%
8,660
9,624
+11.1%
C-130
14,000
13,622
-2.7%
F/A-18
12,500
14,077
+12.6%
AP-3C
9,600
8,172
-14.9%
Chinook
1,270
1,364
7.4%
P-3C
2002-03 (period including Iraq war)
Blackhawk
2003-04 (including Iraq post-conflict, East Timor and Solomon Islands)
C-130
15,000
13,992
-6.7%
F/A-18
12,500
12,820
2.6%
AP-3C
9,100
7,702
-15.4%
Chinook
1,270
876
-31.0%
Blackhawk
8,600
6,864
-20.2%
Kiowa
12,970
11,425
Sources: Defence Annual Reports and Portfolio Budget Statements for 1999-00, 2001-02 and 2002-03.
-11.9%
Interestingly, in 2003-04 the F/A-18 fleet slightly exceeded their flying hour target
due to additional training following the disruption due to operational deployments in
the prior two financial years.
Unfortunately, comparable figures are not available for Navy vessels, although
anecdotal evidence is that they regularly deliver substantial numbers of additional
steaming days in support of operations well above peacetime rates-of-effort.
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So what do we get for our money?
Table 6.4 overleaf lists the net additional cost of recent ADF operations along with a
brief description of what the operation entailed. It’s important to note that many
smaller operations, and even the extensive support given to the Sydney Olympic
games, occur without any supplementation. We’ve done the best we can to separate
out the capital component of the funding but in many cases it is not available. In some
cases the figure given for capital represents the minimum amount that has gone
towards capital equipment.
Table 6.4 Supplementation received for the cost of recent ADF operations ($ million)
Operation
Net
Additional
Operating
Cost
Net
Additional
Capital
Investment
Duration
(months)
Description
East Timor
1999-00
429.7
70.4
9
A peak of 6000 personnel reduced to 1600 in
June 2000. Included 12 Blackhawk plus a troop
of Kiowa helicopters, plus extensive airlift
(Caribou and C-130) and sealift support.
East Timor
2000-01
335.9
123.5
12
1610 personnel in theatre. Included 4 Blackhawk
and a troop of Kiowa helicopters, Caribou
detachment plus airlift and sealift support.
East Timor
2001-02
187.5
0
12
1470 personnel. Included Battalion Group, troop
of Kiowa helicopters plus airlift/sealift support.
(Blackhawk & Caribou use unknown.)
East Timor
2002-03
172.4
0
12
1250 personnel. Included Battalion Group, troop
of Kiowa, and detachment of Blackhawk
helicopters plus airlift/sealift.
East Timor
2003-04
169.1
0
12
Similar to above but drawing down. By 30 June
2004 there were only around 440 personnel and
a Blackhawk detachment remaining.
East Timor
2004-05
27.1
12
Australian contribution to extended UN
peacekeeping in East Timor. Around 100
personnel with no helicopters.
East Timor
2005-06
4.1
Bougainville
1998-99
23
0
12
Unstated number of personnel plus airlift/sealift.
Bougainville
1999-00
18.3
0
12
Unstated number of personnel plus airlift/sealift.
Bougainville
2000-01
20.0
0
12
176 personnel plus airlift/sealift
0
12
35 personnel plus airlift/sealift
0
12
ADF involvement ended in August 2003. This
Bougainville
2001-02
2002-03
10.1
14.6
Bougainville
3
Remediation and repatriation costs. Operation
will cease on 20 may 2004.
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2003-04
funding covers extraction and remediation of
equipment.
Border
Protection
2001-02
15.9
6.3
10
Undisclosed but included Frigates, Amphibious
Transport Vessels, Patrol Boats, Hydrographic
Vessels, P3C Maritime Patrol Aircraft, Special
Forces & other Army personnel.
Border
Protection
2002-03
25.1
2.7
12
Undisclosed.
?
12
Undisclosed.
1100 personnel. Included 2 Frigates, 1 LPA
Amphibious Vessel, 4 F-18 Fighters, 2 B707 Airto-Air Refuelling Aircraft, 2 P3C Maritime Patrol
Aircraft, C-130 Transport Aircraft, 150 Special
Forces plus command elements.
Border
Protection
2003-04
2004-05
2005-06
15.9
16.0
16.4
War on
Terror &
MNIF
2001-02
180
140
9
War on
Terror &
MNIF
2002-03
169
30
MNIF 9
War on
Terror
2003-04
-5
0
-
Iraq 5
2002-03
285.3
?
7
2000 personnel. Included 2 Frigates, 1 LPA
Amphibious Vessel, 14 F-18 fighters, 3 C-130
Transport Aircraft, 2 P3C Maritime Patrol
Aircraft, 2 x Chinook helicopters, 500 Special
Forces, Clearance Diver Team plus command
elements.
Iraq
2003-04
6
240.6
?
12
830 personnel including 279 in Iraq. Deployment
includes C-130 Airlift detachment, Air Traffic
Controllers, AP-3C Maritime Patrol Aircraft,
Frigate, Army Training Team, Medical Team
various HQ elements and a security detachment
for the Australian mission in Iraq.
Iraq
2004-05
255.4
17.3
12
Pre-April 05: 920 pers roughly as per 2003-04.
Post-April 05: 1370 personnel including a 450
strong Task Group to Al Muthanna province
along with 40 Light Armoured Vehicles (ASLAV).
Iraq
2005-06
339.7
62.8
12
1370 personnel including a 450 strong Task
Group to Al Muthanna province along with 40
Light Armoured Vehicles (ASLAV).
Iraq
2006-07
18
19.4
-
Remediation and repatriation costs
Iraq
2007-08
0
4
-
Remediation and repatriation costs
Afghan 3
140
1100 personnel. Included 2 Frigates, 1 LPA
Amphibious Vessel, 2 P3C Maritime Patrol
Aircraft. C-130 Transport Aircraft, 150 Special
Forces plus command elements.
Solomon
Islands
2003-04
90.4
?
12
Initially 1,400 ADF personnel and an unspecified
number of civilians. The size of the operation is
reducing as stability returns to the country.
Solomon
Islands
2004-05
22.2
?
12
Around 30 ADF personnel who assist with AFP
patrols and augment headquarters staff. A larger
security detachment of around 200 was
temporarily deployed temporarily.
Solomon
Islands
2005-06
8.9
Solomon
Islands
2007-07
3.4
Around 30 ADF personnel who assist with AFP
patrols and augment headquarters staff.
Note: Supplementation was not provided to Defence for Bougainville in every year. The capital cost of
the Iraq operation in the first two years was around $146.7 million – split unknown.
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