On Tuesday morning Prime Minister Tony Abbott categorically ruled out introducing new taxes to pay for Australian participation in the third Iraq war.
Thank goodness. Imagine that: a war tax. But the episode – sparked by Finance Minister Mathias Cormann’s refusal to rule out such a tax over the weekend – demonstrates one thing clearly.
Despite the Abbott Government’s turn towards national security and foreign policy, it just can’t get away from its budget problems.
Abbott has suggested the mission might cost Australian taxpayers about half a billion dollars per year. David Johnston, the Defence Minister, says the mission will last many months.
Let’s take both those guesses with a grain of salt. The cost of military action always blows out.
In early 2003 estimates for our participation in the invasion of Iraq were about $500 to $700 million.
John Howard thought the war would last at most several months.
In the end, according to the Australian Strategic Policy Institute’s latest Cost of Defence report, our participation ended up in the order of $3 billion over eight years.
And for all its follies, the original invasion of Iraq had relatively clear goals – overturn the Baathist regime and install a democratic government.
By contrast, this war’s goals are as open-ended and obtuse as they come.
Pressed to give some indication of how the Government will measure its success, all Abbott could say was when the Islamic State is “in retreat, not in advance”.
The Australian Government is talking about months, but British prime minister David Cameron is talking about years of war against the Islamic State.
Another big difference between 2003 and today: Howard had a budget surplus. Abbott has a deficit, a deteriorating economy, an unpredictable senate, and an unfulfilled election promise to return the budget into the black.
Joe Hockey has been trying to manage expectations as he prepares for December’s mid-year economic and fiscal outlook statement.
Yet the cost of military action always seems to be a second-order issue for governments making a decision to go to war.
Financial issues always take a back seat to loftier visions about foreign policy and the role of Australia in the world, to humanitarian concerns and the stability of the geopolitical order, to questions of morality and casualties.
But the mundane reality is that military intervention is a public policy decision like any other and has to be paid for with scarce funds.
Even in peacetime defence is a notorious money sink. The Australian Auditor-General regularly lashes defence procurement processes for poor, over-budget delivery.
(A few years ago in The Drum I noted that one of those projects to have gone 20 per cent over budget was a logistics system specifically designed to reduce waste.)
American estimates of the cost of keeping a single soldier in Afghanistan for a year range between $US815,000 and $1.4 million. That’s many multiples of a soldier’s basic salary, which is between $20-30,000 per annum.
The current guess of how much it will cost to send Australian troops to the staging post in the United Arab Emirates is about $670,000 per soldier.
The high financial cost of warfare has been one of the great drivers of human history.
Indeed, liberal democracy itself was built in the shadow of war finance. Tudor and Stuart kings found themselves reluctantly asking parliament for more taxation in order to fight on the European continent. Parliament used these opportunities to eke out more power relative to the monarchy.
The First World War gave Australia the federal income tax. This was an innovation post-war politicians were happy to retain once hostilities were over.
Between the wars the reparations scheme imposed on Germany to pay for Allied war debts sparked the rise of Nazism.
In WWII Western governments introduced income tax withholding – a neat little innovation that obscured how much tax the government takes.
The cost of stationing troops in West Berlin during the Cold War nearly sunk the Bretton Woods system of managed exchange rates – and therefore the entire global monetary framework.
The spiralling cost of the Vietnam War spelled the end of the Kennedy-Johnson liberal reform program and created the setting for the rise of the conservative movement.
The American fiscal crisis has in large part been caused by the $2 trillion cost of the 2003 Iraq War. (Recall that the federal budget was already broken when the subprime meltdown hit.) We can blame that fiscal crisis for the dysfunctional nature of contemporary Washington politics.
Those ambitious neoconservatives who sought to reshape the world after September 11 imagined the financial cost of their military interventionism as a minor detail. Who could be so crude as to quibble about money when democracy and liberty was at stake?
More than a decade later few American taxpayers would be so blasé.
An old military saying is amateurs talk strategy, professionals talk logistics. Given the state of the Commonwealth budget, perhaps we ought to start talking finance first.