ASPI strategy pays off

Think tank leading push for increased Australian military spending collects $214,500 “management advisory service” fee as Prime Minister announces massive new Defence Budget  

ASPI rakes in millions of dollars from Commonwealth Government contracts while publicly driving the “China Threat” narrative

SPECIAL INVESTIGATION with Michael West Media and John Menadue

1 July 2020 | Marcus Reubenstein

On the day that Prime Minister Scott Morrison announced a $270 billion defence spending plan, the Department of Defence awarded the Australian Strategic Policy Institute (ASPI) a $214,500 contract for “management advisory services”.

ASPI might consider itself unlucky. Exactly one year ago today, on 1 July 2019, it was awarded another “management advisory services” contract for the considerably larger amount of $614,536.

ASPI has pushed hard for boosts to defence spending, in particular an upgrade of Australia’s missile capabilities.

The government says it will spend $800 million on the US-made AGM-158C Long Range Anti-Ship Missile (LRASM). Those missiles are manufactured by Lockheed Martin, which gave ASPI $135,909 in sponsorship funds in 2018-19.

Go to think-tank on China

The Australian Strategic Policy Institute is the ‘go to’ think tank for the mainstream media seeking an “independent voice” to make sense of troubled times with China.

Its analysts are knowledgeable and articulate, always forthcoming with research pointing to the strategic threat of China.

However, it is less forthcoming about the funders of its research, although it is an open secret that foreign governments and multi-billion-dollar weapons makers are generous supporters.

What is not widely known is the extent to which taxpayers are propping it up, through dozens of small contracts not listed in its annual reports.

Last year, these contracts amounted to more than $2 million and were signed by the chiefs of a small group of government departments which, say ASPI’s critics, have vested interests in promoting China as Australia’s No. 1 strategic threat.

On China’s radar

Two weeks ago ASPI was again thrust into the international limelight after China’s foreign ministry directly named it as the source of claims by Prime Minister Scott Morrison that Australia was the victim of a sustained cyber security attack.

Morrison did not name China but, ASPI’s executive director, Peter Jennings did. He told journalists it was a “95%” likelihood that China was behind the alleged attacks.

Critics, including former foreign ministers, ambassadors and senior figures within the defence establishment, contend that ASPI is an anti-China lobby that has hoodwinked the media into believing it is independent.

Labor Senator Kim Carr, who is pursuing ASPI through a Senate committee, argues it’s a conflicted government-funded body that lacks transparency, particularly in the way it reports who funds its research.

“It is an Australian government organisation, a Commonwealth company, and they’ve been at the centre of Sinophobia. This is what happened in the Cold War, you set up a front and create a world view that’s unchallengeable.”

Victorian Labor Senator Kim Carr

Carr has expressed serious concerns not just over its transparency but the way it promotes its research though both mainstream and social media, saying “Then [they] de-legitimize anyone who argues for engagement with China. Ironically, engagement with China remains official government policy.”

Disguised defence largesse

The Howard government set up ASPI in 2001 as an independent think tank that would challenge a supposed culture of stagnated thinking, weighed down by the defence bureaucracy.

Its main funding was an annual grant from the Defence Department but over the past decade it has developed more and more revenue streams – and no obligation to reveal exactly who pays it what.

Defence remains its biggest benefactor. Before the federal election, the Morrison government not only increased this funding by more than 13%, it locked in a guaranteed $20 million until 2023.

This largesse does not include one-off payments for sponsorship and commissioned reports. In its annual reports, ASPI declares the $4 million annual Defence grant but opaquely refers to this as “core funding”.

Department of Finance figures show that in 2018-19 it received an additional $1,363,002.84 in funding from Defence, which was not publicly declared.

According to answers it provided to a Senate Estimates committee in February, ASPI collected $1,158,581.63 (pre-GST) in funding from Defence without clearly declaring the source of those funds.

ASPI didn’t explain the discrepancy between its two reported figures.

37 Commonwealth Government contracts in the past two years


Shrinking support?

In its annual report, ASPI splits income into two sources: “Defence funding” and “Sale of goods and rendering of services”. It also produced a gloomy graph showing how “core” funding had withered away from 100% of its income to a moderate 43%.

However, the graph doesn’t take into account its numerous government tenders and contracts that have delivered a financial windfall. In the past five years the value of its government contracts has increased by more than 300%.

Figures from the Department of Finance’s procurement website AusTender show ASPI was awarded $2,133,716.62 in contracts between July 2019 and June 2020. ASPI records all these government payments in its annual reports but muddies the waters by consolidating them with sponsorships and other commercial revenue.

Among those 2019-20 payments:

$614,536.77 (Department of Defence for 12-month Management Advisory Services)
$359,700 (Department of Defence for 12-week training course)
$55,000 (Dept. of Prime Minister & Cabinet for Research Report Launch & refreshments, QT Hotel Canberra – 31 Oct 2019)

While $55,000 might be more likely the entertainment budget for a gala premiere, the sponsorship from the Department of PM&C was in fact a free talk attended by about 60 people at a Canberra hotel.

ASPI’s Canberra talk that picked up $55,000 from the Prime Minister’s Department

 ASPI collides with Carr

In February, Senator Kim Carr took ASPI to task over the reporting of its finances. A notable omission in its Annual Report is the source of an $88,964.37 payment that it lists from the Institute for War and Peace Reporting (Note: ASPI has no statutory obligation to report such payments). In this instance the source was the US government.

Perhaps ironically, IWPR is a not-for-profit set up to promote free journalism and “advocate for government and institutional accountability”.

As to why a London-headquartered not-for-profit, founded in the former Yugoslavia, was making substantial payments to ASPI on behalf of the US State Department there was no explanation.

ASPI later revealed the US State Department was due to pay ASPI a further US$140,000 in the 2019-20 financial year. That payment will be made by the US Embassy in Canberra on behalf of the State Department’s Global Engagement Center, which is headed up by Lea Gabrielle, a former Fox News reporter controversially appointed to her position by the Trump Administration in 2019.

Trump appointee Lea Gabrielle, heads the US State Department Agency funding ASPI to the tune of A$203,000

Greenbacks and Aussie dollars

In February Senator Carr told Parliament that ASPI had received $450,000 in US State Department funding. The institute denied it, saying in a statement the grant was for less than half the amount quoted.

This is a half-truth at best. The dollar amounts ASPI provided to the Senate were in both US and Australian currency.

The US dollar amount is less than half of Carr’s estimate but the Australian dollar amount of $292,916.37 is substantially more than half.

For a statutory government body, required by legislation to report its earnings in Australian currency, it seems odd it would go before parliament and quote income specifically related to one project in multiple currencies.

Says Senator Carr, “This is one way that ASPI appears to operate, they reported figures [to Senate Estimates on 14 February 2020] in US dollars and they use various accounting methods to give the impression that those amounts are smaller than they might be. Adding to the confusion, grant reporting periods can cross separate years.”

Major backers

ASPI has received funding from the governments of Britain, Japan and Taiwan as well as NATO. Among its corporate supporters are global weapons makers Thales, BAE Systems, Raytheon, SAAB, Northrop Grumman, Naval Group and MBDA Missile Systems. Yet their contribution of over $330,000 last year is dwarfed by that of a handful of government departments and agencies.

Disclosures to the Senate revealed that ASPI had at least 56 sources of income in 2018-19 which it categorised as either sponsorships or commissioned income.

Critics might accuse ASPI of having a narrow world view, but its views are financially supported by a very broad base of benefactors.