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Billions for millions of drones

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New drones for RAAF. Or how to burn billions?

 

Turnbuckle Turnbull and co have announced a staggering $7 billion to buy and use 6 MQ- 4C Triton drones. That's over a Billion a plane. The MQ-4C is a modified marine version of the common Global Hawk which is cheap at under $20 million flyaway fully loaded. The Triton comes in with the latest and greatest tech, bigger range etc and fully loaded $120 million US including the development budget is a big $182 million US. These are the costings in 2015. A very far cry from the supposed $1.2 billion per plane we will pay.

 

Something's going on here and it isn't running costs of the airframe.

 

More genius from the government in buying majic beans?

 

 

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That is an unbelievable price. The government is spending $17 billion on 72 JSF F35 white elephants expected to go into service 15 years late in 2020. Then there is the massive cost of the submarines we don't need. It sounds like the old "reds under the bed" philosophy is alive and well. No wonder we can't adequately fund old age pensions, education and health.

 

 

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Another dud weapons program for the RAAF, why are they flying them out of SA, I understand the politics but the only off shore threat to Australians in SA are sharks. The weird thing is these drones are more expensive than A380s

 

What is wrong with us?

Everyone in the RAAF wants to retire to a cushy job in Boeing or Lockheed Martin, defense is no longer about defense its about people's retirement plans

 

 

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It's not just the astounding price, or that it's our taxpayers giving another huge subsidy to America's bloated weapons industry; it's where the damned things are to be operated- where we can most antagonise our largest trading partner.

 

What a clever country.

 

 

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Can't recall any discussion of that move.. The winner is the manufacturer. Wonder where and when the kick backs happen. Nev

 

 

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the usa defense budget seems to be $ 800 billion for their 2018 year - $ 2.2 billion per day

 

assuming a billion is a 1000 million = $ 91 million per hour !

 

you could deal with lots of reds or buy lots of beds for that (not to mention the needy, hungry and homeless)

 

 

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Just imagine when the first one gets pinged or goes in because someone cant' fly it . 6 for 7 billion. Glad it's not my money. Oh $#!t.. it IS my money (and Yours).. Nev

 

 

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The waste of money on military hardware makes me despair. What is wrong with us?

A potential enemy has started to fund forward bases like Papua New Guinea and Vanuatu.

 

 

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We cut our aid budget to keep the Hanson people happy, The Chinese who are our largest trading partner offered to help our northern neighbours. I don't know how you would describe the Chinese as a potential enemy when they are just doing good deeds for our neighbours.

 

 

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NOTE: I Am not defending the decision to buy the drones, just trying to explain why the cost seems so high.

 

There was a time when the government would buy things and allocate the capital cost to this years budget but then the ongoing running costs came out of a future budget. Now governments like to announce capital spending, it gets them headlines and news stories. It is much less interesting to announce ongoing funding. Also there is a tendency for the defence department itself to want shiny new toys and to not prioritise the maintenance and funding of existing assets. You can have the silly situation where you have shiny new aircraft but not the money to put fuel in them.

 

To get around this it is now generally accepted that you tally the total cost of an item over its entire life including the operating costs, staffing, spares and facility upgrades required to host it. These ongoing costs are often much more than the initial costs, especially if the item has a long life, with upgrades along the way.

 

It might be worth explaining with an example. Imagine that you run a little flight school, you currently have one aircraft but are very busy and want to expand. You could go a buy a new Jabiru for about $80k but what would be the full cost to your business?

 

Well you expect it to fly about 500 hours per year and have a useful life of about 10 years. In that time you will have to do 50 “hundred hourly” inspections (@ $500 each), likely need 1 new engine (@$20k allowing removal and refit) and say 2 top overhauls @ $5k. The total maintenance cost is $55k. You will also need to put fuel in it at 20l/hr (or 100k litres=~$200k)

 

To insure it for use in a flight school will be about $2k per year or $20k total, a new hangar space another $1500 per year…

 

You are busy flying the current jabiru you own. To accommodate the new aircraft you will need to employ a casual flight instructor and you know from experience that about 60% of the time will be dual with the remaining time solo. A casual flight instructor gets $50 per hour so over the 10 years you will spend another $150k.

 

At the end of 10 years you hope to be able to sell the aircraft with a time expired engine for about $20k…. The total cost of the Jabiru over its life is $500k, a lot more than the $80k capital cost. This analysis above is very much simplified and doesn’t include inflation or financing costs.

 

The same logic applies to these drones. The longer the life and more complex a project is the less the capital cost will be as a proportion of the total.

 

 

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We cut our aid budget to keep the Hanson people happy, The Chinese who are our largest trading partner offered to help our northern neighbours. I don't know how you would describe the Chinese as a potential enemy when they are just doing good deeds for our neighbours.

I agree, FT, but what country does "good deeds" without expecting something in return?

 

China clearly expects to expand its sphere of influence; no wonder the US is getting apoplectic about the possibility of Chinese bases in the South Pacific. Much as I respect and admire China, their government is already exerting enormous influence on our universities, businesses, media and politicians. China doesn't give something for nothing, and if they have forward bases in our region, expect this influence to increase.

 

In the case of PNG, I fear Chinese investors will accelerate the rape of that poor country's rainforest and minerals. They care little enough for their own environment; they'd happily sacrifice another country's natural inheritance to lift a billion of their own people out of poverty.

 

 

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WE did plenty of damaging things in PNG. Who are we to talk.? They seem to have gone downhill since the 70's The last time I was there. Could have been a really nice place. Nev

 

 

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NOTE: I Am not defending the decision to buy the drones, just trying to explain why the cost seems so high.

There was a time when the government would buy things and allocate the capital cost to this years budget but then the ongoing running costs came out of a future budget. Now governments like to announce capital spending, it gets them headlines and news stories. It is much less interesting to announce ongoing funding. Also there is a tendency for the defence department itself to want shiny new toys and to not prioritise the maintenance and funding of existing assets. You can have the silly situation where you have shiny new aircraft but not the money to put fuel in them.

 

To get around this it is now generally accepted that you tally the total cost of an item over its entire life including the operating costs, staffing, spares and facility upgrades required to host it. These ongoing costs are often much more than the initial costs, especially if the item has a long life, with upgrades along the way.

 

It might be worth explaining with an example. Imagine that you run a little flight school, you currently have one aircraft but are very busy and want to expand. You could go a buy a new Jabiru for about $80k but what would be the full cost to your business?

 

Well you expect it to fly about 500 hours per year and have a useful life of about 10 years. In that time you will have to do 50 “hundred hourly” inspections (@ $500 each), likely need 1 new engine (@$20k allowing removal and refit) and say 2 top overhauls @ $5k. The total maintenance cost is $55k. You will also need to put fuel in it at 20l/hr (or 100k litres=~$200k)

 

To insure it for use in a flight school will be about $2k per year or $20k total, a new hangar space another $1500 per year…

 

You are busy flying the current jabiru you own. To accommodate the new aircraft you will need to employ a casual flight instructor and you know from experience that about 60% of the time will be dual with the remaining time solo. A casual flight instructor gets $50 per hour so over the 10 years you will spend another $150k.

 

At the end of 10 years you hope to be able to sell the aircraft with a time expired engine for about $20k…. The total cost of the Jabiru over its life is $500k, a lot more than the $80k capital cost. This analysis above is very much simplified and doesn’t include inflation or financing costs.

 

The same logic applies to these drones. The longer the life and more complex a project is the less the capital cost will be as a proportion of the total.

OK so 500 hours a year at $200.00 per hour x 10 years is a million dollars less the 500k costs plus the 20k you just got. $520,000.00 is not a bad return over that time frame after all costs including wages are taken in to account. This logic hardly applies to spending 7 billion with no financial return.

 

 

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OK so 500 hours a year at $200.00 per hour x 10 years is a million dollars less the 500k costs plus the 20k you just got. $520,000.00 is not a bad return over that time frame after all costs including wages are taken in to account. This logic hardly applies to spending 7 billion with no financial return.

That's right. A business decision has a cost and a benefit that can be qualified in dollars and cents. If the benefit outweighs the cost then it is sensible to proceed.

 

A defence spending decision has a cost but it almost always has no financial return but that doesn't mean that working out the total cost over a life cycle is illogical.

 

PS I had included the $20k sale at the end is working out the $500k total cost, so the return is $500k not $520k...

 

 

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WE did plenty of damaging things in PNG. Who are we to talk.? They seem to have gone downhill since the 70's The last time I was there. Could have been a nice place in different circumstances..Nev

 

 

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the usa defense budget seems to be $ 800 billion for their 2018 year - $ 2.2 billion per day

Yup. And spent on what, that's right, the Middle East. 20 people get killed in Syria, they go to war, 250 school girls get kidnapped in Africa by a genuine terrorist group, and nothing. Thousands of Christians murdered, tortued, raped etc in Indonesia every year and we give them 300 million in Aid.

 

There is something badly wrong with the world today, and it's called Israel.

 

you could deal with lots of reds or buy lots of beds for that

The USA could run a basic free health system for their population for a 100 Billion per year.

 

They care little enough for their own environment;

Old news, and no longer true. Most have no idea of the depth, vigilance and spending going on here on the 'clean up'.

 

The Youth of China are as highly educated, and just as motivated and vigilant as any other Nation on Climate Change and environmental impacts.

 

they'd happily sacrifice another country's natural inheritance to lift a billion of their own people out of poverty.

Japan, for one example, has been doing it since industrialisation, difference is China uses all it's resources available to it, Japan does not. Imagine wanting to pull your own people out of poverty, the nerve of them

 

Australia's wealth comes from "happily sacrificing" and selling it's own resources, so I'm not sure what leg you're standing on there.

 

Maybe Australia should have spent a few hundred million keeping Holden, Ford and Toyota in Australia rather than spending billions supporting America's military machine? It's what China does for it's Auto Industry, and ironically, so does America.

 

 

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we are paying AU$1.17B per unit and the unit cost to the USAF is US$180M

 

Northrop Grumman have only spent US$12B developing them and they aren't even fully operational

 

Northrop Grumman MQ-4C Triton - Wikipedia

 

We could create so many industries developing our own indigenous technology or save a packet and just buy the Chinese knockoffs like the rest of Asia

 

 

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Well argued Nobody. You make a good case for thinking things through.

 

But those drones from the US are still too expensive.

 

Seriously, I am sure we could make our own better and cheaper than buying from the US. Cheaper means that you can send more out and I reckon 10,000 cheap drones would have a better chance of having at least one complete the mission than one or 2 expensive drones.

 

 

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Well argued Nobody. You make a good case for thinking things through.But those drones from the US are still too expensive.

 

Seriously, I am sure we could make our own better and cheaper than buying from the US. Cheaper means that you can send more out and I reckon 10,000 cheap drones would have a better chance of having at least one complete the mission than one or 2 expensive drones.

Get Brumby, Morgan, whoever to produce a thousand single seat planes and put 500 pilots into them.

 

100 million for a thousand equipped planes, double it or triple it for running expenses, hell even if it cost a Billion whats the issue? The peripheral employment and Australian economy would benefit as a whole.

 

 

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We cut our aid budget to keep the Hanson people happy, The Chinese who are our largest trading partner offered to help our northern neighbours. I don't know how you would describe the Chinese as a potential enemy when they are just doing good deeds for our neighbours.

I’m not taking the bait; things are changing.

 

 

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Australian Greens Senator Peter Whish-Wilson questioned the Defence Minister, Marise Payne, in Parliament about the increased cost of the MUAS. “Only two years ago in its White Paper the Government said that they would be acquiring seven drones at the cost of between $3 and $4 billion. But two years later, they’re acquiring six of these Triton drones, so one less, for $7 billion. That’s a more than a hundred per cent blowout in costs.”

 

 

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I’m not taking the bait; things are changing.

I think you realise that Australia isn't punching above our weight in regards military competence and any military conflict with China will be sorted out in a few days

 

 

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