A Trillion Dollars and Counting: Paying for Defence to 2050

Release of the Australian Strategic Policy Institute’s (ASPI) Report on Paying for Defence to 2050

The Australian Strategic Policy Institute today released its report A Trillion Dollars and Counting: Paying for Defence to 2050

The author Dr Mark Thomson said:

” We’ve looked at the prospects mid-century for what it will cost to maintain our current defence force and whether the ageing of the population will limit the availability of personnel.”

“The good news is that there will continue to be more than enough young Australians to maintain the personnel strength of the ADF, although Defence will have to be agile and responsive to attract them.”

“The bad news is that the long-term trends in the cost of personnel and military equipment are upwards, as is the trend in the cost of maintaining and operating that equipment.”

“On the basis of these trends, our best estimate is that defence spending will have to rise around three-fold out to 2050 just to maintain our current range of military capabilities, although growth in the economy over the same period will ensure that the percentage of GDP only grows to a bit over 2%.”

“But when we look at credible upper range of the trends, the percentage of GDP in 2050 quickly grows to a more uncomfortable 3%, or even 4%.”

“The problem is that by mid-century the ageing of the population will see overall Commonwealth spending exceed revenues by around 5% of GDP on current policy settings according to Treasury’s 2002 Intergenerational Report.”

“No part of Government will be immune from contributing to a balanced budget later this century – including Defence.”

“While Defence delivered substantial efficiency gains last decade by contracting out non-core activities, the pace of reform has slowed and there are no big productivity gains on the horizon.”

Dr Thomson concluded by saying “The best way to boost Defence efficiency is to move away from the current centrally planned bureaucracy, and adopt a more business-like approach by giving the Service Chiefs direct control over resources and making them directly accountable for delivering results.”