Release of ASPI Special Report – 2008-09 mid-year Defence budget update

The Australian Strategic Policy Institute (ASPI) today released its 2008–09 Defence budget update.

The Update examines defence funding as of late 2008 taking account of the government’s mid-year budget revisions, the latest Defence Annual Report, and the impact of the Global Financial Crisis.

The Update argues that, despite the deteriorating economic situation, it is neither desirable nor necessary for the government to step back from its long-term commitment to increase defence spending in real terms by 3% per year.

Not only does defence spending contribute to activity across the Australian economy, but now would be the wrong time to put long-term plans for the Australian Defence Force (ADF) on hold.

In recent years, the Department of Defence (Defence) has struggled to increase its personnel numbers and suffered major delays in acquiring the equipment that the ADF needs for the 21st century.

With ADF recruiting having only recently turned the corner, and many new acquisition projects still in their early stages, it is important that momentum be maintained through continued funding growth.

It is also worth remembering that Defence is committed to find $10 billion of savings across the next decade to meet funding pressures within its budget.

Other key points from the Update are:

• Around $22.4 billion, or roughly 1.8% of GDP, will be spent by Defence in 2008–09

• Even though ADF retention has reached a fifteen-year high and recruitment rates have improved significantly in recent years, serious problems remain in a number of areas including the submarine force and many skilled trades.

• Investment in new equipment continues to be a problem area with $1.9 billion of acquisition spending deferred since the last budget due to delays in existing projects and the slower than expected approval of new projects.

• Notwithstanding the reduction in Australia’s commitment to Iraq, overseas deployments continue to involve around 3,000 personnel at a cost of more than $1 billion in 2008-09.