The Cost of Defence: ASPI Defence Budget Brief 2005-06

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The Australian Strategic Policy Institute today released its report The Cost of Defence: ASPI Defence Budget Brief 2005-06.

This document has been written to give interested readers greater access to the complex workings of the Defence Budget and to promote informed debate on Defence budget issues. 

In releasing the report, Dr Thomson said: 

Next financial year Defence will spend around $17.5 billion of taxpayer’s money. This is an increase of $880 million compared with the funding for this year, and represents just on 1.9% of GDP.

In the budget, Defence was given $1.2 billion in new initiatives to deliver over four years. This included $420 million for our expanded and continuing role in Iraq, $192 million for new security initiatives and $300 million extra for capital investment. 

But the budget also included some belt tightening for Defence. They have to achieve around $440 million in reduced overheads and other efficiencies over the next four years. This should be achievable. 

One worrying issue revealed by the budget was that full-time military personnel numbers have fallen for the second year in a row – at a time when the ADF is trying to grow. This is despite $400 million of money having been spent over the past four years to improve recruitment, retention and conditions of service.

As far as the Government’s decade-long $50 billion Defence Capability Plan of investment in new military equipment goes, there was mixed news. 

On the positive side, the reforms to Defence’s acquisition agency – the Defence Materiel Organisation – appear to be gaining traction. Not only are they on track to exceed their goals for this year, but $300 million of previously deferred spending has been reinstated into next year’s budget. This is an encouraging sign.

However, at the same time, the approval of new projects by the Government has fallen significantly behind schedule. The main reason for this appears to be the new and more-rigorous project approval process that has been put in place. In the long run this should lead to better project outcomes. However, the fact remains that unless projects are approved on schedule they are unlikely to be delivered on schedule.