THE COST OF DEFENCE: ASPI Defence Budget Brief 2007-2008

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The Australian Strategic Policy Institute today released The Cost of Defence: ASPI Defence Budget Brief 2007-08.

This document has been written to give readers greater access to the complex workings of the Defence budget and to promote informed debate on defence budget issues. 
 
In releasing the document, ASPI Defence Analyst Mark Thomson said:

This year’s budget capped off an extraordinary thirteen month period that saw the government promise more than $41 billion worth of new defence initiatives over eleven years; around $16 billion last budget, $14 billion this budget, and more than $11 billion in between.

As a result, next financial year the Defence budget will reach $22 billion. This is an increase of $2.1 billion over the funding for this year, and represents 2% of GDP.

Key initiatives in this year’s budget included $6.1 billion over ten years for 24 Super Hornet F/A-18F aircraft, $1.8 billion for additional logistics and $1.3 billion for C-17 operating costs.

Another $1.3 billion in operational supplementation was provided which will bring the accumulated cost of the ADF’s commitment to Iraq to $2 billion and Afghanistan to $1.7 billion.

Unfortunately, Defence’s long-troubled acquisition processes again looks to be faltering. $2.1 million of previously planned investment in new equipment has been deferred over the past six months. Further delays cannot be discounted given the ambitious program of investment.

In a positive sign, the size of the permanent ADF has grown rather than fallen for the first time in four years – albeit by only 325 personnel. With an extra 5,500 people required over the next decade, the government is not taking any chances and has provided $2.1 billion over ten years for recruitment and retention (on top of $1 billion provided late last year).

Despite all the money flowing into Defence, still more money will be needed to cover the personnel and operating costs of new capabilities that will be delivered over the next few years. With an election due this year in which fiscal rectitude will be in stark focus, the question is: how much of the projected surplus will be needed to deliver the government’s plans for the defence force?