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1301.0 - Year Book Australia, 2005  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 21/01/2005   
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Contents >> Defence >> Resources

In the decade preceding 2001-02 Defence funding remained relatively stable in 'real' terms. Increases over this period, evident in graph 4.3, reflect maintenance of the Defence funding base after taking account of inflationary and foreign exchange influences.

Graph 4.3: DEFENCE RESOURCING



Defence funding was increased in the 2001-02 budget and forward estimates to address a number of specific priorities detailed in the 2000 Defence White Paper. The White Paper provided a funding commitment for Defence of around $23.5b (in 2000 dollars) over the decade from 2001-02. This funding injection equates to an increase of some 3% of average real growth per year over the period.

In addition to the implementation of the White Paper, the Government has given Defence a number of specific directions to meet emerging strategic priorities. Key 2004-05 budget measures include:
  • $326m to buy two additional Airborne Early Warning and Control aircraft
  • supplementation of $313.9m for the conduct of ADF operations including:
    • the continued ADF contribution to the rehabilitation of Iraq following the hand over to the new Iraqi Government (an additional $131.6m over three years)
    • the ADF’s contribution to the Regional Assistance Mission to the Solomon Islands ($22.2m)
    • continued ADF presence in East Timor ($20.1m over two years)
    • continued border protection operations ($16m)
  • enhancements to Defence’s counter-terrorism capabilities including for intelligence ($54.5m over four years)
  • an extra $815.6m over four years in logistics support for key ADF platforms and equipment, including a range of enhanced maintenance work, refits and upgrades.

Graph 4.4 reflects the significance of both employee costs and the investment in specialist military equipment and infrastructure in delivering Defence capability. The increased share for investment is consistent with initial progress towards acquiring the equipment capabilities outlined in the Defence White Paper. Longer-term projections indicate increases in personnel costs due to growth towards a larger ADF as specified in the White Paper.

Graph 4.4: DEFENCE RESOURCING, By category



From a regional perspective, Australia has tended to spend more on defence than its neighbours, in absolute terms, although some spend more as a proportion of gross domestic product (GDP). Australia spends more than various member countries of the Association of South East Asian Nations (table 4.5). Defence spending levels within the region were varied, but saw an overall increase in 2003. Some budgets neared or surpassed their previous 10-year high points (e.g. Singapore and China). After allowing for price changes, increases in 'real' defence expenditure were recorded by Thailand, Indonesia and Malaysia. Local political and economic conditions, as well as defence policies, affected the size of individual defence budgets and annual funding changes.


4.5 REAL DEFENCE SPENDING(a), Selected countries

1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
US$b
US$b
US$b
US$b
US$b
US$b
US$b
US$b
US$b
US$b
US$b

Australia
6.8
7.1
7.0
7.1
7.1
7.2
7.3
7.4
7.5
7.9
8.8
Malaysia
2.2
2.2
2.4
2.5
2.2
1.8
2.0
1.9
2.3
2.6
2.5
Indonesia
2.3
2.5
2.6
2.9
2.9
2.3
2.4
2.3
2.2
2.2
2.3
Singapore
3.4
3.5
4.0
3.9
4.3
5.0
5.3
5.1
5.4
5.7
5.8
Thailand
3.4
3.7
3.8
3.9
3.6
2.9
2.6
2.7
2.6
2.7
2.7
Philippines
0.9
1.0
1.1
1.1
1.0
0.9
0.9
1.2
1.2
1.4
1.1
Vietnam
1.0
1.6
1.4
1.9
2.0
1.6
1.7
2.1
2.2
2.6
2.4

(a) Data calculated in US $billion 1995.

Source: Defence Intelligence Organisation, 'Defence Economic Trends in the Asia Pacific 2003'.

Defence spending by Australia’s traditional strategic partners, the United States and the United Kingdom, has declined as a share of GDP since the end of the Cold War. Over the period 1993 to 2003, United States defence expenditure as a share of GDP declined from 4.5% to 3.4%, but has begun to stabilise as a result of the events of 11 September 2001 and recent changes in the strategic landscape. Australia’s defence expenditure as a share of GDP is shown in graph 4.6.

Graph 4.6: DEFENCE RESOURCING, Share of GDP


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