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Australia currently spends around $15
billion per annum or about 1.8% of GDP on defence. There has been public debate
that this amount of money is not enough to meet current defence needs and
represents a decline in real terms over recent years. But how much money for
defence is enough?
A common approach is to compare Australia’s defence spending with other
countries. For example, the USA spends about $1600 per person each year compared
with $750 for Australia. USA average incomes are about a third higher than
Australian so that explains part of the difference. They also devote a greater
share of their national production to defence, about 3% of GDP. The USA benefits
from economies of scale and higher productivity. Australia would have to spend a
lot more to approach the USA’s technological sophistication. Equally,
comparisons with defence spending by the USA should be offset by the large
portion their defence budget allocated to nuclear weapons, which Australia has
no equivalent. Defence spending in
the USA is also utilised to meet many non-military function due to their
different federal system, eg, the US Army Corps of Engineers manages inland
waterways.
As another example, Singapore
has similar income levels to Australia and spends about 5% of GDP on defence.
Singapore has the same number of military personal and more combat aircraft than
Australia despite having a much smaller population. Most NATO countries spend
similar proportions on defence as Australia. Japan and Germany spend around 1%
of GDP, although this gives them large technological sophisticated armed forces
because of the massive size of their economies. As another comparison, Indonesia
has a population ten times the size of Australia, but its armed forces has
200,000 personal, which is only four times larger than Australia’s 50,000
strong defence force. Indonesia also spend far less on equipping their military
personal; $1 billion a year in capital spending, compared with $4 billion for
Australia.
Another approach is to
compare defence spending with previous experiences. For example, Australia spent
higher proportion of GDP on defence in each of the decades following WW2; even
in 1980s Australia spent around 2.5% of GDP. However, our economy was smaller,
so our defence effort took a greater share of national production. In absolute
terms, we spend more now. At the height of the Vietnam commitment in 1970
defence spending was $10 billion in constant dollars, which is two thirds of
today’s figure. The current number of full-time personal is slightly more that
it was in 1960. Troops have better training and equipment, aircraft carry
heavier loads further and navy ships require only half the number sailors. This
has to be considered in context; for example, the navy has more effective sonar
systems but modern submarines are quieter. The relative cost of some equipment
has increased, but others have declined; eg, a modern rifle can be purchased for
a fraction of the cost of earlier models. Of course, mouse-pushing technician
are increasingly supplementing diggers with bayonets. This complicates comparing
costs with previous eras. Potential threats have change too; China is our second
largest trading partner, AIDS is ravaging Africa, although incidents of
terrorism around the globe have declined since their height in the 1960s; maybe
its that we feel more exposed to terrorism?
A more sophisticated approach
to defence needs is to evaluate what is needed to meet a country’s particular
strategic circumstances. For example, South Korea spends significantly more of
defence than most other countries due to the large and hostile North Korean
forces just over its boarder. Other countries spend more in relation to internal
security situations; eg, the UK and Turkey both deploy a significant number of
troops in Northern Ireland and Kurdistan respectively. Conversely, New Zealand
is a peripheral country and spends very little on defence. Australia is a little
more engaged with the rest of the World and spends somewhere in between.
Contention about how well placed Australia is to defend itself is problematic.
We are fortunately a very peaceful country facing no identifiable threat.
Australia endeavours to maintain capability parity with other countries in our
region, capitalising on our comparative advantage of a well-educated population
living in country surrounded by a large body of water.
There is an argument that
Australia can only remain safe and prosperous so long as the global security
situation is peaceful. Therefore, contributing to alliances and supporting
institutions like the United Nations best meet Australia’s security interest.
In recent years, Australia has deployed military personal to a variety of
overseas military operations, including East Timor and naval deployments in the
North Indian Ocean. Currently Australia has about 2000 defence force personal
are deployed overseas; about 5%. These commitments cost—on average of $700 per
person per day above normal expenses. By comparison, the UK and USA deploy
around 20% of their troop strength in a range of global commitments, including
the Balkans and Iraq. NATO countries station around 5% of their military forces
outside their own countries; mostly in other NATO countries. Within our own
region, Malaysia and Thailand have made moderate contributions to UN
peacekeeping operations. Few countries deploy significant military forces
outside their own boarders—far cheaper that way.
Australia's Defence Forces
face increasing cost pressures. Much of existing capital equipment is outmoded.
The average age of aircraft is 25 years, the army’s track personal carriers
are over 40 years old and the navy’s Standard air defence missile went out of
production in the 1980s. Much defence force housing and training establishments
were built before the 1970s. Personal costs are increasing at a greater rate
than inflation, especially for skilled personal such as medical staff, IT and
air traffic controllers. The Defence Forces has consistently failed to meet
recruitment targets—half of uniformed personal are over thirty years of age
and there is one officer and two NCOs for every private, seaman, etc. The
situation for reserves is even more severe. In South Australia, recruitment for
reserves met 8% of their target in 1998. Families of defence personal often live
on a single wage in what is increasingly a dual income economy. Administration
of the defence forces also takes a greater share of funding; although this might
be due to inefficiency. Care for veterans is costing more too, over $10 billion
per annum—albeit such expenses are borne out of the veterans budget, but they
still represent the long tail of national security. Defence will require
additional finds in the future merely to “tread water.”
As for how much is enough—that does depend on national priorities, perceptions
of threat and the esteem from being good international citizen.
Unpublished 2004
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