Abstract
A white paper designed to chart Australia' s defence strategy to 2030 was
published in mid-May 2009. It
set out some AUD43bn worth of new
initiatives over the decade. The then defence minister Joel
Fitzgibbon
said the commitments would be funded in full by ‘growing the underlying
defence budget by
3% average real growth to 2017-18, as promised in the
2008-09 budget’ and 2.2% growth in 2029/30. A
key point in the white
paper was the provision for fixed indexation of defence spending at 2.5% each
year
to 2029-30, the target for consumer price inflation agreed by the
Australian government and the Reserve
Bank of Australia for the purpose of
defence planning.
The plan was originally due to be released in December
2008. The Royal Australian Air Force (RAAF)
had hoped to replace its
32-year-old fleet of Orion AP-3C maritime surveillance planes with a mix
of
unmanned aerial systems (UAV) and a new patrol aircraft – the
Boeing P-8A Poseidon. The Australian
government, led by Prime Minister
Kevin Rudd, has now effectively ended hopes for the early acquisition
of
the AUD1.5bn Global Hawk UAV – part of an ambitious 15-year project to
revolutionise maritime
surveillance requirements. The navy was a big
winner with the white paper, which called for a fleet of 12
new generation
submarines costing up to $25bn and 100 new joint strike fighters (JSF) costing
around
$16bn.
The Australian Department of Defence (DoD) has been told
to find AUD20bn in savings and efficiency
gains over the next decade in
order to pay for new capital equipment including the F-35 JSF. Savings
over
the next four years are estimated at AUD3bn.
Fitzgibbon was
forced to resign in June 2009 after it emerged he allowed his brother, who
runs a health
insurance company, to use his ministerial office to conduct
a business meeting with a US army general in
charge of defence health
services. Fitzgibbon had widely been seen as incompetent and his position
was
under pressure for months. A replacement was not immediately
announced.
The government has in part answered questions hanging over the
Australian defence industry in Q109 as
to the effect of the financial
crisis and pressures on the budget on expenditure. The Rudd administration
has now announced spending will jump 21 per cent to AUD26.6bn in 2009/10.
Commentators fear
however, the government will struggle to meet its
promise to increase defence budget 3% in real terms
over the next four
years.
New spending includes a AUD2.4bn boost in expenditure on defence
equipment, on top of an increase in
funding for the war in Afghanistan to
give total spending in 2009/10 of AUD3bn. Afghanistan alone will
cost
AUD1.2bn. The government has also budgeted an extra AUD87mn to establish a
Middle East
operations headquarters in the United Arab Emirates and
AUD62mn for operations in Iraq in 2009/10 –
despite its formal
military operations there ending on July 31.
However, the global financial
crisis has already forced the DoD to shelve plans to buy billions of
dollars
of military equipment, including a new AUD5bn maritime
surveillance system. The economic downturn
will also mean the navy will
not exercise the option to acquire a fourth air warfare destroyer costing
AUD2bn. It could also force a one-year delay in plans to spend AUD16bn on 100
F-35 JTFs.
This quarter, we have introduced a significant new aspect to
BMI' s Defence reports, which is the City
Terrorism Rating (CTR). This
assesses the risk of a terrorist attack. The CTR takes into account the
overall BMI Terrorism Rating for the country in question. It also incorporates
the prevalence of terrorism,
which recognises the frequency of attacks,
and whether a city is a target for terrorists. The CTR also
recognises the
threat of terrorism in terms of the likely numbers of victims and the ability
of groups to
launch sustained campaigns.
In Australia we assess the
CTRs for Sydney and Melbourne, which are created via an integration of the
state-wide threat, with an evaluation of the city-specific characteristics and
level of activity.
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