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Budgets, the economy and the Defence Strategic Review

By Rob Bourke

Current debate over how to defend Australia in a more threatening strategic environment points to an urgent need to strengthen the capabilities of the ADF, partly through purchasing new types of weapons incorporating the latest technologies. 

Standing in the way of that need being realised are two factors. One is a trillion dollars of government debt and intense demands for higher expenditure on other public priorities ranging from health care to climate change. The other is a perception that any shift in defence investment away from more established to new types of weaponry would threaten jobs and growth. 

Among the few options available to Defence to overcome both obstacles is avoiding a significant price premium for preferring the domestic over foreign supply of major weapons platforms and systems through a more targeted approach to Australian industry participation. 

That option need not detract from Australia’s independence or economic welfare. Indeed, available data indicates positive outcomes can be achieved, on both fronts, if at least part of what’s saved through avoiding high price premiums in some areas of defence capability development can be re-invested in others.

However, that depends on avoiding the defence industry policy pitfalls of the recent past. Linking an updated defence capability plan to an outdated industry policy is, at best, a high-risk venture. More realistically, it represents a path to disappointment.

This paper addresses how Defence can not only save money when purchasing a new cadre of weaponry but do so in a way that benefits the economy. Both issues relate to affordability which may ultimately determine the impact of the Defence Strategic Review.