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Crying poor? The affordability of defence expenditure

By Mark Thomson

The May budget saw deep cuts made to Australia's defence budget over the next few years. It will be up to next year's Defence White Paper to decide what happens after that.

It has been argued that the long-term cost of health and ageing will place further pressures on government finances and constrain defence spending in the decades ahead. But while social spending will undoubtedly rise, so too will Australia's prosperity and capacity to pay.

This paper considers fiscal and economic arguments and concludes that spurious arguments about the 'affordability' of defence spending should not be allowed to skew the long-term plans for Australia's defence.

It would be a false economy to slash defence spending and then pay a higher strategic price in the future.