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Defence projects and the economy

By Rob Bourke

This report examines what the national economy stands to gain from nearly $100 billion of planned investment in new defence capital equipment including submarines, frigates and military vehicles.

The report emphasises that although the general public has been informed about some of the economic benefits of those projects, it has limited access to reliable information on most of their economic costs. Nor has the public been fully informed of how much of what goes into the projects will be produced in Australia.

The picture emerging from information available publicly contrasts with the image of vessel and vehicle projects as a major source of ‘jobs and growth’. At best, the projects appear to have a small positive impact on economic activity. That’s due to the substantial economic costs involved.

Author Rob Bourke said that ‘for such large projects whose economic benefits have been portrayed as being far above their economic costs, it’s surprising how little supporting evidence has been made available to Australian taxpayers.

With the economic upside of projects touted widely but the economic downside largely hidden from public view, it’s difficult to assess the merits of investments of national significance.

Government messaging suggests that projects add much more to the economy than they take away. The evidence available publicly paints a different picture: Australia potentially paying a lot to protect a little.

Vessel and vehicle acquisitions might now be difficult to alter. Nonetheless, the lessons in transparency that they provide are important to consider for future investments by Defence, especially with calls for its budget to move well above the current target of 2% of GDP.’