1301.0 - Year Book Australia, 2003  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 24/01/2003   
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In the decade preceding 2001-02 Defence funding remained relatively stable in real terms. Increases over this period, evident in graph 4.4, reflect maintenance of the Defence funding base against inflationary and unfavourable foreign exchange influences.

Defence funding was increased in the 2001-02 budget (and forward estimates) to address a number of specific priorities detailed in the Defence White Paper. The White Paper provided a funding commitment for Defence and injects some $28b over the decade from 2001-02. This funding injection equates to an increase of some 3% average real growth per annum over the period.

In addition to the implementation of the White Paper, the Government has given a number of specific directions to Defence to meet emerging strategic priorities. These include the conduct of operations to protect Australia’s borders, a contribution to the international coalition fighting terrorism, and enhancement of domestic counter terrorism capabilities. Defence was provided with some $730m to address these and other emerging priorities in 2002-03.

Graph - 4.4 Defence Outlays(a)



Graph 4.5 reflects the significance of both employee costs and the investment in specialist military equipment and infrastructure in delivering Defence capability. Increases in operating costs in 2001-02 and 2002-03 are attributable to the enhanced operational tempo associated with operational undertakings such as those occurring in East Timor and the war on terrorism.

Graph - 4.5 Defence Outlays, By category(a)



Defence spending by Australia’s traditional strategic partners, the United States of America and the United Kingdom, has been declining subsequent to the end of the Cold War. Over the period 1992-2001, the United States of America and United Kingdom defence expenditure as a proportion of GDP declined from 4.8% to 3.2% and from 3.8% to 2.5% respectively. These downward trends may stabilise as a result of the events of 11 September 2001 and a changing strategic picture. The United Kingdom, for example, has recently concluded its 2002 spending review, which has resulted in a planned spending increase of some $10b over the period 2002-03 to 2005-06. Australia's defence expenditure as a proportion of GDP is shown in graph 4.6.

Graph - 4.6 Defence outlays, Proportion of GDP(a)


From a regional perspective, Australia has tended to spend more on defence than its neighbours. The ASEAN nations (Association of South East Asian Nations - Indonesia, Malaysia, Singapore, Thailand, Philippines and Vietnam), all spend less than Australia (table 4.7).


4.7 REAL DEFENCE SPENDING(a)
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
US$b
US$b
US$b
US$b
US$b
US$b
US$b
US$b
US$b
US$b
US$b
Australia6.2
6.4
6.8
7.1
7.0
7.2
7.2
7.3
7.5
7.7
7.9
Malaysia2.0
2.0
2.2
2.2
2.4
2.5
2.2
1.8
2.0
1.9
2.3
Indonesia2.1
2.3
2.3
2.5
2.6
2.9
2.9
2.3
2.4
2.3
2.2
Singapore3.1
3.4
3.4
3.5
4.0
3.9
4.3
5.0
5.3
5.1
5.4
Thailand3.0
3.4
3.4
3.7
3.8
3.9
3.6
2.9
2.6
2.7
2.6
Philippines0.8
0.8
0.9
1.0
1.1
1.1
1.0
0.9
0.9
1.2
1.2
Vietnam-
1.2
1.0
1.6
1.4
1.9
2.0
1.6
1.7
2.1
2.2
(a) Data calculated in US $billion 1995.

Source: Defence Intelligence Organisation, 'Defence Economic Trends in the Asia Pacific 2001'.



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