Global spending on defence has grown 56% in the last 15 years. In 2016, the global military budget amounted to US$1.68 trillion.
The US topped the bill with US$611 billion, compared to second placed China’s US$215 billion. Australia spent ‘only’ US$24.6 billion.
This is despite recent cuts in defence spending both locally and overseas. Under former Prime Minister Julia Gillard, defence lost up to $16 billion. The US also cut defence spending over the course of Barack Obama’s two terms. Down to a ‘mere’ US$598 billion in 2015.
This was partly due to sequestering (basically a cap on spending). And also the scaling back of the wars in Iraq and Afghanistan.
But the political climate means that defence spending is on the rise. North Korea is one trigger. As is the ongoing threat of terrorism.
And conservative governments in the US and locally have helped the military’s cause.
US President Donald Trump insists on rebuilding the US military. As a result, the Senate passed the National Defence Authorization Act late last year, with a budget of almost US$700 billion. This gets around the sequestering problem for the time being.
So where will Australia’s defence budget be spent?
Meanwhile, Australia’s defence budget rose to AU$34.7 billion in the recent budget. It’s set to grow to AU$58.7 billion by 2025/26. Which gives our military a AU$150 billion windfall over the next four years.
A defence white paper states that the Royal Australian Navy (RAN) will receive ‘…the most comprehensive regeneration of our Navy since the Second World War.’
AU$89 billion will go to the Navy’s shipbuilding program. The RAN will get three Hobart–class Air Warfare Destroyers, nine new anti-submarine frigates, 12 new offshore patrol vessels, and 21 patrol boats. The planned 12 new submarines get another $50 billion.
The Royal Australian Air Force (RAAF) doesn’t miss out, with 72 F-35A Joint Strike Fighter (JSF) aircraft, at a cost of around $98 million each. Never mind that the JSF is already well behind schedule. Or that even Trump has misgivings about the cost of the program.
Defence budgets are often more about impressive figures than long-term results. Governments want to convey the right impression to voters, allies and potential enemies, alike.
The big winners in all of this are defence contractors and suppliers. And anyone who invested in them at the right time. Lockheed Martin, who are the manufacturers of the JSF, have already made a bundle, whether the JSF is ready or not.
As a global trend, the defence build-up is scary. But the boost to Australia’s defence capabilities may well be timely, possibly even well overdue.
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By Craig Henderson