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Thursday 24 Aug 2017 | 11:12 | SYDNEY
Thursday 24 Aug 2017 | 11:12 | SYDNEY

It's time to cut the defence budget

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COMMENTS

10 February 2009 11:23

I'm already on the record as advocating a more modest, non-provocative defence policy, and part of that argument was a call for a small cut to defence spending that could go toward beefing up our diplomatic capacity.

But even if you think that argument lacks merit (and I'm pretty certain that's how the people drafting the White Paper view it), Australia's economic circumstances surely do require us to consider a cut to defence spending. Sam Bateman has already described the tough budgetary times ahead for defence, but since that post was written, the Government has recommitted itself to 3% growth in the defence budget to 2018.

Page 38-9 of the February 2009 Updated Economic and Fiscal Outlook says (my thanks to Mark Thomson for the link):

All areas of government spending will be examined with a view to finding efficiencies and opportunities to better target programs while continuing to honour the Government’s commitment to provide 3 per cent real growth per year on average in Defence’s underlying funding base to 2017-18.

If the economic crisis is as severe as the Government says, why would you not cut defence spending? As Tom Ricks argues in the American context, a country that has to get by with less must prudently reassess its ends and means. So if the defence budget is based on our current and possible future commitments, maybe we ought to be reassessing those commitments rather than expanding the budget to meet them.

Some might argue for the stimulus benefits of defence spending, particularly if that spending is done at home. But when it comes to big ticket items like major weapons platforms, almost all of our spending is done overseas. Yes, we assemble ships, submarines and aircraft domestically, but any new programs of that kind would take years to come on stream, too late to have any stimulus effect.

The only exception might be if such a major program was about to come to an end, and we could order more ships or planes to keep that particular production line running. But I'm not aware of any such program, and even then, there would be better ways to spend stimulus dollars. When you build a bridge or a railway, the stimulus effect ends when construction finishes. But you then have a productive asset that contributes to economic activity. In purely economic terms, a new destroyer would, on completion, just be a drain on the public purse.

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