Editor's Foreword

for the ��-year period of the White Paper, but the trajectory
of actual funding was thrown into doubt only
ten days later when the ����/�� defence budget was
announced and actually included cuts to near-term
defence spending. In particular, the benefits of the
new indexation regime were deferred for four years;
A$�bn (US$�.�bn) of existing spending was removed
from the next four years’ budgets and deferred into
the future; and A$�bn (US$���m) in ���� and A$���m
(US$���m) in ���� were also deferred. So despite the
initiatives outlined in the White Paper, some A$�.�bn
(US$�bn) has been ‘lost’ from the near-term budget
plan. This prompted the Australian Strategic Policy
Institute to suggest that defence spending may be
viewed as something of a budget-balancing item,
pointing out that the schedule of cuts and deferrals
coincides with the government’s principle economic
goal of returning to a budget surplus in ����.
Central to the long-term funding plan laid out in
the White Paper is the initiative to deliver more than
A$��bn (US$��bn) in gross savings over the next
decade. Indeed, the government is relying on realisation
of these measures to provide two-thirds of
its proposed A$��bn (US$��bn) increase in defence
funding in the next ten years; the remaining A$��bn
(US$�bn) will come from the new indexation regime.
Broadly speaking, these ‘new’ funds will be allocated
as follows: A$�bn (US$�.�bn) for major capital
equipment; A$��bn (US$�bn) for personnel and operating
costs associated with new equipment; A$�bn
(US$�.�bn) for estate, information technology and so
on; and A$�bn (US$�.�bn) for other budget provisions
related to mediation. Defence Minister Joel Fi�gibbon
East Asia and Australasia
389
acknowledged that the failure of previous initiatives to
save money would make some people sceptical about
the reform plan’s chances of success, but he stressed
that the goals of the broader Force ���� programme
could only be realised if savings are achieved. To
date, however, only sketchy details have emerged
about how the MoD will go about saving what is in
effect �% of the present annual defence budget. With
personnel and deployments on the increase, savings
clearly will not be possible in these areas. Thus, it
appears that the bulk of the savings are to be generated
through the more prudent purchasing of goods
and services provided by the private sector. Details
so far published show that savings are expected to be
made as follows: efficiencies in payroll, finance and
human-resource management A$�.�bn (US$�.�bn),
‘smart’ non-equipment procurement A$�.�bn
(US$�bn), standardised IT A$�.�bn (US$�.�bn), be�er
inventory management A$���m (US$���m), ‘smart’
maintenance of equipment A$�.�bn (US$�bn) and
workforces reform A$�.�bn (US$�.�bn).
Whatever the eventual evolution of long-term
defence spending, the ����/�� budget reached a
historic high of A$��.�bn (US$��.�bn), a real-terms
increase of ��% over the previous year. There were
several one-off factors contributing to this: A$�.�bn
(US$�.�bn) of additional spending for overseas
deployments (A$�.�bn in Afghanistan, A$���m for
East Timor and A$��m for Iraq); the provision of
an additional A$�.�bn (US$�.�bn) to compensate
for the depreciation of the Australian dollar; A$�bn
(US$���m) of capital investment that had been
deferred out of last year’s budget; plus the impact
Table 33 East Asia and Australasia Regional Defence Expenditure as % of GDP
% of GDP
2.0
1.5
1.0
0.5
0.0
1.45 1.38 1.41 1.45 1.44 1.41 1.41 1.44 1.45 1.44
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
East Asia and
Australasia