A Greater Australia: Population, policies and governance - CEDA

Section 1.1Though it is rarely conceded, our small army would have at most a very limited role in aserious defence of the continent. It exists to help maintain order in nearby fragile statessuch as East Timor and the Solomon Islands, and to make small but politically importantcontributions to United States ventures in places such as Afghanistan and Iraq.However, that doesn’t mean that the size of our population is irrelevant to our defence.Although we might not need a large army, we do need a large enough economy topurchase and operate the increasingly expensive military equipment upon which ourdefence strategy is built.Population, power and prosperityTo a good approximation, the size of the Australian economy is proportional to the sizeof its population. All other things being equal, if our population were to grow by 10 percent, our Gross Domestic Product (GDP) would also grow by 10 per cent. We wouldalso be likely to have a larger industrial base – though this would not readily translateinto a military technological advantage given that only the largest of nations possessthe economies of scale necessary to develop modern major weapon systems.So what impact would a larger economy have on Australia’s defence? To the extentthat national defence is a pure public good, a larger population would not increase thedemand for defence. A safe and secure country can be enjoyed by all, irrespective ofhow many people live here. Of course, this is something of an idealisation. For onething, a larger population could give rise to additional population centres that wouldneed to be defended against attack. But given Australia’s declared strategy of controllingits air and maritime approaches rather than close defence of its cities and industry,the increased demand for defence capacity (as a result of a larger population) wouldbe slight.On the supply side, a larger population would provide more people to share theeconomic burden imposed by national defence. With a population 10 per cent largerthan at present, we could maintain our current defence capacity with each personcontributing nine per cent less on average than at present. But this would probably notbe the outcome. National defence is not a binary quantity that is either adequate orinadequate. Rather, defence spending represents an investment to mitigate strategicrisk. Higher levels of defence spending allow a wider range of risks to be addressedwith confidence. Consequently, assuming that the demand for defence is elastic, if theper capita cost of defence were to fall we would probably choose to have more of it.A likely outcome would be that Australia would spend more collectively, but less percapita, on defence than at present.From an individual perspective, what could be better? A larger population would allowus each to pay less and yet enjoy better defence. However, it’s not that simple. First it’sworth examining some real world data. Table 1 displays economic and defence spendingdata for Australia and selected countries. The emphasis on North Asian countriesis no accident. Those arguing for stronger defence have their sights firmly set on therise of China.The first thing that is apparent from Table 1 is that some countries devote a substantiallylarger share of their GDP to national defence. Given the precedents of Israel,Singapore and the United States, it’s clear that Australia could more than double itsdefence expenditure without increasing the size of its population. Of course, therewould be an opportunity cost for taxpayers in terms of some combination of privateA Greater Australia: Population, Policies and Governance20