Australia Defence Budget Climbs to AUD 44.6 billion

16 Mei 2021

Defence budget as a share of gross domestic product (GDP) will reach 2.1% (photo : ASPI)

The 2021–22 budget was a ‘no surprises’ one for Defence. The government set out its plan in the 2016 white paper, reaffirmed it in last year’s defence strategic update and is now providing Defence with the funding it promised to deliver the plan. The size of the budget is as expected and that’s good news, but it’s how it can be spent to acquire more offensive firepower well before the 2030s that matters most. The budget tells us little new here.

Because defence ministers no longer state the size of the defence budget in their budget night media release, here it is: $44.6 billion. You can find it in Table 4a in Defence’s portfolio budget statements. That’s the consolidated number for the Department of Defence ($43,560.7 million) and the Australian Signals Directorate ($1,057.9 million). That’s an increase on 2020–21 of 6.1% in nominal terms and 4.1% in real terms.

Once we take into account things such as foreign exchange adjustments and funding supplementation to conduct operations, that amount is pretty much bang on the government’s funding commitment set out on page 54 of the defence strategic update. That’s consistent with the government’s history of delivering on its funding commitments stretching back to the white paper. In short, the defence budget is continuing its solid growth.

Despite the lack of surprises, there are a few significant things to see here. One is that Defence’s acquisition program is continuing to move a lot of money. I’ve noted several times that much of the growth in the budget is focused on that program. If we take a step back to the 2020–21 budget, the government was planning a huge $3 billion (27%) increase in Defence’s acquisition budget, from $11.2 billion to $14.3 billion. Considering Defence had only achieved roughly 5% increases in preceding years, that was very ambitious, particularly in the middle of Covid-19 pandemic that was interfering with global supply chains. Was it overly ambitious?

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