Defence might have to tighten its belt yet again as the federal government moves to return its budget to surplus as quickly as possible, a new study warns. But it was just possible all or some of the A$8.8 billion in defence spending, deferred in the 2009 budget, could be reinstated.
There were powerful countervailing factors working against that possibility, said Mark Thomson from the Australian Strategic Policy Institute (ASPI) in releasing its analysis of the defence white paper.
"In fact, it's entirely conceivable that defence will be told to tighten its belt yet again, come budget night in May," he said.
The defence budget for 2009-10 stands at A$24 billion with the white paper promising 12 years of 2.2 per cent real growth following three per cent growth for nine years initiated by the Howard government.
On the downside, defence has to come up with A$20 billion of efficiencies over 10 years.
On past experience the rapid defence growth planned for 2012-17 was likely to be unachievable, Dr Thomson said.
There would be a political imperative for the government to return its budget to surplus as a tangible sign of responsible economic management.
The 2009 budget forecast a return to surplus in 2015-16, now brought forward to 2014-15 thanks to improved economic circumstances.
"But what's good news for the government is not necessarily good news for defence," Dr Thomson said.
"The risk (for defence spending) is that the government will limit expenditure so as to bring the budget into surplus in time for the election after next in late 2013 or early 2014."
This would require reducing spending sufficiently to move from deficit to surplus two years earlier than projected.
"Past experience shows that this is far from a remote possibility," Dr Thomson said.
Rod Lyon, the institute's director of strategy, said the white paper pointed to an underlying Australian concern with the future role of the United States.
The alliance with the US retained its position at the core of Australian strategic policy. "But the white paper signals a range of deeply-layered worries about the relationship, exactly because of the centrality of the alliance in traditional Australian thinking," he said.
"Those worries seem likely to last. They're not simply the product of the (previous) Bush administration.
"Indeed, Obama's strategic agenda, which seems to focus on the long-term rebuilding of US power, only increases the need for both nations to consider the way forward, not just for the next six months or one year but for the next 20 years."
