Defence funding is inching towards the fabled two per cent of GDP thanks to the extra $2 billion promised in the federal budget.
That extra funding was helped along by slow GDP growth and more than $2 billion supplementary funding to cover the cost of operations in Afghanistan and Iraq and to offset extra costs from the downward movement of the Australian dollar.
In the latest Australian Strategic Policy Institute defence budget brief released on Thursday, budget analyst Mark Thomson said it wasn't surprising that defence again did well in the budget.
The extra funding took defence to $32.1 billion for 2015-16 - a 4.5 per cent increase - accounting for 1.93 per cent of GDP.
Dr Thomson said that maintained a credible path towards achieving the coalition's promise to lift defence funding to two per cent of GDP by 2023-24.
The test would come with the forthcoming Defence White Paper which the government says will deliver a realistic and fully costed plan for the defence force of the future.
Dr Thomson warned that when that time arrives, the government will need to keep a tight rein on defence spending.
He said defence funding of two per cent of GDP would fund an "eye watering" $197 billion for new equipment in the decade beyond 2023-24, compared with a mere $67 billion in the decade to 2015-16.
Funding of that order would enable some especially marginal propositions to be seriously considered, he said.
With so much extra money sloshing around, there was a very real risk that the navy would be expanded through a rolling construction of new warships just to meet local shipbuilders' demands for work.
"By so greatly loosening the fiscal disciplines on defence, the challenge for the government will be to contain the potential for far reaching waste," he said.
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