Budget neglects national security
“Mr Speaker, I am announcing tonight a schedule to increase Australia’s defence expenditure to 3 per cent of GDP over the next 10 years. This is a necessary response to the Defence Strategic Review which the Albanese government commissioned, the recommendations of which we endorsed recently. It is a realistic response to the threats to our national security. The defence of the nation is the first duty of a national government; it is a duty that this financial commitment will help to fulfil.”
These were the words that the Treasurer should have spoken in last week’s budget, but did not.
When the Abbott government committed Australia to expenditure of 2 per cent of GDP on defence, it was to establish a floor, not a ceiling. Yet, almost a decade later, defence expenditure has fallen below 2 per cent and is rising to just 2.04 in 2023-24.
Following the release of the Defence Strategic Review a few weeks ago, I wrote that one of the biggest dangers to the aspirations set out in that document was a funding shortfall.
Defence expenditure is projected to grow to 6.3 per cent of the Commonwealth budget, a minor increase from 6.1 per cent. For the nation’s number one priority, this is grossly inadequate.
Apart from contingency expenditure for the future submarines, there is little additional money for the myriad of new projects outlined in the Defence Strategic Review.
It is as the necessary resources identified by the Review are completely divorced from the government’s future defence expenditure.
It reinforces the view that the Review was released on the eve of Anzac Day to minimise the coverage of its findings.
The budget papers do point to increased funding to 2.3 per cent of GDP in the medium term, that is beyond the budget forward estimates. Yet the forward estimates are just that - estimates. How reliable is a vague promise to increase expenditure in five to ten years’ time?
It is actual expenditure on defence that ultimately counts, not predictions about what a government in two or three parliament’s time might do.
Apart from equipment, the government has not indicated how it will attract thousands of more people to serve in the Australian Defence Force.
These are serious concerns for Australia, having been warned in the public version of the Defence Strategic Review that Australia faces the most dangerous and uncertain security environment since World War II.
“China’s military build-up is now the largest and most ambitious of any country since the end of the Second World War,” warned the authors.
Ironically, that build-up is being underpinned by the export of Australian resources to China, but insufficient of the mining taxes that boosted the budget are expended on defence! You would think that more of the resultant mining taxes – that helped to push the budget into surplus – would be expended on defence.
It was this resource income and a change in accounting to include the Future Fund in the budget bottom line for the first time that provided an unexpected, but temporary budget surplus.
One welcome budget item was the $1.9 billion over four years to bolster our regional security.
Overall, the budget was a missed opportunity. The nation’s net debt is predicted to grow to $702.9 billion in 2026-27 as the one-off surplus disappears.
Each year, we are paying record interest payments to service it.
Social security and welfare payments amount to $250 billion. An out-of-control NDIS is threatening to balloon out to as much as $100 billion.
The underlying issues of low productivity and inadequate workforce participation have not been tackled.
Migration will increase by 1.5 million people – the size of Adelaide – over the next five years, compounding the current housing shortage.
To top all this off, inflation still remains a challenge, with our core inflation rate the highest of every advanced economy in the world.
Coupled with higher power bills and higher taxes, many Australians are facing a challenging future.
First published in the Epoch Times Australia.
