Dr Mark Thomson - Australian Strategic Policy Institute - 2015-2016 Defence budget outlook
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Transcript of Dr Mark Thomson - Australian Strategic Policy Institute - 2015-2016 Defence budget outlook
Defence Budget2016
Mark Thomson
Outline:
• Defence Budget Past and Present
• Capital Investment and Industry
• Budget Prospects
“Within a decade, the budget surplus will be 1 per cent of GDP,
defence spending will be 2 per cent of GDP, the private health
insurance rebate will be fully restored, and each year, government
will be a smaller percentage of our economy.”
Fiscal problems represent political
rather than economic constraints
on the government’s freedom of action.
• $29.3 billion = 1.8% of GDP
• 6% year-on-year real boost
• $1.5 billion brought forward over 4 years
2014 Budget
2015 Budget
• $32.1 billion = 1.93% of GDP
• 4.5% year-on-year real boost
• large forex and op cost increases
0
5
10
15
20
25
30
35
40
45b
illi
on
20
15
-16
$
Operational supplementation
Baseline costs
Steady growth
actual spending
budget
estimates
projected
1.7
4%
1.7
7%
1.7
5%
1.7
8%
1.7
4%
1.9
4%
1.8
2%
1.7
0%
1.7
6%
1.7
6%
1.7
6%
1.7
9%
1.9
5%
1.9
3%
1.9
0%
1.8
7%
1.8
3%
1.7
8%
1.9
3%
1.8
7%
1.6
8%
1.6
0%
GD
P s
har
e =
2.0
0%
1.9
8%
6
8
10
12
14
16
18b
illi
on
20
15
-16
$ (
bil
lio
n)
Personnel
Capital
Operating
Operating Costs
3.0% real growth
2019-10 to 2023-24
Personnel Costs
2.5% real growth
2019-20 to 2023-24
Capital Investment
6.9% real growth
2019-20 to 2023-24
Budget Estimates
Capital Investment
and Industry
Major acquisition announcements:
• Onesky air traffic (February 2015)
• 2 extra C-17 (April 2015)
• CRAM (June 2015)
• 2 extra KC-30 (July 2015)
• Styer upgrade (July 2015)
• OCV to ‘cut steel’ in 2018 (August 2015)
• Frigates to ‘cut steel’ in 2020 (August 2015)
• New grenade launcher (August 2015)
• Battlefield Communications (September 2015)
• Hawkei contract (October 2015)
• Pilot training system (December 2015)
• SEA1000 & SEA1179 set for 2016
Budget Prospects
2% of GDP or not?
0
10
20
30
40
50
60
0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 1.05 1.10
Eff
ecti
ve
bu
yin
g p
ow
er
US$ - A$ exchange rate
$12.7 billion (-26%)
Base:
A$
1 =
0.8
0 U
S$
0.0
0.1
0.2
0.3
0.4
0.5
0.6
IGR 2003 IGR 2007 IGR 2010 IGR 2015
20
14
-15
$ (
tril
lio
n)
$98 billion (-20%)
2% GDP 2% GDP 2% GDP 2% GDP
The Economic Outlook
The Fiscal Outlook
Budget Forecasts
Government Receipts
Government Payments
Nonetheless…
Fiscal problems represent political
rather than economic constraints
on the government’s freedom of action.
The Electorate
Source: Ray Morgan Research
Falling
Revenues
Restive
Electorate
Questions