Military modernisation drives Australia’s defence spend
Australia is seeking to increase arms exports and is forecast to spend US$136.4 billion during 2010-2015, finds Strategic Defence Intelligence.
New research* from the defence business intelligence platform www.strategicdefenceintelligence.com has revealed that during 2010 – 2015 Australia’s overall defence expenditure is estimated to grow at a CAGR (compound annual growth rate) of 1.97%. By 2015, defence expenditure will account for 2.1% of its GDP, with a total annual forecast spend of US$24.7 billion.
Berenice Baker, editor of Strategic Defence Intelligence (SDI), said: “In 2009, the Australian government launched a military modernisation plan to upgrade its forces resulting in the predicted steady increase in spending. This was to counteract the threat posed by rising global terrorism, changing political dynamics in the Asia-Pacific region and the rising number of peacekeeping operations undertaken by Australian forces.”
During the forecast period, key market opportunities in Australia are expected to be found in defence information technology, unmanned aerial vehicles (UAVs), helicopters, patrolling ships and monitoring and security equipment. The country could also invest in armoury, submarine rescue vehicles, sonar systems, troop protection equipment and upgrading vehicles.
Australia currently imports the majority of its arms, including its aircraft and missile systems, largely from the US, Germany, Israel, Spain and France. However, while the country has been successful in its manufacture and export of military ships, the government is now actively engaged in improving the capability of its domestic defence industry, primarily through its Skilling Australian Defence Industry (SADI) programme.
Baker continued: “At the same time, it’s encouraging foreign OEMs to outsource manufacturing so Australia can gain the technology to modernise its military. This means we could see Australia increase its import of advanced defence systems from foreign companies during the forecast period.”
Rather than requiring offsets on military procurement, Australia protects the development of its domestic industry through its Australian Industry Capability (AIC) plan. Under this, the Defence Material Organisation (DMO) assigns and monitors a series of activities for investing foreign OEMs to compete for.
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