Defence tipped to do well from budget

With new ships, submarines and an election on the way, Defence can expect to do well from the budget.

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But the good times may not last as the government seeks to boost defence spending and also balance the budget in the face of diminishing revenues, a leading analyst warns.

Australian Strategic Policy Institute budget analyst Mark Thomson isn’t expecting any shocks come Tuesday night.

“Given the very strong and transparent commitment the government made in the (Defence) white paper, they’ll not vary from what they said,” he told AAP.

“Without a financial crisis to excuse, they will make good on their promise and that’s easy to do in the first year.”

Last year’s budget gave Defence $32.1 billion – 4.5 per cent real growth, taking spending to 1.93 per cent of GDP – close to the government’s 2013 election promise to lift funding to two per cent of GDP.

The white paper outlines a path to lifting Defence funding to two per cent of gross domestic product – $42.6 billion – in 2020/21 and $51.5 billion in 2025/26.

White paper funding promises aren’t engraved in stone, as Labor famously demonstrated in 2009, promising a vast funding boost in its blueprint then speedily backtracking in its budget a few weeks later as the global financial crisis hit home.

The funding projections in the white paper give Defence an extra $700 million in 2016/17, nothing extra the year after then steadily ramping up through to 2025/26.

Dr Thomson says the government faces pressure in coming years as it seeks to balance the commitment to extra defence funding while reining in the budget deficit and satisfying an electorate demanding infrastructure, health, education and other services.

“The risk is that we are going to face some really hard decisions down the track which might imperil sustainability of the white paper’s plan for defence spending,” he said.