A $20 BILLION defence savings plan has been largely postponed even though the funds are needed to pay for a 20-year build-up of the nation's naval and air power.
The budget allocated $25.1 billion to the Defence portfolio next year as the Government stood by its promise to increase spending by 3 per cent each year up to 2017-18.
But it revealed that savings of $20 billion have largely been put off to future years, with just $5 billion to be saved in the next four years. The biggest source of savings will be from changes to supplies and maintenance, but only $1.5 billion from the decade-long target of $5.5 billion will occur in the next four years.
The Government's white paper, released on May 2, featured a range of big-ticket purchases for the navy and air force, including 100 Joint Strike Fighter aircraft and a doubling of the submarine fleet to 12. The extra initiatives are forecast to cost $43 billion and will be funded by increases to the defence budget and the savings program.
The Government has kept its commitment to increase defence spending by 3 per cent each year and will increase the budget from $21.5 billion to $25.1 billion in 2009-10. Defence will receive $308 billion in the next decade and $146 billion in additional funding across the life of the white paper to 2030.
The expansion of the commitment to the war in Afghanistan, including a decision last month to add 450 soldiers to the 1100-strong force, will cost an extra $1.3 billion next year. The Government has warned that the war in Afghanistan will be a long-term conflict, possibly lasting a decade or more, but has not set aside funding for a large-scale deployment in southern Afghanistan beyond the coming year.
The white paper outlined a long-term naval build-up to help defend maritime assets and export routes as countries across the region strengthen their navies. But the navy has had a long-term staffing shortage and is currently only able to man half of its six submarines. The budget yesterday said a plan to add 700 navy personnel will cost about $405.3 million in the next four years and $1.5 billion in the next decade.
Other measures include $70.8 million in the next four years to improve intelligence collection in the region by deploying army intelligence specialists. About $214 million will be spent on the 650-strong deployment in East Timor and $29.6 million on the 110-person commitment to the Solomon Islands. The only remaining forces in Iraq will be a 100-strong security detachment for the embassy in Baghdad, which will cost $62 million in the coming year.
The planned funding increases for Defence will be scaled back from 3 per cent annually in the coming eight years to an average of 2.2 per cent to 2029-30. Defence has settled on a more stable index for future funding increases and will use a fixed indexation rate of 2.5 per cent to 2029-30. The Defence Minister, Joel Fitzgibbon, said the savings program included greater use of video-conferences, to avoid travel costs, and less use of contractors.
DEFENCE
JONATHAN PEARLMAN
P$25.1 billion for Defence
PLong-term navy build-up
P$70.8 million to improve intelligence
