Recently released market study: Australia Defence & Security Report Q2 2013

BMI's Australia Defence & Security report for Q213 examines the country's strategic position in the Pacific region and the wider world. It provides an overview of the contemporary geopolitical challenges facing the country, and the issues it may face in the future.

The report examines the trends occurring in the country's current and future defence procurement, and the order of battle across its armed forces. The report's general conclusion is that the Australian defence establishment is in a state of flux as the future of some ambitious objectives set out in the 2009 Defence White Paper has been called into question by deep cuts to the defence budget. These have been enacted as part of a wider deficit-reduction programme set in train by the administration of Prime Minister Julia Gillard. The government had previously committed to increasing the defence budget by 3% annually; now, defence faces a 7% budget cut compared with 2011-12, and must save AUD5.5bn over five years.

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Full Report Details at
- http://www.fastmr.com/prod/554004_australia_defence_security_report_q2_2013.aspx?afid=301
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This means that the arrival of a new White Paper, due in 2013, cannot come soon enough for the sake of clarity for both the armed forces and for the defence industry. However, with a general election due by November 2013, the government may choose to defer the document's publication in order to avoid making difficult and potentially unpopular decisions in the run-up to a political campaign.

Two major programmes in particular appear vulnerable in the present climate of austerity. The first is the planned procurement of 100 F-35 Joint Strike Fighters (costing around AUD16bn), which could now be scaled back or dropped entirely. With Canada having recently abandoned its plans to procure the F-35, Defence Minister Stephen Smith confirmed in December that the Department of Defence (DoD) was now examining the option of procuring up to 24 more Boeing F/A-18 Super Hornets (to add to the 24 already bought as a first stopgap measure) in order to allow decision on the F-35 to be pushed back. The DoD will announce its decision on the Super Hornet some time in 2013. The second is the stated requirement for 12 new submarines (costing around AUD25bn). While Canberra remains keen on this objective, the lack of money and a shortage of skilled workers to build the new boats may see this requirement scaled back as well.

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