Australia Defence and Security Report Q3 2007

Australia's internal security situation remained stable in the second quarter of 2007. The 2007-08 budget capped off a 13 month period that saw the government promise more than US$41bn worth of new defence initiatives over 11 years; around US$16bn last budget, US$14bn this budget, and more than US$11bn in between. As a result, next financial year the defence budget will reach US$22bn. This is an increase of US$2.1bn over the funding for this year, and represents 2% of GDP. Key initiatives in this year's budget included US$6.1bn over 10 years for 24 Super Hornet F/A-18F aircraft, US$1.8bn for additional logistics and US$1.3bn for C-17 operating costs. Another US$1.3bn in operational supplementation was provided, which will bring the accumulated cost of the ADF's commitment to Iraq to US$2bn and Afghanistan to US$1.7bn.

Australia's defence industry has experienced strong growth in recent years, mainly due to the Australian Defence Force undertaking an ambitious development and upgrade programme. In the fourth quarter of 2006, Australia's defence industry continued to grow, with the most significant development being the takeover of ADI, Australia's largest defence firm, by Thales, whose share of ADI will increase from 50% to 100%.

Australia's arms trade patterns remained largely unchanged and the country still imports a range of bigticket items, such as the purchase of the AGM-158 Joint Air-to-Surface Standoff Missiles (JASSMs) from Lockheed Martin's Alabama plant. The current production rate is 15-17 missiles per month, with 475 of the 779 missiles having been delivered. The decision to purchase the JASSMs was due to the reduction of unit cost if the missiles were purchased from the US.