Australia faces defence challenge from US budget constraints

A flattening US defence budget is likely to drive up the cost of Australia's military modernisation programme while increasing geopolitical risks in the Asia-Pacific region, a report published by the Australian Strategic Policy Institute (ASPI) on 16 March has stated.

The report, written by Mark Thomson, director of ASPI's Budget and Management Programme, said the US is "facing growing pressures to contain defence spending in the future" due to near- and long-term fiscal demands.

Thomson added that these pressures will impact indirectly on Australia in that it will increase delays and costs of its procurement programmes, while at the same geopolitical risks in the Asia-Pacific region may grow as a result of declining US military power.

The report, which is entitled 'Trends in US defence spending: implications for Australia', said: "Most immediately, delays in US defence acquisition programmes will translate into delays to our purchases of US equipment. And as US programmes contract in size, falling economies of scale will translate into higher unit costs."