Australian Economy

Defence spending adds $9b to Australian economy

Scientific and technical services contributed 41 per cent of defence industry gross value added, or about $3.6 billion, while manufacturing contributed 18 per cent, or about $1.6 billion.

The Australian Financial Review earlier this month revealed the government was considering ordering several hundred Bushmaster armoured vehicles to be made in Bendigo to replace those being dispatched to Ukraine.

The Morrison government committed to restoring defence spending to 2 per cent of gross domestic product by 2020-21. In 2022-23, spending is forecast to increase to $48.6 billion, a nominal increase of about 10 per cent.

But despite the growth in the local defence sector, it remains a small portion of Defence’s overall spending.

Defence Minister Richard Marles last month announced a sweeping review into the Defence force led by former defence minister Stephen Smith and former military chief Angus Houston.

The review will examine base locations, the structure of the army, navy and air force, and spending on new weapons and equipment.

In 2021-22, the Defence Department inked 39 contracts with the US government worth $6.4 billion, according to AusTender, ranging from missiles, ammunition and explosives to training and software systems.

UK firm BAE systems secured a massive $1.7 billion in contracts.

Other major Defence suppliers include US-based Boeing, which secured nearly $200 million in government contracts last year, and its European competitor, Airbus, which recorded about $236 million in contracts.

NSW was the biggest beneficiary of Defence’s pivot to local purchasing, accounting for about 30 per cent of the $9 billion gross value added, followed by Victoria and the nation’s capital.

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