Australia Cuts Defense As US Imports Cheapen

Discussion in 'Indo Pacific & East Asia' started by Parthy, May 11, 2011.

  1. Parthy

    Parthy Air Warrior Senior Member

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    The fall of the U.S. dollar is helping Australia to lop A$4.3 billion ($4 billion) from its defense spending over the next four years.

    Capital spending, determined by the timing of acquisitions as well as the lower price resulting from changes in exchange rates, will be A$2.4 billion lower than previously planned, says Defense Minister Stephen Smith. Because some spending has only been delayed, some of the money will return to the defense department in future budgets.

    Defense operations also will be cheaper, by A$1.7 billion, though in that area the appreciation of the Australian dollar should have had less effect.

    Apparently not counted in the capital spending budget, the government says it will spend A$198 million less than previously planned in acquiring a fifth Boeing C-17 and operating it over the coming four years. It is unclear how the government has saved so much money on the purchase and operation of just one aircraft.

    Australia’s defense acquisitions from the U.S., its major foreign supplier, have become cheaper with the decline of the U.S. dollar, not to mention the strength of the Australian dollar based partly on strong mineral sales to China and India. One Australian dollar was worth $1.08 on May 10, compared with 90 cents a year earlier. Every payment denominated in U.S. dollars — for example, for Boeing F/A-18F Super Hornet fighters — is therefore costing Canberra 17% less than a year ago.

    The government is separately trying to drive down defense costs with an initiative called the Strategic Reform Program, which aims at cutting overhead while leaving military capabilities intact. So far, the program “has demonstrated that reform in defense is necessary, achievable and sustainable,” Smith says in a statement accompanying the federal government’s annual budget.

    Still, the government is pushing harder in this area by reducing targeted staff numbers by 1,000 and demanding faster improvements under a long-standing budgetary device called the efficiency dividend, in which the public service is expected to deliver a better ratio of output to costs year after year. The Royal Australian Navy will be exempt from the tighter target, however, as it works to recover from low operational availability of its fleet, notably the amphibious force, which is largely out of service and derelict.

    The timing of specific equipment orders set out in the budget is largely as expected. In the next 18 months Canberra expects to go ahead with projects for naval helicopters under the program called Air 9000 Phase 8, light to medium-heavy army vehicles under Land 121 Phase 3, light army training vehicles under Land 121 Phase 5A, battlespace communication systems under Joint 2072 Phase 2A, and landing craft under Joint 2048 Phase 3.

    These are in addition to approval to buy the fifth C-17 and the British assault ship Largs Bay.




    http://www.aviationweek.com/aw/generic/story_channel.jsp?channel=defense&id=news/asd/2011/05/11/01.xml&headline=Australia%20Cuts%20Defense%20As%20US%20Imports%20Cheapen
     
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  3. Parthy

    Parthy Air Warrior Senior Member

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    Don't need worry too much for cost in C17 from US.. However US would have added that cost with C17 sales to India... :doh:
     

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