Bradley Perrett | Jim Chalmers' federal budget shows Australia's defence strategy is dangerously lacking

Not enough money is being spent on defending the country, and within the defence budget not enough resources are being reassigned from low to high priorities.

We've had repeated warnings that a war could break out this decade, so radical preparations are needed now. Instead, the government is keeping defence spending at about 2 per cent of gross domestic product for the next four financial years.

That's where it has been since 2020-21, so we're supposed to believe that in the seven years to 2026-27 our strategic situation has been and will remain stable enough to warrant no greater share of our economy going to defence.

Our military spending is on track to exceed 2.3 per cent of GDP in 2032-33, Treasurer Jim Chalmers tells us. Well, a fat lot of good that will do if China lunges at Taiwan five years before then and we, helping the US for our own good as well as to defend democracy, find ourselves under attack.

CIA director William Burns said in February that China's armed forces were under orders to be ready by 2027 to seize Taiwan. Two years ago, the then head of the US Indo-Pacific Command, Admiral Philip Davidson, said there was an evident risk of war within six years - that is, by 2027 - and in January this year he stuck to that outlook.

In November, just before his appointment as ambassador to Washington, Kevin Rudd, said: "If we fail to navigate the next five years carefully, there is a grave risk that by the late '20s and the early '30s we could well find ourselves on the cusp of armed conflict."

Ministers are undoubtedly receiving intelligence assessments along similar lines. They're surely being told that China's rising military strength and aggression add up to a frightening and rising risk of conflict this decade.

How can any of that possibly square with the budget's failure to throw more of our economy into defence?

The government's answer would presumably be that, while it's keeping the defence share of GDP more or less constant, it's shifting resources within that budget.

And it is, but not much.

Altogether, it's spending $19 billion over the next four financial years to implement recommendations from the defence review. Some of that is additional funding - not enough to noticeably shift the ratio to GDP - and the rest, $7.8 billion, is reallocated from cancelled and deferred projects.

That reallocation is only 3-4 per cent of defence spending in the same period.

"Australia is facing the most difficult circumstances since the Second World War," Defence Minister Richard Marles says.

Too right. And in this situation he can see only 3-4 per cent of the defence budget that should be reassigned?

It was a grotesquely misshapen defence budget that he inherited last year, structured to suit officers of the armed services, mainly the army, who refused to let go of military capability that was no longer important.

It was a budget that failed to address even the screamingly urgent need to robustly rebuild all six of our northern air bases, flimsy installations that are supposed to form our front line.

It is still a malformed defence budget, even after the review. Some extra money is going to hardening bases, but not much. Dismayingly, there is no great expansion of the air force, the armed service that can most quickly field decisive additional firepower.

Far more than $7.8 billion could have been found if the review and government had cancelled or delayed more programs for ground-combat capability. We face a risk of a maritime and air war with China, not invasion.

Outrageously, acquisition of 29 Boeing AH-64E Apache attack helicopters costing more than $5.5 billion is going ahead. Not only is their utility limited to ground battles; they may indeed be obsolete, too dangerous to use against an enemy with modern anti-aircraft systems.

"Obsolete" is in fact how Japan now describes attack helicopters. It's getting drones instead.

After the review, we're still going ahead with a $3.5 billion purchase of 127 tanks and other armoured vehicles. To use where, for goodness sake?

The review has been hyped as the greatest change in defence policy in decades.

In fact, it's a damp squib, pretty close to a flop.

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The authors, retired Air Chief Marshal Sir Angus Houston and former defence minister Stephen Smith, made many valuable recommendations, but they were too soft on an army that had almost no function in the war that we had to plan for.

They imposed an undoubtedly useful function on the army - deployment of ground-launched strike missiles - but failed to demand much deeper cuts to spending on its traditional capabilities.

That's why the reallocation of funds in the defence budget is so weak.

For all we know, unpublished and rejected recommendations in the review may actually have included rapid expansion of the air force, to be paid for with a well-justified surge in spending. If Houston and Smith did make such recommendations, they did a better job than we can see.

Actually, something about buying combat aircraft must be in the unpublished version, because we heard no mention of an overdue decision on what to do with the fighter fleet. Our 24 Super Hornets are approaching their planned retirement date.

The review isn't good enough, but can we console ourselves that at least the government plans another policy statement next year, when improvements could be made?

No. That will be next year. We have already dithered far too long. More action is needed in 2023.