The parliamentary budget officer says if the federal government wants to meet NATO’s military spending target by 2032 as promised, it will have to almost double defence spending to $81.9 billion.
The budget watchdog made that conclusion in a report published today on the fiscal implications of meeting the NATO target, which stipulates that member states spend two per cent of their GDP on defence.
The government’s latest defence policy, released in April, estimated defence spending would grow to 1.76 per cent of GDP by the end of the decade.
However, the PBO says that forecast was based on erroneous economic growth projections that assume the country would be in a four-year recession.
The PBO says that based on its economic projections, defence spending will only reach 1.58 per cent by then, up from 1.35 per cent in this fiscal year.
The report says the federal government is expected to spend $41 billion on defence in the next fiscal year and would have to reach almost $82 billion by 2032 to meet the NATO target.
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