Australia Defence & Security Report

Published 13 May 2015

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Australia Defence & Security Report

BMI View: We expect Australia ' s defence budget to continue increasing in absolute terms in the next five years. This will be driven by Australia ' s defence policy focused on becoming a key player in regional and international security, which will require an upgrading of both its navy and air force capacities. The government is looking to take advantage of the globalisation of the defence market to continue importing defence materiel whilst, simultaneously, facilitating Australian defence SMEs ' access to the market. This will open up development opportunities for both international and national companies operating in the defence sector.

In its 2009 Defence White Paper, Australia spelled out its Force 2030 strategic defence objective. It aims to redefine the role of the Australian Defence Force (ADF) to one that is not limited to defending the country from potential regional and international threats, but instead also focuses on building Australia's reputation as a key player in regional and international security. This will therefore involve a significant upgrading of the Royal Australian Air Force (RAAF) and the Royal Australian Navy (RAN). The latter, in particular, will be crucial as Australia's current fleet of diesel and electric-powered submarines is reaching the end of its life cycle and needs to be replaced. These objectives were restated in the 2013 Defence White Paper and Australia's defence spending forecasts continue to point to the importance of such defence strategy.

In this context, Australia will be seeking to take advantage of the globalisation of the defence market on two fronts. Firstly, it will seek to promote the expansion of the Australian defence market through the establishment of more support mechanisms for SMEs operating in the sector. This will be done, primarily, through the implementation of the Australian Industry Capability (AIC) programme, which requires bids for defence projects at or above the USD20m threshold value to...

Table of Contents

BMI Industry View
7
SWOT analysis
9
Australia Security SWOT
9
Australia Defence SWOT
11
Political
13
Economic
14
Business Environment
15
Industry Forecast
17
Industry Forecast
17
Defence Expenditure
17
Table: Defence Expenditure (Australia 2011-2018)
18
Table: Defence Expenditure Scenario - Changing % Of GDP (Australia 2011-2018)
19
Armed Forces
19
Table: Armed Forces Personnel (Australia 2004-2011)
21
Table: Manpower Available For Military Services (Australia 2011-2018)
21
Defence Trade
21
Table: Defence Trade Balance (Australia 2011-2018)
23
Imports
23
Table: Defence Imports (Australia 2011-2018)
24
Exports
24
Table: Defence Exports (Australia 2011-2018)
25
Macroeconomic Forecasts
26
Economic Analysis
26
Chinese Reform Efforts To Weigh On Export Growth
27
Consumption Growth To Slow Further
28
Residential Investment To Fall Short
29
Table: Economic Activity (Australia 2009-2018)
30
Industry Risk Reward Ratings
31
Asia Security Risk Ratings
31
Table: Asia Security Risk Ratings
31
Table: Asia State Vulnerability To Terrorism Index
32
Australia Security Risk Ratings
33
Market Overview
34
Australia Defence Market Overview
34
Armed Forces
34
Domestic Industries
35
Imports
37
Australia Security Overview
39
Domestic Threats
39
Regional Threats
39
International Threats
44
Company Profile
45
Austal
45
Boeing Australia
47
BAE Systems Australia
49
Raytheon Australia
51
Thales Australia
53
Regional Overview
54
South East Asia Security Overview
54
Global Industry Overview
67
Political Risk Analysis
67
Methodology
72
Industry Forecast Methodology
72
Sector-Specific Methodology
73
Sources
74
Security Risk Ratings Methodology
74
Table: Indicators And Weighting
75

The Australia Defence & Security Report features BMI Research's independent forecasts for national and international security, the defence industry, military expenditure, employment in arms production, and arms imports and exports, as well as examining industry trends and prospects, national and multinational arms producers and the regulatory environment.

BMI's Australia Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Australian defence and security industry.

Key Benefits

  • Benchmark BMI's independent defence and security industry forecasts on Australia to test other views - a key input for successful budgetary and strategic business planning in the Australian defence and security market.
  • Target business opportunities and risks in the Asia defence and security sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Asia.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).

Coverage

Global and Regional Political Outlooks

A strategic overview of the world’s major political risks, identifying countries facing leadership successions and nations at risk of upheaval, inter-state conflict, or separatism and insurgencies, plus a summary of the world’s ‘wild card’ low-probability high-impact risks.

SWOT Analysis

Snapshot evaluation of the major issues affecting the defence and security sectors, economy and politics, with issues subdivided into strengths, weaknesses, opportunities and threats.

BMI Industry Forecast Scenario

Historic data series and forecasts to end-2019 for key industry indicators supported by explicit assumptions, plus analysis of key downside risks to the main forecast.

  • Defence Expenditure: Defence expenditure (local currency and USDbn); defence expenditure (% of total budget); defence expenditure per capita (USD); defence budget (local currency and USDbn).
  • Armed Forces (to 2012): Manpower available for military service, manpower fit for militaryservice, army personnel, navy personnel,air force personnel, total armed forces, (‘000) (% population).
  • Arms Trade: Arms and ammunition exports and imports (USDmn); bombs, grenades and missiles exports and imports (USDmn); revolver and pistol exports and imports (USDmn); weapons excluding guns and swords exports and imports (USDmn).

Political Risk Assessment

Drawing on BMI’s heritage of more than 25 years of Country Risk analysis, this comprehensively evaluates the key risks to domestic politics and foreign relations, focusing on issues most likely to affect either domestic security or the defence sector.

Security Risk Analysis

BMI’s proprietary Security Risk Indices provide investors with a reliable and country-comparable guide to conflict, terrorism and criminal risk, backed up by our analyst’s latest assessment of each component. Furthermore, drawing on our Country Risk expertise, we assess the state’s vulnerability to a serious, or prolonged, terrorist campaign.

Armed Forces Spending/ Expenditure

The reports contain a detailed breakdown of areas of expenditure by the armed forces, these include spending on international deployments, WMDs and missile defence systems as well as individual breakdowns of the cost-per-soldier.

Competitive Landscape

The domestic security overview lists the various potential internal security threats facing a country, ranging from internal security issues such as terrorism, cyber terrorism, crime and drugs, to external security issues including general defence procedures and potential threats from specific countries. The reports also provide a regional overview which details specific issues and flashpoints affecting the Americas, along with potential risks in the coming year.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

Sources

The Defence & Security Market reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc