The evolution of Australia’s defence expenditure from 1949 to 2023 reveals a story of growth, with recent years showing increases. This article includes interactive graphs to help you explore the data in more detail.
Australia’s journey toward becoming a military power began in the post-war era. In 1949, just a few years after World War II, Australia’s defence expenditure stood at around AUD $114 million.
By 1958, Australia’s defence expenditure had jumped to AUD $406 million – a 241 per cent increase.
This leap mirrored Australia’s growing role on the world stage, particularly during the Cold War, as the country became increasingly involved in international peacekeeping and regional security efforts.
The latter half of the 20th century saw Australia’s defence spending continues to rise, driven by both global and regional concerns.
By 1987, Australia’s military budget had surpassed $2 billion, marking a pivotal point in the nation’s defence evolution.
Today, Australia’s defence posture is undergoing yet another transformation. Programs like AUKUS emphasise a shift towards more technologically advanced and globally integrated defence strategies.
As the nation positions itself to counter regional challenges and secure its future in an increasingly interconnected world, its military spending has reached unprecedented levels.
By 2023, defence expenditure had soared to over $50 billion, and, according to SIPRI, Australia was ranked 13th in global military expenditures during this time frame.
As the Government's National Defence Strategy would suggest, there is no inclination that Australia's defence spending will slow down.
The strategy outlines plans to develop a more lethal Navy, optimise the Army for littoral operations, enhance the Air Force's capabilities, strengthen cyber defences, and integrate space operations.
The government has allocated an additional $50.3 billion over the next decade to enhance Defence capabilities and support the National Defence Strategy.
This includes $11.1 billion for accelerating Navy's surface combatant fleet and expanding shipbuilding, $1 billion over four years for investments in targeting, long-range fires, logistics, fuel resilience, and autonomous systems, and $38.2 billion to support the rebuilt Integrated Investment Program (IIP).
During 2022-2023 alone, it contributed $10.6 billion in Gross Value Added (GVA), employing over 64,000 people, and involving 5,544 businesses.
After the release of the Strategy, the Minister for Defence Industry, Pat Conroy, emphasised that the increased spending is in line with the government’s vision for enhancing Australia’s sovereign capabilities and supporting domestic industry.
“In rebuilding the IIP, the Government is delivering the capabilities the ADF needs to make Australians safer while simultaneously boosting our sovereign defence industry to create jobs and ensure a future made in Australia,” Conroy said.
However, despite the growth in Australia's defence sector and increased defence expenditure, it still represents a small percentage of total government spending.
From 1988 to 2023, Australia's military expenditure as a percentage of government spending steadily declined from 7.0 per cent to around 5.1 per cent, reflecting a shift in priorities toward domestic areas like healthcare and education.
This decline suggests that defence became a relatively smaller part of the overall budget as Australia experienced regional stability and focused on economic growth.
A snapshot of global defence manufacturing
Current data illustrates the dominance of U.S. firms in the global arms industry, with the top five positions held by American companies.
Leading the pack is Lockheed Martin, securing the top spot with US$59.39 billion in arms revenue, which accounts for 90 per cent of its overall income.
Raytheon Technologies follows in second place, generating $39.57 billion from arms sales, making up nearly 60 per cent of its total revenue.
Boeing, in third place, brought in $33.39 billion from its defence division, though military contracts form a smaller part of its broader operations.
Northrop Grumman and General Dynamics round out the top five, each with over $30 billion in arms revenue, cementing the U.S. firms' grip on the defence market.
The key takeaway from the data is the influence of American companies in the global arms trade, underscoring the U.S.'s leading role in both defence production and international military sales.
Although the United States dominates global arms manufacturing, Australian company, Austal Limited, has made it into the top 100, ranking 91st in terms of revenue among all arms manufacturers globally.
Austal, while Australia-based, is a global shipbuilding company and defence prime contractor, specialising in the design, construction, and support of both defence and commercial vessels.
The company recently secured a $670 million contract from General Dynamics Electric Boat to expand its mobile shipyard, constructing a new facility to support U.S. Navy submarine production, expected to create up to 1,000 jobs and be completed by 2026.
What does Australia manufacture?
Australia manufactures a range of defence goods, focusing on naval vessels, armoured vehicles, aerospace systems, and munitions.
Key products include the Hobart-class destroyers, Arafura-class patrol vessels, Bushmaster and Hawkei armoured vehicles, and the Boxer combat reconnaissance vehicle.
The country also contributes to aerospace projects like the F-35 sustainment and develops unmanned aerial vehicles (UAVs).
In addition, Australia produces small arms ammunition, radar and electronic warfare systems, and is enhancing capabilities in missile manufacturing under the Guided Weapons and Explosive Ordnance initiative.
Australia’s defence industry also supports cybersecurity, communication systems, and personal protection equipment, with a focus on growing domestic capabilities.
While precise figures pertaining to arms production can be unreliable, arms exports can paint a more reliable picture.
Australia’s defence export data reveals notable fluctuations in various categories over the years, with ship exports reaching a peak in 2019, when 291 vessels were sold, marking the highest export figure in the dataset.
Aircraft exports also experienced strong surges in recent years, particularly in 2020 and 2021, with 120 and 105 units, respectively.
Armoured vehicle exports remained modest but steady, peaking at 23 in 2023.
In contrast, missile exports were relatively low and inconsistent, with only a few units recorded in select years.
Where does the Australian defence sector fit into the wider economy?
The data provides insight into the role of the defence industry in the economy between 2016 and 2021, offering a snapshot of its contribution over time.
Covering the period from 2016-17 to 2020-21, the figures illustrate both the defence industry’s share of the total economic output and the overall economic performance.
The defence industry’s share of gross value added (GVA) remains relatively modest but consistent, fluctuating between 0.38 per cent and 0.44 per cent during this time.
This percentage indicates that while the defence sector makes up only a small portion of the economy, its contribution has been steady, with slight growth by 2020-21.
Source: Australian Bureau of Statistics
Meanwhile, the total economy’s gross value added shows a clear upward trajectory, increasing from $1.64 trillion in 2016-17 to nearly $2 trillion in 2020-21.
This rise reflects broader economic growth during the period, with the defence industry continuing to contribute a stable share.
In 2022-23, the three largest contributors to defence industry GVA were professional, scientific, and technical services (45.2 per cent), manufacturing (15.4 per cent), and construction (15.0 per cent).
The steady percentage suggests that as the economy grows, so too does the absolute value contributed by the defence sector.
Defence GVA by state
In 2022-23, the Australian defence industry saw varied contributions across states and territories, with different sectors playing key roles in each region's economic output.
Professional, scientific, and technical services dominated the defence industry’s Gross Value Added (GVA) in most states, with New South Wales leading at $1.35 billion, followed by the Australian Capital Territory at $1.12 billion, and South Australia at $956 million.
Manufacturing and construction also played important roles in select regions, reflecting the diverse industrial landscape supporting Australia's defence capabilities.
Note: Some data pertaining to the Northern Territory and Tasmania is not publicly available due to confidentiality requirements.
However, the picture is more varied when looking at the role of other industries.
In Western Australia, manufacturing emerged as the largest contributor to the state's defence GVA, with $177.4 million, surpassing other sectors like professional, scientific, and technical services ($94.1 million).
This highlights Western Australia's focus on industrial production within its defence sector.
Similarly, construction played a pivotal role in the Northern Territory, contributing $27.4 million to defence GVA, significantly more than other sectors.
This contrasts with other states, where construction made smaller contributions relative to other industries.
In New South Wales, while manufacturing contributed $425.9 million to defence GVA, It was smaller in comparison to the $1.35 billion contributed by professional, scientific, and technical services.
South Australia followed a similar trend, with manufacturing contributing $546.4 million, still lower than the $956 million from professional, scientific, and technical services.
Ultimately, Australia’s defence industry has evolved significantly over the decades, transitioning from its modest post-war foundations to a sophisticated sector critical to both national security and economic growth.
With defence expenditure surpassing $50 billion in 2023 and a strategic focus on advanced capabilities through initiatives like AUKUS, Australia is asserting itself as a key player in both regional and global defence.
Despite its growth, the industry remains a relatively small contributor to the overall economy, reflecting a balance between defence priorities and investments in essential domestic sectors like healthcare and education.
As global and regional challenges continue to shift, Australia’s defence manufacturing sector is well-positioned to adapt and thrive, leveraging its growing expertise in naval vessels, armoured vehicles, aerospace systems, and advanced technologies.