Defence industry figures have expressed concern at the likelihood the federal government will not be able to increase military spending in the next two budgets due to deficits.
The Australian Financial Review reports that there are fears that thousands of jobs could be lost in the sector without increases to spending.
The Abbott government pledged during the election to restore defence spending, which was reduced to 1.59 per cent of GDP under Labor, to 2 per cent of GDP within a decade.
The AFR reports that industry sources have received signals from the federal government not to expect increased spending in the next two budgets.
“Industry understands there is a tough budget situation and that the promised big increases in spending might not come for two years . . . but there are some issues the Coalition promised to attend to urgently and it hasn’t happened,” said Graeme Dunk, director of the Australian Business Defence Industry Unit.
“The new government has not inspired any degree of confidence or certainty in the marketplace and even firms which avoided layoffs under the previous government are talking about cutting jobs now”
The Australian Industry Group has said that it backs an increase in spending to 2 per cent of GDP, and that any savings identified in defence by the current Commission of Audit should not be re-allocated elsewhere.