|Australia could become a strong regional power with a large fleet of advanced jet fighters, submarines, warships and even aircraft carriers if it's willing to spend an extra $101 billion over the next 15 years, a new study says.
Australian Strategic Policy Institute (ASPI) analyst Dr Andrew Davies said that would mean Defence spending 2.67 per cent of gross domestic product (GDP) by 2020.
Spending on defence in Australia currently equates to 1.8 per cent of GDP.
Dr Davies said the government had to decide on the strategic challenges it wanted the Australian Defence Force (ADF) to be able to meet, and then design the force structure appropriate for that job.
"... The sort of costs associated with even the more ambitious models for the ADF should remain within the national means for decades to come," he said.
"It really is a case of pay your money, take your pick."
The ASPI study outlines some possible force structure options the government could take in the upcoming Defence white paper, set for release next year.
It will be the first Defence white paper since 2000, and will take into account the war on terrorism and the rise of China and India as global powers.
Dr Davies said that at the lower end would be an ADF configured for mostly peacekeeping, stabilisation and humanitarian operations with no new advanced warplanes, warships or submarines.
This would be the cheapest option, costing an estimated $35 billion by 2025.
At the top end, Australia could become a muscular regional power with 12 extra submarines (the navy has six), 250 Lockheed F-35 Joint Strike Fighters (100 are planned), as well as extra warships and army battalions.
He said the practicality of this program would be questionable and it would be very costly, requiring a Defence budget of $43 billion by 2025.
If Australia truly sought to be a strong regional power, it could aim to acquire aircraft carriers.
A pair of the new UK Queen Elizabeth II class carriers, plus 36 of the naval version of the JSF, would add another $101 billion to the Defence bill between 2010 and 2025.
"At the upper end, Australia would have a powerful military capability for a nation of its size, to the point where explaining our intentions to the neighbours could present a challenge," he said.
Australia has earmarked $22.7 billion for Defence spending in 2008-09, a substantial increase made possible by the economic boom.
ASPI defence budget analyst Dr Mark Thomson warned that an ageing population and rising defence costs could place the ability to operate a high-tech defence force under increasing strain.
"While we should be able to maintain a defence force like we have today or even somewhat larger out to 2050, our relative economic weight is set to decline in the decades ahead along with, more than likely, our strategic weight," he said.