Australian Defence Industry Productivity

摘要

Since 2001 the Australian Government has applied increasing pressure to the Department of Defence to find efficiency savings in its ongoing business operation. During the early 2000s the savings required by the Australian Government in the operational costs of the Department of Defence were fixed amounts and realised primarily through the reduction of administrative overheads and the early retirement of specific military platforms1 such as two of the guided missile frigates (Defence 2008).In 2005 the Australian Government introduced to specific parts of the Department of Defence budget the concept of an efficiency dividend, which required an ongoing percentage of budgetary funds to be returned to the Australian Government in the form of savings. Between 2005 and 2011, as the size and scope of the efficiency dividend increased, the Department of Defence has been required to develop initiatives internally and externally to meet its savings commitments to the Government. One of the initiatives under investigation is ensuring that the productivity benefits generated by the Australian defence industry are distributed equitably to the Department of Defence in its role as sole consumer of defence industry goods and services. Using an index number approach, this study empirically measures the changes in the productivity of the Australian defence industry during the period 2001 to 2009. In addition, the study compares changes in defence industry productivity with changes in defence industry profits, defence industry employee wages, the quality of service being provided by the defence industry, and the level of competition in the defence industry marketplace, to determine how any productivity benefits are being distributed. This study finds that during the period of interest, the defence industry experienced an increase in both multifactor and labour productivity. The study finds evidence to suggest that changes in defence industry productivity have an effect on both the profitability and performance measures calculated for the defence industry but have no obvious direct relationship with changes in defence industry employee wages. The study also finds evidence to suggest that even small changes in the level of competition within the defence industry market can potentially influence changes in defence industry productivity.