Australia 'wasteful in defence' | National News | Breaking National News in Australia

AAP

A NEW report reveals Australia and its closest ally, the US, are the world's most wasteful nations when it comes to buying and maintaining military equipment.

The US and Australia came at the bottom of a list of 33 countries ranked according to how efficiently they spent their defence budgets in the analysis prepared by global consultants McKinsey.

Brazil, Poland and Russia came out on top of the 33 nations which account for 90 per cent of global defence spending, The Weekend Australian says.

McKinsey is uniquely placed to compare the effectiveness of defence spending across nations because it had been invited to carry out comprehensive audits in many of the countries included in its latest research.

The US-based company was called in by the Rudd government to carry out a massive internal search for waste in the Australian Defence Force and the Department of Defence. It recommended that the government should force Defence to find savings of $20 billion over a decade to help pay for major purchases of ships, submarines, aircraft and guns.

That advice triggered an extensive waste elimination program within the department.

McKinsey says countries that support their own defence industries by building their own equipment rather than buying it off the shelf from international suppliers are likely to pay more for it.

The Australian government plans to have 12 submarines built in Adelaide to replace the Navy's six Collins Class boats. Analysts have warned that could cost at least $35 billion, while submarines could be bought off the shelf for much less.