A white paper designed to chart Australia's defence strategy to 2030 was published in mid-May 2009. It set out some AUD43bn worth of new initiatives over the decade. The then defence minister Joel Fitzgibbon said the commitments would be funded in full by ‘growing the underlying defence budget by 3% average real growth to 2017-18, as promised in the 2008-09 budget’ and 2.2% growth in 2029/30. A key point in the white paper was the provision for fixed indexation of defence spending at 2.5% each year to 2029-30, the target for consumer price inflation agreed by the Australian government and the Reserve Bank of Australia for the purpose of defence planning. The plan was originally due to be released in December 2008. The Royal Australian Air Force (RAAF) had hoped to replace its 32-year-old fleet of Orion AP-3C maritime surveillance planes with a mix of unmanned aerial systems (UAV) and a new patrol aircraft – the Boeing P-8A Poseidon. The Australian government, led by Prime Minister Kevin Rudd, has now effectively ended hopes for the early acquisition of the AUD1.5bn Global Hawk UAV – part of an ambitious 15-year project to revolutionise maritime surveillance requirements. The navy was a big winner with the white paper, which called for a fleet of 12 new generation submarines costing up to $25bn and 100 new joint strike fighters (JSF) costing around $16bn. The Australian Department of Defence (DoD) has been told to find AUD20bn in savings and efficiency gains over the next decade in order to pay for new capital equipment including the F-35 JSF. Savings over the next four years are estimated at AUD3bn. Fitzgibbon was forced to resign in June 2009 after it emerged he allowed his brother, who runs a health insurance company, to use his ministerial office to conduct a business meeting with a US army general in charge of defence health services. Fitzgibbon had widely been seen as incompetent and his position was under pressure for months. A replacement was not immediately announced. The government has in part answered questions hanging over the Australian defence industry in Q109 as to the effect of the financial crisis and pressures on the budget on expenditure. The Rudd administration has now announced spending will jump 21 per cent to AUD26.6bn in 2009/10. Commentators fear however, the government will struggle to meet its promise to increase defence budget 3% in real terms over the next four years. New spending includes a AUD2.4bn boost in expenditure on defence equipment, on top of an increase in funding for the war in Afghanistan to give total spending in 2009/10 of AUD3bn. Afghanistan alone will cost AUD1.2bn. The government has also budgeted an extra AUD87mn to establish a Middle East operations headquarters in the United Arab Emirates and AUD62mn for operations in Iraq in 2009/10 – despite its formal military operations there ending on July 31. However, the global financial crisis has already forced the DoD to shelve plans to buy billions of dollars of military equipment, including a new AUD5bn maritime surveillance system. The economic downturn will also mean the navy will not exercise the option to acquire a fourth air warfare destroyer costing AUD2bn. It could also force a one-year delay in plans to spend AUD16bn on 100 F-35 JTFs. This quarter, we have introduced a significant new aspect to BMI's Defence reports, which is the City Terrorism Rating (CTR). This assesses the risk of a terrorist attack. The CTR takes into account the overall BMI Terrorism Rating for the country in question. It also incorporates the prevalence of terrorism, which recognises the frequency of attacks, and whether a city is a target for terrorists. The CTR also recognises the threat of terrorism in terms of the likely numbers of victims and the ability of groups to launch sustained campaigns. In Australia we assess the CTRs for Sydney and Melbourne, which are created via an integration of the state-wide threat, with an evaluation of the city-specific characteristics and level of activity.