Last year, "Australia's annual defence budget of $26 billion was reduced by 10.5 per cent" (Australia's Financial Review, Nov. 13, 2012). China remains a paramount concern because "China's military spending continues to grow at 11 per cent, and growth in Indian military spending peaked this year [2012] at 17 per cent." Fortunately, observers believe that the United States is not likely to trim its Hawaii-based Pacific Command, which watches China's military movements in the Pacific.

In August of last year Duncan Lewis, then secretary of Australia's Department of Defence, stated in a speech to the Australian Strategic Policy Institute, "As things stand I don't think we are structured or postured appropriately to meet our likely strategic circumstances in future" (quoted in The Sydney Morning Herald, Sept. 17, 2012). Not that much has really changed in over a year's time.

Max Hastings, noted British author and defense commentator, observed several years ago: "Like eruptions from an overstrained water main, revelations about the problems of Britain's armed forces burst forth daily. The word 'crisis' is often abused, but it is justified here. Programmes are being slashed, training curtailed and capabilities cut as the Ministry of Defence struggles to control runaway spending" ("The Plight of Our Armed Forces Is Something We Ignore at Our Peril," The Guardian, Jan. 8, 2007).

Hastings went on to show that "the armed forces are now so small that they are close to losing critical mass—falling below a size at which they seem credible institutions."

The overall assessment is somewhat similar in Canada. "The effort to reduce the deficit has resulted in a roughly $2 billion reduction in the $21 billion budget of the Department of National Defence" (Canadian Defence & Foreign Affairs Institute Monthly Column, April 2012). Meanwhile aging army vehicles will get even older. However, troop strength has been largely maintained as civilian defense workers suffered the most from the cutbacks.

The brutal economics of government overspending on other priorities continue to drive defense budgets downward in all three nations.

[Read the article: America's Military Decline: What Does It Mean?]