AUSTRALIA'S former army chief has said we should consider cutting funding from the defence budget - currently $27 billion - and redirecting it towards diplomacy and aid programs.

Peter Leahy, who retired as a lieutenant-general in 2008, has also questioned the federal government's commitment to massive military equipment projects, suggesting that the acquisitions might turn out to be expensive white elephants.

Professor Leahy said a new national security environment, characterised by low-level conflicts, terrorism, policing and reconstruction work, might tilt the funding balance towards the Department of Foreign Affairs and Trade, the Australian Federal Police and the government aid organisation AusAID.

Professor Leahy, who is the head of the National Security Institute at the University of Canberra, said this would be particularly so if the aggregate budget for the ''national security community'' did not increase.

''I'm not sure that the current distribution is going to be the one that survives in five or 10 years' time,'' Professor Leahy told The Age.

''We've also seen the changing nature of threats, from territory and sovereignty to terrorism, transnational criminals, cyber-warfare. We've still yet to figure it out, but food, water and energy shortages, climate change, pandemics, mass migration, how do we live and deal with that sort of stuff?

''We also have to deal with failed and failing states. We've intervened in a number of states in our region and there's an expectation that we should.''

Despite the changing strategic environment, the current and previous federal governments have committed to buying tens of billions of dollars worth of big-ticket items, including 100 F-35 joint strike fighters, 12 new submarines and three air-warfare destroyers.

Professor Leahy said the wisdom of equipping the Australian Defence Force for a war it was unlikely to fight could be questioned, and it was possible that the government might back away from these acquisitions.

''We need to have a very close look at the most effective tools to use in this new security environment, and my view would be that one of those things is let's have a look at high-end equipment being procured for the least likely defence eventuality.

''That's not to say we don't need any of it, but how much do we need?'' he said. ''We need to very carefully consider the number of combat aircraft we need. So far, the debate has been muddied by questions about which aircraft and which type, rather than the numbers.''

He said the AFP's workload had rapidly increased, but that its budget, while growing, had not kept track.

He also pointed to a Lowy Institute report last year that found DFAT, which has a budget of $5.29 billion, was run-down and poorly equipped to deal with looming international threats that include global warming, the financial crisis, terrorism and regional power shifts. The report said Australia needed robust defence, intelligence and law enforcement capabilities but that diplomacy was by far the most effective way to influence the behaviour of other nations.

Professor Leahy said the question of funding balance was already being publicly debated in the United States, where Secretary of Defence Robert Gates and the chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, have said more money needs to go to the State Department and USAID - DFAT and AusAID's American equivalents.

? Defence Minister John Faulkner has ordered an investigation into claims that millions of dollars of dubious expenses were racked up by the Department of Defence.

Senator Faulkner has asked Defence Force chief Angus Houston and the department secretary to review the claims.

The department has reportedly spent billions of dollars on expenses such as travel and stays at five-star hotels and resorts around the world.

This article can originally be found here.