Australia's defence spending has risen by nearly 56 per cent over the past seven years, placing the nation 13th behind the world's defence powerhouses.
Figures compiled by analysts for Jane's Industry Quarterly found Australia spends $US19.74 billion ($A25.66 billion) on defence annually, nearly 2 per cent of its gross domestic product.
Dr Andrew Davies, director of operations and capability at the Australian Strategic Policy Institute, said the ranking reflected Australia's many international commitments.
Australia has troops involved in operations in Afghanistan, Iraq, East Timor and the Solomon Islands.
The Jane's article, released in London yesterday, said Australia's spending would increase to $A29.47 billion in 2010 and that it spent more on defence as a percentage of gross domestic product than some countries in the European Union.
''Most countries spend somewhere between 1.5 and 2 per cent of GDP on defence, the couple of countries that are a bit different are the UK and France,'' Dr Davies said.
This was because both countries, as with the United States and China, were on the United Nations Security Council and had nuclear weapons programs.
The biggest spender on defence was the United States with $US 696.3 billion ($A832.7 billion) this year, followed by Britain with $US79.27 billion)($A94.8 billion) and France with $US65.74 billion ($A78.62billion).
China came in fourth with spending of $US58.07 billion ($A69.45billion. ''If you look at Australia's spending on defence in the last ten years, it was pretty flat from 1997 to 2001 and about 1.6 per cent of GDP and it's gone up to about 2 per cent since 2001,'' Dr Davies said.
''But a lot of that expenditure has been operations in Iraq and Afghanistan.''
Dr Davies said big spending commitments on hardware by the Howard government had also increased Australia's spending.
''We're spending more dollars but in terms of our fraction of national wealth it's pretty much the same,'' Dr Davies said.
Soldiers were also paid more when on active duty overseas.
Jane's said Australia's spending on its commitments overseas and equipment such as fighter aircraft, tanks and helicopters rose from $3.5billion in 2001 to $4.78 billion this year.
Other operational costs involved wages, medical bills, food, and costs equipping personnel from the three services. Australia Defence Association executive director Neil James said up to 40 per cent of defence spending was on wages.