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Defence Materiel Organisation

Increased funding reflects new confidence

By Dr Stephen Gumley

Photograph, caption follows

The DMO Budget 2006–07 includes $792 million for the acquisition of the C-17 heavy-airlift aircraft.
Photo provided by DMO

The 2006–07 Defence Budget provides increased funding to the Defence Materiel Organisation (DMO). This increase in funding reflects DMO's improved project management skills and the Government's confidence in what we are doing.

The budgeted capital investment program for Financial Year 2006–07 for DMO is $5.017 billion. This amount is $1.26 billion higher than for this year. Some $800 million of the capital investment budget will be an initial payment towards the acquisition of up to four C-17 heavy-lift aircraft, while $2 million will go towards the acquisition of Aegis technology for the $6 billion Air Warfare Destroyer Program.

The Budget also brings forward $625.0m in Defence Capability Plan funding. The 2006–07 DMO budget totals $8.783 billion, which is approximately $1.6 billion higher than the projected end-of-year results for 2005–06. This figure represents an increase of almost $1.3 billion compared to the Forward Estimates published in the Portfolio Additional Estimates Statements 2005–06.

The increase in the DMO budget for 2006–07 includes:

  • the acquisition of the C-17 heavy-lift aircraft ($792 million);
  • adjustments to the Defence Capability Plan (DCP) funding ($124 million);
  • additional funding for support to stabilisation and reconstruction activities in Iraq and Afghanistan, and surveillance of Australia's northern approaches ($91 million);
  • funding of sustainment of the naval aviation fleet ($26m); and
  • reactivation of two Huon-class coastal mine hunters for increased patrolling of maritime approaches ($23 million).

All this is good news for Defence and DMO. As mentioned, it reflects the Government's confidence in DMO's ability to deliver, and the achievements we have made as a result of our change agenda and implementing the recommendations of the Defence Procurement (Kinnaird) Review.

This confidence is well placed. Our reforms are showing very pleasing progress with our productivity having lifted over 12 per cent in real terms between 2003 and 2006 with an additional 8 per cent expected during 2006 to 2008. We have seen schedule improvement, a proven ability to deliver rapid acquisitions on time in support of overseas deployments, and an overall commitment and support to Defence. Together, we are meeting our purpose to equip and sustain the Australian Defence Force by delivering capability and sustainment on time, on budget, and to the required capability, safety and quality.

Dr Stephen Gumley is the Chief Executive Officer of the Defence Materiel Organisation.

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