Defence: Funding

Senator Chris Evans asked the Minister for Defence, upon notice, on 21 May 2002:

With reference to the Defence White Paper (page 122), which includes a graph setting out Defence funding by the five capability groups.

1. Can the table of figures used for this graph be provided, that is, the funding for each capability group in each of the 10 years.
2. Can the Minister confirm that the funding figures used are minus the capital use charge, that is, appropriation and equity injection funding minus the capital use charge component.
3. Can the Minister confirm that funding for the strike capability group appears to remain approximately constant over the 10 years.
4. Given the acknowledged increasing cost of flying ageing aircraft, how was it proposed that this capability group could maintain its fleet of aircraft over the 10 year period without any significant increase in funding.

Senator Hill - The answer to the honourable senator's question is as follows:

1. The estimates underlying the graph are set out below. They are in Budget 2000-01 prices and exchange rates, and expressed in cash, not accrual, terms. Exchange rates at that point were based on AUS$D = USD$0.6175. The capability groupings used for the White Paper are different to Defence's Outputs and Sub Outputs, although there is a high degree of correspondence between the "Strike" element in the graph and Sub Output 4.1, Strike/Reconnaissance. All capability groups include a share of Defence support costs.
   
   

   	Defence Funding - Total Estimated Cost by Five Broad Capability Groups $Billion
   	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010
   Air Combat	1.280	1.200	1.375	1.497	1.553	1.816	2.048	2.278	2.663	3.164
   Strike	0.578	0.647	0.723	0.752	0.706	0.556	0.520	0.477	0.491	0.477
   Maritime	3.614	3.760	3.795	3.535	3.569	3.612	3.648	3.581	3.826	3.914
   Land Ops	5.492	5.766	5.836	6.318	6.447	6.802	6.811	6.788	6.659	6.607
   Info Capability	1.470	1.497	1.509	1.369	1.435	1.541	1.581	1.542	1.587	1.696
   Total	12.435	12.870	13.238	13.472	13.710	14.327	14.607	14.665	15.227	15.857

   1. Constant FY2000-01 Prices and Exchange.
   2. Planned Cash Expenditures less Planned Cash Receipts.
2. The data is planned cash expenditure less cash receipts, in constant prices. There is no capital use charge.
3. Yes.
4. The White Paper considered operating cost issues for Defence capabilities for the period for which information was available – generally the forward estimates to FY2003-04. In the case of F-111s these estimates took account of the purchase of life-of-type spares and other F-111 support items from FY1997-98 onwards ($207.12 million in December 1996 prices and exchange rates) and the planned achievement of commercial support savings. The White Paper also recognised that there were significant longer-term operating cost pressures across a wide range of Australian Defence Force capabilities, including from operating older equipment such as the F-111. Given the uncertainty of these estimates at the time, no additional funding was provided to meet them.

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