Defence: Program Funding

Senator Johnston asked the Minister for Defence, upon notice, on 11 January 2010:

1. Why has the Defence budget been reduced by 3.7 per cent ($997.7 million) since the release of the 2009-10 Budget in May 2009.
2. What impact has this reduction had on the Government’s projection of 3.5 per cent real growth.
3. Where will this $997.7 million of Defence money now be spent.
4. Why is $3,565.9 billion of Defence funding to be returned to the general government account over 2009‑10 and the forward estimates.
5. What will this $3,565.9 billion of Defence money now be spent on.
6. What initiatives have been undertaken to cut Australian Defence Force operating costs since the release of the 2009-10 Budget in May 2009.
7. What savings will be made through these ‘initiatives’.

Senator Faulkner - The answer to the honourable Senator’s question is as follows:

1. Please refer to page 16 of the Portfolio Additional Estimates Statements 2009-10.
2. The overall reduction in Defence funding at the 2009-10 Additional Estimates is mainly as a result of foreign exchange movements. This in year funding hand-back will not have an appreciable impact on the Government’s commitment to an average 3 per cent real growth in the Defence budget until 2017-18.
3. and (5)  Defence has returned this funding to Government.
4. Under the no-win/no-loss arrangements Defence is required to return any surplus foreign exchange supplementation to Government for an appreciation of the Australian dollar relative to other currencies. Further details are also outlined on page 22 of the Portfolio Additional Estimates Statements 2009-10.
6. and (7)        Defence has implemented the Strategic Reform Program to make the organisation more efficient and effective, and create significant savings for reinvestment. In addition to the stream savings, there is a component of savings from other categories. This includes reductions to the Australian Defence Force operating budget mainly in activities such as; revising management of some inventory lives, reducing the participation in current exercises, increasing the use of simulators and extending the life of commercial vehicle purchases for administration and transport purposes.

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