The Hon. Dr Brendan Nelson,
Minister for Defence

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09 May 2006
57/06
  074_2006

Tuesday, 9 May 2006

057/2006

A LONG TERM PLAN TO DEFEND AUSTRALIA

The Coalition Government is making a long-term commitment to Defence, with substantial funding increases over the next ten years.

This long-term commitment gives Australia the capacity to build a more combat focused, better equipped, more mobile and operationally ready Defence Force, enhancing our ability to protect our people, interests and values.

The 2000 Defence White Paper committed the Government to increase Defence spending by an average of 3 per cent real growth a year from 2000-01 to 2010-11, adding a further $28.5 billion of resources to Defence over that timeframe.

Now, the Government has decided to continue to increase Defence spending by 3 per cent real growth a year until 2015-16. This will mean an additional $10.7 billion for Defence over the period 2011-12 to 2015-16.

These commitments mean that the Defence budget will grow from $12.6 billion in 2000-01 to $26.7 billion by 2015-16.

Today's long-term financial commitment gives Defence the certainty it needs to plan vital equipment acquisitions.

Due to the size of its acquisition and support programmes, Defence must plan many years into the future and place large contracts that can last a decade or even longer.

The Coalition Government's commitment to Defence has been consistent and ongoing. Despite being faced with an inherited budget deficit of $10.1 billion in 1996, the Government decided in its first budget to quarantine Defence from savings.

A 15-year commitment to an average of 3 per cent real growth in Defence funding is unprecedented in our history. This substantial increase in investment will fund vital projects like the new air combat capability, Air Warfare Destroyers and other priorities set out in the revised 2006-16 Defence Capability Plan to be released later this year.

In addition to the $3 billion in additional funding for 2006-07, provided for in the 2000 Defence White Paper , a further $1.4 billion will be allocated in the coming financial year for new budget measures.

This is the sixth budget in a row that the Government has met or exceeded its 2000 Defence White Paper funding commitment.

The Defence budget will increase to $19.6 billion in 2006-07, up from $10.6 billion in 1995-96. This represents an increase of 37 per cent in real terms. This $19.6 billion commitment to Defence in 2006-07 represents 9.1 per cent of Australian Government outlays and about 1.9 per cent of GDP.

In addition to the 3 per cent real growth commitment and newly announced budget measures, the 2006-07 Budget provides an additional $1.9 billion to acquire a new heavy airlift capability (C-17s), and an extra $1.5 billion over ten years for the Hardened and Networked Army.

The revised 2006-16 Defence Capability Plan sets out the Government's commitment to building a Defence Force able to meet demanding challenges into the future.

The 2006-07 Budget also brings forward $625.1 million in Defence Capability Plan funding over four years, reflecting improved project management by the Defence Materiel Organisation.

Substantial increases in funding in no way changes the Government's commitment for ongoing improvements in efficiency, so that resources can be shifted from the back room to the front line.

The Government has provided an additional $623 million in 2006-07 for Defence operations, comprising:

•  $392.7 million over three years from 2006-07 to maintain the present Australian Defence Force level of commitment to Iraq ;

•  $218.2 million over three years from 2006-07 for deploying and sustaining our Reconstruction Task Force to Afghanistan ; and

•  $12.1 million in 2006-07 for the surveillance of Australia 's northern approaches as part of Operation RELEX II.

The additional funding for operations in Iraq will continue Australia 's commitment to a Coalition of nearly 30 countries, helping to stop terrorists from sabotaging Iraq 's new democracy .

The 2006-07 Budget places increased emphasis on recruiting and retaining great people, with key initiatives including:

•  funding for the next pay rise in the military Workforce Remuneration Agreement;

•  $194 million over four years for Australian Defence Force recruitment and retention initiatives designed to recover and grow Australian Defence Force workforce numbers;

•  a number of initiatives to improve conditions of service for Defence personnel and support for Australian Defence Force families; and

•  increased remuneration for Reserve personnel.

Other new measures contained in the Budget include:

•  $26.2 million in 2006-07 to sustain and enhance Naval Aviation capability;

•  $95.6 million over four years to operate two Huon Class Coastal Mine Hunter vessels to increase surveillance and patrolling of Australia 's maritime approaches;

•  approximately $300 million over eight years to modernise propellant manufacturing at the explosives and propellant facility at Mulwala NSW. This will help us maintain munitions manufacturing in Australia ; and

•  $22.1 million over four years to enhance maritime surveillance and detection.

 

Media contacts

Nigel Blunden

(Dr Nelson)

02 6277 7800

0407 632 931

Defence Media Liaison

 

02 6265 3343

0408 498 664


A Long Term Plan to Defence Australia – Supporting Information

Why is this important?

•  The Government had committed funding provided in the 2000 Defence White Paper out to 2010-11. Provision of long-term financial guidance is critical for effective long-term Defence planning. Under this initiative, Defence is able to partake in long-term capability investment extending as far out as fifteen years to 2015/16.

Who will benefit?

•  The Australian community, through a better prepared Defence Force.

•  The Australian Defence Force, through enhancements to its competitiveness in the international landscape and ensuring that it can attract and retain sufficient military personnel to advance the force of the future.

•  Australian Defence Force personnel, through upgrades to on-base living-in accommodation.

What funding is the Government committing to the initiative?

The Government commitment totals $10.7 billion over five year period to 2015/16 as shown in the table below. This is in addition to the extra $28.5 billion provided in the 2000 Defence White Paper

 
2011-12 $m
2012-13 $m
2013-14 $m
2014-15 $m
2015-16 $m
TOTAL
Personnel Costs
147
337
534
741
918
2,678
Living-In Accomodation
48
101
159
221
290
819
Defence Capability Plan
251
374
543
499
683
2,350

Major Capital Facilities Program

17
35
54
74
95
274
Other Capital Purchases
4
8
13
17
23
65
Operation Costs including for New Equipment
49
192
396
854
1,160
2,651
Logistics Sustainment
61
125
192
264
339
980
Facilities Operating Costs/Estate Upkeep
75
178
203
217
228
901
Total Allocation
652
1,350
2,095
2,887
3,735
10,719

What have we done in the past?

•  The policy foundations presented in the 2000 Defence White Paper and Australia 's National Security: A Defence Update 2005 originally committed ten-year funding guidance. The 2006-07 Budget outcome has seen that extended to fifteen years at approximately three per cent real growth in an unprecedented decision for the Government.

When will the initiative conclude?

•  The funding commitment extends out to 2015-16.

ADDITIONAL FUNDING PROVIDED TO DEFENCE IN THE 2006-07 BUDGET

 

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

TOTAL

 

$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

$m

Defence capability - heavy airlift *1

792

518

360

249

222

-44

-140

-57

-

-

1,899

Hardened and Networked Army - phase 2

24

68

152

196

212

220

164

142

174

196

1,548

Iraq - funding for stabilisation and reconstruction activities

310

67

16

-

-

-

-

-

-

-

393

Afghanistan - contributing to a Provincial Reconstruction Team

92

99

27

-

-

-

-

-

-

-

218

Afghanistan - providing aviation support *2

15

-

-

-

-

-

-

-

-

-

15

Army Reserves - increasing remuneration

36

47

47

52

53

56

65

67

68

70

560

Coastal surveillance - increased patrolling of maritime approaches

24

24

24

24

25

25

26

26

27

27

252

Coastal surveillance - continuation

12

-

-

-

-

-

-

-

-

-

12

Mulwala redevelopment project

-

-

61

29

27

5

5

4

-

-

131

Defence housing - supplementation for competitive neutrality policy

78

-

-

-

-

-

-

-

-

-

78

Defence Headquarters Joint Operations Command *3

-

-

-

-

-

-

-

-

-

-

-

Defence funding beyond 2010-11

-

-

-

-

-

652

1,350

2,094

2,888

3,735

10,719

Logistics - additional funding for naval aviation

26

-

-

-

-

-

-

-

-

-

26

National Security

 

 

 

 

 

 

 

 

 

 

 

- defence communications project

-35

-31

14

19

20

18

17

17

21

21

80

- improving intelligence connectivity

2

4

1

1

-

-

-

-

-

-

8

Securing Borders against Illegal Foreign Fishing

 

 

 

 

 

 

 

 

 

 

 

- charting and surveying in northern waters

5

6

7

-

-

-

-

-

-

-

19

- enhanced detection capabilities

1

1

1

1

-

-

-

-

-

-

4

Military Superannuation Schemes - removal of inequities

-

-

-

-

-

-

-

-

-

-

-

Australian Defence Force - recovering workforce strength

-

-

-

-

-

-

-

-

-

-

-

1. Sub-Total New Budget Measures

1,380

802

711

571

559

931

1,486

2,293

3,178

4,048

15,961

Savings Measures

 

 

 

 

 

 

 

 

 

 

 

Australian Defence Force command and control structure - rationalisation

-6

-13

-21

-31

-31

-31

-31

-31

-31

-31

-256

Efficiency dividend - broadening the application in Defence

-4

-11

-20

-29

-38

-46

-53

-60

-68

-75

-405

Crisis communications - improvements

-4

-

-

-

-

-

-

-

-

-

-4

2. Sub-Total Savings Measures

-14

-24

-41

-60

-69

-77

-84

-91

-99

-106

-665

3. Total 2006-07 Budget Measures (1+2)

1,366

779

670

511

490

855

1,402

2,201

3,079

3,942

15,296

Other Budget Adjustments

 

 

 

 

 

 

 

 

 

 

 

Bring forward of Defence Capability Plan Funding

154

207

52

212

-

-

-337

-343

-

-

-55

Price Indexation

106

72

39

41

42

44

45

48

52

56

545

Foreign Exchange

-257

-257

-333

-491

-591

-653

-736

-736

-638

-651

-5,344

4. Sub-Total Other Budget Adjustments

2

22

-242

-238

-549

-609

-1,027

-1,031

-586

-595

-4,854

5. Total Increase in Defence Funding (3+4)

1,368

800

428

273

-59

246

375

1,170

2,493

3,347

10,442

 

*1 Funds were provided in the Defence Capability Plan to replace or upgrade the 12 C-130H aircraft. With the purchase of up to four C-17s, Defence will now upgrade or replace a lesser number of C-130H aircraft and, as a consequence, an amount of about $300m has been reduced from that project to contribute to the purchase of the C-17s. The C-17s will cost approximately $2.2 billion. Defence will provide $335million as a contribution bringing the funding from Government to $1.899 billion as shown in the table.

*2 As reported in the Portfolio Additional Estimates Statements 2005-06 (p20).

*3 Not for publication due to commercial sensitivities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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