The Hon. Dr Brendan Nelson,
Minister for Defence

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09 May 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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