Defence Budget overview

Budget Review 2013–14 Index

David Watt 

In a partial reversal of last year’s budget cuts the Government has increased Defence spending in the 2013–14 Budget. The Minister for Defence points out that Defence will receive $113.0 billion across the Forward Estimates and contrasts this with the $103.0 billion set out in the Forward Estimates in the 2012–13 Budget.[1] 

Table 1 below compares the total defence funding from the Forward Estimates in the 2011–12, 2012–13 and 2013–14 Portfolio Budget Statements, demonstrating the fluctuating fortunes of the defence budget in recent years.

Table 1: Total defence funding ($ billion)[2]

 

2011–12

2012–13

2013–14

2014–15

2015–16

2016–17

Total

2011–12

26.559

24.826

26.586

27.436

 

 

105.407

2012–13

 

24.217

24.385

26.130

28.806

 

103.538

2013–14

 

 

25.433

27.843

29.40 7

30.797

113.48

 

A change in emphasis from the multi-decade defence funding plan contained in the 2009 Defence White Paper (DWP) to the four year Forward Estimates cycle was announced in the 2013 DWP:

The Government has determined that Defence will manage its resources with the annually updated four-year Forward Estimates model and a subsequent six-year general guidance for general planning purposes.[3]

The Minister’s media release also states that the Government has provided Defence with ‘funding guidance’ of around $220.0 billion between 2017–18 and 2022–23. However, in the post-Global Financial Crisis world, it is difficult to know what ‘funding guidance’ will mean in reality as long-term plans are likely to ‘remain subject to change as strategic circumstances evolve ...’.[4]

Another notable feature of the Budget is that defence is required to absorb the funding of seven of the eight new expense measures set out in the Budget papers. This amounts to some $148.9 million between 2012–13 and 2013–14.[5] The exception is the $585.7 million provided for operations in Afghanistan and the Middle East (see the Parliamentary Library Budget Brief Australian Defence Force (ADF) operations and regional engagement).

Defence Capital Investment

Table 2 below indicates that total capital investment funding has grown from last year. The figures in brackets cover those projects which fall under the Major Capital Investment Program (projects in the Defence Capability Plan (DCP) and projects which have already been approved).

Table 2: Capital Investment Program ($ billion)[6] 

 

2012–13

2013–14

2014–15

2015–16

2016–17

Total

2012–13

4.604
(3.138)

4.391
(2.477)

5.389
(2.401)

6.931
(2.515)

 

21.317
(10.532)

2013–14

 

5.701
(3.268)

7.120
(3.768)

7.454
(3.225)

8.174
(2.928)

28.451
(13.910)

 

The only major new addition to the capital equipment program in the 2013–14 Budget is the decision (announced at the time of the release of the 2013 Defence White Paper) to purchase 12 EA‑18G fighter planes (the Growler variant of the Super Hornet) from the US. This will cost $2.9 billion, with $2.0 billion allocated to Defence in 2014–15 for this purpose.[7]

The Defence White Paper 2013 flagged that the Government would seek to replace the current Armadale Class patrol boats and the supply vessels HMAS Sirius and HMAS Success ‘at the first possible opportunity’.[8] These intentions are repeated in the Minister’s Defence Budget Overview media release. The PBS notes that Project Sea 1654 phase 3 (the replacement of Sirius and Success) is set for first pass approval consideration during 2013–14, but there is no mention of specific new funding for this or the patrol boats.[9]  It is possible these intentions are covered by the $220.0 billion of ‘funding guidance’.

The number of Defence Capability Plan projects being prepared for approval has risen modestly since the 2012–13 Budget. There are now 12 projects on the First Pass list (there were six in last year’s PBS) and 17 projects on the Second Pass list (there were 19 last year).[10]  However, the list of projects set for consideration for Second Pass approval includes major acquisitions in the Joint Strike Fighter and the P-8A Poseidon Maritime Patrol Aircraft.



[1].       S Smith (Minister for Defence), Budget 2013–14: Defence budget overview, media release, 14 May 2013, accessed 15 May 2013.

[2].       Australian Government, Portfolio budget statements 2011–12: budget related paper no. 1.5A; Defence Portfolio, p. 22, accessed 16 May 2013; Australian Government, Portfolio budget statements 2012–13: budget related paper no. 1.5A: Defence Portfolio, p. 233, accessed 16 May 2013; Australian Government, Portfolio budget statements 2013–14: budget related paper 1.4A Defence Portfolio, p. 14, accessed 15 May 2013.

[3].       Department of Defence, Defence White Paper 2013, Commonwealth of Australia, Canberra, 2013, p. 72, accessed 16 May 2013.

[4].       Portfolio budget statements 2013–14, Defence Portfolio, op. cit., p. 13.

[5].       Australian Government, Budget measures: budget paper no. 2: 2013–14, pp. 110–114, accessed 16 May 2013.

[6].       Portfolio budget statements 2012–13, op. cit., p. 32; Portfolio budget statements 2013–14, op. cit., p. 17.

[7].       J Gillard (Prime Minister) and S Smith (Minister for Defence), 2013 Defence White Paper: Air Combat Capability, media release, 3 May 2013, accessed 15 May 2013.

[8].       Defence White Paper 2013, op. cit., pp. 84–85.

[9].       Portfolio budget statements 2013–14, op. cit., p. 119.

[10].     Ibid., pp. 118–119.

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