Nicole Brangwin
The 2015–16 Budget does not reveal any new Defence
capabilities. Much like last year’s Budget, the wait continues for the Defence
White Paper to be released before any new major military acquisitions are
announced.[1] Major capability
announcements are expected to be made in the upcoming Defence White Paper,
which was originally scheduled for release in March 2015 but has been delayed
until the second half of this year.[2] The Defence White Paper
will be accompanied by a Defence Investment Plan (incorporating the Defence Capability
Plan (DCP)) with a 10-year outlook, an Enterprise-level Naval Shipbuilding Plan
and a Defence Industry Policy Statement. The last DCP was updated in 2012 under
the Gillard Government.[3] The most anticipated
announcement will be the Future Submarine program, estimated to be worth around
$50 billion over the life of the submarines.[4]
This Budget reflects the changes being implemented by the
Government following the recommendations of the First Principles Review,
released on 1 April 2015, to re-integrate the functions of the Defence Materiel
Organisation (DMO) into the Department of Defence (Defence).[5]
This was also one of the Commission of Audit’s recommendations.[6]
As of 1 July 2015, the DMO will transition its core
functions over to Defence.[7] The DMO’s ongoing annual
funding of $805 million will automatically transfer to Defence and any savings generated
from this measure ‘will be reinvested in Defence capability’. However, the amount
of savings will not be identified until later in 2015.[8]
Due to the DMO’s transition back into Defence, the 2015–16 Budget does not
allocate direct appropriations from the Government to the DMO, or prepayments
from Defence ‘for contracted acquisition and sustainment services’.[9]
In last year’s Budget these allocations contributed to the DMO’s overall total
net resourcing of almost $12.8 billion.[10]
This Budget continues to refer to the DMO as functioning
within Defence as part of the transition process but does not mention the establishment
of the new Capability Acquisition and Sustainment Group, as recommended by the
First Principles Review.[11]
The Government’s budget fact sheets state that in the last
12 months, around $5 billion worth of capability projects have been approved
and up to $22 billion in total since the 2013 election.[12]
However, in anticipation of the Defence White Paper’s release, only the ‘most
urgent capability projects’ will be considered.[13]
This Budget allocates $885.5 million to the Unapproved Major
Capital Investment Programme (also referred to as the Defence Capability Plan—DCP)
and almost $6.2 billion to the Approved Major Capital Investment Programme
(AMCIP); an investment of just over $7 billion for 2015–16.[14]
Similar to last year’s Budget, the DCP budget is expected to significantly
increase each year, totalling more than $12.2 billion across the Forward
Estimates.[15] The current and future
sustainment costs (including ICT and facilities) for 2015–16 is expected to
reach $7.6 billion and steadily increase over the Forward Estimates, totalling
just over $32.4 billion.[16]
According to the Defence Capability Group, the number of
major projects approved in 2014–15 totalled $1.53 billion in value: two projects
received First Pass approval and seven received Second Pass approval.[17]
This is fewer than the previous financial year which saw seven First Pass
approvals and ten Second Pass approvals totalling around $19 billion.[18]
Some of the more significant capability announcements previously
made by the Abbott Government include:
|
Project announcement
|
Approved Project Expenditure[19]
|
|
Two
additional C-17A Globemaster III aircraft[20]
|
AIR 8000 Phase 4 = $1.3 billion
|
|
An
additional 58 F-35A Joint Strike Fighter (JSF) aircraft, bringing the total
to 72[21]
|
AIR 6000 Phase 2A/B = $15.2 billion
|
|
P-8A Poseidon maritime patrol
replacement aircraft[22]
|
AIR 7000 Phase 2 = $3.9 billion
|
|
Australian
Light Armoured Vehicle (ASLAV) replacement[23]
|
LAND 400 Phase 2 = $117 million
|
Future capability announcements include:
– an
unspecified number of Future Submarines to replace the existing six Collins
Class submarines (SEA 1000 is currently undergoing a competitive evaluation
process)[24]
– an
unspecified number of MQ-4C Triton unmanned aerial surveillance systems (Second
Pass approval for this element of AIR 7000 is ‘subject to the successful
completion of the US Navy’s development programme’)[25]
– replacement
of HMA Ships Success and Sirius (SEA 1654 Phase 3 is undergoing a
limited competitive tender process involving Navantia of Spain and Daewoo of
South Korea)[26] and
– Future
Frigates (SEA 5000 is currently looking at preliminary engineering and design
work).[27]
[1].
K Andrews (Minister for Defence), Budget
2015: Defence budget overview, media release, 12 May 2015 and N
Brangwin, ‘Defence
materiel’, Budget review 2014–15, Research paper series, 2013–14,
Parliamentary Library, Canberra, 2014.
[2].
T Abbott (Leader of the Opposition), Address
to the 2012 RSL National Conference, Sydney, speech, 25 September 2012
and K Andrews (Minister for Defence), Speech—RUSI
Submarine Summit, Adelaide, speech, 25 March 2015.
[3].
Australian Government, ‘Military capability
information’, Department of Defence website.
[4].
K Andrews (Minister for Defence), Speech—RUSI
Submarine Summit, op. cit.
[5].
First Principles Review of Defence, First
Principles Review: creating one Defence, (the Peever report),
Department of Defence, Canberra, 2015, p. 35.
[6].
National Commission of Audit, The
reports of the National Commission of Audit—Towards responsible government:
volume 1: Portfolio overviews: Defence portfolio, Australian
Government, Canberra, 14 February 2014.
[7].
Australian Government, ‘Part
2: expense measures’, Budget measures: budget paper no. 2: 2015–16,
p. 74; First Principles Review of Defence, First
Principles Review: creating one Defence, op. cit., p. 33 and 35.
[8].
Australian Government, ‘Part
2: expense measures’, ibid.
[9].
Australian Government, Portfolio
budget statements 2015–16: budget related paper no. 1.4A: Defence Portfolio,
p. 148.
[10].
Ibid.
[11].
Ibid., pp. 145–220.
[12].
K Andrews (Minister for Defence), Budget
2015: Defence budget overview, op. cit.; Australian Government, ‘Defence 2015–16
budget fact sheets: Capability’, Department of Defence website.
[13].
Ibid.
[14].
Portfolio
budget statements 2015–16: budget related paper no. 1.4A: Defence Portfolio,
op. cit., p. 20.
[15].
Ibid.; N Brangwin, ‘Defence
materiel’, op. cit.
[16].
Portfolio
budget statements 2015–16: budget related paper no. 1.4A: Defence portfolio,
op. cit., p. 21.
[17].
Australian Government, ‘Project
approvals in FY 2014–15’, Defence Capability Group website.
[18].
Australian Government, ‘Project approvals in FY
2013–14’, Defence Capability Group website.
[19].
The Approved Project Expenditure figures have been taken from the
following document unless otherwise sourced: Portfolio
budget statements 2015–16: budget related paper no. 1.4A: Defence portfolio,
op. cit., p. 158.
[20].
T Abbott (Prime Minister) and K Andrews (Minister for Defence), Acquisition
of two additional C-17A Globemaster III aircraft, media release, 10
April 2015.
[21].
At the time the Australian Government announced the approval of an
additional 58 JSF, bringing the total to 72 aircraft, the total capital cost
was $12.4 billion, which included ‘associated facilities, weapons and training’,
cited in T Abbott (Prime Minister) and K Andrews (Minister for Defence), F-35
Joint Strike Fighters to transform Australia’s air combat capability,
media release, 23 April 2014.
[22].
T Abbott (Prime Minister) and D Johnston (Minister for Defence), P-8A
Poseidon aircraft to boost Australia’s maritime surveillance capabilities,
media release, 21 February 2014.
[23].
This project has received First Pass approval and the Request for Tender has
been released, cited in K Andrews, LAND
400 Phase 2 – Mounted Combat Reconnaissance Capability, media release,
19 February 2015.
[24].
K Andrews (Minister for Defence), Speech—RUSI
Submarine Summit, op. cit.
[25].
T Abbott (Prime Minister) and D Johnston (Minister for Defence), Triton
unmanned aerial vehicles to boost maritime surveillance capabilities,
media release, 13 March 2014.
[26].
D Johnston (Minister for Defence), Boosting
Australia’s maritime capabilities, media release, 6 June 2014.
[27].
Ibid.; Australian Government, ‘Project approvals in FY
2013–14’, op. cit.
All online articles accessed May 2015.
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