Defence capability

Budget Review 2015–16 Index

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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