There is less mention this year of national security issues
in the Government’s budget documents than has been the case in recent years.
Instead, emphasis is placed on what the Treasurer’s budget speech describes as:
A defence plan for local hi-tech manufacturing and technology.
This draws out two of the Budget’s major themes: support for
industry and investing in regional growth.
The recently released 2016 Defence White Paper (2016 DWP) set
out a long-term vision for Defence with the promise of an additional $29.9
billion in funding for Defence across ten years to 2025 and linked this to
expenditure of $195 billion in defence capability across the same period. The
Budget Overview document states that this will aid the creation of 3,600
Australian jobs as well as ‘thousands more’ in the supply chain.
The Defence budget measures for 2016–17 are dominated by the
$700 million in additional Defence White Paper funding and $615.8 million for
military operations during 2016–17.
Unsurprisingly, the Budget provides funding for Defence that
is very much in line with the funding model set out in the 2016 DWP and the accompanying
Defence Integrated Investment Program (DIIP). Both documents set out funding
which aims to reach $42.4 billion by 2020–21, or 2 per cent of GDP based on
current Treasury predictions.
The total Defence funding for 2016–17 of $32.4 billion is
close to the 2016 DWP’s promise of $32.3 billion and the forward estimates are
also aligned with their white paper counterparts. Of course, this does not
cover the 10 year period envisaged in the 2016 DWP.
The Australian Strategic Policy Institute (ASPI) states that
this year’s funding is about the same in real terms as the current financial
year and actually represents a slight fall in Defence’s funding as a percentage
of GDP. As ASPI points out, this
accords with the plan set out in the 2016 DWP which outlines modest funding in 2016–17
before the increased funding promised in future years. A further feature
impacting next year’s funding allocation is the rephasing of $500 million from
2016–17 to 2017–18.
The Budget documents also set out major defence capability already
announced, such as the future submarines, offshore patrol vessels and future
frigates. However, since each of these projects is relatively new, they have little
effect on the 2016–17 Budget.
Defence’s contribution to regional
Defence has a prominent presence in the Government’s
statement Investing in Regional Growth—2016–17. This includes:
- Defence assistance to the civil community in dealing with
bushfires and cyclones
- Defence industry’s role in regional Australia
- the Centre for Defence Industry Capability headquartered in
Adelaide, but with services to be provided ‘across the country’
- Defence Logistics Transformation Program which aims to modernise
storage and transport facilities around the country
- Explosive Ordnance Logistics Reform Programs which seek to do the
same for ordinance storage infrastructure
- Defence housing upgrades and
- United States Force Posture initiative.
Not all of these activities include new money (and some do
not mention money at all), but they reinforce Defence’s contribution to
The Budget Overview document repeats the 2016 DWP
commitment of $1.6 billion to build industry skills and competitiveness across
the ten years between 2015–26. This was detailed in the Defence Industry
Policy Statement (DIPS) that accompanied the 2016 DWP. Activities in this area include:
- the Centre for Defence Industry Capability (CDIC) which the documents
accompanying the 2016 DWP stated will be ‘funded at around $230 million over
the decade’. While funded by Defence, the CDIC will be administered by
AusIndustry under a memorandum of understanding (as is the case with the
Defence Industry Innovation Centre, the function of which will be subsumed by CDIC).
- the Next Generation Technologies Fund, which will receive around
$730 million over the decade and
- a ‘virtual’ Defence Innovation Hub funded at around $640 million
across the decade.
These do not form major initiatives in the 2016–17 Budget,
but represent funding commitments for Defence across the decade.
While this is a budget delivered on the eve of an election
campaign, and a number of the Defence initiatives no doubt form part of the federal
government’s re-election strategy, the industry announcements in particular
should significantly improve the Australian Defence Force’s capability.
All online articles accessed May 2016.
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