Budget Review 2021–22 Index

Nic Brangwin, Thea Gellerfy, and David Watt


The Defence budget is unsurprising. The Government is broadly staying on track with the funding plans set out in the 2020 Defence Strategic Update (DSU), which was released on 1 July 2020. The Government provides Defence with this level of certainty about its funding in part because, as the DSU makes clear, Australia’s strategic situation has deteriorated in recent years, but also because the range of complex acquisition programs that Defence is running requires long-term financial commitment to see them to fruition.

Table 1: total defence funding—Defence Strategic Update and Portfolio Budget Statements (PBS) ($ million)

  2020–21 2021–22 2022–23 2023–24 2024–25
DSU 42,151 46,037 50,170 53,318 55,567
PBS 2021–22 42,042 44,618 48,162 51,150 53,330

Note: These figures represent a combined total for the Department of Defence and the Australian Signals Directorate.

Sources: Department of Defence (DoD), 2020 Defence strategic update, DoD, 2020, p. 54; Australian Government, Portfolio budget statements 2021–22: budget related paper no. 1.3A: Defence Portfolio, Table 4a on p. 15.

For 2021–22, this is a 6.13% increase in nominal terms, which, given the forecast CPI increase of 1.75% in this Budget, is 4.3% in real terms.

Defence spending is now in excess of 2% of GDP for the second year, but as explained in the DSU this measure has been abandoned as a target to ensure that Defence funding will not be subject to fluctuations in Australia’s GDP.

The differences in Table 1 between the DSU figure and the 2021–22 PBS seem largely to be the result of some substantial foreign exchange adjustments (-$745.9 million in 2021–22 and -$3.6 billion across the forward estimates—Defence PBS, p.13).


The Defence Portfolio Budget Statements 2021–22 show the Capability Acquisition Program (CAP) for 2021–22 is greater than the Capability Sustainment Program (CSP), with an estimated $15.7 billion for unapproved and approved projects and around $12.9 billion for current and future sustainment activities. As the costs of both programs increase over the forward estimates the variation between them is projected to grow with CAP expenditure totalling $85.9 billion and the CSP $71.2 billion. According to the Capability Acquisition and Sustainment Group’s February 2021 quarterly Project and Sustainment Report, there are around 188 major capital projects and 108 major sustainment products.

For the first time the top 30 list of approved military equipment acquisition projects (Table 54 in the PBS) was presented with what Defence calls an ‘enhanced view’ of the projects, effectively separating project costs into two categories: ‘military equipment acquisition’ and ‘other project inputs to capability’. The former attributes costs to the platform acquisition (i.e. aircraft, ships, vehicles) and the latter includes costs related to other elements of the project such as ICT, facilities, and research and development. This is possibly to highlight that overall project costs involve more than just equipment. Despite the large number of projects managed by Defence, only two in the Defence Budget’s top 30 acquisition list (F-35A Joint Strike Fighter and Battlespace Communications System for Army and Air Force) cited program delays due to COVID-19.

The Project and Sustainment Report notes that a number of other projects are subject to COVID-related delays, which is not mentioned in the 2021–22 PBS. It notes projects are experiencing three to six-month delays due to COVID-19, but that these are being managed through Recovery Deeds with affected contractors.


In 2020–21 workforce was the most expensive item in the Defence budget at a cost of more than $13.4 billion. While workforce costs will continue to increase—totalling $71.1 billion over the forward estimates—its share of the overall Defence budget is projected to decrease from 32.9% in 2020–21 to 28.2% by 2024–25, as Table 2 below shows.

Table 2: workforce planned expenditure ($ million)

2020–21 2021–22 2022–23 2023–24 2024–25
Workforce   13,458.7   13,856.4   14,210.9   14,614.0 15,037.9
Total Defence Planned Expenditure   40,931.7   44,568.0   48,241.8   51,071.3 53,239.6
Workforce share of total 32.9% 31.1% 29.5% 28.6% 28.2%

Source: Australian Government, Portfolio budget statements 2021–22: budget related paper no. 1.3A: Defence Portfolio, p. 15.

Defence is expected to release a new Defence Strategic Workforce Plan in late 2021 that will include strategies for growing the workforce out to 2040. The average full-time Defence workforce total is estimated to be 77,873, which includes 61,468 permanent ADF personnel and 16,405 APS employees (excluding the Australian Signals Directorate). Additionally, there are an estimated 21,390 Reserves personnel.

Tables 8 and 9 in the PBS show that by 2024–25 the planned workforce total is expected to reach 62,905 permanent ADF personnel, 16,447 APS employees and approximately 22,590 Reserve members.


Outcome 1 in the 2021–22 PBS lists 22 active international and domestic operations, an increase of one from 2020–21, with the addition of Operation DYURRA (ADF space operations). Nine of these operations are domestic or unilateral; five represent contributions to NATO, coalition and multi-national operations; five are Australian contributions to United Nations missions; and three are focused on Pacific capacity building and security.

The cost of operations has reduced significantly in 2021–22. This is primarily due to the drawdown of Australia’s presence in the Middle East region under Operations ACCORDIAN, HIGHROAD and OKRA, and the associated savings in the forward estimates. The net additional cost of operations out to 2024–25 is $1.1 billion, approximately $3.8 billion less than forecast in the 2020–21 PBS (p. 20).

Notably, Operation MANITOU and the ‘COVID-19 Response Package—Australian Defence Force’ deployment (Defence Operation COVID-19 ASSIST) are no longer funded under the No Win/No Loss arrangements. This has contributed to the overall operations expenditure decreasing to $271.5 million in 2021–22, down from $751.4 million in 2020–21.

Royal Commission into Defence and Veteran suicide

The Attorney-General’s Department (AGD) and the Department of Veterans’ Affairs (DVA) have been provided with $174.2 million to 2022–23 to fund the Royal Commission into Defence and Veteran Suicide, which was announced by the Government on 19 April 2021.

Most of this funding is provided to the AGD for administrative support to the royal commission but $28.9 million is for DVA to answer information requests from the royal commission and for a ‘targeted adverse events analysis capability’ for DVA to examine suicides and attempted suicides.

Concern about the level of veteran suicide and calls for a royal commission into this have been made with increasing frequency in recent years. In an effort to respond to those concerns the Government announced in February 2020 the creation of a National Commissioner for Defence and Veteran Suicide Prevention. Legislation to establish the position was introduced on 27 August 2020, but the legislation did not satisfy those seeking a royal commission. Background to this issue can be found in the Parliamentary Library’s Bills Digest for the National Commissioner for Defence and Veteran Suicide Prevention Bill 2020.

In the announcement, the Government stated its intention that the royal commission would operate alongside and in a complementary way to the previously announced National Commissioner for Defence and Veteran Suicide Prevention. The media release states:

The Royal Commission will look at past deaths by suicide (including suspected suicides and lived experience of suicide risks) from a systemic point of view, while the National Commissioner will have a forward-looking role, including overseeing the implementation of the Royal Commission’s recommendations.

This brief was updated on 17 May 2021 with an additional reference.