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)
Note: These figures represent
a combined total for the Department of Defence and the Australian Signals
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
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
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).
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)
|Total Defence Planned Expenditure
|Workforce share of total
Government, Portfolio budget statements 2021–22: budget related
paper no. 1.3A: Defence Portfolio,
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.
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.
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
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
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
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
This brief was updated on 17 May 2021 with an additional