Defence funding is set to rise to $34.6 billion in 2017-18, a whisker short of the fabled two per cent of gross domestic product (GDP) promised when the coalition won office in 2013.
That funding – an increase of about two per cent on the PAES (Portfolio Additional Estimates Statements) figure for 2016-17 – means the government is sticking firmly to its undertaking to deliver on funding and capability outlined in the 2016 Defence White Paper, as expenditure will exceed $40 billion by 2020/21.
Budget papers indicate spending on defence will rise from $34.6 billion in 2017-18 to $35.7 billion in 2018-19, $38.4 billion in 2019-20 and then almost $42 billion in 2020-21.
The budget papers outline planned spending on a wide range of new defence equipment that has been in the public arena for some time, in some instances going back to 2009.
That includes acquisition of F-35 Joint Strike Fighter aircraft, with more than $1.5 billion of the total $16 billion AIR 6000 Phase 2A/2B approved project expenditure planned to be spent up to June, and $1.148 billion to be spent next financial year.
For the first time, the government gave some insight into outlays on new submarines. So far $127 million has been spent of the $935 million SEA 1000 Phase 1B budget so far approved, with $319 million expected for 2017-18.
That’s for initial work under the design and mobilisation contract with French firm DCNS and to establish a resident project team in France to oversee design work.
The other big project likely to be decided this year is what will replace the Navy’s eight Anzac frigates, with three companies shortlisted for the competitive evaluation process. Nine vessels will be constructed in Adelaide, with the government declaring work will start in 2020.
So far the government has approved SEA 5000 Phase 1 spending of $335 million, with $146 million spent up to June and $133 million to be spent next year.
Despite speculation that the start of construction could be pushed out two years, budget papers indicate the government is sticking by its proposed schedule, with second pass approval set for next year.
Not so good news for the Navy are propulsion problems afflicting brand new LHD amphibious assault ships HMAS Canberra and Adelaide. Final material release was planned for later this year but could be delayed as both ships have been tied up alongside at Garden Island in Sydney for several weeks.
The budget includes a $300 million efficiency dividend derived from reducing spending on consultants and contractors and international travel.
The Navy is set to retire the rest of its long serving Adelaide class frigates, the FFGs, which entered service in the 1980s. HMAS Darwin will go in September 2017, HMAS Newcastle in June 2019 and HMAS Melbourne in September 2019. As they depart, the three new Hobart class Air Warfare Destroyers will be increasingly available.
Also to go are supply ship HMAS Success in 2018-19 and tanker HMAS Sirius in 2019-20. Their replacements, two new Spanish-built Cantabria class replenishment vessels will enter service in 2019-20.
Australian involvement in the fight against Islamist extremists in Iraq and Syria is set to cost more than $1.3 billion by the time Islamic State is vanquished some time in the next three years.
This mission, called Operation Okra, started in 2014 as IS seized much of northern Iraq and Australia joined the US-led international coalition conducting air operations over Iraq and later Syria.
Six RAAF F/A-18 Hornets conduct missions over Iraq and Syria from a base in the United Arab Emirates, supported by a RAAF KC-30A tanker and E-7A Wedgetail aircraft.
Australia also deployed a training team to assist the Iraqi military and a team of special forces to mentor the elite Iraqi Counter Terrorism Service.
Budget papers indicate a cost of $446 million in 2015-16 and $453 million in 2016-17. With IS facing defeat, costs reduce to an estimated $64 million in 2018-19 and $29.8 million in 2019-20.
The budget documents show the Defence Force is inching towards the White Paper target of 62,400 uniformed members in a decade. Uniformed strength stood at 59,194 in 2017-18.
Defence public service numbers fell to 17,500 in 2016-17 as part of a program to reduce numbers. That’s now on the rise as defence hires in priority areas including cyber security and intelligence.
Public sector numbers are expected to stabilise at 18,200 from 2018-19.