COVID-19 Recovery measures overshadow 2021-22 Defence Budget

In a federal budget which focused on national recovery from the Covid-19 pandemic, Defence didn’t rate much of a mention. But as expected, its funding did increase substantially.

Defence will receive $44.618 billion, a comfortable increase of 4.37 per cent on last year, taking funding to 2.1 per cent of GDP.  But there are no major acquisition surprises and, with Australia withdrawing from Iraq and Afghanistan, Defence operational funding falls substantially.

There were no big announcements other than a repeat of matters already announced – some three times now – such as the upgrade of the Robertson Barracks, Kangaroo Flats, Mount Bundy, and Bradshaw Training Areas in the Northern Territory, and enhancement of HMAS Cairns naval base.

Treasurer Josh Frydenberg left any reference to Defence to the very end of his speech to Parliament. He said while we have been fighting COVID, other threats to our security had not gone away, and that we needed to be prepared for a world that was less stable and more contested.

“This is why we are investing $270 billion over 10 years in our defence capability,” he said. “The Australian Defence Force continues to protect and uphold our national interests abroad and at home. Our Defence Forces are always there for us and we are forever indebted to them.”

New Defence Minister Peter Dutton said that, in 2020 the Government had delivered on its commitment to grow the Defence budget to two per cent of GDP, with a 10-year funding model which provided Defence with a total funding of $575 billion over the decade to 2029-30.

“This includes $270 billion investment in the capability and potency of our Defence force,” he said in a statement.

Minister Dutton said government also continued to build a more secure and resilient Australia through a $59.2 million investment in Operation Resolute to support the ongoing protection of Australia’s borders and offshore maritime interests through surveillance and response.

There’s $66.1 million commitment to upgrade RAAF Base Williamtown through improving the runway to accommodate long-range aircraft and facilitate international flights. This runway is also used by Newcastle Airport, and improvements will support dual use for military and civilian aircraft.

Defence continues to ramp up outlays for new equipment. Budget papers show capability acquisition spending rising from $12.658 billion in 2020-21 to $15.766 billion in 2021-22, and then to $17.804 billion in 2022-23.

By forecast outlay, the top project for 2021-22 is the ongoing acquisition of the Lockheed Martin F-35A. During 2021-22, 17 aircraft will arrive (including two which should have arrived last year but their production was delayed by COVID), taking the fleet to 48 of the planned 72. So far $8.878 billion of the F-35 acquisition budget of $15.6 billion has been spent.

On the maritime front, $982 million will be spent on design of the new Attack class submarine. Up to the end of June, $2.041 billion had been spent from the so far approved budget of $5.8 billion, although the overall planned cost of the future submarines continues to be closely held by Government.

Budget papers show a funding for some overseas operations – which Defence terms “operations supporting wider interests” – falling substantially from $764.8 million in 2020-21 to $279.5 million in 2021-22, to just $35.5 million in 2022-23.

Although Australia is drawing down from Iraq, Afghanistan, and the Middle East, Defence continues to participate in a large number of smaller international operations, some involving just a few personnel.

Defence is ramping up spending on activities closer to home, which it terms “operations contributing to the security of the immediate neighbourhood.” These go from $375,000 in 2020-21 to more than $2 million in 2021-22.

After the COVID-induced slowdown, the Defence Cooperation Program (DCP), Defence’s primary means of assisting regional nations, is ramping up again. From $176.9 million in 2020-21, DCP spending dropped to $126.9 million in 2020-21, but will rise to $155.3 million in 2021-22.

Defence personnel numbers continue to rise, although not by much. The total permanent force is forecast to increase from 60,486 in 2020-21 to 61,468 in 2021-22, and to 62,063 in 2022-23.

The Navy – which will eventually need to crew 12 new submarines and nine new frigates – looks like it managed to recruit just eight additional sailors in 2020-21. These will take the uniformed force to 15,449 in 2021-22, although Navy does better over the forward estimates period, with a forecast uniformed workforce of 16,010 by 2024-25.

In the same period, Army will increase in size from 30,281 uniformed personnel in 2020-21, to 31,246 by 2024-25, while the RAAF will grow from 14,764 in 2020-21 to 15,649 in 2024-25.