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The Hon. Dr Brendan Nelson,
Minister for Defence

Media Release

WORKING TO A PLAN TO DEFEND OUR PEOPLE, INTERESTS AND VALUES

The Coalition Government continues to make substantial investments in Australia's defence capabilities in order to defend our people, interests and values.

In working to this plan, a further $14.0 billion has been allocated over ten years in this year's Budget to build a better equipped, more mobile and operationally ready Defence Force.

The boost to funding comes on top of the $4.1 billion allocated for the enhanced land force initiative, which will establish an extra two Army battalions. An additional $1.0 billion was also allocated to Defence recruitment and retention in December 2006.

This is the seventh budget in a row that the Government has met or exceeded its 2000 Defence White Paper funding commitment.

Since the Coalition Government came to power in 1996, the Defence budget has increased from $10.6 billion in 1995-96 to $22.0 billion in 2007-08, which represents a real increase of about 47% during this time.

This year's budget is $22.0 billion which is an increase of $2.1 billion or 10.6% on 2006-07, and represents 9.3% of Australian Government outlays and 2.0% of GDP.

The Government continues to invest in the Defence Force of today while at the same time building the Defence Force of tomorrow, with the Defence budget planned to grow from $22.0 billion in 2007-08 to $29.9 billion in 2016-17.

The substantial increase in funding will ensure that Defence has a well-equipped and well-trained Defence Force which is able to meet the challenges that lie ahead.

Key investments include the new air combat capability, Air Warfare Destroyers, Amphibious Ships and other priorities included in the Defence Capability Plan.

The additional $14.0 billion allocated over the next ten years will be applied to:

• A package of recruitment and retention measures that are designed to increase recruitment intakes and reduce military separation rates ($2.1 billion).
• The acquisition of 24 F/A-18F Block II Super Hornet multi-role aircraft to ensure that Australia maintains its air combat capability edge during its transition to the F-35 Joint Strike Fighter over the next decade (around $6.6 billion over 13 years).
• Additional logistics sustainment funding to ensure that the Australian Defence Force (ADF) is well prepared and able to respond to contingencies now and in the future, as it has done so exceptionally well in the recent past ($1.8 billion).
• Personnel and operating costs for the C-17 heavy lift aircraft ($1.3 billion).
• A strengthening of Australia 's Defence intelligence and security capabilities to better protect Australia and advance its national interests ($382.2 million).
• An additional $1.3 billion for Defence operations, subject to regular review, comprising:
  • $703 million over three financial years to expand Australia's commitment to operations in Afghanistan, including the redeployment of Special Forces and other enabling support elements including a mobile control and reporting unit, and the redeployment of Chinook helicopter support;
  • $389 million over three financial years to maintain a deployment of about 1,500 ADF personnel in and around Iraq ;
  • $135 million over two financial years to maintain the present ADF force level commitment to East Timor to assist in the restoration of stability and security; and
  • $52 million over four financial years for the continued surveillance of Australia 's northern approaches as part of Operation Resolute.
• Investment in security measures to protect Defence personnel, key assets, facilities and infrastructure at Defence bases ($135 million).
• Additional funding to ensure that the Defence Housing Australia meets competitive requirements, with this measure budget neutral at whole-of-Government level ($954 million).

The substantial increase in funding in no way changes the Government's commitment to ongoing improvements in efficiency. Defence continues to meet its savings measures and efficiency dividends while shifting resources from support areas to the frontline. The recommendations of the recently released Defence Management Review are also being implemented to further improve the efficiency and effectiveness of the organisation.

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Supporting Information

Why is this important?

• The defence of Australia and its vital national security interests is the first responsibility of the Australian Government.
• The measures announced in this budget will ensure that the Government is able to build a better equipped, more mobile, and operationally ready Australian Defence Force (ADF) that can meet the challenges of today and tomorrow.
• The measures will ensure that the ADF is able to grow from 51,000 to 57,000 over the coming decade.

Who will benefit?

• The Australian community, through a better prepared Defence Force.
• The ADF, through enhancements to its platforms and retaining its capability edge in the region, and ensuring that it can attract and retain sufficient military personnel to advance the force of the future.
• ADF personnel and their families, through enhancements to their remuneration and conditions of service through the recruitment and retention initiatives.

What funding is the Government committing to the initiative?

• The Government has allocated an additional $14.0 billion over ten years to Defence. The details are shown in the attached table.

What have we done in the past?

The 2007-08 Budget builds on a long-term commitment to strengthen our Defence capability:

• In 1996, when Australia was confronted with a deficit of $10.3 billion, the Government decided that Defence would be the one area quarantined from Budget cuts.
• At the same time, resources were shifted from the back room to the front line. In ten years, the “tooth to tail” ratio – the percentage of ADF personnel in combat and combat-related positions – has increased from 45.2% in June 1996 to 66.6% today.
• In 2000, the Government released a White Paper, outlining a long term strategic plan for Defence, backed up by an additional $29.4 billion over 10 years. Last year, a decision was taken to extend a 3% real increase in funding each year, out to 2016.
• The current Defence Capability Plan outlines $51 billion of new acquisitions over the next 10 years. The decision to fully supplement this with a further $6 billion for a squadron of Super Hornets – to ensure there is no air combat capability gap – underlines the importance of strong economic management, as a prerequisite to strong defence.
• The 2006 Enhanced Land Force Initiative will mean that by 2010, the Australian Army will have eight regular battalions (up from five in 1996 and six today). Combined with our 2005 Hardened and Networked Army initiative, our Army will not only have greater strength, but better equipment, mobility, combat weight and networked capabilities. Our Army will be further strengthened by the acquisition of 59 Abrams Tanks, 46 MRH-96 Helicopters and over 440 Bushmaster Infantry Mobility Vehicles.
• By joining the Joint Strike Fighter Programme, Australia will have up to 100 of the most advanced, “fifth generation” combat aircraft which combine strike (air-to-ground and air-to-sea attack) and fighter (air-to-air combat) capability. To ensure we maintain regional air superiority during the transition, we are upgrading our existing fleet of 71 F/A-18 Hornets and purchasing 24 F/A-18 Super Hornets.
• Decisions to invest in new air-to-air refuelling aircraft, Unmanned Aerial Vehicles, Airborne Early Warning and Control aircraft, and heavy lift aircraft will also increase our air power.
• We are building a stronger Navy, through u pgrades to our ANZAC and Guided Missile Frigates and new Armidale Class Patrol Boats. Substantial new strength will be added with three Air Warfare Destroyers and two large amphibious ships. After a decade and over $1.0 billion, we have turned around Labor's Collins Class Submarine mess and are bringing world-class submarines into service.
• Major reforms to Defence procurement have improved our ability to ensure major projects are delivered on time and on budget. Of the 93 major projects that have “closed” since our 2003 reforms, 51 have been under budget, while just 10 have required budget increases. The overall net budget increase of $36 million represents just 0.65% of the value of closed projects (a fraction of the budget increase of many infrastructure, or private investment projects).
• A recently announced $1.0 billion, 10-year package to help recruitment and retention will cut red-tape in the enlistment process, provide generous bonuses for those in critical positions and with key skills; create a Military Gap Year Scheme for school leavers; and provide more support for cadets.  
• Under a single, streamlined operation (Operation Resolute), significant Navy resources add serious “teeth” to the Government's co-ordinated approach to cracking down on and deter illegal immigration, smuggling and fishing in our sovereign waters.

When will the initiative conclude?

• With the exception of operations funding, and National Security – Enhanced Protective Security, the measures are ongoing in nature, but subject to periodic review by Government.

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