In the 2011-12 Budget, Defence will undertake a significant realignment of its budget.
This realignment aims to:
- Ensure that Defence has the funding it needs, when it needs it; and
- Reduce operating expenditure through increased efficiencies.
As a result of the realignment, Defence will return to Government:
- $1.1 billion in 2010-11 and an additional $1.3 billion over the next four years by reprogramming Major Capital Investment Program funding; and
- $0.4 billion in 2010-11 and an additional $1.3 billion over the next four years from reduced operating expenditure, adding to savings from the Strategic Reform Program (SRP);
- $87 million in 2010-11 and an additional $111 million over the next four years for lower than planned costs associated with acquiring the fifth C-17 aircraft.
In total, Defence will reduce its call on the budget by $1.6 billion in 2010-11 and $2.7 billion over the next four years (2011-12 to 2014-15).
The reprogramming is necessary to better reflect realistic achievement of milestone delivery payments by industry for capability and infrastructure projects. This accommodates anticipated delays in project delivery from industry.
In 2010-11, capital expenditure has slipped by $1.1 billion which will have flow-on impacts in future years.
The experience to date with the Strategic Reform Program has demonstrated that reform in Defence is necessary, achievable and sustainable.
With the benefit of this experience, the Government considers that Defence can and should do more to reform.
The White Paper and the workforce and shared services stream of the SRP predicted a net increase in the Defence APS workforce of 1,655 from 2010-11 to 2013-14.
Reforms to shared services and other efficiency measures means that Defence can reduce this overall forecast APS workforce growth by 1,000 over the next three years.
This includes the application of the Government’s increased efficiency dividend to Defence. Under this whole of Government measure, the efficiency dividend will rise from 1.25 per cent to 1.5 per cent in 2011-12 and 2012-13, before returning to 1.25 per cent for 2013-14 and 2014-15.
Reducing the APS workforce growth will be achieved by natural attrition, not hiring new staff and, if required, some limited voluntary redundancies.
Savings from these reductions to forecast APS growth will be returned to the Budget.
There will be no reductions to the Australian Defence Force military workforce as a result of these changes.
Given priority accorded to maintaining support to operations, improving Navy sustainment and enhancing capability development, the Joint Operations Command (JOC), the Navy and the Capability Development Group (CDG) will be exempt from these additional reductions to their forecast APS workforce.
These reforms will be incorporated into the Strategic Reform Program, including oversight by the Defence Strategic Reform Advisory Board chaired by Mr George Pappas.
For more information and access to the Portfolio Budget Statement go to http://www.defence.gov.au/budget/11-12/index.htm