The state of Australia’s defence: a quick guide


27 July 2022

PDF version [522 KB]

Nicole Brangwin and David Watt
Foreign Affairs, Defence and Security

Contents

Introduction
Defence funding
Defence workforce
Operations
Defence policy
AUKUS
Defence capability
Defence industry
Parliament’s consideration of defence issues

 

Introduction

The Defence portfolio is extensive, comprising a range of activities and issues such as military exercises and operations; peacekeeping; defence planning and funding; force structure and posture; military-to-military and civil-to-military relationships; strategic policy; international and military law; international and domestic agreements; capability acquisitions, sustainment and disposal; bases, facilities and training areas in Australia and overseas; remediation of contamination at bases, facilities and training areas; personnel issues such as recruitment and retention, honours and awards, housing, pay and conditions, physical and mental health and wellbeing support; and military history, to name a few.

The purpose of this quick guide is to provide the new Parliament with an overview of some (not all) of the key activities and issues relating to the Australian Defence Organisation.

Defence funding

Australian Government funding to the Department of Defence and the Australian Signals Directorate for the 2022–23 financial year is $48.6 billion. The 2016 Defence white paper set a
10-year funding model for Defence totalling around $447.6 billion, of which $195 billion would be allocated to defence capabilities (pp. 177–183).­

The 2020 Defence strategic update (DSU) reaffirmed and adjusted the 10-year funding model to 2029–30 at a total cost of $575 billion, of which $270 billion would be invested in defence capabilities (pp. 53–56). In the lead-up to the 2022 federal election, the Australian Labor Party (ALP) confirmed its support for the funding and capability strategies outlined in the DSU and promised to ‘ensure that Defence has the resources it needs to defend Australia and deter potential aggressors’. An ongoing commitment to maintaining previous government funding on procuring defence capabilities was reaffirmed by the Albanese Government in July 2022.

In Budget strategy and outlook: budget paper no. 1 of the 2022–23 Budget, the Morrison Government allocated Defence’s share of government expenses by function at 6.1% of the total Budget (p. 143).

Defence funding as a percentage of GDP (gross domestic product) is often used in public debate as a measure of the adequacy of the defence budget. However, the 2020 Defence strategic update abandoned the use of defence funding as a proportion of GDP noting:

The Defence Budget has been decoupled from GDP forecasts to avoid the need for adjusting Defence’s plans in response to future fluctuations in GDP.

In his analysis of the 2022–23 Defence Budget, the Australian Strategic Policy Institute’s (ASPI) Marcus Hellyer commented on Defence funding as a proportion of GDP:

For those interested in spending as a percentage of GDP, it’s 2.11% based on the government’s GDP predictions. Of course, using GDP to measure defence spending is a crude tool; 2021–22’s defence budget started off at 2.09% but is now a hair below 2.0% at 1.98% because GDP has recovered so strongly, not because the government didn’t deliver its funding commitment.

With its long-term capital equipment purchases, Defence needs more certainty about its funding than a percentage of fluctuating GDP would allow. While government funding to Defence is far from the largest area of federal funding, Budget paper no. 1 shows that Defence’s share of net capital investment is the largest in the Commonwealth (p. 177). Managing such a large capital program presents Defence with particular challenges and some of these are dealt with below.

More detailed information can be found in The cost of Defence: ASPI Defence budget brief 2022–23 and the ‘Defence overview’ in the Parliamentary Library’s Budget review 2022–23.

Defence workforce

Permanent uniformed personnel

On 10 March 2022 the Morrison Government announced the permanent Australian Defence Force (ADF) workforce would expand by 30% to almost 80,000 personnel by 2040. This announcement centred on the premise that significantly more personnel would be needed to operate new capabilities, platforms and equipment. The ALP in Opposition agreed with the increase, but questioned how it might be achieved given the challenges faced by Defence in recruiting and retaining personnel. The ALP pledged, as part of the 2022 election campaign, to ‘conduct a comprehensive review’ of ADF ‘recruitment and retention mechanisms’ with the aim of growing the ADF workforce.

The planned workforce allocation outlined in the Morrison Government’s 2022–23 Defence budget anticipates a steady increase in the authorised strength of the ADF workforce from 60,330 personnel in 2020–21 to 64,532 personnel by 2025–26. Figure 1 illustrates the trajectory of the ADF’s workforce from 2012 into the forward estimates based on average funded strength figures.

Figure 1    Permanent ADF workforce from 2012–13 to forward estimates

Graph - Permanent ADF workforce from 2012–13 to forward estimates

Source: Defence annual reports from 2012–13 to 2020–21 and Portfolio budget statements 2022–23: budget related paper no. 1.3A: Defence portfolio.

Figure 2 shows the breakdown by service of the permanent ADF workforce from 2012 into the forward estimates based on the average funded strength. The Royal Australian Air Force (RAAF) is expected to increase its permanent workforce by more than 9.2% over the next 4 years, the Royal Australian Navy (RAN) by approximately 7.3% and the Army by 7.3%. There has been a steady increase of personnel numbers by service over the last 10 years, which is expected to continue with the anticipated increases into the forward estimates.

Figure 2    Permanent ADF personnel by service from 2012–13 to forward estimates

Graph - Permanent ADF personnel by service from 2012–13 to forward estimates

Defence annual reports from 2012–13 to 2020–21 and Portfolio budget statements 2022–23: budget related paper no. 1.3A: Defence portfolio.

Initial workforce growth figures in the 2020 Force structure plan indicated the RAN was expected to grow by 650 personnel by 2024, the Army by a modest 50 personnel and the RAAF by 100. In 2020–21 Defence was developing a new Defence strategic workforce plan (DSWP) for consideration by the Government in 2021. The DSWP was expected to be released in late 2021 and include plans to continue growing the workforce between the years 2024 and 2040. The Defence budget 2022–23 acknowledged the DSWP had been developed (p. 17) but not publicly released (possibly being revised in light of recent capability announcements and now a new government).

Reserve force

Reservists have been called out in greater numbers over the last few years and as such, the Reserve force numbers might see an increase of around 8% (from an estimated actual of 20,773 personnel in 2021–22 to 22,440 personnel by 2025–26, with the Army to receive the majority).

ADF recruitment and separations

Attracting the right people in sufficient numbers to the ADF has always been a challenge but the ADF has managed to reach its recruiting targets by around 90% over the last few years. A greater challenge is retaining skilled personnel, particularly in critical employment categories. One of the key employment categories is the RAN’s submarine workforce, which for many years struggled to recruit and retain personnel. In 2016, as a measure to increase the submarine workforce, the RAN issued the Submarine Deliberately Differentiated Package (see the section on the Submarine capability assurance payment in the ADF Pay and Conditions Manual (PACMAN)). The package, which considerably improved the RAN’s submarine workforce, was the first of its type to be used by the ADF and was expected to provide a model for future workforce challenges.

While the submarine workforce is expected to continue growing, the cancellation of the Attack Class submarine program in favour of a (yet to be determined) nuclear-powered submarine fleet under the AUKUS agreement will require a very different workforce plan. The skill sets required for operating a nuclear-powered capability are significantly different to those of the existing conventional submarine workforce. This will be one of the many challenges considered by the Nuclear Powered Submarine Taskforce.

Figure 3 provides a broad overview of ADF recruitment and separations over the last 10 years. The table indicates that, in most years, the ADF recruited slightly more personnel than it lost.

Figure 3    ADF permanent force recruitment and separations

Graph - ADF permanent force recruitment and separations

Source: Defence annual reports from 2012–13 to 2020–21.

Defence’s civilian workforce

Defence’s civilian workforce has seen a steady decline over the last decade. In 2012–13 the Department of Defence employed 21,534 full-time equivalent (FTE) Australian Public Service (APS) staff. By 2020–21 this number had decreased by 23.6% to 16,454 FTE APS staff. The Morrison Government’s 10 March 2022 announcement to increase Defence’s workforce implicitly included the APS – ‘Defence’s total permanent workforce will increase to over 101,000 by 2040’. The 2022–23 Defence budget included a minimal increase of around 5.9% over the forward estimates (from an estimated actual of 16,001 staff in 2021–22 to 16,946 FTE APS staff by 2025–26). By 2040 the APS workforce could potentially reach 2012 figures of close to 21,000 FTE staff. Figure 4 highlights the decline in APS staff since 2012 and the relative levelling out since 2018–19.

Figure 4    Australian Public Service full-time equivalent workforce totals from 2012 to 2026

Graph - Australian Public Service full-time equivalent workforce totals from 2012 to 2026

Source: Defence annual reports from 2012–13 to 202–21 and Portfolio budget statements 2022-23: budget related paper no. 1.3A: Defence portfolio.

Figure 5 shows the available figures for Defence’s APS recruitment since 2012 and the (mostly) higher rates of separation.

Figure 5    Department of Defence APS recruitment and separations

Graph - Department of Defence APS recruitment and separations

Source: Defence annual reports from 2012–13 to 2020–21.

Prior to the 2022 election the ALP expressed concern over the ‘high rate of separations from the ADF’ and committed to conducting a comprehensive review of ADF ‘recruitment and retention mechanisms’ such as ‘pay and conditions, housing and health assistance’. Combined with Defence’s reduced APS workforce, Defence has seen a greater reliance on its external workforce to ensure major capabilities are delivered.

External workforce

Defence categorises its external workforce as consultants, contractors and outsourced service providers, with the latter making up the largest proportion of workers (p. 28). Typically, consultants are contracted to Defence for specific expertise and independent advice to produce a report or product. Contractors tend to be specialists in fields such as information and communications technology (ICT; excluding helpdesk, as this function is done by an outsourced service provider), and project management, working under the general direction of Defence. Outsourced service providers include garrison health and base support, ADF recruitment (which is currently contracted to ManpowerGroup) and submarine maintenance, just to name a few.

Table 1 includes the yearly breakdown of Defence’s expanding external workforce, based on Defence’s census data.[1] As noted by ASPI’s Marcus Hellyer in the 2022–23 Cost of Defence publication, ‘contractors alone are equal to nearly 50% of Defence’s APS workforce’ and are considered Defence’s largest ‘service’ given the size of the workforce (p. 49).

Table 1     Department of Defence external workforce

Workforce July 2019 March 2020 March 2021 March 2022
Contractors 4,669 5,361 6,810 8,311
Consultants 250 255 314 370
Outsourced service providers 18,405 23,017 25,363 26,199
Total 23,324 28,633 32,487 34,880

Source: Marcus Hellyer, The cost of Defence: ASPI Defence budget brief 2022–23, (Canberra: Australian Strategic Policy Institute, June 2022), 50.

The most recent Defence annual report included a breakdown of costs and contract figures for the external workforce, which included outsourced service providers (pp. 274–75). In 2020–21 there was a total of 584 (new and ongoing) consultancy contracts worth around $127.4 million. The top 5 consultancy companies were KPMG, PricewaterhouseCoopers, GHD, AECOM, and Ernst & Young. In the same period there were a total of 34,719 non-consultancy contracts (new and ongoing) worth more than $27 billion. The top 5 non-consultancy contractors were Thales, Boeing, BAE Systems, Ventia and Raytheon.

Operations

Five years ago a large proportion of Australia’s deployed military forces were stationed in the Middle East as part of multinational efforts to conduct counter-piracy, counter-terrorism and maritime security operations, such as Operation Manitou and air combat operations in Iraq and Syria, as well as special operations and army training in Iraq as part of Operation Okra. By 2020 the ADF’s focus had shifted to Australia’s immediate region as Middle East deployments were drawn down to minimal contributions, and in June 2021 the ADF completely withdrew the last of its personnel from Afghanistan.

The Morrison Government’s 2020 Defence strategic update emphasised that this shift was due to the region around Australia becoming ‘more competitive and contested’ and as a consequence, defence planning needed to focus on Australia’s ‘immediate region: ranging from the north-eastern Indian Ocean, through maritime and mainland South East Asia to Papua New Guinea and the South West Pacific’ (p. 6). The diverse range of the ADF’s capabilities and the work of its personnel is demonstrated by the varied nature of operational activities shown below.

Global operations

There are a number of ongoing ADF operations in the Southwest Pacific and Pacific regions:

  • Operation Solania – the ADF’s contribution to multinational activities under the Quadrilateral Defence Coordinating Group (Australia, France, New Zealand and the US) arrangements to provide maritime surveillance in the Pacific. Solania also supports other regional operations under the Pacific Island Forum Fisheries Agency (FFA) efforts to ‘detect and deter’ illegal, unregulated and unreported fishing activity using RAN vessels and RAAF maritime surveillance aircraft.
  • Operation Render Safe – involves RAN and Army explosive ordnance specialists, supported by hydrographic and amphibious ships and aircraft, ‘safely disposing of World War II-vintage explosive remnants of war’ from Pacific Island nations.
  • Enhanced Regional Engagement in the Southwest Pacific – involves the ADF increasing its presence in Pacific Island nations through activities such as combined operations, training and exercising with Pacific Island military forces and security agencies.

In the Indo-Pacific:

  • Operation Gateway – a joint RAAF and Royal Malaysian Air Force (RMAF) operation since 1981 that involves maritime surveillance patrols in the North Indian Ocean and South China Sea conducted out of RMAF Butterworth.
  • Indo-Pacific Endeavour – an annual RAN-led activity since 2017 (except for 2020 due to COVID-19 restrictions) that, at times, involved up to 1,200 personnel from all 3 services. Operating from RAN vessels in different locations each year, IPE engages in bilateral and multilateral training and capacity building with Indo-Pacific nations and has been described as ‘naval diplomacy’.

The ADF’s presence in Asia involves:

  • Operation Argos – a maritime surveillance (RAN vessels and RAAF maritime surveillance aircraft) operation to ensure UN sanctions are enforced against the Democratic People’s Republic of Korea (DPRK; North Korea). A small number of ADF personnel are also deployed to the Korean Peninsula under Operation Linesmen to assist UN Command with ‘monitoring of Comprehensive Military Agreement activities within the Demilitarised Zone’.
  • Operation Augury Global – the operational name for ADF activities countering terrorism and violent extremism – as was the case in 2017 when the ADF provided assistance to the Philippine Government fighting Daesh-aligned militants in Malawi. On 1 December 2019 Operation Augury Philippines transitioned to an Enhanced Defence Cooperation Program. At present, around 40 ADF personnel are stationed in the Middle East under Operation Augury.

The ADF still operates outside the Indo-Pacific contributing to ongoing operations such as Manitou and Accordion, peacekeeping efforts in Africa such as Aslan (South Sudan) and Mazurka (Egypt), and peacetime activities in the Antarctic under Operation Southern Discovery.

Ukraine

Defensive military assistance

On 24 February 2022 the Russian Federation invaded Ukraine. The invasion was condemned by the international community, including Australia. The ADF has not deployed any personnel to the conflict, but, like many allied nations, has sent military equipment to support the Ukrainian Government’s defence against Russia. To date around A$285 million in ‘defensive military assistance’ has been provided to the Ukrainian Government, including:

Sections within the Department of Defence that facilitated this assistance included the Australian Defence Export Office (ADEO), Defence Export Controls (DEC; which is separate to ADEO), and the International Policy Division and Capability Acquisition and Sustainment Group (CASG), which suggests appropriate oversight of arms transfer requirements and export controls under Australia’s treaty obligations. The ALP in Opposition supported all measures taken by the Morrison Government in response to the Ukrainian Government’s requests for assistance.

Prime Minister Albanese visited the Ukrainian capital Kyiv on 3 July 2022 to meet with President Volodymyr Zelenskyy. During the meeting, the Prime Minister offered further military assistance in the form of:

    • A$99.5 million in military assistance, including 14 armoured personnel carriers, 20 Bushmaster protected mobility vehicles and other military equipment supplied by Australia’s defence industry, and a contribution to NATO’s Ukraine Comprehensive Assistance Package Trust Fund. This brings Australia’s total military assistance to Ukraine to approximately A$388 million.
    • A$8.7 million (US$6 million) to assist Ukraine’s Border Guard Service to upgrade border management equipment, improve cyber security and enhance border operations in the field.
    • Duty free access for Ukrainian imports to Australia, complementing similar trade measures taken by our partners, including the UK and the EU.
    • Australia will intervene at the International Court of Justice in support of Ukraine in its case against Russia.
    • Targeted financial sanctions and travel bans on 16 additional Russian ministers and oligarchs.
    • Australia will prohibit imports of Russian gold to reduce Russia’s ability to fund its war, joining with partners, including Canada, Japan, the United Kingdom and United States.

This brings Australia’s total contribution to A$385 million. 

International support

The US-led Ukraine Contact Group met for the first time on 23 May 2022 to discuss continued military aid to Ukraine. The meeting included military chiefs from 44 nations. It is unclear if Australia was represented at that meeting, but US Defense Secretary Austin noted Australia’s contribution of howitzers to Ukraine.

By the time the third meeting was held on 15 June 2022 the membership had grown to almost 50 nations. The Ukrainian Government continues to receive an increasing amount of sophisticated weaponry from many of these nations, but without proper training this high-tech equipment can be a burden. Quoted in a recent New York Times article, an Armed Forces of Ukraine (AFU) soldier described the situation: ‘“It’s like being given an iPhone 13 and only being able to make phone calls”’. The NYT reported that soldiers are using Google Translate to read instruction manuals and watching online videos to learn how to use some complex weapons systems. However, since the Russian annexation of Crimea in 2014 a large proportion of AFU personnel received combat training from the US and other NATO militaries, which included instruction on how to use US and NATO weapons systems. In February 2022 this training moved from Yavoriv, Ukraine to Grafenwoehr, Germany. Small groups of AFU personnel continue to receive more streamlined training in Germany and other NATO countries and once proficient in the use of the new systems, return to Ukraine to train others on the equipment.

Afghanistan

The collapse of Afghanistan’s security forces

Following the complete withdrawal of foreign military forces from Afghanistan (all Australian military personnel and equipment had withdrawn by June 2021) the Taliban took control of the Afghan capital Kabul on 16 August 2021 without any resistance from the Afghan National Defense and Security Forces (ANDSF). Many questions were raised about the swift collapse of the ANDSF, despite the billions of dollars spent training and arming ANDSF personnel over the last 20 years. The US Special Inspector General for Afghanistan Reconstruction (SIGAR) was tasked with the job of explaining why the ANDSF disbanded so easily.

In May 2022 SIGAR released an interim report stating:

SIGAR found that the single most important factor in the ANDSF’s collapse in August 2021 was the U.S. decision to withdraw military forces and contractors from Afghanistan through signing the U.S.-Taliban agreement in February 2020 under the Trump administration, followed by President Biden’s withdrawal announcement in April 2021. Due to the ANDSF’s dependency on U.S. military forces, these events destroyed ANDSF morale. The ANDSF had long relied on the U.S. military’s presence to protect against large-scale ANDSF losses, and Afghan troops saw the United States as a means of holding their government accountable for paying their salaries. The U.S.-Taliban agreement made it clear that this was no longer the case, resulting in a sense of abandonment within the ANDSF and the Afghan population. The agreement set in motion a series of events crucial to understanding the ANDSF’s collapse (p. i).

SIGAR’s final report is scheduled for release around September 2022.

Deteriorating security

The UN Security Council continues to monitor the deteriorating situation in Afghanistan – human rights for women and girls, the worsening humanitarian and economic crisis and an increase in terrorist activities – and updates the mandate for the UN Assistance Mission in Afghanistan (UNAMA). The Afghan affiliate of Daesh, known as the Islamic State in Khorasan Province (ISIS-K), continue its attacks in Afghanistan, most recently killing 50 people in a Kabul mosque. Skirmishes on the Afghan–Pakistan border have also caused security concerns, coupled with reports the insurgency against the Taliban from the National Resistance Front of Afghanistan is building momentum in the Panjshir province of northern Afghanistan.

In March 2022 the head of US Central Command (US CENTCOM) warned the Senate Armed Services Committee that without sustained counter-terrorism activities in Afghanistan, violent extremist organisations (VEO) like ISIS-K ‘could establish an external attack capability against the United States and our allies in twelve to eighteen months, but possibly sooner if the group experiences unanticipated gains in Afghanistan’ (p. 9). The use of the US’s ‘over the horizon’ counter-terrorism capabilities in Afghanistan ‘remains difficult, but not impossible’. However, since the US military withdrawal, large gaps exist in intelligence collection, effectively limiting the US’s ability to target VEOs in Afghanistan (pp. 9–11).

Similarly, the report from the US Lead Inspector-General on Operation Enduring Sentinel warned:

Since the withdrawal of U.S. military forces from Afghanistan in August 2021, the DoD has pivoted to an “over-the-horizon” approach to counterterrorism in that country. Without access to military bases in neighboring countries, this new approach relies primarily on unmanned aerial vehicles operating from U.S. facilities in Doha, Qatar, to provide strike capabilities. As of the end of the quarter, the DoD had not conducted any strikes on terrorist targets in Afghanistan since its withdrawal last year (p. iv).

If the US CENTCOM’s predictions prove true, this would be a devastating outcome after the
20-year multinational mission in Afghanistan to degrade terrorist organisations and diminish the threat of global terrorism.

Domestic operations

In recent years, operational deployments not only involved missions beyond Australia’s borders, but also increasingly within. The national bushfires of 2019–20 saw an unprecedented number of ADF personnel and equipment supporting civilian emergency services under Operation Bushfire Assist 2019–20, which lasted almost 6 months. At its peak, the ADF tasked around 6,500 personnel, including 3,000 reservists under compulsory call-out orders. This was the first time the Calling out the Reserves powers were used for a national disaster (Defence Act 1903, Division 3 of Part III, subsection 28). Operation Bushfire Assist 2019–20 was considered the largest-ever mobilisation of the ADF in response to a domestic disaster. In addition, around 450 military personnel from Canada, Fiji, Indonesia, Japan, New Zealand, Papua New Guinea, Singapore and the US provided assistance (Defence annual report 2019–20, pp. 18–19; 22).

The October 2020 report released by the Royal Commission into National Natural Disaster Arrangements (chaired by former Chief of the Defence Force Mark Binskin) acknowledged the role of the ADF during the national bushfire disaster but highlighted the general public perception ‘that the ADF could assist in every aspect and was always readily available’. The report asserted that this is not the case and it is not ‘a reasonable expectation of the ADF’ (p. 187). The report summarised:

The primary role of the Australian Defence Force (ADF) is defending and protecting Australia. Although not its primary role, the ADF provides assistance, to the benefit of the nation, through its capabilities and resources during and after natural disasters. In some cases, ADF assistance is significant, such as during, and in the aftermath of, the 2019-2020 bushfires.

There appears to be a lack of understanding about the role, capacity and capability of the ADF in relation to natural disasters. The ADF does not have the capacity or capability to fight bushfires. It does, however, have unique capabilities to provide ancillary support. Understanding of ADF capabilities and processes needs to be improved to ensure that it is used effectively (p. 186).

The royal commission made 3 recommendations about the role of the ADF in responding to national natural disasters, including improving understanding of the ADF’s capabilities, a more consistent approach for ADF assistance processes in emergency planning guidelines, and ensuring legal protections for ADF members while conducting disaster response activities.

Immediately following the national bushfire disaster response the ADF was called on to assist with the COVID-19 pandemic. The ADF has been assisting federal and state and territory governments since March 2020 under Operation COVID-19 Assist.

Both the bushfire and COVID-19 assistance operations were conducted under Defence Assistance to the Civil Community (DACC) arrangements (also see National emergency and disaster response arrangements in Australia: a quick guide). The Department of Defence updated and released the DACC Manual in August 2020. According to the Defence annual report 2020–21 the manual was updated ‘to better align Defence with a proactive, integrated whole-of-government approach to planning, preparing for, and responding to natural disasters’ (p. 27).

The ADF continues to contribute around 600 personnel from all 3 services to Operation Resolute as part of the whole-of-government border protection efforts. ADF assets from all 3 services, along with Australian Border Force (ABF), ‘conduct civil maritime security operations’ in relation to illegal maritime arrivals; maritime terrorism; piracy; robbery and violence at sea; and biosecurity (ensuring there is no illegal activity or exploitation of protected areas and natural resources).

The recently identified Operation Dyurra involves the ADF’s space operations in support of broader military operations. Dyurra has been integrated with the US-led Operation Olympic Defender, which also involves Canada, France, Germany, New Zealand and the UK. The US Department of Defense describes the purpose of Olympic Defender as being ‘to strengthen deterrence against potentially hostile actors in space and prevent the spread of debris in space’.

Defence policy

The principal method by which the Australian Government sets out Defence policy to the Australian people is by the publication of Defence white papers. These have been published in 1976, 1987, 1994, 2000, 2009 and 2013, but the most recent Defence white paper was published during 2016 and updated in the 2020 Defence strategic update. The DSU was accompanied by the 2020 Force structure plan, which set out the new and adjusted capability investments necessary to implement defence planning under the DSU.

The 2020 DSU is therefore the most recent statement of the Australian Government’s view of Australia’s strategic situation and military requirements. This statement was delivered with what the Australian Strategic Policy Institute called a ‘new directness’. The DSU is certainly blunt:

Our region is in the midst of the most consequential strategic realignment since the Second World War, and trends including military modernisation, technological disruption and the risk of state-on-state conflict are further complicating our nation’s strategic circumstances (p. 3).

It further states that ‘strategic competition, primarily between the United States and China, will be the principal driver of strategic dynamics in our region’ and notes the growth of great power assertiveness ‘including China’s active pursuit of greater influence in the Indo-Pacific’ (p. 11). The war in Ukraine, while not in Australia’s region, has reinforced the sense that the global strategic environment is destabilising, and that Australia must be prepared for potential conflict.

The DSU articulates a further concern that relates to its assessment of the strategic situation:

Previous Defence planning has assumed a ten-year strategic warning time for a major conventional attack against Australia. This is no longer an appropriate basis for defence planning. Coercion, competition and grey-zone activities directly or indirectly targeting Australian interests are occurring now. Growing regional military capabilities, and the speed at which they can be deployed, mean Australia can no longer rely on a timely warning ahead of conflict occurring (p. 14).

As International Institute for Strategic Studies (IISS) Shangri-La Dialogue Senior Fellow Euan Graham wrote when the DSU was released:

There is a seriousness and urgency to these documents, underlined by the abandoning of a ten-year ‘strategic warning time’ that hitherto served as the basis for Australia’s defence planning. The defence force that emerges as a result of these adjustments may be the one that Australia has to go to war with.

The DSU emphasised that the changing ‘nature of current and future threats – including coercion in the region, more capable and active regional military forces, and expanding anti-access and area denial capabilities – requires Defence to develop a different set of capabilities’ (p. 27). These capabilities will include longer range strike weapons and increased cyber capabilities (the 2022–23 Budget included significant additional funding for offensive cyber capabilities) and area-denial systems. The DSU also stated the need to increase the ADF’s ‘self-reliant ability to deploy and deliver combat power and reduce its dependencies on partners for critical capability’. This would be achieved by increasing the type and quantity of weapons stocks held by the ADF while also investing in other measures such as ‘sovereign manufacturing capabilities for advanced guided weapons and explosive ordnance and expanding ADF fuel storage capacity’ (p. 40).

As noted above in the section on operations, the ADF’s operational activities focus on Australia’s ‘immediate region’. Manifestly, this is a very large region and the DSU stresses the need for defence planning to expand regional cooperation to help ensure that Australia’s access to the region is not constrained (p. 26). To assist with defence planning, the new Albanese Government is expected to conduct a Defence Force Posture Review designed to:

… ensure the Australian Government is considering both long-term strategic posture, and whether Australian defence units, assets and facilities are prepared for the military to take action in a timely way amid a deteriorating strategic situation. 

The last force posture review was completed by Allan Hawke and Ric Smith in 2012 in the lead-up to the Gillard Government’s 2013 Defence white paper. A force posture review involves a strategic assessment of the geographic positioning of Australia’s Defence. This is a separate process to a force structure review, which is undertaken within the Department of Defence as a force design tool to align strategy, resources and capability with future force requirements. The outcomes of force structure reviews are usually not published; however, the 2020 Force structure plan provides an example of how force design is translated into policy. Other relevant Turnbull–Morrison Government era defence policy documents include:

While there is yet to be a public announcement about the commissioning of the Force Posture Review and who will lead it, the Albanese Government has stated that the outcome of the review is expected to be delivered in early 2023.

AUKUS

On 16 September 2021 the leaders of Australia, the UK and the US announced the formation of ‘an enhanced trilateral security partnership called “AUKUS”’. There are 2 streams of work under AUKUS. The first is the acquisition of 8 nuclear-powered (not nuclear armed) submarines for the Royal Australian Navy (RAN) – an announcement that effectively cancelled the Attack Class submarine program with Naval Group (France).

In making the announcement, Prime Minister Scott Morrison stressed that Australia was not seeking to acquire nuclear weapons nor establish a civil nuclear industry, and would continue to meet its nuclear non-proliferation obligations. Mr Morrison also stated that the nuclear-powered submarines are expected to be built in South Australia ‘within the decade’.

The second stream of work relates to advanced capabilities, including:

  • advanced cyber capabilities
  • artificial intelligence and autonomy
  • quantum technologies
  • undersea capabilities.

In September 2021 the Nuclear Powered Submarine Taskforce (NPST) was established to identify ‘the optimal pathway’ for Australia’s acquisition of 8 nuclear-powered submarines over a period of 18 months (March 2023). The NPST involves specialists from multiple agencies: the Department of Defence; Department of Foreign Affairs and Trade; Attorney-General’s; the Department of Education, Skills and Employment; the Australian Nuclear Science and Technology Organisation (ANSTO) and the Australian Radiation Protection and Nuclear Safety Agency (ARPANSA).

AUKUS is not a security alliance in the same vein as ANZUS, nor is it a partnership like the Quadrilateral Security Dialogue (the Quad; involving Australia, India, Japan and the US). ASPI’s Michael Shoebridge described it as a ‘trilateral technology accelerator between the governments of the three nations with a ruthless focus on increasing the military power of each of our militaries…’ for the purpose of national security (p. 4).

AUKUS is very much in its earliest stages. On 8 February 2022, the Exchange of Naval Nuclear Propulsion Information Agreement (ENNPIA) came into force allowing trilateral information-sharing on nuclear propulsion. The ENNPIA allows Australian personnel to receive training from UK and US counterparts on building, operating and supporting nuclear-powered submarines. The Joint Standing Committee on Treaties (JSCOT) supported Australia’s ratification of the ENNPIA and is expected to review subsequent AUKUS agreements.

On 7 March 2022 the Morrison Government announced that in order to support the nuclear-powered submarines, a new submarine base would be established on Australia’s east coast (this would be in addition to the RAN’s existing submarine homeport at HMAS Stirling in WA). Out of 19 potential sites reviewed by the Department of Defence, 3 were identified as preferred locations: Brisbane, Newcastle and Port Kembla. These locations were determined based on ‘access to exercise operating areas, proximity to industrial infrastructure, and significant population centres to support personnel and recruitment’. A deadline of the end of 2023 was established for ‘initial work’ to be completed.

An official fact sheet released in April 2022, following the AUKUS leaders-level meeting, noted progress on the implementation of AUKUS and the inclusion of 4 additional areas in the advanced capabilities stream: hypersonic and counter-hypersonic capabilities; electronic warfare; innovation; and information sharing. As the trilateral partnership matures it is anticipated that ‘allies and close partners’ will be engaged as appropriate.

Speaking at the Shangri-La Dialogue in Singapore on 11 June 2022, the new Minister for Defence Richard Marles reaffirmed the Albanese Government’s commitment to AUKUS:

AUKUS – which Labor supported in Opposition – will be central. It will not only deliver nuclear-powered submarines for Australia, but also guide accelerated development of advanced defence capabilities where they have most impact, such as quantum technology, artificial intelligence, undersea warfare, hypersonics and counter-hypersonics.

Until the work of the NPST is completed it is difficult to predict the potential costs of the nuclear-powered submarine program. ASPI has calculated an out-turned cost of between $116 billion and $129 billion for the ‘most efficient build’ option to between $153 billion and $171 billion for a drawn-out process that includes ‘a continuous build cycle’. However, ASPI caveats these figures by emphasising this is ‘assumption-rich territory’ (p. 67).[2]

One other ramification of Australia’s decision to acquire nuclear-powered submarines will be the need to grow, from a very low base, a workforce with the necessary nuclear science expertise and engineering skills to operate and maintain nuclear technology. As a step down this path the Morrison Government announced in December 2021 the creation of more than 300 Defence Nuclear Science and Engineering Scholarships over the next 5 years.

The new Government has also promised to create the Australian Strategic Research Agency (ASRA) to ‘boost Australia’s involvement in technology sharing and research and development’ under AUKUS. The proposed ASRA would be modelled on the US’s Defense Advanced Research Projects Agency (DARPA).

Defence capability

Decisions around Defence capability follow Defence’s capability policy framework (pp. 1–2). The Defence Capability Manual describes the One Defence Capability System (formerly known as the Defence capability life cycle) which involves four phases that ‘connect Government’s priorities through to prepared forces that are available to be committed to operations. At any point in time, individual capabilities will be at different stages of maturity across the four phases’ (p. 5).

Figure 6 illustrates the four phases of the One defence capability system (ODCS).

Figure 6    One defence capability system

Info graphic - One defence capability system

Source: Department of Defence (Defence), Defence capability manual, (Canberra: Defence, 3 December 2021), 6.

Details of all 4 phases and areas of responsibility are outlined in the Defence capability manual. Capability proposals are usually subjected to a rigorous process (including contestability) involving key decision gates by the Investment Committee and consideration by government, known as passes (pp. 39–40).

Gate 0 involves consideration of a business case by the Investment Committee for a proposed capability. If approved, the proposal progresses to the next gate, or in some cases, is accelerated to gate 2.[3]

Gate 1 develops a more detailed proposal, which is again considered by the Investment Committee. If approved, the committee recommends the proposal proceeds to government for consideration. If the proposal is approved by government (known as First Pass approval) the proposal will progress to Gate 2. First Pass approval of a Gate 1 proposal does not commit the government to acquire a specific capability, but allows for further investigation to progress the proposal to Gate 2, along with any recommendations from government.

A Gate 2 proposal includes detailed planning and capability requirements, such as whole-of-life cost and schedule estimates, risk assessments, workforce planning, and Australian industry participation. The Investment Committee considers the detailed proposal, which will either be recommended for government consideration and approval (known as Second Pass approval) or referred back to the action area for further refinement. Second Pass approval provides Defence with the approval to commence an acquisition process.

Some projects that are considered low risk might bypass the First Pass approval stage and progress directly to Second Pass – commonly referred to as Combined Pass (p. 41).

Transparency and accountability

Defence project funding is incorporated into Defence’s Portfolio budget statements for approval by the Parliament through the appropriations process. The progress of some of Defence’s most expensive equipment acquisition projects is regularly assessed by the Australian National Audit Office. Each year since 2007–08 the ANAO has produced a major project report (MPR) following a performance audit of a select number of Defence’s major equipment acquisitions. The most recent MPR was published in December 2021 and included 21 major projects worth $58 billion in total. The MPRs are reviewed by the Joint Committee of Public Accounts and Audit (JCPAA). The Senate Estimates process also provides the Parliament with an opportunity to question officials about Defence capabilities.

Major capability acquisition projects

The following projects have been used to highlight some of Defence’s major capability projects. This is not a comprehensive list as there are too many projects to include. As at 30 June 2021 the Capability Acquisition and Sustainment Group (CASG) within Defence was managing 161 government-approved major acquisition projects worth $121.6 billion and 109 sustainment products (maintaining and supporting Defence equipment, systems and platforms) at a cost of around $7.7 billion (2020–21 Defence annual report, p. 38).

Defence projects are generally categorised by battlespace domain:

  • Air includes air defence systems, early warning and control systems, rotary and fixed-wing aircraft, over-the-horizon radar and remotely piloted aircraft systems.
  • Land includes battle command systems, counter improvised explosive device capability, aviation and field fire trucks, vehicles and trailers, geospatial support and weapons.
  • Maritime (maritime) includes naval vessels, weapons and missiles systems and rapid environment assessment capability.
  • Information and cyber capabilities are mostly classified but include offensive cyber capabilities for the Australian Signals Directorate, such as project REDSPICE, which stands for resilience, effects, defence, space, intelligence, cyber and enablers.
  • Space is still a relatively new domain for Australia (Space Command was stood up in January 2022 as a joint capability within the RAAF) but the last Defence budget included one space capability project, which is to protect military satellite communications (p. 111).

Some capabilities are categorised as Joint, such as mine warfare capabilities; aviation fuel vehicles; communications and surveillance; and amphibious deployment, while others are minor projects.

There are various acquisition methods available to Defence for major capability purchases. For instance, Foreign Military Sales (FMS), Direct Commercial Sales (DCS), government-to-government cooperation agreements and cooperative programs, just to name a few.

Some examples of recent procurement announcements include:

  • AGM-88E2 anti-radiation missiles (used to detect and target radio emission sources) and related equipment for use in the RAAF’s EA-18G Growler fighter aircraft. The estimated cost is US$94 million with no offsets requested. Once the FMS is approved by Congress, Northrop Grumman Information Systems will deliver the capability (21 June 2022).
  • HIMARS (High Mobility Artillery Rocket Systems) Launchers and related equipment for the Australian Army at an estimated cost of US$385 million. The prime contractors will be Lockheed Martin in the US, Chelton Inc. in the UK and L3 Harris Corp. in Australia. Offsets were requested by Australia (26 May 2022). 
  • three prototype Extra Large Autonomous Undersea Vehicles (XLAUV) will be designed, developed and manufactured under a co-funded program involving the RAN, the Defence Science and Technology Group and Anduril Australia within 3 years (5 May 2022).
  • Raytheon Australia and Lockheed Martin Australia were announced as strategic partners for the $1 billion sovereign guided weapons and explosive ordnance enterprise (5 April 2022) – this is one of 8 defence enterprise programs identified in the 2020 Force structure plan, p. 82.
  • ‘Accelerated acquisition’ of $3.5 billion worth of missile strike capabilities: Joint Air-to-Surface Standoff Missile Extended Range (JASSM-ER) for the RAAF’s F/A-18F Super Hornet and ‘in future the F-35A Lightning II’ Joint Strike Fighter aircraft; Kongsberg’s Naval Strike Missile (NSM) capability will be installed in the RAN’s Anzac Class frigates and Hobart Class destroyers from 2024; and ‘maritime mines to secure Australia’s ports and maritime approaches’ (5 April 2022).
  • 24 uncrewed aerial surveillance (UAS) systems made by Boeing’s Insitu Pacific in Queensland for the Australian Army (11 March 2022).
  • Main Battle Tank Upgrade (LAND 907 Phase 2) and Combat Engineering Vehicle (LAND 8160 Phase 1) projects for the Australian Army worth $3.5 billion (10 January 2022).
  • Self-Propelled Howitzers and Armoured Ammunition Resupply Vehicles for the Australian Army made by Hanwha Defense Australia (Republic of Korea), based in Geelong. The contract is worth around $1 billion (13 December 2021).

A large proportion of Defence’s major capability acquisitions require very long lead times – in some cases years, in other cases decades. Examples of some of Defence’s top 30 capability acquisition projects are:

  • 72 F-35A Lightning II aircraft are in the process of being acquired via a Cooperative Partnership with the US Government. So far, 48 aircraft are in service with the RAAF and are now being managed by CASG as a sustainment product. A further 15 aircraft are expected in Australia by June 2023 (2022–23 PBS, p. 113). Final Operational Capability for the entire F-35A program (known as AIR 6000 Phase 2A/2B) is scheduled for December 2023. The current total approved budget is $17.5 billion (2022–23 PBS, p. 101). For background on the F-35A program, see the Library’s July 2012 publication, The Joint Strike Fighter: overview and status.
  • Four MC-55A Peregrine (AIR 555 Phase 1) long-range electronic warfare aircraft, ‘including mission, ground and support systems, and Australian based facilities’ (18 March 2019). This project is mostly a developmental FMS acquisition through the US Air Force and is worth around $2.6 billion (2022–23 PBS, p. 102).
  • 14 P-8A Poseidon (AIR 7000 Phase 2) crewed maritime surveillance aircraft and 7 MQ-4C Triton (AIR 7000 Phase 1B) uncrewed aircraft systems are being procured for the RAAF under a cooperative program with the US Navy. To date the RAAF has 12 P-8A Poseidons in service with the final 2 expected in 2024–25. Three MQ-4C Tritons have received Second Pass approval – the next tranches of aircraft and support systems to be subsequently considered by government. The current total approved budget for the P-8A is around $6.57 billion and almost $2.5 billion for the Triton (2022–23 PBS, p. 102).
  • 211 combat reconnaissance vehicles (CRV) are being acquired for the Army under LAND 400 Phase 2 with a total approved budget of around $5.7 billion (2022–23 PBS, p. 106). In September 2019 Rheinmetall (Germany) was awarded the contract to ‘assemble’ its Boxer CRVs in Australia. The first 25 CRVs were assembled in Germany, with the remaining vehicles to be assembled at Rheinmetall’s Military Vehicle Centre of Excellence facility in Redbank, Queensland. Delivery of the first Australian-built Boxer CRV is expected in 2023–24.
  • Project Overlander (LAND 121 Phase 4) involves the delivery of 1,098 Protected Mobility Vehicles – Light (Hawkei) and 1,058 companion trailers. Thales (France) was awarded the contract in October 2015, with the vehicle design and build to take place in Bendigo, Victoria. The delivery in tranches of Hawkeis to Defence commenced in 2016 and was expected to be completed by the end of 2021. In 2018 two Hawkeis deployed to Iraq on operations. Initial Operational Capability was reached in July 2021 and Final Operational Capability is scheduled for 2023. This project has a total approved budget of $1.96 billion (2022–23 PBS, p. 107).
  • 12 Offshore Patrol Vessels (OPV) are being built for the RAN in Australia under prime contractor Luerssen (Germany) at Australian shipyards in Osborne, South Australia and Henderson, Western Australia. The first OPV, NUSHIP Arafura, was launched on 16 December 2021. The project has a total approved budget of around $4.6 billion (2022–23 PBS, p. 109).

Recently cancelled projects

Attack Class

An immediate consequence of the Morrison Government’s decision to acquire nuclear-powered submarines as part of the AUKUS agreement was the cancellation of the Attack Class submarine program.

On 11 June 2022, the Albanese Government announced it had reached an agreement with Naval Group about the termination of the Attack Class submarine program. The media release stated that the agreed settlement amount was approximately A$830 million. This is in addition to the 2022–23 Defence portfolio budget statement’s estimation of expenditure of A$3.2 billion.

For further information about the Attack Class program from its inception in the 2009 Defence White Paper until 2020, see the Parliamentary Library’s overview, Managing SEA 1000: Australia’s Attack class submarines.

Sky Guardian

The Royal Australian Air Force’s Project AIR 7003 SkyGuardian, which was first announced in November 2019, would have provided Defence with remotely operated strike capability. SkyGuardian was described by Defence as:

… an armed Medium Altitude Long Endurance Remotely Piloted Aircraft System which will provide Defence with a persistent airborne Intelligence, Surveillance, Reconnaissance, Electronic Warfare and precision strike capability.

It was revealed in a 2022 Senate Estimates hearing that this project has been cancelled. Currently, defence does not operate an armed remotely piloted system and the decision to cancel a project that would have resulted in the acquisition of one was criticised by some commentators. In response to the criticisms, Defence stated:

The Australian Government has made the hard decision to prioritise resources in response to the complex and challenging strategic environment we face.

While the MQ-9B SkyGuardian provides an excellent capability system, tough decisions are required to optimise the ADF force structure for the current strategic environment. Defence continues to progress multiple strike and intelligence, surveillance and reconnaissance capabilities such as MQ-4C Triton and MC-55A Peregrine aircraft, Apache helicopters, MQ28-A Ghost Bat and alternative long-range precision strike options.

Submarine escape and rescue system (SEA 1354 Phase 1)

The 2016 Integrated investment program anticipated that the acquisition schedule of project SEA 1354 Phase 1 – Submarine escape rescue and abandonment systems would take from 2016 to 2024 and cost around $400 million to $500 million (pp. 77; 90). In March 2019 Phoenix International was awarded a $255 million contract for the acquisition phase of this project. However, by June 2020, according to the Capability acquisition and sustainment: quarterly performance report, SEA 1354 Phase 1 had been declared a project of interest (accessed via FOI, pp. 18; 25 and 69–­70).

In January 2021, the Department of Defence cancelled the contract with Phoenix International Australia for the supply of a deployable submarine rescue system. During a March 2021 Senate Estimates hearing, Greg Sammut (General Manager, Submarines) from the Department of Defence stated that a review of the project had led to the decision to terminate the project:

It was to terminate by mutual agreement. I would summarise the outcomes of the review as: a material difference was identified in the interpretation and expectations between Defence and Phoenix that were compromising the execution of the project and contributing to the ongoing delays. That material difference was seen as also getting us to a position where it was preferable to terminate by mutual agreement rather than endeavouring to try to deliver the project (p. 135).

Defence stated that, as at 31 January 2022, the total program expenditure for SEA 1354 Phase 1 was $108 million and that $86 million of this had been paid to Phoenix International against the contract.

With the cancellation of this project, concerns were raised about the RAN’s existing submarine escape and rescue capabilities, which are provided by James Fisher Defence (JFD) using the LR5 system. In addressing concerns about submariner safety, the then Navy Chief, Michael Noonan, asserted that the existing submarine escape and rescue contract provides ‘services for all likely scenarios and operational areas under which submarine rescue would be performed’. Vice Admiral Noonan also pointed out that Australia is a member of ISMERLO (International Submarine Escape and Rescue Liaison Office), which facilitates submarine rescue support globally. In November 2014, JFD was awarded a 5-year contract for the provision of submarine rescue services to the RAN, with the option to extend until 2024. In February 2020 this contract was extended to December 2023 ‘with an option to further extend to November 2024’.

Tiger and MRH-90 helicopter programs

During December 2021 the Government announced that it was scoping the acquisition of
40 UH-60 Black Hawk helicopters to replace the Australian Army’s 40 MRH-90 Taipan helicopters. The Taipan multi-role helicopter was acquired to replace the RAN’s Sea King helicopters and the Army’s Black Hawk helicopters and was expected to remain in service until 2037. However, persistent technical difficulties, rising costs and delays resulted in the aircraft being deemed ‘inefficient, expensive and unreliable’ by the Government.

The Parliamentary Library publication, MRH-90 Taipan helicopter: a quick guide, covers this topic in greater detail.

The Tiger Armed Reconnaissance Helicopter (ARH) had also experienced problems with availability and the 2016 Defence white paper stated that the Government would ‘replace the 22 Tiger Armed Reconnaissance helicopters with a new armed reconnaissance capability from the mid-2020s’. The accompanying Integrated investment program expanded on this:

The Tiger has had a troubled history – essential upgrades are programmed to maintain the capability’s effectiveness. Defence will invest in a future armed reconnaissance capability to replace the Tiger, which could include manned or unmanned systems or a combination of both, to be introduced from the mid-2020s (p. 14).

During January 2021 the Minister for Defence announced that the Boeing Apache Guardian would replace the Tiger ARH from 2025:

By pursuing a proven and low-risk system offered by the Apache, Defence will avoid the ongoing cost and schedule risk typically associated with developmental platforms.” Lessons learnt from issues with the ARH Tiger and other rotary wing projects had informed the strategy to seek a proven, mature ARH replacement capability.

Delayed projects

Hunter Class frigates (SEA 5000)

The Hunter Class frigate project has experienced delays that have put construction of the vessels 18 months behind schedule and the launch of the first ship back to 2031. In turn, this will probably mean that Initial Operational Capability (IOC) will not occur until 2033. The project has also seen significant cost increases.

The 2009 Defence white paper stated the Government’s intention to acquire 8 new ‘future frigates’ to replace the current Anzac class vessels (p. 71). The Future Frigates would have a strong focus on submarine detection and be able to embark both combat helicopters and unmanned aerial vehicles. During April 2016 the Prime Minister and the Minister for Defence announced:

First pass approval for the Future Frigates. Three designers - BAE Systems with the Type 26 Frigate; Fincantieri with the FREMM Frigate, and Navantia with a redesigned F100 - have been short-listed to refine their designs.

This announcement also stated that the 3 shortlisted companies would provide designs for consideration by the Government and that second pass approval would take place during 2018, with construction to begin in 2020.

On 29 June 2018 the Australian Government announced that BAE Systems was the winner of the tender process to design and build the Future Frigate, which would be known as the Hunter Class.

The delays have led to calls for alternatives to be considered as either interim measures or outright replacements.

LAND 400 phase 3

Project LAND 400 Phase 3 involves the acquisition of 450 infantry fighting vehicles to replace the Army’s ageing M113 Armoured Personnel Carriers. The project’s initial cost range was between $18.1 billion and $27.1 billion.

The Turnbull Government provided First Pass approval for the project in March 2018. Defence then issued a request for tender in August 2018, which closed in March 2019. In September 2019 2 companies, Hanwha (Republic of Korea) and Rheinmetall (Germany), were shortlisted for the next evaluation phase. Both companies have established subsidiaries in Australia: Hanwha in Geelong, Victoria and Rheinmetall in Redbank, Queensland.

Both companies participated in a 2-year Risk Mitigation Activity that concluded in October 2021. A decision from government on the successful contractor for this project was rumoured for announcement during March 2022, but to date no such announcement has been made. A June 2022 media report suggested both contenders had been approached by Defence prior to the May 2022 election to resubmit their bids for fewer vehicles. Further delays are expected as the Albanese Government considers the options in line with budget pressures.

Sustainment

Collins class submarine maintenance

Defence’s largest and most expensive sustainment product is the ongoing maintenance and upgrade of the RAN’s Collins class submarine fleet. Commonwealth-owned ASC is contracted to provide in-service support for the Collins class submarines (CCSM) at 2 locations: Osborne North, South Australia and Henderson, Western Australia. The most complex submarine maintenance activity is full-cycle docking (FCD) which takes around 2 years to complete and involves the complete refurbishment of the submarine and selected critical equipment. The CCSM’s planned life-of-type-extension (LOTE) work, approved by the Gillard Government in 2012, is expected to occur during each individual boat’s FCD, starting with HMAS Farncomb in 2026.

Over the last few years, questions arose about whether the ASC’s FCD capability, along with the LOTE work, would move from Osborne North to Henderson. When AUKUS was announced in September 2021 the Morrison Government confirmed the FCD capability would remain in South Australia. The overall cost of FCD and LOTE work is expected to reach $6.4 billion. The 2022–23 Portfolio budget statements included the LOTE in the top 30 sustainment products, with an estimated budget of $104 million for 2022–23 (p. 119).

Defence industry

For the first time there are publicly available metrics on Australia’s defence industry, courtesy of a collaboration between the Australian Bureau of Statistics and the Department of Defence. This collaboration produced the Australian Defence Industry Account (ADIA). The ADIA aims to measure the ‘direct economic contribution of Defence expenditure to the Australian economy in terms of Gross Value Added (GVA) and employment’. The results of the ADIA feasibility study were released in December 2021. The study showed that from financial years 2015–16 to 2019–20 the GVA increased from $6.42 billion to $9.72 billion and the estimated employment from Defence expenditure increased from 57,000 to 80,000 employees. Of note, these figures do not include ‘high value contracts based on imports’ and only measure contracts directly between Defence and a given business entity. The comprehensive ADIA is expected to be launched in the second half of 2022.

The Albanese Government plans to develop a Defence industry development strategy and under its proposed Buy Australian Plan, would also seek to ‘strengthen defence industries and capability’.

Parliament’s consideration of defence issues

The structure of the Australian Parliament provides several avenues for scrutiny of Defence activities (in addition to the Bills process), including:

 

[1].    These figures are based on full-time equivalent positions. In July 2019, Defence began an internal process of tracking the size of its external workforce via a biannual census. Defence officials noted at the Senate Committee hearing on 25 June 2021 that the census timetable would change to an annual census. The census results from July 2019 and March 2020 were released under freedom of information in September 2020 and the March 2021 figures were provided in the 25 June 2021 testimony during the Senate Estimates hearings for Defence. The results from September 2020 (not included in this table) and March 2022 were provided to the Australian Strategic Policy Institute along with revised figures from those originally provided in the FOI response for March 2020.

[2].    The ANAO explains out-turning: ‘When considering and approving budgets, the Government takes into account the estimated impact of inflation over the life of a project which is known as ‘out-turning’. At the time of project approval, project managers estimate the impact of indices tendered (or estimated) for the life of the project. These estimates are built into the project budget as part of the out-turning process, which are revised as part of each budget review and update process’. Australian National Audit Office (ANAO), Major Projects Report 2017–18: Department of Defence, Audit report, 20, 2018–19, (Canberra: ANAO, 2018), 71.

[3].    The Investment Committee is one of 11 enterprise committees within the Department of Defence. It is chaired by the Vice Chief of the Defence Force and is responsible for the implementation and delivery of the Integrated Investment Program (linked is the public version. The classified version is based on a rolling program that is updated biannually then reviewed by government in line with the budget cycle).

 

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