The headline figures show that Defence is on track to spend 1.93 per cent of GDP (once again, thanks to Dr Marcus Hellyer at ASPI for his spreadsheet-generated insights) with $38.7 billion commitment to the portfolio. This puts the government on track to meet the much-vaunted two per cent target by 2020-2021.
However, given the ramp up to meet that target, the last step in the final year of forward estimates is a doozy, asking Defence to double the spending profile from the previous year.
If the ministerial release attached to the Budget is to be taken as gospel, there has never been a better time to be in Defence. The political narrative this year centred around global engagement via deployments/operations and delivering on the $200 billion spending plan outlined in the 2016 White Paper and related documents.
Since the release of the last Budget, some headline programs have hit significant milestones. These include:
- the Strategic Partnering Agreement for the Attack class submarines has been signed and construction work by Australian Naval Industries (the infrastructure part of the old ASC business) on the new yard has begun.
- the head contract for the Future Frigate has been signed with BAE Systems Australia. ASC Shipbuilding has been transferred from the Commonwealth to BAE Systems for the life of the program. ANI, at the time of the Budget release, is also 40 per cent through the construction of the yard to support the construction of the Hunter class.
- Phase 2 of Land 400 for 211 Boxer Combat Reconnaissance Vehicles from Rheinmetall Defence Australia.
- confirmation of the first two Triton RPAs by Cabinet, with another four or five still to be confirmed.
- additional materiel for Soldier Systems.
- first tranche of the Defence Fuel Transformation Program approved.
- the first of the Arafura class has had her keel constructed in Adelaide
- acquisition of the MC-55A Peregrine EW aircraft confirmed
- the update of the Special Purpose Aircraft fleet (more commonly known as the VIP fleet) with Falcon 7Xs was also confirmed the day of the Budget by ADM’s Deputy Editor Nigel Pittaway.
The exact value of these milestones is hard to pin down, even with the release of the Budget papers, as a distinction between dollars committed and dollars spent is not clear.
ADM Comment: The Defence Budget contains very few surprises to those that live and breathe Defence. Big programs are hitting milestones, mid-size programs are moving along, and minors are progressing. There are of course pockets where those outside Russell or Parliament House have very little insight into how the vast majority of programs are performing or what the horizon looks like in any detail.
As the ANAO noted in a recent report, the Projects of Concern framework has all but been neglected to the point of atrophy. As I have opined with alacrity for literally years now, the IIP does not provide the level of detail that the old Defence Capability Plans did, making it hard to measure performance on a number of fronts. It was also a bible for project numbers.
The Budget Portfolio Statement is now the only public document that provides a list of the Top 30 Acquisition and Sustainment projects, complete with these numbers. But there are many more projects on the books than those listed in this document.
One of the big holes in the Budget papers is related to ICT programs.
Chief Information Officer Group spending under the ICT Investment Plan is due to hit the $2 billion mark annually in the outer years of the forward estimates, combining acquisition and sustainment. But on what? How? Why? So many questions and not enough answers.
When asked on the hole and why no ICT programs appear in either Top 30 list, Defence Finance officials commented that the ICT programs are usually short in nature, not materiel-related unlike the other Defence programs, has to have gone through 2nd pass approval and it’s not core business.
That argument rings hollow to me. Take Centralised Processing (CP) or Next Generation Desktop for example; running at well over $1 billion in spending across more than five years, it is a key enabler to Defence’s core business.
With some big ICT programs in the pipeline (ERP/EIM) it would be good to see this oversight addressed in future Defence Budget Portfolio Statements. With so much money going into this space, more detail needs to be provided.
Less money is spent on infrastructure and estate, another key enabler, but the information and the granularity available is beyond sufficient for all but the most economically minded of nerds.
The current government has set Defence on an excellent course in terms of funding and planning priorities.
But this is an election year and a change of government is a very real possibility.
Changing the direction of the behemoth that is Defence is possible but it would upset a lot of apple carts given the long term nature of the raft of programs on the books.