• Credit: Pixabay
    Credit: Pixabay

The Labor government plans to spend $48.699 billion on defence this financial year, in line with the funding trajectory established by the former Coalition government.

But it is holding fire on further initiatives, pending consideration of the new Defence Strategic Review early next year. That will inform decisions, ensuring Defence is prepared and equipped to shape our strategic environment, deter actions against our interests and respond with credible force when required, the government says.

Defence Minister Richard Marles said the 2022-23 Budget delivered on election commitments and reinforced Defence’s readiness and capability to support our nation and promote stability and prosperity in our region.

“As we face the most challenging geopolitical circumstances since the Second World War, the Albanese Government is committed to properly managing every dollar of defence spending, and ensuring Defence can deliver the capabilities ADF personnel need, when they need them,” Minister Marles said.

The government made just two specific funding announcements; $5.1 million for research and development of biofuels to support renewable fuel production; and $32.2 million for the North Queensland Spark Training Facility in Townsville.

This is Australia’s second budget in under a year, with the first delivered by the Coalition in March ahead of the May 21 election when Labor returned to office after most of a decade in opposition.

Despite global turbulence, a succession of natural disasters and inflation, Australia remains in relatively good order. High employment and commodity prices have boosted revenue, allowing the government to better than halve the deficit to $36.9 billion in 2022-23.

However, Treasurer Jim Chalmers warned that Australia could not completely escape the impact of global turbulence.

Budget papers show the consolidated defence funding, which includes funding for the Australian Signals Directorate, rises to $52.162 billion in 2023-24, $54.232 billion in 2024-25 and $56.554 billion in 2025-26.

Because of the rise in Gross Domestic Product (GDP), defence funding as a percentage of GDP has actually gone backwards, falling from 2.11 per cent in March to 1.96 per cent now.

Budget papers reveal some interesting developments. Since most foreign acquired defence equipment comes from the US and the Australian dollar has declined substantially against the greenback, foreign exchange variations are hurting – more than $2.8 billion out to 2025-26.

However, the government does make up defence forex losses. On the same basis, Defence can’t keep any forex gains.

The former government outlined big plans to expand the ADF but budget papers show a small step backwards since March – 59,803 in the ADF permanent force against an estimate of 59,862. Estimates of personnel numbers across the next four years remain unchanged.

The Defence Portfolio Budget Statements list the top 30 defence acquisition projects and there are some interesting newcomers.
The MQ-28A Ghost Bat makes its debut in project DEF 6014 Phase 2, with Defence set to acquire an addition seven aircraft, making a fleet of 10. Total approved budget is $452 million, with $220 million to be spent in 2022-23 to stand up production of the aircraft. Ghost Bat, formerly Loyal Wingman, is a joint project of the ADF and Boeing to develop an advanced pilotless combat aircraft with fighter-like performance.

Also making its debut is project Land 8116 to acquire Hanwha's Huntsman self-propelled artillery, along with ammunition resupply vehicles and weapon locating radar. The total project budget is $1.3 billion, with $244 million to be spent in 2022-23.

Under project Land 4503 Phase 1, the Army’s Airbus Tiger Armed Reconnaissance Helicopters will be replaced by a fleet of 29 US AH-64E Apaches, at a total project cost of $4.225 billion, with $120 million to be spent in 2022-23. Apache deliveries are expected to start in third quarter 2025. Budget papers show 1500 flying hours for Apache in 2025-26.

Under project Sea 3033 Phase 5, the Navy is acquiring an Undersea Support Vessel at a cost of $155 million. Budget papers say this vessel, of unspecified size, will support trials and integration of undersea warfare and surveillance systems. This vessel will also host small teams and onboard and offboard optionally crewed, uncrewed and autonomous systems.

Defence’s largest procurement program continues to be project Air 6000 New Air Combat Capability to acquire a fleet of 72 Lockheed Martin F-35A Lightning Aircraft. So far, 54 have been delivered. Total budget is $16.244 billion, with $10.743 billion spent to date and $976 million to be spent in 2022-23. Final Operational Capability is scheduled for December 2023.

Australia is providing a total of $213.3 million assistance to Ukraine following the invasion by Russia. Of that, $185.6 million is defence aid, mostly in kind in the form of Bushmaster Protected Mobility Vehicles, M-113 armoured personnel carriers, lightweight towed howitzers and other equipment. Australia is also contributing to NATO’s Ukraine Comprehensive Assistance Package Trust Fund.

Defence is absorbing $98 million of the assistance to Ukraine from its own funding.

The budget includes some sweeteners for current and former defence personnel. The Government will provide $46.2 million over four years and $17.8 million per year ongoing to expand access to the Defence Home Ownership Assistance Scheme. The expansion will reduce minimum service periods for subsidised mortgage interest payments and allow veterans to access the scheme any time after they leave the ADF.

To help veterans with rising cost-of-living pressures, the government will provide a $1,000 increase in the annual rate of the Totally and Permanently Incapacitated Payment.

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