Australia: Modest growth promised for Defence funding

After last year's drastic spending cuts, there are aspirations for moderate growth (2% of GDP) in Defence spending. Treasurer Wayne Swan's budget speech stated that "this Budget funds the core defence capabilities required to protect Australia's national security interests". Following the Budget, there is still little clarity on how the aspirational 2% target can be achieved.

Key Defence announcements

11 days ahead of the Budget, the Government released the 2013 Defence White Paper (White Paper). Brought forward a year, the new White Paper was intended to provide an updated roadmap for the realignment of Defence's strategic priorities, particularly given the significant cuts to Defence expenditure in the aftermath of the Global Financial Crisis.
In this year's Budget, the Federal Government has allocated $113 billion to Defence over the next four years (compared to $103 billion which was allocated across the forward estimates period in the 2012-13 Budget).

In the wake of criticism following the significant cuts in Defence spending of $5.5 billion during last year's Budget, the Federal Government has also committed to increasing Defence spending in future Budget allocations to 2 per cent of GDP. The White Paper stated this was: "a long-term objective that will be implemented in an economically responsible manner as and when fiscal circumstances allow."1

Australian Strategic Policy Institute defence analyst Dr Mark Thomson has calculated this year's Defence spend at 1.57% of GDP, rising to 1.67% of GDP by the fourth year, far below the 2% target.

The Federal Government Budget Papers claim that Defence spending this year: "reaffirms the Government's commitment to Australia's national security and interests, and provides Defence with the resources it needs to deliver on the priorities in the 2013 Defence White Paper".2

Key Defence funding announcements in the Budget include:

  • Growler purchase – replacing the previous plan to upgrade 12 of the RAAF's 24 Super Hornets with the purchase of an additional 12 Boeing Super Hornets, configured in the electronic warfare Growler version EA-18G Growlers resulting in costs of almost $3 billion over nine years. The costs for this project are to be met from existing resources within the Defence budget, with an additional $200 million to be provided for the project in 2014-15.
  • Australian Cyber Security Centre, announced in January 2013 – costs for this Centre are to be funded from existing resources from contributing agencies (including Defence).
  • ADF Operations – allocation of an additional $618 million funding for ADF operations around the world, including an additional $585.7 million over the next four years for Operation Slipper (Australia's military contribution in Afghanistan and the Middle East).
  • Defence Abuse Response Taskforce – re-allocation of resources within the Defence budget as part of the Government's response to the DLA Piper Report of the Review of allegations of sexual and other abuse in Defence. This includes an allocation of $83.9 million over the next two years for reparation payments and $37.1 million to fund an independent taskforce.
  • Improved mental health services for current and former ADF personnel – this year's Budget provides $26.4 million over four years within Department of Veterans' Affairs to expand access to mental health services for current and former ADF members and their families.
  • Personnel reductionsreduction of 327 civilian staff across the Department of Defence and Defence Materiel Organisation. This is the second tranche of the 1000 personnel reductions announced in last year's Budget. However, Defence and ASIO have been exempted from the $580 million in cuts to public service executive level jobs required by this year's Budget.

What's missing?

Comparing the Budget to the White Paper announcements, there is a lack of detail around funding for the core capabilities. Funding arrangements for key Defence capabilities discussed in the White Paper not specifically detailed under this year's Budget Papers included:

  • Future Submarines Program:
    • Purchase of 12 new submarines to be built in Adelaide
    • Submarine Propulsion Energy Support and Integration Facility – a new land based facility to be built in Australia intended to provide research and testing support for the Future Submarine's Program.
    • Future Submarine Industry Skills Plan.
  • Replacing HMAS Sirius, HMAS Success and the Armidale-class patrol boats and the current S 70B-2 Seahawk naval helicopters fleet.

The lack of funding detail for the Future Submarines Program is particularly stark. Under the White Paper, the Government has ruled out "off-the-shelf" options to purchase submarines using existing European designs with evolved Collins Class or new design options only to be further explored. This has essentially "removed the two least expensive, least risky, (probably) fastest and least capable options (off-the-shelf) from the potential solution"3 which is to be contrasted with the fiscal challenges outlined in this year's Budget.

This decision is, however, consistent with the Government's broader themes of jobs and growth displayed during the Budget as the decision provides for an ongoing maritime industry in Adelaide. While the time-scale for the delivery of these submarines has been shifted from 2030 to 2038, extending the life of the Collins class submarines for one full operating cycle, it is not yet clear what the cost of these new submarines will be. There was no specific budgetary allocation for the Future Submarines Program outlined in the 2013-14 Defence Budget Papers after last year's allocation of $214 million for design studies.

How will the return to Defence spending growth be achieved?

The White Paper's response to the fiscal challenges appeared to be focused on the continuation of the internal reform program within Defence:

"Defence must ensure that it is spending every dollar of the Defence budget wisely and well. This involves making the right decisions in shaping capabilities and delivering them on time and on budget. It means structuring Defence to be streamlined and efficient to eliminate waste and ensure maximum funding can be directed to defence capability."4

But there is arguably only so far that a 'do more with less' approach can go.

The first 3 years of the Strategic Reform Program (SRP) has yielded $3.3 billion in Defence budget cost reductions through improvements in Defence planning, accountability and productivity.5 Finding additional savings beyond that initial phase of SRP activity will be difficult.

Concluding Remarks

Between the Budget and the White Paper, the Government has arguably sidestepped the challenge of matching capabilities and funding. It has made Defence funding commitments subject to better economic times but not addressed what is realistic to achieve in capability terms in the context of the fiscal reality right now.


1 See White Paper, paras 1.17, 7.17 and Chapter 7 more broadly.

2 See Federal Government Budget Paper No. 1: Budget Strategy and Outlook, Page 1-7.

3 Andrew Davies, The Strategist, Australian Strategic Policy Institute, 'Future Submarines', 3 May 2013.

4 See for example, White Paper para 9.3. See also paras 1.18, and 7.11 and Chapter 9 of the White Paper more broadly.

5 See White Paper, para 9.7.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions