A Safer Australia - Budget 2018–19 Defence Overview

The Turnbull Government’s first priority is the safety and security of Australia and its people.

The 2018–19 Budget will provide national and economic security, while generating thousands of Australian jobs. The Budget provides funding to continue to deliver:

• on our ongoing commitments to Defence Operations around the globe, ensuring safety and security at home and secure maritime borders
• the capability plans set out in the 2016 Defence White Paper through the Defence Integrated Investment Program
• the strategies outlined in the Defence Industry Policy Statement to reshape and refocus the Defence and industry partnership and create more jobs.

The comprehensive, responsible long term plans for Australia’s defence set out in the 2016 Defence White Paper, and reinforced in the 2017 Foreign Policy White Paper, continue to ensure that we develop the capability needed to protect Australia and to secure our interests in the coming decades, despite growing global uncertainty and complexity.

Therefore, the 2018-19 Budget maintains the Government‘s commitment to provide Defence (inclusive of the Australian Signals Directorate (ASD)) with a stable and sustainable funding growth path, with the Defence budget growing to two per cent of GDP by 2020–21. The Government will provide Defence (inclusive of ASD) with $36.4 billion in 2018–19 and $160.7 billion over the Forward Estimates.

DEFENCE OPERATIONS

As part of our ongoing commitment to security and stability at home and around the globe, the Government has agreed to continue funding major operations.

Australia currently has around 2,300 Defence personnel deployed around the world, including on operations across the Middle East and Afghanistan.

Ongoing terrorist attacks underscore the importance of Australia’s significant contribution to the US-led international counter-Daesh coalition in Iraq and Syria. For this reason, Australia has around 600 personnel deployed as part of Operation OKRA.

The Government is committed to assisting the Government of Afghanistan to control its security and to prevent the nation again becoming a safe-haven for terrorist networks. Operation HIGHROAD will continue to provide security, development assistance, and capability building for Afghan institutions.

The ADF is also fully engaged in the near region, as part of the Government’s commitment to securing Australia’s maritime borders. Additionally, we are supporting the Government of Papua New Guinea for that nation’s hosting of the Asia Pacific Economic Cooperation meetings in November 2018.

Major domestic events to attract Defence support in 2018 have included the ASEAN-Australia Special Summit 2018, the Commonwealth Games in Brisbane and the Invictus Games in Sydney. Defence support is an important component of the security arrangements required to deliver a safe and secure environment for these events.

Defence has also provided assistance to the civil community in response to fires, floods and cyclones in affected States and Territories.

DELIVERING THE INTEGRATED INVESTMENT PROGRAM

Over the next decade from 2018–19, the $200 billion Integrated Investment Program demonstrates the Government’s commitment to creating a more potent and capable Defence Force, through programs such as:

• The continuous naval shipbuilding program, which will invest around $90 billion to develop the Royal Australian Navy of the future, while creating a strong and sustainable Australian naval shipbuilding industry with more Australian jobs.
• The 5^th generation F-35 Joint Strike Fighter program, along with the acquisition of EA-18G Growlers and P-8A Poseidon maritime surveillance aircraft, will give the Royal Australian Air Force unprecedented capability to combat future threats to our nation.
• The purchase of a fleet of new Combat Reconnaissance Vehicles to protect our troops. The overwhelming majority of the 211 vehicles will be manufactured and delivered by Australian workers, using Australian steel.

NAVAL SHIPBUILDING PROGRAM

We are investing around $90 billion in the continuous build of new submarines, major surface combatants and minor naval vessels.

A continuous naval shipbuilding program will modernise our naval fleet, support economic growth, maximise Australian industry involvement and secure thousands of Australian jobs for decades to come. The Government continues to progress significant work to support the success of the Naval Shipbuilding Plan:

• We are investing more than $50 billion in the Future Submarine Program, the largest and most complex Defence acquisition Australia has ever undertaken. In January 2018, a $700 million contract was signed with Lockheed Martin Australia, supporting approximately 200 jobs in South Australia as development of the Future Submarine Combat System progresses.
• In November 2017, the Government announced Australia’s investment of up to $4 billion for 12 Offshore Patrol Vessels, which will be designed and built under prime contractor Lürssen. Construction is set to commence on the first vessel later this year. This capability will have an important role in protecting our borders and will provide greater range and endurance than the existing patrol boat fleet.
• We have established the Naval Shipbuilding College, which is working with Australian education providers to identify, train and upskill workers for the naval shipbuilding enterprise.
• The Government will soon select a designer-builder for the Future Frigate Program, which will deliver nine anti-submarine warfare frigates to the Australian Defence Force (ADF).
• Construction of the first Pacific Patrol Boat began in April 2017, and first delivery is planned for later in 2018.

DEFENCE CAPABILITY INVESTMENT

The Defence Integrated Investment Program details Defence’s future capability requirements to ensure the men and women in the ADF have the platforms and equipment they need to keep Australia secure, whether that be at sea, in the air and space, on the land or in the cyber domain.

Over the last 12 months, the Government has committed around $19.7 billion to new capabilities to strengthen our Defence Force, including:

• A $1.2 billion investment to significantly upgrade Australia’s already world leading Jindalee Operational Radar Network which detects and tracks air and maritime targets from Australia’s northern approaches.
• The selection of the combat management system for Australia’s fleet of nine Future Frigates, which will maximise the vessels’ air warfare capabilities and enable these ships to engage threat missiles at long range, which is vital given the ongoing development of missiles with advanced range and speed.
• Approval of $207 million to boost the Nulka program, which will strengthen the anti-ship missile defence capability and ensure the system remains at the cutting edge of capability into the future.

SUPPORTING DEFENCE INDUSTRY

A strong, sovereign Australian defence industry is vital to delivering Australia’s defence capability. It is also front and centre of the Government's plan for jobs and growth in the Australian economy.

The last year has seen the Government make significant progress in establishing the initiatives and policy settings that will guide our defence industry to a sustainable and internationally competitive future.

In January 2018, the Government released the Defence Export Strategy which provides a systematic plan to grow Australian defence exports and support Australian industry to achieve export success. In March 2018, the Government released the expanded Australian Military Sales Catalogue showcasing a range of export ready Australian defence industry capabilities.

Complementing our major policy initiatives such as the Defence Industrial Capability Plan, the last year has seen the roll out of our strengthened Australian Industry Capability (AIC) Plan. The strengthened AIC Plan is a requirement for major capital equipment projects of $20 million and above and is driving greater Australian industry participation in meeting Defence’s capability needs.

In its first year of operation the Centre for Defence Industry Capability has established itself as the ‘single point of entry’ to Defence for small and medium enterprises. The Centre approved facilitation services for 352 small and medium enterprises, issued over $1 million in Capability Improvement Grants and presented to an estimated 3,000 participants at industry briefings in support of the continuous naval shipbuilding public presentations alone.

Since its launch in December 2016, the Defence Innovation Hub has awarded 37 contracts totaling more than $56 million, and manages a portfolio of legacy innovation projects worth approximately $62 million. The Defence Innovation Hub is expected to expand on this success as the program matures and builds towards a full portfolio of innovation investment.

LOCAL JOBS SUPPORTING THE DEFENCE ESTATE

The Government continues to invest in upgrading and expanding the Defence estate, comprising hundreds of bases, facilities and other sites right across Australia, particularly in regional communities. This investment ensures that the ADF has the infrastructure it needs to operate and support our key capabilities.

Key to this upgrade in the Defence estate is local industry. The Government has commenced a pilot of a Local Industry Capability Plan program for major Defence infrastructure projects to ensure that local industry has the best opportunity to be involved in our unprecedented investment in Defence capability. Pilots under this Plan include:

• The Explosive Ordnance Logistics Reform Program, a $230.9 million project covering 12 Defence sites across Australia.
• The Shoalwater Bay Training Area Redevelopment in Queensland, an approximately $135 million substantial infrastructure upgrade project, which will see 80 per cent of the construction sub-contractors come from the Livingston and Rockhampton regions.
• The Townsville Field Training Area Mid-Term Refresh in Queensland, an approximately $24 million project to ensure the Training Area is fit-for-purpose, safe and environmentally compliant.
• The HMAS Cerberus Redevelopment Project in Victoria, an approximately $463 million project.

The Government is also committed to maximising opportunities for North and Central Queensland industry during implementation of the Australia-Singapore Military Training Initiative.

These investments and initiatives will continue to ensure that we continue to implement the plans set out in the 2016 Defence White Paper to keep Australia safe and secure, while maximising the involvement of Australian industry in our unprecedented capability investment.