The Federal Budget


The Federal Budget sees a modest increase in defence spending – up $800 million to $29.2 billion. This is in keeping with a broad commitment made by the Coalition to eventually reach a target of 2% of GDP. The Department of Defence will be required to shed 2,200 positions – a move that has been well telegraphed and which is considerably less than the recommendation of the recent Commission of Audit. The job losses will apparently occur by natural attrition, with the first 600 to go in the coming financial year.

However, while the Budget also foreshadows bringing forward some capital equipment programs – or rather to restore their schedule after they were delayed because of the previous Government’s cuts to Defence – there is no detail of what they will be. This will presumably be in the next Defence Capability Plan – which might not see the light of day until the next White Paper comes out in 2015.

There is nothing in the Budget that deals with the looming naval shipbuilding ‘valley of death’, nor about the long awaited restructuring – or even abolition – of the Defence Materiel Organisation.

The reaction to the document seems likely to be fairly positive, even though there was little that stood out. From the viewpoint of the services and of defence industry it looks like 2014 – 15 will be a slightly better year for the purchase of new equipment, but not by much. It is also possible that the small overall increase in funding will be eaten up by the problems of the Air Warfare Destroyer.

And new recruits will be envious of their peers because they will receive inferior superannuation entitlements – though still a fairly generous 15.4% rather than the current lavish 28%.

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