David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

asked the Minister representing the Minister for Defence, upon notice, on 21 March 2011:

(1) With reference to the Government commissioned report, 2008 Audit of the Defence Budget which identified that 'a real growth rate of 3.5 per cent in capital expenditure on SME [Specialised Military Equipment] [is required] just to replace today's equipment. To deliver the capabilities proposed in the recommended Force Structure Option requires a growth rate of 4.2 per cent': What will be the amount required to fund, in nominal dollars, the major capital equipment program each year from 2010-11 to 2029-30, so as to fund the White Paper 'Force 2030' initiatives.

(2) With reference to the report, The Cost of Defence: ASPI Defence Budget Brief 2010 -11 which states, 'on the basis of long-term trends in defence costs, it is unlikely that the promised 2.2 per cent real growth post 2017-18 will be adequate to sustain let alone expand the ADF [Australian Defence Force] as planned. In other words, the plan was probably not affordable to begin with': Based on this analysis, as at 31 December 2010, how will the Government fund its Defence White Paper commitments when funding drops to 2.2 per cent real growth per annum, below that needed to sustain the ADF.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

The Minister for Defence has provided the following answer to the honourable senator's question:

(1) The amount required to fund the major capital equipment program each year from 2010-11 to 2029-30 to deliver the White Paper 'Force 2030' has been previously provided as outlined below:

(a) at the Senate Estimates hearing on Wednesday 3 June 2009, it was stated that the estimated overall cost of buying the capabilities outlined in the White Paper will be between $245-$275 billion out to 2030; and

(b) on 24 January 2011, Defence provided an update of between $215-$245 billion. This reduction was due to the appreciation of the Australian dollar against the US dollar since that time.

Since January 2011, the Australian dollar has appreciated further against the US dollar and the revised estimate of the amount required to fund the major capital equipment program each year from 2010-11 to 2029-30 to deliver the White Paper 'Force 2030 is between $210-$240 billion.

(2) In the 2009-10 budget, the Government provided Defence with additional funding of $146.1 billion to fund the White Paper over the 21 years to 2029-30 as a result of changing the funding model for Defence. The 2.2 per cent real growth funding beyond 2017-18 is consistent with the inherent long-term cost of Defence, a point highlighted in the 2008 Defence Budget Audit.