Twelve questions for the Defence portfolio’s Senate estimates hearings
Senate Estimates

Senate Estimates provides a rare chance to get information out of Defence officials that they should be making public but refuse to.

Written by

Marcus Hellyer

These questions are based on the information contained in the 2024 National Defence Statement (NDS), 2024 Integrated Investment Program (IIP) and 2024-25 Defence portfolio budget statements (PBS).

Note: In this essay, ‘this year’ refers to the 2024-25 budget year. ‘Last year’ refers to 2023-24. The forward estimates refer to 2024-25 to 2027-28 and the decade to 2024-25 to 2033-34.

Additional funding

    The Government has provided an additional $5.7 billion in funding over the forward estimates and $50.3 billion over the decade.

    This year’s share of the additional funding for the Defence portfolio over the decade is only $400 million (i.e., less than 1%). There is no meaningful increase until the $3.8 billion in the final year of the forward estimates, which makes up the bulk of the additional funding over the forward estimates ($5.7 billion in total).

    According to Defence, $38.2 billion of the $50.3 billion is funding from the contingency reserve that has been made available to Defence to cover the funding gap between the Attack-class submarine, $11.1 billion covers the cost of the General Purpose Frigates in the decade, and only $1 billion is for other priorities. The figures for the forward estimates are $3 billion, $1.7 billion and $1 billion respectively.

    • How is the back loading of additional funding consistent with the strategic assessments in the Defence Strategic Review and the 2024 National Defence Strategy which emphasise our declining situation, the lack of warning and the need for urgency?

      Nuclear-powered submarine enterprise –funding

      Between the Australian Submarine Agency and Program 2.16: Nuclear-powered submarines, the planned budget for SSNs over the forward estimates is $13.5 billion.

      • How much of the $13.5 billion is comprised of industrial uplift payments to the US and UK governments and US and UK companies such as Rolls-Royce?
      • What was the gap between the funding held for the Attack-class program and the SSN enterprise over the forward estimates? Does the additional $3 billion cover the gap?

      Nuclear-powered submarine enterprise—strategic and sovereignty implications

      Defence has not stated how many submariners will be required for the future SSN force. The Government has also consistently stated that Australia’s SSNs will be a sovereign capability and there will be no obligation on Australia to use its SSNs to support the US in conflict.

      Recently Mr Dan Packer, the director of naval submarine force for AUKUS stated that Australia will 3,000 submariners compared to its current 800, suggesting the number will need to grow nearly four-fold.

      Mr Packer also stated that part of the growth strategy involved 440 Australians being ‘completely, 100% integrated’ on 25 USN submarines.

      • Is the Government and Defence confident it can quadruple the number of submariners in the Navy?
      • What are the implications of having large numbers of Australians on half of the US Navy’s SSN force?
      • Will those submariners go to war with the USN?
      • What are the implications for the alliance if they are removed from USN submarines, limiting their ability to deploy?

        Collins submarines

        The PBS’s Top 30 acquisition projects table includes SEA 1450 (Collins Life of Type Extension) and states is it  ‘one of the three elements of the Collins Class Submarine (CCSM) Life of Type Extension (LOTE) Program. The project will address the most significant risks to enduring availability and reliability of CCSM out to the Amended Planned Withdrawal Date.’

        • What are the other two elements of the LOTE?
        • What is the Amended Planned Withdrawal Date of the Collins?
        • The passage above suggests the focus of the LOTE is now ensuring availability and reliability of the Collins rather than capability upgrades? Is that correct?
        • Does that LOTE have defined scope that has been agreed by the Government?
        • Is Defence still planning on replacing Collins’ major systems such as the main motor and diesel generator under the LOTE?

          Hunter class frigates

          According to previous statements from Defence, construction of the Hunter-class frigates was to start in mid-2024 after a series of earlier schedule slippages. The total approved budget for Hunter-class frigates is now $6,243 million and has not grown in recent years. This sum only covers work up to the start of construction. Therefore we can assume that the Government has not yet given second pass approval to acquire and start construction on any frigates.

          • When does the Government anticipate giving second pass approval to commence construction of the Hunter-class frigates?
          • How many ships will it give approval for?
          • When will construction of the Hunters start?
          • When is delivery of the first ship scheduled?
          • When is Initial Operational Capability (i.e., the first ship being ready for operations) scheduled?

            Surface combatant fleet

            Defence is in the middle of a failed capability transition in its surface combatant fleet. Despite Australia’s pressing strategic circumstances, Defence has started retiring Anzac-class frigates. HMAS ANZAC was recently retired, eight years before the first Hunter-class frigate is delivered and almost a decade before it enters service. A second Anzac will follow in the next two years. That will reduce the Navy to nine surface combatants, the lowest number since World War 2.

            As many commentators have noted, the General Purpose Frigate program is ill-defined and faces many risks. It is hard to have confidence that it will achieve the Government’s goal of delivering the first vessel by 2029.

            Meanwhile, the Hobart-class destroyers are about to embark on a major program of upgrades that will take them out of service.

            To deliver this capability failure, the IIP aims to spend $35.5-50.5 billion in acquisition funding on the surface combatant fleet this decade.

            • Are more Anzac retirements planned before the arrival of the first Hunter or GPF?
            • How low will the number of surface combatants go before it starts to recover?
            • When will the surface fleet recover to 11 or 12 ships?
            • How can the surface fleet transition be regarded as anything other than a policy failure of historic proportions?
            • Who is being held to account for this massive failure?
            • How can anyone have any confidence in Defence’s ability to deliver a viable surface combatant force in meaningful timeframes.

            Shipbuilding in Western Australia

            Last year the Government announced that it had decided on its preferred designer (Birdon) and builder (Austal) of the Landing Craft Medium. It also announced it was bringing forward the schedule for the Landing Craft Heavy project. It also stated that Austal would be its strategic shipbuilding partner at the Henderson shipbuilding precinct in Western Australia.

            • Has Defence signed a contract for the construction of the Landing Craft Medium?
            • Has Defence issued an approach to market for the Landing Craft Heavy?

            Since then, the Government has also announced that it will order a new class of 11 General Purpose Frigates, with the first three to be build overseas and the remaining eight at Henderson. This will put significant pressure on the Henderson precinct.

            The Korean company Hanwha has announced it is seeking to buy Austal. If this goes through, it will probably deter other companies from bidding for the GPF program. Nevertheless, the Government has stated that the ownership of Austal is purely a commercial matter.

            • Is Austal also the Government’s strategic shipbuilding partner for the GPF? That is, does the selected GPF designer have to use Austal as the builder?
            • Does the Government still believe that the ownership of Austal is purely a commercial matter if it discourages shipbuilders from bidding for the GPF program?
            • Why is the Government confident that Henderson has sufficient capacity to build landing craft and frigates and support conventional and nuclear submarines?

              42% acquisition aspiration

              The IIP has the ambitious goal of increasing acquisition spending to 42% of the total Defence budget by the end of the decade. The 2016 IIP and the 2020 Force Structure Plan also sought to reach 39% and 40% respectively. Nevertheless, acquisition as a share of Defence spending has hovered around 29-31% and not come close to 40%, suggesting Defence is repeating a failed course of action. If Defence can’t spend the money, it won’t deliver the capabilities set out in the IIP.

              It should be noted that since the 2016 White Paper Defence has underachieved against its planned acquisition spending by $25 billion. Many of the acquisition reforms set out in the NDS have been tried and failed in the past.

              • Why does Defence believe that this time it will achieve what it hasn’t in the past and reach 42% acquisition spending?
              • How will Defence’s acquisition system turn around its chronic underachievement when many of the reforms it is pursuing have been tried and failed in the past?

                Underachievement in facilities program

                In last year’s budget, the planned acquisition spend on estate and infrastructure for 2023-24 was $4,166 million. However, according to this year’s budget, Defence will only achieve $2,741 million—a shortfall of $1,425 million. Many of the infrastructure projects that have missed their spending targets are in northern and remote areas of Australia.

                Similarly, last year’s budget anticipated an estate and infrastructure spend this year of $4,068 million. That has been revised downwards in this year’s PBS by $1,327 million to $2,741 million.

                • Why does Defence keep missing its infrastructure spending targets?
                • How quickly will Defence be able to deliver the northern Australian infrastructure enhancements set out in the IIP noting the underspends?

                  Overspend on workforce

                  Since the 2016 White Paper, the ADF has grown by only 181, around 21 people per year. The ADF is now 5,355 short of the target for 2024-25 set out in the PBS. It still needs to grow by around 20,000 to achieve the growth set out in previous strategic documents.

                  However despite the lack of workforce growth, Defence has consistently overspent on workforce—by a total of between $3.9 and $6.6 billion since 2016 (depending on the target you use).

                  In 2023-24, Defence overspent its workforce budget by $919.5 million. Overall workforce costs grew by $1,470 million (10.3%) in 2023-24 even though ADF numbers went backwards by 400 (although APS numbers grew by around 1,500).

                  • Why does Defence consistently overspend on workforce even though the ADF has not grown?
                  • What is driving the growing workforce costs?
                  • Could Defence afford the missing 5,000 people (and 20,000 in the longer term) even if it could find them?
                  • Does the 10-year funding model in the NDS assume Defence will grow to reach that 20,000 target or continue at its current level?

                  Considering Defence has failed to recruit the workforce needed to operate the future force, it is time to reconsider the force structure rather than continuing to plan for failure

                  • Will Defence revisit its force structure to design a force that can be operated with a smaller military workforce than is in its current plans?

                    Army battle management system

                    For many years senior Army personnel informed the Senate that the digitisation of the Army, including installation of a capable battle management system (BMS) in its headquarters and vehicles, was Army’s highest priority. However, after the expenditure of close to $2 billion, Defence seems to have abandoned its efforts to acquire and install Elbit’s battle management system (BMS) in its vehicles; LAND 200, which was developing and installing the BMS, is no longer in the PBS.

                    However, it is difficult to know what is going on due to the lack of public information about the program, what it has delivered, and how much was spent on it. Some reporting suggests that Army’s vehicles now have no BMS installed in them. If so, this would significantly limit troops’ situational awareness.

                    • Has the contract with Elbit to deliver a BMS been terminated? If so, why?
                    • Was Elbit compensated? And if so, for how much?
                    • How much was spent on LAND 200 before the Elbit solution was cancelled?
                    • What BMS is currently installed in Army’s vehicles?
                    • When will Army finally have a functional BMS

                      Army battlefield helicopters and ‘disposals’

                      Last year after two serious accidents with the MRH-90 the Government permanently ground the fleet before the outcome of investigations into the accidents had been announced. Media reporting later revealed that Defence was stripping the helicopters of components and destroying the aircraft rather than selling them or providing them to Ukraine.

                      • What is the status of the investigations into the MRH-90s crashes?
                      • What is the status of the disposal of the MRH-90 helicopters?

                      Permanently grounding the MRH-90 created a significant capability gap because very few of the replacement Blackhawks had entered service. The Government said it would seek to draw on US assistance to accelerate delivery of Blackhawk helicopters. However, the Blackhawk fleet actually underachieved against its planned flying hours in 2023-24 (1,500 planned; 880 achieved) despite efforts to accelerate delivery and entry into service.

                      • How many Blackhawks currently in service?
                      • When will the Blackhawk fleet achieve IOC and FOC? Is this faster than the original acquisition plan?

                      Defence now has other systems to dispose of that may have still utility, including M1 tanks and Anzac frigates.

                      • What is Defence’s plan to dispose of its M1 tanks?
                      • Will the Government offer them to Ukraine?
                      • What is Defence’s plan to dispose of the retiring Anzac-class frigates?
                      • Will they be retained in some form as a hedge against delays in the Hunter and General Purpose frigate programs or be sunk as dive wrecks?
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