Katherine Ziesing | Canberra
The headline figures pretty much tell you everything you need to know about Defence spending this financial year and for the next four-year period.
With $34.6 billion in funding this financial year and $150.6 billion across the four-year forward estimates, the government is on track to reach two per cent of GDP by 2020-2021. The much vaunted dollar figure for the ‘10-year, $195 billion investment program’ has crept up to $200 billion, mainly thanks to inflation, according to the Budget papers. Australian Strategic Policy Institute Budget Analyst Mark Thomson confirmed that as a proportion of GDP, the Defence spend is sitting at 1.9 per cent this year.
“If an absence of excitement is the price to pay for fulfilled promised and steady progress, bring it on”
“That’s how it looks; no shock, no surprises,” Thomson said. “Past Defence Budgets have often been more exciting than this year’s. But if an absence of excitement is the price to pay for fulfilled promised and steady progress, bring it on.”
Previous programs are confirmed, the list of projects to go to first and second pass is enormous (20 and 37 respectively; an ambitious schedule) and infrastructure spending is strong. All in all, the government is doing exactly what it said it would under the 2016 White Paper, Defence Integrated Investment Plan and Defence Industry Policy Statement.
It also provides some insight into the huge maritime spend on the books. We can now see the first confirmed details of the Future Submarine program contracting costs to date: of the $935 million budgeted for this phase of the program (design and construction), $127 million has been spent and $319 million is set to be spent this year. That’s a lot of engineering hours.
The Future Frigate program design and construction phase has a total budget of $335 million, has spent $146 million and is due to spend another $133 million this year. On what exactly? The RFT is on the streets now with responses due back in late July, ADM understands. This means that the three industry contenders have a scant five months to respond. Industry sources close to the program also say there are many blank spaces in the RFT compared to what they were expecting. They also confirm that two options have been shortlisted for the combat management system (9LV with an Aegis fire control module from Saab and Aegis from Lockheed Martin, ADM understands) which is scheduled to be chosen later in 2017.
The program is due to report back to government in the next financial year for an ‘update to government’.
Another revelation is that the Commonwealth has budgeted $995 million for two replenishment ships from Navantia based on their Cantabria class design. This amount covers the two ships, with the first keel to be laid this year, along with an initial five-year sustainment plan.
The AWDs will hit a number of milestones this financial year with Ship 01 to be handed over to the Navy for commissioning in September as HMAS Hobart, completion of sea trials for Ship 02 Brisbane and the launch and naming of Ship 03 Sydney.