2017-18 Defence Portfolio Budget Statements · Defence Portfolio Budget Statements 2017-18 . 6 ....

Portfolio Budget Statements 2017-18 Budget Related Paper No. 1.4A

Defence Portfolio

Budget Initiatives and Explanations of Appropriations Specified by Outcomes

and Programs by Entity

Defence Portfolio Budget Statements 2017-18

ii

This page intentionally left blank.

iii

© Commonwealth of Australia 2017

ISBN 978-0-9946046-4-4

This publication is available for your use under a Creative Commons BY Attribution 3.0 Australia licence, with the exception of the Commonwealth Coat of Arms, the Department of Defence and Defence Housing Australia logo, photographs, images, signatures and where otherwise stated. The full licence terms are available from http://creativecommons.org/licenses/by/3.0/au/legalcode.

Use of the Department of Defence’s material under a Creative Commons BY Attribution 3.0 Australia licence requires you to attribute the work (but not in any way that suggests that the Department of Defence endorses you or your use of the work).

Department of Defence material used 'as supplied'

Provided you have not modified or transformed the Department of Defence material in any way including, for example, by changing the Department of Defence text; calculating percentage changes; graphing or charting data; or deriving new statistics from published Department of Defence statistics – then the Department of Defence prefers the following attribution:

Source: The Australian Government Department of Defence

Derivative material

If you have modified or transformed the Department of Defence ‘s material, or derived new material from those of the Department of Defence in any way, then the Department of Defence prefers the following attribution:

Based on The Australian Government Department of Defence’s data.

Defence Housing Australia material used 'as supplied'

Provided you have not modified or transformed the Defence Housing Australia material in any way including, for example, by changing the Defence Housing Australia text; calculating percentage changes; graphing or charting data; or deriving new statistics from published Defence Housing Australia statistics – then the Defence Housing Australia prefers the following attribution:

Source: The Australian Government Defence Housing Australia

Derivative material

If you have modified or transformed the Defence Housing Australia‘s material, or derived new material from those of the Defence Housing Australia in any way, then the Defence Housing Australia prefers the following attribution:

Based on The Australian Government Defence Housing Australia’s data.

http://creativecommons.org/licenses/by/3.0/au/deed.en


http://creativecommons.org/licenses/by/3.0/au/legalcode




iv

Use of the Coat of Arms

The terms under which the Coat of Arms can be used are set out on the It’s an Honour website (see www.itsanhonour.gov.au)

Other Uses

Inquiries regarding this licence and any other use of this document are welcome at: Assistant Secretary Costing and Coordination R1-2-C021 Department of Defence PO Box 7900 Canberra BC ACT 2610 Telephone: (02) 6265 7341 Email: [email protected]

http://www.itsanhonour.gov.au/


vi

Abbreviations and Conventions

The following notations may be used:

NEC/nec not elsewhere classified - nil . not zero, but rounded to zero na not applicable (unless otherwise specified) nfp not for publication $m $ million

Figures in tables and in the text may be rounded. Figures in text are generally rounded to one decimal place, whereas figures in tables are generally rounded to the nearest thousand. Discrepancies in tables between totals and sums of components are due to rounding.

Enquiries Should you have any enquiries regarding this publication please contact Assistant Secretary Costing and Coordination, Chief Finance Officer Group, Department of Defence on (02) 6265 7341. Links to Portfolio Budget Statements (including Portfolio Additional Estimates Statements and Portfolio Supplementary Additional Statements) can be located on the Australian Government Budget website at: www.budget.gov.au.

User Guide

vii

USER GUIDE TO THE

PORTFOLIO BUDGET STATEMENTS


viii


User Guide

ix

USER GUIDE

The purpose of the 2017-18 Portfolio Budget Statements (PB Statements) is to inform Senators and Members of Parliament of the proposed allocation of resources to government outcomes by entities within the portfolio. Entities receive resources from the annual appropriations acts, special appropriations (including standing appropriations and special accounts), and revenue from other sources. A key role of the PB Statements is to facilitate the understanding of proposed annual appropriations in Appropriation Bills (No. 1 and No. 2) 2017-18 (or Appropriation (Parliamentary Departments) Bill (No. 1) 2017-18 for the parliamentary departments). In this sense, the PB Statements are Budget related papers and are declared by the Appropriation Acts to be ‘relevant documents’ to the interpretation of the Acts according to section 15AB of the Acts Interpretation Act 1901. The PB Statements provide information, explanation and justification to enable Parliament to understand the purpose of each outcome proposed in the Bills. As required under section 12 of the Charter of Budget Honesty Act 1998, only entities within the general government sector are included as part of the Commonwealth general government sector fiscal estimates and produce PB Statements where they receive funding (either directly or via portfolio departments) through the annual appropriation acts. The Enhanced Commonwealth Performance Framework The following diagram outlines the key components of the enhanced Commonwealth performance framework. The diagram identifies the content of each of the publications and the relationship between them. Links to the publications for each entity within the portfolio can be found in the introduction to Section 2: Outcomes and planned performance.


x

1

Contents

DEFENCE PORTFOLIO OVERVIEW ..................................................................................................... 5

Ministers and their Portfolio Responsibilities ...................................................................................... 8

Changes affecting the Portfolio ..................................................................................................................8

Portfolio Structure and Outcomes .............................................................................................................9

DEPARTMENT OF DEFENCE ............................................................................................................... 17

Section 1: Defence Overview and Resources ....................................................................................... 17

1.1 Strategic Direction Statement ............................................................................................................. 17

1.2 Defence Resource Statement ............................................................................................................... 19

1.3 Budget Measures .................................................................................................................................. 20

1.4 Capital Investment Program .............................................................................................................. 22

1.5 People .................................................................................................................................................... 23

Section 2: Defence Outcomes and Planned Performance .................................................................. 29

2.1 Outcomes and Performance Information ......................................................................................... 29

Section 3: Defence Explanatory Tables and Budgeted Financial Statements ................................ 88

3.1 Explanatory Tables .............................................................................................................................. 88

3.2 Resource Summary .............................................................................................................................. 93

3.3 Budgeted Financial Statements .......................................................................................................... 97

APPENDICES .......................................................................................................................................... 113

Appendix A: Defence Cooperation Program ....................................................................................... 114

Appendix B: Integrated Investment Program ...................................................................................... 117

Appendix C: Top 30 Acquisition Projects by 2017-18 Forecast Expenditure ................................... 120

Appendix D: Top 30 Sustainment Products by 2017-18 Forecast Expenditure ............................... 130

Appendix E: Facilities and Infrastructure Program ............................................................................ 140

Appendix F: Status of Major Projects Foreshadowed for Government and Parliamentary Standing Committee on Public Works Consideration (PWC) in 2017-18 ......................................................... 149


2

DEFENCE HOUSING AUSTRALIA ................................................................................................... 156

Section 1: DHA Overview and Resources .......................................................................................... 156

1.1 Strategic Direction Statement .......................................................................................................... 156

1.2 DHA Resource Statement................................................................................................................. 159

1.3 Budget Measures ............................................................................................................................... 160

Section 2: DHA Outcomes and Planned Performance ..................................................................... 161

2.1 Outcome and Performance Information ........................................................................................ 161

Section 3: DHA Explanatory Tables and Budgeted Financial Statements ................................... 164

3.1 Explanatory Tables ............................................................................................................................ 164

3.2 Budgeted Financial Statements ....................................................................................................... 165

GLOSSARY .............................................................................................................................................. 170

ACRONYMS ............................................................................................................................................ 176

3

PORTFOLIO OVERVIEW


4


Portfolio Overview

5

DEFENCE PORTFOLIO OVERVIEW The Defence Portfolio consists of component organisations that together are responsible for the defence of Australia and its national interests. The most significant bodies are:

• the Department of Defence: a department of state headed by the Secretary of the Department of Defence; and

• the Australian Defence Force (ADF): commanded by the Chief of the Defence Force and consisting of the three Services, which are commanded by Service Chiefs.

In practice, these bodies work together closely and are broadly regarded as one organisation known simply as Defence.

The portfolio contains some smaller entities, including a number of statutory offices, trusts and companies created by the Public Governance, Performance and Accountability Act 2013, Defence Force Discipline Act 1982, Defence Act 1903, Naval Defence Act 2010 and Air Force Act 1923, which are independent but reside administratively within Defence. These include, amongst others, Defence Housing Australia (DHA) and the Australian Strategic Policy Institute (ASPI).

The portfolio also contains the Department of Veterans’ Affairs and associated bodies, as designated in the Administrative Arrangements Order. The Department of Veterans’ Affairs is administered separately to Defence and information related to the Department can be found in the Department of Veterans’ Affairs portfolio budget and portfolio additional estimate statements.

Defence’s primary role is to protect and advance Australia’s strategic interests through the promotion of security and stability, the provision of military capabilities to defend Australia and its national interests, and the provision of support for the Australian community and civilian authorities as directed by Government. The Defence budget will grow to two per cent of Australia’s Gross Domestic Product by 2020-21, amounting to approximately $200 billion in investment in Australia’s Defence Capability over the coming decade. In fulfilling this mission, Defence has two Purposes:

1. Defend Australia and its national interests

2. Protect and advance Australia’s strategic interests

Through implementation of the 2016 Defence White Paper, released by the Prime Minister and Minister for Defence on 25 February 2016, Defence will continue to build and enable capability to support national security interests and promote them in a region that is growing more complex and dynamic. The White Paper sets out the Government’s comprehensive long-term plan for Australia’s defence, with implementation being managed through a two-year plan designed to maintain alignment of strategy, capability and resources.

Implementation of the Government’s First Principles Review, Creating One Defence, commenced on July 2015 and requires Defence to become a more integrated organisation, with clear accountabilities and streamlined decision‐making processes. Defence is on track to complete the 75 recommendations by 30 June 2017. While the recommendations will have been actioned, work remains to embed the new business processes and to mature the operation of the One Defence Business Model introduced by the Review.

A key focus for 2017–18 is the implementation of the 10-year Defence Strategic Workforce Plan that sets out the skills Defence needs and details how Defence will attract, retain and develop its people. The Strategic Workforce Plan provides workforce priorities, initiatives and resources for


6

attracting, growing and retaining the people Defence needs.

Defence will continue cultural reform through implementation of the Pathway to Change strategy. This will be with a planned and professional workforce built on a foundation of strengthened accountability and an inclusive and diverse culture to meet the direction of the First Principles Review and capabilities required under the 2016 Defence White Paper.

In 2017–18, the focus will remain on delivering health, welfare and family support services to meet the requirements of the Australian Defence Force. Defence will also continue to work with the Department of Veterans’ Affairs to enhance the transition process for Members and veterans. Other people priorities in 2017-18 include implementing the new ADF Total Workforce model to provide greater flexible working arrangements for ADF Members and further developing a comprehensive program of professionalisation and development to support careers in the Australian Defence Force and the Australian Public Service.

Defence has one of the largest capital investment programs in the Commonwealth, consisting primarily of acquisition, sustainment and support of Defence materiel. Introduced at the same time as the 2016 Defence White paper, the Integrated Investment Program includes all capital and related investments (such as materiel, estate and facilities, workforce and information and communications technology). The Integrated Investment Program is supported by a contestability function that informs the development of the risk assessment and decision support framework to ensure that acquisitions are aligned with strategy and resources. Upgrading Australian Defence Force bases and logistics systems, including fuel and explosive ordnance facilities in accordance with 2016 Defence White Paper requirements, remains a priority.

In 2017–18 Defence will continue to mature its control functions – financial management, internal audit, inspectors-general and judge advocate – so that they can provide assurance to the Defence senior committees – the Defence Committee, the Enterprise Business Committee and the Investment Committee – that Government-directed outcomes are being delivered in accordance with legislative and policy requirements.

We have strengthened our strategic management capability to set direction for the organisation, monitor and manage the performance of Defence, and provide assurance to Government that Government-directed outcomes are being delivered effectively and efficiently. In 2017–18 the Defence Strategy Framework and Enterprise Performance Management Framework will be implemented, supporting the role of the Defence ‘strategic centre’ in setting direction for the organisation and in ensuring advice provided to Government has been contested rigorously.

Defence is committed in aligning Australia’s defence strategy with capabilities and resourcing, to grow its internal defence partnerships, and invest in the Defence—industry partnership to develop and deliver innovative, cutting-edge capabilities. Key programs to be implemented in 2017-18 and beyond include:

• Implementation of the new force structure and capabilities identified in the White Paper;

• Implementation of the 10-year Defence Strategic Workforce Plan that sets out the skills Defence needs and detail how Defence will attract, retain and develop its people;

• Building on the cultural reform journey started with Pathway to Change and embedding the leadership behaviours introduced through the First Principles Review;

• Continuing to deliver health and welfare services and improve transition support to meet the requirements of the Australian Defence Force;

Portfolio Overview

7

• Upgrading Australian Defence Force bases and logistics systems, including fuel and explosive ordnance facilities in accordance with 2016 Defence White Paper requirements; and

• Implementation of the Integrated Investment Program supported by a contestability function that informs the development of the risk assessment and decision support framework to ensure that acquisitions align with strategy and resources.


8

Ministers and their Portfolio Responsibilities

CHANGES AFFECTING THE PORTFOLIO On 19 July 2016, the new ministry was sworn in following the Federal election held on 2 July 2016. Senator the Hon Marise Payne continues as the Minister for Defence. New ministerial appointments were made, with the Hon Christopher Pyne MP sworn in as the Minister for Defence Industry and the Hon Dan Tehan MP was sworn in as the Minister for Defence Personnel. The new appointments replace the roles of the Assistant Minister for Defence, the Hon Michael McCormack MP and the Minister for Defence Materiel, the Hon Dan Tehan MP. The Ministers and their portfolio responsibilities are as follows: Senator the Hon Marise Payne, Minister for Defence

• Strategic policy • ADF Operations • International Engagement • Budget • Defence White Paper implementation • Force Structure • Development of capability requirements • Capability/cost trade off during capability life cycle • Intelligence and Security • ICT • Science and Technology policy and support to operations

The Hon Christopher Pyne MP, Minister for Defence Industry

• Delivery of capability acquisition and sustainment projects • Development of Australian industry involvement during capability life cycle • Deliver Defence Industry agenda • Support and develop Australian Defence Industry • Encourage Australian Defence Industry involvement in global supply chains • Implementation of Naval Shipbuilding Plan • Centre for Defence Industry Capability • Defence Innovation Hub • Science and Technology engagement with Australian industry • Next Generation Technology Fund

The Hon Dan Tehan MP, Minister for Defence Personnel

• Estate • Garrison and Personnel support • Estate and equipment disposals • Military justice • Honours and Awards • ADF Cadets • Reserves • Parliamentary exchange program


10

Figure 2: Defence Organisational Chart

Minister for Defence Senator the Hon Marise Payne

Minister for Defence Industry The Hon Christopher Pyne MP

Minister for Defence Personnel The Hon Dan Tehan MP

Secretary Mr Dennis Richardson AO

Chief of the Defence Force Air Chief Marshal Mark Binskin AC

****

Enabling functions Capability and output managers

Associate Secretary Mr Brendan Sargeant

Chief Information Officer Dr Peter Lawrence

Deputy Secretary Defence People Ms Roxanne Kelley

Deputy Secretary Estate and Infrastructure Mr Steve Grzeskowiak

Chief Finance Officer Mr Phillip Prior

Deputy Secretary Strategic Policy and Intelligence Ms Rebecca Skinner

Chief Defence Scientist Dr Alex Zelinsky

Deputy Secretary Capability Acquisition and Sustainment Mr Kim Gillis

Stars (*) refer to ADF Star Rank

Vice Chief of the Defence Force Vice Admiral Ray Griggs, AO, CSC *** Chief of Navy Vice Admiral Tim Barrett, AO, CSC *** Chief of Army Lieutenant General Angus Campbell, DSC, AM *** Chief of Air Force Air Marshal Leo Davies, AO, CSC *** Chief of Joint Operations Vice Admiral David Johnston, AM ***

Portfolio Overview

11

Senior Executive Changes

The following changes have taken place since the 2016-17 Portfolio Additional Estimates Statements (PAES):

Nil changes.

Organisational Structure

The following changes have taken place since the 2016-17 PAES:

• Full integration of the Hydrography Meteorology and Oceanography branch into the Australian Geospatial-Intelligence Organisation is dependent on Parliament approving amendments to the Intelligence Service Act 2001, which is currently scheduled for the Autumn 2017 sitting of Parliament as part of a Defence Omnibus Bill.

Program Structure

The following changes have taken place since the 2016-17 PAES in order to reflect the roles, organisations structure and accountabilities within Defence:

• Defence’s Outcomes and Programs have been updated in order to reflect the strategic intent of the 2016 White Paper, First Principles Review and Corporate Plan Purposes.


12

Defence Portfolio Bodies

Army and Air Force Canteen Service

Chairman: Mr Andrew Tregaskis

The Army and Air Force Canteen Service (AAFCANS), a Commonwealth authority established under the Army and Air Force Canteen Service Regulations 1959 supplies goods, facilities and services to, or for the entertainment and recreation of, members of the Army and the Air Force including persons employed in, or in connection with, Army or Air Force installations and dependants of those members or persons, visitors to such installations and members of the Australian Army or Air Force Cadets.

Australian Military Forces Relief Trust Fund

Chairman: Brigadier Peter Daniel

The Australian Military Forces Relief Trust Fund, a Commonwealth authority established under the Services Trust Funds Act 1947, provides benefits to members of the ADF who have served in, or in association with, the Army and to the dependants of such members.

Royal Australian Air Force Veterans’ Residences Trust

Chairman: Air Commodore (Rtd) D.E. Tindal AM

The Royal Australian Air Force Veterans’ Residences Trust, a Commonwealth authority established by the Royal Australian Air Force Veterans’ Residences Act 1953, provides residences in which eligible former members, including dependants, of the Royal Australian Air Force, Royal Australian Air Force Nursing Service and Women’s Auxiliary Australian Air Force who are in necessitous circumstances and, if the Trust so approves, the dependants of such eligible persons, may be accommodated or supported.

Royal Australian Air Force Welfare Trust Fund

Chairman: Chaplain (Air Commodore) Kevin Russell

The Royal Australian Air Force Welfare Trust Fund, a Commonwealth authority established under the Services Trust Funds Act 1947, provides benefits for members of the Defence Force who have served in, or in association with, the Royal Australian Air Force and to the dependants of such members.

Royal Australian Navy Central Canteens Board

Chairman: Commodore Michael Miko

The Royal Australian Navy Central Canteens Board (RANCCB), a corporate Commonwealth entity established under the Navy (Canteens) Regulations 1954, administers the Royal Australian Navy Central Canteens Fund. The principal activities of the RANCCB are to provide welfare and lifestyle related benefits and services to Navy members and their families.

Portfolio Overview

13

Royal Australian Navy Relief Trust Fund

Chairman: RADM Brett Wolski

The Royal Australian Navy Relief Trust Fund, a Commonwealth authority established under the Services Trust Funds Act 1947, provides benefits for members of the Defence Force who have served in, or in association with, the Navy and to the dependants of such members.

AAF Company

President: Brigadier Leigh Wilton

The AAF Company is a Commonwealth company that undertakes the management and trusteeship of the unincorporated funds known as the ‘Army Amenities Fund’ and the ‘Messes Trust Fund’. The AAF Company promotes and supports the objects of the Army Amenities Fund which provides amenities for members of the Australian Army.

Australian Strategic Policy Institute Limited

Chairman: Lt Gen (Rtd) Ken Gillespie, AC DSC CSM

The Australian Strategic Policy Institute Limited is a Commonwealth company that provides policy-relevant research and analysis to inform Government decisions and public understanding of strategic and defence issues.

Royal Australian Air Force Welfare Recreational Company

Chairman: Air Commodore Phillip Tammen

The Royal Australian Air Force Welfare Recreational Company is a Commonwealth company that provides access to discounted recreational accommodation and manages and promotes the Royal Australian Air Force Central Welfare Trust Fund owned recreational facilities for the Royal Australian Air Force members, their families and other eligible persons. It also provides financial support to, and assists in the provision of, recreational facilities and services to the Royal Australian Air Force members.


14


Department of Defence

15


Entity Resources and Planned Performance

Section 1: Defence Overview and Resources

1.1 Strategic Direction Statement

1.2 Defence Resource Statement

1.3 Budget Measures

1.4 Capital Investment Program

1.5 People

Section 2: Defence Outcomes and Planned Performance

2.1 Outcomes and Performance Information

Section 3: Defence Explanatory Tables and Budgeted Financial Statements

3.1 Explanatory Tables

3.2 Resource Summary

3.3 Budgeted Financial Statements


16



17

DEPARTMENT OF DEFENCE

Section 1: Defence Overview and Resources

1.1 STRATEGIC DIRECTION STATEMENT

The Government’s Defence policy, articulated in the 2016 Defence White Paper, is to align Australia’s defence strategy with capabilities and resourcing, grow our international defence partnerships and invest in the Defence–industry partnership to develop and deliver innovative, cutting-edge capabilities. Inherent in this policy is a greater focus on seizing opportunities while managing strategic risks. This will be achieved through developing Defence’s ability to take a more active role in shaping regional affairs and to respond to developments that threaten our interests. Our alliance with the United States will be strengthened as will our partnerships with other countries. This is designed to ensure the Australian Defence Force is better prepared to respond to complex emerging strategic risks by providing Government with greater options and flexibility.

Emerging challenges are increasing strategic risk and uncertainty. As identified in the 2016 Defence White Paper:

We can expect greater uncertainty in Australia’s strategic environment over the next two decades as a consequence of: the changes in the distribution of power in the Indo-Pacific and globally; the continuing threat of terrorism from groups like Daesh and from foreign terrorist fighters; the modernisation of regional military capabilities; the introduction of new military technologies such as cyber systems; and the proliferation of weapons of mass destruction and ballistic missile technology.1

The White Paper sets out a new strategic framework within which all Defence activities are undertaken. This framework identified three Strategic Defence Interests linked to three equally weighted Strategic Defence Objectives:

A secure, resilient Australia, with secure northern approaches and proximate sea lines of communication.

The Strategic Defence Objective for this interest is: Deter, deny and defeat attacks on or threats to Australia and its national interests, and northern approaches. This objective relates to Defence Purpose 1.

A secure nearer region, encompassing maritime South East Asia and South Pacific (comprising Papua New Guinea, Timor–Leste and Pacific Island Countries).

The Strategic Defence Objective for this interest is: Make effective military contributions to support the security of maritime South East Asia and support the governments of Papua New Guinea, Timor–Leste and of Pacific Island Countries to build and strengthen their security. This objective relates to Defence Purpose 2.

A stable Indo-Pacific region and a rules-based global order.

1 Defence White Paper 2016, p.32.


18

The Strategic Defence Objective for this interest is: Contribute military capabilities to coalition operations that support Australia’s interests in a rules-based global order. This objective relates to Defence Purpose 2.

Defence undertakes a number of programs designed to achieve these objectives and manage strategic risk. The major activities to be undertaken in 2017–18 are outlined in the section on Performance.

The First Principles Review and the 2016 Defence White Paper both identified that Defence has a number of significant challenges we must overcome to develop the organisational capability we require to meet Government expectations. In addition to internal challenges, Commonwealth legislation and policy require Defence to develop the capacity to meet specific whole‐of-government requirements.

For example, the Australian National Action Plan on Women, Peace and Security 2012–2018 is a whole‐of‐Government policy to implement the United Nations Security Council Resolution 1325 (UNSCR 1325) and other United Nations (UN) Security Council resolutions related to Women, Peace and Security. The Women, Peace and Security agenda is central to Defence’s operational effectiveness and is an essential component of future planning and conduct of operations.

Defence has the most extensive land and property holdings in Australia, including large training areas and bases close to the coastline. Recognising the challenges posed by climate change, Defence is undertaking studies to determine the level of risk and implementing mitigation strategies to reduce the impact to bases and training areas.

The Government’s Public Management Reform Agenda – as expressed through the PGPA Act and related legislative and policy – requires all entities to take a deliberate approach to corporate planning and performance management, supported by a stronger risk management framework that aligns to the Commonwealth Risk Management Policy 2014. Improved corporate risk management, business planning and performance management will enable Defence to focus all activities on achieving Government‐directed outcomes.

The First Principles Review identified the Defence workforce as one of the most critical contributors to the delivery of the full range of capability expected by Government. The Defence Strategic Workforce Plan was delivered in 2016 and is designed to set the framework for the management of the current and future workforce. Implementation of the plan will continue in 2017‐18, with workforce challenges to be monitored and actively managed through the stewardship of the Enterprise Business Committee and the Defence Committee.

Diversity and inclusion continues to be a priority for Defence as it seeks to increase the representation of the various diversity groups to better reflect the Australian community it services and remove barriers to their participation in the Defence workforce.

The Defence Diversity and Inclusion Strategy identifies the immediate priorities for Defence’s plan for building a more diverse and inclusive workplace, with a particular focus on: Women, Indigenous Australians, people from culturally and linguistically diverse backgrounds and people with disability.


19

1.2 DEFENCE RESOURCE STATEMENT

Table 1: Total Defence Resourcing

Seria

l No. 2016-17

EstimatedActual

$'000

2017-18Previous Estimate

$'000

2017-18Budget

Estimate$'000

Variation$'000

Variation%

2018-19Forward Estimate

$'000


$'000


$'000Defence resourcing

1 30,817,174 Appropriation for departmental outcomes[1] 31,395,832 32,205,226 809,394 2 6 31,906,770 33,628,917 35,825,1392 1,064,704 Equity injection appropriation[1] 2,526,250 2,365,307 -160,943 -6.4 3,842,761 4,731,123 6,142,3533 - Prior year appropriation - - - - - - -4 31,881,878 Current year's appropriation (1 + 2 + 3) 33,922,082 34,570,533 648,451 1.9 35,749,531 38,360,040 41,967,4925 - Draw dow n of appropriations carried forw ard - - - - - - -6 - Other appropriation receivable movements - - - - - - -7 -897 Return to the Official Public Account[2] -919 -919 - - -942 -966 -9908 -897 Funding from / to the OPA (5 + 6 +7) -919 -919 - - -942 -966 -9909 31,880,981 Funding from Government (4 + 8) 33,921,163 34,569,614 648,451 1.9 35,748,589 38,359,074 41,966,502

10 113,572 Capital receipts 117,272 117,282 10 0 0 188,045 354,296 43,28011 484,538 Ow n source revenue (s74 receipts)[3] 479,783 503,986 24,203 5 0 515,381 531,229 555,53812 - Prior year receipts - - - - - - -13 598,110 Funding from other sources (10 + 11 + 12) 597,055 621,268 24,213 4.1 703,426 885,525 598,81814 32,479,091 Total Defence funding (9 + 13) 34,518,218 35,190,882 672,664 1.9 36,452,015 39,244,599 42,565,320

Administered15 7,825,973 Administered special appropriations 5,543,607 5,550,242 6,635 0.1 5,754,528 5,959,659 6,152,77216 1,560,018 Ow n source revenue 1,470,268 1,470,206 -62 -0 0 1,418,097 1,362,112 1,321,56617 -1,560,018 Returns to the Official Public Account -1,470,268 -1,470,206 62 -0 0 -1,418,097 -1,362,112 -1,321,56618 7,825,973 Total Administered funding (15 + 16 + 17) 5,543,607 5,550,242 6,635 0.1 5,754,528 5,959,659 6,152,77219 40,305,064 Total Defence resourcing (14 + 18) 40,061,825 40,741,124 679,299 1.7 42,206,543 45,204,258 48,718,092

Appropriation carried forward

20 687,345Appropriation receivable including previous year's outputs 687,345 687,345 - - 687,345 687,345 687,345

21 47,597 Cash in bank 47,597 47,597 - - 47,597 47,597 47,59722 734,942 Total appropriations carried forward (20 + 21) 734,942 734,942 - - 734,942 734,942 734,942

Notes

3. All f igures are net of GST.2. Represents net transfers to and from the Official Public Account.

1. The Current Year's Appropriation, comprising Appropriation for Departmental Outcomes and the Equity Injection Appropriation, w ill provide the Department w ith anadditional $648m, including $851m in funding for Operations, offset by foreign exchange movements and other budget variations. Refer to Table 2 for further detail.


20

1.3 BUDGET MEASURES

2017-18 Budget Measures and Other Budget Adjustments

Table 2: Defence 2017-18 Budget Measures

Program

2017-18Budget

Estimate$m


$m


$m


$m

TotalForward

Estimates$m

Departmental Budget measuresDefence Force Ombudsman - continuation and expansion[1] 2.12 - - - - -Department of Defence – eff iciencies[2] Various -69.8 -72 3 -76 3 -85.7 -304.1Gold Coast 2018 Commonw ealth Games - additional Australian Government support 1.3 33 9 0 3 - - 34.2Commonw ealth Redress Scheme for Survivors of Institutional Child Sexual Abuse 2.3 -25.8 - - - -25.8Overseas Allow ances for Australian Government Employees - eff iciencies Various -0 9 -2 2 -3.8 -6.6 -13.5Australian Naval Infrastructure Pty Ltd - supporting shipbuilding infrastructure[3] 2.5 nfp nfp nfp nfp nfpVeteran Centric Reform[4] 2.12 - - - - -Per-and Poly-Fluorinated Alkyl Substances - National Health Research Program[5] 2.10 - - - - -Total Departmental Budget Measures -62.6 -74.3 -80.1 -92.2 -309.2Other budget adjustmentsForeign Exchange Various -97.2 -235.1 -4.1 374.6 38.2Operation Okra - extension 1.2 430.0 50 3 29.8 - 510.2Operation Accordion - extension 1.2 218.9 24 5 23.1 - 266.5Operation Manitou - extension[6] 1.2 42.7 -1 9 .. - 40.8Operation Highroad - extension 1.2 72.8 -8 8 1.8 - 65.9Operation Resolute - extension[7] 1.3 52 8 .. - - 52.9Return of Super Governance and Admin Reform Fees 2.12 -1 5 -1 5 -1.5 -1.5 -5.8Total Other Departmental Budget Adjustments 718.6 -172.3 49.1 373.2 968.6Variation to Defence Departmental Funding 656.1 -246.6 -31.0 280.9 659.4

Notes

6. The value of this Operation Manitou measure in 2019-20 is $0.001m.

5. Defence w ill be absorbing the cost ($12.3m) of the specif ic initiatives relating to this measure, being $12 0m in 2017-18; $0.1m in 2018-19; $0.1m in 2019-20; $0.1m in 2020-21.

1. Defence w ill be absorbing the cost ($32.1m) of the specif ic initiatives relating to this measure, being $26 3m in 2017-18; $2.9m in 2018-19; $2.0m in 2019-20; $1.0m in 2020-21.

7. The value of this Operation Resolute measure in 2018-19 is $0.047m.

4. Defence w ill be absorbing the cost ($1 0m) of the specif ic initiatives relating to this measure in 2017-18.

2. This measure relates to a reduction in Contractors, Consultants and Business Travel.3. The expenditure for this measure is not for publication (nfp) due to commercial-in-confidence considerations.

Due to a change in classification treatment of Operations spending, from 2017-18 onwards funding for continuing Operations is disclosed as an Other Budget Adjustment. Previously, this was classified as a Budget Measure. The change in classification better reflects the nature of the on-going Operations, noting that Government will continue to review on-going Operations at least annually, or as otherwise required. New Operations will continue to be classified as Budget Measures.


21

Operations Summary

Table 3: Net Additional Cost of Operations to 2020-21[1]

Actual Result to

2015-16$m

2016-17 Estimated

Actual$m

2017-18 Budget

Estimate$m

2018-19 Forward Estimate

$m


$m


$mTotal

$mOperation Slipper 7,202 6 103 9 - - - - 7,306.5Operation Manitou[2] 73 0 40 2 54.2 10.0 .. - 177.4Operation Accordion 289 9 179.4 222.2 27.7 23.1 - 742.3Operation Highroad 243.7 95 0 83.5 2.7 1.8 - 426.8Operation Resolute[3] 251.1 22 5 55.6 .. - - 329.2Operation Okra 446 0 353 0 453.6 64.2 29.8 - 1,346.7Defence Support to the 2018 Commonw ealth Games - - 33.9 0.3 - - 34.2

Total Net Additional Costs 8,506.3 794.0 903.1 105.0 54.7 - 10,363.1Sources of Funding for Operations

Government Supplementation 8,506 3 794 0 903.1 105.0 54.7 - 10,363.1Total Cost 8,506.3 794.0 903.1 105.0 54.7 - 10,363.1

Notes

2. The value of this Operation Manitou measure in 2019-20 is $0.001m. 3. The value of this Operation Resolute measure in 2018-19 is $0.047m.

1. This table reflects the net additional cost of on-going and new Operations.


22

1.4 CAPITAL INVESTMENT PROGRAM

Table 4: Capital Investment Program

Seria

l No. 2017-18

BudgetEstimate

$m


$m


$m


$mTotal

$m1 Major Capital Investment Program 7,426.4 8,638.7 9,739.6 11,662 9 37,467.72 Capital Facili ies Program 2,025.6 1,909 0 2,177.6 2,593 3 8,705.53 ICT Investment Plan 889.0 1,070 9 1,010.8 1,136.6 4,107.44 Minors Program 75.0 124 0 143.7 235.1 577.85 Other Investment[1] 1,185.7 1,169 5 961.8 356.1 3,673.16 Total Capital Investment Program 11,601.7 12,912.1 14,033.6 15,984.0 54,531.5

1. Includes purchases of plant and equipment, and the capital component of repairable items. Note

Table 5: Capability Sustainment Program

Seria

l No. 2017-18

BudgetEstimate

$m


$m


$m


$mTotal

$m1 Navy Sustainment 2,092.4 2,077.1 2,094.2 2,175.7 8,439.32 Army Sustainment 1,523.6 1,544.4 1,572.8 1,704 5 6,345.33 Air Force Sustainment 2,396.1 2,410 8 2,551.0 2,703 5 10,061.44 Chief Information Officer Sustainment[1] 971.1 1,099.1 1,243.0 1,370 9 4,684.15 Vice Chief of the Defence Force Sustainment 85.9 73 0 141.2 262 2 562.36 Strategic Policy & Intelligence Sustainment 21.3 23.7 23.9 21 9 90.97 Joint Operations Command Sustainment 7.2 7.4 7.8 8 3 30.68 Estate & Infrastructure Group Sustainment[2] 2,007.8 2,097 3 2,306.0 2,212.1 8,623.29 Future Sustainment Costs associated w ith AMCIP, ICT and Facilities 369.0 599 0 803.5 1,049 2 2,820.810 Total Sustainment 9,474.2 9,931.9 10,743.4 11,508.3 41,657.8

Notes1. Chief Information Officer Sustainment includes all ICT sustainment for the Department.2. Estate & Infrastructure Group Sustainment includes all estate maintenance, garrison support and associated costs for the Department.

Table 6: Retained Capital Receipts

Seria

l No. 2017-18

BudgetEstimate

$m


$m


$m


$mTotal

$mProperty Sales

Proceeds from he sale of land and buildings 71.7 146.0 310.0 - 527.7Proceeds from he sale of housing 14.5 15.2 15.9 16.6 62.1Total proceeds from the sale of property 86.1 161.2 325.9 16.6 589.7Costs from the sale of property[1] 44.3 17.4 0.9 0.4 63.0

1 Net property proceeds retained by Defence 130.5 178.6 326.8 17.0 652.82 Proceeds from sale of specialist military equipment 7.5 7.5 7.5 7.5 30.23 Proceeds from sale of infrastructure, plant and equipment 23.6 19.3 20.9 19.2 83.04 Retained Capital Receipts (1+2+3) 161.5 205.3 355.1 43.6 765.5

Note1. Costs from the sale of property include remediation w orks.


23

1.5 PEOPLE

Workforce Overview

ADF Workforce

The Australian Defence Force (ADF) is forecast to achieve an Average Funded Strength (AFS) of 59,194 in 2017-18. The ADF has been below its approved allocations since 2011-12. Defence has been working to address this through increased recruiting for both Navy and Army, and targeted retention measures. Navy’s separation rates have increased with recruiting targets being reassessed in order to grow the size of the force. Army's separation rates have decreased since late 2014-15, which is helping Army to retain more people and grow the size of the force. As a result, the permanent force strength has been increasing since January 2014 and is gradually closing towards the workforce strength approved by Government.

Building on this foundation, under the 2016 Defence White Paper the permanent ADF workforce will grow to around 62,400 over the coming decade, beginning in 2016-17 with some modest growth from the earlier planned strength. Importantly, in 2017-18 Defence will implement the recently developed 10-year Defence Strategic Workforce Plan that sets out the skills Defence needs and how Defence will attract, recruit, develop and retain its people.

The Defence Strategic Workforce Plan also outlines how Defence will address key workforce risks over the coming decade. The action areas that have been identified in the plan are designed to provide Defence with a skilled workforce that delivers the capability of the Defence White Paper and has the agility to meet emerging requirements.

Civilian Workforce

The tables below estimate the Australian Public Service (APS) workforce reaching 17,500 by the end of 2016-17 as the culmination of a conscious program of workforce reductions, before stabilising at 18,200 from 2018-19. The increase reflects priorities outlined in the 2016 Defence White Paper, including enhancements to intelligence, space and cyber security capabilities involving 800 new APS positions.

The growth of White Paper APS positions will be offset by ongoing reductions elsewhere in the APS workforce, including through the reform of service delivery areas of Defence’s business, as part of the continued implementation of the 2015 First Principles Review. Implementation of the recommendations of the First Principles Review also continues to reshape Defence’s structures, systems and processes to enable it to evolve into a single, integrated system. This will inform the size and shape of Defence’s APS workforce in coming years.


24

Table 7: End of Financial Year Full Time Equivalent (FTE) Estimates for 2016-17 and the Forward Estimates

2016-17 Estimated

Actual EOFY FTE

2017-18 EOFY

Full Time Equivalent

Forecast Outcome




Total APS 17,500 18,170 18,200 18,200 18,200

Workforce Summary

The total full-time Defence workforce average is forecast to be 77,164 in 2017-18, comprising:

Permanent Forces (76.7 per cent) of:

14,123 Navy Personnel

30,672 Army Personnel

14,399 Air Force Personnel

17,970 APS staff (23.3 per cent)

The forecast for the total Active and High Readiness Reserves in 2017-18 is 1,014,000 days of service performed by an estimated 19,700 members.

Over the forward estimates period, the total workforce (excluding Reserves) will increase by 1,621 from the forecast of 77,164 in 2017-18 to 78,785 in 2020-21.

The total planned strength of the Defence workforce is shown in Tables 8 and 9, while a breakdown by Service and rank/level is at Table 10.

External Civilian Workforce

Contractors

Defence has refined its reporting process to support the First Principles Review Smart Buyer Model and to continue to reflect the Department of Finance definitions. As a result, the Defence contractor workforce is currently 2,087.

Service Providers

Service providers working under outcomes-based contracts employ their own workforces to support Defence capabilities. These service providers undertake activities such as garrison support, information and communications technology functions and maintenance activities. The size of this workforce cannot be quantified as it is employed by third party organisations that have no obligation to report workforce numbers or arrangements to Defence.


25

Defence People

A diverse and agile workforce remains critical to effectively enabling people capability to deliver Defence’s strategic priorities as outlined in the 2016 Defence White Paper.

In 2017-18 there will be continued focus on the implementation of the 2016-2026 Defence Strategic Workforce Plan and reform in accordance with the First Principles Review. The Defence Strategic Workforce Plan has been informed by a detailed workforce analysis that has identified key enterprise-level workforce risks. Ten actions areas have been developed to address these risks and ensure Defence has an integrated, enterprise approach to recruiting, career and talent management, workforce mobility, education and training, learning and development, transition and re-engagement, and partnerships with other Government Departments, industry and academia.

A particular focus for Defence is managing job families and critical job categories. In 2017-18, Defence will improve its program of professionalisation and development to support careers in the Australian Public Service, with the implementation of Professionalisation Pathways. These Pathways are the mechanism by which formal learning will be identified for every APS occupation in each Job Family.

Defence continues to implement flexible work arrangements, including the ADF Total Workforce Model which came into effect on 1 July 2016. This model supports the White Paper and First Principles Review objectives by enabling optimal use of the whole of the ADF’s workforce (Permanent and Reserve components), allowing greater strategic and organisational flexibility and agility. The model will afford ADF members increased access to flexible service arrangements, encouraging them to make service in the ADF a longer-term career.

Promoting good mental health and providing effective care, rehabilitation and support to military personnel who are wounded, injured or ill is one of Defence’s highest priorities. Defence is working with the Department of Veterans’ Affairs in the development of mental health awareness initiatives, research, rehabilitation and transition processes to improve early recognition of mental health problems and strengthen continuity of health and rehabilitation care arrangements where these are required. A key focus in 2017-18 is the development of a Defence Mental Health and Wellbeing Strategy 2017-2021 (inclusive of ADF and APS) and implementation of the Defence Family and Domestic Violence Strategy 2017-2022.

Defence continues to work with the Department of Veterans’ Affairs, industry and ex-Service organisations to support ADF members through the transition process and to find a new career. Key priorities include the Australian Defence Force transition transformation program, comprising job search preparation, a new transition coaching model, separation with documentation and enhanced post separation support.

Defence’s commitment to cultural reform through ‘Pathway to Change: Evolving Defence Culture’ remains a key priority, with all recommendations now finalised. To build on what has been learnt and to ensure that Pathway to Change continues to drive cultural change in Defence, key areas of focus in 2017-18 and beyond include leadership and accountability; inclusion and capability; ethics and workplace behaviours; flexibility and workforce agility; and leading and developing integrated teams.

Critical to our cultural reform work is increasing the diversity of the Defence workforce, including for women, people from culturally and linguistically diverse backgrounds, Indigenous Australians and people with a disability. Defence’s Diversity and Inclusion strategy will be updated in 2017 with a continued focus on ensuring the Defence workforce reflects the community it serves and to support the Defence Strategic Workforce Plan.


26

To support its key people strategies, Defence is progressing its Human Resources (HR) reform work, including the development of improved payroll and HR management systems and the implementation of a customer-centric service delivery model that supports Defence capability.

Table 8: Planned Workforce Allocation for the 2017-18 Budget and Forward Estimates—Average Fulltime[1]

2016-17Estimated

Actual

2017-18Budget

Estimate[2]

2018-19Forward

Estimate[2]

2019-20Forward

Estimate[2]

2020-21Forward

Estimate[2]

ADF Permanent Force[3]

Navy 14,219 14,123 14,683 14,718 14,763Army 30,352 30,672 30,874 30,936 31,115Air Force 14,305 14,399 14,237 14,436 14,707

1 Total Permanent Force 58,876 59,194 59,794 60,090 60,585Civilian Employees

APS 17,350 17,970 18,200 18,200 18,2002 Total Civilian Employees 17,350 17,970 18,200 18,200 18,200

Total Workforce Strength (1 + 2) 76,226 77,164 77,994 78,290 78,785

3. Numbers for ADF Permanent Force include Reservists on full-time service.

Notes

2. Forw ard Estimates for the full-time w orkforce elements represent the Government approved strength for each year.1. All numbers for the full-time w orkforce elements represent average full-time equivalents.


27

Table 9: Planned Workforce Allocation for the 2017-18 Budget and Forward Estimates – Reserve[1][2]

2016-17Estimated

Actual: days served

(members paid)

2017-18Budget

Estimate: days served

(members paid)

2018-19Forward


(members paid)

2019-20Forward


(members paid)

2020-21Forward


(members paid)

Active Reserve Force100,000 100,000 100,000 100,000 100,000(1,800) (1,850) (1,850) (1,850) (1,850)

680,000 690,000 700,000 700,000 700,000(14,500) (14,750) (15,000) (15,000) (15,000)

200,000 210,000 220,000 225,000 230,000(2,870) (2,870) (2,870) (2,870) (2,870)

980,000 1,000,000 1,020,000 1,025,000 1,030,000(19,170) (19,470) (19,720) (19,720) (19,720)

High Readiness Reserve14,000 14,000 14,000 14,000 14,000(230) (230) (230) (230) (230)

14,000 14,000 14,000 14,000 14,000(230) (230) (230) (230) (230)

994,000 1,014,000 1,034,000 1,039,000 1,044,000(19,400) (19,700) (19,950) (19,950) (19,950)

Navy

Army

Air Force

1

Air Force

Sub-total Active Reserve Force

2. Table 9 includes the High Readiness Reserve Force, Active Reserve Force and Specialist Reserve Force. Reservistson full-time service in the Permanent Forces are not included in Table 9, only in Table 8.

Notes1. As the number of days or hours w orked by Reserve members can vary greatly, f igures in Table 9 show the totalnumber of days’ service rendered, w ith a headcount of members rendering paid service in brackets.

Total Reserves (1 + 2)

Sub-total high Readiness Reserve Force2


28

Table 10: Breakdown of Average Personnel Numbers by Service and Rank

2016-17Estimated

Actual

2017-18Budget

EstimateNavy[1]

One Star and above 53 53Senior Off icers[2] 600 601Officers 2,786 2,870Other Ranks 10,780 10,599Total Navy 14,219 14,123Army[1]

One Star and above 76 77Senior Off icers[2] 868 877Officers 5,522 5,580Other Ranks 23,886 24,138Total Army 30,352 30,672Air Force[1]

One Star and above 60 60Senior Off icers[2] 690 708Officers 4,264 4,299Other Ranks 9,291 9,332Total Air Force 14,305 14,399APS[1]

Senior Executives[3] 159 154Senior Off icers[2] 5,445 5,670Other APS Staff 11,746 12,146Total APS 17,350 17,970Total Workforce 76,226 77,164

Notes1. Permanent Forces and APS numbers are forecasts of the average strength for 2016-17.2. Senior Off icers are of Colonel or Lieutenant Colonel rank equivalent and APS Executive Level 1 and 2.3. The 2017-18 f igures for Senior Executive Service include the Secretary, 12 Chiefs of Division, 1 Medical Off icer Grade 6 and 1 Medical Off icer Grade 5.


29

Section 2: Defence Outcomes and Planned Performance

2.1 OUTCOMES AND PERFORMANCE INFORMATION

Government outcomes are the intended results, impacts or consequences of actions by the Government on the Australian community. Commonwealth programs are the primary vehicle by which government entities achieve the intended results of their outcome statements. Entities are required to identify the programs which contribute to government outcomes over the Budget and forward years.

Each outcome is described below together with its related programs. The following provides detailed information on expenses for each outcome and program, further broken down by funding source.

Note:

Performance reporting requirements in the Portfolio Budget Statements are part of the enhanced Commonwealth performance framework established by the Public Governance, Performance and Accountability Act 2013. It is anticipated that the performance criteria described in Portfolio Budget Statements will be read with broader information provided in an entity’s corporate plans and annual performance statements – included in Annual Reports - to provide an entity’s complete performance story.

The most recent corporate plan for Defence can be found at: http://www.defence.gov.au/publications/corporateplan/.

The most recent annual performance statements can be found at: http://www.defence.gov.au/AnnualReports/15-16/.

http://www.defence.gov.au/publications/corporateplan/

http://www.defence.gov.au/AnnualReports/15-16/


31

Figure 4: New Structure of Defence’s Outcomes effective as at 2017-18 PBS

Programs contribute to the achievement of the Defence Purposes and Defence Outcomes, as shown in the below mapping structure. Budget Programs have been renumbered for 2017-18, in order to reflect the strategic intent of the 2016 White Paper, First Principles Review and Corporate Plan Purposes.

DEFENCE

Outcome 2: Protect and advance Australia's strategic interests through the provision of strategic policy, the development, delivery and sustainment of military, intelligence and enabling capabilities, and the promotion of regional and global security and stability as directed by Government

Outcome 1: Defend Australia and its national interests through the conduct of operations and provision of support for the Australian community and civilian authorities in accordance with Government direction.

2.1 Strategic Policy & Intelligence

Departmental Budget Programs

2 2 Defence Executive Support

2 3 Chief Finance Officer

2 5 Navy Capabilities

2.4 Vice Chief of the Defence Force

2.6 Army Capabilities

2.8 Joint Operations Command

2.9 Capability Acquisition and Sustainment

2.7 Air Force Capabilities

2.10 Estate and Infrastructure

2.13 Defence Science and Technology

2.12 Defence People

Administered Budget Programs 2.14 Defence Force Superannuation Benefits

2.15 Defence Force Superannuation Nominal Interest

2.16 Housing Assistance

2.17 Other Administered

1.1 Operations Contributing to the Safety of the Immediate Neighbourhood

1 2 Operations Supporting Wider Interests

1 3 Defence Contribution to National Support Tasks in Australia

2.11 Chief Information Officer


32



33

Outcome 1: Defend Australia and its national interests through the conduct of operations and provision of support for the Australian community and civilian authorities in accordance with Government direction

Outcome 1 Strategy

We plan for, develop and maintain the capability to deter and defeat armed attacks on Australia or on Australian interests. This includes planning for, conducting, controlling and evaluating Defence and/or coalition contributions to Government-directed operations.

Defence also supports the Commonwealth and State/Territory Governments with emergency and non-emergency tasks, as well as supporting events of national significance as requested by the Australian Government.

Operations include:

• ACCORDIAN – Provide support to ADF operations in the Middle East region within the Gulf States.

• ASLAN – United Nations mission in Sudan.

• Defence Assistance to the Civil Community (DACC) – Contribute to Commonwealth and State/Territory Governments with emergency and non-emergency tasks as required. On a case by case basis, support events of national significance as requested by relevant authorities.

• GATEWAY – Conduct northern Indian Ocean and South China Sea maritime surveillance patrols.

• HIGHROAD – Ongoing contribution to the NATO-led mission in Afghanistan supporting Afghanistan’s security, development and governance.

• MANITOU – Contribute to international maritime security operations in the Middle East Area of Operations and international counter-piracy operations in the Persian Gulf, the Gulf of Aden, the Red Sea and parts of the Indian Ocean.

• MAZURKA – Contribute to the Multinational Force and Observers in the Sinai.

• OKRA – Operations in support of coalition response to the Iraq crisis.

• PALADIN – Contribute to the United Nations Truce Supervision Organisation in the Middle East.

• RENDERSAFE – Provide enduring explosive remnants of war disposal support to the nations of the South West Pacific.

• RESOLUTE - Contribute to the whole-of-government maritime surveillance and response in the Australian area.

• SOLANIA – Conduct South West Pacific maritime surveillance patrols.

• SOUTHERN DISCOVERY – Provide ADF support to the Australian Antarctic Division.


34

Linked Programs

Department of Immigration and Border Protection

Program 1.1 Border Enforcement

Contribution to Outcome 1 by linked programs

Provides security of the Australia’s maritime borders from unauthorised maritime arrivals, prohibited imports and exports, illegal exploitation of natural resources and other maritime threats to Australian Sovereignty.

Australian Communications and Media Authority

Program 1.1 Communications regulation, planning and licensing


Provides support to fulfil Australia’s international obligations to manage interference through High Frequency Direction Finding as part of Project Nullarbor improvements to the Defence High Frequency Communications System.


35

Outcome 1 Resources

Table 11: Total Budgeted Resources Available for Outcome 1

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Program 1.1 - Operations Contributing to the Security of the Immediate NeighbourhoodRevenues from other sources - - - - -Departmental outputs 1,050 792 - - -Program 1.2 - Operations Supporting Wider InterestsRevenues from other sources 15,644 22,809 - - -Departmental outputs 773,085 919,986 209,369 163,160 -Program 1.3 - Defence Contribution to National Support Tasks in AustraliaRevenues from other sources - - - - -Departmental outputs 22,462 89,553 297 - -Total resourcingTotal Departmental outputs 796,597 1,010,331 209,666 163,160 -Total Departmental revenue from other sources 15,644 22,809 - - -Total resources for Outcome 1 812,241 1,033,140 209,666 163,160 -

Notes1. Budget Programs has been renumbered from 2017-18 onw ards. As such, the 2016-17 Estimated Actuals relate to former Program 2.1 Operations Contributing to the Security of the Immediate Neighbourhood.2. Budget Programs has been renumbered from 2017-18 onw ards. As such, the 2016-17 Estimated Actuals relate to former Program 2.2 Operations Suppor ing Wider Interests.3. Budget Programs has been renumbered from 2017-18 onw ards. As such, the 2016-17 Estimated Actuals relate to former Program 3.1 Defence Contribution to National Support Tasks in Australia.


36

Contributions to Outcome 1

Program 1.1: Operations Contributing to the Safety of the Immediate Neighbourhood[1]

Program 1.1 Objective

To ensure that the Government, through the Australian Defence Force, has an active and effective role in promoting regional stability, integrity and cohesion.

Australia shares the immediate neighbourhood with Indonesia, New Zealand, Papua New Guinea, Timor-Leste, South East Asian countries and the island countries of the South West Pacific.

Delivery This program will be achieved by:

• ensuring Defence’s operational capabilities are available to meet Government direction

• conducting joint, combined and interagency operations as directed by Government

• delivering intelligence services

Performance information

Year Performance criteria[2] Targets

2016-17 ADF operations meet requirements.

Operations meet Government’s stated objective/s. Expected to be met. ADF forces are effectively deployed and sustained. Expected to be met.

2017-18 Operational outcomes meet the requirements of Government policy.

All operational requirements are met.

2018-19 and beyond

As per 2017-18. As per 2017-18.

Purpose[3] Purpose 1 – Defend Australia and its national interests.

Material changes to Program 1.1 resulting from the following measures: Nil

Notes

1. Budget Programs have been renumbered from 2017-18 onwards as per Figure 4.

2. New or modified performance criteria that reflect new or materially changed programs are shown in italics.

3. Refers to updated purposes that will be reflected in the 2017-18 Defence Corporate Plan.


37

Table 12: Cost Summary for Program 1.1 Operations Contributing to the Security of the Immediate Neighbourhood[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees - - - - -Suppliers 1,050 792 - - -Grants - - - - -Depreciation and amortisation - - - - -Finance cost - - - - -Write-dow n of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses - - - - -

Total expenses 1,050 792 - - -Income

RevenuesGoods and services - - - - -Other revenue - - - - -Total revenue - - - - -GainsReversal of previous asset w rite-dow ns - - - - -Net gains from sale of assets - - - - -Other gains - - - - -Total gains - - - - -

Total income - - - - -Program 1.1 Operations Contributing to the Security of the Immediate Neighbourhood 1,050 792 - - -

Note1. Budget Programs has been renumbered from 2017-18 onw ards. As such, he 2016-17 Estimated Actuals relate to former Program 2.1 Operations Contributing to the Security of the Immediate Neighbourhood.


39

Table 13: Cost Summary for Program 1.2 Operations Supporting Wider Interests[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 115,332 91,819 - - -Suppliers 585,330 746,328 104,725 54,686 -Grants 88,067 104,643 104,644 108,474 -Depreciation and amortisation - - - - -Finance cost - - - - -Write-dow n of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses - 5 - - -

Total expenses 788,729 942,795 209,369 163,160 -Income

RevenuesGoods and services 15,644 22,809 - - -Other revenue - - - - -Total revenue 15,644 22,809 - - -GainsReversal of previous asset w rite-dow ns - - - - -Net gains from sale of assets - - - - -Other gains - - - - -Total gains - - - - -

Total income 15,644 22,809 - - -g Interests 773,085 919,986 209,369 163,160 -

Note1. Budget Programs has been renumbered from 2017-18 onw ards. As such, the 2016-17 Estimated Actuals relate to former Program 2.2 Operations Supporting Wider Interests.


40

Outcome 1.3 Defence Contribution to National Support Tasks in Australia[1]

Program 1.3 Objective To undertake tasks that include: planning and conduct of operations to provide security of the Australian coastline from unauthorised maritime arrivals, smuggling, quarantine evasion and other intrusions to Australian sovereignty; counter-terrorism responses; search and rescue; humanitarian assistance and disaster relief. Defence contributes to the Department of Immigration and Border Protection civil surveillance program and Maritime Border Command tasking, providing maritime surveillance assets that are tasked routinely in accordance with the Government's direction. Defence, through the Defence Assistance to the Civil Community (DACC) program, supports the Commonwealth and State/Territory Governments with emergency and non-emergency tasks, as well as supporting events of national significance as requested by relevant authorities and the general public. Delivery This program will be achieved by:

• ensuring Defence’s operational capabilities are available to meet Government direction

• conducting joint, combined and interagency operations as directed by Government

• delivering intelligence services



2016-17 ADF operations meet requirements. Operations meet Government’s stated objective/s. Expected to be met. Forces are effectively deployed and sustained. Expected to be met. Forces are withdrawn for reconstitution when they are no longer required. Expected to be met.



2018-19 and beyond

As per 2017-18. As per 2017-18.

Purpose[3] Purpose 1 – Defend Australia and its national interests.

Material changes to Program 1.3 resulting from the following measures: • Gold Coast 2018 Commonwealth Games - additional Australian Government support

Notes





41

Table 14: Cost Summary for Program 1.3 Defence Contribution to National Support Tasks in Australia[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 8,521 9,144 47 - -Suppliers 13,941 80,409 250 - -Grants - - - - -Depreciation and amortisation - - - - -Finance cost - - - - -Write-dow n of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses - - - - -

Total expenses 22,462 89,553 297 - -Income


Total income - - - - -Program 1.3 Defence Contribution to National Support Tasks in Australia 22,462 89,553 297 - -

Note1. Budget Programs has been renumbered from 2017-18 onw ards. As such, the 2016-17 Estimated Actuals relate to former Program 3.1 Defence Contribution to Na ional Support Tasks in Australia.


42

Outcome 2: We protect and advance Australia’s strategic interests through the provision of strategic policy, the development, delivery and sustainment of military, intelligence and enabling capabilities, and the promotion of regional and global security and stability as directed by Government.

Outcome 2 Strategy

Defence must provide high-quality, coherent and timely policy advice to Government on Defence strategy, capability and resourcing. Defence has implemented a ‘strategic centre’ model to ensure that all advice provided to Government is rigorously contested for alignment with Government strategic direction and to ensure the options being presented to Government support achievement of its Defence strategy, as described in the 2016 Defence White Paper.

The Government expects Defence to play an active role in contributing to regional security and stability, and to contribute to coalition operations around the world where our interests are engaged. Delivering on these requirements will require Australia to build on its strong network of bilateral and multilateral relationships. Through regular dialogue and practical cooperation, Defence is strengthening its engagement with partners to support shared responses to shared challenges.

Capability delivery is a core business process that enables Defence to perform its mission of defending Australia and its national interests now and into the future. Defence must procure capability efficiently and effectively. In 2017–18, Defence will continue building the new levels of capability required by Government and described in the 2016 Defence White Paper and the Integrated Investment Program. Major investments will enhance Australian Defence Force capability to conduct operations to deter and defeat threats to Australia, operate over longer distances to conduct independent combat operations in our region, and make more effective contributions to international coalitions.

Australia’s defence industry is a major partner in the Government’s plans for current and future Defence capabilities. It is vital that Australia maintains a science and technology base and defence industry capable of supporting Defence’s acquisition and sustainment requirements during peacetime and operations. A highly skilled and capable Australian defence industry is necessary for Defence to achieve its strategic objectives and deliver large-scale, complex projects and sustain military capability. Defence will work with industry to reflect a shared policy agenda that supports the growth and competitiveness of Australian businesses.


43

Linked Programs

Attorney General’s

Program 1.2 – Attorney General’s Department operating expenses – National Security and Criminal Justice


Under a Memorandum of Understanding, the placement of Emergency Management Australia secondees at the Australian Civil-Military Centre (ACMC) supports a high-priority Australian Government initiative to enhance the effectiveness of national and regional civil-military-police interaction in conflict and disaster management to promote regional and global security and stability.

Under the Service Level Charter, Australian Government Service Vetting Agency (AGSVA) work collaboratively with Government agencies to implement, deliver and monitor security policy and procedures across the Commonwealth (excluding authorised vetting agencies) as well as provide the delivery of security vetting functions on behalf of the Commonwealth in line with Government requirements.

Australian Federal Police

Program 1.1 – Federal Policing and National Security


Under a Memorandum of Understanding there is a framework for cooperation between the participants to strengthen and consolidate sharing of information to promote security and stability within Australia.

Under a Memorandum of Understanding, deliver agreed protective security base support services to Defence.

Under a Memorandum of Understanding, the placement of Australian Federal Police secondees at the Australian Civil-Military Centre supports a high-priority Australian Government initiative to enhance the effectiveness of national and regional civil-military-police interaction in conflict and disaster management to promote regional and global security and stability.

Australian National Audit Office

Program 1.1 – Financial statements audits of Australian Government entities

Contribution to Outcome 2 by linked program

Audit Fraud and Control Division conduct internal audits as well as coordinates Australian National Audit Office performance audit activities in Defence.


44

Australian Security Intelligence Organisation

Program 1.1 – Security Intelligence


Australian Security Intelligence Organisation exercises its foreign collection powers under warrant at the request of the Minster for Defence or the Minister for Foreign Affairs.

Bureau of Meteorology

Program 1.1 – Bureau of Meteorology


Under a Memorandum of Understanding, provide weather station support to training area and range management for the support of Defence training exercises.

Comcover

Program 2.4 – Insurance and Risk Management


Working with Department of Finance to ensure Commonwealth assets are adequately insured and where necessary claims are made in accordance with Commonwealth guidelines and policy.

Commonwealth Superannuation Corporation

Program 1.1 – Superannuation Scheme Governance


The Departments of Finance and Defence provide funding through third party access arrangements to the Commonwealth Superannuation Corporation for the propose of providing payments of retirement and insurance benefits for scheme members and beneficiaries, including past, present and future employees of the Australian Government and other eligible employers and members of the Australian Defence Force.

Defence Housing Australia

Program 1.1 – The provision of Defence housing and housing related services


Under a Services Agreement and in accordance with the Defence Housing Australia Act 1987, DHA provides suitable housing and housing related services in order to meet the operational needs of the Defence Force and the requirements of the Department.


45

Defence Force Ombudsman

Program 1.1 – Office of the Commonwealth Ombudsman


The Office of the Commonwealth Ombudsman ensures administrative action by Australian Government entities is fair and accountable by handling complaints, conducting investigations, performing audits and inspections, encouraging good administration, and discharging other specialist oversight tasks. The Commonwealth Ombudsman is also the Defence Force Ombudsman, who is able to accept complaints alleging that a member of Defence has perpetrated an act of sexual abuse or serious physical abuse, bullying or harassment.

Department of the Environment and Energy

Program 1.6 – Management of Hazardous Wastes, Substances and Pollutants


The Department of the Environment and Energy contributes to the development, delivery and sustainment of military, intelligence and enabling capability through the provision of the National Oil Supplies Emergency Committee (Department of Environment and Energy Committee). Defence, as the largest single user of fuel within Government, participates in forums and discussions and provides input to energy security policy.

Department of Foreign Affairs and Trade

Program 1.1 – Foreign Affairs and Trade Operations


Under a Memorandum of Understanding, the placement of Department of Foreign Affairs and Trade secondees at the Australian Civil-Military Centre (ACMC) supports a high-priority Australian Government initiative to enhance the effectiveness of national and regional civil-military interaction in conflict and disaster management and promotes regional and global security.

Department of Human Services

Program 1.1 – Services to the Community – Social Security and Welfare


The Department of Human Services administers claims and support services to individual and businesses affected by the closure of Hunter River and Port Stephens fisheries.


46

Department of Industry, Innovation and Science (through AusIndustry)

Program 1.1 – Supporting Science and Commercialisation


The Department of Defence (Defence) contributes to growing business investment and improving business capability by collaborating with Industry through the Centre for Defence Industry Capability (CDIC). The CDIC, funded by Defence and delivered by Department of Industry, Innovation and Science, is a key initiative of the 2016 Defence Industry Policy Statement and contributes to improving business capability, productivity and global competitiveness, aligning with Defence’s capability requirements. It is a cornerstone of the government's strategy for resetting the defence-industry partnership. It will help facilitate innovation and build the capability and capacity of Australian industry to meet the Defence' s requirements, through the provision of advisory services and grants to industry. Defence is investing $200 billion in growing Australia’s defence capability over the next decade, including through major projects such as the Future Frigate and Future Submarine Programs. The CDIC is supporting the competitiveness and growth of Australia’s defence industry to win work on these and other Defence programs, as well as connecting businesses to export opportunities.

Department of Infrastructure and Regional Development

Program 1.1 – The Australian Transport Safety Bureau

Program 1.1 – The Civil Aviation Safety Authority


The Memorandum of Understanding between Defence and the Australian Transport Safety Bureau contribute to the outcome through the sharing of expertise, training opportunities, experience and equipment in transport safety investigations and supports the adoption of a systemic approach to aviation safety. The Australian Transport Safety Bureau support to Defence Aviation Safety investigations contribute to capability through the prevention of recurrence and the mutual adoption of a systemic approach to aviation safety enhances capability through the prevention of accident and serious incidents.

The Memorandum of Understanding between Defence and the Civil Aviation Safety Authority contributes to the outcome through a harmonisation of military and civil aviation regulation and management. This harmonisation reaches into areas such as shared use airfield, the provision of air traffic services through Airservices Australia to Defence and the use of civil registered aircraft and UAS by the Military. Agreement between civil and military regulators leads to cooperation and reduced duplication in Air Traffic Management, aviation landing and approach procedures, aviation rescue and fire-fighting services and airport infrastructure.


47

Department of Social Services

Program 2.1 – Families and Communities


Defence will contribute to the establishment by the Australian Government of a Commonwealth Redress Scheme for survivors of institutional childhood sexual abuse.

Department of Veterans’ Affairs

Program 1.1 – Veterans’ Income Support and Allowances

Program 1.2 – Veterans’ Disability Support

Program 1.6 – Military Rehabilitation and Compensation Acts Payment – Income Support and Compensation


Defence and the Department of Veterans’ Affairs work collaboratively on areas of research, mental health, rehabilitation and looking at medical aspects of transition. Defence is also engaged with the Department of Veterans’ Affairs for the future contracting of health care arrangements.

This is supported through Schedule 6 of the Agreement between Defence and Veterans’ Affairs for the Provision of Mental Health Support Services by the Veterans and Veterans Families Counselling Service to ADF Personnel (Agreement for Services).

Under a Memorandum of Understanding, Department of Veterans’ Affairs provides services for the administration of the Defence Homeowners Assistance Scheme and the Defence Homeowners Scheme, including the accurate and timely processing of subsidy payments, member applications and issuing of Subsidy Certificates.


48

Outcome 2 Resources

Table 15: Total Budgeted Resources Available for Outcome 2[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Program 2.1 Strategic Policy and IntelligenceRevenues from other sources 6,758 7,048 7,579 8,064 8,465Departmental outputs 909,177 1,031,349 1,106,838 1,190,236 1,333,307Program 2.2 Defence Executive SupportRevenues from other sources 10,837 22,568 23,295 23,876 24,473Departmental outputs 204,608 212,629 209,136 196,703 200,189Program 2.3 Chief Finance OfficerRevenues from other sources 4,933 5,053 5,176 5,303 5,433Departmental outputs 286,696 244,128 209,007 274,444 308,863Program 2.4 Vice Chief of the Defence ForceRevenues from other sources 218,584 217,724 226,949 233,057 239,915Departmental outputs 1,344,496 1,433,960 1,453,456 1,657,573 1,913,916Program 2.5 Navy CapabilitiesRevenues from other sources 69,369 72,274 75,274 78,117 80,865Departmental outputs 6,144,236 6,413,617 6,114,393 6,359,531 7,084,086Program 2.6 Army CapabilitiesRevenues from other sources 35,712 38,226 40,787 43,648 46,387Departmental outputs 7,876,185 7,325,798 7,372,985 7,735,724 8,382,243Program 2.7 Air Force CapabilitiesRevenues from other sources 62,060 65,355 68,500 71,652 74,840Departmental outputs 6,270,942 6,821,824 7,430,056 7,899,171 8,365,454Program 2.8 Joint Operations CommandRevenues from other sources - - 458 498 543Departmental outputs 44,640 51,330 49,914 76,123 77,943Program 2.9 Capability Acquisition and SustainmentRevenues from other sources 2,596 963 2,727 1,011 2,864Departmental outputs 614,095 653,823 650,072 688,918 717,456Program 2.10 Estate and InfrastructureRevenues from other sources 338,855 363,206 366,777 369,535 387,900Departmental outputs 4,148,791 4,546,774 4,571,241 4,772,254 4,655,282Program 2.11 Chief Information OfficerRevenues from other sources 4,546 11,116 11,065 14,218 17,450Departmental outputs 1,246,811 1,500,627 1,553,345 1,692,388 1,842,368Program 2.12 Defence PeopleRevenues from other sources - - - - -Departmental outputs 481,197 486,039 502,106 516,853 523,817Program 2.13 Defence Science and TechnologyRevenues from other sources 4,607 4,862 5,091 5,317 5,547Departmental outputs 447,468 472,997 474,555 405,839 420,215


49

Table 15: Total Budgeted Resources Available for Outcome 2 (Continued)[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Program 2.14 Defence Force Superannuation BenefitsDefence Force Retirement Benefits Act, 1948 Part 1, s.15D and VIC, s 82ZJ (1) - - - - - Defence Force Retirements and Death Benefits Act, 1973 Part XII, s.125 (3) 177,952 80,316 69,092 58,709 48,315Military Superannuation and Benefits Act, 1991 Part V, s.17 4,038,303 1,408,240 1,374,098 1,341,790 1,296,800Australian Defence Force Cover Act 2015 108,614 116,675 178,883 236,225 289,761Total Administered expenses 4,324,869 1,605,231 1,622,073 1,636,724 1,634,876Administered revenues from other sources 1,416,269 1,352,073 1,293,092 1,242,547 1,199,048Total Program 2.14 2,908,600 253,158 328,981 394,177 435,828Program 2.15 Defence Force Superannuation Nominal InterestDefence Force Retirement Benefits Act, 1948 Part 1, s.15D and VIC, s 82ZJ (1) 14,122 21,611 20,451 19,317 18,212Defence Force Retirements and Death Benefits Act, 1973 Part XII, s.125 (3) 1,326,648 1,725,008 1,735,660 1,743,630 1,748,891Military Superannuation and Benefits Act, 1991 Part V, s.17 2,053,393 2,074,992 2,234,237 2,396,085 2,560,423Australian Defence Force Cover Act 2015 1,456 5,901 14,843 27,698 44,357Total Administered expenses 3,395,619 3,827,512 4,005,191 4,186,730 4,371,883Administered revenues from other sources - - - - -Total Program 2.15 3,395,619 3,827,512 4,005,191 4,186,730 4,371,883Program 2.16 Housing AssistanceDefence Force (Home Loan Assistance) Act , 1990 Part IV, s.38 618 484 379 296 232Defence Home Ownership Assistance Scheme Act 2008 Part VI, s.84 104,867 117,015 126,885 135,909 145,781Total Administered expenses 105,485 117,499 127,264 136,205 146,013Administered revenues from other sources 15,178 15,932 16,658 17,358 18,118Total Program 2.16 90,307 101,567 110,606 118,847 127,895Program 2.17 Other AdministeredAdministered revenues from other sources 106,059 91,274 82,269 85,182 84,945Total Program 2.17 -106,059 -91,274 -82,269 -85,182 -84,945Total resourcingTotal Departmental outputs 30,019,342 31,194,895 31,697,104 33,465,757 35,825,139Total Administered 6,288,467 4,090,963 4,362,509 4,614,572 4,850,661Total Departmental revenue from other sources 758,857 808,395 833,678 854,296 894,682Total Administered revenue from other sources 1,537,506 1,459,279 1,392,019 1,345,087 1,302,111Equity injection 1,064,704 2,365,307 3,842,761 4,731,123 6,142,353Total resources for Outcome 2 39,668,876 39,918,839 42,128,071 45,010,835 49,014,946

Note1. 2016-17 Estimated Actuals reflect the old Program structure of Defence's outcomes.


50


Program 2.1: Strategic Policy and Intelligence[1]


To deliver high-quality policy advice to Government, the Secretary and Chief of the Defence Force to protect and advance Australia’s strategic interests.

Delivery The program will be achieved by:

• The Minister receives policy advice that is clear, accurate and timely to support effective decision-making

• Defence strengthens its engagement with other national security agencies and stakeholders to ensure that the policy development process incorporates wide-ranging inputs and is tested through

• A competitive Australian industrial base is able to engage through the Centre for Defence Industry Capability and the Defence Innovation Hub to enhance and sustain Defence capability

• Defence intelligence agencies enable efficient operations across national security agencies through the delivery of intelligence services and capabilities



2016-17 Government has confidence in the relevance and quality of Defence advice.

Minister expresses high to very high confidence in defence advice. Expected to be met.

Defence intelligence outputs align with Government intelligence priorities.

Whole-of-Government and Australian Defence Force intelligence requirements are met. Expected to be met.

2017-18 Government has confidence in the relevance and quality of Defence policy advice.

Minister expresses high to very high confidence in Defence advice.

Proposals presented to Government for decision incorporate all relevant considerations.

Stakeholders express high confidence in Defence engagement.

The intent of the Defence Industry Policy Statement is met.

The Centre for Defence Industry Capability and the Defence Innovation Hub operate in accordance with the Defence Industry Policy Statement.

Defence intelligence outputs align with Government intelligence priorities.

Whole-of-Government and Australian Defence Force intelligence requirements are met.

2018-19 and beyond

As per 2017-18 As per 2017-18

Purpose[3] Purpose 2 – Protect and advance Australia’s strategic interests.


51

Material changes to Program 2.1 resulting from the following measures:

• Department of Defence – efficiencies

• Overseas Allowances for Australian Government Employees - efficiencies

Notes




Table 16: Cost Summary for Program 2.1 Strategic Policy and Intelligence[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 300,462 357,314 388,955 413,010 436,738Suppliers 559,421 609,425 642,116 685,181 791,861Grants 12,144 13,080 13,420 13,768 14,128Depreciation and amortisation 42,674 57,023 68,107 84,293 96,819Finance cost - - - - -Write-dow n of assets and impairment of assets 1,234 1,555 1,819 2,048 2,226Net losses from sale of assets - - - - -Other expenses - - - - -

Total expenses 915,935 1,038,397 1,114,417 1,198,300 1,341,772Income

RevenuesGoods and services 4,961 4,786 4,934 5,081 5,213Other revenue - - - - 5Total revenue 4,961 4,786 4,934 5,081 5,218GainsReversal of previous asset w rite-dow ns 1,794 2,261 2,645 2,978 3,236Net gains from sale of assets 3 1 - 5 11Other gains - - - - -Total gains 1,797 2,262 2,645 2,983 3,247

Total income 6,758 7,048 7,579 8,064 8,465Program 2.1 Strategic Policy and Intelligence 909,177 1,031,349 1,106,838 1,190,236 1,333,307

Note1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.1 Strategic Policy and Intelligence.


52

Table 17: Strategic Policy and Intelligence Deliverables (Hydrographic Products and Services)[1]

Deliverables

2016-17Estimated

Actual[2]

2017-18Budget

Estimate

2018-19Forward

Year 1

2019-20Forward

Year 2

2020-21Forward

Year 3

1,100 1,100 1,100 1,100 1,10015 15 15 15 1529 29 30 29 29

N/A 15 15 15 15249 249 249 250 249

Notes

7. AHO Availability is w hen the AHO, as a Defence capability, is materielly ready and its personnel state and level of competence enablesthe AHO to provide hydrographic products and services in accordance w ith the Navigation Act 2012 (Clth), immediately.

4. A Charting Project includes all char ing activities involved in compiling and publishing all paper and electronic charts, or other chartingservices, for a particular geographic area.5. Nautical Publications include three annual publications – HydroScheme, Australian National Tide Tables and AusTides; 25 fortnightlyNotices to Mariners; and selected additional publications each year.

Survey Projects[6]

AHO Availability[7]

1. In accordance w ith First Principles Review recommendations, the functions of the Australian Hydrographic Office (AHO) transferredfrom Navy to the Strategic Policy and Intelligence Group in 2016-17. Information relating to HydroScheme Products and he ChartProduction Office component of Hydrographic Force Unit Availability Days are now included in this table. Full details of hydrographicproducts and services are contained in HydroScheme.2. The 2016-17 Estimated Actual f igure represents the Portfolio Budget Statements (PBS) 2016-17 target. No changes w ere made atPortfolio Additional Estimates Statements (PAES).3. A Maritime Safety Update is an urgent safety-critical revision to nautical charts and publications or other hydrographic products andservices.

6. A Survey Project is a major hydrographic survey activity w ithin a particular geographic area.

Maritime Safety Updates[3]

Charting Projects[4]

Nautical Publications[5]


53

Program 2.2: Defence Executive Support[1]


To integrate parts of Defence to deliver more effective and efficient outcomes, particularly in the areas of service delivery. The Associate Secretary operates the One Defence Business Framework on behalf of the Secretary and Chief of the Defence Force.


• developing and implementing a One Defence Business Framework that guides how Defence does business in accordance with the requirements of relevant legislative and policy guidance, including the First Principles Review

• managers across Defence having a view of organisational performance within their work area which is based on true information and assured data, incorporates an understanding of risk, and is legally compliant, enabling them to make effective and robust decisions



2016-17 Enterprise planning and performance monitoring processes are delivered in line with the requirements of the Public Governance, Performance and Accountability Act 2013.

Defence meets its non-financial performance management and risk management obligations under the Public Governance, Performance and Accountability Act 2013. Expected to be met.

Business outcomes are improved as part of broader Defence reform.

Defence reform is achieved as agreed with Government and in accordance with the First Principles Review implementation plan. Expected to be met.

Security and vetting services are delivered to Defence, whole-of-Government and industry customers. Expected to be partially met. Performance is expected to improve in 2017-18.

Security services are delivered in accordance with the security and vetting services Service Offer. Expected to be met.

The Australian Government Security Vetting Agency meets its Charter. Expected to be met.

2017-18 Enterprise planning and performance monitoring processes are delivered in line with the requirements of the Public Governance, Performance and Accountability Act 2013. The Service Delivery System enables Australian Defence Force operations.

Defence meets its non-financial performance management and risk management obligations under the Public Governance, Performance and Accountability Act 2013. Enabling services are delivered in accordance with agreed requirements.

Performance information uses validated information to support decision-making.

All performance information is supported by a reliable and validated data source.


54


2018-19 and beyond

As per 2017-18 As per 2017-18




Notes




Table 18: Cost Summary for Program 2.2 Defence Executive Support[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 88,220 97,981 95,963 95,851 97,941Suppliers 122,907 134,550 134,174 122,383 124,412Grants - - - - -Depreciation and amortisation 1,843 616 192 191 101Finance cost - - - - -Write-dow n of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses 2,475 2,050 2,102 2,154 2,208

Total expenses 215,445 235,197 232,431 220,579 224,662Income

RevenuesGoods and services 10,719 22,558 23,171 23,749 24,343Other revenue 118 10 124 127 130Total revenue 10,837 22,568 23,295 23,876 24,473GainsReversal of previous asset w rite-dow ns - - - - -Net gains from sale of assets - - - - -Other gains - - - - -Total gains - - - - -

Total income 10,837 22,568 23,295 23,876 24,473Program 2.2 Defence Executive Support 204,608 212,629 209,136 196,703 200,189

Note1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.8 Defence Executive Support.


55

Program 2.3: Chief Finance Officer[1]


To deliver enterprise resource planning and budget management in accordance with Commonwealth legislation and policy frameworks.

Delivery The program is achieved by:

• driving Defence’s financial management and improvement programs through uniform financial management approaches and a streamlined accountability structure.

• working with all Services and Groups to identify costs drivers for all key business elements.



2016-17 Quality and timeliness of financial advice to the Minister, the Secretary and Chief of the Defence Force.

Financial advice meets the Minister, Secretary and Chief of the Defence Force’s requirements. Expected to be met.

Production of Defence’s Budget, Financial Statements and the annual Defence Management and Finance Plan.

Produced in accordance within agreed statutory timeframes. Expected to be met.

Status of Financial Statements.

Financial Statements are unqualified. Expected to be met.

2017-18 Quality and timeliness of financial advice to the Minister, the Secretary and Chief of the Defence Force.

Financial advice meets the Minister, Secretary and Chief of the Defence Force’s requirements.

Production of Defence’s Budget, Financial Statements and the annual Defence Management and Finance Plan.

Produced in accordance within agreed statutory timeframes.

Status of Financial Statements. Financial Statements are unqualified.

2018-19 and beyond

As per 2017-18 As per 2017-18



• Commonwealth Redress Scheme for Survivors of Institutional Child Sexual Abuse



Notes





56

Table 19: Cost Summary for Program 2.3 Chief Finance Officer[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees[2] 221,448 171,867 122,178 163,816 171,896Suppliers 66,958 71,128 75,022 77,220 79,264Grants - - - - -Depreciation and amortisation 3,144 6,107 16,904 38,632 63,057Finance cost - - - - -Write-dow n of assets and impairment of assets 79 79 79 79 79Net losses from sale of assets - - - - -Other expenses - - - - -


RevenuesGoods and services - - - - -Other revenue - - - - -Total revenue - - - - -GainsReversal of previous asset w rite-dow ns 115 115 115 115 115Net gains from sale of assets - - - - -Other gains 4,818 4,938 5,061 5,188 5,318Total gains 4,933 5,053 5,176 5,303 5,433

Total income 4,933 5,053 5,176 5,303 5,433Program 2.3 Chief Finance Officer 286,696 244,128 209,007 274,444 308,863

Notes1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.13 Chief Finance Officer.2. Full time equivalent headcount is held in this Program from time to time for future priortisation.


57

Program 2.4: Vice Chief of the Defence Force[1]


To develop and deliver Defence joint capability and military enabling services in order to protect and advance Australia and its national interests. This program manages the Defence Preparedness Management System and operates the Capability Life Cycle. The program also includes the operations of the Australian Civil-Military Centre.


• Government being able to deploy defence capability to support Government policy objectives that ensure Defence’s operational capabilities are available to meet government direction

• effective and efficient health support and welfare services being provided to deliver health and welfare services to meet the requirements of the Australian Defence Force

• implementing policy direction to meet Government’s requirements now and into the future by achieving Government’s strategic policy requirements as set out in the 2016 Defence White Paper

• developing the capability needed to meet Governments requirements now and into the future through delivery of the capability set out in the 2016 Defence White Paper



2016-17 Required preparedness levels are achieved and maintained.

Preparedness levels are achieved as agreed with Government. Expected to be met.

Strategic military advice supports Government-decision making.

Government expresses a high level of confidence in strategic military advice. Expected to be met.

Integrity of the Integrated Investment Program.

Integrated Investment Program is delivered as agreed with Government. Expected to be met.

2017-18 Chief of the Defence Force preparedness levels meet Government requirements.

Chief of the Defence Force preparedness levels are achieved as agreed with Government.

Quality of health and welfare services delivered to Australian Defence Force members and families.

Delivery meets agreed standards.

Effective implementation of the 2016 Defence White Paper.

The 2016 Defence White Paper implementation plan activities for 2017-21 are delivered as agreed with Government.

Effective implementation of the Integrated Investment Program.

The Integrated Investment Program is delivered as agreed with Government.


58


2018-19 and beyond

As per 2017-18 As per 2017-18




Notes




Table 20: Cost Summary for Program 2.4 Vice Chief of the Defence Force[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 592,136 600,388 610,934 659,863 684,298Suppliers 489,933 535,734 521,668 632,548 808,771Grants[2] 4,814 5,820 - - -Depreciation and amortisation 32,772 52,924 76,911 112,779 159,066Finance cost - - - - -Write-dow n of assets and impairment of assets 443,425 456,818 470,892 485,440 501,696Net losses from sale of assets - - - - -Other expenses - - - - -

Total expenses 1,563,080 1,651,684 1,680,405 1,890,630 2,153,831Income

RevenuesGoods and services 12,715 6,600 9,253 9,451 9,650Other revenue 154 158 1,162 1,166 1,170Total revenue 12,869 6,758 10,415 10,617 10,820GainsReversal of previous asset w rite-dow ns 205,715 210,966 216,534 222,440 229,095Net gains from sale of assets - - - - -Other gains - - - - -Total gains 205,715 210,966 216,534 222,440 229,095

Total income 218,584 217,724 226,949 233,057 239,915Program 2.4 Vice Chief of the Defence Force 1,344,496 1,433,960 1,453,456 1,657,573 1,913,916

Notes

2. Grants expense predominately relates to a grant for the Australian International Military Games of $7m from 2016-17 to 2017-18.

1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.6 Vice Chief of the Defence Force.


59

Program 2.5: Navy Capabilities[1]


To provide maritime capabilities that contribute to the Australian Defence Force’s capacity to defend Australia, contribute to regional security, support Australia’s global interests, shape the strategic environment and protect national interests.


• conducting raise, train and sustain activities to ensure maritime forces are available to meet Government direction

• contributing maritime forces to joint, combined and interagency operations as directed by Government

• contributing to a single end-to-end capability development function within Defence to maximise the efficient, effective and professional delivery of maritime capability

• conducting international engagement activities in support of the Defence International Engagement Strategy implementation




As agreed with the Chief of the Defence Force. Expected to be met.

Operational outcomes met the requirements of Government policy.

All operational requirements are met. Expected to be met.



2018-19 and beyond

As per 2017-18 As per 2017-18



• Australian Naval Infrastructure Pty Ltd - supporting shipbuilding infrastructure



Notes





60

Table 21: Cost Summary for Program 2.5 Navy Capabilities[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 2,049,156 2,159,475 2,197,461 2,255,840 2,347,569Suppliers 2,452,258 2,475,860 2,579,923 2,722,435 3,223,986Grants 200 180 150 - -Depreciation and amortisation 1,674,951 1,804,351 1,361,691 1,411,884 1,541,414Finance cost 31,205 38,673 41,302 36,457 40,058Write-dow n of assets and impairment of assets 5,835 7,352 9,140 11,032 11,924Net losses from sale of assets - - - - -Other expenses - - - - -


RevenuesGoods and services 20,820 21,464 22,119 22,807 23,518Other revenue 31,839 32,777 33,699 34,541 35,404Total revenue 52,659 54,241 55,818 57,348 58,922GainsReversal of previous asset w rite-dow ns 16,710 18,033 19,456 20,769 21,943Net gains from sale of assets - - - - -Other gains - - - - -Total gains 16,710 18,033 19,456 20,769 21,943

Total income 69,369 72,274 75,274 78,117 80,865Program 2.5 Navy Capabilities 6,144,236 6,413,617 6,114,393 6,359,531 7,084,086

Note1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.2 Navy Capabilities.


61

Table 22: Navy Deliverables (Unit Availability Days)[1]

Deliverables

2016-17Estimated

Actual

2017-18Budget

Estimate

2018-19Forward

Year 1

2019-20Forward

Year 2

2020-21Forward

Year 320 Major Combatants[2] 3,498 3,795 3,553 3,531 3,72521 Minor Combatants[3] 4,085 4,542 4,438 4,544 4,6245 Amphibious and Afloat Support[4] 1,498 1,315 1,378 1,152 1,0537 Maritime Teams[5] 2,527 2,555 2,555 2,560 2,5559 Hydrographic Force[6] 2,276 1,628 1,661 1,700 1,480

Notes

5. Maritime Teams comprise clearance diving teams, the deployable geospatial support team and mobile meteorological andoceanographic team.6. Hydrographic Force comprises hydrographic ships, survey motor launches, and the Naval Air Station Weather and OceanographicCentre. In accordance w ith the First Principles Review recommendations, the chart production off ice and meteorological andoceanographic centre has now transitioned to Strategic Policy and Intelligence Group. This accounts for the decrease in UAD.Hydroscheme products, previously reported by Navy in Table 3, have also transitioned to Strategic Policy and Intelligence Group. Theseproducts comprise Maritime Safety Updates, Charting Projects, and Nautical Publications.

1. A Unit Availability Day (UAD) is a day w hen a unit is materielly ready and its personnel state and level of competence enables he unitto safely perform tasks in the unit’s normal operating environment, immediately.2. Major Combatants comprises Adelaide class frigates (FFG), Anzac class frigates (FFH), Hobart class destroyers (DDG) andsubmarines. Adelaide class frigates are to be w ithdraw n from service over the forw ard estimates period; HMAS Darwin December2017, HMAS Melbourne September 2019 and HMAS Newcastle June 2019. Hobart class destroyers, HMA Ships Hobart , Brisbane and Sydney w ill begin to accrue UAD in 2018/19, 2019/20, and 2020/21 respectively. 3. Minor Combatants comprises Armidale class patrol boats (ACPB), Cape class patrol boats (CCPB) and coastal mine hunters (MHC).MHCs Haw kesbury and Norman w ere placed in extended readiness in 2009. Signif icant increase in UAD target from 2016-17 to 2017-18 is due to CCPB contributing to UAD.4. Amphibious and Afloat Support comprises oil tanker (AO), replenishment ship (AOR), landing ship dock (LSD), and Canberra classlanding helicopter dock (LHD). The decrease in UAD is attributed to the planned w ithdraw al of HMA Ships Success (AOR) and Sirius (AO) in 2018/19 and 2019/20 respectively. Replacement vessels w ill be introduced into service from 2019/20. Emergent repair w ork forLHDs may see a decrease in UAD. Updated f igures to be provided in 2017-18 PAES.

Table 23: Navy Deliverables (Hydroscheme Products)

Hydroscheme products, previously reported by Navy, have transitioned to Strategic Policy and Intelligence Group. These products comprise Maritime Safety Updates, Charting Projects, and Nautical Publications.


62

Table 24: Navy Deliverables (Flying Hours)

Deliverables

2016-17Estimated

Actual

2017-18Budget

Estimate

2018-19Forward

Year 1

2019-20Forward

Year 2

2020-21Forward

Year 34 S-70B-2 (Seahaw k)[1] 1,200 190 0 0 024 MH-60R 4,800 6,050 7,200 7,200 7,2006 AS350BA (Squirrel)[2] 2,000 450 0 0 0- MRH-90[3] - - - - - 1 Laser airborne depth sounder aircraft (LADS)[4] 980 1,120 1,120 490 0

Notes1. At March 2017 there are four S-70B-2. These w ill be progressively w ithdraw n in 2017, w ith the S-70B-2 Seahaw k to be fullyw ithdraw n from service in December 2017 follow ing introduction of the MH-60R.

4. Laser airborne dep h sounder aircraft (LADS) capability due to be retired in December 2019.

3. Navy is operating MRH-90s; how ever, their f lying hours have been included under Army Aviation, as Army is joint capability managerfor the aircraft. Navy have seven aircraft and approximately 1,500 hours per annum in the mature state.

2. At March 2017 there are six AS350BA. These w ill be progressively w ithdraw n in 2017, w ith the AS350BA to be fully w ithdraw nfrom service in December 2017.


63

Program 2.6: Army Capabilities[1]

Program 2.6: Objective

To provide land and special operations capabilities that contribute to the Australian Defence Force’s capacity to defend Australia; contribute to regional security, support Australia’s global interests, shape the strategic environment and protect national interests.


• conducting raise, train and sustain activities to ensure land forces are available to meet Government direction

• contributing land forces to joint, combined and interagency operations as directed by Government

• contributing to a single end-to-end capability development function within Defence to maximise the efficient, effective and professional delivery of land capability










2018-19 and beyond

As per 2017-18 As per 2017-18

Purpose[3] Purpose 2 – Protect and advance Australia’s strategic interest.




Notes





64

Table 25: Cost Summary for Program 2.6 Army Capabilities[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 4,058,569 4,070,250 4,101,194 4,209,472 4,340,548Suppliers 1,907,928 1,890,446 1,983,775 2,151,688 2,540,618Grants[2] 3,617 493 495 497 100Depreciation and amortisation 1,930,731 1,388,356 1,309,652 1,394,576 1,519,374Finance cost 4,832 4,917 5,681 6,468 7,592Write-dow n of assets and impairment of assets 6,220 9,562 12,975 16,671 20,398Net losses from sale of assets - - - - -Other expenses - - - - -


RevenuesGoods and services 15,428 15,857 16,306 16,735 17,175Other revenue 617 633 649 665 682Total revenue 16,045 16,490 16,955 17,400 17,857GainsReversal of previous asset w rite-dow ns 12,118 14,187 16,283 18,699 20,981Net gains from sale of assets 7,549 7,549 7,549 7,549 7,549Other gains - - - - -Total gains 19,667 21,736 23,832 26,248 28,530

Total income 35,712 38,226 40,787 43,648 46,387Program 2.6 Army Capabilities 7,876,185 7,325,798 7,372,985 7,735,724 8,382,243

Notes

2. Grants expense in 2016-17 predominately relates to a grant made to the Australian War Memorial.

1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.3 Army Capabilities.

Table 26: Army Deliverables (Rate of Effort – Flying Hours)

Deliverables

2016-17Estimated

Actual

2017-18Budget

Estimate

2018-19Forward

Year 1

2019-20Forward

Year 2

2020-21Forward

Year 37 CH-47F Chinook 1,300 2,000 2,400 2,600 2,60034 S-70A-9 Black Hawk 4,150 4,550 4,225 3,800 2,17541 B-206B-1Kiowa[1] 5,150 3,800 1,800 - -22 ARH Tiger 4,800 5,050 5,300 5,300 5,30047 MRH 90 Taipan 6,000 7,600 8,200 9,740 10,300

Note1. B206-B-1 Last Helicopter Qualification Course planned in 2018 before transition to AIR 9000 PH7 HATS (Navy).


65

Program 2.7: Air Force Capabilities[1]


To provide air power capabilities that contribute to the Australian Defence Force’s capacity to defend Australia, contribute to regional security, support Australia’s global interests, shape the strategic environment and protect national interests.


• conducting raise, train and sustain activities to ensure aerospace forces are available to meet Government direction

• contributing air power effects to joint, combined and interagency operations as directed by Government

• contributing to a single end-to-end capability development function within Defence to maximise the efficient, effective and professional delivery of air capability










2018-19 and beyond

As per 2017-18 As per 2017-18





Notes





66

Table 27: Cost Summary for Program 2.7 Air Force Capabilities[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 2,025,848 2,054,522 2,099,728 2,167,460 2,218,712Suppliers 2,493,480 2,931,276 3,270,338 3,540,020 3,799,938Grants 1,881 1,831 1,831 1,831 -Depreciation and amortisation 1,757,593 1,842,785 2,061,558 2,187,824 2,336,220Finance cost 42,248 43,003 49,675 56,555 66,386Write-dow n of assets and impairment of assets 11,952 13,762 15,426 17,133 19,038Net losses from sale of assets - - - - -Other expenses - - - - -


RevenuesGoods and services 37,133 38,253 39,184 40,187 41,217Other revenue 5,333 5,465 5,602 5,743 5,886Total revenue 42,466 43,718 44,786 45,930 47,103GainsReversal of previous asset w rite-dow ns 19,594 21,637 23,714 25,722 27,737Net gains from sale of assets - - - - -Other gains - - - - -Total gains 19,594 21,637 23,714 25,722 27,737

Total income 62,060 65,355 68,500 71,652 74,840Program 2.7 Air Force Capabilities 6,270,942 6,821,824 7,430,056 7,899,171 8,365,454

Note1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.4 Air Force Capabilities.


67

Table 28: Air Force Deliverables (Flying Hours)

Deliverables

2016-17Estimated

Actual

2017-18Budget

Estimate

2018-19Forward

Year 1

2019-20Forward

Year 2

2020-21Forward

Year 362 PC-9/A[1] 17,648 17,952 16,452 3,826 -- PC-21[2] - 2,200 7,000 19,626 23,65216 KA350 King Air 8,300 8,700 8,700 8,300 8,30012 C-130J Hercules 7,350 7,350 7,350 7,350 7,3508 C-17A Globemaster III[3] 7,000 6,200 6,200 6,200 6,20010 C-27J Spartan[4] 2,000 4,000 5,000 7,500 7,5005 KC-30A MRTT[5] 6,000 3,700 3,900 4,700 4,7002 737 BBJ 1,600 1,600 1,600 1,600 1,6003 CL-604 Challenger 2,161 2,403 2,403 2,403 2,40315 AP-3C Orion[6] 6,465 4,660 1,600 600 3008 P-8A Poseidon[7] 450 2,762 4,254 5,400 5,7756 E-7A Wedgetail 3,600 3,600 3,600 3,600 3,60071 F/A-18A/B Hornet[8] 16,700 12,000 11,200 8,100 4,75024 F/A-18F Super Hornet 4,000 4,000 4,050 4,050 4,05033 Hawk 127 6,000 6,500 6,500 6,500 6,50012 E/A-18G Growler[9] 800 1,600 1,900 2,400 2,8002 F-35A Lightning II[10] 500 752 2,538 4,564 8,2042 Heron UAS[11] 1,000 500 - - -

Notes1. PC-9/A hours reflect the phased withdrawal of the aircraft.

6. AP-3C Orion hours reflect the phased withdrawal of aircraft.7. P-8A Poseidon hours reflect the planned schedule for introduction to service.

2. PC-21 hours reflect the planned schedule for introduction to service and increased pilot training commitments.3. C-17A Globemaster III hours for FY 16-17 include operational assignments.4. C-27J Spartan hours reflect the planned schedule for introduction to service.

5. KC-30A MRTT hours for FY 16-17 include operational assignments and in the forward estimates, reflect the plannedintroduction of additional aircraft.

11. Heron UAS operations beyond FY 17-18 are subject to a contract extension.

10. F-35A Lightning II hours for FY 17-18 are for training aircraft and in the forward estimates, reflect the planned schedule forintroduction to service.

9. E/A-18G Growler hours reflect the planned schedule for introduction to service.

8. F/A-18A/B Hornet hours for FY 16-17 include operational assignments and in the forward estimates, reflect the plannedtransition to F-35A Lightning II aircraft.


68

Program 2.8: Joint Operations Command[1]


To ensure joint forces are ready to conduct joint, combined and interagency operations as directed by Government.


• planning and preparing for the effective conduct of joint, combined and interagency operations and national support activities, as directed by Government.

• Monitoring preparedness for Government-directed operations and national support activities.

• coordinating ADF joint collective training to achieve operational preparedness requirements.



2016-17 Operational deployments meet requirements of Government policy.




2018-19 and beyond

As per 2017-18. As per 2017-18.




Notes





69

Table 29: Cost Summary for Program 2.8 Joint Operations Command[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 5,711 7,153 7,723 7,977 8,731Suppliers 37,499 41,289 38,052 62,179 61,334Grants - - - - -Depreciation and amortisation 1,430 2,888 4,597 6,465 8,421Finance cost - - - - -Write-dow n of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses - - - - -


RevenuesGoods and services - - 458 498 543Other revenue - - - - -Total revenue - - 458 498 543GainsReversal of previous asset w rite-dow ns - - - - -Net gains from sale of assets - - - - -Other gains - - - - -Total gains - - - - -

Total income - - 458 498 543Program 2.8 Joint Operations Command 44,640 51,330 49,914 76,123 77,943

Note1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.5 Joint Operations Command.


70

Program 2.9: Capability Acquisition and Sustainment[1]


To purchase and maintain Defence equipment and supplies in the quantities and to the service levels required by Defence and approved by Government.

Delivery This program will be achieved by effectively partnering with Industry to:

• manage the acquisition and sustainment of Defence materiel equipment to meet Government and Defence requirements.

• deliver agreed materiel equipment support to meet operational requirements.



2016-17 Capability proposals, once approved by Government, meet agreed schedule and are delivered within agreed costs and scope.

Deliver Government approved acquisition projects to budget, schedule and agreed capability scope. Expected to be substantially met.

Deliver sustainment of military equipment to budget and agreed availability target. Expected to be substantially met.

Timeliness and quality of advice meets Government and Defence requirements. Expected to be met.

Procurement of Defence capability better leverages industry is more agile and reduces the cost of doing business.

Develop the Smart Buyer function which better leverages industry, delivers capability more rapidly and reduces the cost of doing business for Defence and industry. Expected to be met.

2017-18 Capability proposals, once approved by Government, meet agreed schedule and are delivered within agreed costs and scope.

Deliver Government approved acquisition projects to budget, schedule and agreed capability scope.

Capability is sustained consistent with Government requirements.

Sustainment meets capability manager requirements.

2018-19 and beyond

As per 2017-18 As per 2017-18






71

Notes




Table 30: Cost Summary for Program 2.9 Capability Acquisition and Sustainment[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 423,985 433,740 427,295 414,410 418,613Suppliers 192,705 221,045 225,503 275,518 301,705Grants - - - - -Depreciation and amortisation - - - - -Finance cost - - - - -Write-dow n of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses 1 1 1 1 2


RevenuesGoods and services 2,596 963 2,727 1,011 2,864Other revenue - - - - -Total revenue 2,596 963 2,727 1,011 2,864GainsReversal of previous asset w rite-dow ns - - - - -Net gains from sale of assets - - - - -Other gains - - - - -Total gains - - - - -

Total income 2,596 963 2,727 1,011 2,864Program 2.9 Capability Acquisition and Sustainment 614,095 653,823 650,072 688,918 717,456

Note1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.7 Capability Acquisition and Sustainment.


72

Program 2.10: Estate and Infrastructure[1]


To deliver integrated estate and infrastructure services to enable Defence people, equipment and systems, including base support for the Australian Defence Force, to protect and advance Australia’s strategic interests.

Delivery This program will be achieved by managing and sustaining the Defence estate including training areas and ranges, to meet Government and Defence requirements by developing and delivering major infrastructure, property and environmental programs.

The approved 2017-18 Facilities and Infrastructure Program, a component of the Integrated Investment Program, is outlined at Appendix E.



2016-17 Estate proposals, once approved by Government, meet agreed schedule and are delivered within agreed costs and scope.

The Facilities and Infrastructure Program is delivered within scope, budget and schedule. Expected to be met. The Facilities and Infrastructure Program compliant with legislative and other statutory requirements, standards and policies. Expected to be met.

The estate is aligned with the requirements of the current and future force.

Surplus estate is disposed of as agreed with Government. Expected to be met.

Estate services enable Defence capability requirements.

Estate services are delivered within budget and meet service requirements. Expected to be met.

2017-18 The estate meets the requirements of the Capability Managers

The Defence Estate Strategy implementation plan is delivered as agreed

2018-19 and beyond

As per 2017-18. As per 2017-18.



• Per-and Poly-Fluorinated Alkyl Substances - National Health Research Program


Notes





73

Table 31: Cost Summary for Program 2.10 Estate and Infrastructure Group[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 1,101,694 1,178,648 1,199,873 1,249,863 1,302,562Suppliers 2,111,651 2,480,619 2,525,540 2,718,357 2,595,469Grants - - - - -Depreciation and amortisation 1,138,565 1,096,705 1,076,304 1,047,830 1,019,482Finance cost 94,689 96,395 98,621 97,954 96,945Write-dow n of assets and impairment of assets 25,147 26,013 26,880 27,785 28,724Net losses from sale of assets - - - - -Other expenses 15,900 31,600 10,800 - -


RevenuesGoods and services 314,360 323,187 347,575 360,801 378,849Other revenue 9,134 5,445 5,316 5,493 5,643Total revenue 323,494 328,632 352,891 366,294 384,492GainsReversal of previous asset w rite-dow ns 2,779 2,948 3,086 3,241 3,408Net gains from sale of assets 12,582 31,626 10,800 - -Other gains - - - - -Total gains 15,361 34,574 13,886 3,241 3,408

Total income 338,855 363,206 366,777 369,535 387,900Program 2.10 Estate and Infrastructure 4,148,791 4,546,774 4,571,241 4,772,254 4,655,282

Note1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.9 Estate and Infrastructure Group.


74

Program 2.11: Chief Information Officer[1]


To deliver and sustain a dependable, secure and integrated ICT capability that ensures a secure and integrated information environment to support Defence business and military operations.


• planning and governing Defence ICT ensuring the appropriate networking and operation of ICT systems

• delivering and sustaining ICT programs and assigned ICT elements of endorsed projects and system improvements in the Integrated Investment Program to enhance and transform as necessary key elements of Defence ICT infrastructure



2016-17 ICT services meet requirements. Satisfaction with the service delivery system increases over time Expected to be met.

Effective development of next-generation ICT services.

ICT capability development is in accordance with the Integrated Investment Program. Expected to be met.

Effective development of Enterprise-wide frameworks for information management architecture standards and master data management.

Enterprise Information Management architecture is approved for implementation. Expected to be met.

2017-18 ICT services meet requirements. ICT capabilities are delivered in accordance with the Integrated Investment Program requirements as governed by the Investment Committee.

2018-19 and beyond

As per 2017-18. As per 2017-18.





Notes





75

Table 32: Cost Summary for Program 2.11 Chief Information Officer[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 100,700 122,088 123,701 124,153 126,981Suppliers 910,663 1,148,507 1,182,936 1,316,372 1,444,706Grants - - - - -Depreciation and amortisation 234,221 233,132 247,282 253,296 272,992Finance cost - - - - -Write-dow n of assets and impairment of assets 5,773 8,016 10,491 12,785 15,139Net losses from sale of assets - - - - -Other expenses - - - - -


RevenuesGoods and services - - - - -Other revenue - - - - -Total revenue - - - - -GainsReversal of previous asset w rite-dow ns 9,063 12,298 15,857 19,153 22,533Net gains from sale of assets[2] -4,517 -1,182 -4,792 -4,935 -5,083Other gains - - - - -Total gains 4,546 11,116 11,065 14,218 17,450

Total income 4,546 11,116 11,065 14,218 17,450Program 2.11 Chief Information Officer 1,246,811 1,500,627 1,553,345 1,692,388 1,842,368

Notes

2. Whilst the amounts show n represent losses for this Program, at the Portfolio level, Defence has budgeted for a total net gain from the sale of assets.

1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.10 Chief Information Officer.


76

Program 2.12: Defence People[1]


To deliver a program that enables the required people capability to operate and support Defence equipment and systems, and to manage the business of Defence.

Delivery The program will be achieved by:

• providing timely, accurate and high-quality advice on key people issues to the Secretary, CDF and Government

• delivering and implementing the 10-year Strategic Workforce Plan that sets out the skills Defence needs and how Defence will attract, recruit, develop and retain its people

• driving ongoing cultural reform and workforce culture initiatives that promote acceptance, diversity and inclusion

• delivering a fully compliant Workplace Health and Safety System that ensures Defence provides a safe work environment for its people

• driving a high performing culture where leadership, professionalism and corporate behaviour are rewarded and valued

• providing support to Australian Defence Force members and their families to manage the military way of life throughout their service, and during transition from the Australian Defence Force.



2016-17 Achievement of ADF recruitment targets.

Meet recruitment targets as specified by the Services. Expected to be substantially met.

Achieve ongoing cultural reform and workforce culture initiatives that embed diversity and inclusion.

Workforce diversity has increased. Expected to be met. Cultural reform initiatives are implemented as set out in the Pathway to Change strategy. Expected to be met.

An agile and skilled workforce through alignment and balance of workforce supply and demand.

Workforce is aligned and managed in accordance with the Workforce Strategy and the Australian Defence Force Total Workforce Model. Expected to be met.

Complete implementation of First Principles Review workforce and behavioural recommendations.

Implemented as agreed with Government. Expected to be met.

Australian Defence Force members and families are supported through the delivery of the family support program, transition services and bereavement support.

Support is delivered in a timely and professional manner. Expected to be met.


77


2017-18 Achievement of ADF recruitment targets.

Meet recruitment targets as specified by the Services.

Achieve ongoing cultural reform and workforce culture initiatives that embed diversity and inclusion.

Workforce diversity has increased.

Cultural reform initiatives are implemented as set out in the Pathway to Change strategy.

Actions identified in the 2016-2026 Defence Strategic Workforce Plan are implemented to attract, recruit, develop and retain a highly skilled workforce.

Implementation milestones are achieved.

Enhanced linkages between Defence and the Department of Veterans’ Affairs enable greater support to veterans and ADF members.

Improved electronic information exchange is implemented as agreed between Defence and the Department of Veterans’ Affairs.

Australian Defence Force members and families are supported through the delivery of the family support program, transition services and bereavement support.

Support is delivered in a timely and professional manner.

2018-19 and beyond

As per 2017-18. As per 2017-18.



• Defence Force Ombudsman - continuation and expansion

• Veteran Centric Reform


Notes





78

Table 33: Cost Summary for Program 2.12 Defence People[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 149,442 162,236 160,959 160,132 162,602Suppliers 322,404 314,357 332,105 347,590 359,745Grants 1,553 1,592 1,600 1,700 1,450Depreciation and amortisation 7,798 7,854 7,442 7,431 20Finance cost - - - - -Write-dow n of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses - - - - -



Total income - - - - -Program 2.12 Defence People 481,197 486,039 502,106 516,853 523,817

Note1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.11 Defence People.


79

Program 2.13: Defence Science and Technology[1]


To enable the delivery of a national security capability through science and technology services.

Delivery This program is achieved by:

• conducting applied research focussed on supporting Defence and national security operations, sustaining and enhancing current capability, and supporting the development and acquisition of future capability

• drawing upon the world-class scientific ability of staff and research facilities, and extensive networks and partnerships with external organisations such as international research agencies, industry and academia to support the Defence Science and Technology Group’s role as a knowledge and innovation integrator for Defence and to promote defence science and education in the broader Australian community.



2016-17 Emerging capability and technology is used to support development of best value-for-money capability.

Science and technology activities are balanced to support Defence capability and operational priorities in accordance with 2016 Defence White Paper. Expected to be met.

Defence’s strategic research builds understanding of future Defence capability.

Strategic research activities are aligned with Integrated Investment Program priorities. Expected to be met.

Defence S&T capability enhanced through the delivery of collaborative partnerships with international research agencies, industry and academia.

Collaborative activities with industry, academia and allied defence research agencies are aligned to 2016 Defence White Paper and Defence Industry Policy Statement priorities. Expected to be met.

2017-18 Emerging science and technology is used to support development of best value capability.

Science and technology activities are balanced to support Defence capability and operational priorities in accordance with 2016 Defence White Paper.

Defence’s strategic research builds understanding of future Defence capability.

Strategic research activities are aligned with Integrated Investment Program priorities.

Defence S&T capability enhanced through the delivery of collaborative partnerships with industry, academia and international research agencies.

Collaborative activities with industry, academia and allied defence research agencies are aligned to 2016 Defence White Paper and Defence Industry Policy Statement priorities.


80


2018-19 and beyond

As per 2017-18. As per 2017-18.





Notes




Table 34: Cost Summary for Program 2.13 Defence Science and Technology[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 278,910 296,238 300,456 302,092 310,494Suppliers 142,659 152,307 150,202 80,643 88,099Grants 58 - - - -Depreciation and amortisation 29,323 28,064 27,625 26,950 25,588Finance cost - - - - -Write-dow n of assets and impairment of assets 1,125 1,250 1,363 1,471 1,581Net losses from sale of assets - - - - -Other expenses - - - - -


RevenuesGoods and services 2,776 2,843 2,904 2,967 3,033Other revenue 195 201 206 211 216Total revenue 2,971 3,044 3,110 3,178 3,249GainsReversal of previous asset w rite-dow ns 1,636 1,818 1,981 2,139 2,298Net gains from sale of assets - - - - -Other gains - - - - -Total gains 1,636 1,818 1,981 2,139 2,298

Total income 4,607 4,862 5,091 5,317 5,547Program 2.13 Defence Science and Technology 447,468 472,997 474,555 405,839 420,215

Note1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.12 Defence Science and Technology.


81

Administered Program 2.14: Defence Force Superannuation Benefits[1]

Administered Program 2.14 Objective

To administer and report member and employer contributions paid during the year to the Defence Force Retirement and Death Benefits (DFRDB) scheme, the Military Superannuation and Benefits Scheme (MSBS) and ADF Super. It accounts for the liability for these schemes plus the Defence Forces Retirement Benefits (DFRB) scheme and the statutory death and invalidity scheme, ADF Cover. This program includes payment of the MSBS Retention Benefit.

Delivery This program will be achieved by reporting on superannuation contributions and the movement in liabilities associated with the five military superannuation schemes.

Notes about this program:

• The DFRB commenced in 1948 and only covers members or their dependants who were in receipt of a pension at the time DFRDB commenced. This scheme does not have any contributing members.

• The DFRDB was closed to new participants in 1991. Since 1 July 2016, DFRDB members who re-enter the ADF no longer rejoin DFRDB as contributing members but instead join the ADF’s current superannuation arrangement and become either a member of the default scheme, ADF Super, or elect to become a member of another fund of their choice.

• The MSBS commenced in 1991 and is available to re-entered members with a preserved employer benefit only. The MSBS closed to new participants on 1 July 2016.

• ADF Super is the current superannuation scheme for new ADF members. It commenced on 1 July 2016.

• ADF Cover is the statutory death and invalidity scheme and applies to all members of the ADF’s current superannuation arrangement, regardless of whether they are a member of the default scheme, ADF super, or have elected to become a member of another fund of their choice.

• All five schemes are managed on Defence’s behalf by the Commonwealth Superannuation Corporation.

• Since 1991, Defence has paid the MSBS Retention Benefit to eligible MSBS members after 15 years of continuous eligible service. The purpose of the Retention Benefit is to encourage members to serve until they have completed 20 years of service. Due to legislative amendments passed in 2005, the Retention Benefit is not available to members who enlisted after 6 October 2005.



2016-17 Provision of timely payments to the Commonwealth Superannuation Corporation and quality administration of DFRB, DFRDB, MSBS and ADF Super employer and member contributions.

Payments are provided within agreed timeframes to the Commonwealth Superannuation Corporation and quality administration of DFRB, DFRDB, MSBS and ADF Super employer and member contributions. Expected to be met.


82


2017-18 Provision of timely payments to the Commonwealth Superannuation Corporation and quality administration of DFRB, DFRDB, MSBS and ADF Super employer and member contributions.

Payments are provided within agreed timeframes to the Commonwealth Superannuation Corporation and quality administration of DFRB, DFRDB, MSBS and ADF Super employer and member contributions.

2018-19 and beyond

As per 2017-18. As per 2017-18.



Notes




Table 35: Cost Summary for Administered Program 2.14 Defence Force Superannuation Benefits[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Net foreign exchange losses - - - - -Military retention benefits 79,985 93,548 107,299 120,288 120,636Military superannuation benefits[2] 4,244,884 1,511,683 1,514,774 1,516,436 1,514,240


RevenuesInterest - - - - -Net foreign exchange gains - - - - -Military superannuation contributions 1,416,269 1,352,073 1,293,092 1,242,547 1,199,048

Total income 1,416,269 1,352,073 1,293,092 1,242,547 1,199,048Program 2.14 Defence Force Superannuation Benefits 2,908,600 253,158 328,981 394,177 435,828

Notes1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.14 Defence Force Superannuation Benefits. 2. The decrease from 2016-17 to 2017-18 predominately relates to the change in the interest rate impacting the actuarial losses w ithin equity.


83

Administered Program 2.15: Defence Force Superannuation Nominal Interest[1]


To administer nominal interest for the three defined benefit military superannuation schemes: the Defence Forces Retirement Benefits (DFRB) scheme, the Defence Force Retirement and Death Benefits (DFRDB) scheme and the Military Superannuation and Benefits Scheme (MSBS), as well as the statutory death and invalidity scheme, ADF Cover.

Delivery This program will be achieved by reporting on superannuation nominal interest associated with the three military superannuation schemes and the statutory death and invalidity scheme.


• The DFRB commenced in 1948 and only covers members or their dependants who were in receipt of a pension at the time DFRDB commenced. This scheme does not have any contributing members.

• The DFRDB was closed to new participants in 1991.

• The MSBS commenced in 1991 and is available to all full-time members of the ADF.

• ADF Cover is the statutory death and invalidity scheme that accompanies the new accumulation military superannuation scheme, ADF Super.

• All four schemes are managed on Defence’s behalf by the Commonwealth Superannuation Corporation.



2016-17 Provide quality administration services for DFRB, DFRDB, MSBS and ADF Cover nominal interest transactions.

Administration services are provided as agreed for DFRB, DFRDB, MSBS and ADF Cover nominal interest transactions. Expected to be met.

2017-18 Provide quality administration services for DFRB, DFRDB, MSBS and ADF Cover nominal interest transactions.

Administration services are provided as agreed for DFRB, DFRDB, MSBS and ADF Cover nominal interest transactions.

2018-19 and beyond

As per 2017-18. As per 2017-18.



Notes





84

Table 36: Cost Summary for Administered Program 2.15 Defence Force Superannuation Nominal Interest[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Net foreign exchange losses - - - - -Retention benefits - - - - -Military superannuation benefits 3,395,619 3,827,512 4,005,191 4,186,730 4,371,883


RevenuesInterest - - - - -Net foreign exchange gains - - - - -Military superannuation contributions - - - - -

Total income - - - - -Program 2.15 Defence Force Superannuation Nominal Interest 3,395,619 3,827,512 4,005,191 4,186,730 4,371,883

Note1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.15 Defence Force Superannuation Nominal Interest.


85

Administered Program 2.16: Housing Assistance[1]


The Defence Home Ownership Assistance Scheme (DHOAS) was established in order to support the Government’s retention and recruitment initiatives and influence ADF members’ decision to stay beyond critical career points. The scheme came into effect on 1 July 2008.


• providing ADF members with assistance to achieve home ownership that reflects the contemporary housing and home finance markets.

• providing progressively higher levels of assistance for eligible members serving beyond the critical career points of four, eight and twelve years of service.

• providing quality services for the administration of the Scheme, including the accurate and timely processing of member applications and issuing of Subsidy Certificates.


• the Scheme provides eligible ADF members and ex-serving members with assistance to either purchase a home, purchase land for the purpose of building a home, or to renovate or extend an existing home.

• following a competitive tendering process the Department of Veterans’ Affairs was appointed Scheme Administrator and a panel of three Home Loan Providers was established: National Australia Bank (NAB), Australian Military Bank, and the Defence Bank.



2016-17 Members respond to and take up the scheme.

6,000 applications received with 3,800 members taking up the scheme. Expected to be met.

Ensure that interest rates provided to ADF members by the Home Loan Providers are competitive with other interest rates in the market.

Interest rates offered are consistently lower than other interest rates in the market. Expected to be met.

2017-18 Members respond to and take up the scheme.

6,000 applications received with 3,800 members taking up the scheme.

Ensure that interest rates provided to ADF members by the Home Loan Providers are competitive with other interest rates in the market.

Interest rates offered are consistently lower than other interest rates in the market.

2018-19 and beyond

As per 2017-18 As per 2017-18.




86

Notes




Table 37: Cost Summary for Administered Program 2.16 Housing Assistance[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Net foreign exchange losses - - - - -Housing subsidies 105,485 117,499 127,264 136,205 146,013


RevenuesInterest - - - - -Net foreign exchange gains - - - - -Dividends - - - - -License fees 15,178 15,932 16,658 17,358 18,118Other - - - - -

Total income 15,178 15,932 16,658 17,358 18,118Program 2.16 Housing Assistance 90,307 101,567 110,606 118,847 127,895

Note1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1.16 Housing Assistance.


87

Administered Program 2.17: Other Administered[1]

Administered Program 2.17 Objective This program comprises three elements:

1. interest earned on overdue accounts and on official bank accounts held to facilitate operational requirements.

2. interest on Government loans to fund the building of new accommodation, dividends and tax equivalent payments received from the DHA.

3. revenue received from science and technology royalties where the royalties offset Departmental cost of an activity, to the extent there was no appropriation for the activity.

Delivery Report on interest and other receipts transferred to the Official Public account.



2016-17 Account and report ‘Other Administered’.

Accounting and reporting is accurate. Expected to be met.

2017-18 Account and report ‘Other Administered’.

Accounting and reporting is accurate.

2018-19 and beyond

As per 2017-18. As per 2017-18.



Notes




Table 38: Cost Summary for Administered Program 2.17 Other Administered[1]

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000ExpensesTotal expenses - - - - -Income

RevenuesInterest 25,887 25,887 24,715 24,205 24,205Dividends 39,203 44,780 39,975 43,173 33,230Other 40,969 20,607 17,579 17,804 27,510

Total income 106,059 91,274 82,269 85,182 84,945Program 2.17 Other Administered -106,059 -91,274 -82,269 -85,182 -84,945

Note1. Budget Programs have been renumbered from 2017-18 onw ards. As such 2016-17 Estimated Actuals reflects the former Program 1. 17 Other Administered.


88

Section 3: Defence Explanatory Tables and Budgeted Financial Statements

3.1 EXPLANATORY TABLES

Section 3 presents explanatory tables and budgeted financial statements that provide a comprehensive overview of agency finances for the 2017-18 budget year. It explains how budget plans are incorporated into the financial statements and provides further details of the reconciliation between appropriations and Program expenses, movements in administered funds, special accounts and government indigenous expenditure.

Table 39: Summary of Estimated Special Account Balances[1][2][3]

Opening 2017-18

Receipts 2017-18

Payments 2017-18

Adjustments 2017-18

Closing Balance 2017-18

2016-17 2016-17 2016-17 2016-17 2016-17Outcome $'000 $'000 $'000 $'000 $'000

2 75,900 47,400 -42,760 - 80,540

1 70,953 27,693 -22,746 - 75,900

2 49 1 -1 - 49

1 48 4 -3 - 49

2 169 6 -6 - 1691 169 6 -6 - 169

2 1,600 222 -174 - 1,648

1 1,491 221 -112 - 1,600

Total Special Accounts 2017-18 77,718 47,629 -42,941 - 82,4062016-17 estimated actual 72,661 27,924 -22,867 - 77,718

Notes1. 2017-18 estimates in bold.2. 2016-17 estimated actuals in italics.3. These are all Special Public Monies.

Young Endeavour Youth Program Special Account – Public Governance, Performance and Accountability Act 2013

Services for Other Entities and Trust Moneys - Defence Special Account– Public Governance, Performance and Accountability Act 2013

Defence Endow ments Special Account – Public Governance, Performance and Accountability Act 2013

Fedorczenko Legacy Special Account – Public Governance, Performance and Accountability Act 2013


89

3.1.1 Australian Government Indigenous Expenditure

Table 40: Australian Government Indigenous Expenditure

ProgramBill No. 1

$'000Defence Indigenous Employment Strategy[1][2]

Departmental 2017-18 Budget Estimate 2.12 5,662 Departmental 2016-17 Estimated Actual 1.11 3,619 Army Aboriginal Community Assistance Program[1][3]

Departmental 2017-18 Budget Estimate 2.6 6,700 Departmental 2016-17 Estimated Actual 1.3 5,700 Total 2017-18 Revised Estimate 12,362Total 2016-17 Budget Estimate 9,319

Notes1. All amounts are GST exclusive. Revised Estimate and Budget Estimate are direct costs.2. The Defence Indigenous Development Program, as previously disclosed, has been subsumed into the Defence IndigenousEmployment Strategy.

3. The majority of costs are subsequently recovered from Department of Prime Minister and Cabinet under 2.5 Remote AustralianStrategy Appropriation.

Defence Reconciliation Action Plan

Defence is committed to the Government’s plan to close the gap in Indigenous disadvantage. The Defence Reconciliation Action Plan provides the overarching strategy for Defence’s commitment to increasing its Indigenous employment to 2.7 per cent and Indigenous procurement to three per cent by 30 June 2018.

The Defence Reconciliation Action Plan includes a number of actions under the themes of Respect, Relationships and Opportunities, with the key areas of focus being to:

• offer employment opportunities to Aboriginal and Torres Strait Islander people across Australia;

• provide professional and career development opportunities for our Aboriginal and Torres Strait Islander workforce; and

• provide Indigenous businesses with contracting opportunities.

Defence’s Indigenous workforce continues to grow, with over two per cent of the total Australian Defence Force and Australian Public Service workforce being Indigenous.

Implementation of the Indigenous Procurement Policy across Defence has resulted in the awarding of 285 contracts to 94 Indigenous businesses in financial year 2015–16. This was almost four times Defence’s planned procurement target and totalled $142 million or half of all expenditure under the Commonwealth Indigenous Procurement Policy that year.


90

Defence Indigenous Development Program

Defence continues to offer a range of programs for Indigenous Australians interested in a career in the Australian Defence Force or Defence Australian Public Service workforce and existing Indigenous members of Defence.

The Australian Defence Force continues to conduct the Defence Indigenous Development Program - Navy, Army Indigenous Development Program and Indigenous Pre-Recruit Program across Australia.

Defence implements a number of entry-level programs for the Australian Public Service workforce, including several Indigenous traineeships and Indigenous placements on mainstream graduate programs. These are all implemented through collaboration with other public sector agencies.

A number of programs are offered to existing personnel to support their career development and retention, including Indigenous leadership training, establishment of regional Defence Aboriginal and Torres Strait Islander Network chapters and ensuring that Defence is a culturally inclusive and respectful workplace through the implementation of the Defence Cultural Awareness (Indigenous) Learning Framework and the Defence Indigenous Cultural Advisory Group.

Army Aboriginal Community Assistance Program

The Army Aboriginal Community Assistance Program (AACAP) is a collaborative partnership between the Department of the Prime Minister and Cabinet (PM&C) and the Australian Army which aims to improve environmental health and living conditions in remote Indigenous communities. One project is undertaken each calendar year targeting improvements in housing and essential services including water, power, sewerage and health. Community selection capitalises on Army's ability to deploy and sustain a construction camp for a prolonged period in a remote area of Australia, to holistically deliver a range of services to Indigenous communities which would not normally be available through other project means. The 2017 Project is being delivered in Toomelah, New South Wales over the period April to June 2017. Development for the 2018 Project in Yatala, South Australia is underway.


91

3.1.2 Grants

Table 41: Approved Grants

2016-17 Estimated

Actual$'000[1]

Total Grant Amount

Approved$'000[1]

2017-18 Budget

Estimate$'000[1]

183 1,000 407 183 1,000 407

1,149 1,699 275 63 63 - 1,265 1,265 - 31 31 - 1,621 5,935 357

375 600 225 200 530 180 800 2,000 400 500 500 - - 220 220

40 120 40 291 900 300 176 176 -

129 129 - 14 57 14 2,000 8,000 2,000 36 60 24 792 1,980 792 3,000 7,000 4,000 2,727 9,000 2,727

1,050 1,700 650 2,000 2,000 - 44 120 39 48 141 48 44 128 44 43 126 43 63 186 63 57 148 48 28 85 28 44 132 44 33 99 36 1,100 2,200 1,100 7 6 - 50 150 - 3,442 10,328 3,528 872 2,616 872 104,644 313,931 104,644 229 1,145 229 92 92 -

52 209 - 129,151 375,808 122,972

Total grants[3] 129,334 376,808 123,379

Notes

Australian Airport Association (AAA) Aircraft Pavement ResearchUNSW Airport Apron Pavement Research (AAPR)

Previously approved grantsTotal grants approved since 2016-17 PAES

Family Support Funding Program

United Nations Peace Operations Training Institute (POTI) e Learning for African Peacekeepers[2]

Ins itute for Regional Security (IFRS)Shedden Professorship in Strategic Policy Studies

Approved since 2016-17 PAESNew Air Combat Capability - Industry Support Program (NACC-ISP)

Army History Research Grant Scheme

Manual of International Law Applicable to Military Uses of Outer Space (MILAMOS)

Industry Skilling Program - School Pathw ays Program (ISP-SPP) Regional Development Australia (RDA)

New Air Combat Capability - Industry Support Program (NACC-ISP) Centre for Defence Industry Capability (CDIC) ProgramPriority Industry Capability Innovation Program (PICIP)

Aboriginal Communities and Traditional Ow ners Support

Team Navy Australian Surf Row ers League Series

United Nations Peace Operations Training Institute (POTI)[2]

3. Figures may not balance due to rounding.

1. Figures are GST exclusive.

Australian International Military Games (A MG)

Australian Strategic Policy Institute (ASPI)

Necana AssociationAustralian Peacekeeping Memorial Project

Total previously approved grants

The Australian Defence Force (ADF) Long Tan Youth Leadership and Teamw ork Aw ards

Multinational Force and Observers (MFO)[2]

Larrakeyah Neighbourhood House

2. Total grant amount is reflective of USD figures converted into AUD.

Temora Aviation Museum Operation Enduring Sustainability Australian Women's Pilots' Association

The Australian Chapter of he Council for Security Co-Op in the Asia-Pacif ic (AusCSCAP)

Robert C StevensonThe Sir Richard Williams Foundation Inc.

Top Ender Tri Services Magazine Incorporated

Bandiana Neighbourhood House

United Nations Protection of Civilians Project[2]

Robertson Barracks Family Group

North Atlan ic Treaty Organisation (NATO) Afghan National Army Trust Fund[2]

The Australian Nuclear Science and Technology Organisation (ANSTO)

National Boer War MemorialArmy and Air Force Canteens Services (AAFCANS) Special Amenity Grant

Australian War Memorial (AWM) - ANZAC Centenary Travelling Exhibition

Pow er CommunityDow sing Point Community Centre

Shoalhaven Defence Families AssociationNetw ork Tindal Incorporated


92

The following are grants that have been approved since the 2016-17 Portfolio Additional Estimates Statements:

New Air Combat Capability – Industry Support Program (NACC-ISP)

The Program provides funding to Australian companies and research organisations to support the development of new or improved capabilities that may enhance the ability to win work in the production, sustainment and modernisation phases of the Joint Strike Fighter (JSF) Program.


93

3.2 RESOURCE SUMMARY

Table 42: Budgeted Departmental Net Cost of Service (cash) (for the period ended 30 June)

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000NET COST OF SERVICE (CASH)Cost of Service

Employee payments 11,487,040 11,725,833 11,756,104 12,145,127 12,541,005Supplier payments 11,177,818 12,331,589 12,390,068 13,360,879 14,841,989Purchase of specialist military equipment 5,920,802 6,578,914 7,606,577 8,640,412 10,121,351Purchase of inventory 1,448,565 1,458,529 1,410,996 1,466,068 1,340,686Purchase of other property, plant and equipment 2,168,866 2,778,011 2,996,145 3,359,393 3,559,043Net cash to / (from) the Official Public Account 897 919 942 966 990Other cash used 1,770,039 1,960,982 2,005,695 2,153,295 2,246,935

Total cash used 33,974,027 36,834,777 38,166,527 41,126,140 44,651,999Ow n source receipts 2,092,149 2,264,244 2,416,996 2,766,100 2,684,507

Total cash received 2,092,149 2,264,244 2,416,996 2,766,100 2,684,507Net cost of service (cash) 31,881,878 34,570,533 35,749,531 38,360,040 41,967,492FUNDED BY

Appropriation Bill 1/3 (price of outcomes) 30,817,174 32,205,226 31,906,770 33,628,917 35,825,139Appropriation carried forw ard from previous year - - - - -Appropriation Bill 2/4 (equity injection) 1,064,704 2,365,307 3,842,761 4,731,123 6,142,353

Total funding source 31,881,878 34,570,533 35,749,531 38,360,040 41,967,492

Change in cash - - - - -


94

Portfolio Resource Statement

Table 43: Total Departmental and Administered Consolidated Cash Budget for the Department of Defence[1]

2017-18 Budget

Estimate$m

APPROPRIATIONS AND CAPITALAppropriation (Bill 1) 32,205.2Appropriation - Contributed Equity (Bill 2) 2,365.3Appropriations for military superannuation[2] 2,552.6less Returns to the OPA -1,471.1Total cash available 35,652.0OPERATING ACTIVITIESCash received

Goods and services 459.3Net GST received 1,643.0Interest 25.9Other cash 82.1Fees 15.9

Total cash received 2,226.2Cash used

Employees 10,373.8Suppliers 12,331.6Net GST paid 1,643.0Grants 127.6Other cash 33.7Subsidies paid 117.5Military benefits 2,435.1

Total cash used 27,062.2Net cash from or (used by) operating activities -24,836.1INVESTING ACTIVITIESCash received

Proceeds from sales of land and buildings 86.1Proceeds from sales of infrastructure, plant and equipment 23.6Proceeds from sales of specialist military equipment 7.5Proceeds from sales of heritage and cultural assets -Dividends 38.9Other -

Total cash received 156.2Cash used

Purchase of land and buildings 1,225.9Purchase of infrastructure, plant and equipment 1,462.8Purchase of specialist military equipment 6,578.9Purchase of heritage and cultural assets -Purchase of intangibles 89.3Purchase of inventory 1,458.5Selling costs on sale of assets 13.9Finance costs 110.1

Total cash used 10,939.4Net cash from or (used by) investing activities -10,783.2FINANCING ACTIVITIESCash used

Repayment of debt 32.8Total cash used 32.8Net cash from or (used by) financing activities -32.8Net increase or (decrease) in cash and cash equivalents held -

Cash and cash equivalents at the beginning of the reporting period 47.6Effect of exchange rate movements on cash and cash equivalents -

Cash and cash equivalents at the end of the reporting period 47.6

Notes1. Figures show n eliminate transactions f low ing betw een Departmental and Administered funding. 2. Cross reference w ith Table 60 Budgeted Administered Statement of Cash Flow s for the Department of Defence for the period ended 30 June.


95

Table 44: Defence Resource Statement – Budget Estimates for 2017-18 as at May 2017 Se

rial N

o.

Estimate of prior year amounts

available in 2017-18

$'000

+Proposed at Budget

2017-18 $'000

=Total

Estimate 2017-18

$'000

Totalavailable

Appropriation 2016-17

$'000ORDINARY ANNUAL SERVICES

Outcome 1 - 1,010,331 1,010,331 30,020,611Outcome 2 - 31,194,895 31,194,895 774,101Outcome 3 - - - 22,462

1 Total Departmental outputs - 32,205,226 32,205,226 30,817,1742 Total ordinary annual services (1) - 32,205,226 32,205,226 30,817,174

OTHER SERVICESDepartmental non-operating

Equity injections - 2,365,307 2,365,307 1,064,7043 Total Departmental non-operating - 2,365,307 2,365,307 1,064,7044 Total other services (3) - 2,365,307 2,365,307 1,064,7045 Total available annual appropriation (2+4) - 34,570,533 34,570,533 31,881,878

SPECIAL APPROPRIATIONSSpecial appropriations limited by criteria/entitlement

Defence Forces Retirement Benefits Act, 1948 Part 1 s.15D and VIC, s.82ZJ - 21,611 21,611 14,122Defence Force Retirement and Death Benefits Act, 1973 Part XII, s.125 - 1,805,324 1,805,324 1,504,600Military Superannuation and Benefits Act, 1991 Part V, s.17 - 3,483,232 3,483,232 6,091,696Australian Defence Force Cover Act 2015 - 122,576 122,576 110,070Defence Force (Home Loan Assistance) Act, 1990 Part IV, s.38 - 484 484 618Defence Home Ownership Assistance Scheme Act 2008 Part VI, s.84 - 117,015 117,015 104,867

6 Total special appropriations - 5,550,242 5,550,242 7,825,9737 Total appropriations (5+6) - 40,120,775 40,120,775 39,707,851

Funding from other sources - 2,091,474 2,091,474 2,158,128Returns to the OPA (net) - -1,471,125 -1,471,125 -1,560,915Previous years' outputs (appropriation receivable) 687,345 - 687,345 687,345Cash available 47,597 - 47,597 47,597

8 Total other available resources 734,942 620,349 1,355,291 1,332,1559 Total resourcing (7+8) 734,942 40,741,124 41,476,066 41,040,006

Special AccountsOpening Balance 77,718 - 77,718 72,661Appropriation Receipts - - - -Appropriation Receipts - other agencies - - - -Non-Appropriation Receipts to Special Accounts - 47,629 47,629 27,924

10 Total special accounts 77,718 47,629 125,347 100,585


96

Table 45: Third Party Payments to and from other Agencies[1]

Estimated Actual

2016-17 $'000

Budget Estimate

2017-18 $'000

Receipts from Defence Housing Australia for interest on loans, dividends and competitive neutrality payments (Administered) 113,933 89,784Payments made to Defence Housing Australia for the provision of services (Departmental) 694,507 771,795Payments made to Department of Foreign Affairs and Trade for the provision of services (Departmental) 23,855 24,513Payments made to the Commonw ealth Superannuation Corporation (CSC) for the provision of services (Departmental) 35,971 38,714Payments made to the Department of Finance for the provision of services (Departmental) 66,462 67,645Payments made to Comcare for w orkers compensation premiums (Departmental) 34,696 39,200Payments made to the Australian Federal Police for the provision of services (Departmental) 43,654 45,340Payments made to the Department of Human Services for the provision of services (Departmental) 2,156 -

Note

- Inter-agency transactions relating to Budget Measures as disclosed in Defence Budget Measures. - Inter-agency transactions that w ere in excess of $20m in the previous year's annual statements; and - Inter-agency transactions in excess of $20m per annum; 1. Third party payments to and from other Agencies include:


97

3.3 BUDGETED FINANCIAL STATEMENTS

3.3.1 Departmental and Administered Budgeted Financial Statements

Table 46: Variation in Budgeted Departmental Comprehensive Income Statement (Showing Net Cost of Services) (for the period ended 30 June)

2017-18 PreviousEstimate

$'000

2017-18 Budget

Estimate$'000

Variation$'000

Variation%

EXPENSESEmployee benefits 11,631,215 11,812,863 181,648 1.6Supplier expenses 13,161,793 13,834,064 672,271 5.1Grants 124,022 127,639 3,617 2.9Depreciation and amortisation 6,540,076 6,520,805 -19,271 -0.3Finance costs 183,605 182,988 -617 -0.3Write-dow n of assets and impairment of assets 524,209 524,407 198 -Losses from sale of assets - - - -Other 34,137 33,656 -481 -1.4

Total expenses 32,199,057 33,036,422 837,365 2.6LESS:OWN-SOURCE INCOMEOwn-source revenue

Sales of goods and rendering of services 429,866 459,315 29,449 6.9Other revenue 49,920 44,686 -5,234 -10.5

Total own-source revenue 479,786 504,001 24,215 5.0Gains

Reversals of previous asset w rite-dow ns 283,975 284,263 288 0.1Sale of assets 34,526 37,994 3,468 10.0Other gains 4,938 4,938 - -

Total gains 323,439 327,195 3,756 1.2Total own-source income 803,225 831,196 27,971 3.5Net cost of (contribution by) services 31,395,832 32,205,226 809,394 2.6

Revenue from Government 31,395,832 32,205,226 809,394 2.6Surplus (Deficit) attributable to the Australian Government - - - -Total comprehensive income attributable to the Australian Government - - - -


98

Table 47: Variation in Budgeted Departmental Balance Sheet (as at 30 June)


$'000

2017-18 Budget

Estimate$'000

Variation$'000

Variation%

ASSETSFinancial assets

Cash and cash equivalents 47,597 47,597 - -Trade and other receivables 107,523 107,523 - -Tax assets 243,196 243,196 - -Appropriation receivable 687,345 687,345 - -Other receivables 304,075 304,075 - -

Total financial assets 1,389,735 1,389,735 - -Non-financial assets

Land and buildings 17,851,260 17,551,132 -300,128 -1.7Infrastructure, plant and equipment 9,324,620 9,340,951 16,331 0.2Specialist military equipment 58,252,015 58,045,460 -206,555 -0.4Intangibles 738,358 712,816 -25,542 -3.5Heritage and cultural 564,588 564,590 2 -Inventories 6,379,820 6,381,584 1,764 -Prepayments 2,874,690 2,874,690 - -

Total non-financial assets 95,985,351 95,471,223 -514,128 -0.5Assets held for sale 63,538 63,538 - -

Total assets 97,438,624 96,924,496 -514,128 -0.5LIABILITIESPayables

Suppliers 2,502,268 2,520,860 18,592 0.7Other 233,015 233,015 - -

Total payables 2,735,283 2,753,875 18,592 0.7Interest bearing liabilities

Leases 1,469,184 1,469,184 - -Total interest bearing liabilities 1,469,184 1,469,184 - -Provisions

Employee provisions 2,811,744 2,844,517 32,773 1.2Restoration, decontamination and decommissioning 1,428,162 1,427,537 -625 -Other 29,193 29,193 - -

Total provisions 4,269,099 4,301,247 32,148 0.8Total liabilities 8,473,566 8,524,306 50,740 0.6NET ASSETS 88,965,058 88,400,190 -564,868 -0.6EQUITY

Contributed equity 29,437,507 29,239,086 -198,421 -0.7Reserves 24,303,327 24,303,326 -1 -Retained surplus (accumulated deficit) 35,224,224 34,857,777 -366,447 -1.0

Total equity 88,965,058 88,400,190 -564,868 -0.6


99

Table 48: Variation in Budgeted Departmental Statement of Cash Flows (for the period ended 30 June)


$'000

2017-18 Budget

Estimate$'000

Variation$'000

Variation%

OPERATING ACTIVITIESCash received

Appropriations 31,395,832 32,205,226 809,394 2.6Goods and services 429,866 459,303 29,437 6.8Net GST received 1,596,281 1,642,976 46,695 2.9Other cash received 49,917 44,683 -5,234 -10.5

Total cash received 33,471,896 34,352,188 880,292 2.6Cash used

Employees 11,597,036 11,725,833 128,797 1.1Suppliers 11,727,299 12,331,589 604,290 5.2Net GST paid 1,596,281 1,642,976 46,695 2.9Grants 124,022 127,639 3,617 2.9Other cash used 34,137 33,656 -481 -1.4Cash transfer to the Official Public Account (receivables) 919 919 - -

Total cash used 25,079,694 25,862,612 782,918 3.1Net cash from (used by) operating activities 8,392,202 8,489,576 97,374 1.2INVESTING ACTIVITIESCash received

Proceeds from sales of land and buildings 86,136 86,136 - -Proceeds from sales of infrastructure, plant and equipment 23,587 23,597 10 0.0Proceeds from sales of specialist military equipment 7,549 7,549 - -

Total cash received 117,272 117,282 10 0.0Cash used

Purchase of land and buildings 1,206,248 1,225,924 19,676 1.6Purchase of infrastructure, plant and equipment 1,454,327 1,462,815 8,488 0.6Purchase of specialist military equipment 6,731,209 6,578,914 -152,295 -2.3Purchase of intang bles 90,752 89,272 -1,480 -1.6Purchase of inventory 1,392,974 1,458,529 65,555 4.7Selling costs on sale of assets 17,347 13,877 -3,470 -20.0Finance costs 110,084 110,051 -33 -

Total cash used 11,002,941 10,939,382 -63,559 -0.6Net cash from (used by) investing activities -10,885,669 -10,822,100 63,569 -0.6FINANCING ACTIVITIESCash received

Appropriations - contr buted equity 2,526,250 2,365,307 -160,943 -6.4Total cash received 2,526,250 2,365,307 -160,943 -6.4Cash used

Repayment of debt 32,783 32,783 - -Total cash used 32,783 32,783 - -Net cash from (used by) financing activities 2,493,467 2,332,524 -160,943 -6.5Net increase (decrease) in cash and cash equivalents held - - - -

Cash and cash equivalents at the beginning of the reporting period 47,597 47,597 - -Effect of exchange rate movements on cash and cash equivalentsat the beginning of the reporting period - - - -

Cash and cash equivalents at the end of the reporting period 47,597 47,597 - -


100

Table 49: Budgeted Departmental Comprehensive Income Statement (Showing Net Cost of Services) (for the period ended 30 June)

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000EXPENSES

Employee benefits 11,520,134 11,812,863 11,836,467 12,223,939 12,627,685Supplier expenses 12,410,786 13,834,064 13,766,324 14,786,819 16,219,908Grants 112,334 127,639 122,140 126,270 15,678Depreciation and amortisation 6,855,045 6,520,805 6,258,265 6,572,151 7,042,554Finance costs 172,974 182,988 195,279 197,434 210,981Write-dow n of assets and impairment of assets 500,790 524,407 549,065 574,444 600,805Foreign exchange losses - - - - -Losses from sale of assets - - - - -Other 18,376 33,656 12,903 2,155 2,210

Total expenses 31,590,439 33,036,422 32,740,443 34,483,212 36,719,821LESS:OWN-SOURCE INCOME

Own-source revenueSales of goods and rendering of services 437,152 459,315 468,631 483,287 506,405Other revenue 47,389 44,686 46,753 47,945 49,136

Total own-source revenue 484,541 504,001 515,384 531,232 555,541Gains

Reversals of previous asset w rite-dow ns 269,524 284,263 299,671 315,256 331,346Sale of assets 15,617 37,994 13,557 2,619 2,477Other gains 4,818 4,938 5,061 5,188 5,318

Total gains 289,959 327,195 318,289 323,063 339,141Total own-source income 774,500 831,196 833,673 854,295 894,682Net cost of (contribution by) services 30,815,939 32,205,226 31,906,770 33,628,917 35,825,139

Revenue from Government 30,817,174 32,205,226 31,906,770 33,628,917 35,825,139Surplus (Deficit) attributable to the Australian Government 1,235 - - - -OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Changes in asset revaluation reserves - - - - -Total other comprehensive income/(loss) - - - - -

Total comprehensive income attributable to the Australian Government 1,235 - - - -


101

Table 50: Budgeted Departmental Balance Sheet (as at 30 June)

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000ASSETSFinancial assets

Cash and cash equivalents 47,597 47,597 47,597 47,597 47,597Trade and other receivables 107,523 107,523 107,523 107,523 107,523Tax assets 243,196 243,196 243,196 243,196 243,196Appropriation receivable 687,345 687,345 687,345 687,345 687,345Other receivables 327,700 304,075 300,234 296,390 296,392

Total financial assets 1,413,361 1,389,735 1,385,894 1,382,051 1,382,053Non-financial assets

Land and buildings 17,132,907 17,551,132 18,174,380 18,829,007 20,012,324Infrastructure, plant and equipment 8,444,631 9,340,951 9,977,169 10,780,445 11,477,034Specialist military equipment 56,693,869 58,045,460 60,659,121 63,934,393 68,196,318Intangibles 772,342 712,816 845,162 1,010,304 1,276,854Heritage and cultural 593,847 564,590 535,333 506,076 476,819Inventories 6,564,120 6,381,584 6,184,444 5,975,765 5,733,320Prepayments 2,874,690 2,874,690 2,874,690 2,874,690 2,874,690

Total non-financial assets 93,076,406 95,471,223 99,250,299 103,910,680 110,047,359Assets held for sale 63,538 63,538 63,538 63,538 63,538

Total assets 94,553,304 96,924,496 100,699,731 105,356,268 111,492,949LIABILITIESPayables

Suppliers 2,409,576 2,520,860 2,565,545 2,605,253 2,702,239Other 230,773 233,015 235,866 239,198 245,377

Total payables 2,640,349 2,753,875 2,801,411 2,844,451 2,947,616Interest bearing liabilities

Leases 1,501,967 1,469,184 1,433,779 1,396,124 1,355,761Total interest bearing liabilities 1,501,967 1,469,184 1,433,779 1,396,124 1,355,761Provisions

Employee provisions 2,759,729 2,844,517 2,922,029 2,997,509 3,078,010Restoration, decontamination and decommissioning 1,354,600 1,427,537 1,512,510 1,609,156 1,722,639Other 29,193 29,193 29,193 29,193 29,193

Total provisions 4,143,522 4,301,247 4,463,732 4,635,858 4,829,842Total liabilities 8,285,838 8,524,306 8,698,922 8,876,433 9,133,219NET ASSETS 86,267,466 88,400,190 92,000,809 96,479,835 102,359,730EQUITY

Contributed equity 26,874,697 29,239,086 33,080,907 37,811,062 43,952,424Reserves 24,534,992 24,303,326 24,062,125 23,810,996 23,549,529Retained surplus (accumulated deficit) 34,857,777 34,857,777 34,857,777 34,857,777 34,857,777

Total equity 86,267,466 88,400,190 92,000,809 96,479,835 102,359,730


102

Table 51: Budgeted Departmental Statement of Cash Flows (for the period ended 30 June)

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000OPERATING ACTIVITIESCash received

Appropriations 30,817,174 32,205,226 31,906,770 33,628,917 35,825,139Goods and services 437,152 459,303 468,631 483,287 506,405Net GST received 1,494,039 1,642,976 1,713,570 1,880,575 2,085,689Other cash received 47,386 44,683 46,750 47,942 49,133Cash transfer from the Official Public Account (receivables) - - - - -

Total cash received 32,795,751 34,352,188 34,135,721 36,040,721 38,466,366Cash used

Employees 11,487,040 11,725,833 11,756,104 12,145,127 12,541,005Suppliers 11,177,818 12,331,589 12,390,068 13,360,879 14,841,989Net GST paid 1,494,039 1,642,976 1,713,570 1,880,575 2,085,689Grants 112,334 127,639 122,140 126,270 15,678Other cash used 18,376 33,656 12,903 2,155 2,210Cash transfer to the Official Public Account (receivables) 897 919 942 966 990

Total cash used 24,290,504 25,862,612 25,995,727 27,515,972 29,487,561Net cash from (used by) operating activities 8,505,247 8,489,576 8,139,994 8,524,749 8,978,805INVESTING ACTIVITIESCash received

Proceeds from sales of land and buildings 82,718 86,136 161,176 325,866 16,556Proceeds from sales of infrastructure, plant and equipment 23,305 23,597 19,320 20,881 19,175Proceeds from sales of specialist military equipment 7,549 7,549 7,549 7,549 7,549

Total cash received 113,572 117,282 188,045 354,296 43,280Cash used

Purchase of land and buildings 707,156 1,225,924 1,522,023 1,714,160 1,913,112Purchase of infrastructure, plant and equipment 1,332,534 1,462,815 1,201,028 1,369,734 1,259,520Purchase of specialist military equipment 5,920,802 6,578,914 7,606,577 8,640,412 10,121,351Purchase of intangibles 129,176 89,272 273,094 275,499 386,411Purchase of inventory 1,448,565 1,458,529 1,410,996 1,466,068 1,340,686Selling costs on sale of assets 8,276 13,877 11,371 5,852 5,497Finance costs 104,558 110,051 110,306 100,788 97,498

Total cash used 9,651,067 10,939,382 12,135,395 13,572,513 15,124,075Net cash from (used by) investing activities -9,537,495 -10,822,100 -11,947,350 -13,218,217 -15,080,795FINANCING ACTIVITIESCash received

Appropriations - contributed equity 1,064,704 2,365,307 3,842,761 4,731,123 6,142,353Total cash received 1,064,704 2,365,307 3,842,761 4,731,123 6,142,353Cash used

Repayment of debt 32,456 32,783 35,405 37,655 40,363Total cash used 32,456 32,783 35,405 37,655 40,363Net cash from (used by) financing activities 1,032,248 2,332,524 3,807,356 4,693,468 6,101,990Net increase (decrease) in cash and cash equivalents held - - - - -

Cash and cash equivalents at the beginning of the reporting period 47,597 47,597 47,597 47,597 47,597Effect of exchange rate movements on cash and cash equivalents at beginning of the reporting period - - - - -

Cash and cash equivalents at the end of the reporting period 47,597 47,597 47,597 47,597 47,597


103

Table 52: Departmental Statement of Changes in Equity — Summary of Movement (Budget year 2017-18)

Retained Earnings

$'000

Asset Revaluation

Reserve$'000

Contributed Equity/Capital

$'000

Total Equity$'000

Opening balance as at 1 July 2017Balance carried forw ard from previous period 34,857,777 24,534,992 26,874,697 86,267,466Adjustment for changes in accounting policies - - - -

Adjusted opening balance 34,857,777 24,534,992 26,874,697 86,267,466Comprehensive income

Comprehensive income recognised directly in equity:Gain/loss on revaluation of property - -231,666 - -231,666

Subtotal comprehensive income - -231,666 - -231,666Surplus (Deficit) for the period - - - -

Total comprehensive income recognised directly in equity - -231,666 - -231,666Transactions with owners

Distribution to ownersReturns on capital:

Restructuring - - - -Other - - -919 -919

Contributions by ownersAppropriation (equity injection) - - 2,365,307 2,365,307Other - - - -

Sub-total transaction with owners - - 2,364,389 2,364,389Transfers betw een equity components - - - -

Estimated closing balance as at 30 June 2018 34,857,777 24,303,326 29,239,086 88,400,190


104

Table 53: Departmental Capital Budget Statement

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000CAPITAL APPROPRIATIONS

Equity injection 1,064,704 2,365,307 3,842,761 4,731,123 6,142,353Total capital appropriations 1,064,704 2,365,307 3,842,761 4,731,123 6,142,353Represented by:

Purchase of non-financial assets 1,032,248 2,332,524 3,807,356 4,693,468 6,101,990Annual f inance lease costs 32,456 32,783 35,405 37,655 40,363Other items - - - - -

Total Items 1,064,704 2,365,307 3,842,761 4,731,123 6,142,353PURCHASE OF NON-FINANCIAL ASSETS

Funded by capital appropriations 1,064,704 2,365,307 3,842,761 4,731,123 6,142,353Funded by f inance lease costs - - - - -Funded internally from departmental resources[1] 7,024,220 6,990,797 6,759,041 7,267,504 7,536,725

Total 8,088,924 9,356,104 10,601,802 11,998,627 13,679,078Reconciliation of cash used to acquire assets to asset movement table

Total purchases 8,088,924 9,356,104 10,601,802 11,998,627 13,679,078less additions by f inance lease - - - - -less additions by creditors/borrow ings - - - - -plus borrow ing/f inance costs 104,558 110,051 110,306 100,788 97,498plus annual f inance lease costs 32,456 32,783 35,405 37,655 40,363less gifted assets - - - - -less s75/restructuring - - - - -

Total cash used to acquire assets 8,225,938 9,498,938 10,747,513 12,137,070 13,816,939

Note1. Includes the follow ing sources of funding: - annual and prior year appropriations; - donations and contr butions; - gifts; - internally developed assets; - s74 relevant agency receipts; and - proceeds from the sale of assets.


105

Table 54: Statement of Departmental Asset Movements (2017-18)

Land$'000

Buildings

$'000

Specialist Military

Equipment$'000

Infrastructure, Plant and

Equipment$'000

Intangibles$'000

Heritage and Cultural Assets

$'000

AssetsHeld for

Sale $'000

Total$'000

As at 1 July 2017Gross book value 5,101,236 13,238,267 61,987,483 9,482,408 1,891,056 682,485 63,540 92,446,475Accumulated depreciation/amortisation and impairment - 1,206,596 5,293,618 1,037,777 1,118,714 88,638 2 8,745,345Opening net book balance 5,101,236 12,031,671 56,693,865 8,444,631 772,342 593,847 63,538 83,701,130CAPITAL ASSET ADDITIONSEstimated expenditure on new or replacement assets

By purchase - appropriation equity - 1,225,924 6,624,627 1,462,665 88,222 - - 9,401,438By transfer from another agency - - - - - - - -By purchase - donated funds - - - - - - - -By finance lease - - - - - - - -

Total additions - 1,225,924 6,624,627 1,462,665 88,222 - - 9,401,438Other movementsAssets held for sale - - - - - - - -Reclassif ications[1] - - -221,543 24,504 - - - -197,039Depreciation and amortisation - 741,899 5,051,489 550,412 147,748 29,257 - 6,520,805Disposal of entities or other operations (including restructuring) 27,691 14,124 - 23,584 - - - 65,399Other disposals[2] - 23,985 - 16,853 - - - 40,838Total other movements 27,691 780,008 5,273,032 566,345 147,748 29,257 - 6,824,081As at 30 June 2018Gross book value 5,073,545 14,426,082 68,390,567 10,929,140 1,979,278 682,485 63,540 101,544,637Accumulated depreciation/amortisation and impairment - 1,948,495 10,345,107 1,588,189 1,266,462 117,895 2 15,266,150Closing net book value 5,073,545 12,477,587 58,045,460 9,340,951 712,816 564,590 63,538 86,278,487

Notes1. Reclassif ication include assets f irst found.2. Other disposals includes w rite-offs.


106

Table 55: Variation in Schedule of Budgeted Income and Expenses Administered on Behalf of Government (for the period ended 30 June)


$'000

2017-18 Budget

Estimate$'000

Variation$'000

Variation%

INCOME ADMINISTERED ON BEHALF OF GOVERNMENTRevenueNon-taxation

Interest 25,887 25,887 - -Dividends 44,486 44,780 294 0.7Military superannuation contributions 1,352,073 1,352,073 - -License Fees 15,994 15,932 -62 -0.4Other 20,607 20,607 - -

Total non-taxation 1,459,047 1,459,279 232 -Total revenues administered on behalf of Government 1,459,047 1,459,279 232 -EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT

Subsidies 119,400 117,499 -1,901 -1.6Military retention benefits 93,548 93,548 - -Military superannuation benefits 5,330,659 5,339,195 8,536 0.2

Total expenses administered on behalf of Government 5,543,607 5,550,242 6,635 0.1


107

Table 56: Variation in Schedule of Budgeted Assets and Liabilities Administered on Behalf of Government (as at 30 June)


$'000

2017-18 Budget

Estimate$'000

Variation$'000

Variation%

ASSETS ADMINISTERED ON BEHALF OF GOVERNMENTFinancial assets

Cash and cash equivalents - - - -Trade and other receivables 52,888 64,670 11,782 22.3Investments accounted for using the equity method 2,552,101 2,554,363 2,262 0.1Loans 509,580 509,580 - -

Total financial assets 3,114,569 3,128,613 14,044 0.5Non-financial assets

Prepayments 299,607 299,608 1 -Total non-financial assets 299,607 299,608 1 -Total assets administered on behalf of Government 3,414,176 3,428,221 14,045 0.4LIABILITIES ADMINISTERED ON BEHALF OF GOVERNMENTPayables

Other 8,262 8,262 - -Total payables 8,262 8,262 - -Provisions

Superannuation - DFRB[1] 373,442 360,628 -12,814 -3.4Superannuation - DFRDB[2] 30,281,459 29,704,370 -577,089 -1.9Superannuation - MSBS[3] 36,612,088 36,979,906 367,818 1.0Superannuation - ADF Cover[4] 162,049 162,049 - -

Total provisions 67,429,038 67,206,953 -222,085 -0.3Total liabilities administered on behalf of Government 67,437,300 67,215,215 -222,085 -0.3

Notes1. Defence Force Retirement Benefits.2. Defence Force Retirement and Death Benefits.3. Military Superannuation and Benefits Scheme.4. Australian Defence Force Cover.


108

Table 57: Variation in Schedule of Budgeted Administered Cash Flows (for the period ended 30 June)


$'000

2017-18 Budget

Estimate$'000

Variation$'000

Variation%

OPERATING ACTIVITIESCash received

Interest 25,887 25,887 - -Military superannuation contributions 1,352,073 1,352,073 - -Fees 15,994 15,932 -62 -0.4Other 37,405 37,405 - -

Total cash received 1,431,359 1,431,297 -62 -0.0Cash used

Subsidies paid 119,400 117,499 -1,901 -1.6Military benefits 2,450,343 2,435,121 -15,222 -0.6

Total cash used 2,569,743 2,552,620 -17,123 -0.7Net cash from or (used by) operating activities -1,138,384 -1,121,323 17,061 -1.5INVESTING ACTIVITIESCash received

Dividends 38,909 38,909 - -Total cash received 38,909 38,909 - -Cash used

Loans - - - -Total cash used - - - -Net cash from or (used by) investing activities 38,909 38,909 - -Net increase (decrease) in cash held -1,099,475 -1,082,414 17,061 -1.6

Cash at the beginning of the reporting period - - - -Cash from the Official Public Account for appropriations 2,569,743 2,552,620 -17,123 -0.7Cash to the Official Public Account -1,470,268 -1,470,206 62 -0.0Effect of exchange rate movements on cash and cash equivalents - - - -

Cash and cash equivalents at the end of the reporting period - - - -


109

Table 58: Schedule of Budgeted Income and Expenses Administered on Behalf of Government (for the period ended 30 June)

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000INCOME ADMINISTERED ON BEHALF OF GOVERNMENTRevenueNon-taxation

Interest 25,887 25,887 24,715 24,205 24,205Dividends 39,203 44,780 39,975 43,173 33,230Military superannuation contributions 1,416,269 1,352,073 1,293,092 1,242,547 1,199,048Fees 15,178 15,932 16,658 17,358 18,118Other 40,969 20,607 17,579 17,804 27,510

Total non-taxation 1,537,506 1,459,279 1,392,019 1,345,087 1,302,111Total revenues administered on behalf of Government 1,537,506 1,459,279 1,392,019 1,345,087 1,302,111EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT

Subsidies 105,485 117,499 127,264 136,205 146,013Military retention benefits 79,985 93,548 107,299 120,288 120,636Military superannuation benefits 7,640,503 5,339,195 5,519,965 5,703,166 5,886,123

Total expenses administered on behalf of Government 7,825,973 5,550,242 5,754,528 5,959,659 6,152,772


110

Table 59: Schedule of Budgeted Assets and Liabilities Administered on Behalf of Government (as at 30 June)

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000


$'000ASSETS ADMINISTERED ON BEHALF OF GOVERNMENTFinancial assets

Cash and cash equivalents - - - - -Trade and other receivables 59,090 64,670 59,868 63,070 53,130Investments accounted for using the equity me hod 2,502,692 2,554,363 2,617,667 2,697,453 2,761,174Loans 509,580 509,580 509,580 509,580 509,580

Total financial assets 3,071,362 3,128,613 3,187,115 3,270,103 3,323,884Non-financial assets

Prepayments 271,556 299,608 328,609 342,221 266,285Total non-financial assets 271,556 299,608 328,609 342,221 266,285Total assets administered on behalf of Government 3,342,918 3,428,221 3,515,724 3,612,324 3,590,169LIABILITIES ADMINISTERED ON BEHALF OF GOVERNMENTPayables

Other 8,262 8,262 8,262 8,262 8,262Total payables 8,262 8,262 8,262 8,262 8,262Provisions

Superannuation - DFRB[1] 380,754 360,628 340,933 321,724 303,033Superannuation - DFRDB[2] 29,498,787 29,704,370 29,863,678 29,977,222 30,043,531Superannuation - MSBS[3] 34,270,725 36,979,906 39,736,498 42,534,950 45,376,992Superannuation - ADF Cover[4] 42,216 162,049 350,092 604,158 922,773

Total provisions 64,192,482 67,206,953 70,291,201 73,438,054 76,646,329Total liabilities administered on behalf of Government 64,200,744 67,215,215 70,299,463 73,446,316 76,654,591

Notes1. Defence Force Retirement Benefits.2. Defence Force Retirement and Death Benefits.3. Military Superannuation and Benefits Scheme.4. Australian Defence Force Cover.


111

Table 60: Schedule of Budgeted Administered Cash Flows (for the period ended 30 June)

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000


$'000


$'000



Interest 25,887 25,887 24,715 24,205 24,205Military superannuation contributions 1,416,269 1,352,073 1,293,092 1,242,547 1,199,048Fees 15,178 15,932 16,658 17,358 18,118Other 39,965 37,405 39,146 38,321 37,316


Subsidies paid 105,485 117,499 127,264 136,205 146,013Military benefits 2,288,216 2,435,121 2,562,354 2,682,004 2,715,719

Total cash used 2,393,701 2,552,620 2,689,618 2,818,209 2,861,732Net cash from or (used by) operating activities -896,402 -1,121,323 -1,316,007 -1,495,778 -1,583,045INVESTING ACTIVITIESCash received

Dividends 62,719 38,909 44,486 39,681 42,879Total cash received 62,719 38,909 44,486 39,681 42,879Cash used

Loans - - - - -Total cash used - - - - -Net cash from (used by) investing activities 62,719 38,909 44,486 39,681 42,879Net increase (decrease) in cash held -833,683 -1,082,414 -1,271,521 -1,456,097 -1,540,166

Cash at the beginning of reporting period - - - - -Cash from the Official Public Account for appropriations 2,393,701 2,552,620 2,689,618 2,818,209 2,861,732Cash to the Official Public Account -1,560,018 -1,470,206 -1,418,097 -1,362,112 -1,321,566Effect of exchange rate movements on cash and cash equivalents - - - - -

Cash and cash equivalents at the end of the reporting period - - - - -


112

3.3.2 Notes to the Financial Statements

The financial statements have been prepared in accordance with the Australian Accounting Standards and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR).


113

APPENDICES

Appendix A Defence Cooperation Program

Appendix B Integrated Investment Program

Appendix C Top 30 Acquisition Projects by 2017-18 Forecast Expenditure

Appendix D Top 30 Sustainment Products by 2017-18 Forecast Expenditure

Appendix E Facilities and Infrastructure Program

Appendix F Status of Major Projects Foreshadowed for Government and Parliamentary Standing Committee on Public Works Consideration (PWC) in 2017-18


114

APPENDIX A: DEFENCE COOPERATION PROGRAM

The Defence Cooperation Program (DCP) has made a significant contribution to Australia’s international defence engagement since the 1960s. The program:

• promotes the capacity of partners;

• improves Australia’s capacity to work with partners in response to common security challenges; and

• builds strong people-to-people links with regional militaries at the tactical, operational and strategic levels.

The DCP supports Australia’s strategic interests. In line with those interests, the DCP-priority countries and regions include Papua New Guinea, Indonesia, Timor-Leste, the South West Pacific, South-east Asia, Pakistan and the Middle East. The objective is to maximise Australia’s security through developing close and enduring links with partners that support their capacity to protect their sovereignty, work effectively with the Australian Defence Force and contribute to regional security.

To achieve its objectives, the DCP suite of activities includes education courses, training, personnel exchanges, capacity building, military secondments, strategic dialogues, visits, subject matter expert exchanges, infrastructure support, and exercises and operations. These activities focus on enhancing the ADF’s operational familiarity with different environments and on building partner capacity in humanitarian assistance and disaster relief, peacekeeping, counter-terrorism, maritime security, and military governance and professionalism.

The Australian Defence Force conducts exercises with other militaries in order to build partner capacity and enhance Australia’s capacity to work with partners in response to regional security contingencies. These exercises are conducted in the air, land and maritime domains and take place both in Australia and across the region. Exercising together promotes interoperability and builds familiarity between our armed forces and those of our regional military partners.

The DCP supports the provision of education and training positions in Australia for international military personnel. Junior and senior officers from regional countries undertake short-and long-term courses at Australian military and civilian educational institutions. This training builds military professionalism by equipping participants with the skills they will use throughout their military careers. International military personnel also return home having developed a better understanding of Australia and having built networks with counterparts in the Australian Defence Force. These people-to-people links are further maintained through military alumni associations.

Australia maintains regular defence talks with regional countries in order to exchange views on regional security issues and to discuss defence cooperation priorities. The DCP also supports a program of visits by senior defence representatives to and from Australia. Through these visits, Australia gains an improved understanding of regional militaries and the strategic outlook of neighbouring countries.

Through capacity-building activities Defence seeks to develop the institutional and governance frameworks of regional defence organisations as well as the capabilities of their security forces. The DCP achieves these objectives through Australian Defence Force mobile training teams, support for logistics and infrastructure development, and the posting of Defence personnel as advisers to regional defence and security organisations. Professional and capable militaries are


115

better able to operate with the Australian Defence Force and to contribute to regional security and stability.

A key element of the DCP, and the centrepiece of Australia’s defence engagement in the South Pacific, is the Pacific Patrol Boat Program, through which Australia has provided 22 Patrol Boats (with associated personnel and technical assistance) to 12 countries. The Program engages Pacific navies and police maritime wings and is designed to help Pacific island countries improve their ability to independently police their maritime zones. Under the follow-on Pacific Maritime Security Program, Australia is replacing the fleet with new steel-hulled vessels. In July 2015 and following a tender process, Austal Ships Pty Ltd has been selected to construct up to 21 replacement patrol vessels in Australia, for gifting to Pacific nations from 2018.

Table 61: Defence Cooperation Program budget 2017-18

2015-16 Actual

$'000

2016-17 Budget

Estimate$'000

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000

Papua New Guinea 38,942 40,788 40,239 41,808South Pacif ic Region[1] 42,156 38,876 39,628 55,714South-East Asia 15,977 19,334 18,925 21,380Other regional activities[2] 6,523 7,830 5,534 8,196Defence International Training Centre[3] 4,231 4,599 4,575 4,625Total[4] 107,829 111,427 108,901 131,722

Notes1. The Defence White Paper has allocated additional funds for Aerial surveillance commencing in 2017-18.2. Ukraine has been included as a Defence Cooperation Country from 2016-17.3. The Defence International Training Centre (DITC) provides training in Australia to the defence forces of South-East Asia and South Pacif ic nations and to other selected overseas personnel. The DITC is managed by VCDF Group.4. Includes funding from the Defence White Paper.


116

Table 62: South Pacific Region budget 2017-18

2015-16 Actual

$'000

2016-17 Budget

Estimate$'000

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000

Timor Leste 4,955 5,829 4,381 5,975Vanuatu 424 807 740 858Solomon Islands 792 871 537 954Tonga[1] 4,656 3,042 2,165 2,700Samoa 105 232 139 238Cook Islands 269 182 197 276Republic of the Marshall Islands 117 396 366 406Federated States of Micronesia 80 122 202 207Fji[2] 1,169 2,700 2,254 8,487Tuvalu 197 348 345 350Kiribati 417 395 291 427Palau 418 614 456 629DCP Scheduled Support 4,325 4,102 3,894 5,389Pacif ic Patrol Boat Program[3] 24,232 19,236 23,660 28,818Total 42,156 38,876 39,628 55,714

Notes

2. Budget estimate reflects reinstatement of Defence relationship w ith F ji, including the F jian Patrol boat refit in 2017-18.

1. The decreased budget for Tonga reflects completion of the Tongan Landing Craft acquisition in 2015-16.

3. Budget estimate increase reflects additional Defence White Paper funding for the Pacif ic Maritime Security Program.

Table 63: South-East Asia region budget 2017-18

2015-16 Actual$'000

2016-17 Budget

Estimate$'000

2016-17 Estimated

Actual$'000

2017-18 Budget

Estimate$'000

Singapore[1] 58Philippines 2,803 3,142 3,241 3,285Thailand 2,733 3,034 2,933 3,182Malaysia 3,646 4,250 3,429 4,426Indonesia 3,362 4,290 5,238 5,462Vietnam 1,995 2,552 2,322 2,636Cambodia and Laos 1,242 1,458 1,322 1,664Brunei 42 320 124 328Myanmar 96 288 317 398Total 15,977 19,334 18,925 21,380

Note1. Singapore is considered part of Defence Engagement from 2016-17 onwards.


117

APPENDIX B: INTEGRATED INVESTMENT PROGRAM

The Integrated Investment Program is the means for Defence to deliver Government’s agreed capability plan necessary to meet the strategic challenges outlined in the 2016 Defence White Paper.

Since the 2016-17 Portfolio Budget Statements and as part of the development of the budget, the Integrated Investment Program has been reviewed and updated to reflect the best available information in respect to project planning, delivery reality, cost estimates, phasing, and other important judgments and assumptions critical to the delivery of the capital investment portfolio. The review of the Integrated Investment Program ensures alignment between strategy, capability and resources is maintained in accordance with Government policy direction.

Table 64: Integrated Investment Program projects in development for first pass approval consideration within the financial year 2017-18

Project Number Project Title JP 2089 Phase 4 Tactical Information Exchange Domain (Data Links) - Upgrade JP 9131 Phase 1 Defensive Cyberspace Operations (DCO) for the Deployed

Environment JP 2030 Phase 9 ADF Joint Command Support Environment - Geospatial and

Intelligence Integration JP 2085 Phase 2/3W Explosive Ordnance Warstock - Munitions and Complex GW JP 9320 Phase 1 Joint Force Level Electronic Warfare (JFLEW) - Geolocation LAND 555 Phase 6 Land Force Level Electronic Warfare Signals Intelligence and

Vehicles SEA 5010 Phase 1 Active Electronically Scanned Array - Continuous Development

Program JP 2060 Phase 4 ADF Deployable Health Knowledge Management System ICT 2273 Phase 1 Maritime Fleet Information Environment (FIE) Modernisation

Program ICT 2270 Phase 1 21st Century Security Vetting SEA 1350 Phase 2 Navy Magnetic Treatment Facility LAND 8140 Phase 2 Deployable Force Infrastructure LAND 400 Phase 3 Land Combat Vehicle System LAND 8120 Phase 1 Engineer Support Platforms Program LAND 125 Phase 4 Integrated Soldier System SEA 500 Phase 3 Navy Tactical Electronic Warfare Remediation SEA 4000 Phase 6 AEGIS Capability Upgrade SEA 2400 Phase 1 Hydrographic Data Collection Capability AIR 7000 Phase 2C Maritime Patrol Aircraft Replacement - P-8 Increment 3 (12

Aircraft) ESTATE Z009P Keswick Barracks Mid Term Refresh


118

Table 65: Integrated Investment Program projects in development for second pass approval consideration within the financial year 2017-18

Project Number Project Title LAND 9000 Phase ARHCAP Armed Reconnaissance Helicopter Capability Assurance Program or

replacement (ARH CAP) LAND 4502 Phase 1 Additional Chinook Helicopters (facilities component) AIR 555 Phase 1 AP-3C (EW) Replacement AIR 2025 Phase 6 Jindalee Operational Radar Network (JORN) LAND 1771 Phase 1 Geospatial Support System for Land Force JP 9340 Phase 1 Integrated Broadcast Service - Interactive radios for AWD,LHD,

Northroc, Eastroc, MHQ JP 2064 Phase 3 E2 Geospatial Information, Infrastructure and Services (Evolution 2) JP 9711 Phase 1 Core Simulation Capability SEA 3035 Phase 1 Navy Training Pipeline Simulation Requirements ICT 2284 Phase 1 Enterprise Information Management Acquisition ICT 2203 Phase 1 Mobility and Digitisation ICT 2216 Phase 1 Case Management Systems ICT 2221 Phase 1 Multinational Information Systems (MNIS) ICT 2201 Phase 1 Enterprise Service Orientated Architecture (SOA) ICT 2047 JP 2047 Phase 3 Terrestrial Communications RCI LAND 17 Phase 1C.2 Future Artillery Ammunition LAND 8115 Phase 1 Mortar Ammunition Replacement LAND 121 Phase 5B Overlander - Medium and Heavy Tactical Training Vehicles LAND 154 Phase 2 Joint Counter Improvised Explosive Device Capability LAND 400 Phase 2 Mounted Combat Reconnaissance Capability SEA 1180 Phase 1 Offshore Patrol Vessel SEA 5000 Phase 1 Future Frigate (Design and Construction) AIR 7000 Phase 1B Multi-mission Unmanned Aircraft System SEA 1439 Phase 6 Collins Sonar Capability Assurance SEA 1354 Phase 1 Submarine Escape Rescue & Abandonmt Systems SEA 1397 Phase 5B Nulka Missile Decoy Enhancements AIR 6000 Phase 3 Weapons and Countermeasures for Air Combat Capability AIR 6013 Phase 1 Automatic Dependent Surveillance - Broadcast capability for Hawk Lead-

in Fighter AIR 3023 Phase 1 Enhanced Maritime Strike for the Air Combat Capability ESTATE N2238 Facilities to Support Naval Operations in the North ESTATE J0109P Larrakeyah Barracks Redevelopment, Darwin (include Norforce) ESTATE C8923 Point Wilson Explosive Ordnance Storage & Distribution ESTATE P0007 Airfield Capital Works ESTATE N2232 HMAS Watson Redevelopment ESTATE N2241 Navy Guided Weapon Sustainment System (NGWSS) Remediation &

Augmentation of Missile Testing & Maint Facilities ESTATE D9541 DSTO-E Secure Training and Conference Facilities and DSTO-E

Restricted Corporate Information Systems Centre ESTATE J0105 Joint Health Command (JHC) Redevelopments (Puckapunyal, Duntroon,

Watsonia, Darwin, Enoggera, Albury/Wodonga, Campbell, Larrakeyah Barracks)


119

Table 66: Integrated Investment Program Projects in Development for Other Approval Consideration within the financial year 2017-18

Project Number Project Title INV 1 Single Innovation Fund SEA 5000 Phase 1 Future Frigate (Update to Government)


120

APPENDIX C: TOP 30 ACQUISITION PROJECTS BY 2017-18 FORECAST EXPENDITURE

Table 67: Top 30 Projects by 2017-18 Forecast Expenditure (Gross Plan)

Domain/ Project Name Project Number/

Phase

Approved Project

Expenditure $m

Estimated Cumulative

Expenditure to 30 June

2017 $m

Budget Estimate 2017-18

$m

Top 30 Major Project Descriptions

Air Domain

New Air Combat Capability

AIR 6000 Phase 2A/B

16,003 1,544 1,148

The project is approved to acquire 72 F-35A aircraft and supporting elements to form four squadrons; three squadrons for operational and one squadron for training. Prime Contractor: Lockheed Martin is contracted to the United States Government to develop and produce F-35A Lighting II (Joint Strike Fighter) aircraft. Australia is procuring the aircraft through a government-to-government agreement.

Major activities during 2017-18 will include: progressing the production of Australia’s next eight F-35A aircraft, including delivery of four aircraft; commencing the procurement of a further eight F-35A aircraft; continue maturing the development of a sustainment model for Australian based support; commencing detailed planning and support for the ferry of the first two Australian F-35A aircraft to RAAF Williamtown in 2018; and Australian pilots and maintainers will continue to be trained in the USA, while construction of training facility at RAAF Williamtown, NSW continues.

Maritime Patrol and Response Aircraft System

AIR 7000 Phase 2 5,261 2,686 853

This project is acquiring the materiel elements of the Maritime Patrol and Response Aircraft weapon system including 12 aircraft, a full suite of training systems, three Mobile Tactical Operations Centres and a Through Life Support system as partial replacement of the AP-3C Orion aircraft.

During 2017-18 the project will take delivery of another four aircraft, bringing the total deliveries to seven, and the aircrew training device suite. Major financial requirements in 2017-18 relate to the delivery of aircraft, aircrew and maintenance training devices, an Operational Load Management System, Air-to-Air Refuelling clearance activities, spares and transition training.

Future Naval Aviation Combat System (FNACS)

AIR 9000 Phase 8 3,468 2,028 294

The project has delivered all 24 Seahawk Romeo aircraft, with the final delivery to Australia occurring in September 2016. Six minor Australian-led modifications are being progressively embodied in the aircraft. Construction of the Maritime Helicopter Support Company maintenance facility in Nowra was completed and opened in September 2016, with the first helicopters being inducted into the facility for scheduled deeper maintenance activities.

The Seahawk Romeo capability is operated from HMAS Albatross in Nowra and is currently supporting four embarked flights on Navy ships and will continue to grow to a mature state of eight embarked flights over the next two years.


121

Table 67: Top 30 Projects by 2017-18 Forecast Expenditure (Gross Plan) (Continued)


Phase

Approved Project

Expenditure $m



2017 $m


$m


Air Domain (continued)

Pilot Training System AIR 5428 Phase 1 1,196 136 239

This project will establish a new Pilot Training System for the Australian Defence Force, replace existing training aircraft, and acquire synthetic training systems, an enhanced curriculum and training media.

During 2017-18, 10 training aircraft and four flight training simulators will be delivered. Installation of an associated learning environment will commence at RAAF Base Pearce, WA, and one will be completed at RAAF Base East Sale, VIC, enabling RAAF to validate training material.

AEW&C Interoperability Compliance Upgrade

AIR 5077 Phase 5A 1,138 344 226

This project will deliver inter-operability compliance upgrades to the E-7A Wedgetail Airborne Early Warning and Control aircraft and its associated support systems.

During 2017-18 the project will progress the design and development of mission computing and Identification Friend or Foe upgrades on two aircraft. The project will also develop design options for additional interoperability upgrades for future project approval consideration by Government.

Growler Airborne Electronic Attack Capability

AIR 5349 Phase 3 3,393 2,125 225

This project will deliver an Airborne Electronic Attack Capability based on the EA-18G Growler platform, including an ALQ-99 Tactical Jamming System, anti-radiation captive training missiles, additional air-to-air missiles, simulators and other training devices. Aircrew and maintenance training will also be delivered. All aircraft have now been delivered to RAAF.

The project will continue to progress delivery of a Mobile Threat Training Emitter System for electronic warfare training at ranges west of Amberley in Queensland and at Delamere in the Northern Territory, plus air-to-air and anti-radiation weapons for raise-train-sustain activities over the period 2017- 2022.

Additional Multi-Role Tanker Transport Aircraft

AIR 7403 Phase 3 853 451 132

This project will acquire two additional KC-30A Multi Role Tanker Transport aircraft to increase the existing fleet from five to seven aircraft.

During 2017-18 the project will deliver the first aircraft with the second aircraft scheduled to complete its conversion. The second aircraft will undergo further modification to include an enhanced interior and secure communications suite known as Government Transport and Communications capability. Delivery of spares and support equipment are also expected during this period.


122



Phase

Approved Project

Expenditure $m



2017 $m


$m


Air Domain (continued)

Multi-Role Helicopter (MRH)

AIR 9000 Phase 2 3,732 3,054 119

Project AIR 9000 Phase 2, 4 and 6 is acquiring a total of 47 Multi Role Helicopters (MRH90) for the Army and the Navy: Phase 2 acquires 12 MRH90 for an additional Army air mobile squadron; Phase 4 replaces the Black Hawk fleet; and Phase 6 replaces Navy Sea Kings. During 2017-18, the project is scheduled to accept all final production aircraft, bringing the total number of aircraft to 47; the final aircraft will be delivered in July 2017. The retrofit program, which upgraded the first 13 production aircraft to the mature contracted configuration, delivered the final aircraft four months ahead of schedule in April 2016. The Project focus will continue on the provision of the capabilities required to enable achievement of the remaining operational milestones in the lead-up to Final Operational Capability in 2021.

Helicopter Aircrew Training System

AIR 9000 Phase 7 474 199 90

This project will provide a new joint training system to prepare Navy and the Army aircrew for conversion to operational helicopter types. The new Joint Helicopter School will be located in Nowra, New South Wales. The project will replace the current training systems based on Squirrel and Kiowa helicopters. The acquisition of 15 EC135 helicopters, associated synthetic training systems, courseware, training services and a new training facility at HMAS Albatross, New South Wales, will enable the training of up to 130 military aircrew candidates per year. The first 14 aircraft have been delivered to Australia. During 2017-18 students will commence training in early 2018, with full operational capability planned to be achieved by mid 2019.

Battlefield Airlift - Caribou Replacement

AIR 8000 Phase 2 1,406 751 78

This project is acquiring 10 C-27J ‘Spartan’ Joint Cargo aircraft and three years interim support to replace the retired Caribou. To date, six aircraft have been accepted by the Commonwealth; five aircraft have been delivered to RAAF Base Richmond, NSW, and one aircraft located in the United States to support aircrew and maintainer training. During 2017-18 the project will support the establishment of a Through Life Support contract, complete the balance of aircraft deliveries and continue delivery of associated logistics support. Planning for the longer term training solution and conduct of the Operational Test and Evaluation to support Final Operational Capability will also be undertaken. Work will also continue on preparations for the aircraft Structural Substantiation Program that involves a full scale aircraft fatigue test.

Bridging Air Combat Capability

AIR 5349 Phase 1 3,358 2,828 40

This project is acquiring 24 US Navy common F/A-18F Block II Super Hornet aircraft, weapons, facilities and support systems. To date, all aircraft have been delivered and are currently maintained at RAAF Base Amberley, QLD. The project has some outstanding acquisition activities that will see the project close during 2018-19. The focus for 2017-18 will be the final integration of weapons, continued identification of additional Super Hornet support requirements associated with the revised Planned Withdrawal Date.


123



Phase

Approved Project

Expenditure $m



2017 $m


$m


Joint Domain

Battlespace Communications System (Land)

JP 2072 Phase 2B 930 180 178

This project will provide the Army with a deployable, wideband communications backbone by replacing the existing Battlefield Telecommunications Network with an enhanced deployable network capability. A complementary support system will also be established. Contracts were signed with Boeing Defence Australia on 3 September 2015 for both acquisition and support of the capability. Boeing completed the Detailed Design Review in late 2016 and has demonstrated prototypes of key elements of the capability.

During 2017-18, the project will prepare for the first deliveries in late 2017.

ADF Identification Friend or Foe and Automatic Dependent Surveillance - Broadcast

AIR 90 Phase 1 417 65 79

This project is upgrading the legacy platforms that have military Mode 4 Identification Friend or Foe (IFF) and civilian Modes A/C Secondary Surveillance Radar systems to Mode 5 IFF and Mode S respectively. A new complementary technology, Automatic Dependent Surveillance - Broadcast will also be implemented. The project's scope includes eight platforms: KC-30A multi-role tanker transport aircraft, MRH90 Taipan helicopters, Tiger armed reconnaissance helicopters, HMAS Choules, HMAS Sirius, Huon class minehunters, RBS-70 short-range anti-aircraft missile systems, and the Tactical Air Defence Radar System.

During 2017-18 the key activities for include: first of type installation for Huon class minehunters; Initial Operational Capability for RBS-70; and Detailed Design Review for HMAS Sirius, Tiger, Taipan and KC-30A.

Civil Military Air Traffic System (CMATS)

AIR 5431 Phase 3 731 64 66

This project will provide the Defence element of a single national Civil Military Air Traffic Management System being progressed jointly under the OneSKY Australia program with Airservices Australia. Airservices is the lead agency for OneSKY. The joint project will provide operational benefits and efficiencies for military and civil airspace users, and reduced acquisition and support costs for Airservices and Defence. The Defence scope element includes 12 Air Traffic Management automation systems, communications infrastructure, training systems and Defence’s share of a Joint Software Support Facility. Advance Work Supply Arrangements have been active with the preferred tenderer, Thales Australia, since February 2015 to allow critical path activities to be progressed ahead of the main contracts.

During 2017-18 negotiations with the preferred tenderer to bring the capability, cost and schedule of this complex project within the parameters agreed by Government at Second Pass will continue.


124



Phase

Approved Project

Expenditure $m



2017 $m


$m


Joint Domain (continued)

Woomera Test Range Remediation

JP 3024 Phase 1 238 101 60

This project will replace the aging instrumentation at the Woomera Test Range which is used to conduct Defence Test and Evaluation and Research and Experimentation activities. The Woomera Test Range consists of the Woomera Prohibited Area and the Woomera Restricted Airspace, and occupies an area of approximately 124,000 square kilometres in remote South Australia. The Woomera Test Range will continue to be operated by Air Force with operational maintenance and deeper level maintenance to be conducted by the support contractor. The selected contractor, acting as a Prime System Integrator, will supply the Mission and Support systems and the first five years of support. Rolling wave extensions to the Support Contract beyond the first five years of support will awarded subject to satisfactory performance. During 2017-18 the key activities are the Detailed Design Review and the delivery of the new and upgraded facilities at Woomera to support the Capital Equipment project.

Enhanced Land Electronic Warfare Systems

DEF 500 Phase 1 178 57 57

This project will acquire new and upgrade existing Electronic Warfare capabilities for Army. These capabilities are: Electronic Warfare systems that will be integrated into Bushmaster Protected Mobility Vehicles; manpack Electronic Warfare systems; communication systems to support the networking and coordination of Electronic Warfare operators and assets; systems to allow exploitation of emerging digital devices; and dedicated training systems that will support the training of Electronic Warfare operators. The project will conduct a coordinated acquisition strategy encompassing all of the five capability lines to ensure “whole of systems” delivery. Preference has been given to off-the-shelf products that are technically mature and systems that have interface commonality with existing Army Electronic Warfare capabilities to ensure compatibility and interoperability. The Initial Operational Capability is scheduled for 2017-18 and the Full Operational Capability is scheduled for 2019-20. During 2017-18 the project will: deliver all 12 of the Protected Mobility Vehicles in the Electronic Warfare configuration; deliver the Manpack Electronic Warfare system and commence delivery of the dedicated training systems; and deliver the associated communication systems for networking the capabilities.

Nu ka Missile Decoy Enhancements

SEA 1397 Phase 5C 176 99 42

This project is a collaborative development with the United States Navy for the next generation of the Nulka product line. In 2017-18 the program is undertaking trial activities with the United States.

Improved Tactical Electronic Support Capability for ANZAC Class

SEA 1448 Phase 4A 279 177 42

This project will provide the Anzac class frigates with a replacement tactical Electronic Support mission system for improved passive situational awareness and early threat warning. The project includes the provision of Electronic Support mission system emulators for training and a shore-based support segment for Electronic Support mission system reprogramming. The project successfully completed first of class system installation and at sea trials in August 2015. During 2017-18, delivery and installation of the Eighth and final production system for the Anzac class will occur.


125



Phase

Approved Project

Expenditure $m



2017 $m


$m


Land Domain

Medium and Heavy Capability (MHC), Field Vehicles, Modules and Trailers (FVMT)

LAND 121 Phase 3B 3,363 988 710

This project will deliver approximately 2,700 medium and heavy vehicles in an array of variants, including recovery trucks, integrated load handling systems and flatbeds, in both protected and unprotected configurations. To complement the acquisition, approximately 3,858 modules and flatracks will be supplied and approximately 1,700 trailers will also be acquired to enhance the payload carrying capacity. The prime contractors include: Medium/Heavy Vehicle Capability: Rheinmetall MAN Military Vehicles Australia; Medium/Heavy Trailer Capability: Haulmark Trailers (Australia); Bushmaster vehicles: Thales Australia; Additional G Wagons: Mercedes-Benz Australia-Pacific. During 2017-18, the project will continue to deliver initial capability to Army's 7 Brigade and 1 Brigade, RAAF units, and other supporting organisations within Defence.

Project Overlander - Protected Mobility Vehicle-Light

LAND 121 Phase 4 1,951 303 223

This project will deliver 1,100 Protected Mobility Vehicles – Light (‘Hawkei’) for command, liaison, utility and reconnaissance roles. In addition, approximately 1058 companion trailers will be acquired to enhance payload carrying capacity. The Hawkei balances requirements for survivability, mobility, payload, communications, useability and sustainability; providing a high level of protection against blast and ballistic threats, with the mobility to enable operations in high risk areas. The prime contractor is Thales Australia.

During 2017-18, the project will be conducting capability requirements testing, including reliability trials, on pilot vehicles and trailers, prior to finalising contractor designs for the build of low rate initial production vehicles.

Soldier Enhancement Version 2 - Lethality

LAND 125 Phase 3C 459 142 131

This project will deliver the Enhanced F88 rifle and a suite of Surveillance and Target Acquisition ancillaries including an enhanced day sight and thermal and image intensifier sights. The Prime Contractor is Thales Australia for the Enhanced F88 rifle and Grenade Launcher Attachment.

A contract for the production of 30,000 Enhanced F88 rifles, 2,277 Grenade Launcher Attachments, repair parts and training aids was signed in July 2015. Deliveries commenced in August 2015 and continue in accordance with the schedule.

Contracts for the surveillance and target acquisition ancillaries were signed through seven standing offer deeds with a range of Australian and overseas suppliers by November 2015 and deliveries commenced in February 2016. The delivery of rifles and ancillary devices to North Queensland has been completed and deliveries to South Queensland are scheduled for the second half of 2017.


126



Phase

Approved Project

Expenditure $m



2017 $m


$m


Land Domain (continued)

Night Fighting Equipment Replacement

LAND 53 Phase 1BR

433 34 72

This project is replacing land-based night vision equipment and laser aiming devices that attach to specified ADF weapons. The equipment is being progressively delivered over the period 2017 to 2023. The prime contractor is L3 Oceania (acquisition and support).

In 2017, the first delivery of equipment will be to Army’s 1st Battalion, The Royal Australian Regiment in Townsville and the School of Infantry in Singleton for Operational Testing and Evaluation of the night fighting equipment, accessories and the support system.

Final Materiel Release is scheduled for March 2023, with Final Operational Capability to be declared in September 2023.

Enhanced Gap Crossing Capability

LAND 155 Phase 1 210 119 66

This project will provide land forces with the ability to cross a range of wet and dry gaps in support of combat operations and will comprise of combat bridging that will remain in place for a limited time and can then be redeployed forward to maintain support to the manoeuvre force. Prime Contractor: This project is managed using a Managing Contractor model: Jacobs Pty Ltd. The major bridging suppliers are: Floating Bridge System (FBS) General Dynamics European Land Systems – Germany; Bridge Erection Propulsion Boats – Life of Type Extension: Birdon Pty Ltd; Modular Bridging System: WFEL Ltd; Rapid Emplacement Bridges: WFEL Ltd; and Footbridge: Israeli Military Industries Systems.

During 2017-18, this project will complete production of the Rapid Emplacement Bridge and Modular Bridge System and commence Operational Test and Evaluation of these bridges and the Floating Bridge System and the Foot Bridge.


127



Phase

Approved Project

Expenditure $m



2017 $m


$m


Maritime Domain

Air Warfare Destroyer Program

SEA 4000 Phase 3 9,090 7,219 683

The Air Warfare Destroyer (AWD) program will deliver three Hobart class AWDs and support system to the Navy under an alliance-based contracting arrangement between Australian Submarine Corporation (ASC) AWD Shipbuilder Pty Ltd, Raytheon Australia Pty Ltd and the Government, represented by Defence. The prime contractor is The AWD Alliance.

During 2017-18, this project is expected to achieve a number of key milestones including delivery of Ship 01, Hobart, to the Royal Australian Navy, the completion of sea trials for Ship 02, Brisbane, and the launch and official naming of Ship 03, to be named Sydney.

Future Submarine Design and Construction

SEA 1000 Phase 1B 935 127 319

This project will deliver Australia's Future Submarine capability.

During 2017-18, the Project will continue planning and mobilising to deliver a rolling acquisition program for the delivery of 12 regionally superior Future Submarines including the sovereign capability to operate and sustain them. The mobilisation activities will involve the establishment of a Resident Project Team in France to oversee the submarine design being undertaken by the DCNS and Lockheed Martin Australia and commence work on the infrastructure for construction of the Future Submarines in Adelaide.

Maritime Operational Support Capability

SEA 1654 Phase 3 995 92 270

This project will replace the Royal Australian Navy's existing afloat support capability, HMA Ships Success and Sirius, with a single class of replacement replenishment ships to sustain deployed maritime forces. On 5 May 2016 the Commonwealth entered into contracts with Navantia S. A. for the acquisition and initial five-year sustainment of the two replacement replenishment ships.

During 2017-18, this project will continue the build of the replacement replenishment ships and is expected to achieve a number of key milestones including Keel Laying of Ship 1 and various construction progress milestones as well as undertaking a number of mandated system reviews.


128



Phase

Approved Project

Expenditure $m



2017 $m


$m


Maritime Domain (continued)

Future Frigate - Design and Construction

SEA 5000 Phase 1 335 146 133

The Future Frigate Program will replace Australia’s existing fleet of eight ANZAC Class frigates with a new fleet of nine anti-submarine warfare frigates. SEA 5000 Phase 1 (Future Frigate) will introduce into service the next generation of naval surface combatants. The three short-listed designers, BAE Systems, Fincantieri and Navantia were contracted in August 2016 to participate in the next phase of the Competitive Evaluation Process (CEP). A Request for Tender (RFT) was released to the three designers, on 31 March 2017. In 2017-18, SEA 5000 will work through the next phase of the Competitive Evaluation Process which will include a Risk Reduction Design Study and the Request for Tender process to identify the optimum designer, builder and commercial model in the lead up to Gate 2 Government approval in 2018. Two options have been short listed for the combat management system. SEA 5000 will undertake further detailed studies and decide on a combat management system by the end of 2017.

Collins Sonar Capability Assurance Program

SEA 1439 Phase 6 123 50 67

This project will address obsolescence and capability deficiencies in the Collins class sonar system and establish an ongoing capability assurance program. The project achieved Government first pass approval in March 2016. First pass approval provided funding for risk reduction activities and for development of a fully costed proposal for Gate Two consideration. Funding was also provided for an on-shore acoustic trainer and for the design and production of key components needed to enable the first installation to commence as soon as Government Gate 2 approval is achieved. The project is scheduled for Gate Two consideration by Government in 2017-2018.

Amphibious Ships (LHD)

JP 2048 Phase 4A/B

3,092 2,793 49

This project has delivered two Canberra Class Landing Helicopter Dock (LHD) vessels and associated LHD support system comprising configuration information, training, spares, documentation, and test equipment.

LHD01 was delivered to the Navy in October 2014 and commissioned as HMAS Canberra in November 2014. LHD02 was delivered in October 2015 and commissioned as HMAS Adelaide in December 2015. Final Materiel Release (FMR) is currently planned for 2017, noting however the dependency on the resolution of outstanding defects and deficiencies.

Collins Communications and Electronic Warfare Programme

SEA 1439 Phase 5B2

251 109 41

This project will modernise the communications and electronic warfare systems in Collins class submarines. The project is to be delivered in two stages; Stage 1 will specifically address communications and electronic warfare equipment obsolescence, while Stage 2 will deliver additional wideband satellite communications capabilities. Stage 1 was approved by Government in June 2015 and Stage 2 was approved in March 2017. Installation of the first replacement communications system commenced in mid 2016, with installation of Stage 2 commencing in mid 2018.


129


Domain/ Project Name Approved Project

Expenditure $m



2017 $m


$m

Total Top 30 Projects (Gross Plan) 64,468 29,009 6,731

Other Approved Project Gross Plans 43,698 35,498 1,153

Total Approved Projects (Gross Plan) 108,166 64,507 7,884

Management Margin: Slippage -1,305

Payments Required for the Approved Programme

6,579

Note

1. One classified project has not been included in this table due to its classified nature.


130

APPENDIX D: TOP 30 SUSTAINMENT PRODUCTS BY 2017-18 FORECAST EXPENDITURE

Table 68: Top 30 Sustainment Products by End of Financial Year Outcome 2017-18

Domain/Product Name

Product Serial Budget Estimate 2017-18

$m

Top 30 Product Descriptions

Air Domain "The Air Domain provides through-life support to Air Force fixed wing aircraft, Army and Navy rotary wing aircraft, Unmanned Aerial Systems, and a number of advanced flight simulators and ground support equipment fleets. Key platforms include the F/A-18A/B Hornet and F/A-18F Super Hornet, Hawk 127, E-7A Wedgetail (Airborne Early Warning and Control), AP-3C Orion, C-17A Globemaster III, KC-30A (Multi-Role Tanker/Transport), C-130J Hercules, PC-9 , Special Purpose Aircraft, B300, MRH-90, Tiger, Chinook, and MH-60R.

The high priority sustainment tasks remain the support of operational deployments, including F/A-18A Hornet, F/A-18F Super Hornet, E-7A Wedgetail and KC-30A employed by Air Force in Operation Okra, strategic lift (C-17A Globemaster III, C-130J Hercules) supporting Middle East operations, embarked Seahawk helicopters supporting Operation Manitou, and Humanitarian Assistance/Disaster Relief events.

Key challenges for the Air Domain are supporting ageing platforms (AP-3C Orion, F/A-18A/B Hornet, PC-9, Black Hawk, Kiowa and Squirrel) whilst concurrently introducing new/ replacement capabilities (P8 Poseidon, F/A-18G Growler, PC21 Pilot Training System, MH-60R and Chinook CH4F), and improving performance of the MRH-90 and Tiger systems."

F/A-18F Super Hornet Weapon System CAF21 266

Twenty-four F/A-18F Block II Super Hornet aircraft are operated by 82 Wing in support of air combat capability requirements. The Super Hornet achieved Final Operational Capability in December 2012. Raise, Train Sustainment support and operational targets continue to be met.

During 2017-18, efforts will focus on the transition of the Growler capability into the Air Combat & Electronic Attack sustainment system. Through 2017-18, the Super Hornet spiral capability upgrades will continue, which include upgrades to aircraft hardware, software and the addition of new weapons.

E-7A Airborne Early Warning and Control Capability System

CAF20 212

The Airborne Early Warning and Control weapon system comprises six aircraft, associated simulators and software laboratories. Boeing Defence Australia as the prime contracting partner together with Boeing Defence Systems, Northrop Grumman Systems Corporation and British Aerospace Engineering Systems Australia provide a performance based support arrangement for engineering, training, supply support and maintenance in order to support the capability.

During 2017-18 the focus will continue to be on the annual performance activities with Boeing Defence Australia and the industry partners which will reform elements of the commercial arrangements to better align with contemporary contracting arrangements. The reforms will provide more efficient working arrangements as well as reviewing various support and supply activities.


131

Table 68: Top 30 Sustainment Products by End of Financial Year Outcome 2017-18 (Continued)

Domain/Product Name


$m


Air Domain (Continued)

F/A-18 A/B Classic Hornet Weapon System CAF02 189

This product provides sustainment of the F/A-18 Classic Hornet fleet and associated support materiel by the Tactical Fighter System Program Office.

During 2017-18, focus will continue on supporting the fleet to the Planned Withdrawal Date (PWD) of December 2021, managing ageing aircraft effects, and assuring operational capability effectiveness ‘to the last day’. This includes finalising the Life of Type Assessment and Extension Program to ensure the platform can safely attain PWD. Increased priority will also be given to the planning the strategic disposal of the fleet and associated equipment in the PWD drawdown.

Multi Role Helicopter Weapon System CA48 172

Project AIR 9000 Phases 2, 4 & 6 will deliver 47 MRH-90 helicopters; as well as mission, support and training systems. The final aircraft will be delivered in mid 2017. In-Service Support is provided under a prime contract with Airbus Group Australia Pacific (formerly Australian Aerospace).

The MRH-90 fleet is located at: 5th Aviation Regiment in Townsville, Queensland; Army Aviation Training Centre in Oakey, Queensland; 808 Squadron in Nowra, New South Wales; and Airbus Group Australia Pacific’s deep maintenance facility in Brisbane.

Improving aircraft availability continues to be a key focus for 2017-18, with work to optimise MRH-90 scheduled maintenance arrangements continuing along with optimisation of operational maintenance support arrangements.

Armed Reconnaissance Helicopter System CA12 137

Project AIR87 Phase 2 has delivered all 22 Tiger armed reconnaissance helicopters. In-service support is provided under a prime contract with Airbus Group Australia Pacific (formerly Australian Aerospace). Final Operational Capability for Tiger was declared in 2016 with some caveats.

During 2017-18, activity will continue to focus on engineering developments to rectify Final Operational Capability caveats and the development of the Tiger’s amphibious capability for operations in the new Canberra Class Landing Helicopter Dock ships. Work continues on the improvement of aircraft availability and reliability. Refinements to the through life support arrangements have been undertaken to reduce overall cost of ownership for Defence.

C130J-30 Weapon System CAF06 129

The C-130J fleet consists of 12 aircraft and one Level 5 full flight mission simulator. The C-130J is supported by two prime performance based contracts. Airbus Group Australia Pacific provides intermediate and deeper level maintenance, logistics and engineering support for the aircraft, and StandardAero provides support for the propulsions system.

During 2017-18, the focus will be on continuing fleet embodiment of Large Aircraft Infrared Countermeasures, Link 16 (military tactical data exchange network) and fitment of crashworthy seating; delivery of the new loadmaster and maintainer training devices; procurement of replacement High Frequency radios; progression of the AE2100D3 propulsions system compressor replacement program; and implementing Smart C-130J Through Life Support contract reform.


132


Domain/Product Name


$m


Air Domain (Continued)

Lead-In Fighter Hawk Weapon System CAF03 126

The Lead-in Fighter fleet consists of 33 Hawk 127 aircraft and associated ground and support systems. BAE Systems Australia Limited provides logistics support for the Hawk 127 fleet under an In-Service Support contract.

During 2017-18 the focus will be on: ensuring that BAE Systems continues to provide Operational and Deeper Maintenance support to meet RAAF capability outcomes, and working with BAE Systems and RAAF stakeholders to upgrade the Hawk fleet to meet AIR 5438 Phase 1A – Lead-In-Fighter Capability Assurance Program operational capability milestones with minimal impact to RAAF Raise/Train/Sustain activities.

C-17 Heavy Air Lift Weapons system CAF19 115

The C-17A weapon system comprises eight aircraft and associated training systems. Sustainment is predominately undertaken through a range of Foreign Military Sales arrangements with the US Air Force.

During 2017-18, the planned sustainment reform will be seeking to implement a direct contract with Australian industry negotiated in 2016-17 and enhancement of asset management principles to better support the C-17A weapon system.

P3C Orion Weapons System CAF04 105

The AP-3C Orion maritime intelligence, surveillance, response and electronic warfare weapon system comprises of up to thirteen aircraft, simulators and ground based systems. The weapons system is supported primarily by industry partners: Airbus Group Australia Pacific (AGAP), Raytheon Australia, BAE Systems Australia (BAES), General Dynamics Canada (GDC) and Lockheed Martin (LM) for engineering, maintenance and supply support.

During 2017-2018, the focus will be to continue to maintain agreed availability performance while simultaneously planning and supporting the gradual withdrawal of the aircraft from service, including reduction of excess-to-need spares holdings.

KC-30A Weapon System CAF22 72

The KC-30A weapon system comprises five aircraft and related training system. All five aircraft are fully mission capable for air-to-air refuelling from pods and boom and airlift logistics support.

Early in 2017-18 a sixth aircraft will be brought into service following modification with preparation commencing for delivery for a seventh aircraft in 2019.The focus will remain on achieving cost effective life of type management through enterprise reform and application of asset management principles. KC-30 will continue supporting military operations including the receiver clearances program for conducting air to air refuelling.

MH-60R Seahawk Romeo Weapon System

CN35 56

Project AIR 9000 Phase 8 has delivered all 24 Seahawk Romeo aircraft, with the final delivery to Australia occurring in September 2016. Six minor Australian-led modifications are being progressively embodied in the aircraft. Construction of the Maritime Helicopter Support Company maintenance facility in Nowra was completed and opened in September 2016, with the first helicopters being inducted into the facility for scheduled deeper maintenance activities.

The Seahawk Romeo capability is operated from HMAS Albatross in Nowra and is currently supporting four embarked flights on Navy ships and will continue to grow to a mature state of eight embarked flights over the next two years.


133


Domain/Product Name


$m


Joint Domain "Joint Systems Division provides through-life support to a range of command and control systems, communications, satellites and tactical interoperability systems, airspace surveillance and control systems and electronic warfare systems. The Division also provides and supports all of Defence’s guided and non-guided weapons.

Key challenges in 2017-18 include balancing the delivery of the required sustainment outcomes against growth in demand and increased obsolescence with the effective use of available resources.

Key objectives for sustainment during 2017-18 include the ongoing support to operations with a focus on Air Task Group guided weapons, counter improvised explosive device measures and secure communications into and across the Middle East Region. The transition of new capabilities from acquisition into sustainment and the management of a number of pressing obsolescence issues with legacy systems are also key objectives."

Army Munitions and Army Guided Weapons CA59 and CA60 178

The ADF's inventory consists of both non guided and guided explosive ordnance utilised by Army including: small arms ammunition; cannon ammunition; artillery; tank; rockets and associated warheads; FGM-148 Javelin Missiles, a light infantry surveillance and anti armour guided weapon system; RBS70 Bolide Missiles, a ground based air defence system and; AGM-114 Hellfire Missiles (laser guided air to air missile) for use on the Armed Reconnaissance Helicopter.

During 2017-18, the high priority sustainment tasks will continue to provide engineering and technical support to units deployed on operations while satisfying the broader Raise Train and Sustain demands for explosive ordnance.

Navy Munitions and Navy Guided Weapons CN37 and CN38 149

The ADF's inventory consists of Navigational Outfits, Medium and Large Calibre Gunnery, Pyrotechnics and Cartridge Actuated Devices, Countermeasures, Force Protection and demolition products utilised by Navy. Navy's Guided Weapons are categorised into four main areas: Missiles, Minewarfare, Heavy Weight Torpedoes and Lightweight Torpedoes. Navy's Guided Weapons Explosive Ordnance activities also includes sustainment of Guided Weapons used by Army and Air Force where Navy is the lead service.

During 2017-18, the high priority sustainment tasks will continue to provide explosive ordnance that is safe and suitable for service to deployed units in support of operations, satisfying the broader Navy Raise Train and Sustain demands for explosive ordnance, continue to remediate Navy Missile Maintenance Facilities and planning and conducting weapons engineering, maintenance and technical activities in support of the management of Navy explosive ordnance inventory.

Air Force Munitions and Air Force Guided Weapons

CAF32 and CAF33 116

The ADF’s inventory consists of guided missiles; bomb bodies, fuses and guided bomb components; and inert and training bombs employed by Air Force platforms. The inventory also includes countermeasures, impulse cartridges, cannon ammunition, safety pyrotechnics, and emergency egress power and cartridge actuated devices employed by Air Force, Navy and Army aviation platforms.

During 2017-18, the high priority sustainment tasks will continue to provide engineering and technical support to units deployed on operations while satisfying the broader Raise Train and Sustain demands for explosive ordnance.


134


Domain/Product Name


$m


Joint Domain (Continued)

Wide Area Surveillance CAF13 91

The Wide Area Surveillance Capability consists of three Over-The-Horizon-Radars based in Longreach, Queensland; Laverton, Western Australia; and Alice Springs, Northern Territory and is known as the Jindalee Operational Radar Network. The radars are currently maintained by Lockheed Martin Australia Electronic Systems and BAE Systems Australia. The Wide Area Surveillance product schedule now also includes Overhead Persistent Infrared and C-Band Radar space surveillance capabilities. During 2017-18, the Over-The-Horizon-Radar sustainment effort will continue to progress a High Power Amplifier concept demonstrator as well as obsolescence and maintenance activities to ensure the capability remains effective until the radar upgrade is conducted under Project AIR 2025 Phase 6. Sustainment effort will also support phase-in activities to transition sustainment support from two prime contractors to one prime under Project AIR2025 Phase 6.

Battlespace Communications Systems

CA31 57

Battlespace Communications Systems continue to transition into the support of the next generation of digitised Battlespace communications equipment. These systems range from hand held digital radios to tactical and strategic communications networks. The 2017-18 focus will be on supporting Tactical Data Radios and vehicle communications systems while preparing to support the JP2072 Phase 2B Battlespace Telecommunications Network.

Air Battlespace Management Systems

CAF14 55

The Air Battlespace Management capability consists of the Vigilare command and control system, Mobile Control and Reporting Centre (MCRC) deployable command and control systems, Tactical Air Defence Radar Systems (TADRS) and simulators for provision of airspace surveillance and control services in the Australian region. Through life support is contracted directly to industry with Boeing Defence Australia supporting Vigilare, Lockheed Martin Australia Electronic Systems supporting TADRS and Daronmont Technologies supporting MCRC and simulators. The 2017-18 focus is targeted obsolescence management with a drive towards common product solutions. TADRS obsolescence management includes a Block Upgrade to the primary and secondary radar subsystems scheduled for completion by end of 2018 which will align the Australian systems with the supported global product baseline. Vigilare data sharing will be improved through IP Migration and Server Virtualisation activities which will allow a smaller footprint instance of Vigilare to be installed within No 1 Remote Sensor Unit. MCRC obsolescence and life-of-type management options have been developed with upgrades to the Communications and Operations Cabins along with Data Processing and Display harmonisation with Vigilare including server virtualisation scheduled to be delivered by end of 2019.


135


Domain/Product Name


$m


Joint Domain (Continued)

Air Traffic Control (ATC) Capability CAF12 54

The Air Traffic Management (ATM) system includes fixed and deployable sensors, data processing, displays, navigation aids, command, control and communications (C3) systems and interfaces that enable 44 Wing to deliver fixed Air Base Air Traffic Services, deployable battlefield airspace coordination, mobile Air Traffic Services and Air Navigation Services for ADF operations and national tasking. It is a highly integrated and complex system, which is operated and supported across multiple organisational, functional, technical, and geographical boundaries.

The 2017-18 focus is targeting obsolescence management in order to support the capability to planned withdrawal dates and delivery of several Major and Minor capability replacement projects for Air Navigation systems. The highest risk capability remains the Australian Defence Air Traffic System (ADATS), in particular the deployable system and automation system, to be replaced under AIR 5431 Phases 1 and 3 respectively. Significant engineering and logistical solutions will continue through 2017-18 and beyond in order to mitigate these risks. 2017-18 will also see the consolidation of some 15 support arrangements down to eight and pursuit of increased outsourcing consistent with First Principles and CASG reform recommendations.

Command and Control Capability Systems CAF16 54

Command and Control Capability Systems provide software and system hardware support Air Operations, Mission Planning, Situational Awareness, Intelligence and Targeting, and Network and Enabling systems.

The 2017-18 focus is the replacement of the Theatre Battle Management Core System which will soon be unsupported by the United States, establishment of intent and configuration of the broader command and control environment, establishment of system vulnerability assessment and remediation, and supporting the rapidly increasing user base for off-board mission planning systems introduced by major capability programs.


136


Domain/Product Name


$m


Land Domain Land Domain is responsible for the sustainment of the following land materiel, managed in conjunction with the Navy, Army, Air Force and Joint Health Command as the Capability Managers:

• armoured fighting, combat support and engineering vehicles • logistic service support and commercial vehicles • radar, surveillance, electrical and simulation systems • small arms and weapon systems • medical, and dental equipment, health systems and combat rations

• ADF clothing and personal combat equipment. Key challenges for 2017-18 are to continue to provide reliable and cost effective sustainment options to meet ADF outcomes while the division explores opportunities for further organisational and business reform. Key objectives for sustainment in 2017-18 include:

• meeting the support requirements of forces on operations. • delivering the agreed level of support to the ADF within budget. • continue current sustainment reform initiatives and combine with new initiatives to align with the First Principles Review, CASG Reform and Smart Buyer intent. • working with the CASG Centres of Expertise to develop and deliver effective training and professionalisation of sustainment staff to optimise skills that support the delivery of

sustainment outcomes. • release of the request for tender to industry for the Land Systems Division Commodity Reform activity.

• improved management and maintenance of vehicle fleets through use of Vehicle Health and Usage Monitoring Systems in selected fleets to better manage maintenance and fleet rotation.

ADF Clothing CA39 89

ADF Clothing comprises approximately 21,000 line items of uniform, footwear and other items supplied by the textile, clothing and footwear industry. During 2017-18, the key activities will include:

• provision of combat clothing to operations; • the continued manufacture and delivery of the Australian Multicam Camouflage Uniforms and the General Purpose

Jackets to Army; • product development of functional and garment enhancements across both combat and the non-combat uniform suite

for Navy, Army and Air Force; and • procurement to meet the ADF’s clothing and footwear requirements for the ADF's raise, train and sustain activities.


137


Domain/Product Name


$m


Land Domain (Continued)

Commercial Vehicle Fleet CA19 78

The Australian Defence Organisation’s Commercial Vehicle Fleet comprises approximately 5,800 Defence owned Commercial vehicles and trailers. The fleet ranges from passenger sedans through to heavy rigid trucks, touring coaches and aviation refuelling vehicles. An additional 30 road-train systems are leased under the program.

During 2017-18, approximately 1,000 passenger and light-medium commercial vehicles are scheduled to be replaced. A key priority is to replace Defence's ageing commercial vehicle fleet at Royal Malaysian Air Force Base – Butterworth. This program commenced in 2015–16 and will be completed in 2017–18. In 2017–18, the fleet will continue to focus on improving overall vehicle utilisation and rationalisation.

Maritime Domain

The Maritime Domain sustainment concept is to support maritime capability through cost effective materiel design, maintenance engineering and logistic support to platforms, equipment and systems. The provision of these sustainment services is under a structure of System Program Offices that are collocated regionally with the Navy Forces and Groups by ship class, and that manage the delivery of services through a variety of outsourced commercial contracts. Maritime has transformed over recent years, through the delivery of new capability, improving business practices and continuing to deliver outcomes with a leaner workforce. The key challenge for sustainment during 2017-18 is the implementation of change to business areas to improve waterfront outcomes; effectiveness of configuration management, maintenance planning and execution; a shift to a governance focused business, and the creation of a managed workforce to support sustainable operations.

Collins class submarines CN10 575

The Collins Program objective is to sustain the Collins class submarine materiel capability (including the associated escape and rescue capability), minimise the logistic costs of ownership, and provide sustainable and cost effective design, engineering and logistics support for platform systems and combat systems, through agreements with industry partners including Australian Submarine Corporation (ASC) Pty Ltd, Raytheon Australia, Thales, BAE Systems, PMB and other providers. The Coles Report into the business of sustaining Australia' s strategic Collins class submarine capability of November 2012 has been seminal in catalysing improved submarine availability since 2012, with the attainment of Coles' benchmark availability levels planned to be achieved by 2016-17.

In collaboration with Navy and industry (and as recommended by Coles), Capability Acquisition and Sustainment Group (CASG) has established an enterprise approach to the Collins Program. The follow-up Coles Review 'Beyond Benchmark' released in October 2016, reported a remarkable improvement in the sustainment of the class.

Goals for 2017-18 continue to be; preserve Program performance through sustained delivery of required capability at benchmark availability; maintain regional superiority through timely delivery of Collins capability upgrades; attain benchmark support system efficiency materiel cost of ownership by financial year 2022-23; and manage Collins submarines through to withdrawal cognisant of capability continuity and transition to a Future Submarine force.


138


Domain/Product Name


$m


Maritime Domain (Continued)

Anzac Class Frigate (FFH) CN02 322

The support objective is to maintain the materiel capability of the Anzac Class Frigates through the provision of materiel support and ongoing maintenance of the ships and associated equipment, systems and operator training facilities.

During 2017-18, the focus will be to complete delivery of the Anti Ship Missile Defence Refit and Upgrade program for HMA Ships Toowoomba and Stuart; preparing for installation and integration of ANZAC Midlife Capability Assurance Programme (AMCAP) inclusive of Platform Systems Remediation, SEA 1442 Phase 4 Maritime Communications Modernisation Project, and SEA 1448 Phase 4B Anzac Air Search Radar Replacement which will commence in HMAS Arunta Q4 2017; and consolidating the five-year sustainment program agreement under the Warship Asset Management Agreement.

Canberra Class Landing Helicopter Dock

CN34 106

The scope of this product addresses the sustainment of two Canberra Class Landing Helicopter Dock (LHD) vessels, 12 LHD Landing Craft (LLC), and associated shore-based systems and facilities, as these are introduced into service.

The support objective is to provide the materiel availability of the LHD capability to the Navy, by meeting seaworthiness, materiel confidence, and cost efficiency demands. This will enable the LHD to deliver integrated combat capabilities in amph bious warfare, humanitarian assistance, disaster relief, and sealift.

During 2017-18, the continued focus will be acquiring the knowledge, data and Australian industry capacity to sustain the Canberra Class LHDs for the remainder of their operational life. Building on the initial operating period which has demonstrated the increase in capability enabled by the LHDs, whilst also providing a thorough understanding of the engineering and maintenance requirements, the Usage Upkeep Cycle will continue to be refined with commensurate improvements to the shore support. Separate dockings will be conducted to remediate several propulsion pod issues and conduct routine and non-routine servicing of several fragile ship systems.

Adelaide Class Frigate CN01 96

The support objective is to maintain the materiel capability of the Adelaide Class Frigates through the provision of materiel support and ongoing maintenance of the ships and associated equipment, systems and operator training facilities.

During 2017-18, the focus will be on completing the scheduled ship maintenance activities for HMA Ships Newcastle, and Melbourne and to finalise the disposal project for HMAS Sydney and commence disposal planning for HMAS Darwin (Planned Withdrawal Date 1 December 2017). Additionally, reviews of existing contracts will be commenced noting the planned withdrawal dates for Newcastle and Melbourne.

Auxiliary Oiler Replenishment (AOR) HMAS Success

CN43 78

The support objective is to maintain the materiel capability of a single SIRIUS Class Auxiliary Oiler (AO), HMAS Sirius and a single DURANCE Class Auxiliary Oiler Replenishment (AOR), HMAS Success through the provision of effective materiel support and ongoing maintenance of these vessels.

During 2017-18, the focus will be the successful conduct of the next planned external maintenance activity for HMAS Success and on maximising the operational availability of both vessels.


139


Domain/Product Name


$m


Maritime Domain (Continued)

Armidale Class Patrol Boat CN09 64

The support objective is to maintain the materiel capability of the Armidale Class Patrol Boats (ACPB) through the provision of effective materiel support and ongoing maintenance of the vessels, associated equipment and systems.

2017-18 will see the final ACPB complete its structural remediation program at Austal in Henderson, WA. A reorganised and more streamlined Patrol Boat System Program Office will be in place to support the operational availability of the ACPB vessels, which will be further enhanced by Thales as the new In-Service Support Contractor for the sustainment of the ACPB Fleet commencing 2017-18.

Hydrographic Support CN46 63

The support objective is to maintain the materiel capability of the two LEEUWIN Class Hydrographic Ships (HS), four PALUMA Class Survey Motor Launches (SML), six Survey Motor Boats (SMB) embarked in the HS, two SMB used by the Royal Australian Navy Hydrographic School, the Antarctic Survey Vessel (ASV) used by the Deployable Geospatial Survey Team (DGST), three Tactical Portable Hydrographic Survey Systems (THSS), six Basic Portable Hydrographic Survey Systems (BPHSS), miscellaneous hydrographic survey equipment, meteorological information systems used by Mobile Meteorological Teams (MMTs), as well as the Laser Airborne Depth Sounder II (LADS) system and its host, the Dash 8-200 aircraft.

The focus for 2017-18 is the continued reform of the System Program Office in order to meet and maintain availability targets.

Huon Class Mine Hunter Coastal CN14 61

The support objective is to maintain the materiel capability of the Huon Class Mine Hunter Coastal vessels and associated training equipment through the provision of materiel support and ongoing maintenance of the in-service ships.

2017-18 will see the completion of the combat system upgrade on the remaining vessels, as well as focus is on sustainment obsolescence aspects leading up to the Service Life Extension project.

Cross Platform Items of Supply CN49 57

The support objective is the sustainment of inventory materiel to support RAN Fleet Units and associated maritime capability.

During 2017-18 the continued focus will be on sustainment of inventory requirements and the revision and implementation of long term contractual arrangements.

Total - Top 30 Products 3,922 Other Approved Sustainment Product Estimates 1,395

Total Sustainment Product Funds Available 5,317 Support to Operations 378

Total Sustainment and Operations Funding 5,695


140

APPENDIX E: FACILITIES AND INFRASTRUCTURE PROGRAM

The Facilities and Infrastructure Program component of the Integrated Investment Program comprises approved and yet to be approved major and medium capital facilities projects.

Major capital facilities projects are defined as having expenditure over $15m (excluding GST) and are subject to Government approval and formal review by the Parliamentary Standing Committee on Public Works (PWC). Medium facilities projects have expenditure between $2m and $15m with projects over $8m subject to Government approval. Projects valued between $2m and $15m are required to be notified to and agreed by the PWC but may not be formally reviewed by the Committee. Details of approved major and medium projects are provided in this Appendix.

The Facilities and Infrastructure Program is comprised of projects that support and sustain current and future capability requirements, other government initiatives, meet legislative obligations and provide engineering and infrastructure services and upgrades to existing facilities.


141

Approved Major Facilities and Infrastructure Projects Table 69 provides details on the expenditure to 30 June 2017 on Facilities and Infrastructure Projects and budget estimates for 2017-18. Descriptions for major projects are provided below the table.

Table 69: Approved Major Facilities and Infrastructure Projects by State and Federal Electorate

State and Electorate

TotalEstimated

Expenditure$m

EstimatedCumulative

Expenditureto 30 June

2017$m

2017-18Budget

Estimate$m

New Air Combat Capability (AIR 6000 NACC)[1]

RAAF Williamtow n NSW - Paterson - 470.4 254.4RAAF Tindal NT - Lingiari - 59.0 187.7

Total 1,477.0 529.4 442.1Enhanced Land Force (ELF) Stage 2 [1]

Lone Pine Barracks NSW - Hunter - 115.8 -Puckapunyal Training Area VIC - McEw an - 6.0 2.1Simpson Barracks, Watsonia VIC - Jagajaga - 20.2 -RAAF Amberley QLD - Blair - 9.6 -Lavarack Barracks, Tow nsville QLD - Herbert - 66.1 -Tow nsville Training Area QLD - Kennedy - 3.9 -Greenbank Training Area QLD - Rankin - 120.7 -Gallipoli Barracks, Enoggera QLD - Ryan - 808.0 -Wide Bay Training Area QLD - Wide Bay - 92.0 -Kokoda Barracks, Canungra QLD - Wright - 71.8 -Cultana Training Area SA - Grey - 4.7 47.0RAAF Edinburgh SA - Wakefield - 34.5 -Majura Field Training Area ACT - Fraser - 22.4 -

Total 1,457.8 1,375.8 49.1Maritime Patrol Aircraft Replacement (AIR 7000 Phase 2B)[1]

RAAF Edinburgh SA - Wakefield - 91.7 126.0RAAF Tow nsville QLD - Herbert - - -RAAF Pearce WA - Pearce - - -RAAF Darw in NT - Solomon - - 4.4

Total 707.9 91.7 152.6Air Traffic Control Complex Infrastructure Project and Fixed Base Defence Air Traffic Management and Control System (AIR 5431 Phases 2 and 3)[1]

RAAF Amberley QLD - Blair - - 18.6Army Aviation Centre Oakey QLD - Groom - - 25.4RAAF Tow nsville QLD - Herbert - - 28.8RAAF Richmond NSW - Greenw ay - - 19.7HMAS Albatross NSW - Gilmore - - 4.7RAAF Williamtow n NSW - Paterson - - 27.0RAAF East Sale VIC - Gippsland - - 0.7RAAF Woomera SA - Grey - - 7.8RAAF Edinburgh SA - Wakefield - - 1.7RAAF Gingin WA - Pearce - - 6.8RAAF Pearce WA - Pearce - - 25.4RAAF Darw in NT - Solomon - - 27.5RAAF Tindal NT - Lingiari - - 28.7

Total 409.9 36.7 222.8


142

Table 69: Approved Major Facilities and Infrastructure Projects by State and Federal Electorate (Continued)


TotalEstimated

Expenditure$m

EstimatedCumulative


2017$m

2017-18Budget

Estimate$m

Battlefield Airlifter Facilities (AIR 8000 Phase 2)RAAF Amberley QLD - Blair 370.4 45.8 120.0

HMAS Stirling Redevelopment Stage 3AHMAS Stirling, Rockingham WA - Brand 366.8 12.6 70.4

Growler Airborne Electronic Attack Capability Facilities (AIR 5349 Phase 3)

RAAF Amberley QLD - Blair - 55.3 55.0Delamere Weapons Range NT - Lingiari - 13.4 49.0

Total 348.6 68.7 104.0Pilot Training System Facilities (AIR 5428 Phase 1)[1]

RAAF East Sale VIC - Gippsland - 59.2 101.6RAAF Pearce WA - Pearce - 18.7 66.4RAAF Edinburgh SA - Wakefield - - -RAAF Williamtow n NSW - Paterson - - -

Total 329.8 77.9 168.0

RAAF Base Williamtown Redevelopment Stage 2

RAAF Williamtow n NSW - Paterson 274.0 44.2 103.1LAND 121 Stage 2 (Phases 3 and 4)[1]

Lavarack Barracks, Tow nsville QLD - Herbert - - 50.0Gallipoli Barracks, Enoggera QLD - Ryan - - 31.0RAAF Williamtow n NSW - Paterson - - 8.2Holsw orthy Barracks, Holsw orthy NSW - Hughes - - 1.3Puckapunyal Training Area VIC - McEw an - - 13.0Campbell Barracks WA - Curtin - - 4.4RAAF Edinburgh SA - Wakefield - - 6.1Robertson Barracks NT - Solomon - - 3.5

Total 276.5 54.2 117.5C-17 Maintenance Facility, Aircraft Apron and Associated Infrastructure (AIR 8000 Phase 3)

RAAF Amberley QLD - Blair 219.4 - 100.0Campbell Barracks Redevelopment

Campbell Barracks WA - Curtin 223.6 89.8 38.2HMAS Albatross Redevelopment Stage 3

HMAS Albatross NSW - Gilmore 192.0 185.2 0.5Air 9000 Ph 8 Facilities for the Future Naval Aviation Combat System (FNACS) - MH-60R[1]

HMAS Albatross, Now ra NSW - Gilmore - 178.8 0.4HMAS Stirling, Rockingham WA - Brand - 7.2 -Tw ofold Bay, Eden NSW - Eden-Monaro - 0.3 -

Total 189.0 186.3 0.4Defence Terrestrial Communications Network Facilities Upgrade (JP 2047 Phase 3)[2]

National 131.1 70.7 32.8Airfield Capital Works (Curtin, Tindal and Townsville) [1]

RAAF Tow nsville QLD - Herbert - - -RAAF Curtin WA - Durack - - 2.4RAAF Tindal NT - Lingiari - - 33.6

Total 95.3 55.2 36.0


143



TotalEstimated

Expenditure$m

EstimatedCumulative


2017$m

2017-18Budget

Estimate$m

Space Surveillance Telescope (JP 3029 Phase 2)Harold E Holt, Exmouth WA - Durack 79.0 11.0 27.5

Delamere Range Facilities RedevelopmentDelamere Air Weapons Range NT - Lingiari 74.4 11.5 35.3

Woomera Range Remediation Facilities (JP3024 Phase 1)

Woomera SA - Grey 48.6 0.0 29.6Land 17 Phase 1B/C

Gallipoli Barracks, Enoggera QLD - Ryan - - 3.4Lavarack Barracks QLD - Herbert - - 6.5Robertson Barracks NT - Solomon - - 6.0Puckapunyal Training Area VIC - McEw an - - 6.5Campbell Barracks WA - Curtin - - 3.3Holsw orthy Barracks NSW - Hughes - - 2.9RAAF Williamtow n NSW - Paterson - - 3.0Proof & Experimental Establishment - Port Wakefield QLD - Wakefield - - 0.7

Total 57.1 0.0 32.3Facilities for Chinook Helicopter (AIR 9000 Phases 5B and 5C)

RAAF Tow nsville QLD - Herbert 49.8 35.1 1.4REDFIN Infrastructure (JP 2097 Phase 1B)[1]

Holsw orthy Barracks NSW - Hughes - - 3.6Campbell Barracks WA - Curtin - - 0.2Defence Establishment How ard Springs NT - Solomon - - 1.8Lavarack Barracks QLD - Herbert - - 0.0

Total 50.5 36.5 5.6Puckapunyal Military Area High Voltage Upgrade

Puckapunyal Training Area VIC - McEw an 32.7 6.7 8.1Electronic Warfare Operational Support (JP500 Phase 2)

RAAF Edinburgh SA - Wakefield 24.9 0.0 14.6Low Level Bridge Repair

Fleet Base West, Stirling WA - Brand 12.8 12.9 0.1Centralised Processing Facilities and Infrastructure

National 12.9 1.6 5.5RAAF Base Amberley Sewerage Treatment Plant

RAAF Amberley QLD - Blair 9.2 0.0 5.4Potable Water Supply Upgrade

RAAF Pearce WA - Pearce 8.7 0.6 7.3Land 136 Ph 1 Land Force Mortar Replacement [1]

Holsw orthy Barracks NSW - Hughes - - 0.2Irw in Barracks WA - Curtin - - 0.2Robertson Barracks NT - Solomon - - 0.2

Total 4.5 0.2 0.6


144



TotalEstimated

Expenditure$m

EstimatedCumulative


2017$m

2017-18Budget

Estimate$m

Deployable Defence Air Traffic Management and Control Systems

RAAF Amberley QLD - Blair 4.6 4.2 0.0Projects in or about to enter Defects Liability Period [3] 7.8Total 7,538.9 3,044.6 1,938.7

Notes1. These projects cross state and electoral boundaries. Estimated cumulative expenditure to 30 June 2017 and expenditure estimates for 2017-18 are provided in the table per location.2. This project is delivering facilities at over 200 locations that cross state and electoral boundaries. 3. This amount represents the expenditure estimates for contract administration of four completed projects during their f irst year in-use.

New South Wales

RAAF Base Williamtown Redevelopment Stage 2

This project will sustain and improve the functionality and capability of RAAF Base Williamtown, NSW, including upgrades or replacement of critical ageing infrastructure to meet future requirements. The project is scheduled for completion by mid 2021.

HMAS Albatross Redevelopment Stage 3

This project will replace ageing and obsolete engineering services and infrastructure at HMAS Albatross. The project will also provide a combination of new and refurbished facilities to support operational and training outcomes as well as enabling functions. The project is scheduled for completion by mid 2017.

Queensland

Battlefield Airlifter Facilities (AIR 8000 Phase 2)

This project will provide facilities at RAAF Base Amberley, QLD to accommodate and support the operation of the new C-27J Battlefield Airlifter (BFA) aircraft. The project is scheduled for completion by early 2019.

Facilities for Chinook Helicopter (AIR 9000 Phases 5B and 5C)

This project will provide new and upgraded facilities to support the introduction into service of the new CH47 F Chinook Helicopter. The project will provide working accommodation, simulator facilities, aircraft hangars and workshops, storage facilities and supporting infrastructure for the Army’s 5th Aviation Regiment at RAAF Base Townsville. The project is scheduled for completion by late 2017.

C-17 Maintenance Facility, Aircraft Apron and Associated Infrastructure (AIR 8000 Phase 3)

This project will provide a maintenance facility, working accommodation, an aircraft apron and associated facilities at RAAF Base Amberley. This project is scheduled for completion by late 2018.


145

Shoalwater Bay Training Area Vehicle Wash Point

This project will provide a vehicle wash point at the main entrance to the Shoalwater Bay Training Area. The project is scheduled for completion in mid 2018.

Western Australia

HMAS Stirling Redevelopment Stage 3A

This project will provide upgrades and refurbishment of existing critical shortfalls to infrastructure and facilities. The project is scheduled for completion by early 2020.

Campbell Barracks Redevelopment

This project will provide a new Headquarters for the Special Air Services Regiment, communications facilities, working accommodation, storage facilities and supporting site infrastructure at Campbell Barracks, WA. The project is scheduled for completion by late 2018.

Space Surveillance Telescope (JP 3029 Phase 2)

This project will provide facilities and infrastructure to support the operations of the Space Surveillance Telescope, which will enable ADF space surveillance capability, enhanced global surveillance capability, and an increased ability to track space debris. The project is scheduled for completion by late 2018.

Northern Territory

Delamere Range Facilities Redevelopment

This project will redevelop key range facilities and infrastructure to enable Growler and Mobile Threat Training Emitter Systems capability at Delamere Air Weapons Range, NT. The project is scheduled for completion by mid 2018.

South Australia

Woomera Range Remediation Facilities (AIR 3024 Phase 1)

The facilities Project will provide new and upgraded facilities and infrastructure that are capable of facilitating the operation of a new range safety and control system at Woomera, SA. The project is scheduled for completion in late 2018.

Electronic Warfare Operational Support Facilities (JP500 Phase 2A)

This project will provide facilities to support Joint Project 500 Phase 2A – Electronic Warfare Operational Support, at the Edinburgh Defence Precinct, SA. The project is scheduled for completion in mid 2018.

Victoria

Puckapunyal Military Area High Voltage Upgrade

The project will provide an essential upgrade to the High Voltage power supply and reticulation network at the Puckapunyal Military Area, Victoria. The Project is scheduled for completion in late 2017.


146

Various Locations

New Air Combat Capability (AIR 6000 NACC)

This project will provide new and upgraded facilities and infrastructure to support the introduction of the Joint Strike Fighter at RAAF Base Williamtown Newcastle, NSW, and RAAF Base Tindal, Katherine, NT with support facilities and infrastructure provided at Defence Establishment Myambat, NSW and seven Forward Operating Bases. The project is scheduled for completion by late 2022.

Enhanced Land Force (ELF) Stage 2

This project will provide modern purpose-built facilities and supporting infrastructure for the 8th/9th Battalion the Royal Australian Regiment and supporting elements of the Army's 7th Brigade at Gallipoli Barracks in Enoggera, Brisbane. The project includes the construction of new and refurbished accommodation and training facilities, as well as common use facilities and site infrastructure upgrades at Enoggera and other Defence sites across four States and both mainland Territories.

Facilities at Townsville, Singleton, Duntroon and Watsonia will provide modern accommodation and supporting infrastructure for increased Army career training. In Sydney, at RAAF Bases Amberley and Edinburgh, and at nine other Defence Training Areas, new and refurbished facilities with site infrastructure upgrades will be provided for Army and joint enabling elements supporting the Enhanced Land Force capabilities.

All works are complete with the exception of works at the Puckapunyal Military Area and Mangalore, which are scheduled to be complete in late 2017, and Cultana Training Area which is scheduled for completion by late 2018.

Maritime Patrol Aircraft Replacement (AIR 7000 Phase 2B)

This project will provide new and upgraded facilities and infrastructure to support the introduction of the P-8A aircraft at RAAF Base Edinburgh, SA, RAAF Base Townsville, QLD, RAAF Base Pearce, WA and RAAF Base Darwin, NT, as well as additional explosive ordnance facilities at HMAS Stirling. The project is scheduled for completion by late 2020.

Air Traffic Control Complex Infrastructure Project and Fixed Base Defence Air Traffic Management and Control System (AIR 5431 Phases 2 and 3)

This project will provide facilities across 13 bases in support of replacement Air Traffic Management Surveillance, Command and Control Systems under AIR 5431 Phases 2 and 3, incorporating the replacement of aged and degraded Air Traffic Control Towers. The project is scheduled for completion by late 2021.

Growler Airborne Electronic Attack Capability Facilities (AIR 5349 Phase 3)

This Project will provide the necessary working accommodation, maintenance, warehousing and training facilities at RAAF Base Amberley, QLD to support the introduction of the Growler Airborne Electronic Attack Capability. The project is scheduled for completion by mid 2021.


147

LAND 121 Stage 2 (Phases 3 and 4)

This project will provide facilities across nine bases to sustain the B-vehicle fleet IAW the Basis of Issue for Army, RAAF and JLC. These facilities will maintain (workshops and repair parts storage), support (fuel points, loading ramps, wash points and weigh bridges) and sustain (shelters and hardstand) the vehicles from vehicle acquisition Phase 3A (G-Wagon), Phase 3B (Light/Light Weight and Medium/Heavy) and Phase 4 (Protected Mobility Vehicles Light). The project is scheduled for completion by mid 2019.

Facilities for the MH-60R Seahawk Maritime Combat Helicopters (AIR 9000 Phase 8)

This project will provide new and upgraded facilities for maritime helicopter operations at HMAS Albatross, NSW and HMAS Stirling, WA and at Eden, NSW. The project includes the provision of facilities for aircraft hangars and workshops, synthetic training and working accommodation primarily at HMAS Albatross as well as additional explosive ordnance facilities at HMAS Stirling and Eden. The project is scheduled for completion by mid 2017.

Helicopter Aircrew Training System (JP 9000 Phase 7)

This project will provide new and upgraded training facilities to support the introduction of the new joint Navy and Army Helicopter Aircrew Training System. The project will provide working accommodation, simulation facilities, training facilities and aircraft hangars at HMAS Albatross, NSW as well as communication rooms and helicopter operation areas at Jervis Bay Air field, ACT. The project is scheduled for completion by mid 2017.

Defence Terrestrial Communications Network Facilities Upgrade (JP 2047 Phase 3)

This project will provide upgraded and new communications infrastructure and supporting facilities at multiple Defence owned and leased sites across Australia. The project will support the introduction into service of the new Defence Terrestrial Communications Network. The project is scheduled for completion by late 2018.

Airfield Capital Works (Curtin, Tindal and Townsville)

This project will resurface asphalt pavement and replace airfield lighting at RAAF Base Curtin, WA, RAAF Base Tindal, NT and RAAF Base Townsville, QLD. The project is scheduled for completion by mid 2018.

REDFIN Infrastructure (JP2097 Phase 1B)

This project will provide facilities for the Special Operations Vehicle (SOV) fleet to support mobility and communications for Special Operations Forces. The project is scheduled for completion by early 2019.

Pilot Training System Facilities (AIR 5428 Phase 1)

The project will provide fit-for-purpose facilities to support the modern joint training system being delivered by the AIR5428-1 Capability Project, with the facilities planned to be delivered at RAAF Base East Sale, VIC, RAAF Base Pearce and Gin Gin, WA, RAAF Base Williamtown (New South Wales) and RAAF Base Edinburgh (South Australia). The project is scheduled for completion in late 2020.


148

LAND 17 Phase 1B/C

This project will provide facilities at eight Defence establishments to provide the necessary working, storage, maintenance and training facilities to support the additional Lightweight Towed Howitzer and simulation capability being acquired under LAND 17 Phase 1B/1C. The project is scheduled for completion by mid 2018.

Land Force Mortar Replacement (LAND 136 Phase 1)

This project will provide facilities to support the introduction into service of new mortar simulation systems. The project is scheduled for completion in late 2017.

Defence Centralised Processing Facilities

This project will provide upgrades to building services at eight Defence locations, to support the consolidation of information and communications technology hosting services. The project is scheduled for completion in late 2017.


149

APPENDIX F: STATUS OF MAJOR PROJECTS FORESHADOWED FOR GOVERNMENT AND PARLIAMENTARY STANDING COMMITTEE ON PUBLIC WORKS CONSIDERATION (PWC) IN 2017-18

During 2017-18, Defence expects to present a number of facilities proposal to the Government and the Parliamentary Standing Committee on Public Works (PWC). The following table provides details of the proposed major and medium capital projects expected to be referred to the PWC in 2017-18 or seek Government approval in 2016-17. Descriptions for major projects are provided below the table.

Table 70: Program of Works Foreshadowed for Consideration and Approval

State/Electorate

Actual/Indicative PWC Referral

Date

Actual/Indicative PWC Hearing

Date[1] Current Status Major Capital Facilities Projects Foreshadowed for PWC Consideration in 2017-18

Garden Island Critical Infrastructure Recovery Project - Stage 1

NSW - Wentworth

1 March 2017 20 April 2017 In development

LAND 155 Enhanced Gap Crossing Capability

Multiple 1 March 2017 21 April 2017 In development

Russell Buildings R5 and R6 Infrastructure Upgrade

ACT - Fraser 1 March 2017 21 April 2017 In development

HMAS Moreton Unit Relocation

(previously known as Bulimba Barracks Partial Disposal and Unit Relocation)[2]

Qld - Griffith 30 March 2017 Mid 2017 In development

HMAS Cerberus Redevelopment

VIC - Hastings Mid 2017 Late 2017 In development

JP2008 Phase 5 B2 – Ground Satellite Station (GSS)

Multiple Mid 2017 Late 2017 In development

Explosive Ordnance Logistics Reform Program (EOLRP)


Joint Health Command (JHC) Garrison Health Facilities Upgrade


Navy Guided Weapons Sustainment System (NGWSS) Remediation and Augmentation


JP157 Phase 1 Replacement Aviation Refueling Vehicles



150

Table 70: Program of Works Foreshadowed for Consideration and Approval (Continued)

State/Electorate

Actual/Indicative PWC Referral

Date

Actual/Indicative PWC Hearing

Date[1] Current Status Major Capital Facilities Projects Foreshadowed for PWC Consideration in 2017-18

JP2110 Phase 1B Chemical, Biological, Radiological and Nuclear Defence (CBRND) Capability Facilities[3]


Defence Site Maribyrnong Remediation

Vic – Melbourne Ports

Late 2017 Early 2018 In development

Defence Science and Technology Group Edinburgh (DSTG EDN) Conference and Information Systems Centre

SA - Wakefield Late 2017 Early 2018 In development

Garden Island Critical Infrastructure Recovery Project - Stage 2

NSW - Wentworth

Late 2017 Early 2018 In development

P0007 Aircraft Pavement and Airfield Lighting at RAAF Base Pearce, Gin Gin, RAAF Base East Sale and Army Aviation Centre Oakey

Multiple Late 2017 Early 2018 In development

Point Wilson Waterside Infrastructure Redevelopment

VIC - Jagajaga Late 2017/ Early 2018

Early 2018 In development

Facilities to Support Naval Operations in the North

Multiple Late 2017/ Early 2018


Larrakeyah Barracks Redevelopment

NT - Solomon Late 2017/ Early 2018


Cultana Training Area Redevelopment Stage 2

SA - Grey Early 2018 Mid 2018 In development


151

Table 70: Program of Works Foreshadowed for Consideration and Approval (Continued)

State/Electorate PWC

Notification Current Status Medium Projects Foreshadowed to Seek Approval in 2017-18

SEA 1778 Ph1 - Deployable Mine Counter Measures

NSW - Wentworth Mid 2017 In development

Combat Training Centre - Jungle Training (Tully) Replacement Stokes Litters and Suspension Bridge

Qld - Kennedy Mid 2017

In development

DSTO Fishermans Bend, Vic – Underwater Explosive Ordnance (EO) Test Facility

Vic – Melbourne Ports

Mid 2017 In development

Proof and Experimental Establishment (P&EE) Vibration Test Facility - Port Wakefield

SA - Wakefield Mid 2017 In development

LAND 500 Phase 1 - Remediation of Tactical Land Electronic Warfare

Multiple Mid 2017 In development

DSTO Graytown Armour Testing Facility Vic - Murray Mid 2017 In development

RAAF Base Pearce - Upgrade of Potable Water Infrastructure

WA - Pearce Late 2017 In development

Land 9000 Chinook Configuration Alignment Program

QLD - Herbert Mid 2017 In development

LAND154 Phase 2 Stage 1 (Weapons Technical Intelligence) Joint Counter Improvised Explosive Device Capability

Multiple Mid 2017 In development

2CER Compensatory Hardstand within Gallipoli Barracks

Qld - Ryan Mid 2017 In development

RAAF Base Amberley Sewerage Treatment Plant Qld - Blair Mid 2017 In development

Land 1771 Phase 1 Army Geospatial Support Systems for the Land Force Capability

NSW - Hughes Late 2017 In development

Building 106 Extensions and Alterations, Environmental Test Facility Proof and Experimental Establishment

SA - Wakefield Late 2017 In development

Robertson Barracks Small Arms Range Project NT - Lingiari Late 2017 In development

LAND154 Phase 2 Stage 2 (Force Protection Electronic Counter Measures) Joint Counter Improvised Explosive Device Capability

Multiple Early 2018 In development

Upgrade to the Multi-Purpose Wharf at Twofold Bay, Eden

NSW - Eden Monaro


Notes

1. Hearing dates will be subject to the Committee’s consideration and agreement.

2. HMAS Moreton Unit Relocation Project (previously known as J0126 Bulimba Barracks Partial Disposal and Unit Relocation) costs have increased and now exceed the medium works threshold. This project is now a major project.

3. JP2100 Phase 1B – Chemical, Biological, Radiological and Nuclear Defence (CBRND) Capability Facilities cost have increased and now exceed the medium works threshold. This project is now a major project.


152

South Australia

Defence Science and Technology Group Edinburgh Conference and Information Systems Centre

This project will provide information and communications technology equipment facilities, and secure meeting, conference and training facilities. Subject to Government and Parliamentary approvals, construction is planned to commence in early 2018 and be complete by mid 2019.

Cultana Training Area Redevelopment - Stage 2

This project will provide new infrastructure and facilities at the Cultana Training Area, to support ADF training activities. Subject to Government and Parliamentary approvals, construction is planned to commence in late 2018 and be complete by late 2020.

Northern Territory

Larrakeyah Barracks Redevelopment

This project will provide new and/or refurbished facilities at Larakeyah Barracks. Subject to Government and Parliamentary approvals, construction is planned to commence in late 2018 and be complete by late 2020.

Naval Operations in the North

This project will provide new facilities to support naval operations, including berthing and fuelling facilities. Subject to Government and Parliamentary approvals, construction is planned to commence in late 2018 and be complete by late 2020.

Queensland

HMAS Moreton Unit Relocation

Purpose is to ensure that Navy’s operational and administrative functions are retained after the partial disposal of surplus Defence land at Bulimba Barracks. The project also seeks to construct new facilities and services on the remaining portion of the site to replace those functions that will be displaced due to the partial disposal of the site. Subject to Government and Parliamentary approval, construction is planned to commence in late 2017 and be completed by late 2018.

Australian Capital Territory

Russell Buildings R5 and R6 Infrastructure Upgrade

The project will provide essential building and engineering services upgrade to extend the life of Russell Buildings R5 and R6. Subject to Government and Parliamentary approval, construction is scheduled to commence in early 2018 and be completed by mid 2021.

Victoria

HMAS Cerberus Redevelopment

Engineering services upgrade, consolidation of Living In Accommodation (LIA) and Mess Facilities, co-location of Clothing Store with Naval Store, School of Survivability and Ship Safety upgrade, Gym upgrade, (Armoury, Explosive Ordnance (EO) and Weapons Storage Facility upgrade,) and demolition. Subject to Government and Parliamentary approval, construction is planned to commence in late 2017 and be completed by late 2019.


153

Remediation of Defence Site Maribyrnong

The project will undertake necessary remediation works at Defence site Maribyrnong, Vic. Subject to Government and Parliamentary approval, construction is planned to commence in late 2017 and be completed by late 2019.

Point Wilson Waterside Infrastructure Redevelopment

This project will address deficiencies in the current waterside infrastructure at Point Wilson. Subject to Government and Parliamentary approval, construction is planned to commence in mid 2018 and be complete by late 2021.

New South Wales

Garden Island (East) Critical Infrastructure Recovery Project (CIRP) – Stage One

This project will address critical structural, condition and engineering services risks on the Cruiser Wharf at Garden Island (East), Sydney, NSW. Subject to Parliamentary approval, construction is planned to commence in mid 2017 and be completed by late 2020.

Garden Island (East) Critical Infrastructure Recovery Project (CIRP) – Stage Two

This project will address critical wharf infrastructure and engineering services risks at Garden Island (East), Sydney, NSW (excluding those being addressed under Stage One). Subject to Government and Parliamentary approval, construction is planned to commence in late 2017 and be completed by mid 2018.

JP2008 Phase 5B Ground Satellite Station

This project will provide facilities (mainly engineering services infrastructure) to support JP2008PH5B requirements, at Kapooka Training Base, Wagga Wagga. Subject to Government and Parliamentary approval, construction is planned to commence in mid 2017 and be completed by late 2018.

Navy Guided Weapons Maintenance Facilities Project

This project will provide facilities at Defence Establishment Orchard Hills to support maintenance of guided weapons. Subject to Government and Parliamentary approval, construction is planned to commence in mid 2018 and be completed by early 2021.

Various Locations

LAND 155 Enhanced Gap Crossing Capability

This project will provide new storage and hardstand facilities to support the introduction of enhanced gap crossing capability at Liverpool Military Area, NSW, Joint Logistics Unit South Queensland, Joint Logistics Unit North Queensland and Joint Logistics Unit North, NT. Subject to Parliamentary approval, construction is planned to commence in late 2017 and be completed by mid 2018.

Explosive Ordnance Logistics Reform Program

This project will address explosive ordnance storage capacity shortfalls through delivery of new and enhanced explosive ordnance facilities at 12 Defence sites. Subject to Government and Parliamentary approval, construction is planned to commence in early 2018 and be completed by mid 2020.


154

Joint Health Command – Garrison Health Facilities Upgrade

This project will provide new and refurbished facilities at up to 12 Defence sites to support the efficient delivery of health services for the ADF. Subject to Government and Parliamentary approval, construction is planned to commence in mid 2018 and be complete by early 2020.

JP157 Phase 1 – Replacement Aviation Refuelling Vehicles

This project will provide facilities at selected Defence bases to support the new fleet of aviation refuelling vehicles acquired under JP157 Phase 1. Subject to Parliamentary approval, the construction is planned to commence in mid 2018 and be complete in late 2019.

JP2110 Phase 1B – Chemical, Biological, Radiological and Nuclear Defence (CBRND) Facilities

This project will provide new and refurbished facilities including training and storage facilities, to support ADF CBRND activities. Subject to Government and Parliamentary approvals, construction is planned to commence in mid 2018 and be complete by late 2018.

Airfield Capital Works (RAAF Bases Pearce, Gin Gin, East Sale and Army Aviation Centre Oakey)

This project will provide aircraft pavement and aeronautical ground lighting maintenance works at RAAF Bases Pearce, Gin Gin, East Sale and Army Aviation Centre Oakey. Subject to Government and Parliamentary approvals, construction is planned to commence in mid 2018 and be complete by late 2021.


155


Agency Resources and Planned Performance

Section 1: DHA Overview and Resources

Section 2: DHA Outcomes and Planned Performance

Section 3: DHA Explanatory Tables and Budgeted Financial Statements


156

DEFENCE HOUSING AUSTRALIA

Section 1: DHA Overview and Resources

1.1 STRATEGIC DIRECTION STATEMENT

The main function of Defence Housing Australia (DHA) is to provide housing and related services to members of the Australian Defence Force (ADF) and their families in response to Defence requirements. In fulfilling its role, DHA contributes to Defence retention, recruitment and operational goals.

DHA’s total housing portfolio primarily accommodates ADF members with dependents and their families, but also includes off-base accommodation for ADF singles, newly acquired properties coming on-line, properties being refurbished or off-line for maintenance, and those at the end of lease about to be disposed from the portfolio. DHA manages:

• About 18,500 dwellings in all States and Territories of Australia valued at about $10.6 billion;

• The allocation of dwellings to 16,500 ADF members (Married with Dependants and ADF members who are single);

• 14,000 ADF members on Rental Assistance; and

• The allocation of on-base accommodation for about 11,000 ADF members (31,000 rooms/40,000 beds).

DHA is active in Australian residential housing markets, constructing, purchasing and leasing houses for ADF personnel and raising capital through the sale of properties. DHA is a large property manager, responsible for managing the allocation of dwellings to ADF members and the resulting tenancies. DHA manages a large portfolio of land developments. We acquire and develop land to build enduring and sustainable communities of mixed military and private owners and tenants. DHA helps to finance its activities by selling and leasing back dwellings through its Property Investment program. This is achieved through:

• Land acquisitions.

• The management of land development and dwelling construction.

• Property and tenancy management comprising repairs and maintenance, property allocations and tenancy management.

• Capital raising through the property investment program and the disposal of excess retail land and the disposal of excess property.

DHA is a Government Business Enterprise (GBE) operating under the provisions of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). It is required to maintain a strong balance sheet and to meet shareholder return obligations. DHA is within the Defence portfolio and reports to the Minister for Defence and the Minister for Finance as joint Shareholder Ministers.


157

DHA is not funded from the Budget. DHA is a full tax paying entity and also contributes 60% of Net Profit after Tax as an annual dividend.

DHA Organisational Structure

DHA advises that there are no significant changes to targets published in the Portfolio Budget Statements 2016-17. However, the composition of DHA’s Board of Directors and associated committees has changed and is detailed below.

As at 31 March 2017, the DHA Board members are:

Chairman Hon J.A.L. (Sandy) Macdonald

Managing Director Ms Jan Mason

Commercial Director Hon Alan Ferguson

Commercial Director Mr Robert Fisher AM

Commercial Director Ms Andrea Galloway

Commercial Director Mr Ewen Jones

Nominee Secretary of Defence Mr Martin Brady AO

Nominee Chief of Defence Force Commodore Vicki McConachie CSC RANR

Nominee Secretary of Finance Ms Janice Williams

The DHA Board also has the following subcommittees: Board Audit Committee, Board Property Committee and Nomination and Remuneration Committee.


158

DHA has an Advisory Committee that has the following members as at 31 March 2017:

Chairperson Commodore Vicki McConachie CSC RANR

Convenor of Defence Families Australia

Ms Robyn Ritchie

Appointee of Chief of Navy RADM Michael Noonan AM RAN (Deputy Chief of Navy)

Appointee of Chief of Army MAJGEN Rick Burr DSC AM MVO (Deputy Chief of Army)

Appointee of Chief of Air Force AVM Warren McDonald AM CSC (Deputy Chief of Air Force)

Appointee of Defence Housing Australia

Ms Jan Mason

DHA’s wholly owned subsidiary entity, DHA Investment Management Limited, has a Board comprising a Chairperson and two directors.

As at 31 March 2017, the DHA Investment Management Limited Board members were:

Chairperson Mr Martin Brady AO

Director Ms Jan Mason

Director Mr Jon Brocklehurst

On 30 April 2017, Mr Jon Brocklehurst passed away.


159

1.2 DHA RESOURCE STATEMENT

Table 71: DHA Resource Statement – Budget Estimates for 2017-18

2016-17 estimated

actual$'000

2017-18 estimate

$'000

Opening balance/cash reserves at 1 July 320,453 233,367

Funds from Government

Amounts received from related entitiesAmounts from Department of Defence 725,275 803,042

Total amounts received from related entities 725,275 803,042

Total funds from Government 725,275 803,042

Funds from industry sources

Funds from other sourcesInterest 6,991 3,548Sale of goods and services 510,026 609,474

Total funds from other sources 517,017 613,022Total net resourcing for DHA 1,242,292 1,416,064

2016-17 2017-18Average staffing level (number) 643 643


160

1.3 BUDGET MEASURES

There are no budget measures relating to DHA for the May 2017 Budget.


161

Section 2: DHA Outcomes and Planned Performance

DHA advises no significant changes to targets published in the Portfolio Budget Statements 2017-18.

2.1 OUTCOME AND PERFORMANCE INFORMATION

Government outcomes are the intended results, impacts or consequences of actions by the Government on the Australian community. Commonwealth programs are the primary vehicle by which government entities achieve the intended results of their outcome statements. Entities are required to identify the programs which contribute to government outcomes over the Budget and forward years.

Each outcome is described below together with its related programs. The following provides detailed information on expenses for each outcome and program, further broken down by funding source.

Note:

Performance reporting requirements in the Portfolio Budget Statements are part of the enhanced Commonwealth performance framework established by the Public Governance, Performance and Accountability Act 2013. It is anticipated that the performance criteria described in Portfolio Budget Statements will be read with broader information provided in an entity’s statement of corporate intent and annual performance statements – included in Annual Reports - to provide an entity’s complete performance story.

The most recent statement of corporate intent for DHA can be found at: https://www.dha.gov.au/about-us/our-organisation/governance#planning

The most recent annual performance statement can be found at: https://www.dha.gov.au/annual-reports/2015-2016/

https://www.dha.gov.au/about-us/our-organisation/governance#planning

https://www.dha.gov.au/annual-reports/2015-2016/


162

Outcome 1: To contribute to Defence outcomes by providing total housing services that meet Defence Operational and client needs through a strong customer and business focus

Outcome Expense Statement

Table 72: Budgeted Expenses for Outcome 1

meet Defence operational and client needs through a strong customer and business focus2016-17

Estimated actual$'000

2017-18Budget

$'000

2018-19 Forward estimate

$'000


$'000

2020-21Forward estimate

$'000

Revenue from GovernmentPayment from related entities 636,387 582,470 573,996 603,356 654,788

Revenues from other independent sources 545,807 693,889 746,326 749,517 547,545Total expenses for Program 1.1 1,182,194 1,276,359 1,320,322 1,352,873 1,202,333

2016-17 2017-18Average staffing level (number) 643 643

Program 1.1: (Other Departmental - DHA)

Outcome 1: To contribute to Defence outcomes by providing total housing services that


163


Program 1.1: The provision of Defence housing and housing related services


Include:

• Provide modern quality housing that meets Defence requirements and community standards.

• Meet financial returns

Delivery Program deliverables;

• Deliver housing provisioning schedule outcomes to within 1% of agreed numbers.

• Deliver major land development and acquisition/construction activities in key Defence locations.

• Achieve sustainable sale and leaseback and disposal revenues.


Year Performance criteria Targets

2016-17 • Houses supplied against provisioning schedule

• Members satisfied with their service residence

• Return on equity

• > 99%

• > 80% • 4.3%

Expected to be met

2017-18 • Houses supplied against provisioning schedule



• > 99%

• > 80%

• 4.3%

2018-19 and beyond

• Houses supplied against provisioning schedule



• > 99%

• > 80%

• 4.2%

Purposes • Housing solutions for ADF members and their families • Property, tenancy and lessor management • Property sourcing • Portfolio management • Generate shareholder value


164

Section 3: DHA Explanatory Tables and Budgeted Financial Statements

Section 3 presents budgeted financial statements which provide a comprehensive snapshot of entity finances for the 2017-18 budget year, including the impact of budget measures and resourcing on financial statements.

3.1 EXPLANATORY TABLES

Not applicable to DHA.


165

3.2 BUDGETED FINANCIAL STATEMENTS

3.2.1 Budgeted Financial Statements

Table 73: Comprehensive Income Statement (showing net cost of services) for the period ended 30 June

2016-17 Estimated

actual$'000

2017-18Budget

$'000


$'000


$'000

2020-21Forward estimate

$'000

INCOMERevenue

Sale of goods and rendering of services 1,176,508 1,273,798 1,315,429 1,343,451 1,191,382Interest 6,991 3,548 5,393 10,211 11,490

Total revenue 1,183,499 1,277,346 1,320,822 1,353,662 1,202,872Gains

Sale of assets (1,305) (987) (500) (789) (539)Total gains (1,305) (987) (500) (789) (539)Total income 1,182,194 1,276,359 1,320,322 1,352,873 1,202,333EXPENSES

Employee benefits 68,609 73,320 75,168 77,062 79,898Suppliers 998,998 1,068,289 1,110,818 1,139,028 1,007,848Depreciation and amortisation 5,036 6,172 7,172 8,172 5,200Finance costs 25,887 25,887 24,715 24,205 24,205Write-down and impairment of assets 7,302 7,500 7,500 7,500 -

Total expenses 1,105,832 1,181,168 1,225,373 1,255,967 1,117,151Profit/(loss) before income tax 76,362 95,191 94,949 96,906 85,182

Income tax expense 24,166 28,834 25,719 27,792 21,348Net profit/(loss) 52,196 66,357 69,230 69,114 63,834Profit/(loss) attributable to the Australian Government 52,196 66,357 69,230 69,114 63,834Total comprehensive income attributable to the Australian Government 52,196 66,357 69,230 69,114 63,834Note1. The data in this table is based on DHA's approved 2016-17 Corporate Plan. The Corporate Plan is preparedon a cost basis, whilst the Budget Statements submission has been prepared on a fair value basis, in linewith the PGPA Act Financial Reporting Rules.


166

Table 74: Budgeted Departmental Balance Sheet (as at 30 June)

2016-17 Estimated

actual$'000

2017-18Budget

$'000

2018-19 Forw ard estimate

$'000


$'000

2020-21Forw ard estimate

$'000ASSETSFinancial assets

Cash and cash equivalents 233,367 213,342 306,025 496,969 381,283Trade and other receivables 30,946 7,605 7,713 7,846 7,916Other investments 1,091 1,090 1,090 1,090 1,090Other f inancial assets 10,201 10,300 10,585 10,937 11,127

Total financial assets 275,605 232,337 325,413 516,842 401,416 Non-financial assets

Land and buildings 1,672,045 1,727,664 1,782,662 1,815,667 1,887,397Property, plant and equipment 6,521 5,788 4,635 5,095 3,391Intang bles 7,655 6,805 5,468 1,611 2,986Inventories 1,170,964 1,221,571 1,131,106 970,537 1,088,207Tax assets 20,190 19,648 19,147 18,692 17,642Other non-financial assets 26,236 27,549 29,018 30,783 8,550

Total non-financial assets 2,903,611 3,009,025 2,972,036 2,842,385 3,008,173 Assets held for sale 29,713 29,713 29,713 29,713 29,713

Total assets 3,208,929 3,271,075 3,327,162 3,388,940 3,439,302 LIABILITIESPayables

Suppliers 12,620 13,023 13,439 13,864 14,300Dividends 39,203 44,780 39,975 43,173 33,230Other payables 104,760 109,317 107,618 111,384 109,113

Total payables 156,583 167,120 161,032 168,421 156,643 Interest bearing liabilities

Loans 509,580 509,580 509,580 509,580 509,580Total interest bearing liabilities 509,580 509,580 509,580 509,580 509,580 Provisions

Employee provisions 22,090 22,648 23,223 23,814 24,419Other provisions 114,626 112,039 112,638 109,210 108,461

Total provisions 136,716 134,687 135,861 133,024 132,880 Total liabilities 802,879 811,387 806,473 811,025 799,103 Net assets 2,406,050 2,459,688 2,520,689 2,577,915 2,640,199 EQUITYParent entity interest

Contr buted equity 396,148 396,148 396,148 396,148 396,148Reserves 1,946,592 1,978,359 2,009,811 2,040,802 2,072,188Retained surplus (accumulated deficit)

63,310 85,181 114,730 140,965 171,863

Total parent entity interest 2,406,050 2,459,688 2,520,689 2,577,915 2,640,199Attributed to non-controlling interestTotal non-controlling interest - - - - -Total equity 2,406,050 2,459,688 2,520,689 2,577,915 2,640,199Notes

3. The data in this table is based on DHA's approved 2016-17 Corporate Plan. The Corporate Plan is prepared ona cost basis, w hilst the Budget Statements submission has been prepared on a fair value basis, in line w ith the PGPA Act Financial Reporting Rules.

2. Prepared on Australian Accounting Standards basis.1. Equity is the residual interest in assets after the deduction of liabilities.


167

Table 75: Budgeted Departmental Statement of Cash Flows (for the period ended 30 June)

2016-17 Estimated

actual$'000

2017-18Budget

$'000


$'000


$'000

2020-21Forw ard estimate


Sale of goods and rendering of services

1,177,131 1,362,514 1,365,964 1,393,160 1,186,856

Interest 6,991 3,548 5,393 10,211 11,490Other 30,768 31,247 30,499 28,806 29,662


Employees 79,300 84,287 86,411 88,589 90,821Suppliers 1,036,998 1,157,738 1,044,913 994,954 1,079,616Borrow ing costs 25,887 25,887 24,715 24,205 24,205Other 64,006 60,879 63,770 62,395 60,719

Total cash used 1,206,191 1,328,791 1,219,809 1,170,143 1,255,361Net cash from/(used by) operating activities 8,699 68,518 182,047 262,034 (27,353)INVESTING ACTIVITIESCash received

Proceeds from sales of property, plant and equipment

27,402 18,755 9,508 14,988 10,236

Total cash received 27,402 18,755 9,508 14,988 10,236Cash used

Purchase of property, plant and equipment and intang bles

60,468 68,389 54,386 46,397 55,690

Total cash used 60,468 68,389 54,386 46,397 55,690Net cash from/(used by) investing activities (33,066) (49,634) (44,878) (31,409) (45,454)FINANCING ACTIVITIESCash received

OtherTotal cash received - - - - -Cash used

Dividends paid 62,719 38,909 44,486 39,681 42,879Total cash used 62,719 38,909 44,486 39,681 42,879Net cash from/(used by) financing activities (62,719) (38,909) (44,486) (39,681) (42,879)Net increase/(decrease) in cash held (87,086) (20,025) 92,683 190,944 (115,686)

Cash and cash equivalents at the beginning of the reporting period 320,453 233,367 213,342 306,025 496,969

Cash and cash equivalents at the end of the reporting period 233,367 213,342 306,025 496,969 381,283Notes

2. The data in this table is based on DHA's approved 2016-17 Corporate Plan. The Corporate Plan isprepared on a cost basis, w hilst the Budget Statements submission has been prepared on a fair value basis, in line w ith the PGPA Act Financial Reporting Rules.

1. Prepared on Australian Accounting Standards basis.


168

Table 76: Departmental Statement of Changes in Equity – Summary of Movement (Budget Year 2016-17)

Retainedearnings

$'000

Assetrevaluation

reserve$'000

Otherreserves

$'000

Contr butedequity/capital$'000

Totalequity

$'000Opening balance as at 1 July 2017

Balance carried forw ard from previous period

63,310 1,946,592 396,148 2,406,050

Adjusted opening balance 63,310 1,946,592 - 396,148 2,406,050Comprehensive income

Surplus/(deficit) for the period 66,357 66,357Total comprehensive income 66,357 - - - 66,357

Transactions with ownersDistributions to owners

Returns on capital:Dividends (44,486) (44,486)

Contributions by ownersOther 31,767 31,767

Sub-total transactions with owners (44,486) 31,767 - - (12,719)

Estimated closing balance as at 30 June 2018 85,181 1,978,359 - 396,148 2,459,688

-Closing balance attributable to the Australian Government 85,181 1,978,359 - 396,148 2,459,688Notes

2. The data in this table is based on DHA's approved 2016-17 Corporate Plan. The Corporate Plan isprepared on a cost basis, w hilst the Budget Statements submission has been prepared on a fair value basis, in line w ith the PGPA Act Financial Reporting Rules.

1. Prepared on Australian Accounting Standards basis.


169

Table 77: Departmental Capital Budget Statement

DHA is not directly appropriated. Appropriations are made to Department of Defence which are then paid to DHA and are considered ‘departmental’ for all purposes.

Table 78: Statement of Asset Movements (2017-18)

Land

$'000

Buildings

$'000

O her property,plant and

equipment$'000

Computersoftware and

intangibles$'000

L&B, IP&Eheld for sale

$'000

Total

$'000As at 1 July 2017

Gross book value 905,992 766,059 16,002 20,362 29,713 1,738,128Accumulated depreciation/amortisa ion and impairment (6) (9,481) (12,707) (22,194)

Opening net book balance 905,992 766,053 6,521 7,655 29,713 1,715,934Capital asset additions

Estimated expenditure on new or replacement assetsBy purchase - other 48,135 15,201 4,143 446 67,925Total additions 48,135 15,201 4,143 446 - 67,925Other movementsAssets held for sale or in a disposal group held for sale (19,742) (19,742) 39,484 -Revaluation 17,755 14,012 31,767Depreciation written back on revaluation -Depreciation/amortisa ion expense (4,876) (1,296) (6,172)Disposals (39,484) (39,484)Total other movements (1,987) (5,730) (4,876) (1,296) - (13,889)

As at 30 June 2018Gross book value 952,140 775,530 20,145 20,808 29,713 1,798,336Accumulated depreciation/ amortisation and impairment - (6) (14,357) (14,003) - (28,366)

Closing net book balance 952,140 775,524 5,788 6,805 29,713 1,769,970

2. The data in this table is based on DHA's approved 2016-17 Corporate Plan. The Corporate Plan is prepared on a cost basis, w hilst the Budget Statements submission has been prepared on a fair value basis, in line w ith the PGPA Act Financial Reporting Rules.

1. Prepared on Australian Accounting Standards basis.Notes


170

GLOSSARY Accumulated depreciation

The aggregate depreciation recorded for a particular depreciating asset.

Additional estimates Where amounts appropriated at Budget time are required to change, Parliament may make adjustments to portfolios through the Additional Estimates Acts.

Administered appropriation

Revenue, expenses, assets and liabilities administered by an agency for the Commonwealth (such as taxes, benefits payments and public debt) that are not concerned with running the agency or its commercial activities.

Administered items Expenses, revenues, assets or liabilities managed by agencies on behalf of the Commonwealth. Agencies do not control administered items. Administered expenses include grants, subsidies and benefits. In many cases, administered expenses fund the delivery of third party outputs.

Agency Assets, liabilities, revenues and expenses that are controlled by Defence or a subsidiary. Includes officials allocated to the organisation.

Amortisation A term used interchangeably with depreciation, except that it applies to a non-current physical asset under finance lease, or a non-current intangible asset, over its limited useful life.

Appropriation An authorisation by Parliament to spend money from the Consolidated Revenue Fund (the principal working fund of the Commonwealth) for a particular purpose.

Annual appropriation Two Appropriation Bills are introduced into Parliament in May and comprise the Budget for the financial year beginning 1 July. Further Bills are introduced later in the financial year as part of the Additional Estimates.

Assets Future economic benefits controlled by Defence as a result of past transactions or other past events. Assets are initially recognised at the cost of acquisition. Non-financial assets are subject to ongoing revaluation assessment.

Assets under construction

Assets under construction by Defence for Defence, or for the use of another entity according to a construction contract where Defence controls the asset until completion, or assets under construction or otherwise being made ready by another entity for use by Defence.

Australian Accounting Standards

Specify techniques of accounting practice and the method of presenting financial information about a reporting entity.

Average funded strength

A budgetary measure used to count the average number of Australian Defence Force members paid on a full-time equivalent basis during a financial year.

Capability The combination of military equipment, personnel, logistics support, training, resources, etc. that provides Defence with the ability to achieve its operational aims.

Capability Manager A Capability Manager is responsible for raising, training and sustaining in-service capabilities through the coordination of fundamental inputs to capability. Capability Managers include the Vice Chief of the Defence Force, Deputy Secretary Strategic Policy and Intelligence, and the Service Chiefs.

Capital budget All proposed capital expenditure funded by appropriation for outcomes, by equity injections or loans and/or appropriations for administered capital, or by other sources.

Capital expenditure Expenditure by an agency on capital projects, for example purchasing a building.

Glossary

171

Coalition Countries including Australia who provide troops, logistical support or assistance in military operations, peacekeeping or reconstruction efforts.

Combined exercise An exercise or activity involving one or more Services of the Australian Defence Force with the forces of other countries.

Consolidated Revenue Fund

Section 81 of the Constitution stipulates that all revenue raised or money received by the Commonwealth forms the one consolidated revenue fund. The fund is not a bank account. The Official Public Account reflects most of the operations of the fund.

Corporate governance The process by which agencies are directed and controlled. It is generally understood to encompass authority, accountability, stewardship, leadership, direction and control.

Integrated Investment Program

The Integrated Investment Program is a costed, detailed development plan for the Australian Defence capabilities to be delivered through implementation of the Defence White Paper. The program is reviewed regularly to take account of changing strategic circumstances, new technologies and changed priorities, in the context of the overall Defence budget.

Defence information environment

Encompasses all of Defence’s computing and communication capabilities at all classification levels. It supports all Defence warfighting functions, including overseas deployed elements and connection to Coalition networks, as well as day-to-day business functions.

Defence Management and Finance Plan

The Defence Management and Finance Plan provides Ministers and central agencies with a clear oversight of Defence planning and financing strategies. It describes the strategies agreed through the 2016 Defence White Paper and other policy direction. As a compendium of information attached to Defence’s annual Portfolio Budget Submission, it is intended to help Ministers make informed strategic and budgetary decisions on Defence, by bringing into one document the expected financial position of the portfolio taking into account existing commitments and proposed new investments. The Plan also provides the Government with the information necessary to ensure that its investment in Defence is both affordable and sustainable.

Departmental items Assets, liabilities, revenues and expenses that are controlled by the agency in providing its outputs. Departmental items would generally include computers, plant and equipment assets used by agencies in providing goods and services and most employee expenses, supplier costs and other administrative expenses incurred.

Depreciation Apportionment of an asset’s capital value as an expense over its estimated useful life to take account of normal usage, obsolescence, or the passage of time.

Discretionary grants Payments where the portfolio Minister and paying agency have discretion in determining whether or not a particular applicant should receive funding and may or may not impose conditions in return for the grant. There is a central discretionary grants register.

Employee Any Defence official who receives a salary or wage, along with other benefits, for the provision of services whether on a full-time, part-time, permanent, casual or temporary basis.

Employee expenses Include, but are not limited to, benefits provided to employees in the form of salaries and wages, performance pay, senior officers’ allowances, leave, and superannuation, but does not include amounts paid or owed to employees as reimbursement of out-of-pocket expenses.


172

Equity injection An additional contribution, over and above the cost of outputs. Equity injections form part of the Commonwealth’s investment in Defence.

Expense Total value of all of the resources consumed in producing goods and services or the loss of future economic benefits in the form of reductions in assets or increases in liabilities of an entity.

Fair value The amount for which an asset could be exchanged, or a liability settled, between knowledgeable and willing parties in an arm’s length transaction. The fair value can be affected by the conditions of the sale, market conditions and the intentions of the asset holder.

Force element A component of a unit, a unit or an association of units having common prime objectives and activities.

Force element group A grouping of force elements with an appropriate command and control structure for a specified role or roles (e.g. the Navy Submarine Group).

Forward estimates The level of proposed expenditure for future years, based on relevant demographic, economic and other future forecasting assumptions. The Government requires forward estimates for the following three financial years to be published in each annual Federal Budget paper.

Garrison Support Services

Includes a range of base support services such as ground maintenance, hospitality, training area management, base security, transport, air support and fire fighting and rescue services.

Group A high-level organisational grouping of functions and activities used by the Defence Executive as its primary management grouping (e.g. the Strategic Policy & Intelligence Group).

Infrastructure Items owned, leased or otherwise under the control of Defence in support of activities on land and within buildings. Infrastructure includes items such as runways, roads, car parks, parade grounds, ovals, lighting, water, sewerage and other general service related items. It does not include land upon which, or within which, it is constructed or those fixed items integral to, and under, buildings.

Interoperability The ability of systems, units or forces to provide the services to, and accept services from, other systems, units or forces and to use the services so exchanged to enable them to operate effectively together.

Inventory Inventory is comprised of consumable stores and supplies, fuel and explosive ordnance used in the delivery of Defence services. These are items which are consumed in normal use, lose their identity during periods of use by incorporation into, or attachment upon, another assembly, as a result of wear and tear, cannot be reconditioned because their design does not make it possible or their specific values do not justify it.

Joint exercise An exercise involving two or more Services of the Australian Defence Force.

Liabilities Sacrifices of future economic benefits that Defence is presently obliged to make to other entities as a result of past transactions or other past events.

Listed entity An entity established by regulation under the Public Governance, Performance and Accountability Act 2013. The Act provides financial management authority to, and requires accountability by the Accountable Authority of an entity. This used to be called ‘Prescribed agency’ under the former Financial Management and Accountability Act 1997.

Materiel Acquisition Agreements

Materiel Acquisition Agreements cover the Capability Acquisition and Sustainment Group’s (formerly known as Defence Materiel Organisation) acquisition services to Defence for both major and minor capital equipment.

Glossary

173

Materiel Sustainment Agreements

Materiel Sustainment Agreements are between the Capability Managers and the Deputy Secretary Capability Acquisition and Sustainment. These agreements cover the sustainment of current capability, including good and services such as repairs, maintenance, fuel and explosive ordnance.

Military response options

A set of generic tasks that describe the range of military options the Government could consider as a basis for a response to a particular situation or contingency.

Net assets See Equity.

Operating result Equals revenue less expense.

Operational tempo The rate at which the Australian Defence Force is able to deliver its operations effects, for example, the rate at which forces are dispatched and the time in which they are turned around for their next task. At the local level, this might translate to the crew of an aircraft spending a very small amount of time on the ground before it is re-tasked for its next mission. At the organisational level, this translates to available fighting forces spending very little time at home before they are deployed again for their next operation.

Outcomes The impact that Government seeks from Defence, and are achieved by the successful delivery of its outcomes, to the standards set in the Portfolio Budget Statements. For more information, see Section 2 – Planned Outcome Performance.

Permanent forces The permanent Navy, the regular Army and the permanent Air Force.

Platforms Refers to air, land, surface or sub-surface assets that are discrete and taskable elements within the Australian Defence Force.

Portfolio Additional Estimates Statements

Similar to the portfolio budget statements and prepared at Additional Estimates time to support and update on the Government’s original annual budget for Defence.

Portfolio Budget Statements

The document presented by the Minister for Defence to Parliament to inform Senators and Members of the basis for the Defence budget appropriations in support of the provisions in Appropriations Bills 1 and 2. The statements summarise the Defence budget and provide detail of outcome performance forecasts and resources in order to justify expenditure for Defence.

Price One of the three key efficiency indicators. The amount the Government or the community pays for the delivery of agreed outputs.

Public Governance, Performance and Accountability Act 2013

The Public Governance, Performance and Accountability Act 2013 replaced the Financial Management and Accountability Act 1997 and the Commonwealth Authorities and Companies Act 1997. The PGPA Act seeks to improve the standard of planning and performance reporting for all Commonwealth entities so that Parliament and the Australian community can better understand how public resources are being used to meet Government policy direction.

Purchaser-provider arrangements

Arrangements under which the outputs of one entity are purchased by another entity to contr bute to outcomes. Purchaser-provider arrangements can occur between Commonwealth agencies and state/territory government or private sector bodies.

Quality One of the three key efficiency indicators. Relates to the characteristics by which customers or stakeholders judge an organisation, product or service. Assessment of quality involves use of information gathered from interested parties to identify differences between user's expectations and experiences.

Quantity One of the three key efficiency indicators. Examples include: the size of an output; count or volume measures; how many or how much.


174

Readiness The readiness of forces to be committed to operations within a specified time, dependent on the availability and proficiency of personnel, equipment, facilities and consumables.

Reserves The Naval Reserve, the Army Reserve and the Air Force Reserve.

Revenues Inflows or other enhancements, or savings in outflows, of future economic benefits in the form of increases in assets or reductions in liabilities of Defence, other than those relating to contributions by the Commonwealth, that result in an increase in equity during the reporting period.

Risk management At the highest level, involves the identification and mitigation of those risks that have the potential to adversely affect the achievement of agreed outcome performance at the agreed outcome price.

Special account Balances existing within the Consolidated Revenue Fund, which are supported by standing appropriations (Public Governance, Performance and Accountability Act 2013, ss.78 and 80). Special accounts allow money in the Consolidated Revenue Fund to be acknowledged as set-aside (hypothecated) for a particular purpose. Amounts credited to a Special Account may only be spent for the purposes of the Special Account. Special Accounts can only be established by a written determination of the Finance Minister (s.78 of the Public Governance, Performance and Accountability Act 2013) or through an Act of Parliament (referred to in s.80 of the Public Governance, Performance and Accountability Act 2013).

Special Appropriations (including Standing Appropriations)

An amount of money appropriated by a particular Act of Parliament for a specific purpose and number of years. For special appropriations the authority to withdraw funds from the Consolidated Revenue Fund does not generally cease at the end of the financial year.

Standing appropriations are a sub-category consisting of ongoing special appropriations – the amount appropriated will depend on circumstances specified in the legislation.

Specialist military equipment

Items of a specific military nature and that are not available though the normal external market in their current form to other than government military purchasers. It includes the prime military equipment plus the direct support items associated with the equipment.

Standard Defence Supply System (SDSS)

A key information system for the financial management of inventory, general stores, repairable items and other assets associated with Defence’s logistic capability.

Systems Program Office

The office of the Program Manager. It serves as the single point of contact with industry, government entities, and other activities participating in the acquisition process of a given system.

Theatre The area in which military operations and activities take place.

Two-pass approval process

The process by which major capital investment proposals are developed for consideration and approval by the Government.

Unit ready days The number of days that a force element is available for tasking, by the maritime commander, either outside of major maintenance and within planned readiness requirements, or in accordance with contracted availability. Planned unit ready days are determined for each Force Element Group by aggregating total days for the unit in commission, less all days when the unit is programmed to be in major maintenance and conducting associated pre-workup (preparations for initial operational training) or based on the total number of days the force element is contracted to be available to Defence. Contracted availability applies to the Armidale-class patrol boats and may apply to other classes in the future.

Glossary

175

Weighted average cost An inventory valuation method which considers the fluctuating prices and quantities of acquired goods in computing of the cost of inventory. The weighted average method takes the prices of units at the beginning inventory and the varying prices of purchases made and are weighted by the number of units to determine the weighted average cost per unit. It may be computed as the weighted average cost of all available goods present in a given period, or as a weighted moving average cost adjusted when new goods are delivered.

Write-downs The reduction in the value of assets.


176

ACRONYMS

A AAF Army Amenities Fund

AAFCANS Army and Air Force Canteen Service

ACPB Armidale Class Patrol Boats

ADF Australian Defence Force

AGSVA Australian Government Security Vetting Agency

ANAO Australian National Audit Office

AO Amphibious and Afloat Support – Oil Tanker

AOR Amphibious and Afloat Support – Replenishment Ship

APS Australian Public Service

ASPI Australian Strategic Policy Institute

C

CASG Capability Acquisition and Sustainment Group

CDF Chief of the Defence Force

CFOG Chief Finance Officer Group

D DACC Defence Assistance to the Civil Community

DDG Hobart Class Air Warfare Destroyers

DFRB Defence Force Retirement Benefits

DFRDB Defence Force Retirement and Death Benefits Scheme

DHA Defence Housing Australia

DPG Defence People Group

F FFG Adelaide Class Frigate

FFG Guided Missile Frigate

FFH Anzac Class Frigate

FTE Full Time Equivalent

H HMAS Her Majesty's Australian Ship

Acronyms

177

I ICT Information and Communications Technology

L LHD Landing Helicopter/Heavy Dock

LSD Landing Ship Dock

M MHC Coastal Mine Hunter

MRH Multi-Role Helicopter

MRTT Multi-Role Tanker Transport

MSBS Military Superannuation and Benefits Scheme

N NATO North Atlantic Treaty Organization

P PAES Portfolio Additional Estimates Statements

PGPA Public Governance, Performance and Accountability

PWC Committee on Public Works

R RAN Royal Australian Navy

RANCCB Royal Australian Navy Central Canteens Board

S S&T Science & Technology

U UAD Unit Availability Days

2017-18 Defence Portfolio Budget Statements · Defence Portfolio Budget Statements 2017-18 . 6 ....

Documents

Transcript of 2017-18 Defence Portfolio Budget Statements · Defence Portfolio Budget Statements 2017-18 . 6 ....