As outlined in the 2009-10 Portfolio Budget Statements, the Government provided Defence with additional funding of $146.1 billion to fully fund the White Paper over 21 years to 2029-30. This funding amounts to $104.4 billion over the Budget year and Forward Estimates and $308.2 billion over the decade to 2018-19.
Defence’s funding will be based on the following funding principles:
- 3 per cent average real growth to 2017-18
- 2.2 per cent average real growth from 2018-19 to 2029-30
- 2.5 per cent fixed price indexation from 2009-10 to 2029-30, with the 2.5 per cent to be calculated from 2009-10 but applied from 2013-14
- agreement that Defence will reinvest all savings from the Strategic Reform Program and other initiatives into higher priority Defence capabilities
- agreement that Defence will make savings of $2 billion, which will be returned to Defence beyond 2015-16 in line with the revised funding requirements
- an extension of the efficiency dividend of one per cent of the administrative activities for the life of the White Paper.
This new Defence funding package provides Defence with greater funding stability and certainty while requiring Defence to drive efficiencies and improve productivity. The 2.2 per cent real growth funding is consistent with the long-term Non-Farm GDP Deflator. An efficiency and savings regime to free up resources for reallocation to higher, critical priorities will be combined with a reprogramming of funds to future years, ensuring Defence can fund capabilities outlined in the White Paper as they are required.
In addition to the new funding package, there are several measures and adjustments which affect Defence funding. These are:
- supplementation of $1.7 billion in the budget year and $2.1 billion over four years for Operations
- in response to the Mortimer Review, the transfer of the Defence Materiel Organisation service fee on an ongoing basis through a direct appropriation, which equates to $3.2 billion over four years to 2012-13 and $8.7 billion over the decade to 2018-19
- supplementation of $1.7 million in 2009-10 for the Defence Science and Technology Organisation for its role in the National Crisis Coordination Centre
- a hand back to Government of $2 million over four years and $4.9 million over ten years as part of the rationalisation of medical costs in administering military superannuation schemes.