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Tuesday, 19 August 1980
Page: 130

Earlier this year the Prime Minister and the Minister for Defence announced decisions taken by the Government on measures to significantly increase Australia's defence preparedness in the light of changing strategic prospects.

In keeping with the Government's policy, the outlays on Defence of $3541.4 million provided for in this Budget represent a real increase of at least 7 per cent over defence outlays in 1979-80 compared with last year's actual real increase of about 3 per cent. The financial guidance for Defence planning purposes provides for an average annual increase in defence outlays of about 7 per cent in real terms during the current five-year program, 1980-81 to 1984-85, estimated to bring them to around 3 per cent of Gross Domestic Product compared with a figure of around 2.6 per cent for 1979-80.

The estimate of $3541.4 million for Defence outlays is generally in April 1980 prices but it does allow for the effects of the July National Wage Decision and also includes a bulk provision of $110 million for prospective increases in wages and salaries of service and civilian defence personnel during 1980-81; provision for other price increases in 1980-81 will, as appropriate, be made in Additional Estimates later in the year.

The current estimate of Defence outlays represents 9.8 per cent of estimated total Budget outlays in 1980-81. Outstanding commitments on orders placed, mainly capital items, to be carried over to 1981-82 and later years are estimated to be $2288.2 million compared with $1731.1 million carried into 1980-81.

Manpower Costs

This category provides for the bulk of service and civilian manpower costs of the Department of Defence. The costs of the remaining elements of defence manpower are recorded under the categories Defence Science and Technology, Natural Disasters Organisation, Defence Co-operation and Naval Construction. Net manpower costs associated with the defence-related activities of the Department of Productivity are recorded in the category 'Maintenance of Production Capacity'.

The net increase of $141.8 million in 1980-81 mainly reflects the effects of the December 1979 and July 1980 National Wage Case decisions ($74.0 million), increases in manpower ($14.1 million) and increased provision for defence force retirement and death benefits ($27.5 million). Increases in allowances, particularly overseas allowances, which occurred in 1979-80 have also had an effect.

The estimates provide for service manpower increases of 1580 over the 30 June 1980 target, which will raise the permanent force strength at 30 June 1981 to 72 591. These increases are primarily intended to enable new equipment coming into service to be adequately manned, to support increased activities such as base porting at HMAS Stirling and an increased P3C aircraft surveillance effort, and to bring the Army Operational Deployment Force at Townsville close to full strength.

Provision has also been made for the estimated $8.4 million cost of bringing the effective strength of the Army Reserve from about 22 500 at 1 July 1980 to 30 000 by 30 June 1981.

A target of an additional 1000 regular servicemen per year over the period 1981-82 to 1984-85 has been set to meet the need to man additional equipment and to intensify training. Increased civilian manpower is also proposed, both to support the Services directly and in munitions factories and dockyards.

The total civilian staff ceiling for the Department of Defence has been set at 30 990 at 30 June 1981, an increase of 450 on the 30 June 1980 ceiling. The increase is, in the main, related to tasks arising from the Government's initiatives to enhance defence preparedness, e.g. project activities, technical services, repairs and maintenance and support for the Reserves.

The main factors in the increase of $27.5 million in the provision for defence force retirement and death benefits are the annual update in pension rates in July 1980 (estimated to cost $13.7 million) in line with the increase in the Consumer Price Index of 10.5 per cent over the year to the March Quarter 1980 and a projected net increase of 1427 in the pensioner population.

Defence Equipment and Stores

Outlays on defence equipment and stores are intended to ensure that operational equipment (ships, aircraft, armour, artillery, etc.) is adequate to support the selective increase in operational activity and enhance the capacity for expansion. Outlays on 'capital' type equipment in 1980-81 are estimated at $611.3 million or $120.8 million more than in 1979-80; outstanding commitments on capital items to be carried over to 1981-82 and later years are estimated to be $1324.0 million compared with $985.9 million carried into 1980-81. Outlays on capital equipment are planned to rise to over 25 per cent of total Defence outlays in 1984-85.

The Government's decision to accelerate its program to upgrade and enhance Australia's defence capability will not significantly change the course of development of the force structure which had been planned for later in the decade. Rather it will bring forward items previously scheduled for later acquisition and result, in some cases, in increasing the numbers of items proposed for acquisition within a given time. Action is already under way to acquire two additional Sea King Helicopters to replace recent losses, to order further Mark 48 submarinelaunched torpedoes and to fit a close-in weapon system to the third patrol frigate.

Other decisions on capabilities and equipments for procurement which are provided for in this Budget include a second fleet underway replenishment ship, additional patrol craft, medium general service trucks for the Army, medium range artillery, and the design and construction in Australia of prototype minehunter catamarans. The existing vessels are planned for retirement in 1983. A decision is expected to be made this year on what capability might replace the aircraft carrier HMAS Melbourne and on the design and development in Australia of a new basic training aircraft. Early consideration will also be given to the replacement for the River Class destroyer escorts which it is assessed will be approaching the end of their cost-effective life by the end of the decade.

Amongst the further capabilities and equipments which are now included in the program for decision in the five year period are a new tactical fighter on which a decision will be made shortly and which will involve the purchase of 75 aircraft, an aerial refuelling capability for the tactical fighter aircraft, enhanced capabilities of air defence systems, and an additional hydrographic ship.

Significant components of the estimated outlays in 1980-81 for previously approved equipments are $165 million in progress payments for the four FFG-7 patrol frigates, two of which are scheduled for delivery by the end of 1981; $27 million for fast patrol craft; $18 million for the first fleet underway replenishment ship (AOR1); and $23 million for torpedoes. In addition, $25 million is provided for refurbishment of Mirage and Macchi aircraft. The reduction in expenditure on armoured and combat vehicles and artillery mainly reflects substantial completion of the Leopard tank project.

Expenditure on supporting equipment and stores such as fuel, ammunition, rations, clothing, etc. for the maintenance of the. Defence Force is estimated to increase by $47.4 million. This mainly reflects changed prices and exchange rates (costing $11 million for fuel alone), increased patrol activity by the Navy and Air Force in the Indian Ocean, manpower growth, and a continuing build-up in stockholdings, including $11 million for increased fuel stockholdings.

Outlays on repairs and maintenance of ships, aircraft, vehicles, weapons and equipment are estimated to increase by $17.1 million in 1980-81. This increase is due to higher costs and increased repair activities generally, including the cost of maintaining the sophisticated equipments that have come into service in recent years.

Defence Facilities

Expenditure under this heading is to provide and maintain facilities, including living and working accommodation, for the Defence Force and Department of Defence (other than for Industrial Capacity and Defence Science and Technology).

No provision is made for advances to the States for the construction of houses for servicemen pending the final determination of future arrangements for Service housing. The 1980-81 allocation of $1.8 million is for upgrading of older dwellings to contemporary standards. Provision is made, however, in 'Other Buildings, Works, Furniture and Fittings' for the construction of some 250 houses at Service establishments and in areas where rental accommodation is not readily obtainable, and in 'Acquisition of Sites and Buildings' for the acquisition of some 200 houses from private sources.

Outlays on 'Other Buildings, Works, Furniture and Fittings' are estimated to increase by about 50 per cent in 1980-81. The major part ($91.0 million) of the provision is to meet progress payments on projects committed in earlier years. These include provision for modernisation of facilities at Garden Island Dockyard (NSW), construction of naval patrol boat bases at Cairns (Queensland) and Darwin (NT), the Army schools complex at Bonegilla (Victoria), further work on development of Enoggera Army base (Queensland) and the Pearce Air Force base (WA), and further progress towards the completion of the redevelopment of facilities at Edinburgh (SA) for operation of long range maritime patrol aircraft. Expenditure on new defence works projects in 1980-81 is estimated at $17.7 million or 15.4 per cent of the provision; significant new commencements include provision of additional fuel storage capacity at Navy and Air Force bases, the first stage of the modernisation of Garden Island Dockyard (NSW), further stages in the development of Williamstown Naval Dockyard (Victoria), Army establishments at Randwick (NSW) and Holsworthy (NSW) and RAAF Operational Command Headquarters at Glenbrook (NSW), and the construction of the Australian Defence Force Academy in Canberra.

The estimated 13.7 per cent increase in 1980-81 expenditure on repairs and maintenance of facilities reflects increased costs and an additional provision to further reduce a backlog of essential repairs and maintenance tasks.

Among the major proposals for development of defence facilities over the period to 1984-85 are continued development of HMAS Stirling (WA) and other defence bases, further stages in the modernisation of Garden Island Dockyard (NSW), provision of facilities for the new tactical fighter force, development of Learmonth and Derby airfields (WA), and the redevelopment of the Armoured Centre at Puckapunyal (Victoria) for the Army. Outstanding commitments to be carried over to 1981-82 and later years are estimated to be 1258.6 million compared with $154.4 million carried into 1980-81.

Industrial Capacity

Expenditure under this heading primarily concerns the retention and continuing use, in Government aircraft and munitions factories and related private sector industries, of production capabilities and skills which are regarded as essential for the manufacture or support of defence materiel and equipment but which cannot be fully used in peace-time, the subsidisation of continuing production of Nomad aircraft (of which 109 aircraft of the approved production run of 145 aircraft had been completed at 30 June 1980), the procurement of plant and machinery to maintain or upgrade industry capabilities, and the construction, modernisation and repair of buildings and works.

This item also provides for the purchase or manufacture of items of essential defence materiel for reserve stock holding, the development of production techniques and new production items in Government factories and in industry, and special projects such as rationalisation of the defence aircraft industry at Fishermens Bend (Victoria) and Bankstown (NSW) and upgrading facilities to allow Australian participation in manufacture of parts for the Boeing 757 aircraft.

The provision of additional capacity and modernisation of existing defence production facilities in the Government Munitions and Aircraft Factories and in industry will require generally higher expenditure over the period to 1984-85.

Defence Science and Technology

Expenditure on defence science and technology has as its objective assisting the Services to keep abreast of advances in defence technology and developing weapons and weapon systems suited to Australia's defence needs. The estimated expenditure of $110.3 million in 1980-81 covers salaries, other administrative and operating expenses, machinery, plant, stores and works services of the defence science establishments and laboratories. Considerable effort is being devoted to activities such as the Jindalee over-the-horizon radar, underwater detection techniques, electronic warfare techniques, and modernisation of the Ikara antisubmarine guidance weapons system. A considerable increase is proposed in the number of research and development projects to be contracted to Australian industry and universities. The net increase of $11.5 million reflects effects of price and wage increases and increased activity- on a wide range of projects.

Defence Co-operation

Through defence co-operation the Government seeks to help friendly countries in the region to strengthen their own and therefore the region's defence capacity. Estimated expenditure of $38.7 million in 1980-81 includes an increase to $15.4 million in the provision for defence co-operation activities with Papua New Guinea in 1980-81, which provides for new equipment and increased training and study visits. At the same time the provision for manpower and support costs of Australian servicemen in Papua New Guinea has been reduced in line with the continuing localisation of the Papua New Guinea Defence Force. Current equipment projects include provision of Nomad aircraft, communications equipment and other miscellaneous equipments.

Provision is made for Indonesia to receive $11.9 million in assistance. This will be used for such purposes as survey and mapping work in Maluku Province (the Moluccas), provision of Nomad aircraft, maintenance of C130 aircraft, and training in support, maintenance and communication skills.

Continuing assistance is provided for Malaysia ($4.7 million) and Singapore ($1.0 million). Bilateral programs with these two countries place emphasis on training assistance and combined exercises rather than materiel assistance.

A large part of the allocation for 'Other' is devoted to the development of a co-operative relationship in defence matters with countries of the South West Pacific. Increased provision is also made for military assistance, primarily visits, training and occasional exercises to the Philippines and Thailand..

A gradual increase in expenditure on defence co-operation is planned to continue over the program period, and will mainly take the form of increasing the amount of specialised training of servicemen from other countries in Australia.

Storage and Transport Services

The item provides for general storage and shipping services for defence and for removals and storage of furniture for servicemen and civilians, and their families, on reposting or transfer. The increase of $1.0 million reflects price and wage increases, and an increase in the estimated number of removals.

General Administrative Expenditure

This category covers a range of items relating to service and general defence civilian functions, and includes rent, travel, office requisites, postage and telephones, fuel, light, power and water, freight, compensation payments and medical and dental services.

The proposed increase of $30.1 million to $271.0 million in 1980-81 reflects increases in costs and an increased level of activity, particularly in the areas of training and exercises, computer support and advertising.

Natural Disasters, Civil Defence and Other

Expenditure under this heading covers expenses of the Natural Disasters and Civil Defence Organisation ($4.5 million), including salaries and administrative expenses, reimbursement of the States for some salaries paid to State civil defence personnel, and Commonwealth assistance by way of equipment and stores to State and Territory Emergency Services. Other significant items are outlays on maintenance of war graves ($2.2 million) and variations in Trust Fund Balances (nil for 1980-81, but $5.0 million in 1979-80).

The closure in 1979-80 of the ANZUK Support Trust Account, which involved the distribution, after settlement of all financial transactions, of the balance of $6.1 million to the Commonwealth, UK and New Zealand Governments, is the main reason for the reduced provision under this heading.

Recoveries and Repayments

The principal items provided for under this heading are payments made by service personnel under the Defence Force Group Rental Scheme as rents for houses provided for their use ($38.7 million), charges made for meals and accommodation provided at Defence establishments ($24.9 million), returns from disposals, and recoverable services for research and development.

The reduction in revenue of $2.2 million reflects the net effect of a number of offsetting factors, the main ones being the closure of the ANZUK Support

Trust Account in 1979-80 involving the credit in that year of Australia's share of the outstanding balance ($5.3 million), and an increase in estimated disposals revenue, which mainly reflects the inability to complete the sale of obsolete CI 30 aircraft in 1979-80.

Allowance for Prospective Wage and Salary Increases

The amount required to meet prospective increases in wage and salary rates of civilian and service personnel flowing from the next National Wage Case and other wage adjustments including possible work value increases during 1980-81 will depend on actual increases in wages and salaries. An allowance of $110 million has been included in the Budget estimates; the actual additional provision to be made will be reflected in additional appropriations later in the year.

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