Compare the pair: Behind budget 2024’s Defence figures

It is now time for the rubber to well and truly hit the road, with the government’s core election promises for the Defence portfolio, the Defence Strategic Review, the Independent Analysis into Navy’s Surface Combatant Fleet, the National Defence Strategy and supporting Integrated Investment Program all delivered in relatively quick succession over the past two years.

Yet funding this ambitious and, as described by the government in last night’s budget, “generational investment” in the nation’s defence capabilities over the next decade won’t come cheap, with the National Defence Strategy and “rebuilt” Integrated Investment Program promising the “allocation of $330 billion over the decade to 2033–34”.

Join Defence Industry Minister, the Honourable Pat Conroy, and a host of other policymakers and industry leaders as they unpack the newly announced federal budget. Make sure to book your tickets for the Defence Connect Budget Summit 2024 this Friday, 17 May, at Parliament House in Canberra.

Broken down further, this will see the nation’s Defence budget hit $100 billion by the end of the decade to 2033–34 and will come as a result of an additional $5.7 billion over the forward estimates and an additional $50.3 billion invested over the next decade.

Going further, this expanded spending will see Australia’s Defence spending rise to 2.3 per cent of the nation’s gross domestic product by 2033–34, but now with the release of the supporting Portfolio Budget Statements (PBS), what does Defence have in store and how do the figures compare to last year of the previous projections identified in the National Defence Strategy and Integrated Investment Program?

Please bear with me as the figures will be complex and often confusing (I now have less hair than I did when I started this piece).

Weren’t we supposed to be getting extra money?

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Beginning with the 2024–25 PBS, we see total Defence spending (including funding for the Australian Signals Directorate and Australian Submarine Agency) for the 2024–25 period at $55.68 billion; for the 2025–26 portion of the forward estimates, we see estimated spending of $58.35 billion; for the 2026–27 portion of the forward estimates, we see spending of $60.94 billion; and for the end of the forward estimates period 2027–28, we see spending to $67.39 billion.

For comparison figures out to the 2025–26 timeframe, we can revert back to the 2022–23 PBS, the last released under the former government, which reveals figures (including funding for the Australian Signals Directorate but excluding funding for the Australian Submarine Agency as it hadn’t been formally established at the time) of $53.45 billion and $55.52 billion for the 2025–26 period.

Now, where the figures released in the 2024–25 PBS become really interesting is in Table 4a on page 16, when compared to the forward estimate figures outlined by the government’s own defence resourcing figures outlined in the National Defence Strategy on page 67.

Table 4a of the 2024–25 PBS reveals forward estimates spending (including funding for Australian Signals Directorate and the Australian Submarine Agency) of $55.6 billion for the 2024–25 period, $58.35 billion for the 2025–26 period, $60.94 billion for the 2026–27 period and finally, $67.39 billion for 2027–28.

Yet, according to Table 1 on page 67 of the National Defence Strategy, the government quotes as part of the “Total Defence Funding Profile 2024–25 to 2033–34”, including funding for Australian Signals Directorate and the Australian Submarine Agency, as follows:

In 2024–25, spending will be $55.5 billion (a marginal increase of approximately $200 million); 2025–26 $58.4 billion (a shortfall of $50 million); 2026–27 $61.2 billion (a shortfall of $260–300 million); while the 2027–28 figure comes in at $67.9 billion (with a shortfall of approximately $500 million), respectively, (depending on how the figures are rounded).

What this means is, there is a total “shortfall” over the forward estimates to the 2027–28 timeframe of approximately $850 million (depending on rounding) or when taking into account the marginal increase of $200 million in the 2024–25 time period, a $650 million shortfall overall.

Full disclosure, this depends on rounding in the math, so I have tried to make it as clean and simple to understand as possible.

Yet at the same time, the government is reinforcing figures quoted on page 67 of the National Defence Strategy, which states, “The government is investing an additional $5.7 billion over the next four years to 2027–28 and $50.3 billion over the next decade to 2033–34, above the previous trajectory over that period.”

Meanwhile, the government’s budget media release last night stated that Defence is set to receive, “An additional $5.7 billion over the forward estimates – the largest increase to Defence spending over a forward estimates period in decades; and an additional $50.3 billion over the next decade.”

So if that is the case, where is it and why isn’t it showing up in the forwards at least until the 2028–29 timeframe in a lump sum, well after the next election, and why are we seeing in real terms at least a $650 million cut over the forwards when comparing the government’s own figures?

One also has to ask, with significant structural deficits now all but assured as part of the budget over the forward estimates (worth approximately $112 billion) “out to 2027–28 with total policy decisions since the mid-year review costing $9.5 billion in 2024–25 and $24 billion over the four years”, according to The Australian’s Paul Kelly how, can we be guaranteed that Defence will ever see the money being promised in the “never-never” when they’re already seemingly cutting approximately $820 million?

Final thoughts

Based on the figures, I am at a loss to see how the lofty ambitions articulated by the government in the Defence Strategic Review, the Independent Analysis into Navy’s Surface Combatant Fleet, the National Defence Strategy and supporting Integrated Investment Program will be delivered if they’re already off to a rocky start.

As I have said numerous times before, ultimately, Australia will face a myriad of interconnected challenges to the order upon which our security, prosperity and stability is built; how we confront these challenges and turn them into opportunities is fast becoming the greatest challenges of our age.

Being able to protect our economic, political, and strategic interests in the Indo-Pacific will become the most important responsibility of the Australian government and policymakers in the coming decades, whether they recognise it or not.

So what way Australia? Do we want to be competitive, engaged, consequential and thriving, or do we wish to remain “steady and sturdy” in our managed decline?