Defence 2014-15 Budget Phillip Prior Chief Finance Officer Defence 2014-15 Budget Summary of the Defence 2014-15 Budget • $32.7 billion in total for 2014-15. – $29.2 billion for Departmental. – $3.4 billion for Administered. • $30.7 billion in total for 2013-14. – $27.0 billion for Departmental. – $3.7 billion for Administered. Defence 2014-15 Budget Summary of the Defence 2014-15 Budget (cont’d) Defence Budget Over the 2014-15 Forward Estimates 2013-14 $bn Budget 2014-15 $bn Departmental Budget 27.0 29.2 30.3 30.3 32.9 122.7 Administered Budget 3.7 3.4 3.6 3.8 4.0 14.8 30.7 32.7 33.9 34.1 36.9 137.5 Total Defence Budget Forward Estimates 2015-16 2016-17 2017-18 $bn $bn $bn Total FEs $bn Defence 2014-15 Budget Summary of the Defence 2014-15 Budget (cont’d) Defence Budget as a % of GDP 2013-14 Budget 2014-15 Forward Estimates 2015-16 2016-17 2017-18 % of GDP (2014-15 Budget) 1.71 1.79 1.77 1.69 % of GDP (2013-14 Budget) 1.57 1.63 1.63 1.63 1.75 Capital Operating Year Employee 2023-24 2022-23 2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 $m Defence 2014-15 Budget Defence Departmental Spend by Category ($m) - as at PBS 2014-15 16,000 PBS 2014-15 14,000 12,000 10,000 8,000 6,000 4,000 2,000 Capital Operating Year Employee 2023-24 2022-23 2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 Percentage of Total Budget Defence 2014-15 Budget Defence Departmental Spend by Category (%) - as at PBS 2014-15 65% PBS 2014-15 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% Defence 2014-15 Budget Defence 2014-15 Budget Measures – Departmental & Administered 2013-14 $m 2014-15 $m 2015-16 $m 2016-17 $m 2017-18 Total FEs $m $m 25.0 190.7 -33.1 18.5 176.1 8.6 16.7 24.2 545.5 337.9 595.2 93.4 253.3 157.8 150.6 197.2 759.0 663.9 790.5 736.6 269.1 -1,912.2 -116.1 320.4 336.5 352.6 368.7 1,378.2 -156.9 -269.5 -426.4 195.7 99.2 951.8 Departmental: Operations Election Commitments Other Budget Measures Other Variations Variation to Defence Departmental Funding 39.5 88.9 75.8 -2,149.0 -1,140.1 Administered: Election Commitments Other Budget Measures Variation to Defence Administered Funding 320.4 336.5 Defence 2014-15 Budget Operations Middle East Area of Operations (MEAO) • • • Operation SLIPPER (Afghanistan). 2014-15 $m 2015-16 $m 2016-17 $m 56.0 -16.6 16.8 2017-18 Total FEs $m $m 0.0 56.2 Operation MANITOU (MEAO). 2014-15 $m 2015-16 $m 2016-17 $m 36.1 -9.4 1.7 2017-18 Total FEs $m $m 0.0 28.3 Operation ACCORDION (Gulf, Qatar, UAE) 2014-15 $m 2015-16 $m 2016-17 $m 36.0 -7.7 0.0 2017-18 Total FEs $m $m 0.0 28.3 Defence 2014-15 Budget Operations (cont’d) Operation RESOLUTE – Extension 2014-15 $m 2015-16 $m 2016-17 $m 59.7 0.6 0.0 2017-18 Total FEs $m $m 0.0 60.3 Operation SOUTHERN INDIAN OCEAN 2014-15 $m 2015-16 $m 2016-17 $m 3.0 0.0 0.0 2017-18 Total FEs $m $m 0.0 3.0 Defence 2014-15 Budget Operations (cont’d) ADF Support to the G20 Summit (Defence to absorb) 2014-15 $m 2015-16 $m 2016-17 $m 8.0 0.0 0.0 2017-18 Total FEs $m $m 0.0 8.0 Defence 2014-15 Budget Election Commitments Reinstatement of the ADF Gap Year Programme • Includes an additional 1,033 Average Funded Strength (mature state) for staff and participants. 2014-15 $m 2015-16 $m 2016-17 $m 18.3 37.5 57.5 2017-18 Total FEs $m $m 78.5 191.8 Defence 2014-15 Budget Election Commitments (cont’d) Efficiency Dividend • Efficiency dividend increase by 0.25% to 2.5% (11% of the Budget). 2014-15 $m 2015-16 $m 2016-17 $m -7.4 -16.5 -24.8 2017-18 Total FEs $m $m -27.0 -75.8 Defence 2014-15 Budget Other Budget Measures Summary of Budget Measures for Reinvestment 2013-14 2014-15 2015-16 2016-17 2017-18 Total FEs $m $m $m $m $m $m Savings and Efficiencies Sales of Property and Housing 45.5 173.3 214.6 251.8 557.0 1,196.7 37.9 45.2 13.5 14.1 110.6 200.0 800.0 1,000.0 700.0 700.0 465.3 2,071.1 3,007.3 AMCIP Reprogramming DCP Reprogramming Total Funding Available for Reinvestment 45.5 211.2 259.7 Total $m 3,053 Defence 2014-15 Budget Other Budget Measures (cont’d) Total Reinvestment (Government to finalise) AMCIP 2013-14 $m 2014-15 $m 2015-16 $m 500.0 300.0 200.0 210.1 274.0 214.5 14.1 712.7 300.0 360.0 58.0 718.0 15.6 20.1 20.0 20.5 ICT MCF 0.6 I&S Navy - Rizzo Portfolio - Capital/Other Total Reinvestment 2016-17 $m 510.7 809.6 Total $m 500.0 45.5 545.5 2017-18 Total FEs Beyond FEs $m $m $m 615.1 36.4 21.0 61.5 44.7 -42.0 -42.0 475.3 51.1 1,986.5 520.0 3,053 Defence 2014-15 Budget Other Budget Measures (cont’d) Savings and Efficiencies for Reinvestment 2014-15 - 500 APS, 300 Contractors 2014-15 $m 2015-16 $m 2016-17 $m 92.9 96.6 99.9 103.7 393.1 47.2 47.2 47.2 141.6 35.4 35.4 70.8 2015-16 - 400 APS 2016-17 - 300 APS 2017-18 Total FEs $m $m 6.0 6.0 6.0 6.0 24.0 Major Savings 41.1 38.9 37.0 337.7 454.8 Minor Savings 33.3 25.9 26.3 27.0 112.4 173.3 214.6 251.8 557.0 1,196.7 Consultants (10% reduction in budget) Total Savings Defence 2014-15 Budget Other Budget Measures (cont’d) New Military Superannuation Scheme • MSBS closed and a new superannuation scheme for new members from 1 July 2016. • Employer contributions will be 15.4% and 18% for periods of war-like service. • Death and disability will be the same 2014-15 $m 2015-16 $m 2016-17 $m 0.0 0.0 -87.6 2017-18 Total FEs $m $m -143.1 -230.7 Defence 2014-15 Budget Other Budget Measures (cont’d) US Force Posture Initiative • The cost will be met from within the existing Defence budget and are still under negotiation. Indicative Costs Major Capital Facilities Offsets 2014-15 $m 2015-16 $m 2016-17 $m 2017-18 Total FEs $m $m -14.2 -76.8 -218.4 -761.5 -1,070.9 14.2 76.8 218.4 761.5 1,070.9 Defence 2014-15 Budget Other Budget Variations Foreign Exchange • Foreign Exchange is provided to Defence on a no-win, no-loss basis. 2014-15 $m 2015-16 $m 2016-17 $m 223.9 125.7 117.4 2017-18 Total FEs $m $m 162.6 629.6 Defence 2014-15 Budget Election Commitments - Administered Fair indexation of Defence Superannuation • From 1 July 2014, DFRB and DFRDB improved indexation arrangements. 2014-15 $m 2015-16 $m 2016-17 $m 2017-18 Total FEs $m $m 320.4 336.5 352.6 368.7 1,378.2 Defence 2014-15 Budget Growing the Defence Budget to 2% of GDP Within a Decade • The Government remains committed to growing the Defence budget to 2% of GDP within a decade. Defence 2014-15 Budget Questions? Defence 2014-15 Budget Other Budget Measures (cont’d) Major Savings 2014-15 $m 2015-16 $m 2016-17 $m Army - Clothing Procurement 7.8 7.8 7.8 7.8 31.2 Army - B Vehicle Sustainment 15.0 15.0 15.0 15.0 60.0 300.0 300.0 DSRG - Single LEAP Phase 3 2017-18 Total FEs $m $m CFOG - Smart Sustainment 18.3 16.1 14.2 14.9 63.6 Total Major Savings 41.1 38.9 37.0 337.7 454.8 Defence 2014-15 Budget Other Budget Measures (cont’d) Minor Savings 2014-15 $m 2015-16 $m 2016-17 $m 2017-18 Total FEs $m $m VCDF - Non-progression of Duntroon MCU 1.5 6.8 1.1 9.4 VCDF - PPOC Project 0.5 0.5 0.5 0.6 2.1 Air Force - Reduction in Removals 2.3 2.3 2.4 2.4 9.3 Army - Military Employee Savings 11.0 Army - Exercise Program 0.1 DMO - ICT Support Activities 0.8 DSRG - Property Leases Navy - Minor Capital Equip Program 5.0 CIOG - Reduce ICT Project Delivery 10.0 CDG - Devt Programs and ICT services 0.4 DSTO - DSTO Savings DPG - Payroll-Personnel Admin Reform 0.1 0.2 2.3 2.1 2.2 7.4 2.3 8.2 9.8 20.3 5.0 5.0 5.0 20.0 10.0 0.4 0.4 0.4 1.4 0.3 0.4 0.4 1.0 1.7 DSRG - DHA Cost Reduction Total Minor Savings 11.0 33.3 1.7 6.0 6.2 6.3 18.5 25.9 26.3 27.0 112.4