Portfolio Budget Statements 2015-16 Budget Related Paper …For the purposes of the 2015-16 Portfolio Budget Statements, the DMO is a separate listed entity until 30 June 2015 and,

Portfolio Budget Statements 2015-16 Budget Related Paper No. 1.4A

Defence Portfolio

Budget Initiatives and Explanations of Appropriations Specified by Outcomes

and Programmes by Entity

Defence Portfolio Budget Statements 2015-16

ii

iii

© Commonwealth of Australia 2015

ISBN 978-0-9941680-1-6

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.

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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 Financial Coordination R1-2-A087 Department of Defence PO Box 7900 Canberra BC ACT 2610 Telephone: (02) 6265 5380 Email: [email protected]

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

The Hon Kevin Andrews MP Minister for Defence

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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 Financial Coordination, Chief Finance Officer Group, Department of Defence on (02) 6265 5380.

A copy of this document can be located on the Australian Government Budget website at: http://www.budget.gov.au.

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Table of Contents

USER GUIDE ................................................................................................................................................. XI

PORTFOLIO OVERVIEW ............................................................................................................................. 1

DEFENCE PORTFOLIO OVERVIEW .......................................................................................................... 3

Ministers and their Portfolio Responsibilities ............................................................................................ 5

Changes affecting the Portfolio ....................................................................................................................... 5

Portfolio Structure and Outcomes .................................................................................................................. 8

DEPARTMENT OF DEFENCE .................................................................................................................... 16

Section 1: Defence Overview and Resources ............................................................................................. 16

1.1 Strategic Direction Statement .................................................................................................................. 16

1.2 Defence Resource Statement.................................................................................................................... 17

1.3 Budget Measures ...................................................................................................................................... 18

1.4 Capital Investment Programme .............................................................................................................. 20

1.5 People ........................................................................................................................................................ 22

Section 2: Defence Outcomes and Planned Performance ......................................................................... 28

2.1 Outcomes and Performance Information ............................................................................................... 28

Section 3: Defence Explanatory Tables and Budgeted Financial Statements ........................................ 91

3.1 Explanatory Tables ................................................................................................................................... 91

3.2 Resource Summary .................................................................................................................................. 96

3.3 Budgeted Financial Statements ............................................................................................................. 101

3.4 Consolidated Budgeted Financial Statements for the Department of Defence (including DMO) .... 117

APPENDICES .............................................................................................................................................. 125

Appendix A: Defence Cooperation Programme ........................................................................................ 126

Appendix B: The Unapproved Major Capital Investment Programme (also known as the Defence Capability Plan)............................................................................................................................................ 129

Appendix C: Capital Facilities Programme ................................................................................................ 130

Appendix D: Status of Major Projects Foreshadowed for Government and Parliamentary Standing Committee on Public Works Consideration (PWC) in 2015-16................................................................. 138


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DEFENCE MATERIEL ORGANISATION .............................................................................................. 145

Section 1: DMO Overview and Resources ............................................................................................... 145

1.1 Strategic Direction Statement ................................................................................................................ 145

1.2 DMO Resource Statement ...................................................................................................................... 148

Section 2: DMO Outcomes and Planned Performance ........................................................................... 151

2.1 Outcomes and Performance Information ............................................................................................. 151

Section 3: DMO Explanatory Tables and Budgeted Financial Statements ........................................... 206

3.1 Explanatory Tables ................................................................................................................................. 206


DEFENCE HOUSING AUSTRALIA ........................................................................................................ 223

Section 1: DHA Overview and Resources ................................................................................................ 223

1.1 Strategic Direction Statement ................................................................................................................ 223

1.2 DHA Resource Statement ...................................................................................................................... 225

1.3 Budget Measures .................................................................................................................................... 226

Section 2: DHA Outcomes and Planned Performance ............................................................................ 227

2.1 Outcome and Performance Information ............................................................................................... 227

Section 3: DHA Explanatory Tables and Budgeted Financial Statements............................................ 230

3.1 Explanatory Tables ................................................................................................................................. 230


GLOSSARY ................................................................................................................................................. 236

ACRONYMS ............................................................................................................................................... 242

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USER GUIDE TO THE

PORTFOLIO BUDGET STATEMENTS


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User Guide

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USER GUIDE

The purpose of the 2015-16 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) 2015-16 (or Appropriation (Parliamentary Departments) Bill (No. 1) 2015-16 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, non-general government sector

entities are not consolidated into the Commonwealth general government sector fiscal estimates and accordingly, these entities are not reported in the PB Statements.


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1

PORTFOLIO OVERVIEW


2

Portfolio Overview

3

DEFENCE PORTFOLIO OVERVIEW

The Defence Portfolio consists of a number 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;

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; and

the Defence Materiel Organisation (DMO): a listed entity within Defence, headed by a Chief Executive Officer. From 1 July 2015, the DMO will not be a separate listed entity as it will form part of the Department of Defence.

In practice, these bodies work together closely and are broadly regarded as one organisation known simply as Defence (or the Australian Defence Organisation).

For the purposes of the 2015-16 Portfolio Budget Statements, the DMO is a separate listed entity until 30 June 2015 and, accordingly, the DMO is presented as a separate entity for the 2014-15 year. From 2015-16 onwards, the tables included in the 2015-16 Portfolio Budget Statements have been dissected to clearly demonstrate that DMO forms part of 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.

The First Principles Review was announced by the Minister for Defence on 1 April 2015. The focus of the review was on ensuring Defence is fit for purpose, its business structures support the Australian Defence Force and it can deliver on future requirements, which will be outlined in the forthcoming 2015 Defence White Paper.

The Government agreed or agreed-in-principle to 75 of the 76 recommendations. A two year implementation timeframe has been agreed. In combination, the recommendations will change the structure, governance arrangements, accountabilities, processes and systems of Defence. The combined effect will be a more unified and integrated organisation that is more consistently linked to its strategy and clearly led by its centre. It will involve:

a stronger and more strategic centre able to provide clear direction, contestability of decision making, along with enhanced organisational control of resources and monitoring of organisational performance;

an end-to-end approach for capability development with capability managers having clear authority and accountability as sponsors for the delivery of capability outcomes to time and budget, supported by an integrated capability delivery function and subject to stronger direction setting and contestability from the centre;


4

enablers that are integrated and customer-centric with greater use of cross-functional process, particularly in regional locations; and

a planned and professional workforce with a strong performance management culture at its core.

Portfolio Overview

5

Ministers and their Portfolio Responsibilities

CHANGES AFFECTING THE PORTFOLIO

Following the Prime Minister’s announcement on changes to the ministry on 21 December 2014, on 23 December 2014 the Hon Kevin Andrews MP was sworn in as the Minister for Defence replacing Senator the Hon David Johnston.

The Ministers and their portfolio responsibilities are as follows:

The Hon Kevin Andrews MP – Minister for Defence

Oversight of all aspects of the Defence portfolio and lead on all Cabinet and National Security Committee submissions, with specific responsibility for:

Strategic policy

Operations

Intelligence and security

International policy

Force structure

Portfolio management, finances and reform

Defence estate policy and major projects

The military justice system

Defence export controls

Defence Housing Australia (as joint shareholder Minister)

Australian Strategic Policy Institute

Capability responsibilities:

The Defence Capability Plan

Defence materiel acquisition – major and minor – and sustainment

Industry capacity, structure, policy and engagement.


6

The Hon Stuart Robert MP – Assistant Minister for Defence

Defence support, specifically:

Corporate services

Non-materiel procurement

Corporate communications and information management

Ministerial support

Information and communications technology, specifically:

Corporate systems

ICT shared services, including hardware and applications support

The Single Information Environment

ICT capital projects for which the Chief Information Officer is the capability manager

ICT reform and standardisation

Personnel policy and implementation, specifically:

Personnel policy, including workforce planning

Recruitment and retention

Reserves

Pay and superannuation

Equity and diversity

Defence families and community organisations

Housing policy

Defence Housing Australia contractual matters

Health (including Work Health and Safety)

Science and technology policy, specifically:

Strategic direction

External engagement

Support to operations

Commonwealth corporate entities, for the purposes of the Public Governance, Performance and Accountability Act 2013, other than those that are the responsibility of the Minister for Defence.

Portfolio Overview

7

The Hon Darren Chester MP – Parliamentary Secretary to the Minister for Defence

Assist the Minister for Defence on:

Defence estate policy and major projects

Garrison support

Skills policy

Equipment disposal

Military justice

Medals and awards

Parliamentary Exchange Programme

Navy, Army and Air Force Cadets

Industry engagement.


8

PORTFOLIO STRUCTURE AND OUTCOMES

Figure 1: Defence Portfolio Structure and Outcomes

Department of Defence

Secretary: Dennis Richardson AO

Chief of the Defence Force: Air Chief Marshal Mark Binskin AC

Outcome 1: The protection and advancement of Australia’s national interests through the provision of military

capabilities and the promotion of security and stability.

Outcome 2: The advancement of Australia’s strategic interests through the conduct of military operations and

other tasks directed by Government.

Outcome 3: Support for the Australian community and civilian authorities as requested by Government.

Defence Materiel Organisation (Listed Entity within the Department)

A/Chief Executive Officer: Mr Harry Dunstall

Outcome 1: Contributing to the preparedness of the Australian Defence Organisation through acquisition

and through-life support of military equipment and supplies.

Defence Housing Australia

Managing Director: Mr Peter Howman

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.

Minister for Defence

The Hon Kevin Andrews MP

Assistant Minister for Defence

The Hon Stuart Robert MP

Parliamentary Secretary to the Minister for Defence

The Hon Darren Chester MP

Chief of the Defence Force

Air Chief Marshal Mark Binskin AC

Secretary

Dennis Richardson AO

Australian Defence Force

Navy Army

Department of Defence including

Defence Materiel Organisation

Air Force

Navy

Reserves

Army

Reserves

Air Force

Reserves

Navy

Cadets

Army

Cadets

Air Force

Cadets

Disciplinary appointments

(DFDA)


Various small trusts and

companies

Portfolio Overview

9

Figure 2: Defence Organisational Chart

Minister for Defence The Hon Kevin Andrews MP

Assistant Minister for Defence The Hon Stuart Robert MP

Parliamentary Secretary to the Minister for Defence The Hon Darren Chester MP

Secretary Mr Dennis Richardson AO

Chief of the Defence Force Air Chief Marshal Mark Binskin AC

****

Enabling functions Capability and output managers

Chief Operating Officer

Mr Brendan Sargeant

Chief Information Officer Dr Peter Lawrence

Deputy Secretary

Defence People Ms Rebecca Skinner

Deputy Secretary

Defence Support and Reform Mr Steve Grzeskowiak

Chief Finance Officer

Mr Phillip Prior

Deputy Secretary Strategy Mr Peter Baxter

Chief Defence Scientist

Dr Alex Zelinsky

Chief Capability Development Lieutenant General John Caligari ***

A/Chief Executive Officer

Defence Materiel Organisation Mr Harry Dunstall

General Manager

Land and Maritime Mr Colin Thorne

General Manager

Submarines Mr David Gould

A/General Manager

Commercial Mr Steve Wearn

General Manager

Joint Systems and Air Ms Shireane McKinnie

Stars (*) refer to ADF Star Rank

Vice Chief of the Defence Force

Vice Admiral Raymond Griggs ***

Chief of Navy

Vice Admiral Timothy Barrett ***

Chief of Army

Lieutenant General David Morrison ***

Chief of Air Force

Air Marshal Geoff Brown ***

Chief of Joint Operations

Vice Admiral David Johnston ***

Deputy Secretary

Intelligence and Security Mr Stephen Meekin


10

Senior Executive Changes

The following changes have taken place since the Portfolio Additional Estimates Statements 2014-15

(PAES):

Dr Warren Harch, the previous Deputy Chief Defence Scientist (Partnerships & Outreach), retired from the Australian Public Service on 20 March 2015.

The previous Chief Executive Officer – Defence Materiel Organisation, Mr Warren King, ceased duties in his position on 27 February 2015. Mr King will undertake duties elsewhere in the Department for a period of time before retiring from the Australian Public Service.

Mr Harry Dunstall will act in the position of Chief Executive Officer – Defence Materiel Organisation from 2 March 2015.

Effective as at 11 March 2015, Mr Steve Wearn is Acting General Manager Commercial.

Organisational Structure

The following changes have taken place since the PAES 2014-15:

On 31 March 2015, the DMO Chief Finance Officer and Finance Division transferred to Defence under the CFO Group. Finance management, advice and support are now provided by CFO Defence through a shared service arrangement to the DMO.

CIOG is part way through an Organisational Review Project to align organisational elements, reduce functional duplication and design a flexible, scalable organisation to enhance accountability and deliver more efficient and effective service delivery and management.

Programme Structure

The following changes have taken place since the PAES 2014-15 in order to better reflect the roles, organisation structure and accountabilities within Defence:

From 2015-16, Programme 1.1 Office of the Secretary and CDF will cease with its functions being transferred into Programmes 1.1 Strategy and 1.8 Chief Operating Officer – Defence Executive Support.

The formation of Programme 1.8 Chief Operating Officer – Defence Executive Support from 2015-16 onwards includes the transfer of relevant functions from Programme 1.1 Office of the Secretary and CDF and Programme 1.9 Chief Operating Officer – Defence Support and Reform.

Portfolio Overview

11

Defence Portfolio Bodies

None of the portfolio bodies described below receive direct appropriations from the Commonwealth.

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, AM, CSC

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 D.E. Tindal AM (Retd.)

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 Ian Murray

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.


12

Royal Australian Navy Relief Trust Fund

Chairman: Commodore 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 Peter Daniel, AM, CSC

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: Mr Stephen Loosley

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 Andrew Elfverson

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.

Portfolio Overview

13

Portfolio Resource Statement

Table 1: Portfolio Resources[1]

Departmental

Bill No. 1

$m

Appropriation

Bill No. 2

$m

Return (to) /

from the OPA

$m

Special

Appropriation

$m

Total

Appropriation

$m

Non-

Appropriation

Receipts

$m

Other Non-

Appropriated

Items

$m

Total

Resources

Available

$m


Administered appropriations - - -1,477.8 5,230.4 3,752.6 1,477.8 - 5,230.4

Departmental appropriations[2]

28,976.2 2,875.2 11.8 - 31,863.3 832.1 - 32,695.4

Total Department of Defence 28,976.2 2,875.2 -1,466.0 5,230.4 35,615.8 2,309.9 - 37,925.7

Departmental

Bill No. 1

$m

Appropriation

Bill No. 2

$m

Return (to) /

from the OPA

$m

Special

Appropriation

$m

Total

Appropriation

$m

Non-

Appropriation

Receipts

$m

Other Non-

Appropriated

Items

$m

Total

Resources

Available

$m


Administered appropriations - - - - - - - -

Departmental appropriations - - - - - 1,146.4 - 1,146.4

Total Defence Housing Australia - - - - - 1,146.4 - 1,146.4

Notes

1. Figures shown include inter-agency transactions.

2. In accordance with the First Principles Review, the Defence Materiel Organisation has transferred to the Department of Defence from 2015-16, and as a result, $805m is included in

Defence's Departmental appropriations.


14


Agency 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 Programme

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

3.4 Consolidated Budgeted Financial Statements for the Department of Defence (including DMO)

15


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DEPARTMENT OF DEFENCE

Section 1: Defence Overview and Resources

1.1 STRATEGIC DIRECTION STATEMENT

Defence’s primary focus continues to be to protect and advance Australia's strategic interests through the provision of appropriately prepared and equipped armed forces. To achieve this, Defence prepares for and conducts military operations and other tasks as directed by the Government.

Defence will continue to contribute to the international coalition to disrupt, degrade and defeat Daesh in Iraq. Defence’s contribution currently consists of an Air Task Group, a Special Operations Task Group, and a Building Partner Capacity force to provide training support to Iraq’s security forces.

Over 2015-16, Defence will also continue to support security, governance and development in Afghanistan through the NATO-led Resolute Support Mission.

Enhancing defence engagement with allies and security partners in the Indo-Pacific region will remain a priority.

A new Defence White Paper will be released in the second half of 2015. The White Paper will set out the Government’s strategic direction for Defence, and will be accompanied by a ten-year Defence Capability Plan.

During 2015-16, Defence will build capacity to protect Australia’s interests through the introduction of new capabilities, including ten C-27J Spartan battlefield airlifters to be delivered over the next two years, and the continuing delivery of 24 MH-60R Seahawk Romeo helicopters. Army will continue the implementation of Plan BEERSHEEBA, to best posture Army to respond to the full spectrum of possible operational commitments.


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1.2 DEFENCE RESOURCE STATEMENT

Table 2: Total Defence Resourcing

Seri

al

No

. 2014-15

Estimated

Actual

$'000

2015-16

Previous

Estimate

$'000

2015-16

Budget

Estimate[1]

$'000

Variation

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Defence resourcing

1 26,349,322 Appropriation for departmental outcomes 27,016,201 28,976,236 1,960,035 28,582,387 30,034,828 31,106,731

2 2,758,491 Equity injection appropriation 2,440,165 2,875,209 435,044 2,516,263 3,568,920 4,889,446

3 - Prior year appropriation - - - - - -

4 29,107,813 Current year's appropriation (1 + 2 + 3) 29,456,366 31,851,445 2,395,079 31,098,650 33,603,748 35,996,177

5 -71,357 Draw down of appropriations carried forward - - - - - -

6 - Other appropriation receivable movements - - - - - -

7 -853 Return (to)/from the Official Public Account[2]

-875 11,817 12,692 -77,346 -46,070 -8,066

8 -72,210 Funding from / to the OPA (5 + 6 +7) -875 11,817 12,692 -77,346 -46,070 -8,066

9 29,035,603 Funding from Government (4 + 8) 29,455,491 31,863,262 2,407,771 31,021,304 33,557,678 35,988,111

10 128,153 Capital receipts 229,908 226,974 -2,934 44,978 57,628 42,045

11 933,314 Own source revenue (s74 receipts)[3]

860,058 605,115 -254,943 556,207 580,640 612,615

12 - Prior year receipts - - - - - -

13 1,061,467 Funding from other sources (10 + 11 + 12) 1,089,966 832,089 -257,877 601,185 638,268 654,660

14 30,097,070 Total Defence funding (9 + 13) 30,545,457 32,695,351 2,149,894 31,622,489 34,195,946 36,642,771

Administered

15 6,002,415 Administered special appropriations 5,120,549 5,230,392 109,843 5,371,044 5,517,572 5,679,713

16 1,452,206 Own source revenue 1,459,075 1,477,817 18,742 1,359,133 1,292,326 1,234,268

17 -1,452,206 Returns to the Official Public Account -1,459,075 -1,477,817 -18,742 -1,359,133 -1,292,326 -1,234,268

18 6,002,415 Total Administered funding (15 + 16 + 17) 5,120,549 5,230,392 109,843 5,371,044 5,517,572 5,679,713

19 36,099,485 Total Defence resourcing (14 + 18) 35,666,006 37,925,743 2,259,737 36,993,533 39,713,518 42,322,484

Appropriation carried forward

20 414,742

Appropriation receivable including previous year's

outputs - 171,222 171,222 158,530 199,620 243,408

21 35,490 Cash in bank 12,732 142,732 130,000 142,732 142,732 142,732

22 450,232 Total appropriations carried forward (20 + 21)[4]

12,732 313,954 301,222 301,262 342,352 386,140

Notes

2. Represents net transfers to and from the Official Public Account.

1. The 2015-16 Budget Estimate varies to the 2015-16 Previous Estimate by $2,395.1m as a result of:

- Budget Measures and Adjustments for 2015-16 of $1,483.4m.

- In accordance with the First Principles Review, the Defence Materiel Organisation has transferred to the Department of Defence from 2015-16,

and as a result, $805.0m is included in Defence's Departmental appropriations at Serial No 1.

- Budget adjustments of $106.7m regarding DMO direct appropriation transfers relating to reduced operating costs between

2014-15 Additional Estimates and 2015-16 Budget.

4. The 2015-16 Budget Estimate varies to the 2015-16 Previous Estimate by $301.2m as a result of the DMO Special Account being brought to account in

Defence. This Special Account will be reviewed taking into account the sunsetting provisions of the Legislative Instruments Act 2003 .

3. All figures are net of GST.


18

1.3 BUDGET MEASURES

2015-16 Budget Measures and Other Budget Adjustments

Table 3: Defence 2015-16 Budget Measures

Programme

2014-15

Estimated

Actual

$m

2015-16

Budget

Estimate

$m

2016-17

Forward

Estimate

$m

2017-18

Forward

Estimate

$m

2018-19

Forward

Estimate

$m

Total

Forward

Estimates

$m

Departmental Budget Measures

Expenditure Measures

Operation Okra - continued support 2.2 - 359.8 11.8 10.0 - 381.6

Operation Accordion - extension 2.2 - 189.3 1.4 0.6 - 191.3

Operation Highroad 2.2 - 115.1 11.3 7.9 - 134.4

Operation Manitou 2.2 - 40.3 0.5 0.5 - 41.3

Operation Resolute - extension 3.1 - 48.1 5.7 - - 53.8

Sir John Monash Centre - Villers-Bretonneux, France[1]

1.9 - - - - - -

Digital Transformation Agenda - Portfolio Contributions 1.10 - -1.4 -1.4 -1.4 -1.4 -5.8

Smaller Government - Defence Materiel Organisation - reintegration into the

Department of Defence various - - - - - -

Total Departmental Budget Measures - 751.2 29.2 17.6 -1.4 796.6

Other Departmental Budget Adjustments

Foreign exchange[2]

various 320.3 732.2 681.0 688.7 696.6 2,798.5

Total Other Departmental Budget Adjustments 320.3 732.2 681.0 688.7 696.6 2,798.5

Variation to Defence Departmental Funding 320.3 1,483.4 710.3 706.3 695.2 3,595.2

Notes

1. The cost of this measure will be met from within existing resourcing of the Department of Defence.

2. This other Departmental budget adjustment has also been included in the 2014-15 Portfolio Supplementary Additional Estimates.


19

Operations Summary

Table 4: Net Additional Cost of Operations from 1999-00 to 2018-19

1999-00 to

2013-14

Actual Result

$m

2014-15

Estimated

Actual

$m

2015-16

Budget

Estimate

$m

2016-17

Forward

Estimate

$m

2017-18

Forward

Estimate

$m

2018-19

Forward

Estimate

$m

Operation Astute 4,311.9 - - - - -

Operation Bel Isi 47.7 - - - - -

Operation Slipper 6,924.8 267.5 121.9 103.9 - -

Operation Manitou - 52.0 43.2 2.2 0.5 -

Operation Accordion - 120.2 191.0 1.4 0.6 -

Operation Highroad - 82.4 115.1 11.3 7.9 -

Operation Resolute 175.0 59.7 48.7 5.7 - -

Operation Catalyst 2,364.5 - - - - -

Operation Okra - 260.8 390.8 17.5 10.0 -

Operation Anode 355.2 0.1 - - - -

Operation Sumatra Assist 44.5 - - - - -

Operation Acolyte 10.5 - - - - -

Operation Deluge 6.7 - - - - -

Operation Pakistan Assist 9.8 - - - - -

Operation Outreach 14.6 - - - - -

Operation Kruger 45.3 - - - - -

Operation Southern Indian Ocean 10.8 3.0 - - - -

Enhanced Force Protection in Afghanistan 540.0 16.2 - - - -

Defence Support to 2014 G20 Summit 0.1 8.0 - - - -

Total Net Additional Costs 14,861.5 869.9 910.7 142.1 19.1 -

Sources of Funding for Operations:

Government Supplementation 13,230.7 845.5 910.7 142.1 19.1 -

Department of Foreign Affairs and Trade 9.1 - - - - -

Department of Defence (Absorbed) 1,621.7 24.3 - - - -

Total Cost 14,861.5 869.9 910.7 142.1 19.1 -


20

1.4 CAPITAL INVESTMENT PROGRAMME

Table 5: Capital Investment Programme

Seri

al

No

. 2015-16

Budget

Estimate

$m

2016-17

Forward

Estimate

$m

2017-18

Forward

Estimate

$m

2018-19

Forward

Estimate

$m

Total

$m

1 Defence Capability Plan (DCP) 885.5 1,896.8 3,078.3 6,376.3 12,237.0

2 Approved Major Capital Investment Programme 6,157.9 4,586.4 4,894.2 4,558.9 20,197.4

3 Capital Facilities Programme 1,278.5 1,576.7 2,151.9 2,196.6 7,203.8

4 ICT Investment Plan[1]

415.3 250.1 20.1 9.2 694.7

5 Minors Programme 164.4 170.1 160.4 174.7 669.6

6 Other Investment[2]

893.9 1,102.8 1,166.0 1,312.5 4,475.1

7 Total Capital Investment Programme 9,795.4 9,582.8 11,471.0 14,628.3 45,477.5

Capital component 8,514.4 8,359.6 10,070.6 12,886.3 39,830.9

Operating component 1,281.0 1,223.2 1,400.4 1,742.0 5,646.6

1

2 Includes purchases of plant and equipment, and the capital component of repairable items within the capability sustainment programme.

Notes

Only includes activities delivered by the Chief Information Officer Group.


21

Table 6: Capability Sustainment Programme

Seri

al

No

. 2015-16

Budget

Estimate

$m

2016-17

Forward

Estimate

$m

2017-18

Forward

Estimate

$m

2018-19

Forward

Estimate

$m

Total

$m

Current Sustainment

1 Navy Sustainment 2,066.3 2,007.9 2,028.6 2,120.6 8,223.4

2 Army Sustainment 1,584.4 1,528.7 1,485.9 1,522.4 6,121.4

3 Air Force Sustainment 2,255.0 1,969.4 2,063.4 2,041.1 8,328.9

4 Chief Information Officer Sustainment 694.9 682.5 705.8 708.3 2,791.5

5 Vice Chief of the Defence Force Sustainment 57.6 49.3 52.2 52.9 212.1

6 Strategy Sustainment 21.4 18.0 17.3 18.0 74.7

7 Joint Operations Command Sustainment 6.8 6.9 7.2 7.4 28.4

8 Defence Support and Reform Group Sustainment 655.4 473.4 903.9 677.7 2,710.4

Future Sustainment

9 Future Sustainment Costs associated with AMCIP, ICT and Facilities 266.4 862.1 1,127.3 1,658.2 3,914.1

10 Total Sustainment 7,608.2 7,598.2 8,391.8 8,806.6 32,404.8

Table 7: Retained Net Capital Receipts

Seri

al

No

. 2015-16

Budget

Estimate

$m

2016-17

Forward

Estimate

$m

2017-18

Forward

Estimate

$m

2018-19

Forward

Estimate

$m

Total

$m

Property Sales

Proceeds from the sale of land and buildings 183.3 0.3 12.0 - 195.6

Proceeds from the sale of housing 13.1 13.8 14.5 15.2 56.6

Total proceeds from the sale of property 196.4 14.1 26.5 15.2 252.2

Costs from the sale of property[1]

-26.4 -89.0 -91.3 -0.4 -207.1

1 Net property proceeds retained by Defence 169.9 -74.8 -64.8 14.8 45.1

2Proceeds from sale of specialist military equipment 7.5 7.5 7.5 7.5 30.2

3Proceeds from sale of infrastructure, plant and equipment 23.1 23.3 23.6 19.3 89.3

4 Retained Net Capital Receipts (1+2+3) 200.5 -44.0 -33.7 41.7 164.5

Note

1. Costs from the sale of property include remediation works.


22

1.5 PEOPLE

Workforce Overview

ADF Workforce

The Australian Defence Force (ADF) is forecast to achieve an Average Funded Strength of 57,982 in 2015-16. The ADF has been below its approved allocations since 2011-12. Army's separation rates have decreased since late 2014-15, whereas both Navy and Army have increased their recruitment targets for 2013-14 onwards. As a result, the permanent force strength has increased since January 2014, with it gradually increasing towards the workforce strength approved by Government.

In previous Portfolio Budget Statements, the number of ADF Reserve members has been represented by a simple headcount. While this provided a broad indication of the number of Reservists, it did not adequately describe their contribution to Defence, as some Reservists provide less than one day service per year, while others can provide 20 days or more. To remedy this, Table 10 now shows both the total number of days service provided for each Service, and an estimated headcount of members undertaking paid service.

Civilian Workforce

In line with Government commitments, Defence continues to reduce its Australian Public Service, largely through natural attrition and disciplined recruiting practices.

In 2015-16 Defence’s APS workforce will reduce from an estimated 18,950 full time equivalents to 17,900 by the end of 2015-16—a reduction of around 1,050—as illustrated in Table 8 below. The estimated 18,950 full time equivalents at 1 July 2015 represents a reduction of over 1,000 since 1 July 2014. The savings to date are the result of ongoing reform to Defence’s business practices, which will continue through the implementation of Creating One Defence.

The report of the 2015 First Principles Review, Creating One Defence, provides direction in reshaping

Defence’s structures, systems and processes that will enable it to evolve into a single, integrated system. This will inform the size and shape of Defence’s APS workforce in coming years, and work is progressing to develop a workforce plan outlining the distribution, skill requirements and other details of the workforce. While this workforce plan is refined, the tables below show the APS workforce at an indicative 17,800 from 2016-17. Additionally, the forthcoming Defence White Paper and Force Structure Review will influence the size and shape of Defence’s workforce, as each of these Reviews may change the shape of the workforce allocation over the coming years for a range of capabilities.

Previous statutory reporting has reflected the DMO’s status as a prescribed agency by providing a separate listing for its workforce. The implementation of Creating One Defence will see the DMO fully integrated into the Department of Defence, with different DMO elements residing within various parts of the new Defence structure. As such, the DMO workforce will no longer be shown separately.


23

Table 8: End of Financial Year Full Time Equivalent (FTE) Estimates for 2014-15 and the Forward Estimates

2014-15 Estimated

Actual EOFY FTE

2015-16 EOFY Full

Time Equivalent

Forecast Outcome

2016-17 Forward estimate



Total APS 18,950 17,900 17,800 17,800 17,800

Workforce Summary

The total full-time Defence workforce average is forecast to be 76,846 in 2015-16, comprising:

Permanent Forces (75 per cent) of:

14,238 Navy Personnel

29,528 Army Personnel

14,216 Air Force Personnel

18,380 APS staff (24 per cent)

484 Contractors (less than 1 per cent)

The forecast for the total Active and High Readiness Reserves in 2015-16 is 851,000 days of service performed by an estimated 18,860 members.

Over the forward estimates period, the total workforce (excluding Reserves) will increase by 830 from the forecast of 76,846 in 2015-16 to 77,676 in 2018-19.

Defence’s contractor workforce shows an increase of 132 in average terms from 2014-15 to 2015-16. This is due to low contractor engagement in 2014-15 compared to forecasts, and it is likely that actual contractor numbers in 2015-16 will also fall short of approved allocations.

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.

The total planned strength of the Defence workforce is shown in Tables 9 and 10, while a breakdown by Service and rank/level is at Table 11.


24

Defence People

In 2015-16, there will be significant focus on implementation of the Defence White Paper, and other major

reviews. This includes strategic and organisational reform required through the First Principles Review, Human Resources (HR) service delivery reform, laying the groundwork for transition to the future force and implementation of a new ADF superannuation scheme for those joining the ADF from 1 July 2016 (and for serving and returning members who choose to join).

Defence will implement workforce reform in accordance with the First Principles Review and develop an updated Strategic Workforce Plan. This will include developing workforce plans for the enabling workforce and APS job families, with a focus on skills and competencies, performance and talent management, work value and span of control for managers. Defence will continue the implementation of an ADF Total Workforce Model to enhance workplace flexibility, increase the retention of skilled people and improve the ability to meet future people capability requirements.

Efforts will continue to create a sustainable, affordable and diverse workforce, which remains a key component of Defence’s cultural reform programme. In particular, measures are being taken to increase the representation and employment opportunities for people from culturally and linguistically diverse backgrounds, women, and Indigenous Australians. Specific actions are also under way to support the employment of people with disability. These reforms reflect continued implementation of Defence’s Diversity and Inclusion Strategy.

Defence will also generate the required people capability that underpins the White Paper strategy through a more effective and efficient HR framework, including through streamlining HR policies, and governance and IT reform for payroll and HR management systems.

The health, safety and wellbeing of our people is critical for sustaining capability and will be a continuing priority for Defence.


25

Table 9: Planned Workforce Allocation for the 2015-16 Budget and Forward Estimates—Average Fulltime

[1]

2014-15

Estimated Actual

2015-16 Budget

estimate

2016-17 Forward

estimate[2]

2017-18 Forward

estimate[2]

2018-19 Forward

estimate[2]

ADF Permanent Force[3]

Navy 14,061 14,238 14,368 14,416 14,350

Army 29,433 29,528 30,774 31,018 31,018

Air Force 14,094 14,216 14,236 14,125 14,014

1 Total Permanent Force 57,588 57,982 59,378 59,559 59,382

Civilian Employees

APS 19,360 18,380 17,850 17,800 17,800

Contractors[4]

352 484 490 488 494

2 Total Civilian Employees 19,712 18,864 18,340 18,288 18,294

Total Workforce Strength (1 + 2)

77,300 76,846 77,718 77,847 77,676

Notes

1. All numbers for the full-time workforce elements represent average full-time equivalents.

2. Forward Estimates for the full-time workforce elements represent the Government approved strength for each year, noting that the forward estimates for the civilian workforce will be subject to refinement as implementation plans for Creating One Defence are further developed.

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

4. Contractors are individuals under contract performing agency roles. Contractors are not APS employees.


26

Table 10: Planned Workforce Allocation for the 2015-16 Budget and Forward Estimates—Reserve

[1][2]

2014-15 Estimated

actual: days

served (members

paid)

2015-16 Budget

estimate: days

served (members

paid)

2016-17 Forward

estimate: days

served

2017-18 Forward

estimate: days

served

2018-19 Forward

estimate: days

served

Active Reserve Force

Navy 80,000 (1,760)

80,000 (1,760)

80,000 80,000 80,000

Army[3] 595,000

(14,500) 595,000 (14,000)

595,000 595,000 595,000

Air Force 160,000 (2,765)

162,000 (2,830)

159,000 156,000 153,000

1 Sub-total Active Reserve Force 835,000 (19,025)

837,000 (18,590)

834,000 831,000 828,000

High Readiness Reserve

Air Force 12,000

(235) 14,000

(270) 17,000 20,000 23,000

2 Sub-total High Readiness Reserve Force

12,000 (235)

14,000 (270)

17,000 20,000 23,000

Total Reserves (1 + 2) 847,000 (19,260)

851,000 (18,860)

851,000 851,000 851,000

Notes

1. As the number of days or hours worked by Reserve members can vary greatly, figures in Table 10 for the 2014-15 Estimated Actual and 2015-16 Budget Estimate show the total number of days service rendered, with a headcount of

members rendering paid service in brackets. For the Forward Estimates period, only the estimated number of days served is shown.

2. Table 10 includes the High Readiness Reserve Force, Active Reserve Force and Specialist Reserve Force. Reservists on full-time service in the Permanent Forces are not included in Table 10, only in Table 9.

3. Army has one Reservist serving on a High Readiness Reserve contract.


27

Table 11: Breakdown of Average Personnel Numbers by Service and Rank[1]

2014-15 Estimated

Actual 2015-16 Budget

Estimate

Navy

One Star and above 57 56

Senior Officers[2]

612 620

Officers 2,816 2,841

Other Ranks 10,576 10,721

Total Navy 14,061 14,238

Army


Senior Officers[2]

831 834



Total Army 29,433 29,528

Air Force


Senior Officers[2]

681 660



Total Air Force 14,094 14,216

APS

Senior Executives[3]

160 155

Senior Officers[2]

6,243 6,012

Other APS Staff 12,957 12,213

Total APS 19,360 18,380

Contractors

Contractors[4]

352 484

Total Workforce 77,300 76,846

Notes

1. Permanent Forces and APS numbers are forecasts of the average strength for 2014-15.

2. Senior Officers are of Colonel or Lieutenant Colonel rank equivalent and APS Executive Level 1 and 2.

3. The 2015-16 figures for Senior Executive Service include the Secretary, 14 Chiefs of Division and 2 Medical Officers Grade 6.

4. Contractors are individuals under contract performing agency roles. Contractors are not APS employees.


28

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 programmes are the primary vehicle by which government entities achieve the intended results of their outcome statements. Entities are required to identify the programmes which contribute to government outcomes over the Budget and forward years.

Each outcome is described below, together with its related programmes, specifying the performance indicators and targets used to assess and monitor the performance of the Department of Defence in achieving government outcomes.

For the purposes of the 2015-16 Portfolio Budget Statements, the DMO is a separate listed entity until 30 June 2015, and accordingly, the DMO is presented as a separate entity for the 2014-15 year. From 2015-16 onwards, the tables included in the 2015-16 Portfolio Budget Statements have been dissected to clearly demonstrate that DMO forms part of Defence.

Figure 3: Structure of Defence’s Outcomes


29

Outcome 1: The protection and advancement of Australia’s national interests through the provision of military capabilities and the promotion of security and stability

Outcome 1 Strategy

Outcome 1 addresses the following strategic objectives:

maintaining and building a defence capability that underpins Australia’s security and prosperity and provides options for a credible response wherever Australia's security interests are engaged; and

strengthening Australia’s defence relationships with our allies and partners.

Defence strategy guides the Department in developing and maintaining the capacity to deter and defeat attacks on Australia, and defend our interests.

Australia’s security is ultimately enhanced by the quality of our international relationships with long-term allies and partners in the region, and with partners globally to protect Australia’s interests. This is achieved by a continuing focus on defence international engagement, to build bilateral and multilateral relationships with regional defence and security forces, and develop habits of cooperation with Australia and each other.

A critical challenge under Outcome 1 lies in balancing support for current operations, and positioning Defence for the future, with the strategy and capability to manage a complex strategic environment.

The primary focus of Outcome 1 is on maintaining the capacity to support current commitments and provide strategic response options to the Government to meet the range of potential future security contingencies. It also includes working collaboratively with our neighbours and the broader international defence community, and contributing to coalition operations in support of Australia's national interests. As well as the provision of military capabilities, this outcome encompasses all of the policy, command and support functions undertaken by the organisation.

Defence's administered appropriations relating to superannuation, housing support services for current and retired Defence personnel and Other Administered are covered by Outcome 1. Apart from supporting current operations, which are described in detail under Outcomes 2 and 3, the priorities that will be progressed under Outcome 1 in 2015-16 are:

delivering on the Government’s commitment to release a 2015 Defence White Paper;

implementing the recommendations of the First Principles Review of Defence; and

continuing the commitment to the recruitment and retention of ADF personnel.

The following changes have taken place since the PAES 2014-15 in order to better reflect the roles, organisation structure and accountabilities within Defence:

From 2015-16, Programme 1.1 Office of the Secretary and CDF will cease with its functions being transferred into Programmes 1.1 Strategy and 1.8 Chief Operating Officer – Defence Executive Support.

The formation of Programme 1.8 Chief Operating Officer – Defence Executive Support from 2015-16 onwards includes the transfer of relevant functions from Programme 1.1 Office of the Secretary and CDF and Programme 1.9 Chief Operating Officer – Defence Support and Reform.


30

Outcome 1 Resources

Table 12: Total Budgeted Resources Available for Outcome 1

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Programme 1.1 Office of the Secretary and CDF[1]

Revenues from other sources 538 - - - -

Departmental outputs 169,128 - - - -

Programme 1.1 Strategy[1]

Revenues from other sources - 434 426 420 430

Departmental outputs - 175,385 167,963 179,763 198,077

Programme 1.2 Navy Capabilities

Revenues from other sources 120,964 125,611 129,037 133,393 137,762

Departmental outputs 5,103,368 5,208,839 5,005,256 5,002,152 5,017,616

Programme 1.3 Army Capabilities



Programme 1.4 Air Force Capabilities



Programme 1.5 Joint Operations Command

Revenues from other sources - - 559 572 576

Departmental outputs 43,438 50,452 53,099 57,078 52,003

Programme 1.6 Intelligence Capabilities



Programme 1.7 Vice Chief of the Defence Force



Programme 1.8 Chief Operating Officer - Defence Executive Support[1] [2]

Revenues from other sources - 116 118 122 124

Departmental outputs - 119,050 126,860 106,809 110,516

Programme 1.9 Chief Operating Officer - Defence Support and Reform[2]



Programme 1.10 Chief Operating Officer - Chief Information Officer



Programme 1.11 Chief Operating Officer - Defence People

Revenues from other sources - - - - -


Programme 1.12 Defence Science and Technology



Programme 1.13 Capability Development


Departmental outputs 588,603 1,433,761 2,904,415 3,673,738 4,967,887

Programme 1.14 Chief Finance Officer


Departmental outputs 111,005 976,444 1,037,977 1,072,140 1,108,612


31

Table 12: Total Budgeted Resources Available for Outcome 1 (continued)

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Defence 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) 154,000 99,981 89,237 78,071 67,347

Military Superannuation and Benefits Act, 1991 Part V, s.17 2,337,883 1,453,170 1,417,673 1,391,271 1,375,550

Total Administered Expenses 2,491,883 1,553,151 1,506,910 1,469,342 1,442,897

Administered revenues from other sources 1,316,539 1,347,113 1,234,075 1,166,590 1,099,694

Total Programme 1.15 1,175,344 206,038 272,835 302,752 343,203

Programme 1.16 Defence Force Superannuation Nominal Interest

Defence Force Retirement Benefits Act, 1948 Part 1, s.15D

and VIC, s.82ZJ (1) 23,000 25,542 24,248 22,980 21,744

Defence Force Retirements and Death Benefits Act, 1973

Part XII, s.125 (3) 1,640,000 1,772,645 1,788,588 1,802,054 1,812,804

Military Superannuation and Benefits Act, 1991 Part V, s.17 1,743,000 1,759,277 1,913,665 2,070,851 2,231,171

Total Administered Expenses 3,406,000 3,557,464 3,726,501 3,895,885 4,065,719

Administered revenues from other sources - - - - -

Total Programme 1.16 3,406,000 3,557,464 3,726,501 3,895,885 4,065,719

Programme 1.17 Housing Assistance

Defence Force (Home Loan Assistance) Act , 1990 Part IV,

s.38 1,357 1,116 928 771 640

Defence Home Ownership Assistance Scheme Act 2008

Part VI, s.84 103,175 118,661 136,705 151,574 170,457

Total Administered Expenses 104,532 119,777 137,633 152,345 171,097

Administered revenues from other sources 13,953 14,416 15,268 16,127 16,993

Total Programme 1.17 90,579 105,361 122,365 136,218 154,104

Programme 1.18 Other Administered

Administered revenues from other sources 109,627 112,814 116,149 108,845 99,472

Total Programme 1.18 -109,627 -112,814 -116,149 -108,845 -99,472

Total resourcing

Total Departmental outputs 25,492,580 28,063,724 28,440,300 30,015,770 31,106,731

Total Administered 4,562,296 3,756,049 4,005,552 4,226,010 4,463,554

Total Departmental revenue from other sources 1,999,587 1,224,021 1,237,196 1,298,365 1,340,189

Total Administered revenue from other sources 1,440,119 1,474,343 1,365,492 1,291,562 1,216,159

Equity injection 2,758,491 2,875,209 2,516,263 3,568,920 4,889,446

Total resources for Outcome 1 36,253,073 37,393,346 37,564,803 40,400,627 43,016,079

Notes

1. A restructure of Defence Programmes at the end of 2014-15 has resulted in Programme 1.1 Office of the Secretary and CDF being disbanded,

with resources from this Programme transferred to Programmes 1.1 Strategy and 1.8 Chief Operating Officer – Defence Executive Support from

2015-16 onwards.

2. The formation of Programme 1.8 Chief Operating Officer – Defence Executive Support from 2015-16 onwards includes the transfer of relevant

functions from Programme 1.1 Office of the Secretary and CDF and Programme 1.9 Chief Operating Officer – Defence Support and Reform.

Programme 1.15 Defence Force Superannuation Benefits


32

Contributions to Outcome 1

Programme 1.1: Office of the Secretary and CDF

Programme 1.1 Objective

The Office of the Secretary and CDF (OSCDF) Group’s primary objective in delivering Programme 1.1 is to support the Secretary and CDF so they can deliver high quality policy advice to the Government, drive organisational reform and exercise strategic leadership.

The OSCDF Group manages the vast array of operational, policy, commercial, regulatory, risk and other matters associated with the Defence mission of defending Australia and its national interests.

During 2014-15, the Group continues to drive implementation of the strategic reforms across Defence. It will implement new measures to align Defence’s corporate functions with strategic planning and lead the development of the 2015 Defence White Paper.

The Group comprises the small personal offices of the Secretary and CDF, the Strategy Executive, the Audit and Fraud Control Division, the ADF Investigative Service (ADFIS) and a number of Military Justice agencies.

Table 13: Cost Summary for Programme 1.1 Office of Secretary and CDF[1]

2014-15

Estimated

Actual

$'000

Expenses

Employees 36,607

Suppliers 126,819

Grants 4,766

Depreciation and amortisation 1,474

Finance cost -

Write-down of assets and impairment of assets -

Net losses from sale of assets -

Other expenses -

Total expenses 169,666

Income

Revenues

Goods and services 435

Other revenue 103

Total revenue 538

Gains

Reversal of previous asset write-downs -

Net gains from sale of assets -

Other gains -

Total gains -

Total income 538

Programme 1.1 Office of the Secretary and CDF 169,128

Note



2015-16 onwards.


33

Programme 1.1 Deliverables

Provide direction for the contribution of Defence to operations as directed by Government.

Ensure delivery of the Defence Cooperation Programme within available resources.

Lead the development of the 2015 Defence White Paper.

Ensure Defence strategic policy objectives align with Government direction and priorities, including fiscal policy.

Ensure Defence’s international relationships promote security and enhance productive Defence partnerships, particularly regionally, consistent with broader foreign policy goals including through practical engagement conducted under the Defence Cooperation Programme as discussed in Appendix A.

Provide policy advice on strategic issues including strategic risks and core Defence strategy settings, arms control, counter-proliferation, counter-terrorism, international engagement, cyber, space and ballistic missile defence policy, major capability acquisitions, industry and innovation policy.

Improve the management of export control of defence and strategic goods.

Administer use of the Australia-United States Defence Trade Cooperation Treaty by Australian Government agencies and defence industry.

Implementation of the recommendations of the review into the Woomera Prohibited Area.

On behalf of the Secretary and CDF undertake independent audits of Defence activities, and coordinate Australian National Audit Office activity in Defence.

On behalf of the Secretary and CDF, take a leading role in the prevention and detection of fraud, undertake fraud investigations, and produce the Defence Fraud Control Plan.

Provide investigative and policing advice and deliver investigative services to support discipline within the ADF.

Programme 1.1 Key Performance Indicators

Staff skills are developed and personnel management practices successfully balance competing priorities.

Policy guidance is forward-looking, timely, innovative and practical.


34

Programme 1.1: Strategy


The Strategy Group's primary objective in delivering Programme 1.1 is to provide policy advice to enable the Government to make sound judgements on, and respond to changes in Australia’s strategic environment.

The Strategy Group provides policy advice on the central issues of Australia's defence policy, including ADF operations, international defence relations, arms control, and defence export controls. Strategy Group is also responsible for developing long-term strategic guidance on defence and security issues; advancing Australia’s international security relationships through a network of Defence Attachés and Advisers, and managing the Defence Cooperation Programme, which aims to build the security capacity of partner nations, consistent with Australia’s strategic interests.

During 2015-16, the Group will continue to provide the Government with comprehensive and timely policy advice on ADF operations, current and emerging security issues, and finalise the 2015 Defence

White Paper.

The Group currently comprises the International and Strategic Policy Divisions, and the 2015 White Paper Team.

Table 14: Cost Summary for Programme 1.1 Strategy[1]

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[2]

30,281 23,728 23,263 23,884

Suppliers 139,925 139,221 151,552 168,989

Grants 4,309 4,418 4,482 4,595

Depreciation and amortisation 1,304 1,022 886 1,039

Finance cost - - - -

Write-down of assets and impairment of assets - - - -

Net losses from sale of assets - - - -

Other expenses - - - -

Total expenses 175,819 168,389 180,183 198,507

Income

Revenues

Goods and services 434 426 420 430

Other revenue - - - -

Total revenue 434 426 420 430

Gains

Reversal of previous asset write-downs - - - -

Net gains from sale of assets - - - -

Other gains - - - -

Total gains - - - -

Total income 434 426 420 430

Programme 1.1 Strategy 175,385 167,963 179,763 198,077

Notes

2. Employee expenses in 2015-16 include funding for an additional pay (the 27th pay).



2015-16 onwards.


35


Provide policy guidance for ADF operations consistent with Government direction.

Lead the development of the 2015 Defence White Paper.

Ensure Defence's international relationships promote security, particularly regionally, consistent with Government policy goals.

Ensure delivery of the Defence Cooperation Programme within available resources.

Provide policy advice on strategic issues including arms control, counter-proliferation, counter-terrorism, international engagement, cyber, space and ballistic missile defence policy, major capability acquisitions, foreign investment, and industry and innovation policy.

Improve the management of export control of defence and strategic goods.

Administer use of the Australia-United States Defence Trade Cooperation Treaty by Australian Government agencies and defence industry.

Implement the recommendations of the Review into the Woomera Prohibited Area.


Policy guidance is forward-looking, timely, innovative and practical.

Defence’s international engagement activities contribute to the effective management of Australia’s security interests.

Defence’s export control system is effectively managed, and balances proliferation concerns and Australia’s trade objectives.

Staff skills are developed and continually enhanced.


36

Programme 1.2: Navy Capabilities


The Navy’s objective in delivering Programme 1.2 is to provide maritime forces that contribute to the ADF’s capacity to defend Australia, contribute to regional security, support Australia’s global interests, shape the strategic environment and protect our national interests.

Navy provides maritime patrol and response, interdiction and strategic strike, amphibious operations, protection of shipping and offshore territories and resources, maritime intelligence collection and evaluation, hydrographic and oceanographic operations, and escort duties. Peacetime activities include maritime surveillance and response within Australia’s offshore maritime zones, hydrographic, oceanographic and meteorological support operations, humanitarian assistance, disaster relief and maritime search and rescue.

Table 15: Cost Summary for Programme 1.2 Navy Capabilities

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[1]

1,951,141 2,087,777 2,019,033 2,027,582 2,048,308

Suppliers 2,142,614 2,257,163 2,237,501 2,278,884 2,375,044

Grants[2]

400 - - - -

Depreciation and amortisation 896,751 834,754 723,071 674,373 576,338

Finance cost 29,662 30,982 33,999 37,572 42,700

Write-down of assets and impairment of assets[3]

203,764 123,774 120,689 117,134 112,988

Net losses from sale of assets - - - - -

Other expenses - - - - -

Total expenses 5,224,332 5,334,450 5,134,293 5,135,545 5,155,378

Income

Revenues

Goods and services[4]

68,092 71,973 75,312 78,859 82,460

Other revenue 30,484 31,623 31,839 32,777 33,699

Total revenue 98,576 103,596 107,151 111,636 116,159

Gains

Reversal of previous asset write-downs 22,388 22,015 21,886 21,757 21,603

Net gains from sale of assets - - - - -

Other gains - - - - -

Total gains 22,388 22,015 21,886 21,757 21,603

Total income 120,964 125,611 129,037 133,393 137,762

Programme 1.2 Navy Capabilities 5,103,368 5,208,839 5,005,256 5,002,152 5,017,616

Notes

4. Goods and services revenue include Military workforce cost recovery.


2. Grants in 2014-15 include the approved grant for the Australian Sailor Pty Ltd.

3. Included in the 2014-15 write-down of assets and impairment of assets is an amount relating to the transfer of the Ocean Shield to the Department

of Immigration and Border Protection.


37


Provide assigned forces and maintain preparedness to deliver capability to meet Government requirements.

Undertake joint collective training to ensure force elements are prepared for deployment and operations.

In consultation with the Capability Development Group and the DMO, continue to plan, develop and monitor the delivery of, and transition to, new capability.

Provide timely, accurate and considered advice on Navy capabilities to the Government, the CDF and the Secretary.

Deliver reform and savings without compromising agreed levels of Navy capability and safety.

Meet national hydrographic survey and charting obligations.


Achieve levels of preparedness as directed by CDF.

Generate and sustain forces to meet the Government’s operational requirements.

Achieve a level of training that maintains core skills, professional standards and baseline preparedness.

Provide timely, accurate and considered advice on Navy capabilities to the Government, the CDF and the Secretary.

Achieve Hydroscheme data and surveying tasking requirements to meet national hydrographic surveying and charting obligations.


38

Table 16: Navy Key Performance Indicator (Unit Ready Days)[1]

Deliverables

2014-15

Estimated

Actual

2015-16

Budget

Estimate

2016-17

Forward

Year 1

2017-18

Forward

Year 2

2018-19

Forward

Year 3

20 Major Combatants[2]

3,028 3,280 3,544 4,435 3,628

19 Minor Combatants[3]

4,417 4,186 4,710 4,574 4,574

6 Amphibious and Afloat Support

[4]

1,482 821 1,250 1,538 1,465

7 Maritime Teams[5]

2,555 2,558 2,555 2,555 2,555

9 Hydrographic Force[6]

2,971 2,437 2,381 2,505 2,429

Notes

1. Unit Ready Days (URD) are the aggregate number of days that constituent force elements are available for tasking.

2. Major Combatants comprises Adelaide class frigates, Anzac class frigates, Hobart class air warfare destroyers (from 2016-17) and submarines. Two Adelaide class frigates are to be withdrawn from service, HMAS Sydney in December 2015 and HMAS Darwin in March 2017. HMAS Sydney ceased operational service in March 2015.

3. Minor Combatants comprises Armidale class patrol boats (ACPB) and coastal mine hunters (MHC). MHCs Hawkesbury

and Norman were placed in extended readiness in 2009. ACPB HMAS Bundaberg was decommissioned in

December 2014.

4. Amphibious and Afloat Support comprises oil tanker, replenishment ship, landing ship dock, heavy landing ship and Canberra class landing helicopter dock (from Initial Operational Capability 2015-16). The three remaining heavy landing craft decommissioned November 2014, and HMAS Tobruk is due to decommission in June 2015.

5. Maritime Teams comprises clearance diving teams, the deployable geospatial support team and mobile meteorological and oceanographic team.

6. Hydrographic Force comprises hydrographic ships, survey motor launches, chart production office and meteorological and oceanographic centres.

Table 17: Navy Key Performance Indicator (Unit Availability Days)[1][2]

Deliverables 2014-15

Estimated

Actual

2015-16

Budget

Estimate

2016-17

Forward

Year 1

2017-18

Forward

Year 2

2018-19

Forward

Year 3

20 Major Combatants[3]

2,951 2,984 3,245 3,971 3,300

19 Minor Combatants[4]

3,606 3,724 4,300 4,395 4,395

6 Amphibious and Afloat Support

[5]

1,374 722 1,202 1,411 1,351

7 Maritime Teams[6]

2,555 2,558 2,555 2,555 2,555

9 Hydrographic Force[7]

2,283 2,512 2,457 2,462 2,601

Notes

1. A Unit Availability Day (UAD) is a day when a unit is materially ready and its personnel state and level of competence enables the unit to safely perform tasks in the unit’s normal operating environment, immediately. UAD differs from URD in that for UAD minor maintenance periods, defects, training and personnel state of a unit are taken into account.

2. UAD is intended to replace URD as the Navy statutory reporting measure. Both URD and UAD will be reported for a transition period of two years (2014-15 and 2015-16).

3. Major Combatants comprises Adelaide class frigates, Anzac class frigates, Hobart class air warfare destroyers (from 2016-17) and submarines. Two Adelaide class frigates are to be withdrawn from service, HMAS Sydney in December 2015 and HMAS Darwin in March 2017. HMAS Sydney ceased operational service in March 2015.

4. Minor Combatants comprises Armidale class patrol boats (ACPB) and coastal mine hunters (MHC). MHCs Hawkesbury and Norman were placed in extended readiness in 2009. ACPB HMAS Bundaberg was decommissioned in December 2014.

5. Amphibious and Afloat Support comprises oil tanker, replenishment ship, landing ship dock, heavy landing ship and Canberra class landing helicopter dock (from Initial Operational Capability 2015-16). The three remaining heavy landing craft decommissioned November 2014, and HMAS Tobruk is due to decommission in June 2015.

6. Maritime Teams comprises clearance diving teams, the deployable geospatial support team and mobile meteorological and oceanographic team.

7. Hydrographic Force comprises hydrographic ships, survey motor launches, chart production office and meteorological and

oceanographic centres.


39

Table 18: Navy Key Performance Indicator (Hydroscheme Products)

Deliverables

2014-15

Estimated

Actual

2015-16

Budget

Estimate

2016-17

Forward

Year 1

2017-18

Forward

Year 2

2018-19

Forward

Year 3

Maritime Safety Updates[1]

1,100 1,100 1,100 1,100 1,100

Charting Projects[2]

17 15 15 15 15

Nautical Publications[3]

30 29 29 29 29

Notes

1. A Maritime Safety Update is an urgent safety-critical revision to published paper and Electronic Navigational Charts and official nautical publications that are distributed to the nautical community on a fortnightly cycle.

2. A Charting Project includes all priority elements involved in producing paper and electronic charts for particular geographic area projects.

3. Nautical publications include three annual publications- Australian Tide Tables, Annual Notices to Mariners and AusTides; 25 fortnightly Notices to Mariners; and selected additional publications each year. HydroScheme has been removed from the publications target as it is not a mandated publication.

Table 19: Navy Key Performance Indicator (Flying Hours)

Deliverables

2014-15

Estimated

Actual

2015-16

Budget

Estimate

2016-17

Forward

Year 1

2017-18

Forward

Year 2

2018-19

Forward

Year 3

16 S-70B-2 (Seahawk)[1]

3,200 2,250 1,200 300 -

13 AS350BA (Squirrel)[2]

3,000 1,500 1,500 1,500 1,500

13 MH-60R 2,400 3,400 4,800 6,050 7,200

- MRH-90[3]

- - - - -

1 Laser airborne depth sounder aircraft

935 980 980 980 980

Notes

1. Seahawk hours are being progressively reduced with the introduction of the MH-60R.

2. Squirrel hours have been reduced and those resources redirected to a leased training helicopter ahead of the Squirrel replacement by 15 EC135s helicopters under AIR9000 Ph 7.

3. Navy is operating MRH90s; however, their flying hours have been included under Army Aviation, as Army is joint capability manager for the aircraft. Navy have six aircraft and approximately 1,500 hours per annum in the mature state.


40

Programme 1.3: Army Capabilities


Army’s primary objective in delivering Programme 1.3 is to contribute to the achievement of the Government’s defence objectives through the provision of capabilities for land and special operations. Army is to prepare forces for Joint Force-In-Being contributions to: understanding and shaping the strategic environment; assisting civil authorities in Australia and abroad; and deterring, denying and/or defeating adversaries that threaten Australia, or its strategic interests.

Army’s first priority is to continue to support forces and individuals deployed on operations. During 2015-16 Army will remain committed across a spectrum of operations at the domestic, regional and global level. Army will continue to sustain and preserve the ability to deploy and sustain a brigade group and a battalion group, in different areas of operation, for a prolonged period of time in our primary operational environment.

Army will further develop and refine the Force Generation Cycle to ensure Army is capable of supporting current operations while concurrently posturing to meet the challenges of future operations. During 2015-16, the continued implementation of Combat Brigade and Army Reserve reform, under Plan BEERSHEBA, will see the realisation of common structures and capability across Army. These changes will optimise Army’s Force Generation Cycle and achieve efficiencies in personnel management, resource usage and equipment required to sustain operational missions and readiness for potential contingencies. Army will continue to deliver Plan BEERSHEBA within extant resources. Army’s contributions to the ADF Amphibious capability will continue to be developed and refined.

Army will continue its cultural reform journey through a range of initiatives focused on culture, diversity and inclusion. These initiatives are designed to ensure that Army reflects today’s community standards and attitudes while maintaining its focus on capability and winning the land battle. These initiatives include our: ‘Contract with Australia’, ‘A Matter of Respect’ training package, increased workforce participation for female and Indigenous members, seeking White Ribbon Australia accreditation and the removal of gender restrictions.


41

Table 20: Cost Summary for Programme 1.3 Army Capabilities

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[1]

3,737,281 4,049,921 3,961,791 3,985,104 4,014,185

Suppliers 1,747,748 1,821,103 1,823,999 1,854,352 1,902,123

Grants[2]

3,393 2,997 2,999 93 95

Depreciation and amortisation 1,015,156 915,518 705,172 566,738 467,917

Finance cost 4,064 4,615 4,316 5,130 6,300

Write-down of assets and impairment of assets 94,014 92,508 92,293 91,580 90,416



Total expenses 6,601,656 6,886,662 6,590,570 6,502,997 6,481,036

Income

Revenues


77,065 81,375 85,244 89,821 94,563

Other revenue 3,666 4,052 617 633 649

Total revenue 80,731 85,427 85,861 90,454 95,212

Gains


Net gains from sale of assets[4]

4,185 7,549 7,549 7,549 7,549


Total gains 22,476 26,341 27,321 28,210 29,102

Total income 103,207 111,768 113,182 118,664 124,314

Programme 1.3 Army Capabilities 6,498,449 6,774,894 6,477,388 6,384,333 6,356,722

Notes

2. Grants from 2014-15 to 2016-17 predominately include a grant made to the Australian War Memorial.

4. Net gains from sale of assets include the gains arising from the disposal of B-vehicles.

3. Goods and services revenue include Military workforce cost recovery.



42


Prepare, sustain and lead assigned forces to deliver capability to meet Government requirements.

Conduct force generation and preparation while maintaining CDF directed levels of capability preparedness.

Continue to contribute to domestic security operations.

In consultation with Capability Development Group and the DMO, continue to plan, develop and monitor the delivery of, and transition to, new capabilities.

Provide timely, accurate and considered advice on Army capabilities to the Government, the CDF and the Secretary.

Develop programmes to increase diversity within Army’s workforce including clear milestones for improving participation rates for females and Indigenous members.

Continue to strengthen and improve programmes that provide support for Army’s seriously wounded and ill personnel.

Undertake individual as well as joint and combined collective training to ensure force elements are prepared for deployment.

Implement reform through the Adaptive Army framework, Army Continuous Modernisation Plan and the Army Plan (this includes the Plan BEERSHEBA initiatives such as the forming of: like Combat Brigades, an Amphibious capability and reform of the Army Reserve).

Deliver Group specific reform and savings without compromising agreed levels of Army capability, including the revamping of Army’s governance, risk, budgeting and performance achievement management.


43

Table 21: Army Deliverables (Rate of Effort – Flying Hours)

Deliverables

2014-15

Estimated

Actual

2015-16

Budget

Estimate

2016-17

Forward

Year 1

2017-18

Forward

Year 2

2018-19

Forward

Year 3

6 CH-47D Chinook 1,685 380 - - -

7 CH-47F Chinook[1]

115 1,320 1,700 2,000 2,000

34 S-70A Black Hawk 5,090 4,230 3,730 2,000 -

41 B-206 Kiowa[2]

5,250 6,000 6,000 6,000 6,000

22 ARH Tiger[3]

3,250 5,846 6,227 6,227 6,227

47 MRH90 Taipan[4]

5,335 7,100 8,400 9,300 10,000

Notes

1. 2014-15 Chinook ROE increased from 1,700 to 1,800 baseline to account for early delivery of CH-47F and associated test flying, and transit hours for CH-47Ds as they are withdrawn from service. CH-47F ROE will be increased to 2,000 from

2017-18.

2. 2014-15 B-206 Kiowa ROE underachievement is due to reduced pilot trainee throughput as Operational Type Trainees have been sourced from holding platoon and 173 Avn Sqn. FORCOMD expects to significantly reduce B-206 hours from 2016-17 as transition to Project AIR9000 Phase 7, Helicopter Aircrew Training System begins.

3. While Tiger reliability, availability and maintainability continue to improve, rate of effort is affected by the low rate of availability of aircraft with fully serviceable mission equipment due to poor but improving contracted sustainment support

and the requirement for unscheduled maintenance.

4. MRH90 Taipan experienced a minor underfly in 2014-15 due to the late delivery of aircraft from the production line.


Achieve levels of capability preparedness as directed by the CDF.

Meet the Government’s operational requirements.

Generate, prepare and sustain land forces for each current operation.

Achieve a level of training that maintains core skills, professional standards and baseline capability preparedness.

Provide timely, accurate and considered advice on Army capabilities to the Government, the CDF and the Secretary.


44

Programme 1.4: Air Force Capabilities


The Air Force’s primary objective in delivering Programme 1.4 is to provide air power for Australia’s interests.

Air Force provides the Government with rapid and responsive military options across the spectrum of operations – from humanitarian assistance through to high-end warfighting. Air power’s unique combination of flexibility, reach, precision and speed means that Air Force can project air power anywhere, anytime within our region or around the world to protect Australia and its national interests.

Air Force’s objective is achieved through our core air power roles – control of the air; strike; air mobility; and intelligence, surveillance and reconnaissance – which are supported by our enabling air powers roles – command and control; force protection; and force generation and sustainment.

Air Force is working to create a future force that is agile and adaptive, fully immersed in the information age, and truly joint. This will ensure Air Force can keep pace with changes in our strategic environment and continue to provide rapid, effective and responsive military options for Government into the future.

Table 22: Cost Summary for Programme 1.4 Air Force Capabilities

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[1]

1,937,014 2,067,367 2,013,109 2,018,257 2,038,448

Suppliers 2,094,101 2,294,540 2,207,518 2,330,598 2,325,561

Grants[2]

50 50 50 - -

Depreciation and amortisation 1,127,714 1,167,381 883,322 864,517 859,782

Finance cost 14,497 16,462 15,397 18,298 22,474




Total expenses 5,329,253 5,696,005 5,265,307 5,372,833 5,381,691

Income

Revenues


132,856 158,883 166,982 175,352 184,124

Other revenue 5,086 5,213 5,333 5,465 5,602

Total revenue 137,942 164,096 172,315 180,817 189,726

Gains




Total gains 27,416 26,804 26,454 26,136 25,647

Total income 165,358 190,900 198,769 206,953 215,373

Programme 1.4 Air Force Capabilities 5,163,895 5,505,105 5,066,538 5,165,880 5,166,318

Notes


2. Grants expense include grants to The Sir Richard Williams Foundation.

3. Goods and services revenue include Military workforce cost recovery estimates. The increase between 2014-15 and 2015-16 is as a result of

greater overall cost recoveries expected.


45


Provide air power options for Government by meeting directed preparedness requirements while minimising resource expenditure.

Prepare, sustain and lead assigned forces in operations to deliver capability to meet Government requirements.

Conduct force generation and force preparation and maintain preparedness of capability as directed by the CDF.

Undertake joint collective training to ensure force elements are prepared for deployment.

Deliver force generation to ensure Defence Elements are prepared for Joint Force-in-Being contributions, including joint enabling activities supporting other Services/Groups.

In consultation with other Services/Groups and the Defence Materiel Organisation, continue to plan, develop and monitor the delivery of, transition to, and effective integration of new capability systems.

Provide timely, accurate and considered advice on Air Force capabilities to the Government, the CDF and the Secretary.


46

Table 23: Air Force Deliverables (Flying Hours)

Deliverables 2014-15

Estimated Actual

2015-16

Budget

Estimate

2016-17

Forward

Year 1

2017-18

Forward

Year 2

2018-19

Forward

Year 3

62 PC-9/A[1]

15,570 16,352 16,552 16,352 11,852

- PC-9/A Replacement[2]

1,600 7,000

16 KA350 King Air [3]

10,700 10,700 10,700 10,700 10,700

12 C-130J Hercules [4]

8,300 7,350 7,350 7,350 7,350

8 C-17A Globemaster III[5]

6,000 6,200 6,200 6,200 6,200

10 C-27J Spartan[6]

200 2,500 5,000 7,500 7,500

5 KC-30A MRTT[7]

4,315 3,100 3,100 3,100 3,100

2 737 BBJ[8]

1,500 1,600 1,600 1,600 1,600

3 CL-604 Challenger[8]

1,700 2,403 2,403 2,403 2,403

15 AP-3C Orion[9]

7,300 6,770 6,465 4,660 2,160

6 E-7A Wedgetail[10]

3,600 3,600 3,600 3,600 3,600

71 F/A-18A/B Hornet 13,000 12,000 12,000 12,000 12,000

24 F/A-18F Super Hornet 7,050 5,200 4,000 4,000 4,000

8 P-8A Poseidon - - 450 2,762 4,254

33 Hawk 127[11]

6,500 7,000 7,000 7,000 8,000

12 E/A-18G Growler - - 800 1600 1,900

2 F-35A Lightning II 230 500 500 752 2,000

Notes

1. Number of PC-9/A reduced by one (to 62) due to decommissioning an aircraft for destructive airframe structural inspections. Expected FY 14-15 hours reduced due to reprioritisation of flight test workforce and activities, reduced public relations commitments and reduced demand for instructor assessments for other flying units. Hours may be adjusted

leading up to PC-9/A planned withdrawal date 31 December 2019.

2. PC-9/A replacement aircraft is expected to be gradually introduced from FY 17-18.

3. KA350 King Air hours expected to reduce by 700 hours from FY 14-15 Portfolio Budget Statements estimate (11,400 hours) due to utilisation of new simulator and reduced aircrew availability at School of Air Warfare.

4. C-130J hours for FY 14-15 expected to increase by 950 hours (from the FY 14-15 Portfolio Budget Statements estimate) due to operational assignment.

5. C-17A hours for FY 14-15 expected to increase by 800 hours (from the FY 14-15 Portfolio Budget Statements estimate) due to operational assignment. Hours for FY 15-16 and beyond expected to increase by 1,000 hours following the delivery

of two additional aircraft. The seventh and eighth C-17A are due for delivery in 2015.

6. C-27J hours for FY 14-15 expected to decrease by 800 hours (from the FY 14-15 Portfolio Budget Statements estimate) due to aircraft delivery and training programme delays.

7. KC-30A hours for FY 14-15 expected to increase by 1,215 hours (from the FY 14-15 Portfolio Budget Statements estimate) due to operational assignment.

8. 737 BBJ and CL-604 Challenger expected to underachieve flying hours in FY 14-15. The contract for both aircraft types extended to 2017. Flying Hours for FY 17-18 and 18-19 are for replacement aircraft.

9. AP-3C aircraft numbers to reduce to 15 in FY 15-16 in accordance with the approved drawdown plan.

10. E-7A hours for FY 14-15 expected to increase by 600 hours (from the FY 14-15 Portfolio Additional Estimates Statements revised estimate) due to operational assignment; this adjustment matches the original FY 14-15 Portfolio Budget

Statements estimate.

11. Hawk 127 hours for FY 14-15 expected to reduce by 500 hours (from the FY 14-15 Portfolio Additional Estimates Statements revised estimate) due to a shortage of instructional staff and reduced student throughput. Hours expected to return to 8,000 hours from FY 18-19 due to completion of lead-in fighter capability assurance programme and increased

student throughput.


47


Meet the Government’s operational requirements.

Achieve levels of preparedness as directed by the CDF.

Conduct force generation in a manner that balances operational commitments and contingency planning.

Achieve a level of training that maintains core skills, professional standards and baseline preparedness.

Provide timely, accurate and considered advice on Air Force capabilities to the Government, the CDF and the Secretary.


48

Programme 1.5: Joint Operations Command


Joint Operations Command (JOC) is the ADF joint integrated operational level headquarters (HQ) responsible for ADF contributions to combined and interagency operations and joint training activities, both domestically and internationally, in order to achieve Government and CDF’s strategic priorities and direction.

Chief of Joint Operations (CJOPS), as the commander of JOC, commands Headquarters Joint Operations Command (HQJOC), Northern Command (NORCOM), 1st Joint Movements Group and Joint Task Forces established for operations and major exercises. CJOPS is supported by Liaison Officers assigned to HQJOC from the Australian Federal Police, Defence International Policy Division and the Department of Foreign Affairs and Trade.

CJOPS is the CDF’s principal adviser on operational matters and is responsible to the CDF for the conduct of military operational planning and the development and maintenance of Operational Risk Plans through which Defence activities by JOC assigned assets can be synchronised and coordinated with the wider ADO, other government agencies and Australia’s alliance partners. CJOPS exercises command over assigned deployed combined (coalition and multilateral, military and interagency) and joint task forces and the Australian contingents to United Nations operations.

CJOPS is the ADF Search and Rescue (SAR) authority and is also responsible for coordinating Defence Assistance to the Civil Community (DACC) and Defence Force Aid to the Civil Authority (DFACA). In addition, and on behalf of the CDF, CJOPS is responsible for the ADF’s commitment to protecting Australia’s borders, through the provision of ADF resources to the Border Protection Command for border protection tasks.

CJOPS is the Joint Collective Training Authority responsible for the coordination and management of ADF joint collective training across three core functions of the joint collective training management framework. This includes joint collective training management, joint knowledge management and joint evaluation & support.

VCDF has delegated Defence wide simulation coordination responsibility to CJOPS. As such CJOPS is responsible for coordinating the ADO wide enterprise governance of the Defence Synthetic Environment.

The Border Protection Command programme is listed and reported in the Australian Customs and Border Protection Service section of the Department of Immigration and Border Protection Portfolio Budget Statements (PBS).


49

Table 24: Cost Summary for Programme 1.5 Joint Operations Command

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[1]

6,770 6,599 6,228 6,278 6,160

Suppliers 32,383 40,951 43,394 46,325 39,850

Grants - - - - -


Finance cost - - - - -

Write-down of assets and impairment of assets - - - - -



Total expenses 43,438 50,452 53,658 57,650 52,579

Income

Revenues

Goods and services - - 559 572 576

Other revenue - - - - -

Total revenue - - 559 572 576

Gains

Reversal of previous asset write-downs - - - - -



Total gains - - - - -

Total income - - 559 572 576

Programme 1.5 Joint Operations Command 43,438 50,452 53,099 57,078 52,003

Note



50


Provide input, in the form of reporting, analysis, plans and preparedness requirements, to the strategic level of Defence on military options and operational matters associated with current operational commitments and future directed contingencies.

Plan, control, conduct and evaluate the ADF’s, and where applicable the whole of government and/or coalition, contributions to Government directed operational commitments.

Plan, control, conduct and evaluate the ADF’s contributions to DACC and DFACA, and plan for and coordinate Search and Rescue (SAR) for military purposes.

Plan, control, conduct and evaluate the ADF’s participation in non-operational domestic and international joint, interagency and bilateral and multilateral exercises and JOC-sponsored engagement activities scheduled in the endorsed Programme of Australian Defence Force Activities (PADFA). This includes certification of force elements capable of conducting joint operations across the spectrum of defined joint collective training levels.

In coordination with Services, review and update Defence’s Simulation Strategy and maintain the strategic simulation policy, manual and best practice user guides.

Strengthen Australia’s regional influence by deepening operational partnerships with the US and with select regional powers and the evolution of an operational risk management approach to inform Defence activities across the region.

Maintain ongoing partnerships, collaboration and effective information sharing related to operational matters at the national level and effective engagement at the international level.

Provide advice to Service Headquarters, other Defence Groups and other Government Departments as necessary to support the development of policy and capability in relation to current, planned and anticipated operations.

Contribute to Group specific reforms and cost reductions.


Input to strategic level decision making committees on military options and operational matters and other advice on the development of capability, is timely and accurate.

Joint Forces are certified, deployed, and sustained efficiently and effectively, and in accordance with agreed timeframes.

ADF operations and non-operational activities are planned, controlled and conducted in accordance with the promulgated Rules of Engagement (ROE) and operational governance requirements in the areas of medical administration and clinical governance, and personnel, logistics, financial and contract management.


51

Programme 1.6: Intelligence Capabilities


Intelligence and Security Group delivers Programme 1.6 through the two main objectives of delivering intelligence capability for Defence and Government and leading the development of security policy, standards and plans to meet Defence’s protective security requirements and providing information security services to Government.

As Defence’s ability to preserve its intelligence capability edge is critically dependent on the availability of skilled and experienced ADF and civilian personnel, the Group continues its recruitment and retention strategies through programmes, such as targeted university recruitment drives, incentives for staff with specific language and technical talents, and enhanced use of online recruitment tools. Recruiting and retaining skilled, suitable personnel remains a challenge.

The Defence Security Authority leads the Defence security community in minimising the security risks to Defence’s people, information and material. The Authority is responsible for developing security policy, reporting on security performance, investigating serious security incidents, producing security intelligence and threat assessments, developing and delivering specialist security training, and undertaking personnel security vetting for the majority of Commonwealth agencies and related industry.

Table 25: Cost Summary for Programme 1.6 Intelligence Capabilities

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[1]

255,345 276,664 267,259 265,645 272,999

Suppliers 255,545 326,241 307,398 322,596 350,796

Grants - - - - -






Total expenses 569,983 653,633 622,962 638,168 672,439

Income

Revenues

Goods and services 10,134 10,536 10,652 10,572 10,838


Total revenue 10,134 10,536 10,652 10,572 10,838

Gains




Total gains 1,366 1,537 1,689 1,964 2,176

Total income 11,500 12,073 12,341 12,536 13,014

Programme 1.6 Intelligence Capabilities 558,483 641,560 610,621 625,632 659,425

Note



52


Provide timely, accurate and high quality intelligence and security support in accordance with Government priorities to support the ADF, policy and wider security operations.

Deliver enhanced capabilities to better exploit next generation technologies, improve intelligence assessment, and enhance the security of the Government’s information.

Provide advice and assistance to the Government on the security and integrity of electronic information, cryptography and communications technology.

Meet the Australian Government Security Vetting Agency’s key performance results as specified in the agency’s Service Level Charter.

Strengthen the management framework of the Australian Government Security Vetting Agency.

Provide management and strategic direction for Defence’s foreign language capability.

Ensure the effectiveness of the intelligence and security governance and compliance framework.

Strengthen the workforce through targeted recruitment, retention and training initiatives.

Ensure effective and efficient transfer of expertise, capabilities and intelligence across key international partnerships, and strengthen collaboration with national agencies.


Deliver intelligence and security services to meet Defence and Government requirements.

Develop next generation intelligence, geospatial and security assessment capabilities including Geoint, Sigint and Cyber.

Strengthen the approach to security across Defence and Government.

Deliver strategic guidance and management support to meet Defence’s foreign language requirements.

Achieve best practice in governance and compliance.

Ensure that the intelligence and security workforce is developed and skilled.

Deliver intelligence capability dividends through international and national partnerships.


53

Programme 1.7: Vice Chief of the Defence Force


Vice Chief of the Defence Force Group's mission is to develop, deliver, enable and ensure Defence joint capability in order to protect and advance Australia's national and strategic interests. The Group enables Defence to meet its objectives through the provision of: military strategic effects and commitments advice and planning; joint, common and APS education and training; logistics support; health support; ADF Cadet and Reserve policy; joint capability coordination; preparedness management; and joint and combined ADF doctrine.

The VCDF Group has responsibility for the Australian Civil-Military Centre, which was established by the Government in 2008 with the role of supporting the development of national civil-military capabilities to prevent, prepare and respond more effectively to conflicts and disasters overseas.

In addition, the Group has responsibility for the ADF Parliamentary Programme, the Federation Guard, ADF ceremonial activities, Strategic Communications Branch and the Counter Improvised Explosive Device Task Force.

VCDF Group is committed to drive cultural reform in line with Defence’s Pathway to Change Programme.

Table 26: Cost Summary for Programme 1.7 Vice Chief of the Defence Force

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[1]

538,341 575,638 597,905 595,056 609,311

Suppliers[2]

606,146 568,525 572,165 592,582 599,450

Grants[3]

25 25 - - -






Total expenses 1,527,493 1,546,021 1,588,982 1,625,235 1,667,468

Income

Revenues


144,104 120,694 123,737 126,954 130,065

Other revenue 152 150 154 158 162

Total revenue 144,256 120,844 123,891 127,112 130,227

Gains




Total gains 217,821 227,741 238,031 248,906 260,318

Total income 362,077 348,585 361,922 376,018 390,545

Programme 1.7 Vice Chief of the Defence Force 1,165,416 1,197,436 1,227,060 1,249,217 1,276,923

Notes

1. Employee expenses in 2015-16 include funding for an additional pay (the 27th pay). The budget for employee expenses also includes the funding

for ADF Health.

3. Grants expense include grants to Fisher House Foundation.

2. The reduction in suppliers expense and goods and services revenue between 2014-15 and 2015-16 relates in large part to a reduction in Land

Materiel Maintenance costs and associated cost recovery.


54


Lead the preparation of departmental military strategic advice to Government via Ministerial Submissions, Ministerial Representations, Question Time Briefs and Cabinet Submissions.

Provide military strategic planning and communication expertise to CDF in order to prepare direction from CDF to subordinate headquarters.

Deliver coordinated logistic advice and services to the ADF, and provide oversight and assurance of the Defence logistic capability.

Provide policy advice and deliver services to optimise the health of ADF personnel.

Provide Defence, inter-agency, combined and joint capability coordination and preparedness management.

Provide an integrated and networked learning environment for Joint, common and APS education and training.

Enhance capacity of the ADF Reserves to contribute to ADF capability and preparedness.

Maintain a coordinated, coherent and well-governed approach to Youth development, experience and recognition programmes in Defence, and in particular the ADF Cadets.

Promote best-practice civil-military engagement through the Australian Civil-Military Centre.


55


Timely, accurate and widely consulted advice provided to Government.

High level of engagement with Joint Operations Command, International Policy Division, Strategic Policy Division, Australian Civil-Military Centre, and other Government agencies, for operational matters.

Advice is readily sourced and made available to the Offices of CDF and VDCF to support strategic decision making.

ADF operational tempo is managed within concurrency constraints.

Group-specific reform and savings have been achieved.

ADF operations and exercises receive effective and efficient logistics and health support and services.

ADF joint and combined operational capability is enhanced.

Delivery of learning outcomes meets defence capability requirements.

Planning and policy frameworks to enable the contribution of the Reserves to Defence and the wider community are enhanced.

Governance and accountability frameworks that enhance the youth development experience within the ADF Cadets and the Defence Work Experience Programme.

Australian Civil-Military Centre delivers its goals effectively and efficiently in accordance with Government instructions.

Timely, accurate and widely consulted advice on nature of service classifications.

Timely and accurate advice on strategic communications.

Group-specific outcomes and programmes are delivered on time and within agreed resources.


56

Programme 1.8: Chief Operating Officer – Defence Executive Support


This Programme provides coordinated and substantive specialist advice and services to the Defence Ministers, the Secretary and the Chief of Defence Force.

The programme orchestrates service delivery outcomes for the Defence organisation as a whole. The programme coordinates Defence corporate planning and enterprise risk management, undertakes the performance monitoring and reporting in relation to these activities and provides an independent mechanism for internal audit and review. This mandate is focused on the Australian Defence Organisation so that it can deliver its required outcomes in an efficient and effective manner.

Programme 1.8 comprises the COO Executive Office, Enterprise Reform and Governance Division, United States Force Posture Initiative Programme Office, Legal Division, the small personal offices of the Secretary and CDF, the Audit and Fraud Control Division, the ADF Investigative Services, and a number of Military Justice agencies.

Table 27: Cost Summary for Programme 1.8 Chief Operating Officer – Defence Executive Support

[1]

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[2]

37,078 35,298 35,062 35,649

Suppliers 79,503 89,145 69,269 72,335

Grants - - - -

Depreciation and amortisation 167 60 52 40

Finance cost - - - -

Write-down of assets and impairment of assets - - - -

Net losses from sale of assets - - - -

Other expenses 2,418 2,475 2,548 2,616

Total expenses 119,166 126,978 106,931 110,640

Income

Revenues

Goods and services - - - -

Other revenue 116 118 122 124

Total revenue 116 118 122 124

Gains

Reversal of previous asset write-downs - - - -

Net gains from sale of assets - - - -

Other gains - - - -

Total gains - - - -

Total income 116 118 122 124

Programme 1.8 Chief Operating Officer - Defence

Executive Support 119,050 126,860 106,809 110,516

Notes





57


Coordinate implementation, monitoring and reporting of Defence reform programmes.

Deliver an improved Enterprise Management System, including publication of the Defence Enterprise Risk Policy, the Defence Corporate Plan and the Defence Annual Plan, to meet the risk and performance management aspects of the Public Governance, Performance and Accountability Act 2013.

Coordinate implementation of the Force Posture Initiatives agreed between the Australian and United States Governments.

On behalf of the Secretary and CDF provide oversight and advice around the governance systems that operate across Defence through the conduct of internal audits, reviews and Management Directed Tasks, as well as coordinate Australian National Audit Office performance audit activity in Defence.

On behalf of the Secretary and CDF, take the leading role in the prevention, detection and response to fraud and corruption, manage Defence’s obligations under the Public Interest Disclosure Act 2013,

and produce the Defence Fraud Control and Anti-Corruption Plan.

Provide specialist legal advice and support to Defence Ministers, the Secretary, CDF, Defence and the Government, and legal advice and support for ADF operations.

Continue to implement reforms to the Military Justice System.

Formulation of concept, policy, legislation and procedure for the Defence legislative programme.

Provide investigative and policing advice and deliver investigative services to support discipline within the ADF.


58


Business outcomes are improved as part of broader Defence reform.

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

Defence activities to implement the Force Posture Initiatives are identified and completed in accordance with arrangements between the Australian and United States Governments.

The Defence internal Audit Work Programme is provided to address high-level strategic risks that are linked to the Enterprise Risk Management framework.

The Defence Fraud and Anti-Corruption Plans are to prevent and detect fraud and corruption through the promotion of ethical behaviours across Defence, and the Public Interest Disclosures are managed in accordance with the Public Interest Disclosure Act 2013.

Defence meets its legislative and regulatory obligations.

Defence legal support, including specialist legal advice, is provided to Defence Ministers, the Secretary, CDF and the Government in support of effective decision making and policy engagement.

ADF operational capability is supported, including through the deployment of ADF lawyers to provide access to relevant and timely legal support.


59

Programme 1.9: Chief Operating Officer – Defence Support and Reform


This programme contributes to the achievement of outcome through:

developing and delivering a strategically aligned, affordable, safe and sustainable estate that enables Defence capability and operations.

efficient and responsive delivery of an agreed range of services that enable the Australian Defence Organisation, and are fundamental to generating Defence capability and preparedness.

developing and delivering corporate services that best support Defence’s ability to effect necessary reforms.

Table 28: Cost Summary for Programme 1.9 Chief Operating Officer – Defence Support and Reform

[1]

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[2]

1,117,931 1,139,336 1,185,813 1,222,344 1,262,520

Suppliers 2,142,040 2,094,553 1,892,820 2,502,860 2,212,606

Grants - - - - -

Depreciation and amortisation 949,093 941,079 971,569 1,003,507 1,050,770

Finance cost 102,358 100,019 100,306 100,736 99,891



Other expenses[3]

25,013 34,060 11,920 26,176 14,593

Total expenses 4,354,287 4,327,362 4,181,362 4,875,329 4,660,919

Income

Revenues


Other revenue[4]

17,862 9,865 10,332 10,823 11,338

Total revenue 370,705 345,005 350,369 361,382 375,016

Gains



5,700 25,500 210 11,939 -


Total gains 7,039 26,805 1,592 13,507 1,789

Total income 377,744 371,810 351,961 374,889 376,805


Support and Reform 3,976,543 3,955,552 3,829,401 4,500,440 4,284,114

Notes

4. The 2014-15 Estimated Actual for other revenue includes a one-off recovery of $7.1m for the funding of Fort Hill Wharf Upgrade refunded by the

Northern Territory Government.

2. Employee expenses in 2015-16 include funding for an additional pay (the 27th pay). The budget for employee expenses also includes the funding

for ADF Housing.

5. Net gains from sale of assets includes property and housing disposals. Net gains will fluctuate depending on the disposal programme.

3. Other expenses include costs associated with the restoration of properties. These expenses will fluctuate depending on the restoration

programme.




60


Manage and sustain the Defence estate to meet Government and Defence requirements by developing and delivering major infrastructure, property, base security improvement, and environment programmes. The approved 2015-16 Major Capital Facilities Programme is outlined at Appendix C.

Maintain single service, joint, combined and coalition capability by providing training area and range management, estate development services, and coordinating support to major domestic operations and exercises.

Deliver agreed base support services and other services to Defence.

Provide accurate, timely, high quality advice and support to the Defence Ministers, CDF, Secretary and the Government to enable effective decision making and policy engagement.

Increase public awareness of Defence activities and achievements and strengthen Defence capabilities in media-related activities to promote Defence’s reputation.


The Defence estate is managed and maintained to meet current and future Defence capability and Government priorities.

Approved Major Capital Facilities Projects are delivered within budget and schedule, compliant with legislative and other statutory requirements, standards and policies.

Agreed base support and other corporate services are prioritised and delivered to enable Defence capability requirements.

Timeliness and quality of advice, including Cabinet documentation, provided by the Department meets requirements.


61

Programme 1.10: Chief Operating Officer – Chief Information Officer


The Chief Information Officer Group's (CIOG) objective in delivering Programme 1.10 is to provide Defence with dependable, secure and integrated ICT capabilities to support the conduct of ADF operations and Defence business. CIOG will also focus on delivering key ICT programmes that are fundamental to the achievement of broader Defence reform.

The programme objective is supported by the CIOG Organisational Review Project which will be completed in 2015-16. The objectives of the project are to:

Align the current operating model functions to common capabilities to simplify the organisational structure, provide clearer and broader lines of accountability.

Reduce functional duplication to drive operational efficiencies.

Design a flexible and scalable organisation to support future Business Partner requirements and to develop a broader capability base.

A priority for CIOG in 2015-16 will be the strengthening of governance and accountability for ICT across the entire Defence organisation. This will be achieved through extensive collaboration across all groups and services on initiatives related to Business Process Standardisation, Information Management, ICT Service Delivery Reform and a whole-of-Defence Business Architecture.


62

Table 29: Cost Summary for Programme 1.10 Chief Operating Officer - Chief Information Officer

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[1]

118,142 94,822 82,165 80,703 82,411

Suppliers 952,093 850,781 784,861 875,354 782,069

Grants - - - - -


Finance cost[2]

44 10 - - -




Total expenses 1,258,422 1,149,283 1,083,497 1,175,941 1,078,826

Income

Revenues

Goods and services - - - - -


Total revenue - - - - -

Gains



-992 -4,763 -4,517 -4,652 -4,792


Total gains 4,867 1,983 2,823 2,911 2,998

Total income 4,867 1,983 2,823 2,911 2,998

Programme 1.10 Chief Operating Officer - Chief

Information Officer 1,253,555 1,147,300 1,080,674 1,173,030 1,075,828

Notes


2. Finance costs cease in 2015-16 as a result of the cessation of finance leases.

3. At the Portfolio level, Defence has budgeted for a total net gain from the sale of assets. Whilst the amounts shown in the estimated actual, budget

estimate and forward estimates represent a loss for this Programme, the overall Portfolio budget outcome is for a gain.


63


The priorities for the 2015-16 budget allocation will continue to be:

Support to Military Operations:

Maintain support to ADF operations through the provision of agreed Information and Communication Technology support, the delivery of network defensive operations, and the maintenance of a disaster recovery capability.

The Information and Communications Technology (ICT) Reform projects including security and the realisation of the Single Information Environment (SIE):

CIOG’s Information Transformation Programme (ITP) is the core programme through which CIOG will deliver a secure, integrated and easier to manage ICT environment that improves collaboration and productivity, towards realisation of the SIE. The ITP brings together the following reform projects and programmes:

Terrestrial Communications;

Centralised Processing;

Next Generation Desktop; and

IT Service Management Transformation.

Defence One is another significant ICT reform project, which is focused on delivering a sustainable and efficient Human Resource (HR) System for the whole of Defence.

Maintenance of essential Business as Usual (BAU) Information and Communications Technology (ICT) operations and services:

Maintain and support the BAU ICT operations and services which include communication lines, data centres, software licences, provision of work stations, help desk services, printers, faxes and phones.

Continue to plan and implement ICT shared services.

Deliver ICT services in accordance with the Defence ICT Services Delivery Charter and maintain the integrity and security of the Defence SIE.

Approved Defence Capability Plan (DCP), Major Capital Facilities (MCF), other approved projects and system enhancements.

To deliver the ICT elements of endorsed projects and system enhancements in the DCP, MCF and ICT work plans developed through regular engagement with customer representatives.


64


ICT Capabilities are developed and sustained in accordance with agreed stakeholder priorities.

Strategic investment in consolidated networks, infrastructure, service orientated architecture, applications and information management enables transition to a Single Information Environment.

ICT security is maintained to an appropriate level.

ICT shared services reforms are effective in reducing costs and increasing productivity across Defence.

ICT services and service support are delivered in accordance with the Defence ICT Services Delivery Charter and the Defence ICT Services Catalogue.


65

Programme 1.11: Chief Operating Officer – Defence People


The Defence People Group’s (DPG’s) primary objective in delivering Programme 1.11 is to enable Defence capability through people. DPG contributes to Australia’s national security by providing people management, policy, planning and support services to Defence. This includes a range of deliverables and initiatives in support of the following key requirements:

Culture: Defence has a fair, inclusive and respectful environment.

Numbers: There are sufficient numbers of people to achieve the Defence mission for the current and future force.

Skills: Our people have the required skills to achieve the Defence mission for the current and future force.

Commitment: Defence people are committed to delivering the required capability now and for the future force.

Safety: The health, safety and welfare of our people is paramount.

The need to optimise the Defence HR framework to meet the outcomes of the First Principles Review will be a key focus. This includes supporting our people to transition to an improved organisational structure, continued professionalisation of our workforce, and delivery of further reform in our Human Resources (HR) services and policy.

Building the people capability to deliver the force of the future outlined in the Defence White Paper and Force Structure Review will be supported through the development and implementation of an updated Strategic Workforce Plan, an ADF Total Workforce Model, and a focus on ensuring the skills base for our workforce is aligned to capability requirements, including enablers.


66

Table 30: Cost Summary for Programme 1.11 Chief Operating Officer – Defence People

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[1]

135,459 157,103 146,509 144,261 145,246

Suppliers 303,493 283,549 295,620 290,923 298,365

Grants 1,614 1,521 1,553 1,586 1,623






Total expenses 444,242 446,297 447,907 441,144 449,777

Income

Revenues




Gains





Total income - - - - -


People 444,242 446,297 447,907 441,144 449,777

Note



67


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

Support the implementation of the people components of the First Principles Review and the Defence White Paper, including the Force Structure Review.

Provide professional HR services to Defence and continue to reform and embed shared services as a business as usual model.

Continued coordination and facilitation of the Defence-wide implementation of Pathway to Change, ongoing cultural reform and sustaining the momentum of our diversity agenda.

Develop an updated Strategic Workforce Plan that enables a planned and professional integrated workforce with a strong performance management culture.

Continue to implement of the ADF Total Workforce Model.

Provide contemporary superannuation portability and choice of superannuation fund options to new ADF members.

Full departmental accountability for Defence’s payroll systems.

In conjunction with the Department of Veterans’ Affairs coordinate the measures to provide seamless support to wounded, ill and injured members of the ADF.

Coordinate and facilitate the implementation of the Defence Work Health and Safety Strategy and the Diversity and Inclusion Strategy.

Continue support to ADF members and families through a national service delivery model.

Conduct ADF recruiting, including for the Gap Year programme.

Process applications for Defence medals, honours and awards.


68


Advice to the Secretary, CDF and Government on people issues is timely and of a high quality.

People reform through the First Principles Review, Defence White Paper, and HR services is effective

in improving customer-focused service delivery.

Projects and initiatives described in Pathway to Change and the People chapter of the Defence Annual Plan, which are aimed at delivering a sustainable people capability in Defence, are

completed in a timely manner and achieve the desired outcomes.

Implementation milestones are achieved for an updated Strategic Workforce Plan, including for each APS job family.

Implementation of a strengthened performance management system.

Completion of the ADF Total Workforce Model for implementation by the Services.

Implementation of a new modern military superannuation arrangement for people joining the ADF from 1 July 2016.

Enhanced support to wounded, ill and injured members of the ADF is provided in conjunction with Department of Veterans’ Affairs.

Implementation milestones are achieved on schedule for the Defence Work Health and Safety Strategy and the Diversity and Inclusion Strategy.

Provide timely and professional support services to ADF members and families, including delivery of family support programmes and bereavement support in the event of death and serious casualties.

Achieve ADF recruiting targets.

Ensure timely recognition of ADF members, ex-serving members and APS employees in accordance with the Australian and Imperial Honours and Awards systems, and the civilian long service recognition and schemes.


69

Programme 1.12: Defence Science and Technology


The Defence Science and Technology Organisation’s (DSTO) principal objective in delivering Programme 1.12 is to provide valued scientific advice and innovative technology solutions to the Government, Defence and Australia’s national security agencies to support the conduct of Defence operations, the provision of Defence capabilities and the promotion of security and stability. DSTO also has whole-of-government responsibility for coordinating science and technology (S&T) support to national security.

This objective is achieved through applied research focussed on supporting Defence and national security operations, sustaining and enhancing current capability, and supporting the development and acquisition of future capability. The organisation also has a future-proofing role for Defence by investigating client-focussed future concepts, contexts and capabilities.

DSTO’s strategic research programme is future-focussed, aimed at providing game changing capability for Defence and national security in the longer term by responding to emerging threats and opportunities.

In achieving its objectives, DSTO draws upon the world class scientific ability of its staff and research facilities, and extensive networks and partnerships with external organisations such as international research agencies, industry and academia. These networks support DSTO’s role as a knowledge and innovation integrator for Defence and promote defence science and education in the broader Australian community.

Table 31: Cost Summary for Programme 1.12 Defence Science and Technology

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[1]

275,365 297,729 279,951 264,594 274,509

Suppliers 143,111 138,027 131,240 130,247 120,403

Grants[2]

266 403 58 - -






Total expenses 449,322 464,393 438,760 419,043 418,547

Income

Revenues


Other revenue 186 191 195 201 206

Total revenue 31,690 31,549 32,333 33,184 34,014

Gains




Total gains 1,177 1,195 1,286 1,445 1,620

Total income 32,867 32,744 33,619 34,629 35,634

Programme 1.12 Defence Science and Technology 416,455 431,649 405,141 384,414 382,913

Notes


2. Grants predominately include the approved multi-year grant for the DSTO Industry Placement Programme. Refer to Section 3.1.2 for further detail.


70


Provide timely, accurate and expert science and technology (S&T) advice on Defence and national security related matters to the Secretary, CDF and Government.

Provide effective, relevant and timely:

S&T solutions and technical support to Defence operations, to the current force and to national security agencies’ operations and capabilities

S&T support to capability development and acquisition decision making, including technical risk assessment and certification for Defence Capability Plan projects.

Deliver a programme of strategic research aimed at enhancing future Defence and national security capabilities and maintaining the organisation’s world-class research expertise and facilities.

Further develop strategic partnerships with external organisations, in particular international partners, local industry and academia; promote defence science and related education in the broader Australian community.

Contribute to Defence reform outcomes by continuing to seek and implement improvements to DSTO leadership, business and culture, including fostering diversity and gender equality.


Advice to Defence and the Government on science and technology (S&T) matters is valued through its contribution to improved Defence and national security outcomes.

The applied research programme is strategically balanced and aligned with the needs of Defence in support of operations, the current force, capability development and acquisition, and the needs of national security agencies.

Research programme outputs enable enhanced Defence and national security capability, treat risks and save resources.

Strategic research is focussed on supporting future Defence capability; it enables game-changing capability in the longer term, to both prevent and create strategic surprise.

Programme outcomes are delivered on time, in scope and within agreed resources.

DSTO’s S&T capability is contributed to by:

a workforce with world-class expertise and facilities, measured through benchmarking and client feedback; and

appropriately leveraged S&T engagement and partnerships with research organisations, industry and academia, including international government agencies.


71

Programme 1.13: Capability Development


Capability Development Group (CDG) develops and manages the Defence Capability Plan (DCP) and prepares Defence capability investment approval proposals for Government consideration.

CDG is also responsible for Defence Test and Evaluation advice and policy as well as conducting Defence trials. These duties are carried out by the Australian Defence Test and Evaluation Office.

To achieve this, CDG:

works with other areas of Defence to develop an affordable, achievable DCP that will provide the military capabilities Defence needs to align with the Government’s strategic direction;

develops compelling business cases for projects in the DCP for Government consideration;

works with industry and capability development organisations in other countries; and

provides best practice expertise for all elements of capability development.

Table 32: Cost Summary for Programme 1.13 Capability Development[1]

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[2]

28,672 61,965 117,705 150,594 209,691

Suppliers 470,246 896,223 1,394,189 1,644,691 2,304,987

Grants - - - - -

Depreciation and amortisation 2,992 365,401 1,260,674 1,723,093 2,272,924





Total expenses 605,864 1,455,699 2,930,683 3,704,698 5,003,878

Income

Revenues




Gains




Total gains 17,261 21,938 26,268 30,960 35,991

Total income 17,261 21,938 26,268 30,960 35,991

Programme 1.13 Capability Development 588,603 1,433,761 2,904,415 3,673,738 4,967,887

Notes


1. Operating costs associated with the acquisition programme of Defence, such as net personnel and operating costs, reside in Programme 1.13

Capability Development until such a time that the capital items are transferred to another Programme.


72


Deliver the Defence Capability Plan (DCP).

Provide timely and high quality advice on Defence capability development policy and processes.

Deliver Defence capability modernisation proposals to government for consideration and approval.

Deliver DCP funded innovation programmes.

Deliver independent Test and Evaluation advice, planning, support and trials to Defence throughout the capability systems life cycle.


Provide advice to the Secretary, CDF and the Minister within agreed timeframes.

Deliver Defence capability proposals with feasible schedule, cost and capability estimates.

Innovation activities contribute to current or future Defence capability, or de-risk capability development activities.

Submit Test Concept Documents, Early Test Plans, Test Evaluation Master Plans and Trial reports in support of capability submissions.


73

Programme 1.14: Chief Finance Officer


The Chief Finance Officer Group (CFOG) is responsible for providing strategic financial advice and information to Ministers, the Secretary, the CDF and Defence Senior Leaders. It provides a whole-of-Defence focus for planning, management, monitoring and reporting of key deliverables to the Government, including Defence’s outputs.

The CFOG is responsible for Defence’s financial control and assurance and manages Defence’s budget and its financial policies, principles and practices in accordance with the Public Governance, Performance and Accountability Act 2013.

The CFOG drives Defence’s financial management and improvement programmes through uniform financial management approaches and a streamlined accountability structure.

Portfolio budget pressures and risks are managed through a strong culture of prioritising resource management.

The CFOG works with all Services and Groups to identify costs drivers for all key business elements.

To streamline, standardise and professionalise the delivery of financial services across Defence the CFOG leads the reform programme to deliver Finance as a Shared Service.


74

Table 33: Cost Summary for Programme 1.14 Chief Finance Officer

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees[1]

89,159 129,322 126,840 130,953 133,749

Suppliers[2][3]

817,128 836,896 896,555 927,006 950,742

Grants - - - - -

Depreciation and amortisation[4]

5,621 13,415 17,988 17,815 27,028





Total expenses 914,209 982,503 1,044,148 1,078,438 1,115,235

Income

Revenues

Goods and services 275 - - - -

Other revenue[2]

797,075 - - - -

Total revenue 797,350 - - - -

Gains

Reversal of previous asset write-downs 600 673 651 640 823


Other gains 5,254 5,386 5,520 5,658 5,800

Total gains 5,854 6,059 6,171 6,298 6,623

Total income 803,204 6,059 6,171 6,298 6,623

Programme 1.14 Chief Finance Officer 111,005 976,444 1,037,977 1,072,140 1,108,612

Notes

4. Capital is held in this Programme from time to time for future prioritisation. Accordingly, the associated depreciation and amortisation resides in

this Programme.


3. In accordance with the First Principles Review, the DMO has transferred to Defence from 2015-16, and as a result, $805m is included in Defence's

Departmental appropriations. Expenses are reflected in the Chief Finance Officer until a Programme is established on 1 July 2015 at which time

these expenses will be recorded against this new Programme.

2. In 2014-15 Defence receives resources free of charge from the DMO. In accordance with the First Principles Review, the DMO has transferred to

Defence from 2015-16 and as a result, these resources received free of charge will no longer exist.


Defence Financial Statements.

Defence Portfolio Budget Statements.

Defence Portfolio Additional Estimates Statements.

Defence Accountable Authority Instructions.

Monthly/Annual input to whole-of-government reporting.


75


Provide timely and high quality financial advice to the Minister, the Secretary and CDF.

Produce Defence’s Budget, Financial Statements and the annual Defence Management and Finance Plan within agreed statutory timeframes.

Maintain un-qualified Financial Statements.


76

Administered Programme 1.15: Defence Force Superannuation Benefits


The objective of Programme 1.15 is to administer and report member and employer contributions paid during the year to the Defence Force Retirement and Death Benefits (DFRDB) scheme and the Military Superannuation and Benefits Scheme (MSBS). It accounts for the liability for these schemes plus the Defence Forces Retirement Benefits (DFRB) scheme. This programme includes payment of the MSBS Retention Benefit.

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.

All three 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.

In May 2014, the Government announced a new superannuation scheme for ADF members, which will take effect from 1 July 2016, called ADF Super.

Table 34: Cost Summary for Administered Programme 1.15 Defence Force Superannuation Benefits

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Net foreign exchange losses - - - - -

Retention benefits 95,883 77,940 93,000 105,540 119,920

Military superannuation benefits 2,396,000 1,475,211 1,413,910 1,363,802 1,322,977

Total expenses 2,491,883 1,553,151 1,506,910 1,469,342 1,442,897

Income

Revenues

Interest - - - - -

Net foreign exchange gain - - - - -

Military superannuation contributions 1,316,539 1,347,113 1,234,075 1,166,590 1,099,694

Total income 1,316,539 1,347,113 1,234,075 1,166,590 1,099,694

Programme 1.15 Defence Force Superannuation Benefits 1,175,344 206,038 272,835 302,752 343,203


77


Report on superannuation contributions and the movement in liabilities associated with the three military superannuation schemes.


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


78

Administered Programme 1.16: Defence Force Superannuation Nominal Interest


The objective of Programme 1.16 is to administer nominal interest for the three 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).

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.

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

Table 35: Cost Summary for Administered Programme 1.16 Defence Force Superannuation Nominal Interest

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses


Retention benefits - - - - -


Total expenses 3,406,000 3,557,464 3,726,501 3,895,885 4,065,719

Income

Revenues

Interest - - - - -

Net foreign exchange gain - - - - -

Military superannuation contributions - - - - -


Programme 1.16 Defence Force Superannuation Nominal

Interest 3,406,000 3,557,464 3,726,501 3,895,885 4,065,719


Report on superannuation nominal interest associated with the three military superannuation schemes.


Provide quality administration services for DFRB, DFRDB and MSBS nominal interest transactions.


79

Administered Programme 1.17: Housing Assistance


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.

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.

The Scheme contains a three-tiered subsidised loan limit structure that provides increasing entitlements as members serve beyond key exit points.

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 Defence Credit Union (ADCU), and the Defence Bank.

Table 36: Cost Summary for Administered Programme 1.17 Housing Assistance

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses


Housing subsidies 104,532 119,777 137,633 152,345 171,097

Total expenses 104,532 119,777 137,633 152,345 171,097

Income

Revenues

Interest - - - - -

Net foreign exchange gains - - - - -

Dividends - - - - -

License fees 13,953 14,416 15,268 16,127 16,993

Other - - - - -

Total income 13,953 14,416 15,268 16,127 16,993

Programme 1.17 Housing Assistance 90,579 105,361 122,365 136,218 154,104


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

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

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


80


Members respond to and take 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.


81

Administered Programme 1.18: Other Administered


Other Administered comprises three elements:

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

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

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.

Table 37: Cost Summary for Administered Programme 1.18 Other Administered

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Total expenses - - - - -

Income

Revenues

Interest 29,636 30,936 32,866 34,175 34,175

Dividends 50,274 50,476 57,390 54,331 36,308

Other 29,717 31,402 25,893 20,339 28,989

Total income 109,627 112,814 116,149 108,845 99,472

Programme 1.18 Other Administered -109,627 -112,814 -116,149 -108,845 -99,472


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


Accurate accounting and reporting of ‘Other Administered’.


82

Outcome 2: The advancement of Australia’s strategic interests through the conduct of military operations and other tasks as directed by Government

Outcome 2 Strategy

The ADF is required to undertake a wide range of military and humanitarian assistance operations as directed by the Government to ensure the defence of Australia and its national interests. The ADF's military operations and other tasks contribute to the achievement of the Government's strategic objectives, defined as defending Australia, contributing to the security of the immediate neighbourhood and supporting wider interests.

Outcome 2 Resources


2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Programme 2.1 - Operations Contributing to the Security of the Immediate Neighbourhood

Revenue from other sources - - - - -

Departmental outputs 4,022 74 - - -

Programme 2.2 - Operations Supporting Wider Interests

Revenue from other sources 3,827 15,192 - - -

Departmental outputs 784,980 863,733 136,399 19,058 -

Total resourcing

Total Departmental outputs 789,002 863,807 136,399 19,058 -

Total Departmental revenue from other sources 3,827 15,192 - - -

Total resources for Outcome 2 792,829 878,999 136,399 19,058 -


83


Programme 2.1: Operations Contributing to the Security of the Immediate Neighbourhood


Ensure that the Government, through the ADF, 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, East Timor, South East Asian countries and the island countries of the South West Pacific.

Table 39: Cost Summary for Programme 2.1 Operations Contributing to the Security of the Immediate Neighbourhood

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees - - - - -

Suppliers 4,022 74 - - -

Grants - - - - -

Depreciation and amortisation - - - - -





Total expenses 4,022 74 - - -

Income

Revenues




Gains






Programme 2.1 Operations Contributing to the Security

of the Immediate Neighbourhood 4,022 74 - - -


84


Operation Commenced Objective

Gateway 1981 Conduct northern Indian Ocean and South China Sea maritime surveillance patrols.

Solania 1988 Conduct South West Pacific maritime surveillance patrols.

Render Safe 2011 Provide enduring explosive ordnance disposal support to the nations of the South West Pacific.

Saville 2014 Responses to foreign military activity in Australia’s maritime approaches.

Pacific Assist 2015 ADF’s contribution to the DFAT led Australian Government response providing disaster relief to Vanuatu in the wake of Cyclone Pam.


ADF operations meet their stated objective within the Government’s guidance.

ADF forces are effectively deployed and sustained.

ADF forces are withdrawn for reconstitution when they are no longer required.


85

Programme 2.2: Operations Supporting Wider Interests


Operations supporting wider interests are designed to contribute to United Nations’ and international efforts to uphold global security.

Table 40: Cost Summary for Programme 2.2 Operations Supporting Wider Interests

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees 103,572 128,974 4,602 - -

Suppliers 599,575 663,387 43,730 19,058 -

Grants 85,079 86,561 88,067 - -



Write-down of assets and impairment of assets 40 - - - -


Other expenses 541 3 - - -

Total expenses 788,807 878,925 136,399 19,058 -

Income

Revenues

Goods and services 3,827 15,192 - - -


Total revenue 3,827 15,192 - - -

Gains





Total income 3,827 15,192 - - -

Programme 2.2 Operations Supporting Wider Interests 784,980 863,733 136,399 19,058 -


86



Paladin 1956 Contribute to the United Nations Truce Supervision Organisation in the Middle East.

Mazurka 1982 Contribute to the Multinational Force and Observers in the Sinai.

Palate II 2005 Provide a Military Liaison Officer to the United Nations Assistance Mission in Afghanistan.

Aslan 2011 Contribute to the United Nations mission to the Republic of South Sudan.

Manitou 2014 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.

Accordion 2014 Provide support to Operations MANITOU, HIGHROAD and OKRA from within the Gulf States.

Okra 2014 Operations in support of coalition response to the Iraq crisis.

Highroad 2015 Ongoing contribution to the NATO-led mission in Afghanistan (replaces Operation Slipper (2001) supporting Afghanistan’s security, development and governance, including through a contribution to the post-2014 NATO-led ‘train, advise, assist’ mission).


87


ADF operations meet their stated objective within the Government’s guidance.

ADF forces are effectively deployed and sustained.

ADF forces are withdrawn for reconstitution when they are no longer required.


88

Outcome 3: Support for the Australian community and civilian authorities as requested by Government

Outcome 3 Strategy

Defence can be called upon to provide emergency and non-emergency assistance to the Government and the Australian community in non-combat related roles. The tasks Defence may be requested to undertake could include emergency assistance, search and rescue, disaster recovery, surveillance, security or non-emergency law enforcement roles. Tasks may be directed by the Government or requested by State/Territory Governments, other civil authorities, government departments or agencies through Emergency Management Australia. The Government may also require Defence to support significant domestic events and international events conducted within Australia.

Outcome 3 Resources


2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Programme 3.1 - Defence Contribution to National Support Tasks in Australia

Revenues from other sources - - - - -

Departmental outputs 67,740 48,705 5,688 - -

Total resourcing

Total Departmental outputs 67,740 48,705 5,688 - -

Total Departmental revenue from other sources - - - - -

Total resources for Outcome 3 67,740 48,705 5,688 - -


89


Programme 3.1: Defence Contribution to National Support Tasks in Australia


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 Australian Customs and Border Protection Service civil surveillance programme and Border Protection 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) programme, 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.

Table 42: Cost Summary for Programme 3.1 Defence Contribution to National Support Tasks in Australia

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Expenses

Employees 22,476 17,692 4,414 - -

Suppliers 45,264 31,013 1,274 - -

Grants - - - - -






Total expenses 67,740 48,705 5,688 - -

Income

Revenues




Gains






Programme 3.1 Defence Contribution to National Support

Tasks in Australia 67,740 48,705 5,688 - -


90



Resolute 2006 Contribute to the whole-of-government maritime surveillance and response.

Southern Indian Ocean

2014 Contribute to the whole-of-government search effort for the Malaysian Airlines Flight MH370.

Hawick 2014 Contribute to the whole-of-government Operation Bring Them Home, the search and recovery effort for Malaysian Airlines Flight MH17.

DACC Ongoing 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.


Defence’s contribution to national support tasks in Australia meets Government directives.

Defence’s response to requests for Defence Force Aid to the Civil Authority is effectively managed, sustained and reported.

Defence’s response to requests for Defence Assistance to the Civil Community is effectively managed, sustained and reported.


91

Section 3: Defence Explanatory Tables and Budgeted Financial Statements

3.1 EXPLANATORY TABLES

Section 3 presents explanatory tables and budgeted financial statements which provide a comprehensive snapshot of entity finances for the 2015-16 budget year. It explains how budget plans are incorporated into the financial statements and provides further details of the reconciliation between appropriations and programme expenses, movements in administered funds, special accounts and government indigenous expenditure.

Table 43: Summary of Estimated Special Account Balances [1][2][3]

Outcome

Opening

2015-16

2014-15

$'000

Receipts

2015-16

2014-15

$'000

Payments

2015-16

2014-15

$'000

Adjustments

2015-16

2014-15

$'000

Closing

Balance

2015-16

2014-15

$'000

1 50,698 34,671 -56,345 - 29,024

66,553 39,873 -55,728 - 50,698

1 324 4 -3 - 325

324 4 -4 - 324

1 169 5 -4 - 170

167 6 -4 - 169

1 1,391 309 -272 - 1,428

1,338 68 -15 - 1,391

Total Special Accounts 2015-16 52,582 34,989 -56,624 - 30,947

2014-15 estimated actual 68,382 39,951 -55,751 - 52,582

Notes

2. 2014-15 estimated actuals in italics.

3. These are all Special Public Monies.

1. 2015-16 estimates in bold.

Services for Other Entities and Trust Moneys -

Defence Special Account – Public Governance,

Performance and Accountability Act 2013

Defence Endowments Special Account – Public

Governance, Performance and Accountability Act

2013

Fedorczenko Legacy Special Account – Public

Governance, Performance and Accountability Act

2013

Young Endeavour Youth Program Special Account –

Public Governance, Performance and Accountability

Act 2013


92

3.1.1 Australian Government Indigenous Expenditure

Table 44: Australian Government Indigenous Expenditure

Programme

Bill No. 1

$'000

Outcome 1

Defence Indigenous Employment Strategy[1][2]

1.11

Departmental 2015-16 Budget Estimate 3,862

Departmental 2014-15 Estimated Actual 3,838

Army Aboriginal Community Assistance Programme[1][3]

1.3

Departmental 2015-16 Budget Estimate 5,700

Departmental 2014-15 Estimated Actual 5,700

Total 2015-16 Budget Estimate 9,562

Total 2014-15 Estimated Actual 9,538

Notes

1. All amounts are GST exclusive. Budget Estimate and Estimated Actuals are direct costs.

3. The majority of project costs are subsequently recovered from Department of the Prime Minister and Cabinet

under Outcome 2.2.1 Indigenous Housing and Infrastructure Appropriation.

2. The Defence Indigenous Development Programme, as previously disclosed, has been subsumed into the

Defence Indigenous Employment Strategy.

Defence Indigenous Employment Strategy

Defence is committed to increasing employment opportunities for Indigenous Australians. The Defence Indigenous Employment Strategy (IES) is the roadmap to achieving this outcome in Defence. The IES is guided by the Defence Reconciliation Action Plan, which provides the directive to develop practical employment opportunities for Aboriginal and Torres Strait Islander people and identifies the mechanisms to do so.

The IES includes six strategic imperatives for increasing Indigenous representation in the Defence workforce:

1. Improving the understanding in Defence, at all levels, of why Indigenous employment is important to Defence.

2. Establishing specific targets for Indigenous employment in Defence.

3. Increasing annually the number of Indigenous Australians who are attracted to, and apply for, a Defence career.

4. Implementing specific recruitment activities to maximise Indigenous employment opportunities.

5. Enhanced retention of Indigenous personnel through the application of specifically designed initiatives.

6. Improved Indigenous workforce research to inform future strategies that will inform ongoing development of the Defence IES and measure success.


93

The IES implementation plan includes a number of new activities, but also reflects existing programmes such as the Defence Indigenous Development Programme, Indigenous Pre-Recruitment Courses and Defence participation in the APSC Indigenous Pathways Programme. All activities are being implemented through a whole-of-Defence approach, collaboration with other APS agencies and partnerships with external organisations. A number of programmes are also being implemented to support the retention of Indigenous Defence personnel, including Indigenous Leadership training, reinvigoration of the Defence Aboriginal and Torres Strait Islander Network and ensuring that Defence is a culturally inclusive and respectful workplace through a comprehensive Cultural Awareness Learning Framework.

Army Aboriginal Community Assistance Programme

The Army Aboriginal Community Assistance Programme (AACAP) is a cooperative initiative between Army and the Department of the Prime Minister and Cabinet to improve environmental health conditions within remote Aboriginal communities. The programme seeks to maximise the benefits to Indigenous communities by focusing on projects that allow the Army to make best use of its construction expertise and capability, by capitalising on the Army’s ability to holistically deliver a range of services to remote Indigenous communities that would not normally be available in a single project. The 2015 project is within the Titjikala Community in the Northern Territory. Planning for the 2016 AACAP works is underway with the Laura community, in Far North Queensland.


94

3.1.2 Grants

Table 45: Approved Grants

2014-15

Estimated

Actual

$'000

Total Grant

Amount

Approved

$'000

2015-16

Budget

Estimate

$'000

Approved since 2014-15 PAES

3,527 8,982 2,727

206 535 329

Australian Strategic Policy Institute (ASPI) 150 150 -

105 105 -

3,988 9,772 3,056

66 66 -

1,490 1,490 -

59 59 -

130 130 -

30 30 -

3,276 3,276 -

400 400 -

400 400 -

50 150 100

21 131 52

40 62 22

5,962 6,194 174

Total grants 9,950 15,966 3,231

Australian War Memorial (AWM)

United Nations - Department of Peacekeeping Operations (DPKO) (USD 80)

Australian Member Committee of the Council for Security Cooperation in the

Asia-Pacific (AUS-CSCAP)

Family Support Funding Programme

Defence Science and Technology Organisation (DSTO) Industry Placement

Programme 2015

Total grants approved since 2014-15 PAES

Previously approved grants

Army History Research Grants Scheme

Australian Strategic Policy Institute (ASPI)

The Sir Richard Williams Foundation

Kokoda Foundation - Australia-United States Trilogy Dialogue

Kokoda Foundation - Young Leaders Strategic programme

Royal Melbourne Institute of Technology

Total previously approved grants

Army and Air Force Canteen Service (AAFCANS)

The Australian Sailor Pty Ltd

University of Melbourne

The following are grants that have been approved since the Portfolio Additional Estimates Statements 2014-15:

Australian War Memorial

Two grants were approved for the Australian War Memorial.

A grant of $800,000 was approved to assist in completion of the remaining three volumes of a six volume Official History of Peacekeeping, Humanitarian and Post-Cold War Operations.

A grant of $8,181,818 (plus GST of $818,182) was approved for an Australian War Memorial project visiting remote, regional and urban locations across Australia. Exhibitions provide an opportunity for stories to be shared of the local area's involvement in WW1 and contribution to the ANZAC legacy. This offers an opportunity to raise the profile of the three services and support recruitment initiatives, particularly in rural Australia.


95

Defence Science and Technology Organisation (DSTO) Industry Placement Programme 2015

A multi-year grant (2014-15 to 2016-17) of $534,560 was approved to fund 16 students while undertaking a placement at DSTO for the purpose of meeting the work experience requirements of their university degree.

Australian Strategic Policy Institute (ASPI)

A grant of $150,000 was approved for ASPI, to co-host the second iteration of the North East Asia Defence and Security Forum 1.5 Track Dialogue.

United Nations - Department of Peacekeeping Operations (DPKO)

A grant of USD $80,000 was approved to contribute to the implementation of select recommendations from the UN DPKO Expert Panel’s review of technologies in UN Peacekeeping Operation, aiming to improve the effectiveness of peacekeeping operations.


96

3.2 RESOURCE SUMMARY

As a result of the First Principles Review, the Defence Materiel Organisation will be disbanded and transferred into Defence. From 2015-16 onwards, the figures presented represent Defence inclusive of the former Defence Materiel Organisation.

Table 46: Budgeted Departmental Net Cost of Service (cash) (for the period ended 30 June)[1]

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

NET COST OF SERVICE (CASH)

Cost of Service

Employee payments 10,312,603 11,664,574 11,316,436 11,398,029 11,601,575

Supplier payments 10,637,452 11,202,746 10,673,176 11,764,337 12,292,824

Purchase of specialist military equipment 6,011,568 6,556,394 6,133,138 7,239,304 8,899,257

Purchase of inventory 1,064,033 1,358,054 1,419,531 1,363,183 1,428,627

Purchase of other property, plant and equipment 1,780,084 1,622,501 1,802,750 2,232,508 2,232,448

Appropriation carried forward from previous year 71,357 - - - -

Net cash to / (from) the Official Public Account 853 -11,817 77,346 46,070 8,066

Other cash used 1,056,443 1,087,923 1,050,777 1,046,542 1,070,765

Total cash used 30,934,393 33,480,375 32,473,154 35,089,973 37,533,562

Own source receipts 1,803,822 1,628,930 1,374,504 1,486,225 1,537,385

Total cash received 1,803,822 1,628,930 1,374,504 1,486,225 1,537,385

Net cost of service (cash) 29,130,571 31,851,445 31,098,650 33,603,748 35,996,177

FUNDED BY

Appropriation Bill 1/3/5 (price of outcomes) 26,349,322 28,976,236 28,582,387 30,034,828 31,106,731

Appropriation Bill 2/4/6 (equity injection) 2,758,491 2,875,209 2,516,263 3,568,920 4,889,446

Total funding source 29,107,813 31,851,445 31,098,650 33,603,748 35,996,177

Change in cash -22,758 - - - -

Note

1. As a result of the First Principles Review, the Defence Materiel Organisation will be disbanded and transferred into Defence. From 2015-16 onwards,

the figures presented represent Defence inclusive of the former Defence Materiel Organisation.


97

Portfolio Resource Statement

Table 47: Portfolio Resources[1]

Departmental

Bill No. 1

$m

Appropriation

Bill No. 2

$m

Return (to) /

from the OPA

$m

Special

Appropriation

$m

Total

Appropriation

$m

Non-

Appropriation

Receipts

$m

Other Non-

Appropriated

Items

$m

Total

Resources

Available

$m


Administered appropriations - - -1,477.8 5,230.4 3,752.6 1,477.8 - 5,230.4

Departmental appropriations[2]

28,976.2 2,875.2 11.8 - 31,863.3 832.1 - 32,695.4

Total Department of Defence 28,976.2 2,875.2 -1,466.0 5,230.4 35,615.8 2,309.9 - 37,925.7

Departmental

Bill No. 1

$m

Appropriation

Bill No. 2

$m

Return (to) /

from the OPA

$m

Special

Appropriation

$m

Total

Appropriation

$m

Non-

Appropriation

Receipts

$m

Other Non-

Appropriated

Items

$m

Total

Resources

Available

$m


Administered appropriations - - - - - - - -

Departmental appropriations - - - - - 1,146.4 - 1,146.4

Total Defence Housing Australia - - - - - 1,146.4 - 1,146.4

Notes

1. Figures shown include inter-agency transactions.

2. In accordance with the First Principles Review, the Defence Materiel Organisation has transferred to the Department of Defence from 2015-16, and as a result, $805m is included in

Defence's Departmental appropriations.


98

Table 48: Total Departmental and Administered Cash Budget for the Department of Defence[1]

2015-16

Budget

Estimate[2]

$m

APPROPRIATIONS AND CAPITAL

Appropriation (Bill 1) 28,976.2

Appropriation - Contributed Equity (Bill 2) 2,875.2

Appropriations for military superannuation 2,370.7

less Returns to the OPA -1,466.0

Total cash available 32,756.1

OPERATING ACTIVITIES

Cash received

Goods and services 553.0

Net GST received 796.8

Interest 30.9

Other cash 87.2

Fees 14.4

Total cash received 1,482.4

Cash used

Employees 10,317.5

Suppliers 11,202.7

Net GST paid 796.8

Grants 104.5

Other cash 36.5

Subsidies paid 119.8

Military benefits 2,230.9

Total cash used 24,808.7

Net cash from or (used by) operating activities -23,326.3

INVESTING ACTIVITIES

Cash received

Proceeds from sales of land and buildings 196.4

Proceeds from sales of infrastructure, plant and equipment 23.1

Proceeds from sales of specialist military equipment 7.5

Dividends 50.3

Total cash received 277.2

Cash used

Purchase of land and buildings 974.3

Purchase of infrastructure, plant and equipment 587.8

Purchase of specialist military equipment 6,556.4

Purchase of intangibles 60.4

Purchase of inventory 1,358.1

Selling costs on sale of assets 5.7

Finance costs 105.8

Loans 20.0

Total cash used 9,668.5

Net cash from or (used by) investing activities -9,391.2

FINANCING ACTIVITIES

Cash used

Repayment of debt 38.6

Total cash used 38.6

Net cash from or (used by) financing activities -38.6

Net increase or (decrease) in cash and cash equivalents held -

Cash and cash equivalents at the beginning of the reporting period 142.7

Effect of exchange rate movements on cash and cash equivalents -

Cash and cash equivalents at the end of the reporting period 142.7

Notes

1. Figures shown eliminate interagency transactions and transactions flowing between Departmental and Administered funding.

2. As a result of the First Principles Review, the Defence Materiel Organisation will be disbanded and transferred into Defence. The

figures presented in this table for 2015-16 represent Defence inclusive of the former Defence Materiel Organisation.


99

Table 49: Defence Resource Statement - Budget Estimates for 2015-16 as at May 2015[1]

Seri

al

No

.

Estimate of

prior year

amounts

available in

2015-16

$'000

+

Proposed at

Budget

2015-16

$'000

=

Total Estimate

2015-16

$'000

Total Available

Appropriation

2014-15

$'000

ORDINARY ANNUAL SERVICES

Outcome 1 - 28,063,724 28,063,724 25,492,580

Outcome 2 - 863,807 863,807 789,002

Outcome 3 - 48,705 48,705 67,740

1 Total Departmental outputs - 28,976,236 28,976,236 26,349,322

2 Total ordinary annual services (1) - 28,976,236 28,976,236 26,349,322

OTHER SERVICES

Departmental non-operating

Equity injections - 2,875,209 2,875,209 2,758,491

3 Total Departmental non-operating - 2,875,209 2,875,209 2,758,491

4 Total other services (3) - 2,875,209 2,875,209 2,758,491

5 Total available annual appropriation (2+4) - 31,851,445 31,851,445 29,107,813

SPECIAL APPROPRIATIONS

Special appropriations limited by

criteria/entitlement

Defence Forces Retirement Benefits Act, 1948 Part

1 s.15D and VIC , s.82ZJ - 25,542 25,542 23,000

Defence Force Retirement and Death Benefits Act,

1973 Part XII, s.125 - 1,872,626 1,872,626 1,794,000

Military Superannuation and Benefits Act, 1991 Part

V, s.17 - 3,212,447 3,212,447 4,080,883

Defence Force (Home Loan Assistance) Act, 1990

Part IV, s.38 - 1,116 1,116 1,357

Defence Home Ownership Assistance Scheme Act,

2008 Part VI, s.84 - 118,661 118,661 103,175

6 Total special appropriations - 5,230,392 5,230,392 6,002,415

7 Total appropriations (5+6) - 37,081,837 37,081,837 35,110,228

Funding from other sources - 2,309,906 2,309,906 2,513,673

Returns from the OPA (net) - -1,466,000 -1,466,000 -1,453,059

Previous years' outputs (appropriation receivable) 171,222 - 171,222 414,742

Cash available 142,732 - 142,732 35,490

8 Total other available resources 313,954 843,906 1,157,860 1,510,846

9 Total resourcing (7+8) 313,954 37,925,743 38,239,697 36,621,074

Special Accounts

Opening balance 52,582 - 52,582 68,382

Appropriation receipts - - - -

Appropriation receipts - other agencies - - - -

Non-appropriation receipts to special accounts - 34,989 34,989 39,951

10 Total special accounts 52,582 34,989 87,571 108,333

Note


figures presented in this table for 2015-16 represent Defence inclusive of the former Defence Materiel Organisation.


100

Table 50: Third Party Payments to and from other Agencies

2014-15

$'000

2015-16

$'000

Revenue received from Defence Housing Australia for interest on loans, dividends and

competitive neutrality payments (Administered) 115,815 115,359

Payments made to Defence Housing Australia for the provision of services (Departmental) 532,251 578,104

Payments made to Department of Foreign Affairs and Trade for the provision of services

(Departmental) 22,976 23,247

Payments made to Comsuper for the provision of services (Departmental) 33,215 30,549

Payments made to the Attorney-General's Department for the provision of services

(Departmental) 25,000 13,188

Payments made to the Department of Finance for the provision of services (Departmental) 64,095 65,307

Payments made to the Australian Federal Police for the provision of services (Departmental) 36,657 42,032


101

3.3 BUDGETED FINANCIAL STATEMENTS

3.3.1 Departmental and Administered Budgeted Financial Statements

As a result of the First Principles Review, the Defence Materiel Organisation will be disbanded and transferred into Defence. From 2015-16 onwards, the figures presented represent Defence inclusive of the former Defence Materiel Organisation.

Table 51: Variation in Budgeted Departmental Comprehensive Income Statement (Showing Net Cost of Services) (for the period ended 30 June)

2015-16

Previous

Estimate

$'000

2015-16

Budget

Estimate[1]

$'000

Variation

$'000

Variation

%

EXPENSES

Employee benefits 10,868,445 11,667,963 799,518 7.4

Supplier expenses 12,546,188 12,531,134 -15,054 -0.1

Grants 92,554 104,465 11,911 12.9

Depreciation and amortisation 4,445,973 4,535,334 89,361 2.0

Finance costs 153,189 152,088 -1,101 -0.7

Write-down of assets and impairment of assets 916,785 916,304 -481 -0.1

Losses from sale of assets - - - -

Other 36,478 36,481 3 -

Total expenses 29,059,612 29,943,769 884,157 3.0

LESS:

OWN-SOURCE INCOME

Own-source revenue

Sales of goods and rendering of services 810,034 552,988 -257,046 -31.7

Other revenue 876,284 52,127 -824,157 -94.1

Total own-source revenue 1,686,318 605,115 -1,081,203 -64.1

Gains

Reversals of previous asset write-downs 328,826 328,746 -80 -

Sale of assets 22,881 28,286 5,405 23.6

Other gains 5,386 5,386 - -

Total gains 357,093 362,418 5,325 1.5

Total own-source income 2,043,411 967,533 -1,075,878 -52.7

Net cost of (contribution by) services 27,016,201 28,976,236 1,960,035 7.3

Revenue from Government 27,016,201 28,976,236 1,960,035 7.3

Surplus (deficit) attributable to the Australian Government - - - -

Total comprehensive income attributable to the Australian Government - - - -

Note


2015-16 Budget Estimate figures presented represent Defence inclusive of the former Defence Materiel Organisation.


102

Table 52: Variation in Budgeted Departmental Balance Sheet (as at 30 June)

2015-16

Previous

Estimate

$'000

2015-16

Budget

Estimate[1]

$'000

Variation

$'000

Variation

%

ASSETS

Financial assets

Cash and cash equivalents 12,732 142,732 130,000 1,021.0

Trade and other receivables 82,542 91,322 8,780 10.6

Tax assets 89,757 196,637 106,880 119.1

Appropriation receivable - 158,530 158,530 -

Other receivables 241,764 307,932 66,168 27.4

Total financial assets 426,795 897,153 470,358 110.2

Non-financial assets

Land and buildings 18,093,955 18,099,022 5,067 -

Infrastructure, plant and equipment 7,022,391 7,141,951 119,560 1.7

Specialist military equipment 45,773,813 46,518,675 744,862 1.6

Intangibles 798,009 794,076 -3,933 -0.5

Heritage and cultural 1,002,315 1,002,315 - -

Inventories 6,265,960 6,199,126 -66,834 -1.1

Prepayments 218,244 1,757,003 1,538,759 705.1

Total non-financial assets 79,174,687 81,512,168 2,337,481 3.0

Assets held for sale 28,693 28,693 - -

Total assets 79,630,175 82,438,014 2,807,839 3.5

LIABILITIES

Payables

Suppliers 1,110,276 2,482,671 1,372,395 123.6

Other 384,019 284,419 -99,600 -25.9

Total payables 1,494,295 2,767,090 1,272,795 85.2

Interest bearing liabilities

Leases 1,389,392 1,389,392 - -

Total interest bearing liabilities 1,389,392 1,389,392 - -

Provisions

Employee provisions 2,316,431 2,536,631 220,200 9.5

Restoration, decontamination and decommissioning 997,958 1,003,971 6,013 0.6

Other 2,294 5,318 3,024 131.8

Total provisions 3,316,683 3,545,920 229,237 6.9

Total liabilities 6,200,370 7,702,402 1,502,032 24.2

NET ASSETS 73,429,805 74,735,612 1,305,807 1.8

EQUITY

Contributed equity 24,026,731 25,028,870 1,002,139 4.2

Reserves 14,892,351 14,892,641 290 -

Retained surplus (accumulated deficit) 34,510,723 34,814,101 303,378 0.9

Total equity 73,429,805 74,735,612 1,305,807 1.8

Note




103

Table 53: Variation in Budgeted Departmental Statement of Cash Flows (for the period ended 30 June)

2015-16

Previous

Estimate

$'000

2015-16

Budget

Estimate[1]

$'000

Variation

$'000

Variation

%


Cash received

Appropriations 27,016,201 28,976,236 1,960,035 7.3

Goods and services 810,034 552,988 -257,046 -31.7

Net GST received 730,858 796,841 65,983 9.0

Other cash received 50,024 52,127 2,103 4.2

Cash transfer from the Official Public Account (receivables) - 12,692 12,692 -

Total cash received 28,607,117 30,390,884 1,783,767 6.2

Cash used

Employees 10,859,765 11,664,574 804,809 7.4

Suppliers 10,472,223 11,202,746 730,523 7.0

Net GST paid 730,858 796,841 65,983 9.0

Grants 92,554 104,465 11,911 12.9

Other cash used 36,478 36,481 3 -

Cash transfer to the Official Public Account (receivables) 875 875 - -

Total cash used 22,192,753 23,805,982 1,613,229 7.3

Net cash from (used by) operating activities 6,414,364 6,584,902 170,538 2.7


Cash received

Proceeds from sales of land and buildings 196,359 196,361 2 -

Proceeds from sales of infrastructure, plant and equipment 26,000 23,064 -2,936 -11.3

Proceeds from sales of specialist military equipment 7,549 7,549 - -

Other cash received - - - -

Total cash received 229,908 226,974 -2,934 -1.3

Cash used

Purchase of land and buildings 971,299 974,312 3,013 0.3

Purchase of infrastructure, plant and equipment 468,817 587,750 118,933 25.4

Purchase of specialist military equipment 6,079,955 6,556,394 476,439 7.8

Purchase of intangibles 73,134 60,439 -12,695 -17.4

Purchase of inventory 1,336,675 1,358,054 21,379 1.6

Selling costs on sale of assets 5,445 5,693 248 4.6

Finance costs 110,514 105,845 -4,669 -4.2

Total cash used 9,045,839 9,648,487 602,648 6.7

Net cash from (used by) investing activities -8,815,931 -9,421,513 -605,582 6.9


Cash received

Appropriations - contributed equity 2,440,165 2,875,209 435,044 17.8

Total cash received 2,440,165 2,875,209 435,044 17.8

Cash used

Repayment of debt 38,598 38,598 - -

Cash to the Official Public Account - - - -

Total cash used 38,598 38,598 - -

Net cash from (used by) financing activities 2,401,567 2,836,611 435,044 18.1

Net increase (decrease) in cash and cash equivalents held - - - -

Cash and cash equivalents at the beginning of the reporting period 12,732 142,732 130,000 1,021.0

Effect of exchange rate movements on cash and cash equivalents

at the beginning of the reporting period - - - -

Cash and cash equivalents at the end of the reporting period 12,732 142,732 130,000 1,021.0

Note




104

Table 54: Budgeted Departmental Comprehensive Income Statement (Showing Net Cost of Services) (for the period ended 30 June)

[1]

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

EXPENSES

Employee benefits 10,353,275 11,667,963 11,367,492 11,437,990 11,651,734

Supplier expenses 12,482,328 12,531,134 12,026,770 13,202,359 13,658,674

Grants 95,593 104,465 107,015 14,759 15,138

Depreciation and amortisation 4,288,756 4,535,334 4,869,123 5,160,033 5,560,729

Finance costs 150,625 152,088 154,018 161,736 171,365

Write-down of assets and impairment of assets 956,605 916,304 953,302 991,961 1,032,364

Losses from sale of assets - - - - -

Other 25,554 36,481 14,395 28,724 17,209

Total expenses 28,352,736 29,943,769 29,492,115 30,997,562 32,107,213

LESS:

OWN-SOURCE INCOME

Own-source revenue

Sales of goods and rendering of services 821,135 552,988 505,023 529,498 558,108

Other revenue 854,614 52,127 51,184 51,142 54,507

Total own-source revenue 1,675,749 605,115 556,207 580,640 612,615

Gains

Foreign exchange - - - - -

Reversals of previous asset write-downs 313,518 328,746 344,759 361,600 379,310

Sale of assets 8,893 28,286 3,242 14,836 2,757

Other gains 5,254 5,386 5,520 5,658 5,800

Total gains 327,665 362,418 353,521 382,094 387,867

Total own-source income 2,003,414 967,533 909,728 962,734 1,000,482

Net cost of (contribution by) services 26,349,322 28,976,236 28,582,387 30,034,828 31,106,731

Revenue from Government 26,349,322 28,976,236 28,582,387 30,034,828 31,106,731

Surplus (deficit) attributable to the Australian Government - - - - -

Total comprehensive income attributable to the Australian

Government - - - - -

Note

1. As a result of the First Principles Review, the Defence Materiel Organisation will be disbanded and transferred into Defence. From 2015-

16 onwards, the figures presented represent Defence inclusive of the former Defence Materiel Organisation.


105

Table 55: Budgeted Departmental Balance Sheet (as at 30 June)[1]

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

ASSETS

Financial assets

Cash and cash equivalents 12,732 142,732 142,732 142,732 142,732

Trade and other receivables 82,542 91,322 91,322 91,322 91,322

Tax assets 89,757 196,637 196,637 196,637 196,637

Appropriation receivable - 158,530 199,620 243,408 250,532

Other receivables 346,935 307,932 266,751 243,121 239,276

Total financial assets 531,966 897,153 897,062 917,220 920,499


Land and buildings 17,375,667 18,099,022 18,668,987 19,693,595 20,729,627

Infrastructure, plant and equipment 7,112,794 7,141,951 7,102,188 7,060,116 6,960,688

Specialist military equipment 43,661,175 46,518,675 48,639,203 51,564,524 55,765,678

Intangibles 839,298 794,076 755,259 673,072 605,921

Heritage and cultural 1,002,315 1,002,315 1,002,315 1,002,315 1,002,315

Inventories 6,297,113 6,199,126 6,095,704 5,981,030 5,856,455

Prepayments 218,262 1,757,003 1,756,984 1,756,980 1,756,960

Total non-financial assets 76,506,624 81,512,168 84,020,640 87,731,632 92,677,644

Assets held for sale 28,693 28,693 28,693 28,693 28,693

Total assets 77,067,283 82,438,014 84,946,395 88,677,545 93,626,836

LIABILITIES

Payables

Suppliers 1,094,064 2,482,671 2,457,037 2,569,855 2,559,640

Other 378,531 284,419 290,996 293,356 296,335

Total payables 1,472,595 2,767,090 2,748,033 2,863,211 2,855,975


Leases 1,427,990 1,389,392 1,349,559 1,309,701 1,268,107

Total interest bearing liabilities 1,427,990 1,389,392 1,349,559 1,309,701 1,268,107

Provisions

Employee provisions 2,337,687 2,536,631 2,581,110 2,618,711 2,665,891

Restoration, decontamination and decommissioning 957,728 1,003,971 1,046,756 1,098,332 1,160,769

Other 2,294 5,318 5,318 5,318 5,318

Total provisions 3,297,709 3,545,920 3,633,184 3,722,361 3,831,978

Total liabilities 6,198,294 7,702,402 7,730,776 7,895,273 7,956,060

NET ASSETS 70,868,989 74,735,612 77,215,619 80,782,272 85,670,776

EQUITY

Contributed equity 21,999,168 25,028,870 27,544,236 31,112,237 36,000,741

Reserves 14,892,351 14,892,641 14,892,641 14,892,641 14,892,641

Retained surplus (accumulated deficit) 33,977,470 34,814,101 34,778,742 34,777,394 34,777,394

Total equity 70,868,989 74,735,612 77,215,619 80,782,272 85,670,776

Note




106

Table 56: Budgeted Departmental Statement of Cash Flows (for the period ended 30 June)[1]

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000


Cash received

Appropriations 26,277,965 28,976,236 28,582,387 30,034,828 31,106,731


Net GST received 742,355 796,841 773,319 847,957 882,725

Other cash received 112,179 52,127 51,184 51,142 54,507

Cash transfer from the Official Public Account (receivables) - 12,692 - - -


Cash used

Employees 10,312,603 11,664,574 11,316,436 11,398,029 11,601,575

Suppliers 10,637,452 11,202,746 10,673,176 11,764,337 12,292,824

Net GST paid 742,355 796,841 773,319 847,957 882,725

Grants 95,593 104,465 107,015 14,759 15,138

Other cash used 25,054 36,481 14,395 28,724 17,209

Cash transfer to the Official Public Account (receivables) 853 875 77,346 46,070 8,066

Total cash used 21,813,910 23,805,982 22,961,687 24,099,876 24,817,537

Net cash from (used by) operating activities 6,139,724 6,584,902 6,950,226 7,363,549 7,784,534


Cash received

Proceeds from sales of land and buildings 92,317 196,361 14,127 26,495 15,176

Proceeds from sales of infrastructure, plant and equipment 28,000 23,064 23,302 23,584 19,320

Proceeds from sales of specialist military equipment 7,549 7,549 7,549 7,549 7,549

Other Cash Received 287 - - - -

Total cash received 128,153 226,974 44,978 57,628 42,045

Cash used

Purchase of land and buildings 1,083,027 974,312 1,213,967 1,699,409 1,756,146

Purchase of infrastructure, plant and equipment 578,625 587,750 528,240 520,354 458,352

Purchase of specialist military equipment 6,011,568 6,556,394 6,133,138 7,239,304 8,899,257

Purchase of intangibles 118,432 60,439 60,543 12,745 17,950

Purchase of inventory 1,064,033 1,358,054 1,419,531 1,363,183 1,428,627

Selling costs on sale of assets 6,372 5,693 4,982 5,084 5,171

Finance costs 110,532 105,845 111,233 110,160 108,928

Total cash used 8,972,589 9,648,487 9,471,634 10,950,239 12,674,431

Net cash from (used by) investing activities -8,844,436 -9,421,513 -9,426,656 -10,892,611 -12,632,386


Cash received

Appropriations - contributed equity 2,758,491 2,875,209 2,516,263 3,568,920 4,889,446


Cash used

Repayment of debt 76,537 38,598 39,833 39,858 41,594

Cash to the Official Public Account - - - - -

Total cash used 76,537 38,598 39,833 39,858 41,594

Net cash from (used by) financing activities 2,681,954 2,836,611 2,476,430 3,529,062 4,847,852

Net increase (decrease) in cash and cash equivalents held -22,758 - - - -Cash and cash equivalents at the beginning of the reporting

period[2]

35,490 142,732 142,732 142,732 142,732

Effect 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 12,732 142,732 142,732 142,732 142,732

Notes



2. The figures presented as the 2015-16 opening cash and cash equivalents balance represent Defence inclusive of the former Defence

Materiel Organisation.


107

Table 57: Departmental Statement of Changes in Equity — Summary of Movement (Budget year 2015-16)

Retained

Earnings

$'000

Asset

Revaluation

Reserve

$'000

Contributed

Equity/

Capital

$'000

Total

Equity

$'000

Opening balance as at 1 July 2015[1]

Balance carried forward from previous period 34,296,955 14,892,641 22,154,536 71,344,132

Adjustment for changes in accounting policies - - - -

Adjusted opening balance 34,296,955 14,892,641 22,154,536 71,344,132

Comprehensive income

Comprehensive income recognised directly in equity:

Gain/loss on revaluation of property - - - -

Subtotal comprehensive income - - - -

Surplus (deficit) for the period - - - -

Total comprehensive income recognised directly in

equity - - - -

Transactions with owners

Distribution to owners

Returns on capital:

Restructuring - - - -

Other - - -875 -875

Contributions by owners

Appropriation (equity injection) - - 2,875,209 2,875,209

Other 517,146 - - 517,146

Sub-total transaction with owners 517,146 - 2,874,334 3,391,480

Transfers between equity components - - - -

Estimated closing balance as at 30 June 2016 34,814,101 14,892,641 25,028,870 74,735,612

Note

1. As a result of the First Principles Review, the Defence Materiel Organisation will be disbanded and transferred into Defence.

The figures presented as the 2015-16 opening balance represent Defence inclusive of the former Defence Materiel Organisation.


108

Table 58: Departmental Capital Budget Statement[1]

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

CAPITAL APPROPRIATIONS

Equity injection 2,758,491 2,875,209 2,516,263 3,568,920 4,889,446

Total capital appropriations 2,758,491 2,875,209 2,516,263 3,568,920 4,889,446

Represented by:

Purchase of non-financial assets 2,681,954 2,836,611 2,476,430 3,529,062 4,847,852

Annual finance lease costs 76,537 38,598 39,833 39,858 41,594

Other items - - - - -

Total items 2,758,491 2,875,209 2,516,263 3,568,920 4,889,446

PURCHASE OF NON-FINANCIAL ASSETS

Funded by capital appropriations 2,758,491 2,875,209 2,516,263 3,568,920 4,889,446

Funded by finance lease costs - - - - -

Funded internally from departmental resources[2]

5,033,161 5,303,686 5,419,625 5,902,892 6,242,259

Total 7,791,652 8,178,895 7,935,888 9,471,812 11,131,705

Reconciliation of cash used to acquire assets to

asset movement table

Total purchases 7,791,652 8,178,895 7,935,888 9,471,812 11,131,705

less additions by finance lease - - - - -

less additions by creditors/borrowings - - - - -

plus borrowing/finance costs 110,532 105,845 111,233 110,160 108,928

plus annual finance lease costs 76,537 38,598 39,833 39,858 41,594

less gifted assets - - - - -

less s32/restructuring - - - - -

Total cash used to acquire assets 7,978,721 8,323,338 8,086,954 9,621,830 11,282,227

Notes

2. Includes the following sources of funding:

- annual and prior year appropriations

- donations and contributions

- gifts

- internally developed assets

- s74 relevant agency receipts

- proceeds from the sale of assets.


From 2015-16 onwards, the figures presented represent Defence inclusive of the former Defence Materiel Organisation.


109

Table 59: Statement of Departmental Asset Movements (2015-16)[1]

Land

$'000

Buildings

$'000

Specialist

Military

Equipment

$'000

Infrastructure,

Plant and

Equipment

$'000

Intangibles

$'000

Heritage and

Cultural

Assets

$'000

Assets

Held for

Sale

$'000

Total

$'000

As at 1 July 2015

Gross book value 4,888,026 13,353,008 82,859,585 8,062,950 1,670,498 1,002,315 28,693 111,865,075

Accumulated depreciation/amortisation and impairment - 865,367 39,198,410 945,095 831,200 - - 41,840,072

Opening net book balance 4,888,026 12,487,641 43,661,175 7,117,855 839,298 1,002,315 28,693 70,025,003

CAPITAL ASSET ADDITIONS

Estimated expenditure on new or replacement assets

By purchase - appropriation equity 17,617 956,695 6,580,060 587,750 60,439 - - 8,202,561

By transfer from another agency - 517,146 - - - - - 517,146

By purchase - donated funds - - - - - - - -

By finance lease - - - - - - - -

Total additions 17,617 1,473,841 6,580,060 587,750 60,439 - - 8,719,707

Other movements

Reclassifications[2]

- - 80,852 12,502 - - - 93,354

Depreciation and amortisation - 581,502 3,310,847 537,324 105,661 - - 4,535,334

Disposal of entities or other operations (including restructuring) 157,152 12,779 - 23,064 - - - 192,995

Other disposals[3]

- 16,670 492,565 15,768 - - - 525,003

Total other movements 157,152 610,951 3,722,560 563,654 105,661 - - 5,159,978

As at 30 June 2016

Gross book value 4,748,491 14,797,400 89,027,932 8,624,370 1,730,937 1,002,315 28,693 119,960,138

Accumulated depreciation/amortisation and impairment - 1,446,869 42,509,257 1,482,419 936,861 - - 46,375,406

Closing net book value 4,748,491 13,350,531 46,518,675 7,141,951 794,076 1,002,315 28,693 73,584,732

Notes

2. Reclassification include assets first found.

3. Other disposals includes write-offs.

1. As a result of the First Principles Review, the Defence Materiel Organisation will be disbanded and transferred into Defence. The figures presented in this table, including the 2015-16 opening

balance, represent Defence inclusive of the former Defence Materiel Organisation.


110

Table 60: Variation in Schedule of Budgeted Income and Expenses Administered on Behalf of Government (for the period ended 30 June)

2015-16

Previous

Estimate

$'000

2015-16

Budget

Estimate[1]

$'000

Variation

$'000

Variation

%

INCOME ADMINISTERED ON BEHALF OF GOVERNMENT

Revenue

Non-taxation

Interest 30,936 30,936 - -

Dividends 50,476 50,476 - -

Military superannuation contributions 1,331,754 1,347,113 15,359 1.2

Fees 14,511 14,416 -95 -0.7

Other 31,402 31,652 250 0.8

Total non-taxation 1,459,079 1,474,593 15,514 1.1

Total revenues administered on behalf of Government 1,459,079 1,474,593 15,514 1.1

EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT

Subsidies 121,642 119,777 -1,865 -1.5

Military retention benefits 77,940 77,940 - -

Military superannuation benefits 4,920,967 5,032,675 111,708 2.3

Total expenses administered on behalf of Government 5,120,549 5,230,392 109,843 2.1

Note


The 2015-16 Budget Estimate figures presented represent Defence inclusive of the former Defence Materiel Organisation.


111

Table 61: Variation in Schedule of Budgeted Assets and Liabilities Administered on Behalf of Government (as at 30 June)

2015-16

Previous

Estimate

$'000

2015-16

Budget

Estimate[1]

$'000

Variation

$'000

Variation

%

ASSETS ADMINISTERED ON BEHALF OF GOVERNMENT

Financial assets

Cash and cash equivalents - - - -

Trade and other receivables 63,050 61,470 -1,580 -2.5

Investments accounted for using the equity method 2,373,768 2,395,921 22,153 0.9

Loans 529,580 529,580 - -

Total financial assets 2,966,398 2,986,971 20,573 0.7


Prepayments 189,496 189,496 - -

Total non-financial assets 189,496 189,496 - -

Total assets administered on behalf of Government 3,155,894 3,176,467 20,573 0.7

LIABILITIES ADMINISTERED ON BEHALF OF GOVERNMENT

Payables

Other 5,630 7,169 1,539 27.3

Total payables 5,630 7,169 1,539 27.3

Provisions

Superannuation - DFRB[2]

454,200 426,910 -27,290 -6.0

Superannuation - DFRDB[3]

31,048,000 30,565,982 -482,018 -1.6

Superannuation - MSBS[4]

30,627,149 31,519,297 892,148 2.9

Total provisions 62,129,349 62,512,189 382,840 0.6

Total liabilities administered on behalf of Government 62,134,979 62,519,358 384,379 0.6

Notes

2. Defence Forces Retirement Benefits.

3. Defence Force Retirement and Death Benefits.

4. Military Superannuation and Benefits Scheme.

1. As a result of the First Principles Review, the Defence Materiel Organisation will be disbanded and transferred into

Defence. The 2015-16 Budget Estimate figures presented represent Defence inclusive of the former Defence Materiel

Organisation.


112

Table 62: Variation in Schedule of Budgeted Administered Cash Flows (for the period ended 30 June)

2015-16

Previous

Estimate

$'000

2015-16

Budget

Estimate[1]

$'000

Variation

$'000

Variation

%


Cash received

Interest 30,936 30,936 - -

Military superannuation contributions 1,331,754 1,347,113 15,359 1.2

Fees 14,511 14,416 -95 -0.7

Other 31,746 35,078 3,332 10.5

Total cash received 1,408,947 1,427,543 18,596 1.3

Cash used

Subsidies paid 121,642 119,777 -1,865 -1.5

Military benefits 2,222,044 2,230,885 8,841 0.4

Total cash used 2,343,686 2,350,662 6,976 0.3

Net cash from or (used by) operating activities -934,739 -923,119 11,620 -1.2


Cash received

Dividends 50,128 50,274 146 0.3

Total cash received 50,128 50,274 146 0.3

Cash used

Loans 20,000 20,000 - -

Total cash used 20,000 20,000 - -

Net cash from or (used by) investing activities 30,128 30,274 146 0.5

Net increase (decrease) in cash held -904,611 -892,845 11,766 -1.3

Cash at the beginning of the reporting period - - - -

Cash from the Official Public Account for appropriations 2,363,686 2,370,662 6,976 0.3

Cash to the Official Public Account -1,459,075 -1,477,817 -18,742 1.3

Effect of exchange rate movements on cash and cash equivalents - - - -

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

Note


The 2015-16 Budget Estimate figures presented represent Defence inclusive of the former Defence Materiel Organisation.


113

Table 63: Schedule of Budgeted Income and Expenses Administered on Behalf of Government (for the period ended 30 June)

[1]

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000


Revenue

Non-taxation

Interest 29,636 30,936 32,866 34,175 34,175

Dividends 50,274 50,476 57,390 54,331 36,308


Fees 13,953 14,416 15,268 16,127 16,993

Other 29,717 31,652 26,143 20,589 29,239

Total non-taxation 1,440,119 1,474,593 1,365,742 1,291,812 1,216,409

Total revenues administered on behalf of

Government 1,440,119 1,474,593 1,365,742 1,291,812 1,216,409


Subsidies 104,532 119,777 137,633 152,345 171,097

Military retention benefits 95,883 77,940 93,000 105,540 119,920


Total expenses administered on behalf of

Government 6,002,415 5,230,392 5,371,044 5,517,572 5,679,713

Note




114

Table 64: Schedule of Budgeted Assets and Liabilities Administered on Behalf of Government (as at 30 June)

[1]

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000


Financial assets

Cash and cash equivalents - - - - -


Investments accounted for using the equity method 2,327,338 2,395,921 2,467,770 2,544,454 2,613,429

Loans 509,580 529,580 569,580 569,580 569,580

Total financial assets 2,900,110 2,986,971 3,105,429 3,181,599 3,232,715


Prepayments 161,036 189,496 237,896 253,956 270,336

Total non-financial assets 161,036 189,496 237,896 253,956 270,336

Total assets administered on behalf of Government 3,061,146 3,176,467 3,343,325 3,435,555 3,503,051


Payables

Other 5,630 7,169 7,169 7,169 7,169

Total payables 5,630 7,169 7,169 7,169 7,169

Provisions


449,350 426,910 404,918 383,425 362,489


30,273,280 30,565,982 30,819,863 31,027,448 31,188,073


28,895,151 31,519,297 34,194,273 36,914,423 39,697,128

Total provisions 59,617,781 62,512,189 65,419,054 68,325,296 71,247,690

Total liabilities administered on behalf of

Government 59,623,411 62,519,358 65,426,223 68,332,465 71,254,859

Notes




1. As a result of the First Principles Review, the Defence Materiel Organisation will be disbanded and transferred into Defence. From

2015-16 onwards, the figures presented represent Defence inclusive of the former Defence Materiel Organisation.


115

Table 65: Schedule of Budgeted Administered Cash Flows (for the period ended 30 June)[1]

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000


Cash received

Interest 29,636 30,936 32,866 34,175 34,175


Fees 13,953 14,416 15,268 16,127 16,993

Other 38,087 35,078 26,448 18,044 29,075


Cash used

Subsidies paid 104,532 119,777 137,633 152,345 171,097

Military benefits 2,137,800 2,230,885 2,362,707 2,464,317 2,593,321

Total cash used 2,242,332 2,350,662 2,500,340 2,616,662 2,764,418

Net cash from or (used by) operating activities -844,117 -923,119 -1,191,683 -1,381,726 -1,584,481


Cash received

Dividends 53,991 50,274 50,476 57,390 54,331


Cash used

Loans - 20,000 40,000 - -

Total cash used - 20,000 40,000 - -

Net cash from (used by) investing activities 53,991 30,274 10,476 57,390 54,331

Net increase (decrease) in cash held -790,126 -892,845 -1,181,207 -1,324,336 -1,530,150

Cash at the beginning of reporting period - - - - -

Cash from the Official Public Account for

appropriations 2,242,332 2,370,662 2,540,340 2,616,662 2,764,418

Cash to the Official Public Account -1,452,206 -1,477,817 -1,359,133 -1,292,326 -1,234,268


equivalents - - - - -

Cash and cash equivalents at the end of the

reporting period - - - - -

Note




116

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).


117

3.4 CONSOLIDATED BUDGETED FINANCIAL STATEMENTS FOR THE DEPARTMENT OF

DEFENCE (INCLUDING DMO)

As a result of the First Principles Review, the Defence Materiel Organisation will be disbanded and transferred into Defence. The former Defence Materiel Organisation has been included in the Defence budget from 2015-16 onwards and as a result, only the 2014-15 Estimated Actual Consolidated position is presented in this section.

Table 66: Consolidated Budgeted Departmental Net Cost of Service (cash) for the Department of Defence (including DMO) (for the period ended 30 June)

[1]

2014-15

Estimated

Actual

$'000

NET COST OF SERVICE (CASH)

Cost of Service

Employee payments 10,830,533

Supplier payments 10,714,324

Purchase of specialist military equipment 6,011,568

Purchase of inventory 1,064,033

Purchase of other property, plant and equipment 1,781,397

Appropriation carried forward from previous year 71,357

Net cash to the Official Public Account 853

Other cash used 1,911,774

Total cash used 32,385,839

Own source receipts 2,387,045

Total cash received 2,387,045

Net cost of service (cash) 29,998,794

FUNDED BY

Appropriation Bill 1/3/5 (price of outcomes) 27,224,917

Appropriation Bill 2/4/6 (equity injection) 2,758,491

Total funding source 29,983,408

Change in cash -15,386

Note


former Defence Materiel Organisation has been included in the Defence budget from 2015-16 onwards and as a result, only the 2014-

15 Estimated Actual Consolidated position is presented in this table.


118

Table 67: Consolidated Comprehensive Departmental Income Statement (Showing Net Cost of Services) for the Department of Defence (including DMO) (for the period ending 30 June)

[1]

2014-15

Estimated

Actual

$'000

EXPENSES

Employee benefits 10,875,293

Supplier expenses 11,770,597

Grants 106,063

Depreciation and amortisation 4,290,082

Finance costs 150,625

Write-down of assets and impairment of assets 956,605

Foreign exchange -

Losses from sale of assets -

Other 25,554

Total Expenses 28,174,819

LESS:

Own-source revenue

Revenue

Sales of goods and rendering of services 558,616

Other revenue 59,533

Total own-source revenue 618,149

Gains

Foreign exchange -

Reversals of previous asset write-downs 313,518

Sale of assets 8,893

Other gains 5,254

Total gains 327,665

Total own-source income 945,814

Net cost of (contribution by) services 27,229,005

Revenue from Government 27,229,005

Surplus (Deficit) attributable to the Australian

Government -

Note


The former Defence Materiel Organisation has been included in the Defence budget from 2015-16 onwards and as a result, only

the 2014-15 Estimated Actual Consolidated position is presented in this table.


119

Table 68: Consolidated Budgeted Departmental Balance Sheet for the Department of Defence (including DMO) (as at 30 June)

[1]

2014-15

Estimated

Actual

$'000

ASSETS

Financial assets

Cash and cash equivalents 142,732

Trade and other receivables 91,322

Tax assets 196,637

Appropriation receivable 171,222

Other receivables 346,840

Total financial assets 948,753


Land and buildings 17,375,667

Infrastructure, plant and equipment 7,117,855

Specialist military equipment 43,661,175

Intangibles 839,298

Heritage and cultural 1,002,315

Inventories 6,297,113

Prepayments 1,757,021

Total non-financial assets 78,050,444

Assets held for sale 28,693

Total assets 79,027,890

LIABILITIES

Payables

Suppliers 2,475,061

Other 297,939

Total payables 2,773,000


Leases 1,427,990

Total interest bearing liabilities 1,427,990

Provisions

Employee provisions 2,519,722

Restoration, decontamination and decommissioning 957,728

Other 5,318

Total provisions 3,482,768

Total liabilities 7,683,758

NET ASSETS 71,344,132

EQUITY

Contributed equity 22,154,536

Reserves 14,892,641

Retained surplus (accumulated deficit) 34,296,955

Total equity 71,344,132

Note





120

Table 69: Consolidated Budgeted Departmental Statement of Cash Flows for the Department of Defence (including DMO) (for the period ended 30 June)

[1]

2014-15

Estimated

Actual

$'000


Cash received

Appropriations 27,153,560

Goods and services 558,603

Net GST received 1,587,216

Other cash received 113,073

Cash transfer from the Official Public Account (receivables) -


Cash used

Employees 10,830,533

Suppliers 10,714,324

Net GST paid 1,587,216

Grants 106,063

Other cash used 25,054

Cash transfer to the Official Public Account (receivables) 853


Net cash from (used by) operating activities 6,148,409


Cash received

Proceeds from sales of land and buildings 92,317

Proceeds from sales of infrastructure, plant and equipment 28,000

Proceeds from sales of specialist military equipment 7,549

Other cash received 287

Total cash received 128,153

Cash used

Purchase of land and buildings 1,083,027

Purchase of infrastructure, plant and equipment 579,938

Purchase of specialist military equipment 6,011,568

Purchase of intangibles 118,432

Purchase of inventory 1,064,033

Selling costs on sale of assets 6,372

Finance costs 110,532


Net cash from (used by) investing activities -8,845,749


Cash received

Appropriations - contributed equity 2,758,491


Cash used

Repayment of debt 76,537

Cash to the Official Public Account -

Total cash used 76,537

Net cash from (used by) financing activities 2,681,954

Net increase (decrease) in cash and cash equivalents held -15,386

Cash and cash equivalents at the beginning of the reporting period 158,118

Effect 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 142,732

Note

1. As a result of the First Principles Review, the Defence Materiel Organisation will be disbanded and transferred into Defence. The former Defence

Materiel Organisation has been included in the Defence budget from 2015-16 onwards and as a result, only the 2014-15 Estimated Actual

Consolidated position is presented in this table.


121

Table 70: Consolidated Budgeted Income and Expenses Administered on Behalf of Government for the Department of Defence (including DMO) (for the period ended 30 June)

[1]

2014-15

Estimated

Actual

$'000


Revenue

Non-taxation

Interest 29,636

Dividends 50,274

Military superannuation contributions 1,316,539

Fees 13,953

Foreign exchange -

Other 29,967

Total non-taxation 1,440,369

Total revenues administered on behalf of

Government 1,440,369


Write-down and impairment of assets -

Subsidies 104,532

Military retention benefits 95,883

Military superannuation benefits 5,802,000

Total expenses administered on behalf of

Government 6,002,415

Note





122

Table 71: Consolidated Budgeted Assets and Liabilities Administered on Behalf of Government for the Department of Defence (including DMO) (as at 30 June)

[1]

2014-15

Estimated

Actual

$'000


Financial assets

Cash and cash equivalents -

Trade and other receivables 64,694

Investments accounted for using the equity method 2,327,338

Loans 509,580

Total financial assets 2,901,612


Prepayments 161,036

Total non-financial assets 161,036

Total assets administered on behalf of Government 3,062,648

Payables

Other 7,169

Total payables 7,169

Provisions


449,350


30,273,280


28,895,151

Total provisions 59,617,781

Total liabilities administered on behalf of Government 59,624,950

Notes





1. As a result of the First Principles Review, the Defence Materiel Organisation will be disbanded and transferred into Defence. The former

Defence Materiel Organisation has been included in the Defence budget from 2015-16 onwards and as a result, only the 2014-15

Estimated Actual Consolidated position is presented in this table.


123

Table 72: Consolidated Budgeted Administered Statement of Cash Flows for the Department of Defence (including DMO) (for the period ended 30 June)

[1]

2014-15

Estimated

Actual

$'000


Cash received

Interest 29,636

Military superannuation contributions 1,316,539

Fees 13,953

Other 38,337


Cash used

Subsidies paid 104,532

Military benefits 2,137,800


Net cash from or (used by) operating activities -843,867


Cash received

Dividends 53,991

Total cash received 53,991

Cash used

Loans -

Total Cash used -

Net cash from (used by) investing activities 53,991

Net increase (decrease) in cash held -789,876

Cash at the beginning of reporting period -

Cash from the Official Public Account for appropriations 2,242,332

Cash to the Official Public Account -1,452,456


equivalents -

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

Note

1. As a result of the First Principles Review, the Defence Materiel Organisation will be disbanded and transferred into Defence. The former

Defence Materiel Organisation has been included in the Defence budget from 2015-16 onwards and as a result, only the 2014-15 Estimated

Actual Consolidated position is presented in this table.


124


125

APPENDICES

Appendix A Defence Cooperation Programme

Appendix B The Unapproved Major Capital Investment Programme (also known as the Defence Capability Plan)

Appendix C Capital Facilities Programme

Appendix D Status of Major Projects Foreshadowed for Government and Parliamentary Standing Committee on Public Works Consideration (PWC) in 2015-16


126

APPENDIX A: DEFENCE COOPERATION PROGRAMME

Since the 1960s, the Defence Cooperation Programme (DCP) has made up a significant component of Australia’s international defence engagement. The programme:

promotes the capacity of partners

improves Australia’s capacity to work with partners in response to common security challenges

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 supports their capacity to protect their sovereignty, work effectively with the ADF and contribute to regional security.

To achieve its objectives, the DCP suite of activities include 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 ADF 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 ADF. 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 programme 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 ADF 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 better able to operate with the ADF and to contribute to regional security and stability.


127

A key element of the DCP is the Pacific Patrol Boat Programme, through which Australia has provided 22 Patrol Boats (with associated personnel and technical assistance) to 12 countries. The Programme engages Pacific navies and police maritime wings and is designed to help Pacific island countries improve their ability to independently police their maritime zones. The follow-on Pacific Maritime Security Programme, currently under development, will represent a further significant investment in regional maritime security, beginning in 2015 with a tender process for the foundation element of this new programme - the construction in Australia of up to 21 steel-hulled replacement patrol vessels.

Table 73: Defence Cooperation Programme Budget 2015-16

2013-14

Actual

$’000

2014-15

Budget

Estimate

$’000

2014-15

Estimated

Actual

$’000

2015-16

Budget

Estimate

$’000

Papua New Guinea 23,726 25,917 25,365 37,086

South Pacific Region 35,416 37,553 40,647 40,600

South-East Asia 14,691 15,822 14,066 16,933

Other regional activities 5,807 6,807 5,535 6,831

Defence International Training Centre[1]

4,938 5,855 5,068 5,134

Total 84,578 91,954 90,681 106,583

Note

1. The Defence International Training Centre (DITC) provides training in Australia to the defence forces of

South-East Asia and South Pacific nations and to other selected overseas personnel. The DITC is managed

by VCDF Group.

Table 74: South Pacific Region Budget 2015-16

2013-14

Actual

$’000

2014-15

Budget

Estimate

$’000

2014-15

Estimated

Actual

$’000

2015-16

Budget

Estimate

$’000

Timor Leste 3,523 3,717 3,814 4,707

Vanuatu 853 878 652 800

Solomon Islands 885 851 647 820

Tonga[1]

2,723 4,863 6,296 4,350

Samoa 132 116 174 120

Cook Islands 46 98 90 110

Republic of the Marshall Islands 139 171 73 160

Federates States of Micronesia 159 112 105 105

Fiji[2]

0 0 193 2,200

Tuvalu 104 237 396 200

Kiribati 133 166 233 200

Palau 236 376 397 350

DCP Scheduled Support 5,335 4,263 5,382 4,382

Pacific Patrol Boat Programme 21,148 21,705 22,195 22,096

Total 35,416 37,553 40,647 40,600

Notes

1. The decreased budget for Tonga reflects completion of the Tongan Landing Craft acquisition.

2. Budget estimate reflects reinstatement of Defence relationship with Fiji.


128

Table 75: South-East Asia Region Budget 2015-16

2013-14

Actual

$’000

2014-15

Budget

Estimate

$’000

2014-15

Estimated

Actual

$’000

2015-16

Budget

Estimate

$’000

Singapore 69 72 63 80

Philippines 2,626 2,743 2,063 2,641

Thailand 2,489 2,640 2,743 2,685

Malaysia 3,131 3,176 2,950 3,567

Indonesia 3,200 3,796 3,248 4,268

Vietnam 2,130 1,977 1,858 2,100

Cambodia and Laos 1,021 1,240 1,055 1,320

Brunei 5 11 30 45

Myanmar 20 167 56 227

Total 14,691 15,822 14,066 16,933


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APPENDIX B: THE UNAPPROVED MAJOR CAPITAL INVESTMENT PROGRAMME (ALSO

KNOWN AS THE DEFENCE CAPABILITY PLAN)

The Defence Capability Plan (DCP) is a costed, detailed development plan for Australia’s future military capabilities. The plan is reviewed regularly to take account of changing strategic circumstances, Government priorities, and emerging threats and technologies in the context of the overall Defence budget.

As part of the Defence White Paper 2015, Defence is developing DCP 2015. This will be an affordable, achievable plan that will deliver the capabilities Defence needs to meet Government’s strategic direction presented in the White Paper.

The table below highlights a sample of projects to be considered by Government in 2015-16. Additional projects to be considered in 2015-16 will be announced in the 2015 Defence White Paper.

Table 76: Defence Capability Plan projects in development for first pass approval consideration within the Financial Year 2015-16

Project Number Project Title

AIR 5077 Phase 5A AEW&C Interoperability Compliance Upgrade

LAND 1771 Phase 1 Geospatial Support Systems for the Land Force

Table 77: Defence Capability Plan projects in development for second pass approval consideration within the Financial Year 2015-16

Project Number Project Title

AIR 8000 Phase 2 C-27J Facilities

DEF 2044 Phase 4A Digital Topographical Systems Upgrade

DEF 7013 Phase 4 Joint Intelligence Support System

DEF 2069 Phase 3 High Grade Cryptographic Equipment

LAND 121 Phase 4 Overlander – Protected Mobility Vehicle Light

LAND 155 Phase 1 Enhanced Gap Crossing Capability

LAND 500 Phase 1 Remediation of Land Tactical Electronic Warfare

SEA 1770 Phase 1 Rapid Environmental Assessment


130

APPENDIX C: CAPITAL FACILITIES PROGRAMME

The Capital Facilities Programme comprises approved and unapproved major and medium projects.

Major capital facilities projects are defined as having expenditure over $15m and are subject to Government approval and formal review by the Parliamentary Standing Committee on Public Works (PWC). Medium facilities projects have an expenditure of between $500,000 and $15m. Projects valued over $8m are 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. Projects over $15m require referral to and full consideration by the PWC, with approval granted by the Parliament. Details of approved major and medium projects are provided in this Appendix.

The Capital Facilities Programme gives priority to projects that support and sustain current and future capability requirements, other government initiatives, meet legislative obligations, and provide engineering and infrastructure services in support of new projects and upgrades to existing facilities.

Approved Capital Facilities Projects

The table below and the following descriptions provide details on the progress and expenditure to 30 June 2015 on capital facilities projects, and budget estimates for 2015-16. Projects valued over $500,000 are included in the table and descriptions for major projects are provided below the table.


131

Table 78: Approved Capital Facilities Projects by State and Federal Electorate

State and

Electorate

Total

Estimated

Expenditure

$m

Estimated

Cumulative

Expenditure

to 30 June 2015

$m

2015-16

Budget

Estimate

$m

Facilities in support of the New Air Combat

Capability [1]

RAAF Williamtown NSW - Newcastle- 60.0 238.4

RAAF Tindal NT - Lingiari- 3.0 6.6

Total 1,477.0 63.0 245.0

Enhanced Land Force Stage 2 Works [1]

Lone Pine Barracks NSW - Hunter- 117.1 -

Puckapunyal Training Area VIC - McEwan- 0.7 8.2

Simpson Barracks, Watsonia VIC - Jagajaga- 20.2 -

RAAF Amberley QLD - Blair- 9.6 -

Lavarack Barracks, Townsville QLD - Herbert- 66.5 -

Townsville Training Area QLD - Kennedy- 3.9 -

Greenbank Training Area QLD - Rankin- 122.0 0.0

Gallipoli Barracks, Enoggera QLD - Ryan- 808.7 6.9

Wide Bay Training Area QLD - Wide Bay- 81.5 10.2

Kokoda Barracks, Canungra QLD - Wright- 68.5 -

Cultana Training Area SA - Grey- 3.9 33.9

RAAF Edinburgh SA - Wakefield- 34.6 -

Majura Field Training Area ACT - Fraser- 22.4 -

Total 1,457.8 1,359.5 59.2

Defence Logistics Transformation Programme [1]

Defence National Storage & Distribution Centre,

MoorebankNSW - Hughes -

206.5 0.6

Wadsworth Barracks, Bandiana VIC - Indi -62.3 0.4

RAAF Amberley QLD - Blair- 140.9 0.1

Lavarack Barracks, Townsville QLD - Herbert -94.6 23.9

RAAF Edinburgh SA - Wakefield- 22.2 1.5

HMAS Stirling, Rockingham WA - Brand- 0.6 -

Palmer Barracks WA - Hasluck7.9 -

Robertson Barracks NT - Solomon- 127.0 0.1

Total 752.7 662.1 26.6


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Table 78 (continued): Approved Capital Facilities Projects by State and Federal Electorate

State and

Electorate

Total

Estimated

Expenditure

$m

Estimated

Cumulative

Expenditure

to 30 June 2015

$m

2015-16

Budget

Estimate

$m

Maritime Patrol Aircraft Phase 2B (AIR 7000)

RAAF Edinburgh SA - Wakefield707.9 - 60.5

Moorebank Units Relocation [2]

Steele Barracks, Moorebank NSW - Hughes352.9 313.5 16.1

Albatross Redevelopment Stage 3

HMAS Albatross, Nowra NSW - Gilmore192.0 71.5 66.3

Facilities for MH-60R Seahawk Maritime Combat

Helicopters [1]

HMAS Albatross, Nowra NSW - Gilmore- 157.2 -

HMAS Stirling, Rockingham WA - Brand- 1.6 4.9

Total 189.0 158.8 4.9

East Sale Redevelopment

RAAF East Sale VIC - Gippsland185.6 151.4 27.2

Helicopter Aircrew Training System (AIR 9000 Phase

7)

HMAS Albatross, Nowra NSW - Gilmore157.1 1.8 81.0

Defence Terrestrial Communications Network

Facilities Upgrade (JP2047) [3]

National131.1 41.5 68.9

Facilities for Air Warfare Destroyer

(SEA 4000)

Garden Island NSW - Wentworth109.9 80.8 24.0

Defence Force School of Signals

Simpson Barracks, Watsonia VIC - Jagajaga101.3 92.4 4.9

Airfield Capital Works [1]

RAAF Townsville QLD - Herbert- - -

RAAF Curtin WA - Durack- - 23.0

RAAF Tindal NT - Lingiari- - -

Total 95.3 - 23.0


133


State and

Electorate

Total

Estimated

Expenditure

$m

Estimated

Cumulative

Expenditure

to 30 June 2015

$m

2015-16

Budget

Estimate

$m

Space Telescope (Joint Project (JP) 3029)

Harold E Holt, Exmouth WA - Durack63.0 3.2 51.2

Facilities for Landing Helicopter Dock Ships (JP

2048)

Garden Island NSW - Wentworth60.3 44.9 12.6

Facilities for Chinook Helicopter (AIR 9000 Phases

5B and 5C)

RAAF Townsville QLD - Herbert49.8 14.4 13.7

DSTO Fishermans Bend - Land Division Security and

Facilities Upgrade

Fishermans BendVIC - Melbourne

Ports 41.1 14.2 19.4

Facilities for Joint Counter Improvised Explosive

Device Capability (JP 154 Phase 1 Stage 1) -

Nurrungar

Woomera SA - Grey14.2 1.1 11.0

Low Level Bridge Repair

Fleet Base West, StirlingWA - Brand 13.3 1.6 6.4

Facilities for Lead in Fighter Capability Assurance

Programme (AIR 5438 Phase 1) [1]


RAAF Pearce WA - Pearce - - 3.2

Total 12.9 1.3 7.7

Flood Mitigation

RAAF DarwinNT - Solomon 9.9 2.6 4.9

Land 998 Phase 1 Replacement Aviation Fire Truck [1]

RAAF Richmond NSW - Greenway- 0.3 1.1


RAAF Amberley QLD - Blair- 0.3 1.1

Lavarack Barracks, Townsville QLD - Herbert- 0.3 1.1

Gallipoli Barracks, Enoggera QLD - Ryan- 0.3 1.1

Robertson Barracks NT - Solomon- 0.3 1.1

RAAF Tindal NT - Lingiari- 0.3 1.1

Total 9.6 1.8 7.8


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State and

Electorate

Total

Estimated

Expenditure

$m

Estimated

Cumulative

Expenditure

to 30 June 2015

$m

2015-16

Budget

Estimate

$m

Defence Centralised Processing Facilities

National9.3 3.4 5.9

Thermal Test Facility

Fishermans BendVIC - Melbourne

Ports 9.2 5.3 3.6

Refurbishment of R5 Basement

Russell OfficesACT - Fraser 6.6 2.1 2.1

Army Emergency Response Facilities

Holsworthy Barracks, Holsworthy NSW - Hughes5.9 0.7 5.3

Shoal Bay Receiving Station Facilities Upgrade

Shoal Bay Receiving Station Facilities NT - Solomon5.9 - 5.0

Holsworthy Fuel Point

Holsworthy Barracks, Holsworthy NSW - Hughes4.9 0.2 4.4

Potable Water Supply Upgrade

RAAF Pearce WA - Pearce 4.6 0.4 4.0

Land 400 Ph 2 Land Combat Vehicle System

Monegetta Proving Grounds VIC - McEwan4.5 - 4.5

Porton Barracks Redevelopment

Porton Barracks, Edmonton QLD - Edmonton4.3 0.4 2.6

Deployable Defence Air Traffic Management and

Control Systems

RAAF Amberley QLD - Blair4.2 0.0 3.5

Support Facilities Landing Helicopter Dock (LHD)

Landing Crafts

HMAS Waterhen NSW - Wentworth3.9 1.1 2.6

Projects in or about to enter Defects Liability Period [4]

19.7

Total 6,247.0 3,094.8 905.4

Notes

2. This amount represents the Defence funded element of the Moorebank Units Relocation Project. The Department of Finance are

funding the remaining element of $517.1m with a total approved project value of $870.0m.

4. This amount represents the expenditure estimates for contract administration of 14 completed projects during their first year in-

use and construction completion of five medium works projects that are under the $2m reporting threshold to the Public Works

Committee.

1. These projects cross state and electoral boundaries. Estimated cumulative expenditure to 30 June 2015 and expenditure

estimates for 2015-16 are provided in the table per location.

3. This project is delivering facilities at over 200 locations that cross state and electoral boundaries.


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New South Wales

Moorebank - Units Relocation (MUR)

This project supports the Government’s proposed Moorebank Intermodal Terminal (IMT) on Commonwealth owned-Defence occupied land at Moorebank. The project is delivering new facilities at Holsworthy Barracks to relocate affected Defence units and facilities from the proposed Moorebank IMT site, including the School of Military Engineering. The project is scheduled for completion by late 2015.

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.

Facilities for Air Warfare Destroyer (SEA 4000)

This project will provide new and upgraded wharf-side facilities to support berthing and sustainment at Garden Island, Sydney for the new Hobart Class Air Warfare Destroyers. The project also includes the provision of training facilities at HMAS Watson and Randwick Barracks, Sydney. The project is scheduled for completion by late 2015.

Facilities for the Landing Helicopter Dock Ships (JP 2048)

This project will provide new and upgraded wharf-side facilities to support berthing and sustainment at Garden Island, Sydney for the new Canberra Class Landing Helicopter Dock Ships. The project also includes the provision of training facilities at Randwick Barracks, Sydney and at the Multi-user Wharf at Eden, NSW. The project is scheduled for completion by late 2015.

Queensland

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 mid 2017.

Victoria

RAAF Base East Sale Redevelopment Stage 2

This project will provide in-ground engineering services upgrades, new working accommodation, new training and maintenance facilities, security upgrades, new air traffic control complex, new commercial and community facilities, a new chapel, new firing range, new living-in accommodation and demolition of redundant facilities. The project is scheduled for completion by early 2016.

Watsonia - Defence Force School of Signals

This project will provide new working accommodation, improved security arrangements and upgraded living-in accommodation for the Defence Force School of Signals at Simpson Barracks, Watsonia. Construction commenced in October 2008. The living-in accommodation and all other major components of the project are now complete, with one remaining component scheduled for completion by late 2017.


136

DSTO Fishermans Bend – Land Division and Security

This project will provide new and upgraded site security and will rectify identified working accommodation shortfalls within the Land Division facilities located at the Defence Science and Technology Organisation site at Fishermans Bend, Melbourne. The project is scheduled for completion by early 2016.

South Australia

Facilities for Joint Counter Improvised Explosive Device Capability (JP 154 Phase 1 Stage 1) - Nurrungar

This project will provide test and evaluation facilities at Nurrungar. Construction is planned to commence in mid 2015 and be completed in mid 2016.

Western Australia

Space Telescope (JP 3029)

This project will provide facilities and infrastructure at the Harold E Holt Naval Communications Station 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 in late 2016.

VARIOUS Locations

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 (ELF) capabilities. Facilities at Garden Island, Balmoral, HMAS Penguin, Watsonia, Puckapunyal, RAAF Base Amberley, Townsville Field Training Area, Majura Field Training Area and the Royal Military College Duntroon have been completed.

The final project element to be delivered is at Cultana Training Area and is scheduled for completion by early 2017.

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.

Defence Logistics Transformation Programme (DLTP) - Formerly DLSP

This project will modernise and enhance the wholesale storage, distribution and land materiel functions of Joint Logistic Command units nationally to provide optimum support to Defence operations. The facilities component of the programme will provide enhanced logistics facilities at Moorebank, NSW, Bandiana, Vic., Amberley and Townsville, Qld, Palmerston, NT, Edinburgh, SA and Guilford and Garden Island, WA. The project is scheduled for completion by mid 2016.


137

Defence Terrestrial Communications Network Facilities Upgrade (JP 2047)

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 mid 2016.

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.

Facilities for Joint Counter Improvised Explosive Device Capability (JP 154 Phase 1 Stage 2) - Other sites

This project will provide test and evaluation facilities at Edinburgh, SA, plus storage and training facilities at 14 other sites across Australia in support of the ADF’s counter improvised explosive device capability. The project is scheduled for completion by mid 2016.

Facilities for the MH-60R Seahawk Maritime Combat Helicopters (AIR 9000 Phase 8) (previously reported as Facilities for Future Naval Aviation Combat System Support 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.

Maritime Patrol Aircraft Phase 2B (AIR 7000)

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 mid 2020.


138

APPENDIX D: STATUS OF MAJOR PROJECTS FORESHADOWED FOR GOVERNMENT

AND PARLIAMENTARY STANDING COMMITTEE ON PUBLIC WORKS CONSIDERATION

(PWC) IN 2015-16

During 2015-16, Defence expects to present a number of facilities proposals to the Government and the Parliamentary Standing Committee on Public Works (PWC). Table 79 provides details of the proposed major and medium capital projects expected to be referred to the PWC in 2015-16 or seek Government approval in 2015-16. In some cases, the projects may require the Government's approval before referral to the PWC. Descriptions for major projects are provided below the table.

Table 79: Programme 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 2015-16

Russell Buildings R5 and R6 Infrastructure Upgrade

ACT - Fraser Mid 2016 Mid 2016 In development

RAAF Base Williamtown Redevelopment Stage 2

NSW - Newcastle Mid 2015 Late 2015 In development

Garden Island Critical Infrastructure Recovery Project Stage 1

NSW - Wentworth Late 2015 Late 2015 In development

17th Construction Squadron Relocation Infrastructure Project

Qld - Blair Mid 2015 Mid 2015 In development

AIR 8000 Phase 2 - Battlefield Airlifter Facilities

Qld - Blair Mid 2015 Late 2015 In development

AIR 5349 Phase 3 - Growler Airborne Electronic Attack Capability Facilities

Qld - Blair Mid 2015 Late 2015 In development

C-17 Maintenance Facility, Aircraft Apron and Associated Infrastructure

Qld - Blair Early 2016 Mid 2016 In development

Delamere Air Weapons Range

Redevelopment

NT - Lingiari Mid 2015 Late 2015 In

development

Remediation of Defence Site Maribyrnong Vic. - Maribyrnong Mid 2015 Late 2015 In development

Puckapunyal High Voltage Project Vic. - McEwen Late 2015 Early 2016 In

development

Campbell Barracks Redevelopment WA - Curtin Mid 2015 Late 2015 In development

JP2097 REDFIN Phase 1B WA - Curtin Mid 2015 Late 2015 In development

HMAS Stirling Redevelopment Stage 3A WA - Brand Late 2015 Late 2015 In development

Joint Health Facilities Interim Works (Tranche 1 and 2)

Multiple Mid 2015 Late 2015 In development


139

Aircraft Pavements and Airfield Lighting at RAAF Base Pearce, Gin Gin, RAAF Base East Sale and Army Aviation Centre Oakey

[2].

Multiple Early 2016 Mid 2016 In development

Air Traffic Control Complex Infrastructure Project and AIR5431 Phases 2and 3, and Fixed Base Defence Air Traffic Management and Control System

Multiple Mid 2015 Mid 2015 In development

LAND 121 Phases 3 and 4 Stage 2 Multiple Mid 2015 Late 2015 In development

LAND 17 Phases 1B an 1C - Additional Towed Guns

Multiple Early 2016 Mid 2016 In development

LAND 155 Enhanced Gap Crossing Capability


Navy Guided Weapons Maintenance Facilities


Medium Capital Facilities Projects Foreshadowed to Seek Approval in 15/16

Proof & Experimental Establishment (P&EE) Vibration Test Facility - Port

Wakefield

SA - Wakefield In development

Cultana Training Area Infrastructure and Facilities

SA - Grey In development

RAAF Base Amberley Base Infrastructure Works

Qld - Blair In development

Bulimba Barracks Partial Disposal and Unit Relocation

Qld - Griffith In development

Joint Movement Control Office Working

Accommodation - Lavarack Barracks

Qld - Herbert In

development

Garden Island (East) Building 130 Refurbishment

NSW - Wentworth In development

JP1770 Phase 1 Maritime Rapid Environment Assessment - HMAS Waterhen

NSW - Wentworth In development

Upgrade of Multi Purpose Wharf, Two Fold Bay Eden

NSW - Eden Monaro

In development

Robertson Barracks 25m Range Refurbishment

NT - Solomon In development

JP 2072 Phase 2 Battlespace Communications Facilities Simpson

Barracks, Watsonia

Vic. - Jagajaga In development

Benalla Proof & Experimental Establishment (P&EE) Small Arms Ammunition Test Facility

Vic. -Indi In development

LAND 136 Phase 1 Land Force Mortar Replacement

Multiple In development


140

JP2064 Phase 3 Geospatial Information Infrastructure and Services Facilities Support

Multiple In development

Notes

1. Hearing dates will be subject to the Committee's consideration and agreement.

2. Defence proposes to seek exemption from Public Works Committee scrutiny of this project on the grounds that the work is declared repetitive in accordance with Section 18(8A) of the Public Works Act 1969.

Russell Buildings R5 and R6 Infrastructure Upgrade

This project will provide essential building and engineering services upgrade to extend the life of Russell Buildings R5 and R6. Subject to Government and Parliamentary approvals, construction is scheduled to commence in late 2016 and be completed by mid 2019.

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. Subject to Government and Parliamentary approvals, construction is scheduled to commence in mid 2016 and be completed by mid 2021.

Garden Island Critical Infrastructure Recovery Project Stage 1

This project will address critical wharf infrastructure and engineering services risks at Garden Island, NSW. Subject to Government and Parliamentary approvals, construction is scheduled to commence in mid 2016 and be completed by mid 2017.

17th Construction Squadron Relocation Infrastructure Project

This project will provide facilities to collocate the 17th Construction Squadron with the 6th Engineer Support Regiment and the 21st Construction Squadron at RAAF Base Amberley, Qld. Subject to Government and Parliamentary approvals, construction is planned to commence in late 2015 and be completed by late 2016.

AIR 8000 Phase 2 - Battlefield Airlifter Facilities Project

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. Subject to Government and Parliamentary approvals, construction is planned to commence in early 2016 and be completed by late 2017.

AIR 5349 Phase 3 - Growler Airborne Electronic Attack Capability Facilities Project

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. Subject to Government and Parliamentary approvals, construction is planned to commence in mid 2016 and be completed by mid 2017.

C-17 Maintenance Facility, Aircraft Apron and Associated Infrastructure Project

This project will provide a maintenance facility, additional working accommodation, aircraft apron and associated infrastructure to support C-17 operations at RAAF Base Amberley, Qld. Subject to Government and Parliamentary approvals, construction is planned to commence in mid 2016 and be completed by late 2018.


141

Delamere Air Weapons Range 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. Subject to Government and Parliamentary approvals, construction is planned to commence in mid 2016 and be completed by mid 2018.

Remediation of Defence Site Maribyrnong

This project will undertake necessary remediation works at Defence site Maribyrnong, Victoria. Subject to Government and Parliamentary approvals, construction is planned to commence in late 2016 and be completed by late 2020.

Puckapunyal High Voltage Project

This project will provide an essential upgrade to the High Voltage power supply and reticulation network at the Puckapunyal Military Area, Victoria. Subject to Government and Parliamentary approval, construction is planned to commence in mid 2016 and be completed by early 2017.

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. Subject to Government and Parliamentary approvals, construction is planned to commence in late 2015 and be completed by late 2018.

JP2097 REDFIN Phase 1B

This project will provide facilities for the Special Operations Vehicle (SOV) fleet to support mobility and Networked Special Operations Capability. Subject to Government and Parliamentary approvals, construction is planned to commence in early 2016 and be completed by early 2019.

HMAS Stirling Redevelopment Stage 3A

This project will provide upgrades and refurbishment of existing critical shortfalls to infrastructure and facilities. Subject to Government and Parliamentary approvals, construction is planned to commence in mid 2017 and be completed by late 2019.

Joint Health Facilities Interim Works (Tranche 1 and 2)

Tranche One of this project will provide an interim health centre for Australian Defence Force personnel at Larrakeyah Barracks, NT, and refurbishment of the existing health centre at Robertson Barracks, NT. Tranche Two will provide a mid-life upgrade to RAAF Townsville Health Centre, Qld, and relocation of dental services into the RAAF Pearce Health Centre, WA. Construction is planned to commence for Tranche One in June 2015 and be completed by February 2016. Subject to Government and Parliamentary approvals, Tranche Two construction is planned to commence in early 2016 and be completed in late 2016.

Aircraft Pavements and Airfield Lighting at RAAF Base Pearce, Gin Gin, RAAF Base East Sale and Army Aviation Centre Oakey

This project will resurface asphalt pavement and replace airfield lighting at RAAF Base Pearce, WA, Gin Gin, WA, RAAF Base East Sale, Victoria. and Army Aviation Centre Oakey, Qld. Subject to Government and Parliamentary approvals, construction is planned to commence in late 2016 and be completed by mid 2019.


142

Air Traffic Control Complex Infrastructure Project and AIR5431 ph2/3 Fixed Base Defence Air Traffic Management and Control System

This project will provide facilities in support of replacement Air Traffic Management Surveillance, Command and Control Systems under AIR5431 Phases 2 and 3, including the replacement of aged and degraded Air Traffic Control Towers. Subject to Government and Parliamentary approvals, construction is planned to commence in late 2015 and be completed by late 2021.

LAND 121 Phase 3 and 4 Stage 2

This project will provide the facilities for the long-term storage, maintenance and training requirements of a number of new military B vehicle fleets at multiple Defence sites across Australia. Subject to Government and Parliamentary approvals, construction is planned to commence in mid 2016 and be completed by late 2019.

LAND 17 Phases 1B and 1C - Additional Towed Guns

This project will provide working accommodation, storage, maintenance and training facilities in support of the Lightweight Towed Howitzer at multiple Defence sites across Australia. Subject to Government and Parliamentary approvals, construction is planned to commence in early 2017 and be completed by early 2018.

LAND 155 Enhanced Gap Crossing Capability

This project will provide new warehousing, storage, hardstand, maintenance and training facilities to support the introduction of enhanced gap crossing capability at Holsworthy Military Area, NSW, Joint Logistics Unit South Queensland, Joint Logistics Unit North Queensland and Joint Logistics Unit North, NT. Subject to Government and Parliamentary approvals, construction is planned to commence in late 2016 and be completed by mid 2017.

Navy Guided Weapons Maintenance Facilities

This project will provide new guided and surface weapons testing, maintenance and training facilities at Defence Establishment Orchard Hills, NSW and HMAS Stirling, WA. Subject to Government and Parliamentary approvals, construction is planned to commence in late 2016 and be completed by early 2018.

143



Section 1: DMO Overview and Resources

1.1 Strategic Direction Statement

1.2 DMO Resource Statement

Section 2: DMO Outcomes and Planned Performance

2.1 Outcomes and Performance Information

Section 3: DMO Explanatory Tables and Budgeted Financial Statements

3.1 Explanatory Tables

3.2 Budgeted Financial Statements


144


145

DEFENCE MATERIEL ORGANISATION

Section 1: DMO Overview and Resources


Given the recommendations of the First Principles Review the Defence Materiel Organisation (DMO) will commence transition to the new arrangements during the 2015-16 financial year. In the interim the DMO will continue to provide the materiel equipment and sustainment elements of capability for the ADF in an effective, efficient, economical and safe manner.

While financial performance of the DMO over the last five years continues to be, on average, above comparable benchmarks, there continues to be a need to improve schedule performance. This will be a major focus of revised processes resulting from the First Principles Review.

The DMO will continue to work with the Capability Managers to set the required sustainment performance standards and to deliver within agreed budgets. It will also be seeking opportunities to improve schedule efficiency by providing incentives to DMO’s industry partners with innovative contractual arrangements.

The continuing reduction in the DMO’s workforce through reform has been challenging for the organisation while the work the DMO manages increases year on year. The DMO workforce is four per cent smaller than when established as a prescribed agency almost a decade ago. This is despite the workload, measured in real budget, growing 40 per cent over the same period, and the increasing technical complexity of the work itself.

Organisational Structure

On 31 March 2015, the DMO Chief Finance Officer and Finance Division transferred to Defence under the CFO Group. Finance management, advice and support are now provided by CFO Defence through a shared service arrangement to the DMO.


146

Figure 4: The DMO Organisational Structure as at 1 May 2015


147

Senior Executive Changes

The following changes have taken place since the Portfolio Additional Estimates Statements 2014-15.

The previous Chief Executive Officer – Defence Materiel Organisation, Mr Warren King, ceased duties in his position on 27 February 2015. Mr King will undertake duties elsewhere in the Department for a period of time before retiring from the Australian Public Service.

Mr Harry Dunstall will act in the position of Chief Executive Officer – Defence Materiel Organisation from 2 March 2015.

Effective as at 11 March 2015, Mr Steve Wearn is Acting General Manager Commercial.


148

1.2 DMO RESOURCE STATEMENT

Resourcing For 2015-16

As an outcome of the First Principles Review the DMO will be transitioning to new arrangements during the 2015-16 financial year under the Department of Defence. As a result, the DMO will no longer receive a Direct Appropriation from Government with Operating costs being provided as part of the Defence Appropriation. There will also no longer be a prepayment from Defence to the DMO for contracted Acquisition and Sustainment services.

Financial Tables for the DMO have been modified to reflect these new arrangements with the 2014-15 Estimated Actual and the 2015-16 Budget and Forward Estimates being shown in separate tables as appropriate. As at 1 July 2015 DMO will have an opening Special account balance of $301.222m excluding amounts held on behalf of Foreign Governments. This amount will transfer to the Department of Defence as part of these transition arrangements.

Table 80: DMO Resource Statement - Budget Estimates 2015-16 as at Budget May 2015

Total

Available

Appropriation

2014-15

$'000

Estimate of

prior year

amounts

available in

2015-16

$'000

+Proposed

at budget

2015-16

$'000

=Total

Estimate

2015-16

$'000

ORDINARY ANNUAL SERVICES

Departmental appropriation

Prior year departmental appropriation[1]

297,121 301,222 - 301,222

Departmental appropriation[2]

879,683 - - -

Total Departmental appropriation 1,176,804 301,222 - 301,222

A Total Ordinary Annual Services 1,176,804 301,222 - 301,222

Total Available Annual Appropriations 1,176,804 301,222 - 301,222

Special Accounts

Opening balance[3,4]

297,121 301,222 - 301,222

Appropriation receipts[5]

879,683 - - -

Appropriation receipts - other agencies[6]

11,712,220 - - -

Non-Appropriation receipts to Special Accounts 894 - - -

B Total Special Accounts 12,889,918 301,222 - 301,222

Total Resourcing (A + B) 14,066,722 602,444 - 602,444

Less appropriations drawn from annual appropriations

above and credited to special accounts 1,176,804 301,222 - 301,222

Total Net Resourcing for DMO 12,889,918 301,222 - 301,222

Notes

1. Estimated adjusted balance carried forward from previous year.

2. Appropriation Bill (No. 1) 2015-16.

3. Estimated opening balance for special account.

4. Excludes monies held on behalf of Foreign Governments

5. Direct appropriation in 2014-15 for Workforce and Operating Expenses.

6. Appropriation receipts from Defence credited to the DMO's special account.

Reader Note: All figures are GST exclusive


149

Table 81: DMO Cost Summary 2014-15 Estimated Actual

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

EXPENSES

Employees 522,018 - - - -

Suppliers[1]

11,945,304 - - - -

Grants 10,470 - - - -

Depreciation and amortisation 1,326 - - - -

Finance Cost - - - - -



Other Expenses - - - - -

Total expenses 12,479,118 - - - -

Income

Revenues

Goods and services 11,564,830 - - - -

Other revenue 34,605 - - - -

Total revenue 11,599,435 - - - -

Gains





Total Income 11,599,435 - - - -

DMO 879,683 - - - -

Notes

1. Includes Military Workforce costs of $174.1m


150

Table 82: Cost Summary 2015-16 Budget and Forward Estimates

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

EXPENSES

Employees - 509,695 495,142 488,294 494,664

Suppliers[1]

- 286,283 361,626 399,773 417,257

Grants - 8,599 9,870 8,598 8,825

Depreciation and amortisation - 1,346 1,380 1,415 1,450

Finance Cost - - - - -



Other Expenses - - - - -

Total expenses - 805,923 868,018 898,080 922,196

Income

Revenues


Other revenue - 917 2,596 963 2,727

Total revenue - 917 2,596 963 2,727

Gains





Total Income - 917 2,596 963 2,727

DMO - 805,006 865,422 897,117 919,469

Notes

1. Includes Military Workforce costs of $181.9m in 2015-16, $237.1m in 2016-17, $241.4m in 2017-18 and $244.8m in 2018-19.

Table 83: Expenditure on behalf of other Defence Groups

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

Acquisition

Capital 5,689,729 6,246,331 5,551,692 6,699,344 9,008,773

Operating 408,928 672,653 628,274 654,746 829,648

Total Acquisition 6,098,657 6,918,984 6,179,966 7,354,090 9,838,421

Sustainment

Capital 1,029,091 995,055 1,032,693 1,003,358 1,001,277

Operating 4,437,082 4,745,621 4,738,877 5,091,591 5,540,977

Total Sustainment 5,466,173 5,740,676 5,771,570 6,094,949 6,542,254

Total expenses 11,564,830 12,659,660 11,951,536 13,449,039 16,380,675


151

Section 2: DMO Outcomes and Planned Performance

Outcome 1 encapsulates the entire business of the DMO, the activities it undertakes as part of Defence in acquisition and sustainment of materiel and the advice it provides on contracting policy and industry related matters.

The outcome is described in Section 2.1 together with its related programmes, specifying the performance indicators and targets used to assess and monitor the performance of the DMO in achieving Government outcomes.

2.1 OUTCOMES AND PERFORMANCE INFORMATION

Outcome 1: Contributing to the preparedness of Australian Defence Organisation through acquisition and through-life support of military equipment and supplies

Outcome 1 Strategy

In 2015-16, the DMO will continue to deliver against Outcome 1 targets while simultaneously pursuing improvement and change activities to enhance future performance against this Outcome.

Under Programme 1.1, Management of Capability Acquisition, the DMO will:

deliver the approved materiel elements of the Defence Capability Plan (DCP) and continue to meet capability and budget targets while striving to improve overall schedule performance

perform the role of Defence Business Domain Process Owner for Procurement and Project Management

perform the role of Defence Business Domain Process Owner for Materiel Engineering and Materiel Logistics

undertake an independent Gate Review of major acquisition projects

improve and rationalise methods for cost and schedule estimation prior to contract and for monitoring and control of schedules post contract award.

Under Programme 1.2, Management of Capability Sustainment, the DMO will:

support military operations

sustain capability as specified in the Materiel Sustainment Agreements

continue to implement efficiency measures to reduce cost of ownership

perform the role of the Defence Business Process Owner for Procurement, Materiel Engineering, Sustainment Management and Materiel Logistics

continue the implementation of a more standardised Sustainment Model to promote better and more consistent practice

continue the development of sustainment management skilling programs and the development of standardised sustainment performance measures.


152

Under Programme 1.3, Provision of Policy Advice and Management Services, the DMO will:

implement the DMO-related reforms associated with the Defence First Principles Review,

provide independent assurance and trusted expert advice to the Government and Defence on materiel acquisition and sustainment

deliver Defence industry programmes and inform the development of the Defence Industry Policy Statement

perform the role of the Defence Business Domain Process Owner for Procurement Policy and Procurement Professionalisation

streamline internal policy and process

enhance the skill and diversity of the DMO workforce and collaborate with Defence industry to support sustained delivery of services required by Government and the Australian Defence Organisation.

STRATEGY HIGHLIGHT: DMO Change Priorities 2015-16

The four DMO change priorities from 2014-15 have been refined and will be further pursued in 2015-16 through targeted actions. The change priorities for 2015-16 are:

1. Deliver acquisition and sustainment more efficiently Use the DMO resources more efficiently to deliver approved acquisition and sustainment services to the ADO. The DMO will continue to pursue reform activities consistent with the Government’s reform agenda, including: a more commercially astute and focused delivery of materiel; removing unnecessary administrative burdens for organisations dealing with the DMO; and rationalising enabling services in the DMO.

2. Implement Government-directed review recommendations Proactively engage with all elements of Defence and the other Government departments to implement Government directed recommendations applicable to the DMO.

3. Streamline internal processes Streamline internal policies and processes to empower greater delegation of both decision making and accountability.

4. Reform the DMO Develop and implement a DMO reform program that draws together Review recommendations and initiatives to put in place a new DMO operating model without compromising continuity in delivery of essential DMO outcomes. In parallel, enhance the skill and diversity of the DMO workforce and collaborate with Defence industry to support the new operating model.

Some key activities planned to enact the 2015-16 change priorities include:

1. Shared Services Implementation The DMO will actively support and best utilise broadened Defence shared services.

2. Inventory Reform The DMO will continue to pursue inventory reform through: ongoing collaboration with defence industry; improving the DMO capacity to forecast inventory demand; and increasing the use of electronic purchasing arrangements.


153

3. Deregulation Action Network/Cutting the Red Tape The DMO will continue to support the Government Deregulation Action Network to ‘cut red tape’ through a range of procurement-related activities. These include: progressive transition from physical to electronic tendering; standardising the approach to Performance Based Contracting (PBC); simplifying the requirements of the Australian Standard for Defence Contracting (ASDEFCON) Support and Strategic Materiel templates; and streamlining tender evaluation and approval timelines.


154

Outcome Expenses and Resource Statement

The following table provides an overview of the total expenses for Outcome 1 by programme.

Table 84: Budgeted Expenses and Resources for Outcome 1

Outcome 1: Contributing to the preparedness of Australian Defence

Organisation through acquisition and through-life support of military

equipment and supplies

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

Programme 1.1 Management of Capability Acquisition

Departmental expenses


302,054 -

Special Accounts 6,098,657 -

Expenses not requiring appropriation in the Budget year[2]

7,191 -

Total for Programme 1.1 6,407,902 -

Programme 1.2 Management of Capability Sustainment



479,760 -



15,259 -

Total for Programme 1.2 5,961,192 -

Programme 1.3 Provision of Policy Advice and Management Services



97,869 -

Special Accounts 894 -


11,261 -

Total for Programme 1.3 110,024 -

Outcome 1 Total by appropriation type



879,683 -



33,711 -

Total Expenses for Outcome 1 12,479,118 -

2014-15 2015-16

Average Staffing Level (number)[3]

4,482 -

Notes

1. Departmental Appropriation combines "Ordinary annual services (Appropriation Bills

No. 1)" and "Retained Revenue Receipts under s74 of the PGPA Act 2013"".

2. Expenses not requiring appropriation in the Budget year is made up of resources

received free of charge.

3. Average staffing levels do not include military staff posted to the DMO, as military staff

remain employees of the Department of Defence and are included in its staffing.


155


Programme 1.1: Management of Capability Acquisition


Acquisition projects will be delivered in accordance with approved parameters and in a transparent and accountable manner.

Programme 1.1 Expenses

The cost of Programme 1.1 provides for estimated expenditure on acquisition of specialist military and associated equipment for the ADF. This covers all the DMO’s activities in support of acquisition processes for major and minor capital investment projects. The estimated expenses for this Programme include the estimated budget for all approved projects together with an estimate for the unapproved major and minor projects that are expected to be approved during that year.

The planned resource use for Programme 1.1 is $7,200.8m in 2015-16 which represents approximately 53 per cent of the DMO’s total expenses.

The planned resource use for Programme 1.1 includes:

the DMO major capital investment programme of $6,782.4m, which comprises the Approved Major Capital Investment Programme of $6,157.9m and $624.5m of work planned to be approved during 2015-16

the DMO minor capital investment programme of $136.6m, including the approved minor programme of $31.3m and $105.3m of work planned to be approved during 2015-16

$281.8m relating to Acquisition Workforce and Operating Expenses.

Table 85: Programme 1.1 Management of Capability Acquisition

2014-15

Estimated

Actual

$'000

2015-16

Budget

$'000

2016-17

Forward

estimate

$'000

2017-18

Forward

estimate

$'000

2018-19

Forward

estimate

$'000

Special Account Expenses:

Defence Materiel Special Account 6,098,657 - - - -

Annual Departmental Expenses:

Ordinary Annual Services

(Appropriation Bill No. 1)

302,054 - - - -


7,191 - - - -

Total Programme Expenses 6,407,902 - - - -

Note

1. Expenses not requiring appropriation is made up of resources received

free of charge.


156

Table 86: Capability Acquisition Programme

2014-15

Estimated

Actual

$'000

2015-16

Budget

$'000

2016-17

Forward

estimate

$'000

2017-18

Forward

estimate

$'000

2018-19

Forward

estimate

$'000

Capital - 6,246,331 5,551,692 6,699,344 9,008,773

Operating - 672,653 628,274 654,746 829,648

Total Acquisition - 6,918,984 6,179,966 7,354,090 9,838,421

Workforce and Operating Expenses - 281,830 320,056 340,969 343,296

Total Programme Expenses - 7,200,814 6,500,022 7,695,059 10,181,717


This Programme delivers specialist military and associated equipment. It encompasses the DMO’s activities in support of the acquisition process, including all pre-approval activities for major and minor capital investments.

The DMO is currently managing approximately 180 major capital projects. A major capital project meets more than one of the following criteria: it has an estimated total one-time cost of bringing the capital equipment concerned into operation of $20m or more; the unit cost of an individual item in a multi-item acquisition is estimated at $1m or more; and the project is strategically important and/or has significant Defence policy or joint Service implications. Government approvals are in a Joint Project Directive issued by the Secretary and Chief of the Defence Force (for projects approved after March 2010). Key deliverables are described in more detail in a Materiel Acquisition Agreement (MAA) with the Capability Development Group and relevant Capability Manager. The Top 30 major capital equipment projects are discussed under the project headings in Table 87. A status update on other major projects that were included in the Top 30 list in previous years is provided at Table 89. The DMO is currently managing six minor capital investment Programmes funded by the Capability Managers which incorporate approximately 50 minor acquisition projects with an average value of $8.9m. The number of minor projects has decreased from the previous year (by approximately 29 per cent) as a result of the closure of projects that have achieved delivery. A minor capital project, as stated in the current policy guidance, is classified as having a low to medium risk, or low strategic significance, is nominally valued up to $20m and generally will not exceed $100m. The Top 10 minor capital projects are discussed under the project headings following Table 90.


The key performance indicators are to deliver major and minor capital equipment within the agreed parameters for schedule, scope and budget. The detail varies with each project and is specified in each project’s MAA.

Australian Defence industry involvement in major capital equipment projects will be reported as an appendix in the Defence Annual Report 2015-16.


157

Top 30 Acquisition Projects by 2015-16 Forecast Expenditure

The following table lists the Top 30 Government approved major projects by forecast expenditure for 2015-16. The descriptions that follow provide details of the capability being acquired including delivery schedules, project risk and strategies employed by project offices to manage this risk.

In 2015-16, the ten largest projects within the Top 30 list are forecast to constitute 61 per cent of the DMO’s total forecast acquisition expenditure for 2015-16 (predicted on the forecast outcome for 2014-15).


158

Table 87: Top 30 Acquisition Projects by 2015-16 Forecast Expenditure (Gross Plan)

Project

Number/

Phase

Approved

Project

Expenditure

$m

Estimated

Cumulative

Expenditure

to 30 June

2015

$m

Budget

Estimate

2015-16

$m

Growler Airborne Electronic Attack CapabilityAIR 5349

Phase 33,569 1,189 890

Maritime Patrol and Response Aircraft SystemAIR 7000

Phase 23,968 606 717

Heavy Airlift - Additional C-17AAIR 8000

Phase 41,375 790 261

Battlefield Airlift - Caribou ReplacementAIR 8000

Phase 21,369 696 230

Lead-In Fighter Capability Assurance ProgramAIR 5438

Phase 1A270 116 68

Air to Air Refuelling Capability AIR 5402 1,823 1,695 67

AEW&C Interoperability Compliance UpgradeAIR 5077

Phase 5A106 36 51

Battlefield Command SystemsLAND 75

Phase 4354 178 102

Wideband Transportable Land TerminalsJP 3008

Phase 5B1197 24 81

Maritime Communication ModernisationSEA 1442

Phase 4442 44 71

Anzac Electronic Support System ImprovementsSEA 1448

Phase 4A278 69 69

Civil Military Air Traffic Management System (CMATS)AIR 5431

Phase 3731 25 63

C-130J Large Aircraft Infrared Countermeasures (LAIRCM)AIR 5416

Phase 4B2222 33 46

Deployable Defence Air Traffic Management and Control

System (DDATMCS)

AIR 5431

Phase 2191 29 41

Future Naval Aviation Combat System HelicopterAIR 9000

Phase 83,419 1,469 546

Multi Role HelicopterAIR 9000

Phase 23,748 2,698 212

Evolved Seasparrow Missile (ESSM) UpgradeSEA 1352

Phase 1374 58 97

Helicopter Aircrew Training SystemAIR 9000

Phase 7474 52 67

Medium Lift HelicopterAIR 9000

Phase 5C634 388 63

Joint Strike Fighter AircraftAIR 6000

Phase 2A/B 15,181 748 463

Air Warfare Destroyer BuildSEA 4000

Phase 37,891 5,987 746

Overlander - Medium Heavy Capability, Field Vehicles,

Modules and Trailers

LAND 121

Phase 3B3,388 149 205

Redfin - Phase 1BJP 2097

Phase 1B335 100 122

Field Vehicles and Trailers - Overlander ProgramLAND 121

Phase 31,016 736 120

Mounted Combat Reconnaissance CapabilityLAND 4000

Phase 2117 1 73

Soldier Enhancement Version 2 - SurvivabilityLAND 125

Phase 3B183 25 62

Bushmaster Protected Mobility VehiclesLAND 116

Phase 31,251 985 49

Amphibious Deployment and SustainmentJP 2048

Phase 4A/B3,091 2,725 146

Anzac Ship Anti-Ship Missile DefenceSEA 1448

Phase 2B679 548 59

Future Submarine - AcquisitionSEA 1000

Phase 1A297 132 87

56,972 22,332 5,873

66,161 60,535 832

123,133 82,867 6,705

Other Approved Project Gross Plans

Total - Approved Projects (Gross Plan)

General Manager Joint, Systems and Air

Aerospace Systems

Electronic Systems

Helicopters, Tactical Unmanned Areial Systems and Guided Weapons

Joint Strike Fighter

General Manager Land and Maritime

Future Submarines

Total -Top 30 Projects (Gross Plan)

Air Warfare Destroyer

Land Systems

Maritime Systems

General Manager Submarines


159

Table 88: Major Capital Investment Programme by 2015-16 Forecast Expenditure

2015-16

Budget

Estimate

$m

A Top 30 Projects Gross Plans 5,873

B Other Approved Project Gross Plans 832

C Total Gross Plan Project Estimates (A+B) 6,705

D Management Margin: Slippage[1]

-548

E

Payments Required from Defence for the Approved

Programme (C+D) 6,158

F Projects Planned for Government Consideration 625

Total Estimated Funds Available (E+F) 6,782

Note

1. Management margin is an estimate of possible overall approved capital programme

expenditure slippage that may occur as the 2015-16 financial year progresses.

The above table reflects the cash programmed to fund the current Approved Major Capital Investment Programme. The Total Programme Estimate for Major Capital Projects (serial C) is referred to as the Programme’s ‘Gross Plan’ estimate and is based on project expenditure expected to occur during the year in accordance with project schedules. The Management Margin (serial D) reflects an estimate of possible overall programme slippage that may occur during the year. This management margin is deducted from the Gross Plan estimate to calculate the estimated cash required for the Approved Programme (serial E). An estimate for projects that are planned for Government consideration and transfer to the approved programme during 2015-16 (serial F) is then added to obtain the total estimated funds available for the Major Capital Investment Programme.

The management margin is applied because of the inherent uncertainty in a programme with a large number of complex and long lead time projects. Unknown project events will occur which will impact on funding requirements. These events include cost savings and better payment terms, variations to project schedules, withholding of planned payments due to contractor non-performance, and variations to payments required under the US Government’s FMS Program. The DMO estimates and applies a slippage model to determine the appropriate management margin and annual cash requirement for the programme.

The slippage model is predicated upon the assumption that for each year, a certain percentage of project Gross Plan estimates will slip or be accelerated. The percentages applied vary with the composition of the programme, the estimates update being conducted and the probability assessments of expenditure plan achievement provided by projects.


160

Top 30 Major Project Descriptions


Aerospace Systems

Bridging Air Combat Capability (BACC) – AIR 5349 Phase 3

Prime Contractor: US Navy (USN), through a number of FMS cases (USN prime contractors the Hornet Industry Team consisting of Boeing, Northrop Grumman, Raytheon and General Electric).

This project will deliver an Airborne Electronic Attack Capability based on the EA-18G Growler platform, including the 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.

During 2015-16, all 12 aircraft will complete production, with the first two aircraft rolling off the Boeing St Louis, US production line in August 2015. Aircraft flight test will also be completed this year, culminating in delivery of the aircraft and mission planning software. The ALQ-99 and training missile production will continue through the financial year.

Maritime Patrol and Response Aircraft System – AIR 7000 Phase 2

Prime Contractor: US Navy (USN), under a cooperative program (USN prime contractor Boeing).

The project is delivering eight P-8A Increment 2 Poseidon aircraft and the associated through-life support infrastructure as partial replacement of the AP-3C Orion.

During 2015-16, the production of the first four Air Force P-8A aircraft, the flight and mission crew training systems, and the mission support system, will begin. Aircrew and Mission Support System operator training will begin in the second quarter of 2016. Initial P-8A aircraft spares will also begin to arrive in Australia. The USN will also be authorised to sign contracts for the Maintenance Training Device Suite.

The key risk for this project is the timely production of the aircrew training devices and the integration of Australian engineering and logistics information systems with the equivalent USN systems.

Additional C-17A – AIR 8000 Phase 4

Prime Contractor: Boeing, through a FMS case with the US Air Force.

This project provides an additional four C-17 Globemaster III aircraft to complement the four aircraft acquired under Project AIR 8000 Phase 3, and related provisions, including an enhanced US-common electronic warfare self-protection system. The fifth and sixth C-17 aircraft are now in service with the Air Force and the seventh and eighth aircraft are on schedule for delivery in 2015. Final Operational Capability is expected in December 2017, upon installation of the enhanced US-common electronic warfare self-protection system.


161

Battlefield Airlift Caribou Replacement– AIR 8000 Phase 2

Prime Contractor: US Air Force (USAF) through a number of FMS cases (USAF prime contractor L-3 Communications, Platform Integration Division (L-3 PID)).

This project is acquiring ten C-27J ‘Spartan’ Joint Cargo Aircraft and three years interim support to replace the retired Caribou.

Delivery of the first aircraft to 35 Squadron at RAAF Base Richmond, New South Wales, is scheduled for mid 2015. During 2015-16 the focus will be on the establishment of interim FMS logistic support arrangements at RAAF Base Richmond, achievement of training throughput, delivery of additional aircraft and conduct of 35 Squadron operation test and evaluation to support IOC by the end of 2016. Work will also continue on preparations for the aircraft structure fatigue test and procurement of training aids.

Lead-in Fighter Capability Assurance Program – AIR 5438 Phase 1A

Prime Contractor: BAE Systems United Kingdom.

This project will deliver an upgraded Lead-In Fighter Training System which includes an upgrade to the fleet of 33 Hawk 127 aircraft; procurement of new full mission simulators; and procurement of additional Air Combat Manoeuvring Instrumentation pods.

During 2015-16, this project will continue flight testing of the two validation and verification aircraft; complete construction of simulator facilities at RAAF Base Williamtown, New South Wales; and accept delivery of Air Combat Manoeuvring Instrumentation pods.

The key risk for this project relates to the operational implementation of the capability. Contracts have been established for the construction of new simulator facilities at RAAF Base Williamtown, and RAAF Base Pearce, Western Australia, significantly reducing the associated risk to the program.

Air to Air Refuelling Capability – AIR 5402

Prime Contractor: EADS CASA (Trading as Airbus Defence and Space).

This project has delivered five Airbus A330 Multi-Role Tanker Transport (KC-30A) aircraft and the associated through-life support infrastructure for the fleet.

The project has been removed from the Project of Concern List and began the Introduction to Service of the Aerial Refuelling Boom System and updated Mission System in early 2015. During 2015-16, the project will complete the KC-30A Block Upgrade Program that will bring the aircraft fleet to a common standard configuration.

AEW&C Interoperability Compliance Upgrade – AIR 5077 Phase 5A

Prime Contractor: Boeing Defence Australia.

This project will deliver interoperability compliance upgrades to the E-7A Wedgetail Airborne Early Warning and Control aircraft and its associated support systems.

During 2015-16, this project will implement risk reduction activities that will develop mission computing and Identification Friend or Foe design information for future project approval consideration by Government.


162

Electronic Systems

Battlefield Command Systems – LAND 75 Phase 4

Prime Contractor: Not in contract.

This project will continue to digitise and enhance the Command, Control and Communications systems for land tactical forces. The project will seek to complete the provisioning of the initial digitised brigade, commenced under LAND 75 Phase 3.4, Battle Management System, and introduce equipment into a second brigade plus the supporting elements.

In 2015-16 the project will complete the majority of vehicle installations based on the designs delivered under LAND 75 Phase 3.4, and complete the design for integration into the M113AS4 (Armoured Personnel Carriers) vehicles.

The project will also finalise first to second pass risk reduction activities, including concept demonstrators, that will generate the information required for a future project approval consideration by government.

The key risk for this project is the complexity of systems integration of the Battle Management System into other related systems that are either in development or in use within the ADF.

Military Satellite Capability – Wideband Terrestrial Infrastructure – JP 2008 Phase 5B1

Prime Contractor: Raytheon Australia.

Tranche 1 of this project will deliver small, medium and large sized transportable satellite terminals for the ADF units and introduces into service an advanced waveform modem with the associated spares.

The satellite terminals will expand the use of the Wideband Global SATCOM (WGS) system by introducing these WGS certified terminals to the ADF land forces.

During 2015-16 the initial terminal acceptance testing and delivery will be achieved. The system level verification and the centralised monitoring and control system verification are scheduled for 2016-17.

The key risks for the project are the WGS certification of the advanced waveform modems, the conformance to Australian electrical standards, and the completion of the engineering reviews.

Maritime Communications Modernisation – SEA 1442 Phase 4

Prime Contractor: Selex ES Ltd.

This project will upgrade the communications capability in the Anzac Class Frigates. The modernised capability will include improved communications management system, secure voice and tactical intercom system, secure switching, tactical radio systems, and a high data rate line of sight capability. Shore based integration and training systems will also be provided.

During 2015-16, this project will finalise each of the sub-system designs and progress system level integration in preparation for First of Class installation.

The key risks for this project are timely availability of the ships for installation, other system installations in the Anzac ship concurrent with this project’s installation, system of systems integration of the modernised communication system, and integration into the complex electromagnetic environment of the Anzac Class Frigates.


163

Improved Tactical Electronic Support Capability for ANZAC Class – SEA 1448 Phase 4A

Prime Contractor: Exelis Inc.

This project will provide the Anzac Class Frigates with a replacement tactical Electronic Support (ES) mission system for improved passive situational awareness and early threat warning. The project includes the provision of ES mission system emulators for training and a ground based support segment for ES mission system reprogramming.

The project successfully completed Factory Acceptance Testing of the first system in March 2015. Delivery of production systems and installation of the capability across the Anzac Class including land based support facilities will commence in the third of quarter 2015.

Civil Military Air Traffic System (CMATS) – AIR 5431 Phase 3

Prime Contractor: Not in Contract.

This project will provide the Defence element of a single national Civil Military Air Traffic Management System (CMATS) being progressed jointly under the OneSky program with Airservices Australia. Airservices Australia is the lead agency for the OneSky program. The CMATS will provide operational benefits and efficiencies for military and civil airspace users, and reduced acquisition and support costs for Airservices Australia and Defence. The scope includes 12 Air Traffic Management automation systems, communications infrastructure, training systems, and Defence’s share of a Joint Software Support Facility.

An Advance Work Supply Arrangement Deed of Standing Offer (AWSA) was signed on 27 February 2015 by Thales Australia and Airservices Australia to allow critical path activities associated with requirements determination for Defence and Airservices Australia, and accelerated deployment of Airservices Australia voice systems to be progressed in 2015-16. A supporting collateral deed was signed by Thales, Airservices Australia and Defence.

C-130J Large Aircraft Infrared Countermeasures (LAIRCM) – AIR 5416 Phase 4B2

Prime Contractor: US FMS case with the USAF.

This project will provide the Air Force C-130J with the Large Aircraft Infrared Counter Measures (LAIRCM) system, to enhance the Electronic Warfare Self Protection of the aircraft. The LAIRCM capability design, hardware and the modification of the first four aircraft in the US, are being provided via FMS. The remaining eight aircraft will be modified in Australia.

The Project Systems Requirements Review was conducted in February 2015 ahead of the first aircraft induction, planned for December 2015 at the Lockheed Martin Greenville SC facility. The program stakeholders have agreed to consider various options to expedite the aircraft modification schedule to support operations, with the intent to modify the first four aircraft in the USA earlier than the current IOC plan projects.

The key risk for this project is contractor performance maintaining the project plan, particularly with respect to the activities leading to the first aircraft induction.


164

Fixed Defence Air Traffic Control Surveillance Sensors – AIR 5431 Phase 2


This project will provide new radars and Automatic Dependent Surveillance - Broadcast sensors to replace the aging radars located at nine Defence airfields. The new radars and ADS-B sensors will support Defence Air Traffic Management, and provide data to Defence’s Air Battle Management systems and Airservices Australia.

Initial design work is planned to commence during 2015-16.

Helicopters, Tactical Unmanned Aerial Systems and Guided Weapons

Future Naval Aviation Combat System (FNACS) – AIR 9000 Phase 8

Prime Contractor: Sikorsky and Lockheed Martin through United States Foreign Military Sale cases from United States Navy.

The 24 MH-60R Seahawk ‘Romeo’ helicopters to be acquired by the project will replace the current fleet of 16 S-70B-2 Seahawk ‘Classic’ helicopters.

The acquisition of the Romeos will enable the Navy to provide eight helicopters concurrently embarked in Anzac Class Frigates and the new Hobart Class Destroyers. The remainder will be based at HMAS Albatross, New South Wales, conducting training and maintenance.

The project remains on schedule and budget. During 2015-16 a further 11 aircraft will be delivered to the Navy, bringing the total number of aircraft in inventory to 22. The main focus in 2015-16 will be to achieve IOC at sea. The final two aircraft are scheduled for delivery in early 2016-17.

The Australian Unique Modification program will be prototyped by Sikorsky in the US and will complete testing by the end of March 2016. The modifications will then be progressively retrofitted into the Australian Romeo fleet by 2020.

Multi-Role Helicopter (MRH) – AIR 9000 Phase 2

Prime Contractor: Airbus Group Australia Pacific (formerly Australian Aerospace).

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 2015-16 the project is scheduled to accept a further six production aircraft, bringing the total number of aircraft in inventory to 40. A retrofit program which upgrades the initial 13 aircraft to the final contracted configuration will also complete during the year. The aircraft have achieved IOC in both the Army and the Navy and the focus this year will continue to be on achieving the remaining operational milestones in the lead-up to the FOC in 2019.

The key risk for the project is the remediation of technical and supportability issues associated with the achievement of operational milestones.


165

Evolved Sea Sparrow Missile Upgrade - SEA 1352 Phase 1

Prime Contractor: Raytheon Missile Systems through the North Atlantic Treaty Organisation Seasparrow Consortium.

This project seeks to upgrade the Navy’s existing Evolved Sea Sparrow Missile (ESSM) capability to ensure that the surface combatant force can defeat the evolving regional anti-ship missile threat. An upgraded ESSM is notionally being described as the ESSM Block 2. This project achieved first pass in 2014.

During 2015-16 Australia will contribute financially to the development of the ESSM Block 2 through the NATO Seasparrow Consortium and will continue ship and facility integration studies in preparation for intermediate pass.

The key risk for this project is the timely progression of missile engineering and manufacturing development activities, and the finalisation of missile design.

Helicopter Aircrew Training System – JP [AIR] 9000 Phase 7

Prime Contractor: Boeing Defence Australia.

The new Helicopter Aircrew Training System is being delivered through the project will provide a new Joint training system to prepare the Navy and the Army aircrew for conversion to operational helicopter aircraft. The project will replace the current 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 a year with the first pilot student course commencing in 2018.

During 2015-16 Boeing Defence Australia will complete the training system design and focus on development of the training devices and courseware.

The key risk is coordination of the facilities construction schedule with the delivery of key support elements, such as the first flight simulator, to commence aircrew instructor training in early 2017.

Medium Lift Helicopters – AIR 9000 Phase 5C

Prime Contractor: Boeing Military Aircraft through US FMS Sale case with the US Army.

The project is acquiring seven CH-47F Chinook helicopters, to replace six CH-47D Chinook helicopters currently in Army service, and two Transportable Flight Proficiency Simulators. The Chinook provides the Army with its medium-lift battlefield support capability. The new helicopters will be based at the 5th Aviation Regiment, RAAF Base Townsville, Queensland.

The final two CH-47Fs will be delivered during 2015-16, bring the total number of aircraft in inventory to the contracted seven. Both Transportable Flight Proficiency Simulators were delivered in 2014-15. The helicopters will be maintained in the US Army baseline configuration, with the principal difference being the fitment of a rotor brake to allow embarked operations from the new Canberra Class Landing Helicopter Dock ships.

During 2015-16 the project plans to achieve Australian Military Type Certification and continue qualification activities in support of the simulators, aircrew and maintainer training and undertake transition into service activities.


166

Joint Strike Fighter

New Air Combat Capability – AIR 6000 Phase 2A/2B

Prime Contractor: Lockheed Martin is contracted to the US Government for the development and production of the F-35 Joint Strike Fighter (JSF). Australia is procuring the aircraft through a government-to-government agreement.

The project is approved to acquire 72 JSF aircraft and supporting elements to form three operational squadrons and one training squadron.

During 2015-16 Australian pilot training will continue at the International Pilot Training Centre at Luke Air Force Base Arizona, US with the two Australian JSF aircraft currently deployed there.

Other major activity will include the contracting of Australia’s next eight JSF aircraft under Low Rate Initial Production Contract 10; commencement of construction at RAAF Base Williamtown, New South Wales; and the development of a sustainment model for Australian based support.

Major risks to the program include:

affordability (cost pressures) associated with changes to the JSF production profile

the ongoing maturing of the JSF capability, in particular the Autonomic Logistic Information System ALIS and electronic warfare reprogramming

the development and ramp up of the global, regional and Australian based sustainment solution

the establishment of the required infrastructure to met the ramp up of capability, particularly at Williamtown, New South Wales and Tindal, Northern Territory.


Air Warfare Destroyer

Air Warfare Destroyer Program – SEA 4000 Phase 3

Prime Contractor: The AWD Alliance.

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 ASC AWD Shipbuilder Pty Ltd, Raytheon Australia Pty Ltd and the Government, represented by the DMO.

During 2015-16, this project is expected to achieve a number of key milestones including the completion of consolidation for Ship 02, Brisbane; and the keel-laying ceremony for Ship 03, Sydney.

Blocks will arrive in Adelaide from BAE Systems in Williamstown, Victoria and Forgacs in Newcastle, New South Wales for Ship 03, Sydney, and construction and consolidation of blocks will continue. The

AWD project will move from the interim phase of the AWD Reform Strategy to long term arrangements, which will bring a re-baselined schedule and cost to deliver against.

The key challenges for this project are to increase shipyard productivity, ensure the most efficient use of current resources, and effectively manage costs.


167

Land Systems

Medium and Heavy Capability (MHC), Field Vehicles, Modules and Trailers (FVMT) – LAND 121 Phase 3B

Prime Contractors:

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.

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 3,800 modules and flatracks will be supplied and approximately 1,700 trailers will also be acquired to enhance the payload carrying capacity.

During 2015-16, this project will be finalising contractor designs and conducting prototype verification. Introduction into service for the medium/heavy capability is on schedule to begin in late 2017.

The key risk for the project is the performance of various systems during verification to meet the Commonwealth’s requirements.

Enhancements to Special Operations Capability – JP 2097 Phase 1B

Prime Contractors:

Special Operations Vehicle - Commando capability: Supacat Pty Ltd.

Suite of selected communication systems to meet networked requirements: Harris Corporation.

Mobile communications capability: Northrop Grumman M5 Network Security.

Special Operations Vehicle - Support Capability: Jankel Armouring Ltd.

This project will enhance the ADF’s special operations land mobility and networked special operations capabilities. The land mobility component will deliver 89 special operations vehicles for commando operations and 22 special operations vehicles for support. The networked special operations component will deliver a range of command, control, communications, computing and intelligence sub-systems to meet special operations needs.

During 2015-16, this project will deliver a range of tactical radios and ancillary items, 32 commando vehicles and 14 remote weapon stations.

The key risk for this project is achieving the technical requirements for the mobile information and communications technology system.


168

Light and Lightweight Capability (LLC) Field Vehicles, Modules and Trailers – LAND 121 Phase 3

Prime Contractors:

Light/Lightweight Vehicle: Mercedes-Benz Australia-Pacific.

Light/Lightweight Trailer: Haulmark Trailers Australia.

This project will deliver approximately 2,150 G-Wagons, 540 modules and 1,800 trailers. The new G-Wagons, together with the trailers and a range of modules, will be used by the Army and the Air Force for training, and to support domestic security and emergency response efforts. The vehicles will also be employed on Humanitarian Assistance/Disaster Relief and low-threat operations. The project is currently in the materiel release phase of delivering to units.

During 2015-16, this project will continue to deliver vehicles and trailers to units.

The key risk for this project is the finalisation of the Command Post Mobile module requirement and meeting the subsequent schedule for production.

Mounted Combat Reconnaissance Capability – LAND 400 Phase 2


This project will deliver a Combat Reconnaissance Vehicle that will replace the current Australian Light Armoured Vehicle (ASLAV).

The open Request for Tender (RFT) was released on 19 February 2015 immediately following Government announcement of first pass approval.

During 2015-16, this project will continue market solicitation activities including the shortlisting of tender responses and the commencement of risk mitigation activities with shortlisted tenderers.

The key risk for the project during 2015-16 is an extended RFT open period and/or protracted tender evaluation activities that result in delays to the commencement of risk mitigation activities.

Soldier Enhancement Version 2 – Survivability – LAND 125 Phase 3B

Prime Contractors:

Load Carriage Equipment: Australian Defence Apparel.

Protection Equipment (Body Armour): Craig International Ballistics.

Tiered Combat Helmets Tranche 1: Spearpoint Solutions and Technology.

Combat Hearing Protection Tranche 1: J Blackwood & Son.

The project will deliver modernised individual soldier survivability capabilities including enhancements to body armour and helmets, individual load carriage, eye protection and hearing protection. The capabilities will be delivered in three tranches of approximately 7,000 sets in each tranche over the period 2015 to 2017.

During 2015-16, the project will complete deliveries of the first tranche of 7,000 sets and commence deliveries of the second tranche.

The key risk for this project is meeting the ballistic protection performance requirements.


169

Bushranger Protected Mobility Vehicle – LAND 116 Phase 3

Prime Contractor: Thales Australia.

This project will deliver approximately 1,050 vehicles, across its five production periods, in seven variants. The vehicles provide protected land mobility to the Army’s combat units and Air Force Airfield Defence Guards. The delivery of Production Period 5 vehicles commenced in July 2013 and will conclude in June 2016.

During 2015-16, this project will deliver the final of the 214 Production Period 5 vehicles and will continue with the installation of External Composite Armour mounting points to previously manufactured vehicles.

The key risk for this project is now incorporating all production line engineering changes into updated support documentation to allow project closure to proceed on schedule over 2016-17.

Maritime Systems

Amphibious Ships (LHD) Project – JP 2048 Phase 4A/4B

Prime Contractor: BAE Systems Australia Maritime.

This project is to deliver two Canberra Class Landing Heavy 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 Adelaide is undergoing fit out and testing at the shipyard in Williamstown, Victoria. Delivery to the Navy is to occur within the last quarter of 2015, reflecting an estimated delay of two months to original schedule. As was experienced with LHD01, delays to planned work finalisation and delivery are attributed to industry workforce capacity and capability.

The key risks for this project are associated with the complex system integration and the availability of appropriately qualified personnel.

Anzac Anti-ship Missile Defence Upgrade – SEA 1448 Phase 2B

Prime Contractor: CEA Technologies Proprietary Limited and the Anzac Ship Integrated Materiel Support Program Alliance (Commonwealth of Australia (Defence) with BAE Systems and Saab Australia).

This project will deliver a phased array radar system to the Anzac Class Frigates for target indication/tracking, mid-course guidance and target illumination for the Evolved Sea Sparrow Missile, and a new dual navigation radar system to replace the existing navigation radar suite.

During 2015-16, this project will continue with the Anti Ship Missile Defence (ASMD) Follow-On Ship upgrade work on HMA Ships Warramunga, Ballarat, Parramatta, Toowoomba and Stuart.

The key risk for this project is the supply and efficient management of shipyard resources required to maintain schedule with three ships in the ASMD Upgrade and Refit Program at any one time.


170


Future Submarine Program

Future Submarine - Acquisition – SEA 1000


This project will deliver Australia’s future submarine capability.

During 2015-16, this project will complete the competitive evaluation process that will inform the selection of an International Partner to work with Australia to develop a Future Submarine Capability that meets capability requirements. Proposals will be sought from potential partners for pre-concept design, options for design and build, rough order of magnitude costs and schedule, and positions on key commercial issues. The evaluation process will also seek to maximise the involvement of Australian industry in the Future Submarine Program while not compromising capability, cost, program schedule and risk.

The mobilisation of appropriate resources necessary to manage the Future Submarine Program with the international support remains a major focus for the project.


171

Acquisition Projects previously included in the Top 30 Projects - Current Status

This table provides an update on the status of major projects reported in previous financial years. These projects were not ranked in the Top 30 projects by expenditure in 2015-16.

Table 89: Current Status of Previously Reported Top 30 Projects (Projects Reported in the Last Five Financial Year)

Project number/ phase

Last Financial

Year Reported in

Top 30

Approved Project

Expenditure $m

Cumulative Expenditure

to 30 June 2015

$m

Budget Estimate 2015-16

$m Status Report


Aerospace Systems

Bridging Air Combat Capability (BACC)

AIR 5349 Phase 1

2012-13 3,327 2,787 28 Under FMS cases with the USN, the project has procured the Super Hornet capability. Phase 1 continues to provide residual spares and minor project activity including acquisition of maintenance work stands, air quality monitoring and weapons integration.

Airborne Early Warning and Control System

AIR 5077 Phase 3

2014-15 3,893 3,567 24 This project has delivered six E-7A Wedgetail Airborne Early Warning and Control aircraft and the associated ground and support systems. Initial Operational Capability was declared in November 2012 and Final Materiel Release achieved during 2014-15, with minor residual tasks transferred to sustainment for completion. During 2015-16 the project will finalise project closure.

C-17 Globemaster III Heavy Airlifter

AIR 8000 Phase 3

2014-15 1,704 1,428 9 The project procured the initial four C-17 Globemaster III for Australia. Residual project tasks will continue to be transitioned to in-service management towards the end of 2015-16 when planned activities are completed.


172


Last Financial

Year Reported in

Top 30

Approved Project

Expenditure $m


to 30 June 2015

$m


$m Status Report

Hornet Upgrade Project

AIR 5376 Phase 2

2011-12 1,883 1,656 8 The Classic Hornet simulator improvement program is the final approved element of the project. This improvement program is under contract and on schedule for installation and testing during 2015, with completion in 2016 and FOC scheduled for 2017.

Airbourne Surveillance for Land Operations

JP 129 Phase 2

2012-13 97 77 1 The project has successfully delivered the majority of equipment required for the capability and has transitioned support activities to the sustainment organisation. The final equipment delivery of four One System Remote Video Terminals is planned for May 2016.

Electronic Systems

Battlespace Communications Systems Land

JP 2072 Phase 2A

2014-15 462 297 35 The rollout of new digital radios and ancillary equipment is all but complete, with some remaining ancillaries undergoing design acceptance to enable use in specific configurations required for dismounted roles. The mature support contracts that will support the new radios through life-of-type acquired under the project phases as well as other major projects are undergoing solicitation and negotiation activities through 2015-16. Interim support arrangements will continue while this is finalised. The key risks for this project are: finalising design acceptance for the combinations of off-the-shelf equipment used by various end-users; establishment of performance based support contracts for the new fleets; and the smooth transition into sustainment in alignment with the withdrawal of legacy fleets.


173


Last Financial

Year Reported in

Top 30

Approved Project

Expenditure $m


to 30 June 2015

$m


$m Status Report

LND75Ph 3.4 Battle Management System

LAND 75 Phase 3.4

2014-15 322 219 28 This project has delivered Mounted Battle Management Systems including command post systems to the ADF in cooperation with LAND 125 Phase 3A (dismounted systems) and JP 2072 Phase 1 (Combat Radio System). All of the physical vehicle installations and training have been delivered to the Army. In 2015-16, this project will achieve Final Acceptance of the acquisition contract; complete transition to sustainment of the Battle Group and Below Command and Control System; and will progress project closure. The key risk for this project is completing transition into service arrangements.

High Frequency Modernisation

JP 2043 Phase 3A

2014-15 580 466 20 This project has delivered a Defence High Frequency Communications System for Defence long range communications. The Direction Finding and Signal Enhancement capability, Project Nullarbor, entered contract in 2014 and is on track to be delivered in late 2016 with most build and integration activities being conducted in 2015-16. This will include significant work to address obsolescence issues resulting from the delayed delivery of the Defence High Frequency Communications System and will include work on upgrading Voice and Data equipment to meet system Life-of-Type.


174


Last Financial

Year Reported in

Top 30

Approved Project

Expenditure $m


to 30 June 2015

$m


$m Status Report

NULKA PH5A Replenish Nulka Warstock

SEA 1397 Phase 5A

2014-15 87 60 18 This project has been replenishing the Navy's Nulka off-board anti-ship missile decoy inventory. The project is tracking to plan with contract closure expected by the second quarter of 2015. A joint project meeting with United States Navy is planned for the second quarter of 2015 where the focus will be on the transition from joint production to Nulka sustainment.

Joint Command Support Environment

JP 2030 Phase 8

2014-15 257 190 14 This project will deliver capability solutions and improvements to Situational Awareness, Joint Operations Planning and Management, Preparedness and a Special Operations Combat Net Radio Interface. Operational Test and Evaluation has commenced and will continue during 2015-16 leading to FOC declaration. During 2015-16, this project will finalise and complete capability deliveries and undertake project closure.

Battlespace Communications System (Land)

JP 2072 Phase 1

2011-12 260 227 13 The tactical data and voice communications radios have been delivered to the units in accordance with the approved Basis of Issue. Documentation for achieving Final Operational Capability is currently in progress and is expected to be completed by mid 2015. Activities to support project closure have commenced, and are expected to be completed by end of 2015.

Indian Ocean Ultra High Frequency Satellite Communication

JP 2008 Phase 5A

2012-13 420 342 11 This project has delivered an upgraded Ultra High Frequency Satellite capability to the ADF. The associated network management system has experienced delays associated with software development. The project is working closely with the contractor to develop a mitigation plan.


175


Last Financial

Year Reported in

Top 30

Approved Project

Expenditure $m


to 30 June 2015

$m


$m Status Report

Tactical Information Exchange Domain

JP 2089 Phase 2A

2010-11 104 87 9 This project will install advanced Tactical Data Links (TDL) onto the Anzac Class Frigate and deliver Initial Common Support Infrastructure (ISCI) to test the functionality and performance of the ADF's TDL Network Management Systems. During 2015-2016, it is planned that Anzac Multi Link Upgrade to achieve Initial Operating Release and installation on further ships will continue. In addition, certification and completion of transition into service of the first two ICSI deployable systems will occur.

Battlespace Communications System (LAND)

JP 2072 Phase 3

2014-15 185 145 5 Work Package A is continuing to digitise and enhance the Command, Control and Communications systems for land tactical forces. The project is receiving the final deliveries of Tactical Data and Voice radios in preparation for installation by project LAND 75, Battlefield Management System, in quarter two of 2015. All deliveries are expected to be complete by end of quarter two of 2015. In 2015-16, the Project will be undertaking a Request for Tender process for work packages B-D.

Next Generation Satellite Communications System

JP 2008 Phase 4

2013-14 869 570 .. The six satellites that make up the Wideband Global Satellite Communications System constellation have all been launched successfully and are fully operational. The project has achieved Final Materiel Release. Work continues to manage the upgrade of the US supplied satellite control equipment. The project expects to complete transition to sustainment and project closure during 2015-16.


176


Last Financial

Year Reported in

Top 30

Approved Project

Expenditure $m


to 30 June 2015

$m


$m Status Report

Dismounted Battle Group and Below C3 System

LAND 125 Phase 3A

2011-12 107 92 - This project has delivered Dismounted Battle Management Systems including a command post system to the ADF in cooperation with LAND 75 Phase 3.4, Battle Management System, and JP 2072 Phase 1, Battlespace Communications System (Land). The focus for 2015-16 is on project closure activities

Military Satellite Capability - Wideband Terrestrial Terminals (WTT)

JP 2008 Phase 3H

2013-14 45 39 - This project has been delayed pending an issue with electrical safety of the Wideband Terrestrial Terminals being rectified by the contractor. All of the supplies have been remediated and delivered and compliance achieved in December 2014. The project has completed the rollout to units of the first 25 terminals meeting the Initial Materiel Release (IMR) terminal deliverables requirement. Provisional Design Acceptance has been obtained and the project is in the process of delivering IMR training. Operational Test and Evaluation (OT&E) was successfully conducted in February 2015. The Project Office is preparing its application for the declaration of IMR. The OT&E report is scheduled to be released in April 2015 allowing the declaration of IOC. Final Materiel Release and FOC are scheduled to be declared in the second quarter of 2015-16.


177


Last Financial

Year Reported in

Top 30

Approved Project

Expenditure $m


to 30 June 2015

$m


$m Status Report

Helicopter, Tactical Unmanned Aerial Systems and Guided Weapons

Bridging Air Combat Capability - Super Hornet Weapons

AIR 5349 Phase 2

2014-15 302 154 15 This project is introducing into service air-to-air and air-to-ground precision guided weapons and countermeasures for the Australian Super Hornet. Service release of the AGM-154 Joint Stand-Off Weapon and AIM-120 Advanced Medium Range Air to Air Missile has been delayed and is now scheduled for 2016-17. All other weapons and countermeasures in the approved project scope have been delivered and are operational.

Follow-on Stand Off Weapon Capability

AIR 5418 Phase 1

2011-12 319 284 9 Work to finalise project deliverables is ongoing. The project will be closed in 2015-16.

Lightweight Torpedo Replacement

JP 2070 Phase 2

2013-14 342 313 8 Work to finalise project deliverables is ongoing. The project will be closed in 2016-17 following expiry of the initial In-Service Support contract.

Standard Missile-2 Conversion and Upgrade

SEA 4000 Phase 3.2

2013-14 110 62 4 In 2014-15 this project upgraded the Mark 698 missile test set at Defence Establishment Orchard Hills, New South Wales and established materiel supply arrangements through US FMS. In 2015-16 the project will begin converting the Navy's Standard Missile 2 inventory to vertical launch configuration for use in Hobart class destroyers, and upgrading these missiles from Block IIIA to IIIB configuration for improved performance.

Rotary Wing for Land Force

AIR 87 Phase 2

2012-13 2,033 1,865 2 Administrative planning activities for project closure are well advanced and project closure will be complete by the end of 2015.


178


Last Financial

Year Reported in

Top 30

Approved Project

Expenditure $m


to 30 June 2015

$m


$m Status Report

New ADF Anti-Submarine Lightweight Torpedo

JP 2070 Phase 3

2011-12 303 276 - This project will be closed in 2015-16.


Land Systems

Replacement Artillery

LAND 17 Phase 1A

2013-14 345 167 22 This project has completed delivery of the Towed Howitzers and the battle management system. The Course Correcting Fuze element has been transferred to LAND 17 Phase 1C.1 Additional Lightweight Towed Howitzers, and the project will be closed in 2015.

Direct Fire Support Weapons

LAND 40 Phase 2

2010-11 164 40 16 A new tender for the Light Weight Automatic Grenade Launcher was released in July 2014 and closed for evaluation in October 2014. The evaluation process was completed in February 2015. Contract signature is scheduled to occur in June 2015. The project continues to be managed as a Project of Concern.


179


Last Financial

Year Reported in

Top 30

Approved Project

Expenditure $m


to 30 June 2015

$m


$m Status Report

Mulwala Redevelopment Project

JP 2086 Phase 1

2013-14 371 362 5 This project will deliver a modernised propellant manufacturing facility at the Commonwealth owned Mulwala Munitions Factory, Victoria, to replace the existing, but now obsolete, plant that dates back to the 1940s. The modernised facility will meet more stringent and contemporary environmental, work, health and safety standards. The factory manufactures propellants for incorporation into ADF munitions, and is operated by Thales Australia Limited on behalf of the Commonwealth. Plant performance testing has been completed and remaining deficiencies are being addressed by the contractor. Testing has been completed on all five propellants that the plant is required to produce. A Deed of Completion for this project has been agreed with the contractor, and Final Acceptance was awarded on 30 April 2015. Preparations for transfer of the new plant to Thales as the future operator are progressing. This project continues to be managed as a Project of Concern.

Counter - Rocket, Artillery and Mortar (C-RAM) Project

LAND 19 Phase 7A

2012-13 262 182 5 During 2015-16, this project will continue to sustain the acquired counter-rocket, artillery and mortar systems within the current project budget. The project will also support a submission to Government for the ongoing sustainment of the capability.


180


Last Financial

Year Reported in

Top 30

Approved Project

Expenditure $m


to 30 June 2015

$m


$m Status Report

Digital Terminal Control System (DTCS)

LAND 17 Phase 1B

2013-14 121 94 .. This project will deliver approximately 150 Digital Terminal Control Systems. This capability allows artillery forward observers and joint terminal attack controllers to identify targets with greater accuracy through the use of precision targeting software. It also provides the means to digitally request fire support from land, sea or airborne weapon systems. During 2015-16, this project will confirm delivery of the final control terminal software and the support systems and the project will be closed by the end of 2015.

M-113 Upgrade LAND 106

791 791 - This project has delivered 431 M-113 AS4 vehicles in seven variants, Appliqué Armour and Integrated Logistic Support. The final air and sea transportation certification is complete and the project was closed in 2014-15.

Australian Protected Route Clearance Capability

JP 154 Phase 3A

2012-13 74 36 .. The project has delivered the Protected Route Clearance equipment to the Army's combat engineers and transitioned the capability to sustainment. The DMO continues to support the Army's introduction into service, including some residual work to integrate the mine roller to the in-service Bushmaster. This project will close during 2015-16.


181


Last Financial

Year Reported in

Top 30

Approved Project

Expenditure $m


to 30 June 2015

$m


$m Status Report

Maritime Systems

Anzac Anti-ship Missile Defence

SEA 1448 Phase 2B

2014-15 679 548 59 This project is being conducted concurrently with SEA 1448 Phase 2B Anzac Anti-ship Missile Defence. HMA Ships Perth, Anzac and Arunta have now completed the upgrade. During 2015-16, this project will continue with the Anti Ship Missile Defence Follow-On Ship upgrade work on HMA Ships Warramunga, Ballarat, Parramatta, Toowoomba and Stuart.

Amphibious Watercraft Replacement -

JP 2048 Phase 3

2014-15 236 144 35 This project will deliver 12 new watercraft to operate with the two Canberra Class Landing Helicopter Dock (LHD) ships. The watercraft will provide an organic ship-to-shore connection in support of Defence's amphibious capability, operating with the LHD ships to enable transport of personnel and equipment between the LHD ships and the shore, including where there are no fixed ports or prepared landing facilities. During 2015-16, this project will deliver the third batch of four landing craft to the Navy. The key risk for this project is the unavailability of the Integrated Logistics System products to meet the scheduled delivery of the third batch of four landing craft.


182


Last Financial

Year Reported in

Top 30

Approved Project

Expenditure $m


to 30 June 2015

$m


$m Status Report

Anzac Anti-ship Missile Defence

SEA 1448 Phase 2A

2014-15 387 331 25 This project will upgrade the Combat Management System and introduce an Infrared Search and Track System to the Anzac Class Frigates. During 2015-16, this project will continue with the Anti Ship Missile Defence (ASMD) Follow On Ship upgrade work on HMA Ships Warramunga, Ballarat, Parramatta, Toowoomba and Stuart. The key risk for this project is the supply and efficient management of shipyard resources required to maintain schedule with three ships in the ASMD Upgrade and Refit Program at any one time.

SM-1 Replacement Project

SEA 1390 Phase 4B

2013-14 414 346 16 Commercial support arrangements with key US Original Equipment Manufacturers are now in place to complement US FMS support for the Ship SM-2 Weapon System. MAA and project closure process to follow.

FFG Upgrade SEA 1390 Phase 2.1

2010-11 1,453 1,374 2 The focus during 2015-16 will be the completion of the Navy-directed Panorama sonar processing solution. This will enable progression to full Operational Release and project closure in mid-2016 as planned. Panorama successfully exited critical design review in early December 2014.


183

Top 10 Minor Capital Investment Projects by 2015-16 Forecast Expenditure

This table lists the Top 10 Minor Projects by forecast expenditure for 2015-16. The descriptions that follow provide details of the capability being acquired including delivery schedules, project risk and strategies employed by the project office to manage this risk.

Table 90: Top 10 Approved Minor Acquisition Projects by 2015-16 Forecast Expenditure

Project

Number/

Phase

Approved

Project

Expenditure

$m

Estimated

Cumulative

Expenditure to

30 June 2015

$m

Budget

Estimate

2015-16

$m

Digital Voice Recording System Equipment NMP1822 16 12 2

Typhoon Training System for the DDG and LHD at

West Head Gunnery Range (WHGR)NMP1928 3 .. 1

Protected Weapon System AMP002.16 6 - 5

Enhanced Land Force Weapons Training Simulation

SystemAMP029.44 36 25 5

Kiowa Pilot Seating AMP015.58 7 5 1

RAAF Deployable Catering Capability AFM00972 15 .. 10

School of Air Warfare (SAW) Training

Environment RemediationAFM01029 5 2 3

Multi-Band, Multi-Mode Radio Capability AFM00975 5 2 3

Distributed Ground Station – Australia (Interim)

(DGS AUS) (I)AFM01025 8 2 3

Deployable Tactical Air Control and Navigation AFM01006 6 .. ..

107 47 32Total - Top 10 Minor Projects

Navy

Army

Air Force


184

Table 91: Minor Capital Investment Programme by 2015-16 Forecast Expenditure

2015-16

Budget

Estimate

$m

A Top 10 Projects Gross Plans 33

B Other Approved Project Gross Plans -

C Total Gross Plan Project Estimates (A+B) 33

D Management Margin: Slippage -2

E

Payments Required from Defence for Approved Programmes

(C+D) 31

F Projects Planned for Government Consideration 105

Total Estimated Funds Available (E+F) 137


185

Top 10 Minor Project Descriptions

Navy

Digital Voice Recording System (DVRS) Capability – NMP1822

Prime Contractor: BAE Systems.

This project will design a Digital Voice Recording System for installation in a number of ships and training facilities. The scope was reduced in August 2013 due to the withdrawal from service of the Balikpapan Class of landing craft. The system will provide for the capture of critical operational, damage control and safety voice communications that are reproduced for analysis of critical event reconstruction.

During 2015-16, the project will complete installation in five Anzac Class Frigates.

Typhoon Training System for DDG & LHD at West Head Gunnery Range (WHGR) – NMP1928

Prime Contractor: Raytheon Australia.

The project will deliver and install a Typhoon Weapon Mark 25 Modification 2 System and associated training consoles to West Head Gunnery Range at Flinders, Victoria. The system will support training for the Navy gunnery system being installed in the Landing Helicopter Dock and Air Warfare Destroyer ships.

During 2015-16, the project will complete all Typhoon Training System acceptance testing and finalise deliveries of spare parts and special tools.

Army

Protected Weapon System – AMP002.16

Prime Contractor: Thales Australia.

This project will deliver the initial requirement for 45 upgraded remote weapon stations for Defence’s fleet of Protected Mobility Vehicles to allow Army to better define its future requirements for Protected Weapon Stations (PWS). This upgrade to the PWS will improve sensor range and resolution, mobile engagement capabilities and automatic target tracking.

During 2015-16, this project will equip the first of two combat brigades with upgraded PWS to commence capability evaluation by quarter one of 2015-16. The project will complete deliveries and close by quarter four of 2015-16.

Hardened and Networked Army (HNA)/Enhanced Land Force (ELF) Weapons Training Simulation System (WTSS) Fitout – AMP029.44

Prime Contractor: Meggitt Training Systems Australia.

This project will deliver new simulated weapon types and ammunition natures into service as part of the final capability delivery phase.

During 2015-16, the project will finalise deliveries of a new and enhanced simulation capability for the 12.7mm Heavy Machine Gun, 9mm pistol, 81mm Mortar and Carl Gustav 84mm Medium Direct Fire Support Weapon.


186

Kiowa Pilot Seating – AMP015.58

Prime Contractor: Sikorsky Aircraft Australia Limited (Sikorsky Helitech).

The project integrates commercial-off-the-shelf pilot seats into 23 Kiowa helicopters. The project addresses the restrictions imposed by the current pilot seated height limits and also incorporates design features which enhance the level of crash protection for aircrew. A total of 12 aircraft will have undergone modifications by the end of 2014-15, with the remaining 11 aircraft expected to complete their modifications in 2015-16.

Air Force

Deployable Catering Capability – AFM00972

Prime Contractor: Global Defence Solutions Pty Ltd.

This project will deliver three Deployable Catering systems. Each system includes a containerised kitchen capable of feeding 500 personnel and a smaller in-flight kitchen capable of cooking 120 specialised meals, together with a drinkable/waste water reticulation system.

During 2015-16, this project will deliver the first trial system in quarter one of 2016.

School of Air Warfare (SAW) Training Environment Remediation – AFM01029

Prime Contractor: Cirrus Real Time Processing Systems (Cirrus).

The project will update the Synthetic and Airborne Navigation Training (SNT/ANT) devices operated by the School of Air Warfare, Victoria, and will provide a new Part Task Trainer capability. Updates to the SNT and ANT devices include: Inverse Synthetic Aperture Radar simulation, Search and Survivor Assistance simulation, improved Electro-Optic and Infra-Red simulation, improved Human-Machine Interface, and an improved front cockpit right hand seat training environment.

During 2015-16 the project will continue design, development and production tasks to achieve FOC in May-July 2016.

Multi-Band Multi-Mode Radio Capability – AFM00975

Prime Contractor: No Prime Contractor. The Project Office is the Prime Systems Integrator.

This project will deliver an expanded tactical satellite communication capability to the Air Force to meet the increased communication needs of current and future platforms.

The Project Office will deliver 31 Single Radio Integrated Base-station Systems to the Air Force units in 2015-16.

Distributed Ground Station – Australia (Interim) – AFM01025


This project will deliver the Distributed Ground System – Australia (Interim) System that will provide a limited capability for multi-source, multi-disciplinary, time-dominant Processing, Exploitation and Dissemination (PED) for Defence airborne Intelligence Surveillance Reconnaissance assets in direct support of the ADF and Allied operations and exercises. The minor project will develop and test operating concepts and build expertise in distributed PED operations.

During 2015-16, the project will complete preliminary and detailed design phases and commence build, integration and implementation.


187

Deployable TACAN – AFM01006


This project will deliver deployable Tactical Air Control and Navigation (TACAN) systems, spares, support and test equipment, publications and training to replace the Air Force’s current fleet of portable TACAN systems.

The responses to an initial tender significantly exceeded budget and the project was delayed while an appropriate way forward was agreed by the DMO and the Air Force.

During 2015-16, the project will award a contract for the acquisition and support of the deployable TACAN systems. Following contract award, the project will begin the design review process with industry leading to initial system production.


188

Programme 1.2: Management of Capability Sustainment


Defence capabilities will be sustained to meet operational requirements as identified in the specific Materiel Sustainment Agreement (MSA).

Sustainment involves the provision of in-service support for specialist military equipment, including platforms, fleets and systems operated by Defence. Typical services include repair and maintenance, engineering, supply, configuration management and disposal action. It includes the maintenance of equipment and purchasing of inventory, such as explosive ordnance, fuel, stores and spare parts.


The cost of Programme 1.2 provides for estimated expenditure on maintenance and inventory purchases and the DMO’s costs in delivering sustainment services, including support to ADF Operations.

Planned resource use for Programme 1.2 is $6,185.1m in 2015-16 which represents approximately 46 per cent of the DMO’s total expenses.

The planned resource use for Programme 1.2 includes:

sustainment services of $5,182.1m

support for current ADF operations of $357.2m

sustainment workforce and operating expenses of $444.4m

Net Operating Costs of $201.3m in support of new capabilities expected to enter service.

Table 92: Programme 1.2 Management of Capability Sustainment

2014-15

Estimated

Actual

$'000

2015-16

Budget

$'000

2016-17

Forward

estimate

$'000

2017-18

Forward

estimate

$'000

2018-19

Forward

estimate

$'000


Defence Materiel Special Account 5,466,173 - - - -




479,760 - - - -


15,259 - - - -

Total Programme Expenses 5,961,192 - - - -

Note


free of charge.


189

Table 93: Programme 1.2 Capability Sustainment Programme

2014-15

Estimated

Actual

$'000

2015-16

Budget

$'000

2016-17

Forward

estimate

$'000

2017-18

Forward

estimate

$'000

2018-19

Forward

estimate

$'000

Capital - 995,055 1,032,693 1,003,358 1,001,277

Operating - 4,745,621 4,738,877 5,091,591 5,540,977

Total Sustainment - 5,740,676 5,771,570 6,094,949 6,542,254

Workforce and Operating - 444,393 464,543 461,975 468,604

Total Programme Expenses - 6,185,069 6,236,113 6,556,924 7,010,858


Key deliverables are specified under each MSA, and the Top 30 sustainment products are discussed under the product headings in the following text. There are currently seven MSAs incorporating 118 product schedules.


The indicators vary with each sustainment product and are specified in the MSAs.


190

Top 30 Sustainment Products by 2015-16 Forecast Expenditure

Table 94: Top 30 Sustainment Products by End of Financial Year Outcome 2015-16

Budget

Estimate

2015-16

$m


Aerospace Systems

F/A-18A Hornet Weapons System 243

Airborne Early Warning and Control 214

F/A-18F Super Hornet Weapons System 180

C130J-30 Weapons System 125

P-3C/AO-3C Orion Weapons System 120

Lead-In Fighter Hawk 127 Weapons System 89

C-17 Heavy Air Lift Weapons System 79

KC-30A Weapon System 67

PC-9/A Weapon System 51

Special Purpose Aircraft Weapons System 50

Electronic Systems

Wide Area Survllance Capability 101

Battlespace Communication System 55

Command & Intelligence Systems 54

Tactical Electronic Warfare Fleet 51

Helicopters, Tactical Unmanned Areial Systems and Guided

Weapons

Guided Weapons - Navy, Army, Air Force 201

Multi Role Helicopter - MRH90 161

Armed Reconnaissance Helicopter Weapons System 119

MH-60R Seahawk Romeo Helicopter 97

S-70B-2 Seahawk Weapons System 52


Land Systems

Munitions - Navy, Army, Air Force 304

ADF Clothing 79

ADO Commercial Vehicle Fleet 68

General Service B Vehicle Fleet 61

Health Systems 53

Maritime Systems

ANZAC Class Frigate 343

Adelaide Class Frigate 138

Canberra Class Landing Helicopter Dock (LHD) 92

Auxiliary Oiler Replenishment 75

Mine Hunter Coastal 53


Collins Submarine Management Program

Collins Class Submarines 521

Total - Top 30 Products 3,893

Other Approved Sustainment Product Estimates 1,289

Total Sustainment Product Funds Available 5,182

Support to Operations 357

Total Sustainment and Operations Funding 5,539


191

Top 30 Sustainment Product Descriptions


Aerospace Systems

Aerospace Systems Division (ASD) provides through-life support to a range of fixed wing aircraft types including the F/A-18A/B Hornet and F/A-18F Super Hornet, E-7A Wedgetail (Airborne Early Warning and Control), AP-3C Orion, C-17A Globemaster III, KC-30A (Multi-Role Tanker/Transport), C-130J Hercules, PC9 and the Heron Unmanned Aerial System. Aerospace Systems Division also provides through-life support to a number of advanced flight simulators and ground support equipment fleets.

Key challenges for ASD in 2015-16 include supporting ageing platforms such as the AP-3C Orion and the PC9.

During 2015-16, the major objectives for sustainment include:

supporting operationally deployed weapon systems such as the F/A-18A/B, E-7A and C-130J aircraft,

maturing the in-service support arrangements for the KC-30A fleet, and

supporting the expansion of C-27J operations in Australia.

Aerospace Systems Products

F/A-18 A/B Classic Hornet Weapon System – CAF02

Seventy-one F/A-18 Classic Hornet aircraft and associated training systems are supported by a range of commercial contracts and in-house Air Force workshops.

During 2015-16, the focus will be on simultaneously sustaining a mature flying rate of effort and a demanding deployment tempo supporting Operation OKRA, as well as continuing to partner with the Air Force and industry to finalise the plans and contracts that will sustain the capability to retirement in 2021-22. An extension to the Classic Hornet Spares and Repairs Support Contract will be completed late 2015; and the Hornet Usage Monitoring contract will be extended and amended to include the Growler aircraft.

The major challenge in supporting the Classic Hornet is parts obsolescence and the increased maintenance requirements of an ageing aircraft fleet. Other challenges include continued effort to ensure structural integrity of the aircraft through to retirement.


192

E-7A Airborne Early Warning and Control Capability System – CAF20

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 2015-16 the focus will be on further improving the commercial arrangement with contracted industry partners through an annual performance review. The review will improve alignment of the contracted performance management framework with the capability requirements as specified by the Air Force. The improvements will also focus on activities associated with support to operational activities including the refinement of Fly Away Kits and supply support arrangements.

F/A-18F Super Hornet Weapon System – CAF21

Twenty-four F/A-18F Block II Super Hornet aircraft are operated by 82 Wing Squadron in support of air combat capability requirements. The Super Hornet achieved FOC in December 2012. Raise, train and sustain support requirements and operational targets continue to be met.

During 2015-16, efforts will focus on: reconstituting the capability following the Operation OKRA deployment, continuing to focus on enhancing the existing support arrangements in response to the extension of the planned withdrawal date and the expansion of the fleet to include 12 new Growler aircraft, and the implementation of deeper maintenance and spiral development capability upgrades.

C-130J-30 Weapon System – CAF06

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 similar for the propulsion system.

During 2015-16, the focus will be on: continuing to deliver improvements to C-130J training system through upgrades to the full flight mission simulator and considering the procurement of a loadmaster and maintainer training device that will reduce the need to use on-line aircraft for training requirements, procurement and certification of crashworthy loadmaster seating for the fleet, and delivery and service release of the Link-16 enhanced communications system.

AP-3C (EW) - CAF04

The AP-3C Weapon System includes 16 aircraft and a range of ground based systems. Airbus Group Australia Pacific, BAE Systems and Raytheon Australia are the key industry partners providing deeper maintenance, engineering and logistics support to the capability.

During 2015-16, the AP-3C fleet will continue to be maintained under the more resource intensive 'safety-by-inspection' program. This program comprises additional targeted airframe structural inspections, repairs and/or structural element replacements.

AP-3C sustainment continues to enable achievement of an intense flying program while the P-3 remains heavily tasked on operations in northern Australia. Fleet disposal through harvesting of spares and subsequent destruction of airframes to scrap will continue in 2015-16. Re-utilisation of spares from the first three airframes disposed of in 2014-15 has reduced the need for spares procurement, eased critical item management and improved supportability of the remaining AP-3C aircraft in the fleet.


193

Lead-In Fighter Hawk Weapon System – CAF03

The Lead-in Fighter fleet consists of 33 Hawk 127 aircraft and associated ground and support systems. BAE Systems Australia Limited provides total logistics support for the Hawk 127 fleet under an In-Service Support contract.

During 2015-16 major activities include: the finalisation of the fleet corrosion control and re-paint program, and planning the modification effort for introduction of AIR 5438 Phase 1A – Lead-In-Fighter Capability Assurance Program. Negotiations are well advanced for the future transfer of operational maintenance from the Air Force to BAE Systems.

C-17 Heavy Air Lift Weapons System – CAF19

The C-17A weapon system currently comprises six aircraft and associated training systems. Sustainment is predominately undertaken through a range of FMS arrangements with the USAF.

During 2015-16, the focus will be on the introduction into service of two recently approved additional C-17A aircraft, bringing the total ADF C-17A aircraft to eight. A range of primarily role equipment capability upgrades to the C-17A fleet are being rapidly undertaken. Proposals to reform sustainment, training and maintenance support are also being developed. The reforms are intended to result in a better balanced and effective sustainment organisation, exploiting the synergies of a larger Australian fleet.

KC-30A Weapon System – CAF22

The KC-30A weapon system comprises five aircraft and the related training system. The KC-30A capability remains in transition from the project phase to sustainment, with fleet availability impacted by the acquisition based modification programs. All five aircraft will be fully mission capable for air-to-air refuelling from pods and boom and airlift logistics support in 2016 following completion of the modification program.

During 2015-16 the focus will be on generating fully mission capable aircraft and continuing the transition from acquisition to sustainment. Additionally, a number of reforms to the entire ‘sustainment enterprise’ are actively being worked to redevelop the relationship between the Commonwealth and a number of industrial entities supporting the KC-30A.

PC9/A Weapon System – CAF10

Sixty-two PC-9/A aircraft are supported by Airflite for aircraft and component maintenance, Northrop Grumman Integrated Defence Services for engine maintenance, and Pilatus for engineering support. The PC-9/A is an ageing aircraft and with a recently extended planned withdrawal date is subject to structural and systems analysis to assure ongoing airworthiness.

During 2015-16, the focus will be to continue to partner with the Air Force and industry to implement plans and contracts that will sustain the platform out to withdrawal in 2019-20.

Special Purpose Aircraft – CAF09

The Special Purpose Aircraft consists of two Boeing Business Jets and three Challenger 604 aircraft. These leased aircraft are managed under a total contractor support arrangement with Northrop Grumman Integrated Defence Services. In accordance with Government direction, aircraft lease and maintenance support arrangements have been extended until mid-2017.

During 2015-16, the focus will be on ensuring the continued delivery of the Special Purpose Aircraft capability and engaging Government and the Air Force to determine capability options beyond mid-2017.


194

Electronic Systems

Electronic Systems Division provides through-life support to a range of command and control systems, communications, satellites and tactical interoperability, airspace surveillance and control systems and electronic warfare systems.

Key challenges in 2015-16 include the delivery of required sustainment outcomes with growth in demand, increased obsolescence and effective use of available resources.

Key objectives for sustainment during 2015-16 include:

transitioning to sustainment the fleet of Combat Net Radio equipment procured under JP 2072 Phase 1 and Phase 2A, Battlespace Communications (Land)

managing sustainment to achieve further program savings for all ADF Large Aircraft Infrared Countermeasures Systems, covering multiple current and future airborne programs

sustaining the Joint Counter Improvised Explosive Device capability protecting Australian personnel deployed in the Middle East Region

remediation of ALENIA and Tactical Air Navigation support strategies and contracts in preparation for possible life of type extension and to achieve reform in the context of ageing platforms facing significant obsolescence challenges

treatment of obsolescence in the Tactical Air Defence Radar System and to remediate support arrangements to achieve reform

addressing obsolescence issues at the Woomera Test Range, South Australia and the Air Weapons Ranges

development of support concepts for narrowband satellite communications control systems

identifying further efficiencies and remediation of obsolescence issues affecting satellite communications systems

developing upgrades to the core Air Force Command and Control systems

upgrading the next generation of Air Force Deployable Local Area Networks

supporting to the development of the Classic Hornet 25 platform upgrade Mission Planning System.

Electronic Systems Products

Wide Area Surveillance and Air Force Minor Projects – CAF13

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 (JORN). The radars are maintained by Lockheed Martin Australia and BAE Systems. The capability is remotely operated by the Air Force from an operations centre at RAAF Base Edinburgh, South Australia.

During 2015-16, sustainment effort will: continue on a four year program to replace cooling systems that use refrigerant gas R22; continue progression of the Defence Fuel Installation Audit remediation activities at remote radar sites; and continue the JORN Priority Industry Capability Support Program which is reducing risk for the next major JORN development program. An initiative to trial the use of solar power at a remote radar site will continue.


195

Command Support Systems – Battlespace – CA33

This Product Schedule sustains Land-based command and control systems. During 2015-16 the focus will be on:

supporting the Force XX1 Battle Command Brigade and Below – Blue Force Tracker (FBCB2-BFT) system which is fitted as part of the operational deployment specification for Protected Military Vehicles (PMVs)

transitioning assets acquired by Land 75 Ph 3.4 and Land 125 Ph 3A into sustainment including (i) Battle Management System (BMS) supported by Elbit Systems; and (ii) Track Management System (TMS) supported by Northrup Grumman

withdrawing the obsolete Battlefield Command Support System (BCSS) fleet in readiness for a major fleet-wide disposal activity

supporting the Commanders Briefing Tool (CBT). This work is contracted to SAAB Australia.

Command and Intelligence Systems Software Applications – CA40

The Deployable Command and Intelligence Systems environment comprises a range of hardware and software products to support key warfighting functions, command, control and intelligence, for land based deployed Army, Air Force and Navy components. These systems consist of hardware and software configured primarily to provide protected and secret deployable networks of varying sizes and configurations for the Army and Special Operations.

During 2015-16 the primary focus will be on the introduction into service of the next generation deployable Secret and Protected networks for the Army, the Navy and the Air Force. The period will also see significant effort in maintaining the health of extant systems that are rapidly approaching life of type.

ADF Tactical Electronic Warfare (EW) Fleet – CA36

Tactical Electronic Warfare Systems comprise 26 diverse products that directly support tactical electronic warfare missions. These products deliver electronic effects in the joint, maritime and land domains; and typically are man-portable or fitted to military platforms. Airbourne tactical electronic warfare products are to be transferred to CAF15, Countermeasures Development and Validation, as of July 2015, meeting a Chief of Air Force request to better align funding and capability.

The technical refresh of maritime platform mission systems and ground based capabilities continues. Technical refresh activities will address obsolescence issues and changes in target technologies.

Helicopter, Tactical Unmanned Aerial Systems and Guided Weapons

The Helicopters, Tactical Unmanned Aerial Systems and Guided Weapons Division provides through-life support to eight Army and Navy rotary wing weapons systems; supports Army’s Shadow 200 tactical unmanned aerial system; and provides and supports all of the guided weapons for Army, Navy and Air Force. Support consists of fleet-wide engineering, repair parts, contract management for deeper level maintenance, replacement of ageing and obsolescent equipment, and, where required, disposal activities.

The high priority sustainment tasks remain the support of operational deployments, including the guided weapons being employed by Air Force on Operation Okra and the embarked Seahawks in Navy ships supporting Operation Manitou.

The key challenges in 2015-16 will be continuing to improve the performance of the MRH90 and Tiger systems and transitioning elements of the guided weapons sustainment system to an out-sourced arrangement with industry.


196

During 2015-16, the key sustainment objectives include:

providing ongoing guided weapons support to operationally deployed Air Force fighter aircraft

providing ongoing support to operationally deployed helicopters

providing cost-conscious support of Seahawk, Black Hawk and Chinook helicopters for training and operations while managing their withdrawal from service

providing cost-conscious support to Kiowa and Squirrel training helicopters ahead of their withdrawal from service

continuing to support and update the shadow tactical unmanned aerial system in Australia

maturing and implementing new support arrangements for the Tiger and MRH90 helicopters to improve performance and optimise cost of ownership through life

establishing new support networks for the Seahawk Romeo and Chinook Foxtrot

Helicopter, Tactical Unmanned Aerial Systems and Guided Weapons Products

Navy, Army and RAAF Guided Weapons – CN38, CA60 and CAF33

The ADF’s inventory of guided weapons includes: heavy and light weight torpedoes; air, sea, land and submarine launched missiles; bombs and bomb guidance kits; and mine countermeasure explosive ordnance.

During 2015-16, the high priority sustainment tasks will be continuing to provide guided weapons engineering and technical support to units deployed on operations while satisfying the broader raise, train and sustain demands for guided weapons. Work will also continue on outsourcing selected guided weapons maintenance, converting and upgrading of the existing missile inventory for the Air Warfare Destroyer, and remediating and upgrading of the Harpoon missile inventory.

Multi Role Helicopter Weapon System – CA48

During 2015-16, MRH90 production deliveries will expand the fleet to 40 aircraft of the 47 to be acquired. In-Service Support is provided under contract by Airbus Group Australia Pacific (formerly Australian Aerospace).

The MRH90 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.

The primary risk in sustainment is sub-optimal aircraft availability resulting from a conservative scheduled maintenance program. Optimisation of scheduled maintenance requirements is a key focus for 2015-16.

Work will also continue on the improvement of technical enabling services and supply/engineering support required to enable the Navy and the Army in the timely achievement of their key capability milestones.


197

Armed Reconnaissance Helicopter System– CA12

All 22 Tiger armed reconnaissance helicopters are in-service in the final mature configuration. In-Service Support is provided under contract by Airbus Helicopters Australia Pacific (formerly Australian Aerospace).

During 2015-16, activity will be focused on implementation contract changes, agreed with Airbus Group Australia Pacific in December 2014, to improve aircraft availability and support the Army in the achievement of the planned flying rates of effort required to attain FOC.

MH-60R Seahawk Romeo Weapon System – CN35

During 2015-16 a further nine ‘Romeo’ helicopters will be accepted into service, bringing the total number in service to 22.

The Romeo will contribute to the Navy’s anti-surface and anti-submarine warfare capabilities, replacing the Seahawk ‘Classic’ in service. A through-life support contract with the Maritime Helicopter Support Company, a Lockheed Martin/Sikorsky Aircraft Corporation joint venture, is being administered via a US FMS sustainment case.

The focus for 2015-16 is supporting the growth of Seahawk 'Romeo' capability to four embarked flights. Construction of the Maritime Helicopter Support Company commercial maintenance and warehousing facility at Nowra, New South Wales, is expected to be completed by end of 2015 to support commencement of the Romeo aircraft deeper maintenance programme from mid 2016.

S-70B-2 Seahawk Weapon System – CN03

The Seahawk ‘Classic’ continues to perform as expected as it is progressively withdrawn from service and replaced by the new Seahawk ‘Romeo’. The transition out of service continues with ten Seahawk Classics planned to be withdrawn from flying operations by June 2016. All Seahawk Classics are planned to be withdrawn by early 2018.

During 2015-16, the focus will be the ongoing careful management of the Seahawk Classic sustainment risks to maintain a viable embarked helicopter capability as the new Seahawk Romeo capability is introduced.


Land Systems

Land Systems Division is responsible for the sustainment of the following materiel, managed in conjunction with the Navy, the Army, the Air Force and the Joint Health Command as the Capability Managers:

armoured fighting, combat support and field 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

ADF munitions.


198

Key challenges in 2015-16 are to provide innovative, cost effective sustainment options to meet ADF outcomes with greater agility and diversification of supply.

Key objectives for sustainment in 2015-16 include:

meeting the support requirements of forces on operations

delivering the agreed level of support to the ADF within budget

undertaking comprehensive fleet performance reviews with Capability Managers

enhancing training and professionalisation of sustainment staff to optimise skills and improve agility to better manage scarce resources

ongoing modernisation of vehicle fleets utilising Vehicle Health and Usage Monitoring Systems in selected fleets to better manage maintenance and fleet rotation, thus achieving sustainment savings.

Land Systems Products

Navy Munitions, Army Munitions, Explosive Ordnance - Munitions – CN37, CA59, CAF32

Sustainment of munitions includes all activities required to ensure munitions are available to meet specified ADF requirements, such as: inventory management; introduction of munitions into service; management of domestic manufacturing capability; importation; management of the service life of each munition; and disposal of munitions.

During 2015-16, the focus will be on:

ensuring safe and serviceable munitions are available to meet ADF requirements

pursuing improved commercial arrangements for the supply of munitions to the ADF

continuing to deliver sustainable savings and strategic reform in munitions procurement

further developing optimum inventory management and associated reporting capabilities

commencement of munitions delivery under the Strategic Munitions Interim Contract, which replaces the Strategic Agreement for Munitions Supply and the Mulwala Agreement.


199

ADF Clothing – CA39

ADF Clothing comprises approximately 20,500 line items of personal clothing, footwear and other items manufactured by the textile, clothing and footwear industry.

During 2015-16, the key activities include:

receiving initial deliveries of the Air Force General Purpose Jacket

manufacturing and delivering over 113,000 Australian Multicam Combat Uniform and the Air Force’s General Purpose Uniform garments

finalising the issuing of the new Army Parade Boots to all members of the Army and commence purchasing the boots online post ANZAC Day

continued introduction of the new General Purpose Jacket for the Army and the Air Force

further development to enhance wearer comfort of the new Navy and Air Force parade shoes

continued enhancement of both the combat and non-combat uniforms

conducting ongoing procurement to meet the ADF’s clothing and footwear requirements for operations as well as for raise, train and sustain activities.

Commercial Vehicle Fleet – CA19

The ADO Commercial Vehicle Fleet comprises approximately 5,400 Defence owned vehicles and trailers. The fleet ranges from passenger sedans through to heavy rigid trucks and touring coaches. An additional 30 road-train systems are leased under the program. During 2015-16, approximately 1,400 passenger and light-medium commercial vehicles were replaced, including the purchase of 20 replacement prime movers and completion of the replacement program for the Touring Coach fleet.

During 2015-16, a continued fleet focus will be on reducing the number of vehicles that are beyond their designated life. This will be undertaken with an increased emphasis on fleet rationalisation and improvement of its overall utilisation. There are approximately 2,000 vehicles identified for replacement during this year.

General Service B Vehicle Fleet – CA45

The B Vehicle Fleet consists of both Light B and Medium/Heavy B vehicles, comprising approximately 8,500 vehicles and trailer variants. Most vehicles are being progressively replaced under Projects Land 121 and JP 2097. Land Rover variants are currently being phased out as the Mercedes Benz G Wagon variants are introduced into service. During 2014-15 approximately 1,400 vehicles and trailers were disposed. There were also 26 vehicles remediated and readied for a return to service after having been on deployed operations.

During 2015-16, the focus for the B Vehicle Fleet will be on the continued phase out of the Land Rover fleet and balancing the broader B-vehicle fleet, in conjunction with the Capability Manager, to meet the Army’s Plan BEERSHEBA requirements. There is ongoing work to remediate vehicles returning from operations and planning to ensure the ADF General Service vehicle capability continues to meet requirements until replaced.


200

Health Capability – JHC001

The Health Sustainment Fleet provides pharmaceutical, medical and dental consumables and equipment to support ADF Health Capability requirements.

During 2015-16, the focus will be on the transition to a prime vendor for pharmaceuticals to replace the existing contract which expires in December 2016. Work will also be undertaken to investigate alternate strategies for the management of medical and dental equipment.

Maritime Systems

The Maritime Systems 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 SPOs 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.

The key challenge for sustainment during 2015-16 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

Key objectives for sustainment during 2015-16 include:

providing ongoing support to HMAS Choules

implementing the first stages of the in-service sustainment of the LHD

focused approach to the materiel In-Service Support arrangements to support the Armidale Class Patrol Boats

strategic reform initiatives such as implementation of a systems management approach to inventory; establish productivity and performance-based relational contracts and in partnership with industry, shift to a more governance focused enterprise

ensuring the enduring benefits of the Rizzo Review continue by contributing to and monitoring the DMO aspects of the strategic governance arrangements

planning and instigating the disposal of HMAS Tobruk

ensuring that the remaining Anzac frigates continue through the Anti Ship Middle Defence program in accordance with the revised schedule

establishing a new Anzac alliance support contract ensuring HMAS Success proceeds through the next major refit on time.


201

Maritime Systems Products

Anzac Class Frigate (FFH) – CN02

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 2015-16, the focus will be on the conduct of the Anti Ship Missile Defence Refit and Upgrade program for HMA Ships Ballarat, Parramatta, Toowoomba and Stuart ; preparation for the Anzac Class

frigate block upgrade period, inclusive of the Platform Systems Remediation Program, Maritime Communications Modernisation Project , SEA 1442 Phase 4, and the proposed Anzac Air Search Radar Replacement SEA 1448 Phase 4B; and the implementation of a total asset management support contract that will better align Industry outputs to the Navy requirements.

Adelaide Class Frigate – CN01

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 2015-16, the focus will be on completing the scheduled ship maintenance activities for HMA Ships Darwin, Newcastle, and Melbourne; consolidating the FFG enterprise (the Navy, the DMO, and Industry); preparations for the decommissioning of HMAS Sydney; and support the training

outcomes of the Navy’s Harbour Training Ship initiative.

Canberra Class Landing Helicopter Dock – CN34

The scope of this product addresses the sustainment of two Canberra Class LHD ships, 12 LHD Landing Craft (LLC), and associated shore-based systems and facilities, as these are introduced into service.

The 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 amphibious warfare, humanitarian assistance, disaster relief, and sealift.

During 2015-16, the focus will be on embedding and fostering the critical enabling functions for the initial period of LHD and LLC operations. This includes effecting the successful introduction of key commercial relationships with Australian defence industry partners to provide LHD and LLC maintenance, engineering and supply support services, and asset management, governance support and independent assurance services.

Auxiliary Oiler Replenishment (AOR) HMAS Success – CN13

The support objective is to continue to maintain the materiel capability of the Underway Replenishment Tanker, HMAS Success, through the effective provision of materiel support and ongoing maintenance of

the ship and associated equipment and systems.

During 2015-16, the focus will be on successful completion of the scheduled docking refit and ship maintenance activities for HMAS Success as programmed in the Force Generation Plan.


202

Huon Class Mine Hunter Coastal – CN14

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.

2015-2016 will see the completion of the combat system upgrade on the remaining vessels, as well as further development of the detailed designs and schedule for integration of Watermist ships fire fighting system, to replace NAF-S111 onto the Mine Hunter Coastal ships.


Collins

Collins Class Submarines – CN10

The objective of the Collins Program is to sustain the Collins Class Submarine (CCSM) 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 ASC Pty Ltd (ASC), Raytheon Australia, Thales, BAE Systems and other providers. A new performance based In-Service Support Contract with ASC became operational on 1 July 2012. Recommendations from the Coles Studies, that were delivered in late 2012 and early 2014, re-emphasise the importance of ongoing Collins reform work currently underway with Navy’s Rizzo and associated continuous improvement programs. Significant effort is ongoing to drive implementation of the Coles recommendations including major changes to the Collins usage upkeep cycle to improve CCSM availability.

The DMO has established an enterprise approach with industry partners with the goals being:

delivering required capability at benchmark availability

building an enterprise workforce with sustained submarine knowledge embedded in a collaborative working environment

participants collaborate in successful enterprise with aligned objectives and interest

reducing sustainment costs over time through productivity improvements.

During 2015 -16, the focus is to continue efforts to improve the availability and reliability of the CCSM against the interim performance targets agreed with the Capability Manager (Navy).

203

Programme 1.3 Provision of Policy Advice and Management Services


The DMO will meet Government, Ministerial and Departmental expectations and timeframes for the provision of policy, advice and support and delivery of industry programmes.


The cost of Programme 1.3 provides for estimated expenditure in delivering industry programmes and procurement policy and advice to both the Defence Portfolio and the Government, and the corporate in support of the DMO’s business activities. Planned resource use for Programme 1.3 is $79.7m representing approximately one per cent of the DMO’s total expenses.

The planned resource use for Programme 1.3 primarily includes:

workforce and operating expenses relating to the provision of policy advice and management services of $52.0m

$26.8m relating to industry programmes

other resources of $0.9m.

Table 95: Programme 1.3 Provision of Policy Advice and Management Services

2014-15

Estimated

Actual

$'000

2015-16

Budget

$'000

2016-17

Forward

estimate

$'000

2017-18

Forward

estimate

$'000

2018-19

Forward

estimate

$'000


Defence Materiel Special Account 894 - - - -




97,869 - - - -


11,261 - - - -

Total Programme Expenses 110,024 - - - -

Note


free of charge.

Table 96: Programme 1.3 Policy Advice and Management Services Programme

2014-15

Estimated

Actual

$'000

2015-16

Budget

$'000

2016-17

Forward

estimate

$'000

2017-18

Forward

estimate

$'000

2018-19

Forward

estimate

$'000

Workforce and Operating - 79,700 83,419 95,136 110,296

Total Programme Expenses - 79,700 83,419 95,136 110,296


204


This Programme supports the Government and the Department and delivers specialist legal, procurement and contracting policy and services, industry programmes and engagement, and acquisition and sustainment advice.


The DMO is meeting Government, Ministerial and Departmental expectations and timeframes for provision of policy, advice and support and delivery of industry programmes.

Programme 1.3 performance targets include:

Enhancing Australian industry support to the Australian Defence Force through delivering effective Defence industry programmes and engagement in accordance with the Defence Industry Policy Statement.

The scope and funding available for Defence industry assistance and innovation programs is under review, pending policy guidance in the form of the new Defence White Paper and Defence Industry Policy Statement to be released later in 2015.

The Government is committed to ensuring Australia's domestic Defence industry base remains healthy and that opportunities are provided to allow Australian companies to compete for Defence work on their merits. Defence industry programs aim to increase Australian industry's skills, capacity, productivity, innovation and commercial viability.

In 2015-16 Defence will continue to ensure that Australian companies are provided with opportunities to compete for Defence work and continue to pursue wider industry development initiatives, including through:

regular high-level engagement with Defence industry through existing roundtable and working group mechanisms;

the Australian Military Sales Office, including:

enabling government-to-government transactions on behalf of industry

managing major Defence asset disposals, including seeking opportunities for industry involvement where these can lead to improved outcomes

the Global Supply Chain Program, which facilitates opportunities for Australian companies to enter the supply chains of multi-national Defence contractors/suppliers

leveraging international materiel cooperation and international Defence cooperation engagement to progress and mutually reinforce both industry and international policy objectives, including the ‘Team Defence Australia’ initiative which facilitates opportunities for exports by Australian Defence industry through a program of missions and trade show representation

implementing Australian Industry Capability policy which seeks to maximise opportunities for Australian industry to compete on its merits

205

other Defence industry programs aimed at supporting industry competiveness and skilling, for example: Skilling Australia’s Defence Industry, Defence Engineering Internship Program, School Pathways Programs and sponsorship of Science, Technology, Engineering and Mathematics (STEM) initiatives.

As the Defence Business Domain Process Owner for procurement and contracting, the DMO oversees an ongoing program of reform aimed at realising improved efficiency and effectiveness in outcomes from Defence procurements.

Major procurement policy initiatives for 2015-16 include:

delivering key parts of the commercial reform program for the Australian Standard for Defence Contracting (ASDEFCON) suite of tendering and contracting templates including updated and improved provisions for both commercial risk and liability; and intellectual property and technical data that are aimed at improving capability delivery and sustainment

redeveloping the Defence Procurement Policy Manual with the aim to simplify and streamline the content and make the information contained in the manual more accessible

implementing a range of policy and process improvements aimed at reducing the costs of tendering to both Defence and industry by reducing the amount of red tape

ensuring that Defence procurement policy and guidance is relevant, current and responsive to change, through publication of material that is up to date, useable and readily accessible,

e-Procurement initiatives focused on streamlining and standardising Defence processes associated with Commonwealth procurement reporting obligations, including the delivery of enhanced management reporting on Defence contracts

establishing the future arrangements for DMO’s strategic commercial panels for the provision of legal advice and specialist support services in line with the outcomes of the First Principles Review

development and delivery of a professionalisation program for the Defence procurement and contracting job family which will include working with industry and professional bodies such as the Chartered Institute of Purchasing and Supply Australasia (CIPSA).


206

Section 3: DMO Explanatory Tables and Budgeted Financial Statements

Section 3 presents explanatory tables and budgeted financial statements that provide a comprehensive overview of agency finances for the 2015-16 budget year. It explains how budget plans are incorporated into the financial statements and provides further details of the reconciliation between appropriations and programme expenses, movements in administered funds, special accounts and government Indigenous expenditure.


3.1.1 Special Accounts

Special Accounts provide a means to set aside and record amounts used for specified purposes. Special Accounts can be created by a Finance Minister’s Determination under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) Act or under separate enabling legislation. The expected

additions (receipts) and reductions (payments) for each account used by the DMO are detailed in the table below.

Table 97: Estimates of Special Account Flows and Balances

Outcome

Opening

2015-16

2014-15

$'000

Receipts

2015-16

2014-15

$'000

Payments

2015-16

2014-15

$'000

Adjustments

2015-16

2014-15

$'000

Closing

Balance

2015-16

2014-15

$'000

1 333,217 867,355 880,047 - 320,525

329,116 12,652,678 12,648,577 - 333,217

Total Special Accounts 2015-16 333,217 867,355 880,047 - 320,525

2014-15 estimated actual 329,116 12,652,678 12,648,577 - 333,217

Notes

Opening and closing balances include monies held on behalf of Foreign Governments of $31.995m.

Defence Materiel Special Account (A & D)

(A) = Administered

(D) = Departmental

The Defence Materiel Special Account is due to cease on 1 October 2015 under the sunsetting provisions of the Legislative Instruments

Act 2003 .

207

3.1.2 Australian Government Indigenous Expenditure

The DMO actively and positively participates in the wider Departmental Indigenous Programmes. The 2015-16 Australian Indigenous Statement is not applicable to the DMO as the DMO does not have separate appropriation for DMO specific indigenous programmes.

3.1.3 Grants

The DMO’s grants are paid from departmental funds and are approved by the Minister for Defence. The approved budget for the DMO’s grants programme is $8.599m in 2015-16.

Table 98: Approved Grants for 2015-16

2014-15

Estimated

Actual

$’000

2015-16

Budget

Estimate

$’000

Skilling Australia’s Defence Industry (SADI) 5,300 5,639

Priority Industry Capability Innovation Program (PIC IP) 2,763 1,122

Industry Skilling Programme Enhancement (ISPE) 894 1,838

New Air Combat Capability Industry Support Program (NACC ISP) 1,513

Total 10,470 8,599

Detailed information on Grant Programmes and recipients can be found at:

<http://www.defence.gov.au/dmo/DoingBusiness/Industry/SkillingDefenceIndustry/SkillingAustralianDefenceIndustry/>

<http://www.defence.gov.au/dmo/DoingBusiness/Industry/IndustrySupportPrograms/PriorityIndustryCapabilityInnovationProgram/>

<http://www.defence.gov.au/dmo/DoingBusiness/Industry/SkillingDefenceIndustry/IndustrySkillingProgramEnhancement/>

<http://www.defence.gov.au/dmo/DoingBusiness/Industry/IndustrySupportPrograms/JSF-ISP/>

http://www.defence.gov.au/dmo/DoingBusiness/Industry/SkillingDefenceIndustry/SkillingAustralianDefenceIndustry/

http://www.defence.gov.au/dmo/DoingBusiness/Industry/SkillingDefenceIndustry/SkillingAustralianDefenceIndustry/

http://www.defence.gov.au/dmo/DoingBusiness/Industry/IndustrySupportPrograms/PriorityIndustryCapabilityInnovationProgram/

http://www.defence.gov.au/dmo/DoingBusiness/Industry/IndustrySupportPrograms/PriorityIndustryCapabilityInnovationProgram/

http://www.defence.gov.au/dmo/DoingBusiness/Industry/SkillingDefenceIndustry/IndustrySkillingProgramEnhancement/

http://www.defence.gov.au/dmo/DoingBusiness/Industry/SkillingDefenceIndustry/IndustrySkillingProgramEnhancement/


208


As an outcome of the First Principals Review the DMO will be transitioning to new arrangements during the 2015-16 financial year under the Department of Defence. Separate Financial Statements Tables in this section are provided for the 2014-15 Estimated Actual and the 2015-16 Budget and Forward Estimates.

3.2.1 Budgeted Financial Statements Tables

Table 99: DMO Comprehensive Income Statement (Showing Net Cost of Services) for the Period Ended 30 June (2014-15 Estimated Actual)

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

EXPENSES

Employee benefits 522,018 - - - -

Supplier expenses 11,945,304 - - - -

Grants 10,470 - - - -

Depreciation and amortisation 1,326 - - - -

Total expenses 12,479,118 - - - -

LESS:

OWN-SOURCE INCOME

Own-source revenue

Sales of goods and rendering of services 11,564,830 - - - -

Other revenue 34,605 - - - -

Total own-source revenue 11,599,435 - - - -

Net cost of (contribution by) services 879,683 - - - -

Revenue from Government 879,683 - - - -

Surplus (Deficit) attributable to the Australian Government - - - - -

OTHER COMPREHENSIVE INCOME

Changes in asset revaluation reserves - - - - -

Total other comprehensive income - - - - -

Total comprehensive income (loss) attributable to the

Australian Government - - - - -

209

Table 100: Comprehensive Income Statement (Showing Net Cost of Services) for the Period Ended 30 June (2015-16 Budget and Forward Estimates)

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

EXPENSES

Employee benefits - 509,695 495,142 488,294 494,664

Supplier expenses - 286,283 361,626 399,773 417,257

Grants - 8,599 9,870 8,598 8,825

Depreciation and amortisation - 1,346 1,380 1,415 1,450

Total expenses - 805,923 868,018 898,080 922,196

LESS:

OWN-SOURCE INCOME

Own-source revenue

Sales of goods and rendering of services - 805,006 865,422 897,117 919,469

Other revenue - 917 2,596 963 2,727

Total own-source revenue - 805,923 868,018 898,080 922,196

Net cost of (contribution by) services - - - - -

Revenue from Government - - - - -

Surplus (Deficit) attributable to the Australian Government - - - - -

OTHER COMPREHENSIVE INCOME

Changes in asset revaluation reserves - - - - -

Total other comprehensive income - - - - -

Total comprehensive income (loss) attributable to the

Australian Government - - - - -


210

Table 101: DMO Budgeted Departmental Balance Sheet (as at 30 June) 2014-15 Estimated Actual

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

ASSETS

Financial assets

Cash and cash equivalents 130,000 - - - -

Trade and other receivables 503,752 - - - -

Total financial assets 633,752 - - - -


Property, plant and equipment 5,061 - - - -

Intangibles - - - - -

Other non-financial assets 1,538,759 - - - -

Total non-financial assets 1,543,820 - - - -

Total assets 2,177,572 - - - -

LIABILITIES

Payables

Suppliers 1,380,997 - - - -

Grants 5,733 - - - -

Other payables 130,640 - - - -

Total payables 1,517,370 - - - -

Provisions

Employee provisions 182,035 - - - -

Other provisions 3,024 - - - -

Total provisions 185,059 - - - -

Total liabilities 1,702,429 - - - -

NET ASSETS 475,143 - - - -

EQUITY

Contributed equity 155,368 - - - -

Reserves 290 - - - -

Retained surplus (accumulated deficit) 319,485 - - - -

Total parent entity interest 475,143 - - - -

Total equity 475,143 - - - -

211

Table 102: Budgeted Departmental Balance Sheet (as at 30 June) 2015-16 Budget and Forward Estimates

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000

ASSETS

Financial assets

Cash and cash equivalents - 130,000 130,000 130,000 130,000

Trade and other receivables - 452,151 384,757 366,663 369,942

Total financial assets - 582,151 514,757 496,663 499,942


Property, plant and equipment - 5,061 5,061 5,061 5,061

Intangibles - - - - -

Other non-financial assets - 1,538,759 1,538,759 1,538,774 1,538,774

Total non-financial assets - 1,543,820 1,543,820 1,543,835 1,543,835

Total assets - 2,125,971 2,058,577 2,040,498 2,043,777

LIABILITIES

Payables

Suppliers - 1,380,997 1,380,997 1,380,997 1,380,997

Grants - 5,733 5,733 5,733 5,733

Other payables - 72,723 34,166 10,701 7,027

Total payables - 1,459,453 1,420,896 1,397,431 1,393,757

Provisions

Employee provisions - 188,351 194,873 201,607 208,560

Other provisions - 3,024 3,024 3,024 3,024

Total provisions - 191,375 197,897 204,631 211,584

Total liabilities - 1,650,828 1,618,793 1,602,062 1,605,341

NET ASSETS - 475,143 439,784 438,436 438,436

EQUITY

Contributed equity - 155,368 155,368 155,368 155,368

Reserves - 290 290 290 290

Retained surplus (accumulated deficit) - 319,485 284,126 282,778 282,778

Total parent entity interest - 475,143 439,784 438,436 438,436

Total equity - 475,143 439,784 438,436 438,436


212

Table 103: Departmental Statement of Changes in Equity – Summary of Movement (Budget Year 2015-16)

Retained

Earnings

$'000

Asset

Revaluation

Reserve

$'000

Contributed

Equity/

Capital

$'000

Total

Equity

$'000

Opening balance as at 1 July 2015

Balance carried forward from previous period 319,485 290 155,368 475,143

Adjustment for changes in accounting policies - - - -

Adjusted opening balance 319,485 290 155,368 475,143

Surplus (Deficit) for the period - - - -

Total comprehensive income recognised directly in

equity - - - -



Appropriation (equity injection) - - - -

Departmental Capital Budget (DCB) - - - -

Consolidation into Defence -319,485 -290 -155,368 -475,143

Sub-total transaction with owners -319,485 -290 -155,368 -475,143

Estimated closing balance as at 30 June 2016 - - - -

213

Table 104: DMO Budgeted Departmental Statement of Cash Flows (for the Period Ended 30 June) 2014-15 Estimated Actual

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000


Cash received

Goods and services 11,719,579 - - - -

Appropriations 875,595 - - - -

Cash from the OPA - - - - -

Net GST received 844,861 - - - -

Other cash received 894 - - - -

Total cash received 13,440,929 - - - -

Cash used

Employees 517,930 - - - -

Suppliers 12,058,983 - - - -

Grants 10,470 - - - -

Cash to the OPA - - - - -

Net GST paid 844,861 - - - -

Other cash used - - - - -

Total cash used 13,432,244 - - - -

Net cash from (used by) operating activities 8,685 - - - -


Cash Received

Proceeds from sale of property, plant and equipment - - - - -

Total cash Received - - - - -

Cash used

Purchase of property, plant and equipment 1,313 - - - -

Total cash used 1,313 - - - -

Net cash from (used by) investing activities -1,313 - - - -

Net increase (decrease) in cash held 7,372 - - - -

Cash and cash equivalents at the beginning of the reporting

period 122,628 - - - -

Cash and cash equivalents at the end of the reporting period 130,000 - - - -


214

Table 105: Budgeted Departmental Statement of Cash Flows (for the Period Ended 30 June) 2015-16 Budget and Forward Estimates

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000


Cash received

Goods and services - 805,006 932,725 935,369 919,469

Appropriations - - - - -

Cash from the OPA - 12,692 - - -

Net GST received - 20,736 26,101 28,685 29,927

Other cash received - 917 2,596 963 2,727

Total cash received - 839,351 961,422 965,017 952,123

Cash used

Employees - 522,387 485,996 481,395 487,540

Suppliers - 286,283 361,626 399,773 417,257

Grants - 8,599 9,870 8,598 8,825

Cash to the OPA - - 76,449 45,151 7,124

Net GST paid - 20,736 26,101 28,685 29,927

Other cash used - - - - -

Total cash used - 838,005 960,042 963,602 950,673

Net cash from (used by) operating activities - 1,346 1,380 1,415 1,450


Cash Received

Proceeds from sale of property, plant and equipment - - - - -

Total cash Received - - - - -

Cash used

Purchase of property, plant and equipment - 1,346 1,380 1,415 1,450

Total cash used - 1,346 1,380 1,415 1,450

Net cash from (used by) investing activities - -1,346 -1,380 -1,415 -1,450

Net increase (decrease) in cash held - - - - -

Cash and cash equivalents at the beginning of the reporting

period - 130,000 130,000 130,000 130,000

Cash and cash equivalents at the end of the reporting period - 130,000 130,000 130,000 130,000

215

Table 106: DMO Departmental Capital Budget Statement 2014-15 Estimated Actual

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000



1,313 - - - -

Total 1,313 - - - -

Reconciliation of cash used to acquire assets to asset

movement table

Total purchases 1,313 - - - -

Total cash used to acquire assets 1,313 - - - -

Note




- gifts


- s74 Retained Revenue Receipts


Table 107: Departmental Capital Budget Statement 2015-16 Budget and Forward Estimates

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000



- 1,346 1,380 1,415 1,450

Total - 1,346 1,380 1,415 1,450

Reconciliation of cash used to acquire assets to asset

movement table

Total purchases - 1,346 1,380 1,415 1,450

Total cash used to acquire assets - 1,346 1,380 1,415 1,450

Note




- gifts


- s74 Retained Revenue Receipts



216

3.2.2 Administered Budgeted Financial Statements Tables

Table 108: DMO Schedule of Budgeted Income and Expenses Administered on Behalf of Government (for the Period Ended 30 June) 2014-15 Estimated Actual

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000


Revenue

Non-taxation

Interest - - - - -

Other 250 - - - -

Total Non-taxation 250 - - - -

Total own-sourced income administered on behalf of

Government 250 - - - -

Table 109: Schedule of Budgeted Income and Expenses Administered on Behalf of Government (for the Period Ended 30 June) 2015-16 Budget and Forward Estimates

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000


Revenue

Non-taxation

Interest - - - - -

Other - 250 250 250 250

Total Non-taxation - 250 250 250 250

Total own-sourced income administered on behalf of

Government - 250 250 250 250

217

Table 110: DMO Schedule of Budgeted Assets and Liabilities Administered on Behalf of Government (as at 30 June) 2014-15 Estimated Actual

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000


Financial assets

Receivables 1,502 - - - -

Total Financial assets 1,502 - - - -

Total Assets administered on behalf of Government 1,502 - - - -


Payables

Other Payables 1,539 - - - -

Total Financial assets 1,539 - - - -

Total Assets administered on behalf of Government 1,539 - - - -

Table 111: Schedule of Budgeted Assets and Liabilities Administered on Behalf of Government (as at 30 June) 2015-16 Budget and Forward Estimates

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000


Financial assets

Receivables - 1,502 1,502 1,502 1,502

Total Financial assets - 1,502 1,502 1,502 1,502

Total Assets administered on behalf of Government - 1,502 1,502 1,502 1,502


Payables

Other Payables - 1,539 1,539 1,539 1,539

Total Financial assets - 1,539 1,539 1,539 1,539

Total Assets administered on behalf of Government - 1,539 1,539 1,539 1,539


218

Table 112: DMO Schedule of Budgeted Administered Cash Flows (for the Period Ended 30 June) 2014-15 Estimated Actual

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000


Cash received

Other 250 - - - -

Total Cash received 250 - - - -

Net cash from or (used by) operating activities 250 - - - -

Net increase (decrease) in cash held and cash equivalents

held 250 - - - -

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

Cash to the Official Public Account for:

- Transfers to other entities (Finance -

Whole of Government) 250 - - - -

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

Table 113: Schedule of Budgeted Administered Cash Flows (for the Period Ended 30 June) 2015-16 Budget and Forward Estimates

2014-15

Estimated

Actual

$'000

2015-16

Budget

Estimate

$'000

2016-17

Forward

Estimate

$'000

2017-18

Forward

Estimate

$'000

2018-19

Forward

Estimate

$'000


Cash received

Other - 250 250 250 250

Total Cash received - 250 250 250 250

Net cash from or (used by) operating activities - 250 250 250 250

Net increase (decrease) in cash held and cash equivalents

held - 250 250 250 250

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

Cash to the Official Public Account for:

- Transfers to other entities (Finance -

Whole of Government) - 250 250 250 250

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

219

3.2.3 Notes to the Financial Statements

Budgeted Financial Statements

The budgeted financial statements (income, balance sheet, cash flows and capital budget statement) show the revenues, expenses, assets and liabilities of the DMO. These budgeted statements contain estimates prepared in accordance with the requirements of the Government’s financial budgeting and reporting framework and reflect the planned financial performance of the DMO in delivering its programmes to Defence and the Government. Unless otherwise stated, the convention used in these budgeted financial statements is to round amounts to the nearest $’000.

DMO Departmental Revenue

Funding for workforce and operating expenses received from Defence is recognised as revenue. Revenue for the delivery of Programmes 1.1 and 1.2 is recognised by reference to the stage of completion of contracts or other agreements and in accordance with expense incurred. Revenue from other sources represents sales to non-Defence organisations for goods and services and is recognised at the time the service is provided.

DMO Departmental Expenses

Employees

Employee expenses include payments and net increases in entitlements to civilian employees for services rendered in the financial year. The DMO pays a fee for service to Defence for the use of military personnel provided to the DMO, which is reported as part of suppliers expenses.

Suppliers

This includes payments to suppliers for goods and services used in providing DMO programmes and cost of sales expenses associated with the delivery of goods and services to Defence.

Depreciation and Amortisation

Items of property, plant and equipment and intangible assets are depreciated to their estimated residual values over their estimated useful lives. In all cases, the ‘straight-line’ method of depreciation is used.

DMO Departmental Assets

Departmental Assets — Financial

The primary financial assets are cash and receivables.

Departmental Assets — Non-financial

This includes infrastructure, plant and equipment, intangibles and other non-financial assets (including prepayments), which are used in the delivery of programmes. The reported value represents the purchase price paid less depreciation incurred to date in using the asset.

DMO Departmental Liabilities

Departmental Liabilities — Provisions

Provision has been made for the DMO’s liability for employee entitlements, arising from services rendered by employees. This liability includes unpaid annual leave and long service leave.


220

Departmental Liabilities — Payables

Payables include unpaid suppliers and an unearned revenue liability associated with goods and services awaiting delivery to Defence.

221



Section 1: DHA Overview and Resources

Section 2: DHA Outcomes and Planned Performance

Section 3: DHA Explanatory Tables and Budgeted Financial Statements


222


223

DEFENCE HOUSING AUSTRALIA

Section 1: DHA Overview and Resources


The primary function of Defence Housing Australia (DHA), as set out by the Defence Housing Australia Act 1987, is to provide housing and related services for members of the Australian Defence Force (ADF)

and their families in line with the Defence operational requirements. DHA seeks to deliver positive outcomes for Defence while also functioning as a Government Business Enterprise charged with operating commercially and delivering shareholder return targets.

DHA achieves its function through a contracted relationship with the Commonwealth of Australia (Defence). A Services Agreement outlines the commercial arrangements and the responsibilities of both parties in providing housing services to the members of the ADF and their families. In accordance with the governance arrangements for Government Business Enterprises, DHA prepares a Corporate Plan to be agreed with its shareholder ministers.

DHA will continue to meet Defence housing needs for ADF members with dependents while expanding its off-base singles programme and maintaining a strong balance sheet. Critical to success will be land development and increased sales of DHA properties, mainly through the Sale and Leaseback (SLB) programme. The current outlook for SLB is positive. As the off-base singles portfolio grows, DHA will increase the number of apartments available to investors.

After successive years of growth in the Defence housing requirement, the latest forecast from the Department of Defence sees a flattening of demand over the next three years. Even so, the overall size of DHA’s portfolio will increase over the next three years as DHA seeks to reduce the number of members housed in the private rental market and provide additional housing choices for single members of the ADF.

DHA will continue a $300m programme to upgrade and replace Defence-owned housing on-base and off-base to meet the 2017 deadline for all housing to comply with the 2006 Defence minimum standard. DHA will further consolidate the allocation service for Defence Living-In-Accommodation.

Over the next four years it is estimated that DHA’s capital expenditure will exceed $2b. The programme will primarily be funded through DHA’s Sale and Leaseback programme with additional funding options being implemented if approved by Government. The sale of surplus lots from DHA’s major developments will also contribute. DHA will seek to preserve its Standard & Poor’s credit rating of AA+.

DHA plans to continue providing a strong financial return to Government.


224

DHA Organisational Structure

The DHA Board and Advisory Committee compositions have changed and are detailed below.

The DHA Board members are:

Chairman The Hon J.A.L. (Sandy) Macdonald

Managing Director Mr Peter Howman

Commercial Director Ms Margaret Walker

Commercial Director Ms Carol Holley

Commercial Director The Hon Alan Ferguson

Commercial Director Vacant

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

DHA has an Advisory Committee which has the following members:

Chairman Ms Vicki McConachie CSC RANR

Committee Member Mr Peter Howman

Committee Member Mrs Robyn Ritchie

Committee Member Rear Admiral Michael Van Balen

Committee Member Major General Rick Burr DSC AM MVO

Committee Member Air Vice-Marshal Gavin (Leo) Davies, CSC

DHA’s wholly owned subsidiary entity DHA Investment Management Limited has a Board comprising a Chairperson and two directors.

The DHA Investment Management Limited Board members are:

Chair/ Non Executive Director Ms Carol Holley

Executive Director Mr Peter Howman

Executive Director Mr Jon Brocklehurst


225

1.2 DHA RESOURCE STATEMENT

Table 114: DHA Resource Statement – Budget Estimates for 2015-16

Estimate of prior

year amounts

available in

2015-16

$'000

Proposed at

2015-16 Budget

$'000

Total 2015-16

estimate

$'000

Opening balance/Reserves at bank 136,236 (32,837) 103,399

REVENUE FROM GOVERNMENT

Other services

Non-operating - - -

Total other services - - -

Total annual appropriations - - -

Payments from related entities

Department of Defence 627,180 - 627,180

Total 627,180 - 627,180

Total funds from Government 627,180 - 627,180

FUNDS FROM INDUSTRY SOURCES

FUNDS FROM OTHER SOURCES

Interest 2,947 - 2,947

Sale of goods and services 516,282 - 516,282

Total 519,229 - 519,229

Total net resourcing for entity 1,146,409 - 1,146,409

Notes

2. All figures are GST exclusive.

1. 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.


226

1.3 BUDGET MEASURES

There are no budget measures relating to DHA for the May 2015 Budget.


227

Section 2: DHA Outcomes and Planned Performance

DHA advises no significant changes to targets published in the Portfolio Budget Statements 2014-15.

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 programmes are the primary vehicle by which government entities achieve the intended results of their outcome statements. Entities are required to identify the programmes which contribute to government outcomes over the Budget and forward years.

Each outcome is described below together with its related programmes, specifying the performance indicators and targets used to assess and monitor the performance of Defence Housing Australia in achieving government outcomes.


228

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 1 Strategy

DHA will meet this outcome through the execution of the Services Agreement on Housing and Related Matters (Services Agreement) between the Commonwealth of Australia (Defence) and DHA.

Under the terms of the Service Agreement, DHA provides a provisioning schedule to Defence in response to the Defence Housing Forecast (DHF). A Capital Programme is also developed which contains the detailed financial programme of capital expenditure related to the provisioning schedule. The key drivers of DHA’s Capital Programme are changes to ADF strength and disposition; changes to Defence housing policy and standards; and DHA’s need to replace expiring leases and ageing stock.

Outcome Expense Statement

Table 115: Budgeted Expenses for Outcome 1

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)

2014-15

Estimated actual

expenses

$'000

2015-16

Estimated

expenses

$'000

Programme 1.1: (Other Departmental - DHA)

Revenue from Government

Payment from related entities 594,010 627,180

Revenues from other independent sources 703,233 671,406

Total for Programme 1.1 1,297,243 1,298,586

Total expenses for Outcome 1 1,297,243 1,298,586


229


Programme 1.1: The provision of Defence housing and housing related services


Provide modern quality housing that meets Defence requirements and community standards.

Meet financial return targets.

Table 116: Cost Summary Programme 1.1 The provision of Defence housing and housing related services


Deliver housing provisioning schedule outcomes to within 1% of agreed numbers.

Deliver major land developments and acquisition/construction activities in key Defence locations.

Achieve sustainable sale and leaseback and disposal revenues.

Key performance indicators

2014-15 Revised budget

2014-15 On target

2015-16 Budget

target

2016-17 Forward

year 1

2017-18 Forward

year 2

2018-19 Forward

year 3

Houses supplied against provisioning schedule 99% Yes 99% 99% 99% 99%

Members satisfied with their service residence 80% Yes 80% 80% 80% 80%

Return on equity 5.6% Yes 5.7% 6.5% 6.5% 6.5%


230

Section 3: DHA Explanatory Tables and Budgeted Financial Statements

Section 3 presents explanatory tables and budgeted financial statements which provide a comprehensive snapshot of entity finances for the 2015-16 budget year. It explains how budget plans are incorporated into the financial statements and provides further details of the reconciliation between appropriations and programme expenses, movements in administered funds, special accounts and government indigenous expenditure.


Not applicable to DHA.


231


3.2.1 Budgeted Financial Statements

Table 117: Comprehensive Income Statement (showing net cost of services) for the period ended 30 June

2014-15

Estimated

actual

$'000

2015-16

Budget

$'000

2016-17

Forward

estimate

$'000

2017-18

Forward

estimate

$'000

2018-19

Forward

estimate

$'000

INCOME

Revenue

Sale of goods and rendering of services 1,289,773 1,295,439 1,448,884 1,497,117 1,203,042

Interest 7,470 3,147 2,059 3,967 11,460

Total revenue 1,297,243 1,298,586 1,450,943 1,501,084 1,214,502

Gains

Sale of assets (2,064) (1,702) (2,200) (1,315) (966)

Total gains (2,064) (1,702) (2,200) (1,315) (966)

Total income 1,295,179 1,296,884 1,448,743 1,499,769 1,213,536

EXPENSES

Employee benefits 71,188 75,135 77,906 80,799 83,794

Suppliers 1,083,999 1,081,772 1,214,877 1,260,971 1,006,246


Finance costs 29,636 30,936 32,866 34,175 34,175

Write-down and impairment of assets 12,000 7,500 7,500 7,500 7,500

Total expenses 1,211,135 1,210,013 1,348,186 1,398,381 1,146,951

Profit/(loss) before income tax 84,044 86,871 100,557 101,388 66,585

Income tax expense 27,118 26,566 30,205 28,595 19,110

Net profit (loss) 56,926 60,305 70,352 72,793 47,475

Profit/(loss) attributable to the Australian

Government 56,926 60,305 70,352 72,793 47,475


232

Table 118: Budgeted Departmental Balance Sheet (as at 30 June)

2014-15

Estimated

actual

$'000

2015-16

Budget

$'000

2016-17

Forward

estimate

$'000

2017-18

Forward

estimate

$'000

2018-19

Forward

estimate

$'000

ASSETS

Financial assets

Cash and cash equivalents 103,398 22,747 40,119 103,740 274,699


Other investments 2,500 3,502 0 0 0

Other financial assets 55,372 62,929 62,963 62,668 66,043

Total financial assets 266,398 269,312 310,263 374,419 541,146


Land and buildings 1,491,243 1,494,101 1,483,527 1,494,705 1,514,022

Property, plant and equipment 14,978 18,978 22,978 24,874 26,965

Tax assets 22,558 23,122 23,700 4,547 4,110

Other non-financial assets 39,018 39,018 39,018 39,023 39,023

Total non-financial assets 1,567,797 1,575,219 1,569,223 1,563,149 1,584,120

Assets held for sale 1,204,311 1,261,115 1,338,716 1,393,607 1,250,810

Total assets 3,038,506 3,105,646 3,218,202 3,331,175 3,376,076

LIABILITIES

Payables

Suppliers 52,129 54,630 53,109 82,955 85,030

Dividends 50,274 50,476 57,390 54,331 36,308

Other payables 16,289 17,070 16,595 21,223 13,890

Total payables 118,692 122,176 127,094 158,509 135,228


Loans 509,580 529,580 569,580 569,580 569,580

Total interest bearing liabilities 509,580 529,580 569,580 569,580 569,580

Provisions

Employee provisions 53,369 33,138 34,062 26,327 27,303

Other provisions 115,224 109,226 105,626 119,548 119,025

Total provisions 168,593 142,364 139,688 145,875 146,328

Total liabilities 796,865 794,120 836,362 873,964 851,136

Net assets 2,241,641 2,311,526 2,381,840 2,457,211 2,524,940

EQUITY*

Parent entity interest

Contributed equity 396,148 396,148 396,148 396,148 396,148

Reserves 1,810,702 1,868,715 1,926,067 1,982,976 2,039,538

Retained surplus (accumulated deficit) 34,791 46,663 59,625 78,087 89,254

Total parent entity interest 2,241,641 2,311,526 2,381,840 2,457,211 2,524,940

Attributed to non-controlling interest

Total non-controlling interest - - - - -

Total Equity 2,241,641 2,311,526 2,381,840 2,457,211 2,524,940

*Equity is the residual interest in assets after the deduction of liabilities.


233

Table 119: Budgeted Departmental Statement of Cash Flows (for the period ended 30 June)

2014-15

Estimated

actual

$'000

2015-16

Budget

$'000

2016-17

Forward

estimate

$'000

2017-18

Forward

estimate

$'000

2018-19

Forward

estimate

$'000


Cash received

Sale of goods and rendering of services 1,287,400 1,143,462 1,425,193 1,494,954 1,231,206

Interest 7,470 2,947 2,099 3,968 11,458

Other 25,100 24,013 25,481 28,639 28,687


Cash used

Employees 69,000 78,596 77,906 74,003 76,745

Suppliers 1,276,845 998,858 1,221,577 1,185,362 861,932

Borrowing costs 29,636 30,936 32,866 34,175 34,175

Other 51,246 77,511 66,916 75,777 66,233

Total cash used 1,426,727 1,185,901 1,399,265 1,369,317 1,039,085

Net cash from/(used by) operating

activities(106,757) (15,479) 53,508 158,244 232,266


Cash received

Proceeds from sales of property, plant

and equipment51,600 42,538 54,995 32,887 24,143


Cash used

Purchase of property, plant and

equipment

Investments 69,455 77,437 80,701 70,120 31,120

Total cash used 69,455 77,437 80,701 70,120 31,120

Net cash from/(used by) investing

activities(17,855) (34,899) (25,706) (37,233) (6,977)


Cash received

Other - 20,000 40,000 - -

Total cash received - 20,000 40,000 - -

Cash used

Repayments of borrowings

Dividends paid 53,991 50,274 50,476 57,390 54,331

Other

Total cash used 53,991 50,274 50,476 57,390 54,331

Net cash from/(used by) financing

activities(53,991) (30,274) (10,476) (57,390) (54,331)

Net increase/(decrease) in cash held (178,603) (80,652) 17,326 63,621 170,958

Cash and cash equivalents at the

beginning of the reporting period282,002 103,399 22,793 40,119 103,741

Cash and cash equivalents at the end

of the reporting period103,399 22,747 40,119 103,740 274,699


234

Table 120: Departmental Statement of Changes in Equity – Summary of Movement (Budget Year 2015-16)

Retained

earnings

$'000

Asset

revaluation

reserve

$'000

Other

reserves

$'000

Contributed

equity/

capital

$'000

Total equity

$'000

Opening balance as at 1 July 2015

Balance carried forward from previous period 34,791 1,810,702 - 396,148 2,241,641

Adjusted opening balance 34,791 1,810,702 - 396,148 2,241,641

Comprehensive income

Surplus/(deficit) for the period 60,305 - - - 60,305

Total comprehensive income 60,305 - - - 60,305


Distributions to owners

Returns on capital:

Dividends (48,433) - - - (48,433)


Other - 58,013 - - 58,013

Sub-total transactions with owners (48,433) 58,013 - - 9,580

Estimated closing balance as at 30 June

201646,663 1,868,715 - 396,148 2,311,526

Less: non-controlling interests - - - - -

Closing balance attributable to the

Australian Government46,663 1,868,715 - 396,148 2,311,526


235

Table 121: Departmental Capital Budget Statement

2014-15

Estimated

actual

$'000

2015-16

Budget

$'000

2016-17

Forward

estimate

$'000

2017-18

Forward

estimate

$'000

2018-19

Forward

estimate

$'000


Funded internally from departmental

resources (a) 69,455 77,437 80,701 70,120 31,120

TOTAL 69,455 77,437 80,701 70,120 31,120

RECONCILIATION OF CASH USED TO

ACQUIRE ASSETS TO ASSET

MOVEMENT TABLE

Total purchases 69,455 77,437 80,701 70,120 31,120

Total cash used to acquire assets 69,455 77,437 80,701 70,120 31,120

(a) Includes the following sources of funding:

- current Bill 1 and prior year Act 1/3/5 appropriations (excluding amounts from the DCB);

- donations and contributions;

- gifts;

- internally developed assets;

- s 74 Retained revenue receipts;


Table 122: Statement of Asset Movements (2015-16)

Land

$'000

Buildings

$'000

Other property,

plant and

equipment

$'000

L&B, IP&E

held for sale

$'000

Total

$'000

As at 1 July 2015

Gross book value 811,598 679,690 34,368 39,018 1,564,674

Accumulated depreciation/amortisation and

impairment - (45) (21,444) - (21,489)

Opening net book balance 811,598 679,645 12,924 39,018 1,543,185

Capital asset additions

Estimated expenditure on new or

replacement assets

By purchase - other 5,058 - 6,054 - 11,112

Total additions 5,058 - 6,054 - 11,112

Other movements

Assets held for sale or in a disposal group

held for sale - (2,200) - - (2,200)

Depreciation/amortisation expense - - - - -

Total other movements - (2,200) - - (2,200)

As at 30 June 2016

Gross book value 816,656 677,490 40,422 39,018 1,573,586

Accumulated depreciation/amortisation and

impairment - (45) (21,444) - (21,489)

Closing net book balance 816,656 677,445 18,978 39,018 1,552,097


236

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 ADF 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 Service Chiefs, the Chief of Joint Operations and the Chief

Information Officer.

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

237

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 ADF 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.

Defence Capability

Plan

The Defence Capability Plan is a costed, detailed development plan for Australia’s

military capabilities over a ten-year period. The plan 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 the day-to-day

management functions.

Defence

Management and

Finance Plan

The Defence Management and Finance Plan provide Ministers and central agencies

with a clear oversight of Defence planning and financing strategies. It describes the

strategies agreed through the 2000 Defence White Paper and subsequent Strategic

Review papers. 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.

Defence

Procurement

Review

An independent review initiated by the Government in December 2002 to examine the

procurement process for major acquisitions in Defence. The review was led by Mr

Malcolm Kinnaird and is also known as the Kinnaird Review.

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 Australian Public Service officer of Defence or serving Defence Force member

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.


238

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 required

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 Capability Development

Group).

Hardened and

Networked Army

The Army’s key initiative to modernise and meet future operations demands and

requirements of the Government. It will increase the size and firepower of the land

force, improve the protection provided to troops, and allow them to communicate

better on the future battlefield.

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 ADF.

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.

Glossary

239

Listed Entity (a) any body (except a body corporate), person, group of persons or organisation;

(b) any combination of bodies (except bodies corporate), persons, groups of persons

or organisations (whether or not part of a Department of State);

that is prescribed by an Act or the Public Governance, Performance and

Accountability Rule 2014 to be a listed entity.

Materiel Acquisition

Agreements

Materiel Acquisition Agreements cover the Defence Materiel Organisation’s

acquisition services to Defence for both major and minor capital equipment.

Materiel

Sustainment

Agreements

Materiel Sustainment Agreements are between the Capability Managers and the

Chief Executive Officer of the Defence Materiel Organisation. 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.

Network Centric

Warfare

The aim of Network Centric Warfare is to improve the ability of the ADF to collaborate

internally with supporting agencies and with coalition partners across organisation

and geographic boundaries. Network Centric Warfare would allow Defence to

harness recent development in computing and communications technologies to

enhance decision making and warfighting capability.

Operating result Equals revenue less expense.

Operational tempo The rate at which the ADF 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 results that the Government seeks from Defence, and are achieved by the

successful delivery of its outputs, to the standards set in the Portfolio Budget

Statements. For more information, see Defence’s 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 ADF.

Portfolio Additional

Estimates

Statements

Similar to the portfolio budget statement 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 provides 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.


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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 on 1 July 2014.

Professional Service

Providers

Individuals with specialist skills contracted to fill a line position.

Purchaser-provider

arrangements

Arrangements under which the outputs of one agency are purchased by another

agency to contribute 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.

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 output performance at the

agreed output price.

Special account Balances existing within the Consolidated Revenue Fund, that are supported by

standing appropriations (Public Governance, Performance and Accountability Act

2013 (PGPA Act), 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 PGPA Act) or through an Act of

Parliament (referred to in s.80 of the PGPA Act).

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.

Glossary

241

System Programme

Office

The office of the Programme Manager. It serves as the single point of contact with

industry, government agencies, 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.

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.


242

ACRONYMS

A

AACAP Army Aboriginal Community Assistance Programme

AAFCANS Army and Air Force Canteen Service

ACMI Air Combat Manoeuvring Instrumentation

ACPB Armidale Class Patrol Boat

ADCU Australian Defence Credit Union

ADF Australian Defence Force

ADFA Australian Defence Force Academy

ADFHQ Australian Defence Force Headquarters

ADFIS Australian Defence Force Investigative Service

ADO Australian Defence Organisation

AFS Average Funded Strength

AMCIP Approved Major Capital Investment Programme

AMRAAM Advanced Medium Range Air to Air Missile

ANAO Australian National Audit Office

AOR Auxiliary Oiler Replenishment

APS Australian Public Service

APRCC Australian Protected Route Clearance Capability

ASDEFCON Australian Standard for Defence Contracting

ASLAV Australian Light Armoured Vehicle

ASMD Anti-Ship Missile Defence

ASPI Australian Strategic Policy Institute

AWD Air Warfare Destroyer

AWSA Advance Work Supply Arrangement Deed of Standing Offer

B

BAU Business as Usual

BCSS Battlefield Command Support System

BMS Battle Management System

Acronyms

243

C

CBT Commanders Briefing Tool

C-RAM Counter Rocket, Artillery & Mortar

CDF Chief of the Defence Force

CCSM Collins Class Submarine

CDG Capability Development Group

CEO Chief Executive Officer

CFOG Chief Finance Officer Group

CIR Capability Investment and Resources

CIOG Chief Information Officer Group

CJOPS Chief of Joint Operations

CMATS Civil Military Air Traffic System

COO Chief Operating Officer

CPM Command Post Mobile

D

DACC Defence Assistance to the Civil Community

DCB Departmental Capital Budget

DCEO Deputy Chief Executive Officer

DCP Defence Capability Plan

DCP Defence Cooperation Programme

DFACA Defence Force Aid to the Civil Authority

DFAT Department of Foreign Affairs and Trade

DFRB Defence Forces Retirement Benefits Scheme

DFRDB Defence Force Retirement and Death Benefits Scheme

DHA Defence Housing Australia

DHF Defence Housing Forecast

DHOAS Defence Home Ownership Assistance Scheme

DMO Defence Materiel Organisation

DPG Defence People Group

DSRG Defence Support and Reform Group

DSTO Defence Science & Technology Organisation

DVRS Digital Voice Recording System


244

E

ELF Enhanced Land Force

ES Electronic Support

ESSM Evolved Sea Sparrow Missile

F

FFG Guided Missile Frigate

FMS Foreign Military Sales

FNACS Future Naval Aviation Combat System

FOC Full Operational Capability

FVMT Field Vehicles, Modules and Trailers

G

GMCOM General Manager Commercial

GM LM General Manager Land and Maritime

GM JSA General Manager Joint, Systems and Air

H

HF High Frequency

HMAS Her Majesty's Australian Ship

HNA Hardened and Networked Army

HQ Headquarters

HQJOC Headquarters Joint Operations Command

HR Human Resources

I

ICT Information and Communications Technology

IES Indigenous Employment Strategy

IMR Initial Materiel Release

IMT Intermodal Terminal, Moorebank

IOC Initial Operational Capability

ISCI Initial Common Support Infrastructure

ITP Information Transformation Programme

Acronyms

245

J

JLC Joint Logistics Command

JOC Joint Operations Command

JORN Jindalee Operational Radar Network

JP Joint Project

JSF Joint Strike Fighter

L

LADS Laser Airborne Depth Sounder Aircraft

LAIRCM Large Aircraft Infra Red Counter Measure

LHD Landing Helicopter Dock

LLC Light and Lightweight Capability/LHD Landing Craft

LOGIS Logistics Information Systems

M

MA Mulwala Agreement

MAA Materiel Acquisition Agreement

MCF Major Capital Facilities

MHC Coastal Mine Hunters/Medium and Heavy Capability

MRH Multi-Role Helicopter

MRTT Multi-Role Tanker Transport

MSA Materiel Sustainment Agreement

MSBS Military Superannuation and Benefits Scheme

MYEFO Mid Year Economic and Fiscal Outlook

N

NAB National Australia Bank

NACC New Air Combat Capability

NATO North Atlantic Treaty Organisation

NORCOM Northern Command

NPOC Net Personnel & Operating Costs

O

OPA Official Public Account

OSCDF Office of the Secretary & CDF

OT&E Operational Test & Evaluation


246

P

PADFA Programme of Australian Defence Force Activities

PAES Portfolio Additional Estimates Statements

PBC Performance Based Contracting

PBS Portfolio Budget Statements

PED Processing, Exploitation and Dissemination

P&EE Proof & Experimental Establishment

PGPA Public Governance Performance and Accountability

PICSP Priority Industry Capability Support Programme

PMV Protected Mobility Vehicle / Protected Military Vehicle

PWC Public Works Consideration/Parliamentary Standing Committee on Public Works

R

RAAF Royal Australian Air Force

RADM Rear Admiral

RANCCF Royal Australian Navy Central Canteens Fund

RFT Request for Tender

ROE Rules of Engagement

S

SAR Search and Rescue

SATCOM Satellite Communications

S&T Science & Technology

SIE Single Information Environment

SME Specialist Military Equipment

SPO System Programme Office

T

TACAN Tactical Air Control and Navigation

TDL Tactical Data Links

TMS Track Management System

Acronyms

247

U

UAD Unit Availability Days

URD Unit Ready Days

US United States

USAF United States Air Force

USN United States Navy

V

VCDF Vice Chief of the Defence Force

W

WHGR West Head Gunnery Range

WTT Wideband Terrestrial Terminals

WTSS Weapons Training Simulation System