Australia’s Defence Budget 2023-24

Australia’s 2023-24 Defence Budget was handed down on 9 May 2023, less than a month after the release of the unclassified Defence Strategic Review (DSR). It follows much the same trajectory as the budgets handed down last year: the budget for 2023-24 is $52.56 billion, made up of $50.1 billion for the Department itself and about $2.4 billion for the Australian Signals Directorate (ASD).

The budget is expected to rise in successive years to $54.4, $56.8 and $59.8 billion in 2026-27. It has climbed to a shade over 2% of Gross Domestic Product (GDP) and may remain at about that level for the duration of the current term of government.

The Budget doesn’t really live up to the expectations created by the DSR itself and the run-up to it. The dollar amounts don’t look sufficient and specific new capabilities mentioned in ministerial announcements over the past few weeks and months are mostly not mentioned or not funded. Despite this, the ministerial announcement says that over the next four years, Defence will invest more than $19 billion to implement the immediate priorities identified in response to the DSR. These include:

• $9 billion for the nuclear-powered submarine program through AUKUS
• $4.1 billion for long-range strike capabilities
• $3.8 billion for northern base infrastructure
• $400 million to support Australian Defence Force personnel through a new continuation bonus
• $900 million on defence innovation, to establish the Advanced Strategic Capabilities Accelerator and through AUKUS Pillar 2

The post-DSR strategic direction of the Defence portfolio will see Australian pursue a strategy of deterrence by denial – that is, preventing anybody with hostile intentions from getting into a position where they can threaten Australia or its interests, rather than retaliating to hostile action.

Rather than produce Defence White Papers at irregular intervals, in an era of rapid strategic change Defence has also undertaken to publish a National Defence Strategy every two years, with the first due in early 2024. This will include a reprioritisation of the Integrated Investment Program first published in 2016, probably along with the outcomes of a ‘short and sharp’ review of the RAN’s fleet of surface combatants will be complete by September this year.

Strangely, the 2023-24 PBS does not include any funding directed explicitly at AUKUS Pillar2, which sets out eight so-called Advanced Capabilities for the three AUKUS partners and flags joint R&D and acquisition programs in the future.

In May 2023 Defence announced the formation of the Advanced Strategic Capabilities Accelerator (ASCA), which would replace the Defence Innovation Hub, Next Generation Technologies Fund (NGTF), Capability Accelerator Fund and Rapid Prototyping Initiative. The ASCA will come into being on 1 July 2023 and is accounted for in the budget of the Defence Science and Technology Group (DSTG).

The DSTG budget for 2023-24 is $628.7 million. It will rise in 2024-25 to $657.8 million and then rises to $746.9 million and $775.3 million 2026-27, reflecting the growth in the funding of ASCA. This is still a relatively small amount: the Minister for Defence Industry, Pat Conroy, made much of the fact that the US spends up to 13% of its defence budget on R&D while the UK spends about 7%; Australia spends only 3%. It’s hard at present to see how the creation of ASCA raises this proportion, though the DSR’s commitment to ensuring that R&D and innovation are only funded when there is a clear path to frontline service will help ensure that available money is spent wisely.

The NGTF, which is administered by DSTG, currently funds programs such as the Trusted Autonomous Systems Defence CRC and Defence’s share of the Ghost Shark Extra Large Autonomous Undersea Vessel (XL-AUV) program. Contracts awarded by the Hub and activities funded by the NGTF will continue until they reach their planned termination date.