portfolio budget statements 2016-17 budget related paper no. 1 · defence portfolio budget...

Portfolio Budget Statements 2016-17

Budget Related Paper No. 1.4A

Defence Portfolio

Budget Initiatives and Explanations of Appropriations Specified by Outcomes

and Programs by Entity

Defence Portfolio Budget Statements 2016-17

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© Commonwealth of Australia 2016

ISBN 978-0-9944235-5-9

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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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/

Senator the Hon Marise Payne 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

$b $ billion

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. Links to Portfolio Budget Statements (including Portfolio Additional Estimates Statements and Portfolio Supplementary Additional Statements) can be located on the Australian Government Budget website at: www.budget.gov.au.

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Table of Contents

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

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 Program .......................................................................................................................... 21

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

Section 2: Defence Outcomes and Planned Performance ............................................................................. 27

2.1 Outcomes and Performance Information ..................................................................................................... 27

Section 3: Defence Explanatory Tables and Budgeted Financial Statements ........................................... 99

3.1 Explanatory Tables .......................................................................................................................................... 99

3.2 Resource Summary ....................................................................................................................................... 104

3.3 Budgeted Financial Statements ................................................................................................................... 108

APPENDICES ..................................................................................................................................................... 124

Appendix A: Defence Cooperation Program .................................................................................................. 125

Appendix B: The Unapproved Major Capital Investment Program (also known as the Defence Capability Plan) ................................................................................................................................................... 128

Appendix C: Top 30 Acquisition Projects by 2016-17 Forecast Expenditure .............................................. 130

Appendix D: Current Status of Previously Reported Top 30 Projects (Projects Reported in the Last Five Financial Years). .................................................................................................................................................. 145

Appendix E: Top 10 Minor Capital Investment Projects by 2016-17 Forecast Expenditure ..................... 158

Appendix F: Top 30 Sustainment Products by 2016-17 Forecast Expenditure ........................................... 161

Appendix G: Capital Facilities Program .......................................................................................................... 175

Appendix H: Status of Major Projects Foreshadowed for Government and Parliamentary Standing Committee on Public Works Consideration (PWC) in 2016-17 .................................................................... 184


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DEFENCE HOUSING AUSTRALIA .............................................................................................................. 190

Section 1: DHA Overview and Resources ..................................................................................................... 190

1.1 Strategic Direction Statement ...................................................................................................................... 190

1.2 DHA Resource Statement............................................................................................................................. 192

1.3 Budget Measures ........................................................................................................................................... 193

Section 2: DHA Outcomes and Planned Performance ................................................................................ 194

2.1 Outcome and Performance Information .................................................................................................... 194

Section 3: DHA Explanatory Tables and Budgeted Financial Statements .............................................. 197

3.1 Explanatory Tables ........................................................................................................................................ 197

3.2 Budgeted Financial Statements ................................................................................................................... 198

GLOSSARY ......................................................................................................................................................... 203

ACRONYMS ....................................................................................................................................................... 209

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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 2016-17 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) 2016-17 (or Appropriation (Parliamentary Departments) Bill (No. 1) 2016-17 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, only entities within the general government sector are included as part of the Commonwealth general government sector fiscal estimates and produce PB Statements where they receive funding (either directly or via portfolio departments) through the annual appropriation acts.


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1

Portfolio Overview


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Portfolio Overview

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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; and

• 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.

In practice, these bodies work together closely and are broadly regarded as one organisation known simply as 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 2016 Defence White Paper, released by the Prime Minister and Minister for Defence on 25 February 2016, sets out the Government’s comprehensive long-term plan for Australia’s defence. The Defence budget will grow to two per cent of Australia’s Gross Domestic Product by 2020-21, amounting to an investment of approximately $195 billion in Australia’s Defence Capability over 10 years. This includes significant investment in the ADF’s ability to operate as a joint force and in critical enabling capabilities. The Integrated Investment Program released with the Defence White Paper, brings together all capability-related investments, including: platforms and systems; Defence estate, facilities and training areas; information and communications technology; science and technology; and workforce elements. The Defence Industry Policy Statement, also released with the Defence White Paper, recognises the fundamental contribution that Australian industry and science and technology research organisations provide to Defence capability. The Defence Industry Policy Statement refocuses Defence’s relationship with Australian industry to support the plans in the Defence White Paper.

Delivering on the objectives of the White Paper requires successful implementation of the recommendations from the First Principles Review which are focused on ensuring that Defence is appropriately structured and organised and has the right business practices in place to support the Australian Defence Force in the 21st Century.

The two year implementation of the First Principles Review commenced on 1 July 2015. A strong governance regime has been implemented with weekly reports to the Implementation Committee which is the decision-making body chaired by the Secretary. The five work streams (behaviours, strategic centre, capability life cycle, enablers and workforce) are all led by members of the Defence Committee. The Oversight Board, comprised of members of the Review team reports directly to the Minister for Defence and is meeting regularly and monitoring progress. An Implementation Office coordinates the work stream activity and reports directly to the Implementation Committee and Oversight Board with a focus on providing assurance that implementation is meeting the intent of the Review.

After nine months of implementation, 30 of the 75 agreed recommendations have been implemented. The first six months of implementation focussed on the straight-forward structural and process changes which have laid the foundations for the broader changes that are required to ensure Defence becomes a


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more professional organisation. There was also a focus on planning and designing the more complex changes to ensure that the Review’s intent for establishing an end-to-end capability life cycle and Defence becoming a smart buyer, were realised.

The focus in early 2016 has transitioned to implementing the changes. An important element in making these changes is strengthening accountability and ensuring decision-making meets the needs of Defence as a whole and delivers on Government objectives. Strengthening accountability has focused on the Senior Leadership Group taking responsibility and being held accountable for what they do and how they do it.

As part of strengthening decision-making, the Strategic Policy and Intelligence Group was established on 8 February 2016. This Group consolidates the policy and intelligence functions across Defence and includes the recently established Contestability Division and Industry Policy Division. The reason for creating this Group is to improve the quality of our advice and ensure it is aligned with strategy, plans and resource allocations.

Strengthening decision-making has also involved significant changes to our senior committees. This has included a reduction in the number of senior committees and clarity about the role and function of the three senior committees. The Defence Committee has a smaller membership and continues to be the primary decision-making body in Defence. It is now supported by the Enterprise Business Committee which monitors in-year performance of the organisation and the Investment Committee which manages future investments and is responsible for maintaining the integrity of the Integrated Investment Program released with the White Paper.

The redesign of the capability development process is an important change in ensuring Defence delivers on Government requirements. Transition to the new end-to-end model commenced on 1 April 2016. From April 2016 to July 2016 there will be a gradual transition of projects and processes into the new model, and from July 2016 onwards the focus will be on embedding the new model and consolidating it as business as usual. There are five key changes in the new model:

• Strategy led decision-making with stronger governance mechanisms;

• Arms-length contestability to improve the quality of decision-making;

• An enduring centre-led force design process to ensure future force design is in accordance with Government direction;

• Comprehensive management of the Integrated Investment Program to reinforce the focus on joint, whole-of-Defence planning and to optimise use of resources; and

• Becoming a smart buyer in developing tailored approval process and project management, acquisition and sustainment strategies based on a thorough analysis of project risk.

Over 2016-17, changes will continue to be implemented that are focused on:

• A stronger and more strategic centre which sets direction for Defence, ensures that Government is provided with the best possible advice and monitors the organisation’s performance;

• A capability development process where investment approvals are informed, contested and timely and where value for money is delivered through efficient and effective procurement, sustainment and disposal of Defence capabilities;

• Enabling services that are customer-centric, integrated and focused on Defence outcomes; and

• A planned and professional workforce where people take responsibility and are held accountable for what they do and how they do it.

Portfolio Overview

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Ministers and their Portfolio Responsibilities

CHANGES AFFECTING THE PORTFOLIO Following the Prime Minister’s announcement of changes to the ministry on 20 September 2015, on 21 September 2015 Senator the Hon Marise Payne was sworn in as the Minister for Defence replacing the Hon Kevin Andrews MP and the Hon Mal Brough MP was sworn in as the Minister for Defence Materiel and Science replacing the Hon Stuart Robert MP. On 18 February 2016, the Hon Dan Tehan MP was sworn in as the Minister for Defence Materiel replacing the Hon Mal Brough MP, and the Hon Michael McCormack MP was sworn in as the Assistant Minister for Defence replacing the Hon Darren Chester MP.

The Ministers and their portfolio responsibilities are as follows:

Senator the Hon Marise Payne – 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, including the Defence White Paper

• Operations

• Intelligence and security

• International policy

• Force structure

• Portfolio management, finances and reform

• Science and technology policy

• Defence export controls

• Implementation of First Principles Review

• Capability responsibilities

• The Integrated Investment Program

• Naval Shipbuilding Plan

• Major Defence Materiel projects including:

o Future Frigates

o Offshore Patrol Vessels

o Future Submarine Program

o Collins Class submarines

o Land 400

o Next Generation desktop

o JP2047 Terrestrial communications.


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The Hon Dan Tehan MP – Minister for Defence Materiel

Assist the Minister for Defence on:

• Defence materiel acquisition and sustainment projects except for major projects listed with Minister for Defence

• Equipment disposal

• Monitor Projects of Concern

• Defence skilling programs to support industry

• Industry capacity, structure, policy and engagement

• Implementation of the Naval Shipbuilding Plan

• ICT elements of the Integrated Investment Program

• Responsibility for implementation of the Centre for Defence Industry Capability

• Engaging with Defence industry on the Defence Industry Policy Statement.

Portfolio Overview

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The Hon Michael McCormack – Assistant Minister for Defence

Assist the Minister for Defence on:

• Defence estate policy and major projects

• Defence Housing Australia

• Estate disposal

• Garrison support

• Personnel policy, specifically:

o Workforce planning

o Recruitment and retention

o Reserves

o Pay and superannuation

o Equity and Diversity

o Defence families and community organisations

• Military justice

• Medals and awards

• Parliamentary Exchange Program

• Navy, Army and Air Force Cadets

• Young Endeavour Youth Scheme

• 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

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Figure 2: Defence Organisational Chart

Minister for Defence Senator The Hon Marise Payne

Minister for Defence Materiel The Hon Dan Tehan MP

Assistant Minister for Defence The Hon Michael McCormack MP

Secretary Mr Dennis Richardson AO

Chief of the Defence Force Air Chief Marshal Mark Binskin AC

****

Enabling functions Capability and output managers

Associate Secretary Mr Brendan Sargeant

Chief Information Officer Dr Peter Lawrence

Deputy Secretary Defence People Ms Rebecca Skinner

Deputy Secretary Estate and Infrastructure Mr Steve Grzeskowiak

Chief Finance Officer Mr Phillip Prior

Deputy Secretary Strategic Policy and Intelligence Mr Peter Baxter

Chief Defence Scientist Dr Alex Zelinsky

Deputy Secretary Capability Acquisition and Sustainment Mr Kim Gillis

Stars (*) refer to ADF Star Rank As at 7 April 2016

Vice Chief of the Defence Force Vice Admiral Ray Griggs *** Chief of Navy Vice Admiral Tim Barrett *** Chief of Army Lieutenant General Angus Campbell *** Chief of Air Force Air Marshal Leo Davies *** Deputy Secretary Strategic Policy and Intelligence Mr Peter Baxter

Defence Outputs

Chief of Joint Operations Vice Admiral David Johnston ***

Defence delivers five principal outputs to Government

The Joint Force-in-Being

The standing, prepared force that provides options to Government for future joint force operations.

Joint Force Operations

The coordinated use of the Joint Force-in-Being, often with other instruments of national power, to meet national strategic objectives.

National intelligence products

All-source intelligence assessments and other products to support Defence and national-level decision making and the planning and conduct of ADF and other operations.

Engagement and advice to Government

The suite of relationships between Defence and the Government and Parliament, with other agencies of Government, other governments and defence forces, Australian industry and the wider Australian community, as well as the provision of advice to Government on all

aspects of Defence’s activities.

Obligations to Government

The breadth of obligations and compliance requirements that form the basis of Defence’s relationship with Government and the Australian community.


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Senior Executive Changes

The following changes have taken place since the 2015-16 Portfolio Additional Estimates Statements (PAES):

• On 5 February 2016, Mr Stephen Meekin ceased duties in his position as Deputy Secretary Intelligence and Security.

• On 8 February 2016, Mr Peter Baxter became Deputy Secretary Strategic Policy & Intelligence.

• On 8 February 2016, Mr Stephen Meekin became Deputy Secretary Geospatial Enterprise Review.

• On 1 April 2016, Air Vice-Marshal M.E.G. Hupfeld AO, DSC ceased performing the role of Acting Chief of Capability Development Group, following Capability Development Group’s disbandment, and has commenced his new appointment as Head Force Design.

Organisational Structure

The following changes have taken place since the 2015-16 PAES:

• Strategic Policy and Intelligence (SP&I) Group started on 8 February 2016 in accordance with recommendations 1.9 and 1.11 of the First Principles Review (FPR). The Group is led by Deputy Secretary Strategic Policy and Intelligence and consists of five divisions - International Policy, Strategic Policy, Defence Industry Policy, Contestability and Ministerial and Executive Coordination and Communication. It also comprises of three defence intelligence agencies -. Australian Geospatial-Intelligence Organisation, Australian Signals Directorate and Defence Intelligence Organisation. Two new Divisions have been established - the Defence Industry Policy Division was established on 14 December 2015 and the Contestability Division was established on 1 February 2016.

• Ministerial and Executive Coordination and Communication transferred from Program 1.9 Estate and Infrastructure to Program 1.1 Strategic Policy and Intelligence, and Program 1.8 Defence Executive Support.

• In accordance with First Principles Review Recommendation 2.1, Capability Development Group (CDG) was disbanded effective from 1 April 2016 and all CDG responsibilities have been transitioned to the services, Vice Chief of the Defence Force Group (VCDF), Strategic Policy and Intelligence (SP&I) Group and Capability Acquisition and Sustainment Group (CASG).

• A new division within CFO Group has been created to manage CASG, VCDF and the Service Groups’ financial services.

• With effect 1 April 2016, Force Design and Joint Capability Management and Integration Divisions were established as part of the implementation of the First Principles Review. Joint Capability Command has been absorbed within these Divisions.

Portfolio Overview

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Program Structure

The following changes have taken place since the 2015-16 PAES in order to better reflect the roles, organisation structure and accountabilities within Defence:

• Program 1.1 was renamed to Strategic Policy and Intelligence to reflect the combination of policy and intelligence functions under a Deputy Secretary Strategic Policy and Intelligence.

• Program 1.6 Intelligence Capabilities was removed.

• Program 1.14 Capability Development was removed to reflect disbandment of the Capability Development Group (CDG), effective 1 April 2016.


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Defence Portfolio Bodies

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 Leigh Wilton

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.

Royal Australian Navy Relief Trust Fund

Chairman: RADM 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.

Portfolio Overview

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AAF Company

President: Brigadier Leigh Wilton

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: Vacant (as at 21 April 2016)

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.


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Department of Defence

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Entity 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 Program

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


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DEPARTMENT OF DEFENCE

Section 1: Defence Overview and Resources

1.1STRATEGIC DIRECTION STATEMENT

The 2016 Defence White Paper outlines Australia’s Strategic Defence Interests in a secure and resilient Australia, a secure near region, encompassing maritime South East Asia and the South Pacific, and a stable Indo-Pacific region and rules-based global order which supports our interests.

This Defence White Paper restores the alignment of strategy, capability and resources. For the first time in any Defence White Paper, plans have been fully costed, with external private sector validation to ensure they are affordable and achievable. The task for Defence over the next year is to ensure that this plan is put into practice as comprehensively as it was developed. A White Paper Implementation Strategy will ensure key elements of the White Paper are delivered, and will be subject to regular reports to Government through the Defence Committee and the Minister for Defence.

Defence’s primary focus continues to be to protect and advance Australia's strategic interests through the provision of a regionally superior ADF with the highest levels of military capability and scientific and technological sophistication. 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 2016-17, 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.

The 2016 Integrated Investment Program provides a 10-year, detailed capability investment plan for the future force covering all of its major elements. It includes major acquisitions of new weapons, platforms and systems and investment in information and communications technology, infrastructure and the enabling workforce.

The 2016 Defence Industry Policy Statement strengthens Defence’s collaboration with Australian Defence industry by linking Defence’s capability needs with Australian defence industry’s capacity to deliver. The Defence Industry Policy Statement also highlights two initiatives to improve Defence capability – streamlining Government’s approach to tendering and contracting to reduce red tape, and investing in new technologies to help build Australian defence industry competitiveness.

Under the plan set out in the White Paper, Defence will implement a substantial force modernisation program, introducing new capabilities that will carry within them the requirements for new ways of working. The reforms being implemented under the First Principles Review are essential to delivering these plans. Key elements of the First Principles Review that will continue to be a priority over the next 12 months include improving the quality of advice and decision-making through a stronger strategic centre; transitioning to the new streamlined Capability Life Cycle; and ensuring that enablers such as services, information and communications technology, and the Defence estate, are appropriately resourced.


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1.2 DEFENCE RESOURCE STATEMENT

Table 1: Total Defence Resourcing

Seria

l No. 2015-16

EstimatedActual$'000

2016-17Previous Estimate

$'000

2016-17Budget

Estimate$'000

Variation$'000

Variation%

2017-18Forward Estimate

$'000


$'000


$'000Defence resourcing

1 29,212,545 Appropriation for departmental outcomes 28,648,671 30,016,525 1,367,854 4.8 30,692,324 32,109,205 34,150,5682 2,535,548 Equity injection appropriation 2,750,832 2,321,327 -429,505 -15.6 3,858,356 4,666,796 5,075,1483 - Prior year appropriation - - - - - - -4 31,748,093 Current year's appropriation (1 + 2 + 3) 31,399,503 32,337,852 938,349 3.0 34,550,680 36,776,001 39,225,7165 - Draw down of appropriations carried forward - - - - - - -6 134,704 Other appropriation receivable movements - - - - - - -7 -875 Return to the Official Public Account[1] -897 -897 - - -919 -942 -9668 133,829 Funding from / to the OPA (5 + 6 +7) -897 -897 - - -919 -942 -9669 31,881,922 Funding from Government (4 + 8) 31,398,606 32,336,955 938,349 3.0 34,549,761 36,775,059 39,224,750

10 106,982 Capital receipts 44,984 44,988 4 - 57,638 42,057 44,30511 505,306 Own source revenue (s74 receipts)[2] 494,735 500,098 5,363 1.1 497,874 516,777 533,05612 - Prior year receipts - - - - - - -13 612,288 Funding from other sources (10 + 11 + 12) 539,719 545,086 5,367 1.0 555,512 558,834 577,36114 32,494,210 Total Defence funding (9 + 13) 31,938,325 32,882,041 943,716 3.0 35,105,273 37,333,893 39,802,111

Administered15 6,157,288 Administered special appropriations 5,332,023 5,341,663 9,640 0.2 5,542,482 5,746,856 5,952,85416 1,597,625 Own source revenue 1,351,289 1,488,796 137,507 10.2 1,413,392 1,350,186 1,301,74217 -1,597,625 Returns to the Official Public Account -1,351,289 -1,488,796 -137,507 10.2 -1,413,392 -1,350,186 -1,301,74218 6,157,288 Total Administered funding (15 + 16 + 17) 5,332,023 5,341,663 9,640 0.2 5,542,482 5,746,856 5,952,85419 38,651,498 Total Defence resourcing (14 + 18) 37,270,348 38,223,704 953,356 2.6 40,647,755 43,080,749 45,754,965

Appropriation carried forward

20 10,166Appropriation receivable including previous year's outputs 10,166 10,166 - - 10,166 10,166 10,166

21 11,530 Cash in bank 11,530 11,530 - - 11,530 11,530 11,53022 21,696 Total appropriations carried forward (20 + 21) 21,696 21,696 - - 21,696 21,696 21,696

Notes

2. All figures are net of GST.1. Represents net transfers to and from the Official Public Account.


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1.3 BUDGET MEASURES

2016-17 Budget Measures and Other Budget Adjustments

Table 2: Defence 2016-17 Budget Measures

Program

2016-17Budget

Estimate$m


$m


$m


$m

TotalForward

Estimates$m

Departmental Budget measures2016 Defence White Paper - additional funding Various 700.0 - 60.0 600.0 1,360.0Operation Okra - extension 2.2 335.4 13.6 13.9 - 363.0Operation Accordion - extension 2.2 178.0 2.7 3.2 - 183.8Operation Manitou - extension 2.2 38.0 11.0 11.9 - 60.9Operation Highroad - extension 2.2 47.6 -0.1 11.2 - 58.7Operation Resolute - extension 3.1 16.8 2.8 - - 19.6Trans-Pacific Partnership - implementation 1.13 2.7 - - - 2.7Antarctica - maintaining Australia's presence [1] 1.13 -11.2 -11.2 -11.2 -11.2 -44.8Spirit of ANZAC Centenary Experience Travelling Exhibition - additional funding [1] 1.13 -10.0 - - - -10.0Cyber Security - implementation of Australia's Cyber Security Strategy [2] Various -23.5 -34.0 -32.6 -32.0 -122.2Closure of Hunter River and Port Stephens Fisheries - assistance to individuals and businesses - extension [3] 1.9 - - - - -Total Departmental Budget Measures 1,273.8 -15.3 56.4 556.8 1,871.7Other budget adjustmentsForeign Exchange Various 162.1 152.9 306.8 459.3 1,081.1Defence Budget Rephasing 1.13 -500.0 500.0 - - -Contribution to Shared and Common Services Program 1.13 -4.1 -8.2 -8.2 - -20.6DHA PSS Super Adjustment 1.9 -0.2 -0.2 -0.2 -0.2 -0.7Defence PSS Super Adjustment Various 5.9 5.7 5.6 5.4 22.6Defence CSS Super Adjustment Various 0.9 0.8 0.7 0.6 2.9Total Other Departmental Budget Adjustments -335.4 651.0 304.6 465.1 1,085.2Variation to Defence Departmental Funding 938.3 635.7 361.0 1,021.9 2,956.9

Notes1. Defence's appropriation will be reduced to provide funding for this measure.

3. Defence will be absorbing the cost ($2.2m) of the specific initiatives relating to this measure in 2016-17.

2. Defence's appropriation will be reduced to provide funding for this measure and Defence will be absorbing the cost ($51.1m) of the specific initiatives relating to this measure over four years from 2016-17.


19

Table 3: Reconciliation of Departmental Funding: 2016 Defence White Paper to 2016-17 Budget

2016-17Budget

Estimate$m


$m


$m


$m

TotalForward

Estimates$m

Total Departmental Funding as at 2016 Defence White Paper 32,374.4 34,199.0 36,769.1 39,086.0 142,428.4Departmental Budget measuresOperation Okra - extension 335.4 13.6 13.9 - 363.0Operation Accordion - extension 178.0 2.7 3.2 - 183.8Operation Manitou - extension 38.0 11.0 11.9 - 60.9Operation Highroad - extension 47.6 -0.1 11.2 - 58.7Operation Resolute - extension 16.8 2.8 - - 19.6Trans-Pacific Partnership - implementation 2.7 - - - 2.7Antarctica - maintaining Australia's presence -11.2 -11.2 -11.2 -11.2 -44.8Spirit of ANZAC Centenary Experience Travelling Exhibition - additional funding -10.0 - - - -10.0Cyber Security - implementation of Australia's Cyber Security Strategy -23.5 -34.0 -32.6 -32.0 -122.2Total Departmental Budget Measures 573.8 -15.3 -3.6 -43.2 511.7Other budget adjustmentsForeign Exchange -112.7 -131.1 12.7 177.1 -54.0Defence Budget Rephasing -500.0 500.0 - - -Contribution to Shared and Common Services Program -4.1 -8.2 -8.2 - -20.6DHA PSS Super Adjustment -0.2 -0.2 -0.2 -0.2 -0.7Defence PSS Super Adjustment 5.9 5.7 5.6 5.4 22.6Defence CSS Super Adjustment 0.9 0.8 0.7 0.6 2.9Total Other Departmental Budget Adjustments -610.3 367.0 10.6 182.9 -49.9Total Departmental Funding as at 2016-17 Budget 32,337.9 34,550.7 36,776.0 39,225.7 142,890.2


20

Operations Summary

Table 4: Net Additional Cost of Operations from 1999-00 to 2019-20

1999-00 to 2014-15

Actual Result$m

2015-16 Estimated

Actual$m

2016-17 Budget

Estimate$m

2017-18 Forward Estimate

$m


$m


$mTotal

$mOperation Astute 4,312.0 - - - - - 4,312.0Operation Bel Isi 47.7 - - - - - 47.7Operation Slipper 7,177.3 121.9 103.9 - - - 7,403.1Operation Manitou 39.4 43.2 40.2 11.5 11.9 - 146.2Operation Accordion 123.5 191.0 179.4 3.3 3.2 - 500.3Operation Highroad 40.5 115.1 59.0 7.8 11.2 - 233.6Operation Resolute 220.0 48.7 22.5 2.8 - - 293.9Operation Catalyst 2,364.5 - - - - - 2,364.5Operation Okra 159.4 390.8 353.0 23.6 13.9 - 940.7Operation Anode 355.2 - - - - - 355.2Operation Sumatra Assist 44.5 - - - - - 44.5Operation Acolyte 10.5 - - - - - 10.5Operation Deluge 6.7 - - - - - 6.7Operation Pakistan Assist 9.8 - - - - - 9.8Operation Outreach 14.6 - - - - - 14.6Operation Kruger 45.3 - - - - - 45.3Operation Southern Indian Ocean 11.9 - - - - - 11.9Enhanced Force Protection in Afghanistan 540.0 - - - - - 540.0Defence Support to 2014 G20 Summit 3.6 - - - - - 3.6

Total Net Additional Costs 15,526.5 910.7 757.9 49.0 40.2 - 17,284.3Sources of Funding for Operations

Government Supplementation 13,891.0 910.7 757.9 49.0 40.2 - 15,648.8Department of Foreign Affairs and Trade 9.1 - - - - - 9.1Department of Defence (Absorbed) 1,626.4 - - - - - 1,626.4

Total Cost 15,526.5 910.7 757.9 49.0 40.2 - 17,284.3


21

1.4 CAPITAL INVESTMENT PROGRAM

Table 5: Capital Investment Program

Seria

l No. 2016-17

BudgetEstimate

$m


$m


$m


$mTotal

$m1 Defence Capability Plan (DCP) 1,039.6 2,031.6 3,684.7 5,498.9 12,254.82 Approved Major Capital Investment Program 6,203.6 6,098.6 5,811.8 4,848.3 22,962.33 Capital Facilities Program 1,758.1 1,726.1 1,706.0 2,009.8 7,200.04 ICT Investment Plan 823.5 763.0 963.9 1,010.8 3,561.25 Minors Program 83.8 82.2 126.9 144.3 437.16 Other Investment[1] 931.5 699.0 681.6 511.9 2,824.17 Total Capital Investment Program 10,840.1 11,400.4 12,974.9 14,024.1 49,239.6

1. Includes purchases of plant and equipment, and the capital component of repairable items. Note

Table 6: Capability Sustainment Program

Seria

l No. 2016-17

BudgetEstimate

$m


$m


$m


$mTotal

$m1 Navy Sustainment 2,079.6 2,057.3 2,112.9 2,107.0 8,356.72 Army Sustainment 1,641.0 1,532.3 1,611.1 1,628.0 6,412.53 Air Force Sustainment 2,180.5 2,069.6 2,041.6 2,106.0 8,397.84 Chief Information Officer Sustainment[1] 939.5 1,035.5 1,148.8 1,309.7 4,433.65 Vice Chief of the Defence Force Sustainment 47.4 47.2 47.3 111.5 253.46 Strategic Policy & Intelligence Sustainment 18.0 17.3 18.0 18.1 71.47 Joint Operations Command Sustainment 7.3 7.6 7.9 8.3 31.18 Estate & Infrastructure Group Sustainment[2] 1,436.4 1,685.8 1,779.5 1,962.3 6,864.09 Future Sustainment Costs associated with AMCIP, ICT and Facilities (NPOC) 315.8 723.5 1,277.3 1,616.0 3,932.7

10 Total Sustainment 8,665.5 9,176.2 10,044.5 10,867.0 38,753.2

1. Chief Information Officer Sustainment includes all ICT sustainment for the Department.2. Estate & Infrastructure Group Sustainment includes all estate maintenance, garrison support and associated costs for the Department.

Notes

Table 7: Retained Capital Receipts

Seria

l No. 2016-17

BudgetEstimate

$m


$m


$m


$mTotal

$mProperty Sales

Proceeds from the sale of land and buildings 0.3 12.0 - - 12.3Proceeds from the sale of housing 13.8 14.5 15.2 15.9 59.3Total proceeds from the sale of property 14.1 26.5 15.2 15.9 71.7Costs from the sale of property[1] -89.0 -91.3 -0.4 -0.4 -181.1

1 Net property proceeds retained by Defence -74.8 -64.8 14.8 15.5 -109.4

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

3 Proceeds from sale of infrastructure, plant and equipment 23.3 23.6 19.3 20.9 87.14 Retained Capital Receipts (1+2+3) -44.1 -33.8 41.6 43.8 7.5

Note1. 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 59,209 in 2016-17. The ADF has been below its approved allocations since 2011-12 due to a combination of factors. Defence has been working to address this through increased recruiting throughput for both Navy and Army. In addition, Army's separation rates have decreased since late 2014-15, which is helping Army to retain more people and grow the size of the force. As a result, the permanent force strength has been increasing since January 2014 and is gradually closing towards the workforce strength approved by Government.

Under the 2016 Defence White Paper the permanent ADF workforce will grow to around 62,400 over the coming decade, beginning in 2016-17 with some modest growth from the earlier planned strength. Importantly, in 2016-17 Defence will deliver a 10-year Strategic Workforce Plan that will set out the skills Defence needs and how Defence will attract, recruit, develop and retain its people.

Civilian Workforce

The tables below show the APS workforce will approach 17,500 by the end of 2015-16, which is the culmination of a conscious program of workforce reductions and recruitment restraint, before stabilising at 18,200 from 2016-17. This increase reflects priorities outlined in the 2016 Defence White Paper. These include enhancements to intelligence, space and cyber security capabilities and will be achieved through a combination of organisation redesign and the creation of new positions.

The workforce will be supported by continuing reform in service delivery areas of Defence’s business, as part of the implementation of the 2015 First Principles Review.


23

Table 8: End of Financial Year Full Time Equivalent (FTE) Estimates for 2015-16 and the Forward Estimates

2015-16 Estimated

Actual EOFY FTE

2016-17 EOFY

Full Time Equivalent

Forecast Outcome




Total APS 17,500 18,200 18,200 18,200 18,200

Workforce Summary

The total full-time Defence workforce average is forecast to be 77,649 in 2016-17, comprising:

Permanent Forces (76 per cent) of:

14,394 Navy Personnel

30,430 Army Personnel

14,385 Air Force Personnel

17,950 APS staff (23 per cent)

490 Contractors (less than 1 per cent)

The forecast for the total Active and High Readiness Reserves in 2016-17 is 971,000 days of service performed by an estimated 19,110 members.

Over the forward estimates period, the total workforce (excluding Reserves) will increase by 1,135 from the forecast of 77,649 in 2016-17 to 78,784 in 2019-20.

Defence’s contractor workforce shows an increase of 89 in average terms from 2015-16 to 2016-17. This is due to low contractor engagement in 2015-16 compared to forecasts. It is likely that actual contractor numbers in 2016-17 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

Effectively managing people capability is critical to delivering Defence’s strategic priorities, as outlined in the 2016 Defence White Paper. Key to Defence’s people capability will be a number of core strategies that deliver a diverse and agile workforce.

In 2016-17 there will be a continued focus on the implementation of workforce planning and reform in accordance with the First Principles Review. Key to this is the development of a Strategic Workforce Plan. The Plan will enable a highly capable ADF and APS workforce with the necessary skills to deliver Defence capability, including a focus on developing initiatives that attract and retain personnel in the science, technology, engineering and mathematics fields.

The Strategic Workforce Plan will also enable greater learning and development, talent management and career planning for the APS workforce, particularly for critical job categories. Defence will continue to reform the APS workforce ensuring appropriate work value and alignment of management structures in accordance with the requirements of the Australian Public Service Commission.

For the ADF, the implementation of the ADF Total Workforce Model will provide greater workforce agility by contemporising career arrangements and increasing the retention of skilled people to meet future people capability requirements. In addition, the implementation of the new ADF Super scheme on 1 July 2016 will provide for greater flexibility and portability of ADF superannuation.

Defence’s commitment to cultural reform through ‘Pathway to Change: Evolving Defence Culture’ remains steadfast. Many of the recommendations from Pathway to Change have been implemented and this agenda remains critically important to developing and maintaining a diverse and inclusive workforce. Defence will continue its efforts through evaluating and reinforcing key initiatives to align with the First Principles Review, and facilitate positive leadership behaviours and cultural change to achieve Defence’s cultural reform goals that we are: trusted to defend, proven to deliver and respectful always.

Initiatives that increase the representation and opportunities for women, people from culturally and linguistically diverse backgrounds, Indigenous Australians and people with a disability remain a high priority. The continued implementation of Defence’s Diversity and Inclusion Strategy will ensure the Defence workforce reflects the community we protect and serve. This will reflect and support the Strategic Workforce Plan and Defence White Paper outcomes.

These strategies are underpinned by ongoing reform initiatives. Key activities include the delivery of a more effective and efficient Human Resources (HR) framework; the streamlining of policies; the development of improved payroll and HR management systems and the implementation of a customer-centric Service Delivery Model. Defence will continue to focus on improving performance management throughout the organisation to enable greater accountability and a culture where leadership, professionalism and corporate behaviour are valued and rewarded.


25

Table 9: Planned Workforce Allocation for the 2016-17 Budget and Forward Estimates—Average Fulltime[1]

2015-16Estimated

Actual

2016-17Budget

Estimate[2]

2017-18Forward

Estimate[2]

2018-19Forward

Estimate[2]

2019-20Forward

Estimate[2]

ADF Permanent Force[3]

Navy 14,216 14,394 14,456 14,684 14,718Army 29,640 30,430 30,891 30,907 30,966Air Force 14,165 14,385 14,334 14,203 14,406

1 Total Permanent Force 58,021 59,209 59,681 59,794 60,090Civilian Employees

APS 18,100 17,950 18,200 18,200 18,200Contractors[4] 401 490 488 494 494

2 Total Civilian Employees 18,501 18,440 18,688 18,694 18,694Total Workforce Strength (1 + 2) 76,522 77,649 78,369 78,488 78,784

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

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.

Notes

2. Forward Estimates for the full-time workforce elements represent the Government approved strength for each year.

Table 10: Planned Workforce Allocation for the 2016-17 Budget and Forward Estimates—Reserve[1][2]

2015-16Estimated

Actual: days served

(members paid)

2016-17Budget

Estimate: days served

(members paid)

2017-18Forward


(members paid)

2018-19Forward


(members paid)

2019-20Forward


(members paid)

Active Reserve Force81,000 81,000 81,000 81,000 81,000

(1,760) (1,760) (1,760) (1,760) (1,760)

700,000 700,000 700,000 710,000 720,000(14,500) (14,250) (14,500) (14,750) (15,000)

174,000 176,000 179,000 182,000 186,000(2,860) (2,840) (2,820) (2,800) (2,780)

955,000 957,000 960,000 973,000 987,000(19,120) (18,850) (19,080) (19,310) (19,540)

High Readiness Reserve12,700 14,000 15,000 16,000 17,000

(240) (260) (280) (300) (320)

12,700 14,000 15,000 16,000 17,000

(240) (260) (280) (300) (320)967,700 971,000 975,000 989,000 1,004,000

(19,360) (19,110) (19,360) (19,610) (19,860)

Navy

Army

Air Force

1

Air Force

Sub-total Active Reserve Force

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.

Notes1. As the number of days or hours worked by Reserve members can vary greatly, figures in Table 10 show the total number of days’ service rendered, with a headcount of members rendering paid service in brackets.

Total Reserves (1 + 2)

Sub-total high Readiness Reserve Force2


26

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

2015-16Estimated

Actual

2016-17Budget

EstimateNavy[1]

One Star and above 57 52Senior Officers[2] 597 605Officers 2,826 2,842Other Ranks 10,736 10,895Total Navy 14,216 14,394Army[1]

One Star and above 74 76Senior Officers[2] 840 862Officers 5,496 5,643Other Ranks 23,230 23,849Total Army 29,640 30,430Air Force[1]

One Star and above 58 58Senior Officers[2] 620 612Officers 4,322 4,481Other Ranks 9,165 9,234Total Air Force 14,165 14,385APS[1]

Senior Executives[3] 153 152Senior Officers[2] 5,815 5,767Other APS Staff 12,132 12,031Total APS 18,100 17,950ContractorsContractors[4] 401 490Total Contractors 401 490Total Workforce 76,522 77,649

Notes

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

1. Permanent Forces and APS numbers are forecasts of the average strength for 2015-16.2. Senior Officers are of Colonel or Lieutenant Colonel rank equivalent and APS Executive Level 1 and 2.3. The 2016-17 figures for Senior Executive Service include the Secretary, 12 Chiefs of Division, 1 Medical Officer Grade 6 and 1 Medical Officer Grade 5.


27

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

Each outcome is described below together with its related programs. The following provides detailed information on expenses for each outcome and program, further broken down by funding source.

Note:

From 1 July 2015, performance reporting requirements in the Portfolio Budget Statements sit alongside those required under the enhanced commonwealth performance framework. It is anticipated that the performance criteria described in Portfolio Budget Statements will be read with broader information provided in an entity’s corporate plans and annual performance statements – included in Annual Reports from October 2016 – to provide an entity’s complete performance story.


30

Linked programs

Attorney General’s

Contribution to Outcome 1 made by linked program

Under the Service Level Charter, Australian Government Service Vetting Agency (AGSVA) work collaboratively with Government agencies to implement, deliver and monitor security policy and procedures across the Commonwealth (excluding authorised vetting agencies) as well as provide the delivery of security vetting functions on behalf of the Commonwealth in line with Government requirements.

Australian Federal Police


Under Memorandum of Understanding, deliver agreed Protective Security base support services to Defence.

Federal Policing and National Security addresses criminal and security threats through activities including: national and transnational investigations, counter-terrorism, aviation operations, protective services, and joint taskforces with international, Commonwealth, state, territory and private-sector partners.

Another Memorandum of Understanding has the purpose of assisting the participants to achieve their objectives in protecting the interests of the Commonwealth of Australia in accordance with their statutory roles and obligations. The aim of the MOU is to establish a framework for cooperation between the participants to strengthen and consolidate sharing of information. This promotes security and stability within Australia as required by outcome 1.

Further, under the Service Level Charter, Australian Government Service Vetting Agency (AGSVA) work collaboratively with Government agencies to implement, deliver and monitor security policy and procedures across the Commonwealth (excluding authorised vetting agencies) as well as provide the delivery of security vetting functions on behalf of the Commonwealth in line with Government requirements.

Australian National Audit Office


Audit Fraud & Control Division conduct internal audits as well as coordinate Australian National Audit Office (ANAO) performance audit activities in Defence.

Australian Security Intelligence Organisation


ASIO exercises its foreign collection powers under warrant at the request of the Minister for Defence or the Minister for Foreign Affairs.


31

Bureau of Meteorology


Under Memorandum of Understanding, provide weather station support to training area and range management for the support of Defence training exercises

Comcover


Working with Department of Finance to ensure Commonwealth assets are adequately insured and where necessary claims are made in accordance with Commonwealth guidelines and policy.

Commonwealth Superannuation Corporation

Contribution to Outcome 1 by linked program

The Departments of Finance and Defence provide funding through third party access arrangements to Commonwealth Superannuation Corporation for the propose of providing payments of retirement and insurance benefits for scheme members and beneficiaries, including past, present and future employees of the Australian Government and other eligible employers and members of the Australian Defence Force.

Department of Finance


Procurement/Travel – working with the Department of Finance to centralise whole of Government standing offer arrangements to ensure the Commonwealth gets best value for money and open and effective competition is maintained.

Department of Foreign Affairs & Trade


Defence will increase its investment in international engagement over the next 20 years to build cooperation with key partners and improve the coordination of responses to shared challenges such as terrorism and humanitarian disasters and help reduce the risk of military confrontation. International engagement will become an integrated core function across the entire Defence portfolio, aligned with the Strategic Defence Objectives. To do this the Government will increase the number of Defence personnel overseas to conduct more liaison, capacity building, training and mentoring with partner defence and security forces. The Defence-Department of Foreign Affairs and Trade Service Level Agreement supports the posting of Defence personnel to Department of Foreign Affairs and Trade managed overseas posts.

Defence Housing Australia

Contribution to Outcome 1 made by linked programs

Under a Services Agreement and in accordance with the Defence Housing Australia Act 1987, DHA provides suitable housing and housing related services in order to meet the operational needs of the Defence Force and the requirements of the Department.


32

Department of Human Services


The Department of Human services administers claims to individuals and businesses affected by the closure of Hunter River and Port Stephens fisheries.

Department of Industry, Innovation and Science (through AusIndustry)


Defence funds the DIIC and, from the second half of 2016, the CDIC which will be delivered by AusIndustry under a Memorandum of Understanding. The CDIC is a key initiative of the Defence Industry Policy Statement 2016 and commences operations this financial year. The purpose of the CDIC is to provide strategic leadership for the defence sector, and to help build the capability and capacity of Australian industry to support the ADF. The CDIC is designed to best meet the needs of both industry and Defence and will build on the success of the DIIC, which will be subsumed into the new centre.

Department of the Prime Minister & Cabinet


MECC implements Departmental Parliamentary Workflow Solution managed by the Department of the Prime Minister and Cabinet (PM&C). MECC works within PM&C guidelines and policies to publicise Defence activities and strengthen Defence capabilities in media related activities.

Further, under the Service Level Charter, Australian Government Service Vetting Agency (AGSVA) work collaboratively with Government agencies to implement, deliver and monitor security policy and procedures across the Commonwealth (excluding authorised vetting agencies) as well as provide the delivery of security vetting functions on behalf of the Commonwealth in line with Government requirements.

Department of Veterans’ Affairs


Defence continues to work collaboratively with the Department of Veterans’ Affairs to improve the mechanisms for providing support to current and former members of the Australian Defence Force and their families.

Under a Memorandum of Understanding, DVA provides services for the administration of the Defence Homeowners Assistance Scheme (DHOAS) and the Defence Homeowners Scheme (DHOS), including the accurate and timely processing of subsidy payments, member applications and issuing of Subsidy Certificates.


33

Outcome 1 Resources

Table 12: Total Budgeted Resources Available for Outcome 1[1]

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Program 1.1 Strategy[2]

Revenues from other sources 443Departmental outputs 232,946Program 1.1 Strategic Policy and Intelligence[2][3]

Revenues from other sources 2,095 2,108 2,571 2,824Departmental outputs 866,778 1,000,520 1,142,906 1,221,215Program 1.2 Navy Capabilities[3]

Revenues from other sources 92,805 86,984 88,632 90,920 93,160Departmental outputs 5,494,370 5,917,270 5,855,148 6,076,780 6,283,335Program 1.3 Army Capabilities[3]

Revenues from other sources 41,588 45,773 46,658 47,898 50,166Departmental outputs 7,186,684 7,329,033 7,138,010 7,274,855 7,664,331Program 1.4 Air Force Capabilities[3]

Revenues from other sources 78,975 79,271 80,179 81,166 82,694Departmental outputs 5,713,283 5,829,941 6,598,903 7,218,802 7,849,502Program 1.5 Joint Operations CommandRevenues from other sources - - 524 544 571Departmental outputs 48,722 48,775 56,658 52,568 79,122Program 1.6 Intelligence Capabilities[2]

Revenues from other sources 1,571Departmental outputs 535,771Program 1.6 Vice Chief of the Defence Force[3]

Revenues from other sources 208,437 216,540 228,450 239,277 249,333Departmental outputs 1,308,641 1,466,071 1,592,478 1,686,576 1,923,629Program 1.7 Capability Acquisition and SustainmentRevenues from other sources 917 2,596 963 2,727 1,011Departmental outputs 591,183 692,055 693,695 690,992 731,359Program 1.8 Defence Executive SupportRevenues from other sources 9,692 9,912 10,097 10,321 10,556Departmental outputs 200,319 194,155 191,524 193,586 184,097Program 1.9 Estate and InfrastructureRevenues from other sources 340,172 345,225 367,997 369,644 384,012Departmental outputs 4,239,401 4,145,448 4,478,467 4,575,400 4,823,786Program 1.10 Chief Information OfficerRevenues from other sources 4,282 72 45 -6 -43Departmental outputs 1,059,046 1,632,688 1,898,500 2,045,621 2,238,319Program 1.11 Defence PeopleRevenues from other sources - - - - -Departmental outputs 500,836 510,647 505,114 518,236 542,443Program 1.12 Defence Science and TechnologyRevenues from other sources 3,557 3,631 3,787 3,953 4,127Departmental outputs 464,340 438,140 434,988 420,243 416,273Program 1.13 Chief Finance OfficerRevenues from other sources 4,700 4,818 4,938 5,061 5,188Departmental outputs 279,853 185,089 199,296 172,416 193,157Program 1.14 Capability Development[3]

Revenues from other sources -Departmental outputs 399,933


34

Table 12: Total Budgeted Resources Available for Outcome 1[1] (Continued)

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Program 1.14 Defence Force Superannuation BenefitsDefence 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) 152,113 88,954 77,731 66,993 57,054Military Superannuation and Benefits Act, 1991 Part V, s.17 2,408,097 1,472,240 1,505,328 1,535,386 1,561,793Total Administered expenses 2,560,210 1,561,194 1,583,059 1,602,379 1,618,847Administered revenues from other sources 1,470,576 1,358,948 1,292,637 1,227,879 1,167,434Total Program 1.14 1,089,634 202,246 290,422 374,500 451,413Program 1.15 Defence Force Superannuation Nominal InterestDefence Force Retirement Benefits Act, 1948 Part 1, s.15D and VIC, s.82ZJ (1) 19,021 23,601 22,377 21,181 20,014Defence Force Retirements and Death Benefits Act, 1973 Part XII, s.125 (3) 1,545,783 1,745,927 1,758,849 1,769,073 1,776,572Military Superannuation and Benefits Act, 1991 Part V, s.17 1,929,018 1,899,314 2,059,922 2,227,021 2,400,720Total Administered expenses 3,493,822 3,668,842 3,841,148 4,017,275 4,197,306Administered revenues from other sources - - - - -Total Program 1.15 3,493,822 3,668,842 3,841,148 4,017,275 4,197,306Program 1.16 Housing AssistanceDefence Force (Home Loan Assistance) Act , 1990 Part IV, s.38 917 775 645 537 446Defence Home Ownership Assistance Scheme Act 2008 Part VI, s.84 102,339 110,852 117,630 126,665 136,255Total Administered expenses 103,256 111,627 118,275 127,202 136,701Administered revenues from other sources 13,871 15,644 16,440 17,236 18,038Total Program 1.16 89,385 95,983 101,835 109,966 118,663Program 1.17 Other AdministeredAdministered revenues from other sources 141,806 106,047 97,089 109,023 91,926Total Program 1.17 -141,806 -106,047 -97,089 -109,023 -91,926Total resourcingTotal Departmental outputs 28,255,328 29,256,090 30,643,301 32,068,981 34,150,568Total Administered 4,531,035 3,861,024 4,136,316 4,392,718 4,675,456Total Departmental revenue from other sources 787,139 796,917 834,378 854,076 883,599Total Administered revenue from other sources 1,626,253 1,480,639 1,406,166 1,354,138 1,277,398Equity injection 2,535,548 2,321,327 3,858,356 4,666,796 5,075,148Total resources for Outcome 1 37,735,303 37,715,997 40,878,517 43,336,709 46,062,169

Notes

2. From 8 February 2016, an organisational change was implemented to transfer management of Program 1.1 Strategy and Program 1.6 Intelligence Capabilities to Program 1.1 Strategic Policy and Intelligence. Budgeted resources will continue to be managed in the original Programs until the end of 2015-16. From 2016-17 onward, budgeted resources will be reflected in Program 1.1 Strategic Policy and Intelligence. 3. Program 1.14 Capability Development has been disbanded 1 April 2016, with relevant functions transferred to the following Programs: Strategic Policy and Intelligence, Navy Capabilities, Army Capabilities, Air Force Capabilities, and Vice Chief of Defence Force.

1. A restructure of Defence Programs at the end of 2015-16 has resulted in the renumbering of Programs to account for the impact of the disbanding of two Programs, Program 1.6 Intelligence Capabilities and Program 1.14 Capability Development Group.


36

Table 13: Cost Summary for Program 1.1 Strategy[1]

2015-16 Estimated

Actual$'000

ExpensesEmployees[2] 52,282Suppliers 175,098Grants 4,686Depreciation and amortisation 1,303Finance cost -Write-down of assets and impairment of assets 28Net losses from sale of assets[3] -8Other expenses -

Total expenses 233,389Income

RevenuesGoods and services 434Other revenue 3Total revenue 437GainsReversal of previous asset write-downs 6Net gains from sale of assets -Other gains -Total gains 6

Total income 443Program 1.1 Strategy 232,946

Notes

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

1. From 8 February 2016, an organisational change was implemented to transfer management of Program 1.1 Strategy and Program 1.6 Intelligence Capabilities to Program 1.1 Strategic Policy and Intelligence. Budgeted resources will continue to be managed in the original Programs until the end of 2015-16. From 2016-17 onward, budgeted resources will be reflected in Program 1.1 Strategic Policy and Intelligence.

3. Whilst the amount shown in the 2015-16 estimated actual represents a gain for this Program, at the Portfolio level, Defence has budgeted for a total net loss from the sale of assets in 2015-16.


38

Purposes[3] Purpose 1 – Provide advice to Government.

Purpose 2 – Deliver and sustain Defence capability and conduct operations.

Material changes to Program 1.1 resulting from the following measures:

• 2016 Defence White Paper - additional funding.

• Cyber Security - implementation of Australia’s Cyber Security Strategy.

Notes

1. New or modified performance criteria that reflect new or materially changed programs are shown in italics.

2. Strategic Policy & Intelligence Group merged the former Strategy and Intelligence & Security Groups. As such, the 2015-16 performance criteria are reflected in Program 1.1 Strategy and Program 1.6 Intelligence & Security.

3. Refers to updated purposes that will be reflected in the 2016-17 Corporate Plan.


39

Table 14: Cost Summary for Program 1.1 Strategic Policy and Intelligence[1][2]

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 321,037 351,962 384,442 409,609Suppliers 489,037 559,458 650,065 700,328Grants 4,418 4,482 4,595 4,710Depreciation and amortisation 51,570 82,776 100,662 102,900Finance cost - - - -Write-down of assets and impairment of assets 2,811 3,950 5,713 6,492Net losses from sale of assets - - - -Other expenses - - - -

Total expenses 868,873 1,002,628 1,145,477 1,224,039Income

RevenuesGoods and services 1,284 1,017 1,071 1,121Other revenue 2 1 3 4Total revenue 1,286 1,018 1,074 1,125GainsReversal of previous asset write-downs 799 1,080 1,485 1,685Net gains from sale of assets 10 10 12 14Other gains - - - -Total gains 809 1,090 1,497 1,699

Total income 2,095 2,108 2,571 2,824Program 1.1 Strategic Policy and Intelligence 866,778 1,000,520 1,142,906 1,221,215

Notes1. From 8 February 2016, an organisational change was implemented to transfer management of Program 1.1 Strategy and Program 1.6 Intelligence Capabilities to Program 1.1 Strategic Policy and Intelligence. Budgeted resources will continue to be managed in the original Programs until the end of 2015-16. From 2016-17 onward, budgeted resources will be reflected in Program 1.1 Strategic Policy and Intelligence.

2. Program 1.14 Capability Development has been disbanded in 2015-16 with a portion of relevant functions transferring to this Program from 1 April 2016 onwards. The transfer of the relevant portion of the Approved Major Capital Investment Program, Defence Capability Plan and Future Sustainment costs have predominantly impacted on employee, supplier and depreciation and amortisation expenses within this program.


41



Notes



Table 15: Cost Summary for Program 1.2 Navy Capabilities[1]

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees[2] 2,098,668 2,079,594 2,116,051 2,165,891 2,217,839Suppliers 2,402,863 2,544,051 2,559,598 2,660,978 2,739,544Grants - - - - -Depreciation and amortisation 935,528 1,205,843 1,091,635 1,157,944 1,233,091Finance cost 8,901 35,345 38,374 43,214 44,895Write-down of assets and impairment of assets 141,215 139,421 138,122 139,673 141,126Net losses from sale of assets - - - - -Other expenses - - - - -

Total expenses 5,587,175 6,004,254 5,943,780 6,167,700 6,376,495Income

RevenuesGoods and services 23,774 24,497 25,233 25,982 26,767Other revenue 38,223 31,839 32,777 33,699 34,541Total revenue 61,997 56,336 58,010 59,681 61,308GainsReversal of previous asset write-downs 30,808 30,648 30,622 31,239 31,852Net gains from sale of assets - - - - -Other gains - - - - -Total gains 30,808 30,648 30,622 31,239 31,852

Total income 92,805 86,984 88,632 90,920 93,160Program 1.2 Navy Capabilities 5,494,370 5,917,270 5,855,148 6,076,780 6,283,335

Notes




42

Table 16: Navy Deliverables (Unit Availability Days)[1]

Deliverables

2015-16 Estimated

Actual[2]

2016-17 Budget

Estimate

2017-18 Forward

Year 1

2018-19 Forward

Year 2

2019-20 Forward

Year 3

19 Major Combatants[3] 2,935 3,498 3,709 3,154 3,477

21 Minor Combatants[4] 3,677 4,085 4,293 4,293 4,294

5 Amphibious and Afloat Support[5]

785 1,498 1,314 1,528 1,494

7 Maritime Teams[6] 2,558 2,527 2,527 2,527 2,529

9 Hydrographic Force[7] 2,266 2,276 2,105 2,264 2,303

Notes

1. A Unit Availability Day (UAD) is a day when a unit is materielly ready and its personnel state and level of competence enables the unit to safely perform tasks in the unit’s normal operating environment, immediately.

2. The 2015-16 Estimated Actual figure represents the Portfolio Additional Estimates Statements (PAES) 2015-16 target.

3. Major Combatants comprises Adelaide class frigates (FFG), Anzac class frigates (FFH), Hobart class air warfare destroyers (DDG) and submarines. Adelaide class frigates are to be withdrawn from service over the forward estimates period. HMAS Darwin December 2017, HMAS Melbourne August 2018 and HMAS Newcastle January 2019. Hobart class Air Warfare Destroyers HMA Ships Hobart and Brisbane will begin to accrue UAD in 2018 and 2019 respectively. The significant increase in UAD from 2015-16 to 2016-17 is due to improved availability of Submarines, FFGs and FFHs.

4. Minor Combatants comprises Armidale class patrol boats (ACPB), Cape class patrol boats (CCPB) and coastal mine hunters (MHC). MHCs Hawkesbury and Norman were placed in extended readiness in 2009. Significant increase in UAD target from 2015-16 to 2016-17 is due to CCPB contributing to UAD from 2016-17.

5. Amphibious and Afloat Support comprises oil tanker (AO), replenishment ship (AOR), landing ship dock (LSD), and Canberra class landing helicopter dock (LHD). The increase in UAD for 2016-17 is due to both LHDs contributing to UAD.

6. Maritime Teams comprise 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.

Table 17: Navy Deliverables (Hydroscheme Products)[1]

Deliverables

2015-16 Estimated

Actual[2]

2016-17 Budget

Estimate

2017-18 Forward

Year 1

2018-19 Forward

Year 2

2019-20 Forward

Year 3 Maritime Safety Updates[3] 1,100 1,100 1,100 1,100 1,100

Charting Projects[4] 15 15 15 15 15

Nautical Publications[5] 29 29 29 30 29

Notes

1. In accordance with First Principles Review recommendations, Hydroscheme products (Table 17) and the Chart Production Office component of Hydrographic Force UAD (Table 17) are expected to be transitioned to Strategy, Policy and Intelligence Group during 2016-17.


3. 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.

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

5. Nautical publications include three annual publications - Australian Tide Tables, Hydroscheme and AusTides; 25 fortnightly Notices to Mariners; and selected additional publications each year. Annual Notices to Mariners will not be published from 2016-17 with Notices being promulgated fortnightly and enduring information incorporated into the Seafarer’s Handbook for Australian Waters.


43

Table 18: Navy Deliverables (Flying Hours)

Deliverables

2015-16 Estimated

Actual1]

2016-17 Budget

Estimate

2017-18 Forward

Year 1

2018-19 Forward

Year 2

2019-20 Forward

Year 3 7 S-70B-2 (Seahawk)[2] 2,250 1,200 300 - - 7 AS350BA (Squirrel) [3] 1,500 2,000 1,200 500 -

22 MH-60R 3,400 4,800 6,050 7,200 7,200 - MRH-90[4] - - - - -

1 Laser airborne depth sounder aircraft (LADS)[5]

980 980 980 980 490

Notes


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

3. Squirrel hours are reducing and those resources redirected to a leased training helicopter ahead of the Squirrel replacement.

4. 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.

5. LADS capability due to be retired December 2019.


45



Notes



Table 19: Cost Summary for Program 1.3 Army Capabilities[1] 2015-16

EstimatedActual

$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees[2] 4,056,466 4,061,817 4,075,215 4,108,273 4,218,825Suppliers 1,812,391 1,997,597 1,986,490 2,080,462 2,224,073Grants[3] 2,815 2,817 93 95 97Depreciation and amortisation 1,263,809 1,209,776 1,019,842 1,028,834 1,160,193Finance cost - 3,954 4,549 5,498 5,835Write-down of assets and impairment of assets 100,340 98,845 98,479 99,591 105,474Net losses from sale of assets[4] -7,549 - - - -Other expenses - - - - -


RevenuesGoods and services 15,573 15,428 15,857 16,306 16,735Other revenue 4,052 617 633 649 665Total revenue 19,625 16,045 16,490 16,955 17,400GainsReversal of previous asset write-downs 21,963 22,179 22,619 23,394 25,217Net gains from sale of assets[5] - 7,549 7,549 7,549 7,549Other gains - - - - -Total gains 21,963 29,728 30,168 30,943 32,766

Total income 41,588 45,773 46,658 47,898 50,166Program 1.3 Army Capabilities 7,186,684 7,329,033 7,138,010 7,274,855 7,664,331

Notes

2. Employee expenses in 2015-16 include funding for an additional pay (the 27th pay). 3. Grants in 2015-16 and 2016-17 predominantly include a grant made to the Australian War Memorial.

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

4. Whilst the amount shown in the 2015-16 estimated actual represents a gain for this Program, at the Portfolio level, Defence has budgeted for a total net loss from the sale of assets in 2015-16.



46

Table 20: Army Deliverables (Rate of Effort – Flying Hours)

Deliverables

2015-16 Estimated

Actual

2016-17 Budget

Estimate

2017-18 Forward

Year 1

2018-19 Forward

Year 2

2019-20 Forward

Year 3 6 CH-47D Chinook [1][2] 480 0 0 0 0 7 CH-47F Chinook 1,300 1,700 2,000 2,000 2,000 34 S-70A-9 Black Hawk 4,575 4,552 4,550 4,225 3,750 41 B-206B-1 Kiowa[3] 5,300 5,500 4,150 2,150 0 22 ARH Tiger 4,350 6,227 6,227 6,227 6,227 47 MRH 90 Taipan 6,250 7,000 7,600 8,200 9,740

Notes

1. CH47D Additional 100 hrs required to conduct Flight Trials to Landing Helicopter Dock.

2. CH-47D Planned Withdrawal Date April 2016.

3. B-206B-1 Last Helicopter Qualification Course planned in 2018 before transition to AIR 9000 Ph 7 HATS (Navy).


48

Table 21: Cost Summary for Program 1.4 Air Force Capabilities[1]

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees[2] 2,074,275 2,045,523 2,104,474 2,185,894 2,268,465Suppliers 2,480,029 2,503,854 2,856,095 3,097,417 3,382,300Grants[3] 50 50 - - -Depreciation and amortisation 1,068,472 1,182,229 1,541,671 1,838,423 2,101,531Finance cost - 12,497 14,380 17,381 18,444Write-down of assets and impairment of assets 169,432 165,059 162,462 160,853 161,456Net losses from sale of assets - - - - -Other expenses - - - - -


RevenuesGoods and services 34,948 35,762 36,758 37,628 38,569Other revenue 5,213 5,333 5,465 5,602 5,743Total revenue 40,161 41,095 42,223 43,230 44,312GainsReversal of previous asset write-downs 38,814 38,176 37,956 37,936 38,382Net gains from sale of assets - - - - -Other gains - - - - -Total gains 38,814 38,176 37,956 37,936 38,382

Total income 78,975 79,271 80,179 81,166 82,694Program 1.4 Air Force Capabilities 5,713,283 5,829,941 6,598,903 7,218,802 7,849,502

Notes

2. Employee expenses in 2015-16 include funding for an additional pay (the 27th pay). 3. Grants expense include grants to the Sir Richard Williams Foundation.



49

Table 22: Air Force Deliverables (Flying Hours)

Deliverables

2015-16 Estimated

Actual

2016-17 Budget

Estimate

2017-18 Forward

Year 1

2018-19 Forward

Year 2

2019-20 Forward

Year 3 62 PC-9/A[1] 16,574 18,552 16,352 12,852 2,926 - PC-21[2] - - 2,200 7,000 19,626 16 KA350 King Air 8,850 8,700 8,700 8,700 8,700 12 C-130J Hercules 7,350 7,350 7,350 7,350 7,350 8 C-17A Globemaster III[3] 7,000 6,200 6,200 6,200 6,200 10 C-27J Spartan[4] 1,200 2,000 4,000 5,000 7,500 5 KC-30A MRTT[5] 6,000 3,100 3,700 3,900 4,700 2 737 BBJ 1,500 1,600 1,600 1,600 1,600 3 CL-604 Challenger 1,903 2,403 2,403 2,403 2,403 15 AP-3C Orion[6] 6,770 6,465 4,660 2,160 600 6 E-7A Wedgetail 3,600 3,600 3,600 3,600 3,600

71 F/A-18A/B Hornet[7] 15,700 12,000 12,000 12,000 10,800 24 F/A-18F Super Hornet 4,800 4,000 4,000 4,050 4,050 8 P-8A Poseidon[8] - 450 2,762 4,254 5,400 33 Hawk 127 6,650 7,000 7,000 8,000 8,000

12 E/A-18G Growler[9] - 800 1,600 1,900 2,400 2 F-35A Lighting II[10] 500 500 752 2,538 4,564 2 Heron UAS[11] - 1,000 500 - -

Notes

1. PC-9/A hours reflect the phased withdrawal of the aircraft.

2. PC-21 hours reflect the planned schedule for introduction to service and increased pilot training commitments.

3. C-17A Globemaster III hours for FY 15-16 include operational assignments.

4. C-27J Spartan hours reflect the planned schedule for introduction to service.

5. KC-30A MRTT hours for FY 15-16 include operational assignments and in the forward estimates, reflect the planned introduction of additional aircraft.

6. AP-3C Orion hours reflect the phased withdrawal of aircraft.

7. F/A-18A/B Hornet hours for FY 15-16 include operational assignments and in the forward estimates, reflect the planned transition to F-35A Lightning II aircraft.

8. P-8A Poseidon hours reflect the planned schedule for introduction to service.

9. E/A-18G Growler hours reflect the planned schedule for introduction to service.

10. F-35A Lightning II hours for FY 16-17 are for training aircraft and in the forward estimates, reflect the planned schedule for introduction to service.

11. Heron UAS operations beyond FY 17-18 are subject to a contract extension.


51

Performance information

Year Performance criteria[1] Targets

2015-16 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. Expected to be met.

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

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. Expected to be met.

No targets were prepared for performance criteria in 2015-16. Improved performance criteria and targets have been developed for 2016-17, in accordance with Commonwealth Performance Framework requirements.

2016-17 Operational deployments meet requirements of Government policy.

All operational requirements are met.

2017-18 and beyond

As per 2016-17. As per 2016-17.

Purposes[2] Purpose 2 – Deliver and sustain Defence capability and conduct operations.

Notes

1. Performance criteria that reflect 2015-16 PBS key performance indicators or 2015-16 to 2019-20 performance measures identified in the 2015-16 Defence Corporate Plan. New or modified performance criteria that reflect new or materially changed programs are shown in italics.



52

Table 23: Cost Summary for Program 1.5 Joint Operations Command

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees[1] 6,596 6,843 7,468 8,175 8,455Suppliers 39,655 39,277 45,767 39,280 63,703Grants - - - - -Depreciation and amortisation 2,471 2,655 3,947 5,657 7,535Finance cost - - - - -Write-down of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses - - - - -

Total expenses 48,722 48,775 57,182 53,112 79,693Income

RevenuesGoods and services - - 524 544 571Other revenue - - - - -Total revenue - - 524 544 571GainsReversal of previous asset write-downs - - - - -Net gains from sale of assets - - - - -Other gains - - - - -Total gains - - - - -

Total income - - 524 544 571Program 1.5 Joint Operations Command 48,722 48,775 56,658 52,568 79,122

Note1. Employee expenses in 2015-16 include funding for an additional pay (the 27th pay).


54



2015-16 Deliver intelligence and security services to meet Defence and Government requirements. Expected to be partially met.


Develop next generation intelligence, geospatial and security assessment capabilities including Geoint, Sigint and Cyber. Expected to be met.

Strengthen the approach to security across Defence and Government. Expected to be met.

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

Achieve best practice in governance and compliance. Expected to be partially met.

Ensure that the intelligence and security workforce is developed and skilled. Expected to be met.

Deliver intelligence capability dividends through international and national partnerships. Expected to be met.

Purposes[2] Purpose 1 - Provide advice to Government.


Notes




55

Table 24: Cost Summary for Program 1.6 Intelligence Capabilities[1]

2015-16 Estimated

Actual$'000

ExpensesEmployees[2] 239,904Suppliers 254,048Grants -Depreciation and amortisation 41,358Finance cost -Write-down of assets and impairment of assets 2,032Net losses from sale of assets -Other expenses -


RevenuesGoods and services 960Other revenue -Total revenue 960GainsReversal of previous asset write-downs 611Net gains from sale of assets -Other gains -Total gains 611

Total income 1,571Program 1.6 Intelligence Capabilities 535,771

Notes


1. From 8 February 2016, an organisational change was implemented to transfer management of Program 1.1 Strategy and Program 1.6 Intelligence Capabilities to Program 1.1 Strategic Policy and Intelligence. Budgeted resources will continue to be managed in the original Programs until the end of 2015-16. From 2016-17 onward, budgeted resources will be reflected in Program 1.1 Strategic Policy and Intelligence.


57


Year Performance criteria[1] Targets be substantially met.

ADF joint and combined operational capability is enhanced. Expected to be met.

Delivery of learning outcomes meets defence capability requirements. Expected to be met.

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

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

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

Timely, accurate and widely consulted advice on nature of service classifications. Expected to be met.

Timely and accurate advice on strategic communications. Expected to be met.

Group-specific outcomes and programmes are delivered on time and within agreed resources. Expected to be met.

2016-17 Required preparedness levels are achieved and maintained.

Preparedness levels are achieved and maintained as directed by the Chief of the Defence Force.

Strategic military advice supports Government-decision making.

Government expresses a high level of confidence in strategic military advice.

Integrity of the Integrated Investment Program.

Integrated Investment Program is delivered as agreed with Government.

2017-18 and beyond

As per 2016-17. As per 2016-17.


58



Purpose 3 – Develop the future capability Defence needs to conduct operations.



Notes



Table 25: Cost Summary for Program 1.6 Vice Chief of the Defence Force[1]

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees[2] 562,667 599,387 610,973 634,551 690,032Suppliers 426,561 504,618 549,546 596,611 730,375Grants[3] 200 - - - -Depreciation and amortisation 25,731 34,514 76,709 76,750 105,023Finance cost - - - - -Write-down of assets and impairment of assets 501,919 544,092 583,700 617,941 647,532Net losses from sale of assets - - - - -Other expenses - - - - -


RevenuesGoods and services 13,336 8,879 9,119 9,253 9,451Other revenue 650 1,154 1,158 1,162 1,166Total revenue 13,986 10,033 10,277 10,415 10,617GainsReversal of previous asset write-downs 194,451 206,507 218,173 228,862 238,716Net gains from sale of assets - - - - -Other gains - - - - -Total gains 194,451 206,507 218,173 228,862 238,716

Total income 208,437 216,540 228,450 239,277 249,333Program 1.6 Vice Chief of the Defence Force 1,308,641 1,466,071 1,592,478 1,686,576 1,923,629

Notes

3. Grants expense include grants to Fisher House Foundation.

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 Health.



60



Procurement of Defence capability better leverages industry, is more agile and reduces the cost of doing business.

Develop the Smart Buyer function which better leverages industry, delivers capability more rapidly and reduces the cost of doing business for Defence and industry.

2017-18 and beyond

As per 2016-17. As per 2016-17.





Notes


2. 2015-16 performance criteria were taken from the Portfolio Budget Statements 2015-16 Defence Materiel Organisation Outcomes and Planned Performance section. Defence Materiel Organisation ceased to exist from 1 July 2015, and became part of the Department of Defence known, as the Capability Acquisition and Sustainment Group.


Table 26: Cost Summary for Program 1.7 Capability Acquisition and Sustainment

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees[1] 474,816 455,455 449,805 440,295 430,818Suppliers 108,230 228,429 235,358 243,702 291,597Grants 8,599 9,870 8,598 8,825 9,058Depreciation and amortisation 455 897 897 897 897Finance cost - - - - -Write-down of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses - - - - -


RevenuesGoods and services 917 2,596 963 2,727 1,011Other revenue - - - - -Total revenue 917 2,596 963 2,727 1,011GainsReversal of previous asset write-downs - - - - -Net gains from sale of assets - - - - -Other gains - - - - -Total gains - - - - -

Total income 917 2,596 963 2,727 1,011Program 1.7 Capability Acquisition and Sustainment 591,183 692,055 693,695 690,992 731,359



62



2015-16 Business outcomes are improved as part of broader Defence reform. Expected to be met.

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

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

Defence Internal Audit Work Program is provided to address high-level strategic risks are linked to the Enterprise Risk Management Framework. Expected to be met.

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 Disclosure Scheme are managed in accordance with the Public Interest Disclosure Act 2013. Expected to be met.

Defence meets its legislative and regulatory obligations. Expected to be met.

Defence legal support, including specialist legal advice, is provided to Defence Ministers, the Secretary, Chief of the Defence Force and the Government in support of effective decision making and policy engagement. Expected to be met.

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



63



2016-17 Enterprise planning and performance monitoring processes are delivered in line with the requirements of the Public Governance, Performance and Accountability Act 2013.

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

Business outcomes are improved as part of broader Defence reform.

Defence reform is achieved as agreed with Government and in accordance with the First Principles Review implementation plan.

Security and vetting services are delivered to Defence, whole-of-Government and industry customers.

Security services are delivered in accordance with the security and vetting services Service Offer.

The Australian Government Security Vetting Agency meets its Charter.

2017-18 and beyond

Enterprise planning and performance monitoring processes are delivered in line with the requirements of the Public Governance, Performance and Accountability Act 2013.

The Service Delivery System enables Australian Defence Force operations.

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

Enabling services are delivered in accordance with agreed Service Offers.


Notes




64

Table 27: Cost Summary for Program 1.8 Defence Executive Support

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees[1] 84,395 82,336 84,058 85,428 87,125Suppliers 121,257 118,881 114,609 115,432 104,401Grants - - - - -Depreciation and amortisation 359 375 406 431 446Finance cost - - - - -Write-down of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses 4,000 2,475 2,548 2,616 2,681


RevenuesGoods and services 9,576 9,794 9,975 10,197 10,429Other revenue 116 118 122 124 127Total revenue 9,692 9,912 10,097 10,321 10,556GainsReversal of previous asset write-downs - - - - -Net gains from sale of assets - - - - -Other gains - - - - -Total gains - - - - -

Total income 9,692 9,912 10,097 10,321 10,556Program 1.8 Defence Executive Support 200,319 194,155 191,524 193,586 184,097



66



2016-17 Estate proposals, once approved by Government, meet agreed schedule and are delivered within agreed costs and scope.

The Major Capital Facilities Program is delivered within scope, budget and schedule.

The Major Capital Facilities Program is compliant with legislative and other statutory requirements, standards and policies.

The estate is aligned with the requirements of the current and future force.

Surplus estate is disposed of as agreed with Government.

Estate services enable Defence capability requirements.

Estate services are delivered within budget and meet service requirements.

2017-18 and beyond

As per 2016-17. As per 2016-17.




• Closure of Hunter River and Port Stephens Fisheries - assistance to individuals and businesses - extension.

Notes




67

Table 28: Cost Summary for Program 1.9 Estate and Infrastructure

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees[1] 1,109,965 1,167,543 1,215,677 1,254,962 1,307,176Suppliers 2,224,960 2,215,173 2,487,992 2,528,121 2,706,507Grants - - - - -Depreciation and amortisation 1,000,316 981,280 1,008,251 1,037,682 1,068,837Finance cost 97,241 101,175 99,613 100,420 100,381Write-down of assets and impairment of assets 21,291 21,992 22,892 23,859 24,897Net losses from sale of assets 94,500 - - - -Other expenses 31,300 3,510 12,039 - -


RevenuesGoods and services 330,422 334,629 345,118 358,113 371,826Other revenue 9,026 9,636 10,110 10,607 11,152Total revenue 339,448 344,265 355,228 368,720 382,978GainsReversal of previous asset write-downs 724 750 830 924 1,034Net gains from sale of assets - 210 11,939 - -Other gains - - - - -Total gains 724 960 12,769 924 1,034

Total income 340,172 345,225 367,997 369,644 384,012Program 1.9 Estate and Infrastructure 4,239,401 4,145,448 4,478,467 4,575,400 4,823,786



69



Effective development of Enterprise-wide frameworks for information management architecture standards and master data management.

Enterprise Information Management architecture is approved for implementation.

2017-18 and beyond

As per 2016-17. As per 2016-17.




Notes



Table 29: Cost Summary for Program 1.10 Chief Information Officer

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees[1] 116,819 121,004 126,409 129,321 131,887Suppliers[2] 757,103 1,302,290 1,551,796 1,702,976 1,907,005Grants - - - - -Depreciation and amortisation 168,530 192,419 203,012 195,787 181,584Finance cost[3] 10 - - - -Write-down of assets and impairment of assets 16,103 17,047 17,328 17,531 17,800Net losses from sale of assets 4,763 - - - -Other expenses - - - - -


RevenuesGoods and services - - - - -Other revenue - - - - -Total revenue - - - - -GainsReversal of previous asset write-downs 4,282 4,589 4,697 4,786 4,892Net gains from sale of assets[4] - -4,517 -4,652 -4,792 -4,935Other gains - - - - -Total gains 4,282 72 45 -6 -43

Total income 4,282 72 45 -6 -43Program 1.10 Chief Information Officer 1,059,046 1,632,688 1,898,500 2,045,621 2,238,319

Notes

2. The increase in supplier expense since 2015-16 Portfolio Additional Estimates results from additional funding being directed to the ICT program as a result of the 2016 Defence White Paper.

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


4. Whilst the amounts shown in 2016-17 onwards represent losses for this Program, at the Portfolio level, Defence has budgeted for a total net gain from the sale of assets in these years.


71



2015-16 Advice to the Secretary, Chief of the Defence Force and Government on people issues is timely and of a high quality. Expected to be met.


People reform through the First Principles Review, Defence White Paper, and HR services is effective in improving customer-focused service delivery. Expected to be met.

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. Expected to be met.

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

Implementation of a strengthened performance management system. Expected to be met.

Completion of the ADF Total Workforce Model for implementation by the Services. Expected to be met.

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

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

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


72



Provide timely and professional support services to ADF members and families, including delivery of family support program, transition services and bereavement support in the event of death and serious casualties. Expected to be met.

Achieve ADF recruitment targets. Expected to be met.

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. Expected to be substantially met.

2016-17 Achievement of ADF recruitment targets.

Meet recruitment targets as specified by the Services.

Achieve ongoing cultural reform and workforce culture initiatives that embed diversity and inclusion.

Workforce diversity has increased.

Cultural reform initiatives are implemented as set out in the Pathway to Change program.

An agile and skilled workforce through alignment and balance of workforce supply and demand.

Workforce is aligned and managed in accordance with the Workforce Strategy and the ADF Total Workforce Model.

Complete implementation of First Principles Review workforce and behavioral recommendations.

Implemented as agreed with Government.

ADF members and families are supported through the delivery of the family support program, transition services and bereavement support.

Support is delivered in a timely and professional manner.

2017-18 and beyond

As per 2016-17. As per 2016-17.





Notes




73

Table 30: Cost Summary for Program 1.11 Defence People

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees[1] 168,958 169,135 170,476 171,992 176,252Suppliers 326,179 335,577 328,546 340,339 360,106Grants 1,521 1,553 1,586 1,623 1,666Depreciation and amortisation 4,178 4,382 4,506 4,282 4,419Finance cost - - - - -Write-down of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses - - - - -


RevenuesGoods and services - - - - -Other revenue - - - - -Total revenue - - - - -GainsReversal of previous asset write-downs - - - - -Net gains from sale of assets - - - - -Other gains - - - - -Total gains - - - - -

Total income - - - - -Program 1.11 Defence People 500,836 510,647 505,114 518,236 542,443



75



DSTG’s science and technology capability is contributed to by: a workforce with world-class expertise and facilities, measured through benchmarking and client feedback; and appropriately leveraged science and technology engagement and partnerships with research organisations, industry and academia, including international government agencies. Expected to be met.

Collaborative activities with industry, academia and allied defence research agencies are clearly aligned with the strategic direction of Defence and government.

2016-17 Emerging capability and technology is used to support development of best value-for-money capability.

Science and technology activities are balanced to support Defence capability and operational priorities in accordance with 2016 Defence White Paper.

Defence’s strategic research builds understanding of future Defence capability.

Strategic research activities are aligned with Integrated Investment Program priorities.

Defence S&T capability enhanced through the delivery of collaborative partnerships with international research agencies, industry and academia.

Collaborative activities with industry, academia and allied defence research agencies are aligned to 2016 Defence White Paper and Defence Industry Policy Statement priorities.

2017-18 and beyond

As per 2016-17. As per 2016-17.



Notes




76

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

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees[1] 301,666 295,833 299,478 304,612 310,583Suppliers 138,229 117,619 113,115 94,359 84,541Grants[2] 403 58 - - -Depreciation and amortisation 25,538 26,067 23,712 22,425 22,123Finance cost - - - - -Write-down of assets and impairment of assets 2,057 2,194 2,470 2,800 3,153Net losses from sale of assets 4 - - - -Other expenses - - - - -


RevenuesGoods and services 2,747 2,776 2,843 2,904 2,967Other revenue 191 195 201 206 211Total revenue 2,938 2,971 3,044 3,110 3,178GainsReversal of previous asset write-downs 619 660 743 843 949Net gains from sale of assets - - - - -Other gains - - - - -Total gains 619 660 743 843 949

Total income 3,557 3,631 3,787 3,953 4,127Program 1.12 Defence Science and Technology 464,340 438,140 434,988 420,243 416,273

Notes1. Employee expenses in 2015-16 include funding for an additional pay (the 27th pay). 2. Grants predominantly include the approved multi-year grant for the DSTG Industry Placement Program.


78



• 2016 Defence White Paper - additional funding. • Trans-Pacific Partnership - implementation. • Antarctica - maintaining Australia's presence.

• Cyber Security - implementation of Australia’s Cyber Security Strategy.

• Spirit of the ANZAC Centenary Experience Travelling Exhibition - additional funding.

Notes



Table 32: Cost Summary for Program 1.13 Chief Finance Officer

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees[1] 209,108 120,190 131,189 100,603 119,355Suppliers 72,923 68,384 71,829 75,813 78,031Grants - - - - -Depreciation and amortisation 2,522 1,333 1,216 1,061 959Finance cost - - - - -Write-down of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses - - - - -


RevenuesGoods and services - - - - -Other revenue - - - - -Total revenue - - - - -GainsReversal of previous asset write-downs - - - - -Net gains from sale of assets - - - - -Other gains 4,700 4,818 4,938 5,061 5,188Total gains 4,700 4,818 4,938 5,061 5,188

Total income 4,700 4,818 4,938 5,061 5,188Program 1.13 Chief Finance Officer 279,853 185,089 199,296 172,416 193,157

Note1. Employee expenses in 2015-16 include funding for an additional pay (the 27th pay). The 2015-16 budget also includes additional funding relating to voluntary redundancies.


80



2015-16 Provide advice to the Secretary, Chief of the Defence Force and the Minister within agreed timeframes. Met.


Deliver Defence capability proposals with feasible schedule, cost and capability estimates. Met – CDG delivered Defence capability proposals with a higher than usual number of Government approvals for financial year 2015-16.

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

Submit Test Concept documents, Early Test plans, Test Evaluation Master Plans and trial reports in support of capability submissions. Met.

Purposes[2] Purpose 3 – develop the future capability Defence needs to conduct operations.

Notes




81

Table 33: Cost Summary for Program 1.14 Capability Development[1]

2015-16 Estimated

Actual$'000

ExpensesEmployees[2] 7,149Suppliers 392,784Grants -Depreciation and amortisation -Finance cost -Write-down of assets and impairment of assets -Net losses from sale of assets -Other expenses -


RevenuesGoods and services -Other revenue -Total revenue -GainsReversal of previous asset write-downs -Net gains from sale of assets -Other gains -Total gains -

Total income -Program 1.14 Capability Development 399,933

Notes


1. Program 1.14 Capability Development has been disbanded in 2015-16, with relevant functions transferred to the following programs from 1 April 2016 onwards, being Strategic Policy and Intelligence, Navy Capabilities, Army Capabilities, Air Force Capabilities, and Vice Chief of the Defence Force.


83



2015-16 Provision of timely payments to the Commonwealth Superannuation Corporation and quality administration of DFRB, DFRDB and MSBS employer and member contributions. Expected to be met.


2016-17 Provision of timely payments to the Commonwealth Superannuation Corporation and quality administration of DFRB, DFRDB, MSBS and ADF Super employer and member contributions.

Payments are provided within agreed timeframes to the Commonwealth Superannuation Corporation and quality administration of DFRB, DFRDB, MSBS and ADF Super employer and member contributions.

2017-18 and beyond

As per 2016-17. As per 2016-17.


Notes



Table 34: Cost Summary for Administered Program 1.14 Defence Force Superannuation Benefits

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Net foreign exchange losses - - - - -Military retention benefits 69,798 79,985 93,548 107,299 120,288Military superannuation benefits 2,490,412 1,481,209 1,489,511 1,495,080 1,498,559


RevenuesInterest - - - - -Net foreign exchange gains - - - - -Military superannuation contributions 1,470,576 1,358,948 1,292,637 1,227,879 1,167,434

Total income 1,470,576 1,358,948 1,292,637 1,227,879 1,167,434Program 1.14 Defence Force Superannuation Benefits 1,089,634 202,246 290,422 374,500 451,413


85

Table 35: Cost Summary for Administered Program 1.15 Defence Force Superannuation Nominal Interest

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Net foreign exchange losses - - - - -Retention benefits - - - - -Military superannuation benefits 3,493,822 3,668,842 3,841,148 4,017,275 4,197,306


RevenuesInterest - - - - -Net foreign exchange gains - - - - -Military superannuation contributions - - - - -

Total income - - - - -Program 1.15 Defence Force Superannuation Nominal Interest 3,493,822 3,668,842 3,841,148 4,017,275 4,197,306


87



2015-16 Members respond to and take up the scheme.

While not included in the 2015-16 Portfolio Budget Statements, the targeted number of applications to be received is 6,000 with 4,500 members to actually take up the scheme. The actual outcome is expected to be consistent with this target.

Ensure that interest rates provided to ADF members by the Home Loan Providers are competitive with other interest rates in the market. Expected to be met.


2016-17 Members respond to and take up the scheme.

6,000 applications received with 3,800 members taking 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.

Interest rates offered are consistently lower than other interest rates in the market.

2017-18 and beyond

As per 2016-17. As per 2016-17.


Notes



Table 36: Cost Summary for Administered Program 1.16 Housing Assistance

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Net foreign exchange losses - - - - -Housing subsidies 103,256 111,627 118,275 127,202 136,701


RevenuesInterest - - - - -Net foreign exchange gains - - - - -Dividends - - - - -License fees 13,871 15,644 16,440 17,236 18,038Other - - - - -

Total income 13,871 15,644 16,440 17,236 18,038Program 1.16 Housing Assistance 89,385 95,983 101,835 109,966 118,663


91



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

2017-18 and beyond

As per 2016-17. As per 2016-17.


Notes



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

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees - - - - -Suppliers 97 1,023 - - -Grants - - - - -Depreciation and amortisation - - - - -Finance cost - - - - -Write-down of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses - - - - -

Total expenses 97 1,023 - - -Income


Total income - - - - -Program 2.1 Operations Contributing to the Security of the Immediate Neighbourhood 97 1,023 - - -


93



2016-17 ADF operations meet requirements. Operations meet Government’s stated objective/s.

ADF forces are effectively deployed and sustained.


2017-18 and beyond

As per 2016-17. As per 2016-17.



• Operation Accordion - extension.

• Operation Highroad - extension.

• Operation Manitou - extension.

• Operation Okra - extension.

Notes




94

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

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 129,574 102,194 3,543 - -Suppliers 662,789 562,278 42,688 40,224 -Grants 86,561 88,067 - - -Depreciation and amortisation - - - - -Finance cost - - - - -Write-down of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses 3 - - - -

Total expenses 878,927 752,539 46,231 40,224 -Income

RevenuesGoods and services 15,190 15,589 - - -Other revenue - - - - -Total revenue 15,190 15,589 - - -GainsReversal of previous asset write-downs - - - - -Net gains from sale of assets - - - - -Other gains - - - - -Total gains - - - - -

Total income 15,190 15,589 - - -Program 2.2 Operations Supporting Wider Interests 863,737 736,950 46,231 40,224 -


97



2015-16 Defence’s contribution to national support tasks in Australia meets Government directives. Expected to be met.

Defence’s response to requests for Defence force Aid to the Civil Authority is effectively managed, sustained and reported. Expected to be met.

Defence’s response to requests for Defence Assistance to the Civil Community is effectively managed, sustained and reported. Expected to be met.


2016-17 ADF operations meet requirements. Operations meet Government’s stated objective/s.

ADF forces are effectively deployed and sustained.


2017-18 and beyond

As per 2016-17. As per 2016-17.



• Operation Resolute - extension.

Notes




98

Table 42: Cost Summary for Program 3.1 Defence Contribution to National Support Tasks in Australia

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000Expenses

Employees 17,692 8,521 2,387 - -Suppliers 31,009 13,941 405 - -Grants - - - - -Depreciation and amortisation - - - - -Finance cost - - - - -Write-down of assets and impairment of assets - - - - -Net losses from sale of assets - - - - -Other expenses - - - - -

Total expenses 48,701 22,462 2,792 - -Income


Total income - - - - -Program 3.1 Defence Contribution to National Support Tasks in Australia 48,701 22,462 2,792 - -


99

Section 3: Defence Explanatory Tables and Budgeted Financial Statements

3.1 EXPLANATORY TABLES

Section 3 presents explanatory tables and budgeted financial statements that provide a comprehensive overview of agency finances for the 2016-17 budget year. It explains how budget plans are incorporated into the financial statements and provides further details of the reconciliation between appropriations and program expenses, movements in administered funds, special accounts and government indigenous expenditure.

Table 43: Summary of Estimated Special Account Balances[1][2][3]

Opening 2016-17

Receipts 2016-17

Payments 2016-17

Adjustments 2016-17

Closing Balance 2016-17

2015-16 2015-16 2015-16 2015-16 2015-16Outcome $'000 $'000 $'000 $'000 $'000

1 43,153 27,693 -22,746 - 48,100

64,827 34,671 -56,345 - 43,153

1 49 4 -3 - 50

48 4 -3 - 49

1 168 6 -6 - 168

167 5 -4 - 168

1 1,412 221 -112 - 1,521

1,375 309 -272 - 1,412

Total Special Accounts 2016-17 44,782 27,924 -22,867 - 49,8392015-16 estimated actual 66,417 34,989 -56,624 - 44,782

Notes1. 2016-17 estimates in bold.2. 2015-16 estimated actuals in italics.3. These are all Special Public Monies.

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


100

3.1.1 Australian Government Indigenous Expenditure

Table 44: Australian Government Indigenous Expenditure

ProgramBill No. 1

$'000Outcome 1Defence Indigenous Employment Strategy[1][2] 1.11 Departmental 2016-17 Budget Estimate 3,619 Departmental 2015-16 Estimated Actual 4,079 Army Aboriginal Community Assistance Program[1][3] 1.3 Departmental 2016-17 Budget Estimate 5,700 Departmental 2015-16 Estimated Actual 5,700 Total 2016-17 Revised Estimate 9,319Total 2015-16 Budget Estimate 9,779

Notes1. All amounts are GST exclusive. Revised Estimate and Budget Estimate are direct costs.2. The Defence Indigenous Development Program, as previously disclosed, has been subsumed into the Defence Indigenous Employment Strategy.

3. The majority of costs are subsequently recovered from Department of Prime Minister and Cabinet under 2.5 Remote Australian Strategy Appropriation.

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.

The IES implementation plan includes a number of new activities, but also reflects existing programs such as the Defence Indigenous Development Program - Navy, Army Indigenous Development Program, Indigenous Pre-Recruitment Courses and Defence participation in the APSC Indigenous Pathways Program. All activities are being implemented through a whole-of-Defence approach, collaboration with other APS agencies and partnerships with external organisations. A number of programs 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.


101

Army Aboriginal Community Assistance Program

The Army Aboriginal Community Assistance Program (AACAP) is a collaborative partnership between the Department of the Prime Minister and Cabinet (PM&C) and the Australian Army which aims to improve environmental health and living conditions in remote Indigenous communities. One project is undertaken each calendar year targeting improvements in housing and essential services including water, power, sewerage and health. Community selection capitalises on Army's ability to deploy and sustain a construction camp for a prolonged period in a remote area of Australia, to holistically deliver a range of services to Indigenous communities which would not normally be available through other project means. The 2016 Project is being delivered in Laura, Far North Queensland with planning for the 2017 Project in Toomelah, northern New South Wales underway.


102

3.1.2 Grants

Table 45: Approved Grants

2015-16 Estimated

Actual$'000[1]

Total Grant Amount

Approved$'000[1]

2016-17 Budget

Estimate$'000[1]

1,625 1,625 - 176 176 - 1,801 1,801 -

237 535 - 1,474 2,317 404 3,365 3,365 - 563 563 - 59 59 - 2,300 5,075 528 939 2,805 935 50 150 50 2,727 8,181 2,727 19 62 - 46 131 - 25 225 - 250 400 - 3,358 10,328 3,442 101 297 - 248 731 - 153 434 - 100 100 - 2,000 2,000 - 1,450 1,450 - 150 150 - 19,614 39,358 8,086

Total grants 21,415 41,159 8,086

Notes

5. This grant was approved in June 2012.

Defence Science and Technology Group (DSTG) Industry Placement Program 2015Previously approved grantsTotal grants approved since 2015-16 PAESInstitute for Regional Security (IFRS)

Total previously approved grantsStand Tall for PTS

Skilling Australia's Defence Industry (SADI)Approved since 2015-16 PAES

6. This grant was approved in June 2013.

New Air Combat Capability Industry Support Program (NACC ISP)[2]Australian Army History Research Grant SchemeIndustry Skilling Program - Enhancement School Pathways ProgramSkilling Australia's Defence Industry (SADI)Family Support Funding Program

National Boer War Memorial Association

The Sir Richard Williams Foundation

Royal Melbourne Institute of Technology

China MattersThe ANU - Post Doctoral Fellow[6]The ANU - Shedden Professorial Chair[5]Royal United Services Institute (RUSI)[4]Australian Strategic Policy Institute (ASPI)

Multinational Force and Observers[3]

2. Total grant approved amount includes $1 million for a grant which has payments scheduled for 2017-18.

4. This grant was approved in June 2013.3. Total grant amount is reflective of USD figures converted into AUD.

1. Figures are GST exclusive.

Australian Peacekeeping Memorial Project

The Australian Sailor Pty LtdFisher House Foundation

University of MelbourneAustralian War Memorial


103

The following are grants that have been approved since the 2015-16 Portfolio Additional Estimates Statements.

Skilling Australia’s Defence Industry

Since the publication of the PAES 2015-16, the Skilling Australia’s Defence Industry Program has approved grants to the total of $1,625,147 (GST exclusive). This program provides financial support for training and skilling activities in trade, technical or professional skill sets that are required to meet a current or future Defence Capability need.

Institute for Regional Security

Two grants to the total value of $176,000 (GST exclusive) have been approved to support the IFRS Annual Dinner at the National Gallery of Australia and the Strategic Dialogue between Australia, the United States and Japan at the Gibraltar Hotel in Bowral NSW; and two Future Strategic Leaders (FSL) Congresses at the ANU Kioloa Coastal Campus NSW.


104

3.2 RESOURCE SUMMARY

Table 46: Budgeted Departmental Net Cost of Service (cash) (for the period ended 30 June)

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000NET COST OF SERVICE (CASH)Cost of Service

Employee payments 11,698,635 11,570,112 11,692,955 11,920,209 12,322,508Supplier payments 11,077,833 11,520,104 12,053,095 12,852,919 13,855,734Purchase of specialist military equipment 6,679,099 6,097,456 8,053,766 9,098,896 9,662,542Purchase of inventory 1,330,920 1,491,637 1,366,348 1,392,070 1,563,022Purchase of other property, plant and equipment 1,432,043 1,941,243 1,761,736 1,902,541 2,229,552Net cash to / (from) the Official Public Account -133,829 897 919 942 966Other cash used 1,830,982 1,881,400 1,904,863 2,067,192 2,213,242

Total cash used 33,915,683 34,502,849 36,833,682 39,234,769 41,847,566Own source receipts 2,167,590 2,164,997 2,283,002 2,458,768 2,621,850

Total cash received 2,167,590 2,164,997 2,283,002 2,458,768 2,621,850Net cost of service (cash) 31,748,093 32,337,852 34,550,680 36,776,001 39,225,716FUNDED BY

Appropriation Bill 1/3 (price of outcomes) 29,212,545 30,016,525 30,692,324 32,109,205 34,150,568Appropriation carried forward from previous year - - - - -Appropriation Bill 2/4 (equity injection) 2,535,548 2,321,327 3,858,356 4,666,796 5,075,148

Total funding source 31,748,093 32,337,852 34,550,680 36,776,001 39,225,716

Change in cash - - - - -


105

Table 47: Total Departmental and Administered Consolidated Cash Budget for the Department of Defence[1]

2016-17 BudgetEstimate

$mAPPROPRIATIONS AND CAPITALAppropriation (Bill 1) 30,016.5Appropriation - Contributed Equity (Bill 2) 2,321.3Appropriations for military superannuation[2] 2,467.4less Returns to the OPA -1,489.7Total cash available 33,315.6OPERATING ACTIVITIESCash received

Goods and services 451.2Net GST received 1,619.9Interest 28.0Other cash 74.9Fees 15.6

Total cash received 2,189.6Cash used

Employees 10,211.2Suppliers 11,520.1Net GST paid 1,619.9Grants 106.8Other cash 6.0Subsidies paid 111.6Military benefits 2,355.8

Total cash used 25,931.4Net cash from or (used by) operating activities -23,741.8INVESTING ACTIVITIESCash received

Proceeds from sales of land and buildings 14.1Proceeds from sales of infrastructure, plant and equipment 23.3Proceeds from sales of specialist military equipment 7.5Proceeds from sales of heritage and cultural assets -Dividends 60.2Other -

Total cash received 105.2Cash used

Purchase of land and buildings 865.6Purchase of infrastructure, plant and equipment 970.1Purchase of specialist military equipment 6,097.5Purchase of heritage and cultural assets -Purchase of intangibles 105.5Purchase of inventory 1,491.6Selling costs on sale of assets 5.0Finance costs 111.2

Total cash used 9,646.6Net cash from or (used by) investing activities -9,541.3FINANCING ACTIVITIESCash used

Repayment of debt 32.5Total cash used 32.5Net cash from or (used by) financing activities -32.5Net increase or (decrease) in cash and cash equivalents held -

Cash and cash equivalents at the beginning of the reporting period 11.5Effect of exchange rate movements on cash and cash equivalents -

Cash and cash equivalents at the end of the reporting period 11.5

Notes1. Figures shown eliminate transactions flowing between Departmental and Administered funding. 2. Cross reference with Table 64 Budgeted Administered Statement of Cash Flows for the Department of Defence for the period ended 30 June.


106

Table 48: Defence Resource Statement – Budget Estimates for 2016-17 as at Budget May 2016 Se

rial N

o.

Estimate of prior year amounts

available in 2016-17

$'000

+Proposed at Budget

2016-17 $'000

=Total

Estimate 2016-17

$'000

Totalavailable

Appropriation 2015-16

$'000ORDINARY ANNUAL SERVICES

Outcome 1 - 29,256,090 29,256,090 28,300,010Outcome 2 - 737,973 737,973 863,834Outcome 3 - 22,462 22,462 48,701

1 Total Departmental outputs - 30,016,525 30,016,525 29,212,5452 Total ordinary annual services (1) - 30,016,525 30,016,525 29,212,545

OTHER SERVICESDepartmental non-operating

Equity injections - 2,321,327 2,321,327 2,535,5483 Total Departmental non-operating - 2,321,327 2,321,327 2,535,5484 Total other services (3) - 2,321,327 2,321,327 2,535,5485 Total available annual appropriation (2+4) - 32,337,852 32,337,852 31,748,093

SPECIAL APPROPRIATIONSSpecial appropriations limited by criteria/entitlement

Defence Forces Retirement Benefits Act, 1948 Part 1 s.15D and VIC, s.82ZJ - 23,601 23,601 19,021Defence Force Retirement and Death Benefits Act, 1973 Part XII, s.125 - 1,834,881 1,834,881 1,697,896Military Superannuation and Benefits Act, 1991 Part V, s.17 - 3,371,554 3,371,554 4,337,115Defence Force (Home Loan Assistance) Act, 1990 Part IV, s.38 - 775 775 917Defence Home Ownership Assistance Scheme Act 2008 Part VI, s.84 - 110,852 110,852 102,339

6 Total special appropriations - 5,341,663 5,341,663 6,157,2887 Total appropriations (5+6) - 37,679,515 37,679,515 37,905,381

Funding from other sources - 2,033,882 2,033,882 2,209,913Returns to the OPA (net) - -1,489,693 -1,489,693 -1,463,796Previous years' outputs (appropriation receivable) 10,166 - 10,166 10,166Cash available 11,530 - 11,530 11,530

8 Total other available resources 21,696 544,189 565,885 767,8139 Total resourcing (7+8) 21,696 38,223,704 38,245,400 38,673,194

Special AccountsOpening Balance 44,782 - 44,782 66,417Appropriation Receipts - - - -Appropriation Receipts - other agencies - - - -Non-Appropriation Receipts to Special Accounts - 27,924 27,924 34,989

10 Total special accounts 44,782 27,924 72,706 101,406


107

Table 49: Third Party Payments to and from other Agencies[1]

Estimated Actual

2015-16 $'000

Budget Estimate2016-17

$'000Receipts from Defence Housing Australia for interest on loans, dividends and competitive neutrality payments (Administered) 111,373 113,569Payments made to Defence Housing Australia for the provision of services (Departmental) 580,819 657,094Payments made to Department of Foreign Affairs and Trade for the provision of services (Departmental) 23,247 23,855Payments made to the Commonwealth Superannuation Corporation (CSC) for the provision of services (Departmental) 34,611 39,930Payments made to the Attorney-General's Department for the provision of services (Departmental) 13,188 -Payments made to the Department of Finance for the provision of services (Departmental) 107,307 66,462Payments made to Comcare for workers compensation premiums (Departmental) 39,164 48,696Payments made to the Australian Federal Police for the provision of services (Departmental) 42,032 43,654Payments made to the Department of Human Services for the provision of services (Departmental) 2,568 2,156

Note

- Inter-agency transactions relating to Budget Measures as disclosed in Table 2 Defence 2016-17 Budget Measures. - Inter-agency transactions that were in excess of $20m in the previous year's annual statements; and - Inter-agency transactions in excess of $20m per annum; 1. Third party payments to and from other Agencies include:


108

3.3 BUDGETED FINANCIAL STATEMENTS

3.3.1 Departmental and Administered Budgeted Financial Statements

Table 50: Variation in Budgeted Departmental Comprehensive Income Statement (Showing Net Cost of Services) (for the period ended 30 June)

2016-17 PreviousEstimate

$'000

2016-17 Budget

Estimate$'000

Variation$'000

Variation%

EXPENSESEmployee benefits 11,275,594 11,636,412 360,818 3.2Supplier expenses 12,241,657 13,041,999 800,342 6.5Grants 106,833 106,833 - -Depreciation and amortisation 4,760,197 4,893,340 133,143 2.8Finance costs 149,961 152,971 3,010 2.0Write-down of assets and impairment of assets 947,457 991,461 44,004 4.6Losses from sale of assets - - - -Other 5,985 5,985 - -

Total expenses 29,487,684 30,829,001 1,341,317 4.5LESS:OWN-SOURCE INCOMEOwn-source revenue

Sales of goods and rendering of services 445,841 451,204 5,363 1.2Other revenue 48,894 48,894 - -

Total own-source revenue 494,735 500,098 5,363 1.1Gains

Reversals of previous asset write-downs 336,212 304,308 -31,904 -9.5Sale of assets 3,248 3,252 4 0.1Other gains 4,818 4,818 -1 -

Total gains 344,278 312,378 -31,901 -9.3Total own-source income 839,013 812,476 -26,538 -3.2Net cost of (contribution by) services 28,648,671 30,016,525 1,367,854 4.8

Revenue from Government 28,648,671 30,016,525 1,367,854 4.8Surplus (Deficit) attributable to the Australian Government - - - -Total comprehensive income attributable to the Australian Government - - - -


109

Table 51: Variation in Budgeted Departmental Balance Sheet (as at 30 June)


$'000

2016-17 Budget

Estimate$'000

Variation$'000

Variation%

ASSETSFinancial assets

Cash and cash equivalents 11,530 11,530 - -Trade and other receivables 96,714 96,714 - -Tax assets 106,002 106,002 - -Appropriation receivable 10,166 10,166 - -Other receivables 382,304 382,304 - -

Total financial assets 606,716 606,716 - -Non-financial assets

Land and buildings 18,558,751 18,275,135 -283,616 -1.5Infrastructure, plant and equipment 7,942,408 7,909,483 -32,925 -0.4Specialist military equipment 47,846,249 47,848,649 2,400 -Intangibles 670,778 722,199 51,421 7.7Heritage and cultural 1,006,955 907,345 -99,610 -9.9Inventories 6,275,517 6,107,144 -168,373 -2.7Prepayments 3,203,867 3,203,904 37 0.0

Total non-financial assets 85,504,525 84,973,859 -530,666 -0.6Assets held for sale 37,684 37,684 - -

Total assets 86,148,925 85,618,259 -530,666 -0.6LIABILITIESPayables

Suppliers 2,247,410 2,412,367 164,957 7.3Other 280,087 347,522 67,435 24.1

Total payables 2,527,497 2,759,889 232,392 9.2Interest bearing liabilities

Leases 1,373,301 1,390,347 17,046 1.2Total interest bearing liabilities 1,373,301 1,390,347 17,046 1.2Provisions

Employee provisions 2,580,195 2,589,834 9,639 0.4Restoration, decontamination and decommissioning 1,045,677 1,048,168 2,491 0.2Other 290 290 - -

Total provisions 3,626,162 3,638,292 12,130 0.3Total liabilities 7,526,960 7,788,528 261,568 3.5NET ASSETS 78,621,965 77,829,731 -792,234 -1.0EQUITY

Contributed equity 28,055,377 27,218,461 -836,916 -3.0Reserves 15,299,751 15,299,751 - -Retained surplus (accumulated deficit) 35,266,837 35,311,519 44,682 0.1

Total equity 78,621,965 77,829,731 -792,234 -1.0


110

Table 52: Variation in Budgeted Departmental Statement of Cash Flows (for the period ended 30 June)


$'000

2016-17 Budget

Estimate$'000

Variation$'000

Variation%

OPERATING ACTIVITIESCash received

Appropriations 28,648,671 30,016,525 1,367,854 4.8Goods and services 445,841 451,204 5,363 1.2Net GST received 1,425,573 1,619,911 194,338 13.6Other cash received 48,894 48,894 - -

Total cash received 30,568,979 32,136,534 1,567,555 5.1Cash used

Employees 11,214,815 11,570,112 355,297 3.2Suppliers 10,982,155 11,520,104 537,949 4.9Net GST paid 1,425,573 1,619,911 194,338 13.6Grants 106,833 106,833 - -Other cash used 5,985 5,985 - -Cash transfer to the Official Public Account (receivables) 897 897 - -

Total cash used 23,736,258 24,823,842 1,087,584 4.6Net cash from (used by) operating activities 6,832,721 7,312,692 479,971 7.0INVESTING ACTIVITIESCash received

Proceeds from sales of land and buildings 14,127 14,127 - -Proceeds from sales of infrastructure, plant and equipment 23,308 23,312 4 0.0Proceeds from sales of specialist military equipment 7,549 7,549 - -

Total cash received 44,984 44,988 4 0.0Cash used

Purchase of land and buildings 1,050,865 865,627 -185,238 -17.6Purchase of infrastructure, plant and equipment 971,287 970,081 -1,206 -0.1Purchase of specialist military equipment 5,997,362 6,097,456 100,094 1.7Purchase of intangibles 65,942 105,535 39,593 60.0Purchase of inventory 1,387,033 1,491,637 104,604 7.5Selling costs on sale of assets 4,982 4,982 - -Finance costs 111,233 111,233 - -

Total cash used 9,588,704 9,646,551 57,847 0.6Net cash from (used by) investing activities -9,543,720 -9,601,563 -57,843 0.6FINANCING ACTIVITIESCash received

Appropriations - contributed equity 2,750,832 2,321,327 -429,505 -15.6Total cash received 2,750,832 2,321,327 -429,505 -15.6Cash used

Repayment of debt 39,833 32,456 -7,377 -18.5Total cash used 39,833 32,456 -7,377 -18.5Net cash from (used by) financing activities 2,710,999 2,288,871 -422,128 -15.6Net increase (decrease) in cash and cash equivalents held - - - -

Cash and cash equivalents at the beginning of the reporting period 11,530 11,530 - -Effect of exchange rate movements on cash and cash equivalentsat the beginning of the reporting period - - - -

Cash and cash equivalents at the end of the reporting period 11,530 11,530 - -


111

Table 53: Budgeted Departmental Comprehensive Income Statement (Showing Net Cost of Services) (for the period ended 30 June)

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000EXPENSES

Employee benefits 11,711,000 11,636,412 11,749,165 11,974,439 12,376,421Supplier expenses 12,426,160 13,041,999 13,503,292 14,265,779 15,372,511Grants 104,835 106,833 14,759 15,138 15,531Depreciation and amortisation 4,540,570 4,893,340 5,058,580 5,470,835 5,989,538Finance costs 106,152 152,971 156,916 166,513 169,555Write-down of assets and impairment of assets 954,417 991,461 1,029,403 1,067,961 1,107,930Foreign exchange lossesLosses from sale of assets 91,710 - - - -Other 35,303 5,985 14,587 2,616 2,681

Total expenses 29,970,147 30,829,001 31,526,702 32,963,281 35,034,167LESS:OWN-SOURCE INCOME

Own-source revenueSales of goods and rendering of services 447,832 451,204 447,407 464,725 479,447Other revenue 57,474 48,894 50,467 52,052 53,609

Total own-source revenue 505,306 500,098 497,874 516,777 533,056Gains

Reversals of previous asset write-downs 292,278 304,308 316,720 329,469 342,727Sale of assets - 3,252 14,846 2,769 2,628Other gains 4,700 4,818 4,938 5,061 5,188

Total gains 296,978 312,378 336,504 337,299 350,543Total own-source income 802,284 812,476 834,378 854,076 883,599Net cost of (contribution by) services 29,167,863 30,016,525 30,692,324 32,109,205 34,150,568

Revenue from Government 29,212,545 30,016,525 30,692,324 32,109,205 34,150,568Surplus (Deficit) attributable to the Australian Government 44,682 - - - -OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Changes in asset revaluation reserves - - - - -Total other comprehensive income/(loss) - - - - -

Total comprehensive income attributable to the Australian Government 44,682 - - - -


112

Table 54: Budgeted Departmental Balance Sheet (as at 30 June)

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000ASSETSFinancial assets

Cash and cash equivalents 11,530 11,530 11,530 11,530 11,530Trade and other receivables 96,714 96,714 96,714 96,714 96,714Tax assets 106,002 106,002 106,002 106,002 106,002Appropriation receivable 10,166 10,166 10,166 10,166 10,166Other receivables 423,485 382,304 358,674 354,829 350,984

Total financial assets 647,897 606,716 583,086 579,241 575,396Non-financial assets

Land and buildings 18,011,287 18,275,135 18,401,780 18,870,559 19,560,243Infrastructure, plant and equipment 7,530,191 7,909,483 8,323,052 8,341,951 8,450,734Specialist military equipment 45,720,502 47,848,649 51,749,972 56,276,269 60,808,288Intangibles 753,616 722,199 599,130 661,917 763,320Heritage and cultural 955,856 907,345 858,834 810,323 761,812Inventories 6,288,745 6,107,144 5,912,350 5,705,825 5,497,151Prepayments 3,203,904 3,203,904 3,203,904 3,203,904 3,203,904

Total non-financial assets 82,464,101 84,973,859 89,049,022 93,870,748 99,045,452Assets held for sale 37,684 37,684 37,684 37,684 37,684

Total assets 83,149,682 85,618,259 89,669,792 94,487,673 99,658,532LIABILITIESPayables

Suppliers 2,339,802 2,412,367 2,536,280 2,611,897 2,630,315Other 344,798 347,522 349,731 352,547 355,821

Total payables 2,684,600 2,759,889 2,886,011 2,964,444 2,986,136Interest bearing liabilities

Leases 1,422,803 1,390,347 1,357,564 1,322,159 1,284,504Total interest bearing liabilities 1,422,803 1,390,347 1,357,564 1,322,159 1,284,504Provisions

Employee provisions 2,526,258 2,589,834 2,643,835 2,695,249 2,745,888Restoration, decontamination and decommissioning 1,006,430 1,048,168 1,094,924 1,152,509 1,214,510Other 290 290 290 290 290

Total provisions 3,532,978 3,638,292 3,739,049 3,848,048 3,960,688Total liabilities 7,640,381 7,788,528 7,982,624 8,134,651 8,231,328NET ASSETS 75,509,301 77,829,731 81,687,168 86,353,022 91,427,204EQUITY

Contributed equity 24,898,031 27,218,461 31,075,898 35,741,752 40,815,934Reserves 15,299,751 15,299,751 15,299,751 15,299,751 15,299,751Retained surplus (accumulated deficit) 35,311,519 35,311,519 35,311,519 35,311,519 35,311,519

Total equity 75,509,301 77,829,731 81,687,168 86,353,022 91,427,204


113

Table 55: Budgeted Departmental Statement of Cash Flows (for the period ended 30 June)

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000OPERATING ACTIVITIESCash received

Appropriations 29,212,545 30,016,525 30,692,324 32,109,205 34,150,568Goods and services 447,832 451,204 447,407 464,725 479,447Net GST received 1,555,302 1,619,911 1,727,490 1,899,934 2,044,489Other cash received 57,474 48,894 50,467 52,052 53,609Cash transfer from the Official Public Account (receivables) 134,704 - - - -

Total cash received 31,407,857 32,136,534 32,917,688 34,525,916 36,728,113Cash used

Employees 11,698,635 11,570,112 11,692,955 11,920,209 12,322,508Suppliers 11,077,833 11,520,104 12,053,095 12,852,919 13,855,734Net GST paid 1,555,302 1,619,911 1,727,490 1,899,934 2,044,489Grants 104,835 106,833 14,759 15,138 15,531Other cash used 35,303 5,985 14,587 2,616 2,681Cash transfer to the Official Public Account (receivables) 875 897 919 942 966

Total cash used 24,472,783 24,823,842 25,503,805 26,691,758 28,241,909Net cash from (used by) operating activities 6,935,074 7,312,692 7,413,883 7,834,158 8,486,204INVESTING ACTIVITIESCash received

Proceeds from sales of land and buildings 76,361 14,127 26,495 15,176 15,866Proceeds from sales of infrastructure, plant and equipment 23,072 23,312 23,594 19,332 20,890Proceeds from sales of specialist military equipment 7,549 7,549 7,549 7,549 7,549

Total cash received 106,982 44,988 57,638 42,057 44,305Cash used

Purchase of land and buildings 587,238 865,627 739,816 1,101,293 1,345,864Purchase of infrastructure, plant and equipment 772,059 970,081 1,011,330 615,710 702,394Purchase of specialist military equipment 6,679,099 6,097,456 8,053,766 9,098,896 9,662,542Purchase of intangibles 72,746 105,535 10,590 185,538 181,294Purchase of inventory 1,330,920 1,491,637 1,366,348 1,392,070 1,563,022Selling costs on sale of assets 5,697 4,982 5,084 5,171 5,332Finance costs 100,916 111,233 110,160 108,928 107,554

Total cash used 9,548,675 9,646,551 11,297,094 12,507,606 13,568,002Net cash from (used by) investing activities -9,441,693 -9,601,563 -11,239,456 -12,465,549 -13,523,697FINANCING ACTIVITIESCash received

Appropriations - contributed equity 2,535,548 2,321,327 3,858,356 4,666,796 5,075,148Total cash received 2,535,548 2,321,327 3,858,356 4,666,796 5,075,148Cash used

Repayment of debt 28,929 32,456 32,783 35,405 37,655Total cash used 28,929 32,456 32,783 35,405 37,655Net cash from (used by) financing activities 2,506,619 2,288,871 3,825,573 4,631,391 5,037,493Net increase (decrease) in cash and cash equivalents held - - - - -

Cash and cash equivalents at the beginning of the reporting period 11,530 11,530 11,530 11,530 11,530Effect 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 11,530 11,530 11,530 11,530 11,530


114

Table 56: Departmental Statement of Changes in Equity — Summary of Movement (Budget year 2016-17)

Retained Earnings

$'000

Asset Revaluation

Reserve$'000

Contributed Equity/Capital

$'000

Total Equity

$'000Opening balance as at 1 July 2016

Balance carried forward from previous period 35,311,519 15,299,751 24,898,031 75,509,301Adjustment for changes in accounting policies - - - -

Adjusted opening balance 35,311,519 15,299,751 24,898,031 75,509,301Comprehensive 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 ownersReturns on capital:

Restructuring - - - -Other - - -897 -897

Contributions by ownersAppropriation (equity injection) - - 2,321,327 2,321,327Other - - - -

Sub-total transaction with owners - - 2,320,430 2,320,430Transfers between equity components - - - -

Estimated closing balance as at 30 June 2017 35,311,519 15,299,751 27,218,461 77,829,731


115

Table 57: Departmental Capital Budget Statement

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000CAPITAL APPROPRIATIONS

Equity injection 2,535,548 2,321,327 3,858,356 4,666,796 5,075,148Total capital appropriations 2,535,548 2,321,327 3,858,356 4,666,796 5,075,148Represented by:

Purchase of non-financial assets 2,506,619 2,288,871 3,825,573 4,631,391 5,037,493Annual finance lease costs 28,929 32,456 32,783 35,405 37,655Other items - - - - -

Total Items 2,535,548 2,321,327 3,858,356 4,666,796 5,075,148PURCHASE OF NON-FINANCIAL ASSETS

Funded by capital appropriations 2,535,548 2,321,327 3,858,356 4,666,796 5,075,148Funded by finance lease costs - - - - -Funded internally from departmental resources[1] 5,575,594 5,717,372 5,957,146 6,334,641 6,816,946

Total 8,111,142 8,038,699 9,815,502 11,001,437 11,892,094Reconciliation of cash used to acquire assets to asset movement table

Total purchases 8,111,142 8,038,699 9,815,502 11,001,437 11,892,094less additions by finance lease - - - - -less additions by creditors/borrowings - - - - -plus borrowing/finance costs 100,916 111,233 110,160 108,928 107,554plus annual finance lease costs 28,929 32,456 32,783 35,405 37,655less gifted assets - - - - -less s75/restructuring - - - - -

Total cash used to acquire assets 8,240,987 8,182,388 9,958,445 11,145,770 12,037,303

Notes1. Includes the following sources of funding: - annual and prior year appropriations; - donations and contributions; - gifts; - internally developed assets; - s74 relevant agency receipts; and - proceeds from the sale of assets.


116

Table 58: Statement of Departmental Asset Movements (2016-17)

Land$'000

Buildings

$'000

Specialist Military

Equipment$'000

Infrastructure, Plant and

Equipment$'000

Intangibles$'000

Heritage and Cultural

Assets $'000

AssetsHeld for

Sale $'000

Total$'000

As at 1 July 2016Gross book value 4,982,286 13,946,451 87,418,234 8,448,447 1,714,155 1,060,343 37,684 117,607,600Accumulated depreciation/amortisation and impairment - 917,450 41,697,732 918,256 960,539 104,487 - 44,598,464Opening net book balance 4,982,286 13,029,001 45,720,502 7,530,191 753,616 955,856 37,684 73,009,136CAPITAL ASSET ADDITIONSEstimated expenditure on new or replacement assets

By purchase - appropriation equity - 865,627 6,189,760 970,040 105,136 - - 8,130,563By transfer from another agency - - - - - - - -By purchase - donated funds - - - - - - - -By finance lease - - - - - - - -

Total additions - 865,627 6,189,760 970,040 105,136 - - 8,130,563Other movementsAssets held for saleReclassifications[1] - - 41,607 6,629 - - - 48,236Depreciation and amortisation - 568,827 3,587,402 552,047 136,553 48,511 - 4,893,340Disposal of entities or other operations (including restructuring) - 13,452 - 23,302 - - - 36,754Other disposals[2] - 19,500 515,818 22,028 - - - 557,346Total other movements - 601,779 4,061,613 590,748 136,553 48,511 - 5,439,204As at 30 June 2017Gross book value 4,982,286 14,779,126 93,133,783 9,379,786 1,819,291 1,060,343 37,684 125,192,299Accumulated depreciation/amortisation and impairment - 1,486,277 45,285,134 1,470,303 1,097,092 152,998 - 49,491,804Closing net book value 4,982,286 13,292,849 47,848,649 7,909,483 722,199 907,345 37,684 75,700,495

Notes1. Reclassification include assets first found.2. Other disposals includes write-offs.


117

Table 59: Variation in Schedule of Budgeted Income and Expenses Administered on Behalf of Government (for the period ended 30 June)


$'000

2016-17 Budget

Estimate$'000

Variation$'000

Variation%

INCOME ADMINISTERED ON BEHALF OF GOVERNMENTRevenueNon-taxation

Interest 28,027 28,027 - -Dividends 50,767 50,767 - -Military superannuation contributions 1,221,423 1,358,948 137,525 11.3License Fees 15,644 15,644 - -Other 27,271 27,253 -18 -0.1

Total non-taxation 1,343,132 1,480,639 137,507 10.2Total revenues administered on behalf of Government 1,343,132 1,480,639 137,507 10.2EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT

Subsidies 111,627 111,627 - -Military retention benefits 79,985 79,985 - -Military superannuation benefits 5,140,411 5,150,051 9,640 0.2

Total expenses administered on behalf of Government 5,332,023 5,341,663 9,640 0.2


118

Table 60: Variation in Schedule of Budgeted Assets and Liabilities Administered on Behalf of Government (as at 30 June)


$'000

2016-17 Budget

Estimate$'000

Variation$'000

Variation%

ASSETS ADMINISTERED ON BEHALF OF GOVERNMENTFinancial assets

Cash and cash equivalents - - - -Trade and other receivables 69,837 59,571 -10,266 -14.7Investments accounted for using the equity method 2,450,631 2,459,537 8,906 0.4Loans 509,580 509,580 - -

Total financial assets 3,030,048 3,028,688 -1,360 -Non-financial assets

Prepayments 271,556 271,556 - -Total non-financial assets 271,556 271,556 - -Total assets administered on behalf of Government 3,301,604 3,300,244 -1,360 -LIABILITIES ADMINISTERED ON BEHALF OF GOVERNMENTPayables

Other 5,502 5,502 - -Total payables 5,502 5,502 - -Provisions

Superannuation - DFRB[1] 404,918 394,220 -10,698 -2.6Superannuation - DFRDB[2] 30,819,863 30,082,945 -736,918 -2.4Superannuation - MSBS[3] 34,194,273 33,960,822 -233,451 -0.7

Total provisions 65,419,054 64,437,987 -981,067 -1.5Total liabilities administered on behalf of Government 65,424,556 64,443,489 -981,067 -1.5

Notes1. Defence Force Retirement Benefits.2. Defence Force Retirement and Death Benefits.3. Military Superannuation and Benefits Scheme.


119

Table 61: Variation in Schedule of Budgeted Administered Cash Flows (for the period ended 30 June)


$'000

2016-17 Budget

Estimate$'000

Variation$'000

Variation%

OPERATING ACTIVITIESCash received

Interest 28,027 28,027 - -Military superannuation contributions 1,221,423 1,358,948 137,525 11.3Fees 15,644 15,644 - -Other 25,980 25,962 -18 -0.1

Total cash received 1,291,074 1,428,581 137,507 10.7Cash used

Subsidies paid 111,627 111,627 - -Military benefits 2,362,707 2,355,778 -6,929 -0.3

Total cash used 2,474,334 2,467,405 -6,929 -0.3Net cash from or (used by) operating activities -1,183,260 -1,038,824 144,436 -12.2INVESTING ACTIVITIESCash received

Dividends 60,215 60,215 - -Total cash received 60,215 60,215 - -Cash used

Loans - - - -Total cash used - - - -Net cash from or (used by) investing activities 60,215 60,215 - -Net increase (decrease) in cash held -1,123,045 -978,609 144,436 -12.9

Cash at the beginning of the reporting period - - - -Cash from the Official Public Account for appropriations 2,474,334 2,467,405 -6,929 -0.3Cash to the Official Public Account -1,351,289 -1,488,796 -137,507 10.2Effect of exchange rate movements on cash and cash equivalents - - - -

Cash and cash equivalents at the end of the reporting period - - - -


120

Table 62: Schedule of Budgeted Income and Expenses Administered on Behalf of Government (for the period ended 30 June)

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000INCOME ADMINISTERED ON BEHALF OF GOVERNMENTRevenueNon-taxation

Interest 28,027 28,027 28,027 28,027 28,027Dividends 63,049 50,767 49,952 59,318 41,974Military superannuation contributions 1,470,576 1,358,948 1,292,637 1,227,879 1,167,434Fees 13,871 15,644 16,440 17,236 18,038Other 50,730 27,253 19,110 21,678 21,925

Total non-taxation 1,626,253 1,480,639 1,406,166 1,354,138 1,277,398Total revenues administered on behalf of Government 1,626,253 1,480,639 1,406,166 1,354,138 1,277,398EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT

Subsidies 103,256 111,627 118,275 127,202 136,701Military retention benefits 69,798 79,985 93,548 107,299 120,288Military superannuation benefits 5,984,234 5,150,051 5,330,659 5,512,355 5,695,865

Total expenses administered on behalf of Government 6,157,288 5,341,663 5,542,482 5,746,856 5,952,854


121

Table 63: Schedule of Budgeted Assets and Liabilities Administered on Behalf of Government (as at 30 June)

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000ASSETS ADMINISTERED ON BEHALF OF GOVERNMENTFinancial assets

Cash and cash equivalents - - - - -Trade and other receivables 71,571 59,571 59,045 68,707 51,690Investments accounted for using the equity method 2,413,445 2,459,537 2,526,650 2,598,068 2,694,499Loans 509,580 509,580 509,580 509,580 509,580

Total financial assets 2,994,596 3,028,688 3,095,275 3,176,355 3,255,769Non-financial assets

Prepayments 210,141 271,556 299,608 328,609 342,221Total non-financial assets 210,141 271,556 299,608 328,609 342,221Total assets administered on behalf of Government 3,204,737 3,300,244 3,394,883 3,504,964 3,597,990LIABILITIES ADMINISTERED ON BEHALF OF GOVERNMENTPayables

Other 5,502 5,502 5,502 5,502 5,502Total payables 5,502 5,502 5,502 5,502 5,502Provisions

Superannuation - DFRB[1] 415,437 394,220 373,442 353,158 333,423Superannuation - DFRDB[2] 29,838,660 30,082,945 30,281,459 30,433,152 30,538,126Superannuation - MSBS[3] 31,260,629 33,960,822 36,774,137 39,697,046 42,736,988

Total provisions 61,514,726 64,437,987 67,429,038 70,483,356 73,608,537Total liabilities administered on behalf of Government 61,520,228 64,443,489 67,434,540 70,488,858 73,614,039

Notes1. Defence Force Retirement Benefits.2. Defence Force Retirement and Death Benefits.3. Military Superannuation and Benefits Scheme.


122

Table 64: Schedule of Budgeted Administered Cash Flows (for the period ended 30 June)

2015-16 Estimated

Actual$'000

2016-17 Budget

Estimate$'000


$'000


$'000


$'000OPERATING ACTIVITIESCash received

Interest 28,027 28,027 28,027 28,027 28,027Military superannuation contributions 1,470,576 1,358,948 1,292,637 1,227,879 1,167,434Fees 13,871 15,644 16,440 17,236 18,038Other 30,514 25,962 25,521 27,092 28,925

Total cash received 1,542,988 1,428,581 1,362,625 1,300,234 1,242,424Cash used

Subsidies paid 103,256 111,627 118,275 127,202 136,701Military benefits 2,182,538 2,355,778 2,450,343 2,584,954 2,696,599

Total cash used 2,285,794 2,467,405 2,568,618 2,712,156 2,833,300Net cash from or (used by) operating activities -742,806 -1,038,824 -1,205,993 -1,411,922 -1,590,876INVESTING ACTIVITIESCash received

Dividends 54,637 60,215 50,767 49,952 59,318Total cash received 54,637 60,215 50,767 49,952 59,318Cash used

Loans - - - - -Total cash used - - - - -Net cash from (used by) investing activities 54,637 60,215 50,767 49,952 59,318Net increase (decrease) in cash held -688,169 -978,609 -1,155,226 -1,361,970 -1,531,558

Cash at the beginning of reporting period - - - - -Cash from the Official Public Account for appropriations 2,285,794 2,467,405 2,568,618 2,712,156 2,833,300Cash to the Official Public Account -1,597,625 -1,488,796 -1,413,392 -1,350,186 -1,301,742Effect of exchange rate movements on cash and cash equivalents - - - - -

Cash and cash equivalents at the end of the reporting period - - - - -


123

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).


124

APPENDICES

Appendix A Defence Cooperation Program

Appendix B The Unapproved Major Capital Investment Program (also known as the Defence Capability Plan)

Appendix C Top 30 Acquisition Projects by 2016-17 Forecast Expenditure

Appendix D Current Status of Previously Reported Top 30 Projects (Projects Reported in the Last Five Financial Years)

Appendix E Top 10 Minor Capital Investment Projects by 2016-17 Forecast Expenditure

Appendix F Top 30 Sustainment Products by 2016-17 Forecast Expenditure

Appendix G Capital Facilities Program

Appendix H Status of Major Projects Foreshadowed for Government and Parliamentary Standing Committee on Public Works Consideration (PWC) in 2016-17


125

APPENDIX A: DEFENCE COOPERATION PROGRAM

Since the 1960s, the Defence Cooperation Program (DCP) has made up a significant component of Australia’s international defence engagement. The program:

• 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 program 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.


126

A key element of the DCP is the Pacific Patrol Boat Program, through which Australia has provided 22 Patrol Boats (with associated personnel and technical assistance) to 12 countries. The Program engages Pacific navies and police maritime wings and is designed to help Pacific island countries improve their ability to independently police their maritime zones. Under the follow-on Pacific Maritime Security Program, Australia is replacing the fleet with new steel-hulled vessels. These vessels have been designed in consultation with our international partners in the Program. With the selection of the preferred tender in early 2016 our international partners in the Program will receive a significantly enhanced replacement vessel that will continue to support their maritime surveillance needs over the next 30 years.

Table 65: Defence Cooperation Program budget 2016-17

2014-15Actual$'000

2015-16Budget

Estimate$'000

2015-16Estimated

Actual$'000

2016-17Budget

Estimate$'000

Papua New Guinea 25,274 37,086 40,297 40,788South Pacific Region 37,571 40,600 41,969 38,876South-East Asia 13,588 16,933 18,678 19,334Other regional activities[1] 5,229 6,831 6,262 7,830Defence International Training Centre[2] 4,948 5,134 4,496 4,599Total 86,610 106,584 111,702 111,427

Notes1. The Ukraine has been included as a Defence Cooperation Country from 2016-17.

2. 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 66: South Pacific Region budget 2016-17

2014-15Actual$'000

2015-16Budget

Estimate$'000

2015-16Estimated

Actual$'000

2016-17Budget

Estimate$'000

Timor Leste 4,003 4,707 4,901 5,829Vanuatu 938 800 333 807Solomon Islands 718 820 898 871Tonga[1] 6,467 4,350 4,499 3,042Samoa 138 120 89 232Cook Islands 59 110 234 182Republic of the Marshall Islands 64 160 105 396Federated States of Micronesia 95 105 67 122Fiji 407 2,200 2,383 2,700Tuvalu 469 200 210 348Kiribati 208 200 266 395Palau 396 350 289 614DCP Scheduled Support 4,312 4,382 3,241 4,102Pacific Patrol Boat Program 22,717 22,096 23,347 19,236Total 40,991 40,600 40,862 38,876

Note1. The decreased budget for Tonga reflects completion of the Tongan Landing Craft acquisition.


127

Table 67: South-East Asia region budget 2016-17

2014-15Actual$'000

2015-16Budget

Estimate$'000

2015-16Estimated

Actual$'000

2016-17Budget

Estimate$'000

Singapore[1] 41 80 60 -Philippines 2,031 2,641 3,886 3,142Thailand 2,514 2,685 2,758 3,034Malaysia 2,786 3,567 4,813 4,250Indonesia 3,374 4,268 3,427 4,290Vietnam 1,971 2,100 2,242 2,552Cambodia and Laos 767 1,320 1,352 1,458Brunei - 45 30 320Myanmar 43 227 120 288Total 13,527 16,933 18,688 19,334

Note1. Singapore is considered part of Defence Engagement from 2016-17 onwards.


130

APPENDIX C: TOP 30 ACQUISITION PROJECTS BY 2016-17 FORECAST EXPENDITURE

Table 71: Top 30 Projects by 2016-17 Forecast Expenditure (Gross Plan)

ProjectNumber/Phase

ApprovedProject

Expenditure$m

EstimatedCumulative

Expenditureto 30 June

2016$m

BudgetEstimate2016-17

$m

Maritime Patrol and Response Aircraft System AIR 7000 Phase 2 5,501 1,446 1,047

New Air Combat Capability AIR 6000 Phase 2A/B 16,631 930 726

Growler Airborne Electronic Attack Capability AIR 5349 Phase 3 3,530 2,204 242

Future Naval Aviation Combat System (FNACS) AIR 9000 Phase 8 3,520 1,900 230

Helicopter Aircrew Training System AIR 9000 Phase 7 488 49 193

Multi-Role Helicopter (MRH) AIR 9000Phase 2 3,774 2,900 174

Additional Multi-Role Tanker Transport Aircraft AIR 7403 Phase 3 906 314 170

AEW&C Interoperability Compliance Upgrade AIR 5077 Phase 5A 652 138 164

Battlefield Airlift - Caribou Replacement AIR 8000 Phase 2 1,435 724 148

Pilot Training System AIR 5428 Phase 1 1,269 27 144

Bridging Air Combat Capability AIR 5349 Phase 1 3,362 2,808 57

Lead-in Fighter Capability Assurance Program AIR 5438 Phase 1A 272 177 55

Battlespace Communications System (Land) JNT 2072 Phase 2B 950 111 167

Woomera Test Range Remediation JNT 3024 Phase 1 244 42 78

Maritime Communication Modernisation SEA 1442 Phase 4 455 104 71

Civil Military Air Traffic System (CMATS) AIR 5431 Phase 3 731 29 60

Enhanced Land Electronic Warfare Systems DEF 500 Phase 1 188 16 56

Battlefield Command Systems LND 75 Phase 4 372 294 53

Improved Tactical Electronic Support Capability for ANZAC Class

SEA 1448 Phase 4A 284 129 52

Aerospace

Joint


131

Table 71: Top 30 Projects by 2016-17 Forecast Expenditure (Gross Plan) (Continued)

ProjectNumber/Phase

ApprovedProject

Expenditure$m

EstimatedCumulative

Expenditureto 30 June

2016$m


$m

Medium and Heavy Capability (MHC), Field Vehicles, Modules and Trailers (FVMT)

LND 121 Phase 3B 3,466 318 686

Enhanced F88 LND 125 Phase 3C 481 56 110

Project Overlander - Protected Mobility Vehicle-Light LND 121 Phase 4 2,005 248 95

Enhancements to Special Operations Capability JNT 2097 Phase 1B 345 204 89

Enhanced Gap Crossing Capability LND 155 Phase 1 230 63 69

Direct Fire Support Weapons LND 40 Phase 2 168 44 63

Additional Lightweight Towed Howitzers and Capability Assurance Program

LND 17 Phase 1C1 227 79 58

Soldier Enhancement Version 2 - Survivability LND 125 Phase 3B 189 108 52

Air Warfare Destroyer Program SEA 4000 Phase 3 9,121 6,655 726

Collins Communications and Electronic Warfare Programme SEA 1439 Phase 5B2 256 58 67

Collins Sonar Capability Assurance Program SEA 1439 Phase 6 128 12 63

Total -Top 30 Projects (Gross Plan) 61,180 22,187 5,963

Other Approved Project Gross Plans 45,309 37,957 1,125

Total - Approved Projects (Gross Plan) 106,489 60,144 7,088

Management Margin: Slippage[1] -884

Payments Required for the Approved Programme 6,204 Projects planned for Government consideration and yet to be allocated to Capability Managers as a result of recent Government announcements[2] 921

Total Estimated Funds Available 7,125

2. This includes amounts relating to the recent announcements by the Government relating to Future Frigates, Offshore Patrol Vessels and Future Submarines.

Notes1. Management margin is an estimate of possible overall approved capital programme expenditure slippage that may occur as the 2016-17 financial year progresses.

Land

Maritime


132

Top 30 Major Project Descriptions

Aerospace Domain

Maritime Patrol and Response Aircraft System – AIR 7000 Phase 2

Prime Contractor: United States Navy (USN), under a cooperative program. Boeing is the USN prime contractor.

The project is delivering twelve P-8A Poseidon aircraft and the associated through-life support infrastructure as partial replacement of the AP-3C Orion.

During 2016-17, the first two RAAF P-8A Poseidon aircraft will be delivered, and are expected to enter RAAF service in 2016 and 2017 respectively. The aircraft will be utilised to commence the Initial Operational Test and Evaluation program, which will progressively expand the operational roles performed by the RAAF P-8A. The first two (of three) Mobile Tactical Operations Centres will also be delivered, and connected to the Defence Single Information Environment.

The through-life support infrastructure required to enable initial P-8A operations will be delivered during 2016-17, including support and test equipment, spares and the necessary engineering and logistics information systems. Training of aircrew, maintenance crews and Mobile Tactical Operations Centres crews will continue in the USA.

Growler Airborne Electronic Attack – AIR 5349 Phase 3

Prime Contractor: United States 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 EW (Electronic Warfare) Training Ranges. Aircrew and maintenance training will also be delivered.

During 2016-17, EA-18G Growler aircraft, threat jamming systems, stores and equipment will be delivered to Australia. Logistics and operational support systems will be established to achieve State registration of the aircraft. Australian based initial operations will commence. An Initial Operational Test and Evaluation program, including live fire of missiles, will be conducted at Ranges in the United States.


133

AIR 6000 Phase 2A/2B- New Air Combat Capability

Prime Contractor: Lockheed Martin is contracted to the United States 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 F-35A JSF aircraft and supporting elements to form three operational squadrons and one training squadron.

During 2016-17 Australian F-35A pilot training will continue at the International Pilot Training Centre at Luke Air Force Base Arizona, US where the first two Australian F-35A aircraft are currently deployed.

Other major activities will include:

• progressing the production of Australia’s next eight F-35A aircraft under the Low Rate Initial Production 10 Contract;

• contracting activity associated with procurement of a further eight F-35A aircraft under the Low Rate Initial Production 11 Contract, and 15 aircraft under the mature production Lot 12 Contract;

• continuing the construction at RAAF Base Williamtown, New South Wales and commencing construction at RAAF Base Tindal, Northern Territory;

• maturing the development of a sustainment model for Australian based support; and

• commencing detailed planning and support for the ferry of the first two Australian F-35A aircraft to RAAF Base Williamtown in 2018.

Major risks to the program include:

• establishing and ramping up the F-35 sustainment system given the current immaturity of the Global Sustainment Solution;

• establishing and integrating the F-35 capability with existing infrastructure and systems as part of the overall transition process;

• establishing supporting information technology systems and timely access to JSF Program information;

• meeting industry outcomes both during production and transition into service;

• managing the workforce through the transition to the new capability; and

• changes to acquisition and life-cycle costs due to variation in US and F-35 Partner procurement plans.

AIR 6000 required facilities at RAAF Base Williamtown are currently on schedule. RAAF Base Tindal facilities are expected to be delivered ahead of schedule.


134

Future Naval Aviation Combat System (MH-60R Seahawk Romeo) – 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 being 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 2016-17 the final three aircraft will be delivered to the Navy, bringing the total number of aircraft in inventory to 24. The final aircraft is scheduled for delivery in early 2016-17. The main focus in 2016-17 will be the delivery of additional aircrew and maintenance training devices and providing sufficient stores and equipment to support the increasing number of flights at sea.

The first of two tranches of Australian Unique Modifications have been prototyped and tested by the United States Navy. These modifications will be progressively retrofitted into the Australian Romeo fleet over the period to 2020.

Helicopter Aircrew Training System – JP (Air) 9000 Phase 7

Prime Contractor: Boeing Defence Australia.

The Helicopter Aircrew Training System being delivered through this project will provide a new joint training system to prepare Navy and the Army aircrew for conversion to operational helicopter types. The Joint Helicopter School will be located in Nowra, New South Wales. The project will replace the current training 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 per year with the first course commencing in 2018.

During 2016-17 Boeing Defence Australia will take delivery of all 15 helicopters and the majority of the synthetic training devices which will be installed in the new training facilities. This equipment will facilitate continued courseware development and verification, and training for the initial cadre of aircrew instructors, in preparation for Initial Materiel Release in late 2017.

Despite an aggressive schedule, the facilities program remains on schedule. The managing contractor has successfully employed innovative techniques and practices to deliver critical infrastructure on time, reducing the risk to the capability delivery schedule.

The project is approximately six months behind schedule in the design of the total training system. The Project Team and Prime Contractor remain focussed on schedule recovery to ensure training commences in 2018.


135

Multi-Role Helicopter (MRH90) – 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 2016-17, the project is scheduled to accept all but the final production aircraft, bringing the total number of aircraft to 46; the final aircraft will be delivered in July 2017. The retrofit program, which upgraded the first 13 production aircraft to the mature contracted configuration, delivered the final aircraft four months ahead of schedule in April 2016. The Project focus will continue on the provision of the capabilities required to enable achievement of the remaining operational milestones in the lead-up to Final Operational Capability in 2021.

The key risks for the project are associated with the remediation of technical, role equipment and supportability issues required for the achievement of operational milestones.

Additional KC-30A MRTT – AIR 7403 Phase 3

Prime Contractor: Airbus Defence and Space.

Air 7403 Phase 3 will acquire two additional KC-30A Multi Role Tanker Transport (MRTT) aircraft to increase the existing fleet of KC-30A MRTTs from five to seven aircraft.

During 2016-17 the first aircraft will complete conversion in the Airbus Defence and Space conversion facility in Madrid, Spain, with delivery planned for mid 2017. The second aircraft is scheduled to commence conversion in May 2016.

AEW&C Interoperability Compliance Upgrade – AIR 5077 Phase 5A


This project will deliver interoperability compliance upgrades to the E-7A Wedgetail Airborne Early Warning and Control aircraft and its associated support systems.

During 2016-17, this project will progress the design and development of mission computing and Identification Friend or Foe changes for delivery on two aircraft in 2018-19. This project will also develop design options for additional interoperability upgrades for future project approval consideration by Government.

Battlefield Airlift Caribou Replacement – AIR 8000 Phase 2

Prime Contractor: US Air Force (USAF) through Foreign Military Sales (FMS) (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.

Four aircraft have been accepted by the Commonwealth. Two aircraft have been delivered to 35 Squadron at RAAF Base Richmond, New South Wales, with two aircraft located in the United States to support aircrew and maintainer training. During 2016-17 the project will: continue establishment of logistic support arrangements at RAAF Base Richmond, continue delivery of aircraft, plan for a longer term training solution and conduct 35 Squadron Operation Test and Evaluation to support Initial Operational Capability (end 2016). Work will also continue on preparations for the aircraft structural fatigue test and procurement of training aids.


136

Pilot Training System - AIR 5428 Phase 1

Prime Contractor: Lockheed Martin Australia Pty Ltd.

AIR 5428 Phase 1 will establish a new Pilot Training System for the Australian Defence Force. AIR5428 will replace existing training aircraft and acquire synthetic training systems, an enhanced curriculum and training media. The planned withdrawal date of the current advanced training aircraft (PC-9/A) is December 2019.

During 2016-17, this project will deliver four PC-21 training aircraft, and two flight training simulators. The associated learning environment will be near completion which will enable Air Force to commence validation of training material at RAAF Base East Sale. Air Force will also continue training of flying instructors in preparation for commencement of Pilot Training System operation in 2018-2019.

Bridging Air Combat Capability- AIR 5349 Phase 1

Prime Contractor: The Boeing Company/ Boeing Defence Australia.

Under Foreign Military Sales cases with the United States Navy, the project has procured the Super Hornet capability. Phase 1 continues to provide residual spares and support minor project activity including weapons integration.

The focus for 2016-17 will be the continued identification of additional Super Hornet support requirements associated with the revised Planned Withdrawal Date.

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.

In accordance with the re-baselined schedule, during 2016-17 the project will conduct the final phase of flight testing and seek full Service Release of the capability. The project will also commence full rate fleet modification to support Initial Operating Capability and Final Operational Capability.

The key risks for this project are the delivery of the final aircraft software load with acceptable level of integrity, maturity of the fleet modification process and implementation of the operational support system.


137

Joint Domain

Battlespace Communications System (Land) Ph2B - JP 2072 Phase 2B


The project will provide the Army with a deployable, wideband communications backbone by replacing the existing Battlefield Telecommunications Network with an enhanced deployable network capability. A complementary support system will also be established.

Contracts were signed with Boeing Defence Australia on 3 September 2015 for both acquisition and support of the capability. Boeing completed the System Requirements Review and Systems Design Review by early 2016 and have demonstrated prototypes of key elements of the capability.

The focus of development in 2016-17 is preparation for the Preliminary Design Review in late 2016.

The key risk for the project is the contractor coordinating and integrating the development of multiple sub-elements of the capabilities.

Woomera Range Remediation – JP 3024 Phase 1

Prime Contractor: Not in contract.

This project will replace the aging instrumentation at the Woomera Test Range which is used to conduct Defence Test and Evaluation and Research and Experimentation activities. The Woomera Test Range consists of the Woomera Prohibited Area and the Woomera Restricted Airspace, and occupies an area of approximately 124,000 square kilometres in remote South Australia.

The Woomera Test Range will continue to be operated by Air Force with operational maintenance and deeper level maintenance to be conducted by the support contractor. The selected contractor, acting as a Prime System Integrator, will supply the Mission and Support systems and the first five years of support. Rolling wave extensions to the Support Contract beyond the first five years of support will awarded subject to satisfactory performance.

The key activities planned for 2016-17 are the System Requirements Review, System Definition Review and Preliminary Design Review.

The most significant risk concerning late handover of the facilities and infrastructure works has been partially mitigated by the use of mobile sensors integrated into a mobile Range Control Centre instead of the fixed Range Control Centre.


138

Maritime Communications Modernisation – SEA 1442 Phase 4

Prime Contractor: Selex ES Ltd (Southampton UK).

This project will upgrade the communications capability of the Anzac class frigates. The modernised capability will include improved communications management systems, secure voice and tactical intercom systems; secure switching, tactical radio systems, and a high data rate line of sight capability. Shore based integration and training systems will also be provided.

In 2016-17 the project will complete system-level design and finalise system-level integration in preparation for first of class installation. A system demonstration will be conducted in a shore environment prior to detailed design review and the initial installation will be aligned with the Anzac class Life Of Type Assurance Program.

The key risk for this project is the completion of system-level and integration testing to allow the initial installation to occur as scheduled. Other risks include timely availability of the ships for installation, other system installations across the Anzac class frigates 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.

Civil Military Air Traffic Management 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 being progressed jointly under the OneSKY Australia program with Airservices Australia. Airservices is the lead agency for OneSKY. The joint project will provide operational benefits and efficiencies for military and civil airspace users, and reduced acquisition and support costs for Airservices and Defence. The Defence scope element includes 12 Air Traffic Management automation systems, communications infrastructure, training systems and Defence’s share of a Joint Software Support Facility.

Advance Work Supply Arrangements have been active with the preferred tenderer, Thales Australia, since February 2015 to allow critical path activities to be progressed ahead of the main contracts.

During 2016-17, negotiations with the preferred contractor to bring the capability, cost and schedule of this complex project within the parameters agreed by Government at Second Pass will continue with a view to entering into the acquisition and sustainment contracts by the end of 2016.


139

Remediation of Land Tactical Electronic Warfare – DEF 500 Phase 1

Prime Contractor: Thales Australia for the major Bushmaster Protected Mobility Vehicle Integration contract.

This project will acquire new and upgrade existing Electronic Warfare capabilities for Army. These capabilities are:

• Electronic Warfare systems that will be integrated into Bushmaster Protected Mobility Vehicles;

• Manpack Electronic Warfare systems;

• Communication systems to support the networking and coordination of Electronic Warfare operators and assets;

• Systems to allow exploitation of emerging digital devices; and

• Dedicated training systems that will support the training of Electronic Warfare operators.

The project will conduct a coordinated acquisition strategy encompassing all of the five capability lines to ensure “whole of systems” delivery. Preference has been given to off-the-shelf products that are technically mature and systems that have interface commonality with existing Army Electronic Warfare capabilities. This will ensure compatibility and interoperability.

The Initial Operational Capability is scheduled for 2017-18 and the Full Operational Capability is scheduled for 2019-20.

Across 2016-17 the project will:

• Finalise the design package for the delivery of the first four Protected Mobility Vehicles in the Electronic Warfare configuration;

• Continue to work with Manpack Electronic Warfare system to ensure that the capability, cost and schedule meet the expectations set by Government

The key risk for this project is delay in the contract execution for the Manpack Electronic Warfare systems may possibly have flow on affects to:

• Integration into the Bushmaster Protected Mobility Vehicle; and

• The completion of training studies.

Battlefield Command Systems – LAND 75 Phase 4

Prime Contractor: Elbit Systems Limited.

This project will continue to digitise and enhance the Command, Control and Communications systems for land tactical forces. In 2016-17 the project will complete all the required vehicle installations of the Battle Management System.

The project will also finalise first to second pass risk reduction activities 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.


140

Improved Tactical Electronic Support Capability for ANZAC Class – SEA 1448 Phase 4A

Prime Contractor: Harris Corporation following acquisition of Exelis in June 2015.

This project will provide the Anzac class frigates with a replacement tactical Electronic Support mission system for improved passive situational awareness and early threat warning. The project includes the provision of Electronic Support mission system emulators for training and a shore-based support segment for Electronic Support mission system reprogramming.

The project successfully completed first of class system installation and at sea trials in August 2015. Delivery of production systems and installation of the capability across the Anzac class will continue throughout 2016-17.

Land Domain

Overlander Medium and Heavy Capability (MHC) – LAND 121 Phase 3B

Prime Contractor: 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-Pacific.

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, 3,845 modules and flatracks will be supplied and approximately 1,700 trailers will also be acquired to enhance the payload carrying capacity

During 2016-17, this project will be transitioning from detailed design and verification to production and delivery of the capability to Defence. In quarter one 2017, the project will begin the first delivery of vehicles, trailers and modules to Army units.

The key risk for the project remains the performance of various systems during verification to meet the Commonwealth’s requirements.

Enhanced F88- LAND 125 Phase 3C

Prime Contractor: Thales Australia.

Land 125 Phase 3C will deliver the Enhanced F88 rifle and a suite of Surveillance and Target Acquisition ancillaries including an enhanced day sight and thermal and image intensifier sights.

A contract for the production of 30,000 Enhanced F88 rifles, 2,277 Grenade Launcher Attachments, repair parts and training aids was signed in July 15. Deliveries commenced in August 2015 and continue in accordance with the schedule.

Contracts for the surveillance and target acquisition ancillaries were signed through seven standing offer deeds by November 2015 and deliveries commenced in February 2016. The delivery of all ancillary devices is scheduled to occur ahead of the original schedule.

The Introduction Into Service of the Land 125 Phase 3C capability is scheduled to commence in July 2016.

The key risk for the project is late delivery of systems from the surveillance and target acquisition ancillaries’ manufacturers.


141

Overlander Program (Phase 4) - LAND 121 Phase 4


This project will deliver 1,100 Protected Mobility Vehicles – Light (‘Hawkei’) for command, liaison, utility and reconnaissance roles. In addition, approximately 1050 companion trailers will be acquired to enhance payload carrying capacity. The Hawkei balances requirements for survivability, mobility, payload, communications, useability and sustainability; providing a high level of protection against blast and ballistic threats, with the mobility to enable operations in high risk areas.

During 2016-17, this project will be conducting reliability trials and other capability requirements testing on pilot vehicles and trailers, prior to finalising contractor designs for the build of low rate initial production vehicles.

The key risk for the project is the performance of the vehicles during capability requirements verification, particularly in the areas of reliability and survivability.

Enhancements to Special Operations Capability – JP 2097 Phase 1B

Prime Contractor: 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 2016-17, this project will complete the delivery of 32 special operations vehicles for commando operations to meet the initial operating capability requirement, provide a range of equipment to deliver a high frequency patrol radio capability and deliver 156 diveable radios.

The key risks for this project are: achieving the technical and accreditation requirements for the mobile information and communications technology capability; and meeting the reliability requirements to maintain the schedule for the Special Operations Vehicle -Commando.

Enhanced Gap Crossing Capability - LAND 155 Phase 1

Prime Contractor: This project is managed using a Managing Contractor model: Jacobs Pty Ltd. The major bridging suppliers are: Floating Bridge System (FBS) General Dynamics European Land Systems – Germany; Bridge Erection Propulsion Boats – Life of Type Extension: Birdon Pty Ltd; Modular Bridging System: WFEL Ltd; Rapid Emplacement Bridges: WFEL Ltd; and Footbridge: Israeli Military Industries Systems.

This project will provide land forces with the ability to cross a range of wet and dry gaps in support of combat operations and will comprise of combat bridging that will remain in place for a limited time and can then be redeployed forward to maintain support to the manoeuvre force.

During 2016-17, this project will complete acceptance testing and evaluation for the Floating Bridge System and the Footbridge.

The key risk for this project is to schedule; due to a possibility that personnel will not be available to support testing at critical project milestone points.


142

Direct Fire Support Weapons – Land 40 Phase 2

Prime Contractor: NIOA Nominees Pty Ltd.

This project is providing two new direct fire support weapon capabilities into service: the 84mm M3 Carl Gustaf recoilless rifle with a Heavy Weapon Thermal Sight which has been delivered and the Light Weight Automatic Grenade Launcher component.

The Light Weight Automatic Grenade Launcher Acquisition and Support contracts were signed in June 2015. The first systems will be delivered in August 2016 with the majority of systems received by end of July 2017.

The key risk for the project is late delivery of systems from the manufacturer.

Additional Lightweight Towed Howitzers and Capability Assurance Program – LAND 17 Phase 1C1

Prime Contractor: The M777A2 Lightweight Towed Howitzers are contracted through a Foreign Military Sales Case with the United States.

This project has provided an additional 19 M777A2 Lightweight Towed Howitzers and will provide a range of additional elements necessary to deliver the full capability, such as storage modules, local area defence weapons, range instrumentation and material handling equipment.

During 2016-17, this project will deliver up to 4000 Course Correcting Fuses, a 155mm gun and ammunition testing system, instrumentation for the Joint Proof and Experimental Unit, 16 forklifts and 12 tow motors.

The key risk for this project is potential technical difficulties in the design and development of the gun and ammunition testing system.


143

Soldier Enhancement Version 2 – Survivability – LAND 125 Phase 3B

Prime Contractor: Load Carriage Equipment: Australian Defence Apparel;

Protection Equipment (Body Armour): Craig International Ballistics;

Tiered Combat Helmets:

• Tranche 1: Spearpoint Solutions and Technology

• Tranches 2/3: Aquaterro

Combat Hearing Protection:

• Tranche 1: J Blackwood & Son; Combat Hearing Protection

• Tranches 2/3: Defcon Technologies Group

Known collectively as the Soldier Combat Ensemble (SCE), the project is delivering modernised individual soldier survivability capabilities including enhanced body armour and helmets, individual load carriage equipment, eye protection and hearing protection. The equipment is being delivered in three tranches of approximately 7,000 sets in each tranche over the period 2015 to 2017.

In 2016-2017, the second tranche of equipment will be rolled out to Army’s 3rd Brigade and Air Force units in Townsville, Army supporting brigade units throughout Australia, and various RAN ships. In the first quarter of 2017, supplier deliveries will occur to support the third tranche of equipment requirements.

Defence is implementing in parallel the SCE Modernisation Plan to address Army, Navy and Air Force units not provisioned under LAND 125 Phase 3B. This acquisition will leverage off the extant LAND 125 Phase 3B standing offers.

The key risk for this project is late supplier deliveries to support second and third tranche SCE requirements.

Maritime Domain

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 Department of Defence.

During 2016-17, this project is expected to achieve a number of key milestones including commencement of sea trials and the provision acceptance of Ship 01, Hobart; and float off and the start of Combat System Light Off for Ship 02, Brisbane. The consolidation of Ship 03, Sydney, will continue throughout the year.

As part of the long term arrangements for AWD Reform, Navantia is providing an expert shipbuilding management team in the ASC shipyard.

The key challenges for this project are to increase shipyard productivity, ensure the most efficient use of resources, and manage costs effectively.


144

Collins Class Communications and EW Improvement Program – SEA 1439 Phase 5B2

Prime Contractor: Raytheon Australia- Platform System Integrator.

Project SEA1439 Phase 5B2 will modernise the communications and electronic warfare systems in the Collins class submarines.

The project is to be delivered in two stages; Stage 1 will specifically address communications and electronic warfare equipment obsolescence and was approved by Government in June 2015.

The first replacement communications and electronic warfare suites are scheduled to be delivered for installation in mid 2017.

Stage 2 will provide additional capabilities including wideband satellite communications, and is scheduled for Second Pass in 2016-17.

Collins Sonar Capability Assurance Program – SEA 1439 Phase 6

Prime Contractor: Not in contract.

This project was given approval in March 2016.

This project seeks to address obsolescence and capability deficiencies in the Collins class sonar system and establish an ongoing capability assurance program.

Approved scope includes:

• capability development funding for risk reduction activities, development of a fully costed proposal for second pass consideration.

• acquisition funding to begin the design and production of select sonar upgrades to achieve first installation in 2018-20, and to acquire an on-shore acoustic trainer.


146

Table 72: Current Status of Previously Reported Top 30 Projects (Projects Reported in the Last Five Financial Years) (Continued)

DOMAIN/ Project

Project Number/

Phase

Last Financial

Year reported in

Top 30

Approved Project

Expenditure $m

Cumulative Expenditure to 30 June 2016

$m

Budget Estimate

2016-17 $m Status Report

Hornet Upgrade Project

AIR 5376 Phase 2

2011-12 1,883 1,660 4 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 early 2016, with completion in mid 2016 and Final Operational Capability scheduled for 2017.

Airborne Surveillance for Land Operations

JP 129 Phase 2

2012-13 98 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 along with Project closure activities are planned during 2016-17.

Additional Chinook Helicopter Project

AIR 9000 Phase 5C

2015-16 642 444 31 Prime Contractor: Boeing Military Aircraft through US FMS case with the US Army

The project is acquiring seven CH-47F Chinook helicopters, two Transportable Flight Proficiency Simulators, maintenance training systems and associated spares. These aircraft will replace six CH-47D Chinook helicopters being withdrawn from Army service. The Chinook provides the Army with its medium-lift battlefield support helicopter capability. The new helicopters will be based at the 5th Aviation Regiment, RAAF Base Townsville, Queensland.

All seven CH-47Fs were delivered ahead of schedule with the final aircraft arriving at RAAF Base Townsville in August 2015; the Transportable Flight Proficiency Simulators were delivered in 2014-15. The CH-47F configuration is to be maintained in close alignment with the US Army baseline in order to improve interoperability and minimise the cost of ownership in sustainment; however, the Australian fleet will be modified slightly to meet certain Australian-unique requirements and to enable embarked operations from the new Canberra Class Landing Helicopter Dock ships. At the end of 2015, aircrew and maintainer transition training was completed and Australian Military Type Certification and Service Release of the CH-47F was granted. Initial Operational Capability was declared by Chief of Army in March 2016.

During 2016-17, the project will focus upon provision of support required for the declaration of Final Operational Capability in January 2017.

Rotary Wing for Land Force

AIR 87 Phase 2

2012-13 2,033 1,867 3 Project closure and the declaration of Final Operational Capability will be completed in 2016.


148


DOMAIN/ Project

Project Number/

Phase

Last Financial

Year reported in

Top 30

Approved Project

Expenditure $m


$m

Budget Estimate


Battle Management System

LAND 75 Phase 3.4

2014-15 317 256 28 This project has delivered the 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, supplies and training have been delivered to Army. Final Acceptance of the acquisition contract was achieved within the financial provision and project closure activities have commenced.

Prime Contractor: Elbit Systems Limited (ESL)

C-130J Large Aircraft Infrared Countermeasures (LAIRCM)

AIR 5416 Phase 4B2

2015-16 237 58 38 Prime Contractor: US Air Force Foreign Military Sales (utilising Lockheed Martin and Northrop Grumman).

This project will provide the Air Force C-130J Hercules fleet 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 a Foreign Military Sales case. The remaining eight aircraft will be modified in Australia by Airbus Group Australia Pacific pending successful contract negotiations.

Modification of the first two aircraft is proceeding on schedule in the US. Completion of the US based LAIRCM modification effort on the first four aircraft will occur before the end of 2016 with the entire project related activities under the Foreign Military Sales case due for completion in the first half of 2017.

The key risk for this project is contractor performance maintaining the project plan, particularly with respect to the activities leading to the aircraft modification and the timely delivery of airworthiness artefacts to support the ongoing certification effort.


149


DOMAIN/ Project

Project Number/

Phase

Last Financial

Year reported in

Top 30

Approved Project

Expenditure $m


$m

Budget Estimate


Fixed Defence Air Traffic Control Surveillance Sensors

AIR 5431 Phase 2

2015-16 200 49 24 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 sensors will support Defence Air Traffic Management and provide data to Defence’s Air Battle Management systems and Airservices Australia.

The project successfully completed System Requirements/System Definition Reviews in December 2015 and planning for Preliminary Design Review is well underway with the review occurring in May 2016.

During 2016-17 the project will continue to progress through the engineering design process, culminating in the Detailed Design Review in January 2017.

The key risks for this project are site-related, namely potential weather and subterranean issues which could result in delays to the installation program and subsequent achievement of the Initial Materiel Release and Final Materiel Release milestones.

Prime Contractor: Airbus Defence and Space GmbH

Indian Ocean Ultra High Frequency Satellite Communication

JP 2008 Phase 5A

2012-13 421 341 5 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 was re-baselined to mitigate delay and introduce an Interim Capability which will provide an Integrated Waveform capability.

Next Generation Satellite Communications System

JP 2008 Phase 4

2013-14 869 569 6 The 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.

The project has transitioned into sustainment and project closure will complete during 2016-17.

Dismounted Battle Group and Below C3 System

LAND 125 Phase 3A

2011-12 107 92 - This project is complete. Closure will be synchronised with the Land 75 Phase 3.4 project closure.

Prime Contractor: Elbit Systems Limited (ESL)


150


DOMAIN/ Project

Project Number/

Phase

Last Financial

Year reported in

Top 30

Approved Project

Expenditure $m


$m

Budget Estimate


Military Satellite Capability – Wideband Terrestrial Terminals (WTT)

JP 2008 Phase 3H

2013-14 45 39 - Initial Materiel Release and Initial Operating Capability have been declared. All terminals have been issued to units, with some terminals now supporting operations, and introduction into service training has been completed. The project continues to pursue Technical Certification. Final Materiel Release and Final Operating Capability will be declared in 2016.

Battlespace Communications System (LAND)

JP 2072 Phase 3

2014-15 179 147 3 The project has delivered Tactical Data and Voice radios for installation into vehicles by project LAND 75, Battlefield Management System as part of the first Work package.

Tender evaluation continues for the remaining work package which will support the development of a Tactical Communications Network.

High Frequency Modernisation

JP 2043 Phase 3A

2014-15 580 485 13 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.

Life-of-Type obsolescence remediation work is progressing as scheduled.

Joint Command Support Environment

JP 2030 Phase 8

2014-15 257 206 - Final Materiel Release of the Joint Command Support Environment was achieved in late 2015. Full Acceptance Into Service for operation on the Defence Secret Network is in progress and expected to be completed in 2016.

NULKA PH5A Replenish Nulka Warstock

SEA 1397 Phase 5A

2014-15 88 78 7 This project is replenishing Navy’s Nulka off-board anti-ship missile decoy inventory.

The project is tracking to plan with contract closure commenced. All sub-contract obligations have been completed with contractual closure being progressed. The final decoy round assembly and delivery with the Prime Contractor will continue until March 2017 to support a smooth transition to sustainment.

A Joint Nulka Sustainment Plan with United States Navy has been agreed as in currently in the implementation phase.

Prime Contractor: BAE Systems.


151


DOMAIN/ Project

Project Number/

Phase

Last Financial

Year reported in

Top 30

Approved Project

Expenditure $m


$m

Budget Estimate


Bridging Air Combat Capability – Super Hornet Weapons

AIR 5349 Phase 2

2014-15 306 216 21 This project introduces into service a number of new weapons including the USN common AIM-9X short-range air-to-air missile, the latest version of the AIM-120 medium-range air-to-air missile, the AGM-154 Joint Stand-off Weapon and countermeasures for the Australian Super Hornet Program. These weapons will significantly enhance the Air Force’s ability to conduct air, land and maritime strike operations.

Initial delivery of new AIM-120s is scheduled for September 2016. Operational test and evaluation of the new AIM-120s and AGM-154s is planned to start from May 2017 to realise the full capability. All other weapons and countermeasures in the approved project scope have been delivered and are operational.

The key risk for this project remains schedule. Both the USAF and USN are under budgetary pressure and have identified early indications of schedule slip in their domestic programs and production contracts that may flow on to impact the Australian products.

Prime Contractor: United States Foreign Military Sales cases.

Follow-on Stand Off Weapon Capability

AIR 5418 Phase 1

2011-12 319 284 - This project introduced into service the AGM-158A Joint Air-to-Surface Stand-off Missile for the Classic Hornet. The Air Force has achieved Final Operating Capability and all approved project scope has been delivered. Work to finalise the project is ongoing. The project will be closed in 2016-17.

Lightweight Torpedo Replacement

JP 2070 Phase 2

2013-14 342 319 1 This project has introduced the MU90 lightweight torpedo into service with the Anzac and Adelaide class frigates. Navy has achieved Final Operating Capability with the MU90 and the project will be closed in 2016-17 at the end of the initial MU90 in-service support contract.

New ADF Anti-Submarine Lightweight Torpedo

JP 2070 Phase 3

2011-12 304 276 - All project scope has been delivered and the project is in closure.


153


DOMAIN/ Project

Project Number/

Phase

Last Financial

Year reported in

Top 30

Approved Project

Expenditure $m


$m

Budget Estimate


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, 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.

A Deed of Completion for this project has been agreed with the contractor, and Final Acceptance was awarded on 30 April 2015.

During 2016-17, the five major defects identified at Final Acceptance will be remediated to enable the project to close by the end of 2016.

The project remains on the Project of Concern list pending completion of the final defect.

Digital Terminal Control System (DTCS)

LAND 17 Phase 1B

2013-14 121 93 - The project has delivered 152 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.

The final control terminal software and the support systems have been delivered to allow the full operating capability milestone to be met on schedule in March 2016. The project is scheduled to close in Q2 2016.

Replacement Artillery LAND 17 Phase 1A

2013-14 158 158 - 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 was closed in Apr 2015.

Counter - Rocket, Artillery and Mortar (C-RAM) Project

LAND 19 Phase 7A

2012-13 265 186 - This project has delivered a 'sense and warn' force protection capability.

During 2016-17, this project will complete support arrangements for the counter-rocket, artillery and mortar systems and will be closed.


154


DOMAIN/ Project

Project Number/

Phase

Last Financial

Year reported in

Top 30

Approved Project

Expenditure $m


$m

Budget Estimate


Australian Protected Route Clearance Capability

JP 154 Phase 3A

2012-13 36 36 - The project has delivered the Protected Route Clearance equipment to the Army's combat engineers and transitioned the capability to sustainment. The Project completed introduction into service, including some residual work to integrate the mine roller to the in-service Bushmaster. This project was closed in March 2016.

Bushranger Protected Mobility Vehicle

LAND 116 Phase 3

2015-16 1,251 1,032 6 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 September 2016.

During 2016-17, this project will deliver the final 12 of the 214 Production Period 5 vehicles and will support delivery of the Full Operational Capability scheduled for December 2016.

The key risk for this project is incorporating all production line engineering changes into updated support documentation to allow project closure to proceed on schedule over 2017.

M-113 Upgrade LAND 106 2012-13 791 791 - 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.


155


DOMAIN/ Project

Project Number/

Phase

Last Financial

Year reported in

Top 30

Approved Project

Expenditure $m


$m

Budget Estimate


Mounted Combat Reconnaissance Capability

LAND 400 Phase 2

2015-16 117 14 41 Prime Contractor: Not in contract.

This project will deliver around 225 Combat Reconnaissance Vehicles and support systems that will replace the current Australian Light Armoured Vehicle (ASLAV) capability.

During 2016-17 the project will conduct a review of the Australian Industry Involvement aspects of this project phase to ensure alignment with the 2016 Defence Industry Policy Statement.

The review will inform the Risk Mitigation Activities (RMA) that shortlisted tenderers will be invited to participate in. The RMA will validate technical compliance through a Test and Evaluation program; improve Australian Industry involvement, assess cost and capability trade-off options.

These activities will enable the development of options, differentiated by both cost and capability levels, for presentation to Government at Second Pass.

The key risk for the project during 2016-17 are delays to the completion of the Australian Industry Involvement review leading to slippage in commencement of the Risk Mitigation Activities.


158

APPENDIX E: TOP 10 MINOR CAPITAL INVESTMENT PROJECTS BY 2016-17 FORECAST EXPENDITURE

Table 73: Top 10 Approved Minor Projects by 2016-17 Forecast Expenditure

ProjectNumber/

Phase

ApprovedProject

Expenditure$m

EstimatedCumulative

Expenditureto 30 June 2016

$m


$m

Ship Specific Marine Technician Lead-In Simulator NMP1935 4 1 3

Digital Voice Recording System (DVRS) Capability NMP1822 16 14 1

Tier 2 Watercraft Replacement - Regional Patrol Craft (RPC) AMP005.15 6 6 ..

Deployable Catering Capability AFM00972 15 6 7

Deployable Tactical Air Control and Navigation (TACAN) AFM01006 6 1 4

Non Directional Beacons AFM01011 5 .. 3Distributed Ground Station - AUS (Interim) AFM01025 8 5 2Multi-Band Multi-Mode Radio Capability AFM00975 6 5 ..

B300 Tactical ISTAREW (Intelligence, Surveillance, Target Acquisition, Reconnaissance, Electronic Warfare ) Utility Aircraft

AFM01037 7 3 3

73 40 23Other Approved Project Gross Plans 105 92 -

178 132 23Total - Approved Projects (Gross Plan)

Total - Top Minor Projects

Maritime

Land

Aerospace

Joint


159

Top 10 Minor Project Descriptions

Maritime

Ship Specific Marine Technician Lead-In Simulator- NMP1935

Prime Contractor: Kongsberg Maritime AS, NORWAY.

This Project achieved Combined Pass Approval in Aug 15 and Prime Contract signature in Feb 16. The Project will expand on the existing Marine Technician Lead-In Simulator (MT LIS) at HMAS Cerberus to provide for ‘ship specific’ MT training for HMAS Choules for the MT category. The project will also expand on some of the other capabilities of the MT LIS to support generic MT training.

During 2016-17 the project will deliver Choules Engine Room System (ERS) and electrical switchboard models to Cerberus, and commence the Transition process.

Digital Voice Recording System (DVRS) Capability – NMP1822

Prime Contractor: Sonartech Atlas Pty Ltd.

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 2016-17, the project will complete the three remaining Anzac class Frigate Installations, transition sustainment support and achieve project closure.

Tier 2 Watercraft Replacement- RPC AMP005.15

Prime Contractor: Birdon Pty Ltd.

(NOTE: Project closure and Real-Cost-Decrease final is expected in Apr 16)

This project procured 11 Regional Patrol Craft and Trailers to provide Regional Force Surveillance Units with ongoing Army Tier 2 Watercraft Capability. The watercraft are an 8.2 metre open workboat designed to deliver a full Tier 2 capability as well as provide appropriate Patrol Support Craft for the current Tier 1 craft utilised by the Regional Force Surveillance Units. The Watercraft and Trailers were accepted into service in June 2015. The project is in final closure which is scheduled to complete in April 2016. No financial expenditure is expected in FY 2016-17.

Land

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 two will include a smaller in-flight kitchen capable of cooking 120 specialised meals, together with a drinkable/waste water reticulation system.

During 2016-17, this project will complete delivery of the three Deployable catering Systems and the project will be closed in Q2 2017.


160

Joint

Deployable TACAN – AFM01006

Prime Contractor: BAE Systems Australia Limited.

This project will deliver five new deployable Tactical Air Control and Navigation systems, spares, support and test equipment, publications and training to replace the Air Force’s current fleet of obsolete deployable systems.

The Acquisition Contract was signed in December 2015 followed by the Execution of a Support Deed in February 2016.

The project is on track to deliver ahead of the current approved Materiel Acquisition Agreement schedule during first quarter 2017.

Non Directional Beacons (NDB) – AFM01011

Prime Contractor: Not in Contract.

This project will deliver seven Non-Directional Beacons for air navigation at the same configuration as Airservices Australia’s fleet of beacons; providing opportunities for further harmonisation with the civil Air Traffic Management system.

Contract signature is targeted for August 2016 with Final Materiel Release scheduled for September 2017.

Distributed Ground Station – Australia (Interim) – AFM01025


This project will deliver a Distributed Ground System – Australia (Interim) System that will provide a limited multi-source, multi-disciplinary, time-dominant Processing, Exploitation and Dissemination capability 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 Processing, Exploitation and Dissemination operations.

During 2016-17, the project will commence build, integration and implementation with Initial Materiel Release planned for 2017-18.

Multi-Band Multi-Mode Radio Capability – AFM00975

Prime Contractor: No Prime Contractor. Defence is the Prime Systems Integrator.

Design acceptance of Single Radio Integrated Base-station System has been delayed due to resolution of safety case report issues. The project now forecasts the procurement and acceptance of 31 Base Stations by the fourth quarter of 2016 and will have completed delivery of those Base-station Systems with associated training to the Air Force units by the second quarter of 2017.

Aerospace

B300 Tactical ISTAREW Utility Aircraft – AFM01037

Prime Contractor: Hawker Pacific.

The Project plans to provide three B300 Series 600 aircraft modified to accept Special Operations Command roll-on/roll-off Intelligence, Surveillance, Target Acquisition, Reconnaissance and Electronic Warfare mission system within 2016-17. The Initial Operating Capability milestone is planned to be achieved within 2016-17.


161

APPENDIX F: TOP 30 SUSTAINMENT PRODUCTS BY 2016-17 FORECAST EXPENDITURE Table 74: Top 30 Sustainment Products by End of Financial Year Outcome 2016-17


$mAerospace Domain

Aerospace SystemsE-7A Airborne Early Warning and Control System - AEWC CAF20 213F/A-18 Hornet Weapon System CAF02 192F/A18F SuperHornet Weapon System CAF21 192Lead-In Fighter Hawk 127 Weapon System CAF03 117P3C Orion Weapon System CAF04 108C130J-30 Weapon System CAF06 104C-17 Heavy Air Lift Weapons System CAF19 93KC-30A Weapon System CAF22 77Special Purpose Aircraft Weapon System - SPA CAF09 52Helicopter SystemsMulti Role Helicopter - TLH MRH90 CA48 207Armed Reconnaissance Helicopter Weapons System CA12 145AIR 9000 Phase 8 - MH-60R CN35 53

Joint DomainJoint SystemsGuided Weapons - Navy, Army, Air Force CN38, CA60, CAF33 208Wide Area Surveillance CAF13 101Command and Intelligence Systems CA40 65Battlespace Communication Systems CA31 54

Land DomainLand SystemsMunitions - Navy, Army, Airforce CN37, CA59, CAF32 290ADF Clothing CA39 89ADO Commercial Vehicles Fleet CA19 84General Service B Vehicle Fleet CA45 57ASLAV CA02 54Protected Mobility Vehicles CA04 51

Maritime DomainMaritime SystemsANZAC Class Frigate CN02 350Adelaide Class Frigate CN01 117Canberra Class Landing Helicopter Dock CN34 107Hydrographic Support CN46 71Huon Class Mine Hunter Coastal CN14 68Armidale Class Patrol Boat CN09 67AO/AOR Afloat Support CN43 50SubmarinesCollins Class Submarine CN10 586

Total - Top 30 Products 4,022Other Approved Sustainment Product Estimates 1,215Total Sustainment Product Funds Available 5,237Support to Operations 202Total Sustainment and Operations Funding 5,440


162

Top 30 Sustainment Product Descriptions

Aerospace Domain

Aerospace Systems Division

The Aerospace Systems Division (ASD) provides through-life support to fixed wing aircraft types including the F/A-18A/B Hornet and F/A-18F Super Hornet, Hawk 127, 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 , Special Purpose Aircraft, B300 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.

The high priority sustainment tasks remain the support of operational deployments, including F/A-18A Hornet, F/A-18F Super Hornet, E-7A Wedgetail and KC-30A employed by Air Force in Operation Okra and strategic lift (C-17A Globemaster III, C-130J Hercules) supporting Middle East operations and Humanitarian Assistance/Disaster Relief events.

The key challenges for ASD in 2016-17 are supporting ageing platforms (AP-3C Orion, F/A-18A/B Hornet, PC9) whilst concurrently introducing new/ replacement capabilities (P8 Poseidon, F/A-18G Growler, PC21 Pilot Training System), supporting operations in the Middle East and implementing reforms associated with the First Principles Review.

During 2016-17, the major objectives for sustainment include:

• supporting operationally deployed weapon systems such as the F/A-18A/B, F/A-18F E-7A and KC-30A aircraft,

• maturing the in-service support arrangements for the expanded KC-30A and C-17 fleets,

• maturing in-service support arrangements to support expansion of C-27J operations in Australia,

• establishing in-service support arrangements for the F/A-18G Growler and P8 Poseidon,

• optimising the in-service support arrangements and commencing disposals planning for the F/A-18 A/B Hornet to enable transition for introduction of the Joint Strike Fighter, and

• optimising the in-service arrangements and continuing disposals for the AP-3C Orion to enable transition for introduction of the P8 Poseidon.

Aerospace Products

E-7A Airborne Early Warning and Control 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 2016-17 the focus will be on the annual performance activities with Boeing Defence Australia and the industry partners which will reform organisational arrangements within both the industry elements and the Commonwealth. The reforms will provide more efficient working arrangements as well as reviewing the maintenance arrangements of the platform through the fleet planning activities. There will also be a focus to optimise supply support arrangements for operations.


163

F/A-18 Hornet Weapon System – CAF02

The F/A-18 Classic Hornet fleet and associated support materiel is sustained by Tactical Fighter System Program Office (TFSPO). TFSPO is supported through multiple CASG organisations, Air Force workshops and contracted industry partners.

The concurrent sustainment of Operation OKRA and in country flying rate of effort has matured. The sustainment of the ageing fleet is challenged by structural integrity and parts obsolescence issues whilst maintaining ongoing capability development to meet operational requirements.

Contract development and consultation with industry partners for the life of type sustainment and future disposal development of the Hornet Fleet planned for 2021-22 is a primary focus for 2016-17.

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 Final Operational Capability in December 2012. Raise, train and sustain support requirements and operational targets continue to be met.

During 2016-17, efforts will focus on the commencement of the Air Combat Electronic Attack Sustainment Contract and the transition of the Growler capability into the Air Combat & Electronic Attack sustainment system. Through 2016-17, the Super Hornet spiral capability upgrades will continue, which include upgrades to aircraft hardware, software and the addition of new weapons.

Lead-In Fighter Hawk 127 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 logistics support for the Hawk 127 fleet under an In-Service Support contract.

During 2016-17 the focus will be on: ensuring the transfer of Operational Maintenance from Air Force to BAE Systems occurs with minimal impact on capability; finalising the first Award Term extension of the In-Service Support contract; and collaboratively working with BAE Systems and Air Force stakeholders to ensure the introduction of AIR 5438 Phase 1A – Lead-In-Fighter Capability Assurance Program (which requires the fleet of aircraft to be modified) has minimal impact to Air Force Raise/Train/Sustain activities.

PC3 Orion – CAF04

The AP-3C fleet consists of 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. Propulsion System support is provided by Standard Aero Ltd.

During 2016-17, 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 which are scheduled to be completed by the end of 2016; however, these targeted inspections may still identify damage that requires structural repair and/or replacement. P-3 sustainment will continue to enable achievement of the Raise, Train and Sustain flying program and on operations in northern Australia. Fleet disposal will continue in 2016-17 in accordance with the approved disposal strategy.


164

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 support for the propulsions system.

During 2016-17, the focus will be on completing fleet embodiment of Link 16 and the secure communications systems, fitment of crashworthy loadmaster seating and internal storage panniers to the C-130J fleet, and the development of a new loadmaster and maintainer training device.

C-17 Heavy Air Lift Weapons System – CAF19

The C-17A weapon system comprises eight aircraft and associated training systems. Sustainment is predominately undertaken through a range of Foreign Military Sales arrangements with the United States Air Force.

During 2016-17, the focus will be on a range of equipment capability upgrades to the C-17A fleet.

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 following delivery of two additional aircraft in 2015.

KC-30A Weapon System – CAF22

The KC-30A weapon system comprises five aircraft and the related training system. The KC-30A capability is completing transition from the project phase to sustainment. All five aircraft will be fully mission capable for air-to-air refuelling, from pods and boom, and airlift logistics support following completion of the modification program in Q4 2015-16.

During 2016-17 the focus will be on generating fully mission capable aircraft and implementing the Contract Reform program that will be completed in Q4 2015-2016. Additionally, a number of reforms to the entire sustainment enterprise will continue to be implemented between the Commonwealth and a number of industry entities supporting the KC-30A.

The sustainment organisation is commencing the work required to transition the first additional aircraft into service, which is planned to be achieved in Q4 2016-17. Additionally, CAF22 continues to support the increasing receiver clearances program for conducting air to air refuelling.

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.

Defence has exercised extension options for the aircraft lease arrangements and has commenced formal market solicitation to acquire the future Special Purpose Aircraft service.

During 2016-17, the focus will be on ensuring the continued delivery of the Special Purpose Aircraft capability and finalising the procurement activities to acquire the future Special Purpose Aircraft service.


165

Helicopters Systems Division

With the transition of Guided Weapons to the Joint Systems Division completed towards the end of 2015, the Division which was known as the Helicopters, Tactical Unmanned Aerial Systems and Guided Weapons Division, has reverted to its former title, the Helicopter Systems Division.

The Helicopter Systems Division provides through-life support to eight Army and Navy rotary wing weapons systems and supports Army’s Shadow 200 tactical unmanned aerial system. 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 embarked Seahawks in Navy ships supporting Operation Manitou and the MRH90 supporting Operation Fiji Assist.

The key challenges in 2016-17 will be continuing to improve the performance of the MRH90 and Tiger systems.

During 2016-17, the key sustainment objectives include:

• 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

Helicopter Products

Multi Role Helicopter - TLH MRH90 – CA48

During 2016-17, MRH90 production deliveries will expand the fleet to 46 aircraft of the 47 to be acquired. In-Service Support is provided under a prime contract with 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.

Improving aircraft availability is a key focus for 2016-17 and beyond; to that end, a Maintenance Burden Reduction Program will optimise and reduce MRH90 scheduled maintenance.

Continual improvement activities associated with technical enabling services and supply/engineering support have been implemented to facilitate timely achievement of key Army and Navy operational capability milestones.


166

Armed Reconnaissance Helicopter Weapons System – CA12

All 22 Tiger armed reconnaissance helicopters are in-service in the final mature configuration. In-Service Support is provided under a prime contract with Airbus Group Australia Pacific (formerly Australian Aerospace).

Remediation of technical issues associated with aircraft systems has improved weapon system performance and availability. Final Operational Capability for Tiger was declared in March 2016.

During 2016-17, activity was focused on refinement and implementation of the through life support arrangements agreed with Airbus Group Australia Pacific in December 2014 which are intended to improve aircraft availability and reduce overall cost of ownership for Defence. Support will also be provided for the development of the Tiger’s amphibious capability for operations in the new Canberra Class Landing Helicopters Dock; first of class flight trials are scheduled for the first quarter of 2017.

AIR 9000 Phase 8 - MH-60R – CN35

During 2016-17 production and delivery of Romeo helicopters will complete, with all 24 delivered to Australia by early in FY16-17. The Romeo capability is on schedule to grow to four embarked flights by the first half of FY16-17, with materiel support in place for six flights by the end of FY16-17.

Construction of the Maritime Helicopter Support Company maintenance facility is on schedule to open late FY15-16. The first helicopter will be inducted into this facility for deep maintenance early in FY16-17.

Joint Domain

Joint Systems Division

Joint Systems Division provides through-life support to a range of command and control systems, communications, satellites and tactical interoperability systems, airspace surveillance and control systems and electronic warfare systems. The Division also provides and supports all of Defence’s guided and non-guided weapons.

Key challenges in 2016-17 include balancing the delivery of the required sustainment outcomes against growth in demand and increased obsolescence with the effective use of available resources.

Key objectives for sustainment during 2016-17 include the ongoing support to operations with a focus on Air Task Group guided weapons, counter improvised explosive device measures and secure communications into and across the Middle East area of operations. The transition of new capabilities from acquisition into sustainment and the management of a number of pressing obsolescence issues with legacy systems are also key objectives.

Joint Products

Guided Weapons – Navy, Army, Air Force – CN38, CA60, 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 2016-17, 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 Hobart class destroyers and remediating and upgrading of the Harpoon missile inventory.


167

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. The radars are maintained by Lockheed Martin Australia and BAE Systems. The Wide Area Surveillance now also includes Overhead Persistent Infrared (OPIR) surveillance satellite capability.

During 2016-17, sustainment effort will: finalise the Defence Fuel Installation Audit remediation activities at remote radar sites; continue High Power Amplifier obsolescence remediation program and continue the over-the-horizon-radar Priority Industry Capability Support Program, which is reducing risk for the next major development program.

Command and Intelligence Systems Software Applications – CA40

The Deployable Command and Intelligence Systems environment comprises a range of hardware and software products to support the command, control and intelligence functions of deployed (land based) 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.

The 2016-17 focus is on introduction into service of the next generation enhanced deployable Secret and Protected networks for Army, Navy and Air Force. Previous generation systems will be disposed as these new systems are introduced.

Battlespace Communications Systems – CA31

Battlespace Communications Systems continue to meet key performance indicators in support of the current generation of Battlespace communications equipment. The 2016-17 focus will be on managing the mature support contract for the Combat Net Radios and working through transition for management of the Tactical Data Radio support contract.


168

Navy Munitions, Army Munitions, Explosive Ordnance - Munitions – CN37, CA59, CAF32

Sustainment of munitions includes:

• a broad range of non-guided Explosive Ordnance (munitions) including: small arms, cannon, tank, mortar, and artillery ammunition;

• a range of hand-emplaced demolition stores, grenades, flares, safety markers, vehicle and aircraft pyrotechnic countermeasures; and

• aircraft-installed explosive ordnance to support ejection systems.

Sustainment through-life activities are managed to support ADF operations, training and contingencies. It also includes the management of Commonwealth-owned munitions industrial base facilities in Benalla and Mulwala.

During 2016-17, the focus will be on:

• ensuring safe and serviceable munitions are available to meet ADF requirements

• improving commercial arrangements for the supply of munitions to the ADF

• improving inventory management and planning practices

• continued safe operation and optimisation of Commonwealth-owned Explosive Ordnance manufacturing facilities managed under the Strategic Munitions Interim Contract

• progressively increasing the quantities of propellants manufactured in the modernised propellant manufacturing facility at Mulwala delivered under Joint Project 2086.


169

Land Domain

Land Systems Division

Land Systems Division is responsible for the sustainment of the following land materiel, managed in conjunction with the Navy, the Army, the Air Forces and the Joint Health Command as the Capability Managers:

• armoured fighting, combat support and 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.

Key challenges for 2016-17 are to provide reliable and cost effective sustainment options to meet ADF outcomes.

Key objectives for sustainment in 2016-17 include:

• meeting the support requirements of forces on operations

• delivering the agreed level of support to the ADF within budget

• continue current sustainment reform initiatives and combine with new initiatives to align with First Principles, CASG and Smart Buyer intent

• undertaking comprehensive equipment fleet performance reviews with Defence Capability Managers

• enhancing training and professionalisation of sustainment staff to optimise skills that support the delivery of sustainment outcomes.

• ongoing modernisation of vehicle fleets through use of Vehicle Health and Usage Monitoring Systems in selected fleets to better manage maintenance and fleet rotation.


170

Land Products

ADF Clothing – CA39

ADF Clothing comprises about 21,000 line items of uniform, footwear and other items supplied by the textile, clothing and footwear industry.

During 2016-17, the key activities include:

• provision of combat clothing to operations,

• introduction into service of the female fit Navy General Purpose Jacket,

• product development of the Maritime Multicam Pattern Uniform for maritime operations, for introduction in 2017,

• the manufacture and delivery of the Australian Multicam Camouflage Uniforms and the General Purpose Jackets to Army,

• introduction into service of the modernised Army Service Dress Uniform,

• product development of functional and garment enhancements to both combat and non-combat uniform suite, and

• 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 Australian Defence Organisation’s Commercial Vehicle Fleet comprises approximately 5,500 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 2016–17, approximately 900 passenger and light-medium commercial vehicles are scheduled to be replaced.

A key priority is to replace the ageing commercial vehicle fleet at Royal Malaysian Air Force Base – Butterworth. This program commenced in 2015–16 and will be completed in 2016–17. In 2016-17, the fleet will continue to focus on reducing the number of vehicles that are beyond their designated life, with an emphasis on improvement of overall utilisation.

General Service B Vehicle Fleet – CA45

The B Vehicle Fleet consists of both Light B and Medium/Heavy B vehicles, comprising approximately 7,600 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 2016-17, the focus for the B Vehicle Fleet will be on the continued phase out of the Land Rover fleet and ensuring that the current in-service ADF General Service vehicle capability continues to meet Capability Manager requirements.


171

ASLAV – CA02

The Australian Light Armoured Vehicle (ASLAV) Fleet consists of 253 vehicles across seven variants, 18 Crew Procedural Trainers and 15 Tyre Maintenance Shelters. Vehicles are currently in service at 2nd Cavalry Regiment, 1st Armoured Regiment, 2/14 Light Horse Regiment and the School of Armour.

During 2016-17, the focus will be on continuing to implement the ASLAV Life of Type Management Plan to address a range of obsolescence issues. The ASLAV Life of Type Management Plan has identified sub-system components, including turret control system elements that require intensive management to ensure the ASLAV capability remains relevant through to its replacement by Land 400.

Protected Mobility Vehicles – CA04

Once all vehicles are delivered through Land 116 Bushmaster Protected Mobility Vehicle in 2016-17, the Protected Mobility Vehicle Fleet will consist of 1052 vehicles in seven variants (Troop, Command, Mortar, Assault Pioneer, Direct Fire Weapon, Ambulance and Air Defence). The vehicles provide protected land mobility to Army combat units and RAAF Airfield Defence Guards.

During 2016-17, the focus will be on initial work to standardise the fleet’s configuration. The vehicles will have been delivered across five production periods over 14 years and a selected number of vehicles were modified to varying configurations to meet specific operational requirements. The configuration for each variant type and the priorities for roll out to sustain the capability through to 2030 will be defined. The modifications will be implemented in the longer term in accordance with Defence operational and training priorities and subject to funding priorities.


172

Maritime Domain

Maritime Systems Division

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 System Program Offices 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.

Key challenges for sustainment during 2016-17 include:

• ongoing implementation of change to business areas to improve Divisional structure and performance activities which deliver MSD sustainment and acquisition obligations

• focused approach to the materiel in-service support arrangements and remediation activities to support the Armidale Class Patrol Boats

• continued implementation of strategic reform initiatives

• planning and instigating the disposal of ex-HMA Ships Tobruk and Sydney in accordance with the Government intent for this activity

• introduction into service of HMAS Adelaide including integration of LHDSPO into the MSD

• the development and implementation of follow-on in service support contract for the Armidale Class Patrol Boat Fleet.

Maritime 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 2016-17, the focus will be on the conduct of the Anti Ship Missile Defence Refit and Upgrade program for HMA Ships Parramatta, Toowoomba and Stuart ; preparations for HMAS Perth Life-of-Type Assurance Program, inclusive of Platform Systems Remediation, SEA 1442 Phase 4 Maritime Communications Modernisation Project , and SEA 1448 Phase 4B Anzac Air Search Radar Replacement; and the execution and operation of the new Warship Asset Management Agreement for total asset management support and better alignment of Industry outputs and performance to 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 2016-17, the focus will be on completing the scheduled ship maintenance activities for HMA Ships Darwin, Newcastle, and Melbourne; continuing with the transformation and improvement of the FFG Enterprise (comprised of Navy, CASG and Industry); finalising the disposal of ex-HMAS Sydney in accordance with Government intent for this activity, and the planning for the withdrawal from service of HMAS Darwin in December 2017.


173

Canberra Class Landing Helicopter Dock – CN34

The support objective is to maintain the materiel capability of the Canberra Class Landing Helicopter Dock ships and the LHD Landing Craft through the provision of materiel support and ongoing maintenance of the ships and associated equipment, systems and operator training facilities.

During 2016-17, the focus will be on the completing the scheduled ship maintenance activities for HMA Ships Canberra and Adelaide and fostering the further development of the critical commercial relationships with Australian defence industry partners.

Hydrographic Support – CN46

The scope of this product is the sustainment of two Leeuwin Class Hydrographic Ships; four Paluma Class Survey Motor Launches; eight Survey Motor Boats (embarked in the Hydrographic Ships); the Antarctic Survey Vessel; three Tactical Portable Hydrographic Survey Systems; six Basic Portable Hydrographic Survey Systems, and the Laser Airborne Depth Sounder II system.

The objective is to provide the materiel availability of the Hydrographic capability to the Navy by meeting materiel availability, seaworthiness, materiel confidence, and sustainment efficiency demands.

During 2016-17, the focus will be on continuing with materiel condition assessments and transitioning to the Polysiloxane Haze Grey paint specification. The Survey Motor Launch life-of-type-extension activities will continue as scheduled. The Depth Sounder capability will continue with a technical refresh from the current MKII surveying system to the LADS HD system.

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.

During 2016-17, the continued focus will be on increasing activity in sustainment obsolescence aspects leading into the Service Life Extension Project.

Armidale Class Patrol Boat – CN09

This product is to provide for the sustainment of the Armidale Class Patrol Boats and associated support, information management and training Systems.

The objective is to provide the materiel availability of the Patrol Boat capability to the Navy, by meeting materiel availability; seaworthiness; materiel confidence, and sustainment efficiency demands.

During 2016-17, the focus will be on improving delivery of materiel support and ongoing maintenance of the vessels through a mid-life refit and tendering the in-service support arrangements. CASG and Navy will transition two Austal built, Cape Class Patrol Boats into service for an agreed lease period commencing Quarter 1-2017.

AO/AOR Afloat Support – CN43

The support objective is to maintain the material capability of HMA Ships Success and Sirius through the provision of materiel support and ongoing maintenance of the ships and associated equipment and systems.

During 2016-17, the focus will be on introducing a new performance based contract for HMAS Success, planning for the next major refit of HMAS Success, and completing the scheduled ship maintenance activity for HMAS Sirius.


174

Submarines

Collins Class Submarine – CN10

The Collins Program objective 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, PMB and other providers.

The Coles Report into the business of sustaining Australia’s strategic Collins Class Submarine capability of November 2012 has been seminal in catalysing improved submarine availability since 2012, with the attainment of Coles' benchmark availability levels planned to be achieved by 2016-17. In collaboration with Navy and industry (and as recommended by Coles), CASG has established an enterprise approach to the Collins Program which now looks to move 'beyond Coles' with the goals beyond 2016-17 being:

• Preserve Program performance through sustained delivery of required capability at benchmark availability;

• Maintain regional superiority through timely delivery of Collins capability upgrades;

• Attain benchmark support system efficiency (materiel cost of ownership by FY22-23 ; and

• Manage Collins submarines through to withdrawal cognisant of capability continuity and transition to a Future Submarine force.


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APPENDIX G: CAPITAL FACILITIES PROGRAM

The Capital Facilities Program 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 Program 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.


176

Approved Major Capital Facilities Projects

The table below provides details on the expenditure to 30 June 2016 on capital facilities projects and budget estimates for 2016-17. Projects valued over $500,000 are included in the table. Descriptions for major projects are provided below the table.

Table 75: Approved Capital Facilities Projects by State and Federal Electorate

State and

Electorate

Total Estimated

Expenditure $m

Estimated Cumulative

Expenditure to 30 June

2016 $m

2016-17 Budget

Estimate $m

Facilities in support of the New Air Combat Capability (AIR 6000)[1]

RAAF Williamtown NSW - Newcastle - 201.4 161.3

RAAF Tindal NT - Lingiari - 11.0 81.7

Total 1,465.4 212.4 243.0

Enhanced Land Force Stage 2 Works[1]

Lone Pine Barracks NSW - Hunter - 117.8 -

Puckapunyal Training Area Vic. - McEwan - 1.9 7.1

Simpson Barracks, Watsonia Vic. - Jagajaga - 20.2 -

RAAF Amberley Qld - Blair - 9.6 -

Lavarack Barracks, Townsville Qld - Herbert - 66.3 -

Townsville Training Area Qld - Kennedy - 3.9 -

Greenbank Training Area Qld - Rankin - 121.0 -

Gallipoli Barracks, Enoggera Qld - Ryan - 810.6 -

Wide Bay Training Area Qld - Wide Bay - 100.6 0.5

Kokoda Barracks, Canungra Qld - Wright - 72.1 -

Cultana Training Area SA - Grey - 2.9 14.2

RAAF Edinburgh SA - Wakefield - 34.5 -

Majura Field Training Area ACT - Fraser - 22.4 -

Total 1,457.8 1,383.7 21.8

Defence Logistics Transformation Program[1]

Defence National Storage and Distribution Centre, Moorebank NSW - Hughes

- 205.4 -

Wadsworth Barracks, Bandiana Vic. - Indi - 63.5 -

RAAF Amberley Qld - Blair - 144.8 -

Lavarack Barracks, Townsville Qld - Herbert - 131.5 5.0


177

Table 75: Approved Capital Facilities Projects by State and Federal Electorate (Continued)

State and

Electorate

Total Estimated

Expenditure $m



2016 $m

2016-17 Budget

Estimate $m

RAAF Edinburgh SA - Wakefield - 21.9 -

HMAS Stirling, Rockingham WA - Brand - 1.3 -

Palmer Barracks WA - Hasluck 8.5 -

Robertson Barracks NT - Solomon - 126.9 -

Total 732.6 703.8 5.0 Maritime Patrol Aircraft Replacement (AIR 7000 Phase 2B)[1]

RAAF Edinburgh SA - Wakefield - 5.9 168.1

RAAF Townsville Qld - Herbert - - -

RAAF Pearce WA - Pearce - - -

RAAF Darwin NT - Solomon - - -

Total 707.9 5.9 168.1

Air Traffic Control Complex Infrastructure Project, AIR 5431 Phases 2 and 3 and Fixed Base Defence Air Traffic Management and Control System[1]

RAAF Amberley Qld - Blair - 2.3 43.9

Army Aviation Centre Oakey Qld - Groom - 0.1 2.6


RAAF Richmond NSW - Greenway - - -

HMAS Albatross NSW - Gilmore - - -

RAAF Williamtown NSW - Newcastle - - -

RAAF East Sale Vic. - Gippsland - 0.5 10.4

RAAF Woomera SA - Grey - - -

RAAF Edinburgh SA - Wakefield - 0.4 7.8

RAAF Gingin WA - Pearce - - -

RAAF Pearce WA - Pearce - 0.3 5.8

RAAF Darwin NT - Solomon - 0.4 6.9

RAAF Tindal NT - Lingiari - 0.9 17.8

Total 409.9 4.9 95.1

Battlefield Airlifter Facilities (AIR 8000 Phase 2)

RAAF Amberley Qld - Blair 370.4 1.4 201.0


178


State and

Electorate

Total Estimated

Expenditure $m



2016 $m

2016-17 Budget

Estimate $m

HMAS Stirling Redevelopment Stage 3A

HMAS Stirling, Rockingham WA - Brand 366.8 14.9 23.4

Growler Airborne Electronic Attack Capability Facilities (AIR 5349 Phase 3)


LAND 121 Phases 3 and 4 Overlander Facilities Stage 2 [1]

Lavarack Barracks, Townsville Qld - Herbert - 7.5 60.5

Gallipoli Barracks, Enoggera Qld - Ryan - 3.9 42.1

RAAF Williamtown NSW - Newcastle - - 11.5

Holsworthy Barracks, Holsworthy NSW - Hughes - - 1.3

Puckapunyal Training Area Vic. - McEwan - 0.9 -

Campbell Barracks WA - Curtin - - -

RAAF Edinburgh SA - Wakefield - - -

Robertson Barracks NT - Solomon - - 0.5

Total

276.5 12.3 115.9

RAAF Williamtown Redevelopment Stage 2

RAAF Williamtown NSW - Newcastle 274.0 6.3 102.8

Campbell Barracks Redevelopment

Campbell Barracks WA - Curtin 223.6 10.5 45.0

HMAS Albatross Redevelopment Stage 3

HMAS Albatross NSW - Gilmore 194.2 141.5 39.2

Facilities for MH-60R Seahawk Maritime Combat Helicopters (AIR 9000 Phase 8)[1]

HMAS Albatross, Nowra NSW - Gilmore - 160.7 -

HMAS Stirling, Rockingham WA - Brand - 6.5 1.6

Twofold Bay, Eden NSW - Eden-Monaro - 0.3 0.5

Total

189.0 167.5 2.1 Helicopter Aircrew Training System (AIR 9000 Phase 7)[1]

HMAS Albatross, Nowra NSW - Gilmore 157.1 64.5 60.2

Defence Terrestrial Communications Network Facilities Upgrade (JP2047)[2]

National 130.8 55.2 40.7


179


State and

Electorate

Total Estimated

Expenditure $m



2016 $m

2016-17 Budget

Estimate $m

Airfield Capital Works[1]


RAAF Curtin WA - Durack - - 2.3

RAAF Tindal NT - Lingiari - - 31.7

Total 95.3 - 34.0

Delamere Range Facilities Redevelopment

Delamere Air Weapons Range NT - Lingiari 74.4 4.7 49.8

17th Construction Squadron Relocation


Space Telescope (Joint Project (JP) 3029)

Harold E Holt, Exmouth WA - Durack 63.0 8.1 48.0

REDFIN Infrastructure (JP 2097 Phase 1B)[1]

Holsworthy Barracks NSW - Hughes - 8.1 5.2

Campbell Barracks WA - Curtin - 0.4 8.9

Defence Establishment Howard Springs NT - Solomon - 4.0 1.0

Lavarack Barracks Qld - Herbert - 0.1 2.0

Total

50.5 12.6 17.1 Facilities for Chinook Helicopter (AIR 9000 Phases 5B and 5C)

RAAF Townsville Qld - Herbert 54.8 20.9 11.5

RAAF Base Amberley Sewerage Treatment Plant


Low Level Bridge Repair

Fleet Base West, Stirling WA - Brand 12.8 0.6 6.4

Facilities for Lead in Fighter Capability Assurance Program (AIR 5438 Phase 1)[1]

RAAF Williamtown NSW - Newcastle - 6.6 -

RAAF Pearce WA - Pearce - 1.0 3.8

Total 12.7 7.6 3.8

JHC Facilities Upgrades - Interim Works [1]

Larrakeyah / Coonawarra NT - Solomon - 3.0 2.7


181

New South Wales

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. The project is scheduled for completion by mid 2021.

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.

Queensland

Battlefield Airlifter Facilities (AIR 8000 Phase 2)

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. The project is scheduled for completion by early 2019.

Growler Airborne Electronic Attack Capability Facilities (AIR 5349 Phase 3)

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. The project is scheduled for completion by mid 2021.

17th Construction Squadron Relocation

This project will provide facilities to collocate 17th Construction Squadron with 6th Engineer Support Regiment and 21st Construction Squadron at RAAF Base Amberley, Qld. The project is scheduled to be completed by late 2016.

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.

Western Australia

HMAS Stirling Redevelopment Stage 3A

This project will provide upgrades and refurbishment of existing critical shortfalls to infrastructure and facilities. The project is scheduled for completion by late 2019.

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. The project is scheduled for completion by late 2018.


182

Space Telescope (Joint Project (JP) 3029)

This project will provide facilities and infrastructure 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 by late 2018.

Northern Territory

Delamere Range Facilities 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. The project is scheduled for completion by mid 2018.

VARIOUS Locations

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.

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 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 late 2018.

Defence Logistics Transformation Program (DLTP)

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 program 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.

Maritime Patrol Aircraft Replacement (AIR 7000 Phase 2B)

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 late 2020.


183

Air Traffic Control Complex Infrastructure Project and AIR 5431 Phases 2 and 3, and Fixed Base Defence Air Traffic Management and Control System

This project will provide facilities across 13 bases in support of replacement Air Traffic Management Surveillance, Command and Control Systems under AIR 5431 Phases 2 and 3, incorporating the replacement of aged and degraded Air Traffic Control Towers. The project is scheduled for completion by late 2021.

LAND 121 Stage 2 (Phases 3 and 4)

This project will provide facilities across nine bases to sustain the B-vehicle fleet IAW the Basis of Issue for Army, RAAF and JLC. These facilities will maintain (workshops and repair parts storage), support (fuel points, loading ramps, wash points and weigh bridges) and sustain (shelters and hardstand) the vehicles from vehicle acquisition Phase 3A (G-Wagon), Phase 3B (Light/Light Weight and Medium/Heavy) and Phase 4 (Protected Mobility Vehicles Light). The project is scheduled for completion by mid 2019.

Facilities for the MH-60R Seahawk Maritime Combat Helicopters (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.

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 late 2017.

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.

REDFIN Infrastructure (JP2097 Phase 1B)

This project will provide facilities for the Special Operations Vehicle (SOV) fleet to support mobility and Networked Special Operations Capability. The project is scheduled for completion by early 2019.


186

Table 76: Program of Works Foreshadowed for Consideration and Approval (Continued)

State/Electorate

Actual/Indicative PWC Referral

Date

Actual/Indicative PWC Hearing

Date[1] Current

Status

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

The project will provide essential building and engineering services upgrade to extend the life of Russell Buildings R5 and R6. Subject to Government and Parliamentary approval, construction is scheduled to commence in mid 2017 and be completed by mid 2020.

Garden Island (East) Critical Infrastructure Recovery Project (CIRP) – Stage One

The project will address critical structural, condition and engineering services risks on the Cruiser Wharf at Garden Island (East), Sydney, NSW. Subject to Government and Parliamentary approval, construction is scheduled to commence in mid 2017 and be completed by late 2020.

C-17 Maintenance Facility, Aircraft Apron and Associated Infrastructure

The 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 approval, construction is planned to commence in late 2016 and be completed by early 2019.

Remediation of Defence Site Maribyrnong

The project will undertake necessary remediation works at Defence site Maribyrnong, Vic. Subject to Government and Parliamentary approvals, construction is planned to commence in mid 2017 and be completed by 2020.

Puckapunyal High Voltage Project

The project will provide an essential upgrade to the High Voltage power supply and reticulation network at the Puckapunyal Military Area, Vic. Subject to Government and Parliamentary approval, construction is planned to commence in mid 2016 and be completed by early 2017.

Cultana Training Area Infrastructure and Facilities

The project will provide facilities and infrastructure for the Cultana Training Area, SA. Subject to Government and Parliamentary approval, construction is planned to commence early 2017 and be completed by late 2018.


187

Woomera Range Safety and Control System Remediation

The project will provide facilities and infrastructure to support the systems developed for Woomera Test Range (WTR) under project JP3024-Phase 1. The Project will include, but is not limited to, the development of a number of remote array sites, buried fibre optic cable, construction of new facilities and infrastructure at WTR including a new Range Control Centre. Subject to Government and Parliamentary approval, construction is planned to commence early 2017 and be completed by late 2018.

JP500 Phase 2 - Electronic Warfare Operational Support

The project will provide facilities and infrastructure to support Electronic Warfare capability at DSTO Edinburgh, SA. Subject to Government and Parliamentary approval, construction is planned to commence mid 2017 and be completed by early 2018.

AIR 5428 Phase 1 - Pilot Training System Facilities Project

The project will provide fit-for-purpose facilities to support the modern joint training system being delivered by the AIR5428-1 Capability Project. Subject to Government and Parliamentary approval, construction is planned to commence mid 2016 with all sites to be completed by 2019.

Navy Guided Weapons Maintenance Facilities Project

The project will deliver 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 approval, construction is planned to commence late 2017 and be completed by mid 2019.

LAND 155 Enhanced Gap Crossing Capability

The 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 approval, construction is planned to commence in early 2017 and be completed by late 2017.

LAND 17 Phases 1B and 1C - Additional Towed Guns

The 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 approval, construction is planned to commence in mid 2017 and be completed by mid 2018.

Aircraft Pavements and Airfield Lighting at RAAF Base Pearce, Gin Gin, RAAF Base East Sale and Army Aviation Centre Oakey

The project will resurface asphalt pavement and replace airfield lighting at RAAF Base Pearce, WA, Gin Gin, WA, RAAF East Sale, Vic., and Army Aviation Centre Oakey, Qld. Subject to Government and Parliamentary approvals, construction is planned to commence in mid 2018 and be completed by mid 2021.


188


189


Agency Resources and Planned Performance

Section 1: DHA Overview and Resources

Section 2: DHA Outcomes and Planned Performance

Section 3: DHA Explanatory Tables and Budgeted Financial Statements


190

DEFENCE HOUSING AUSTRALIA

Section 1: DHA Overview and Resources

1.1 STRATEGIC DIRECTION STATEMENT

The main function of Defence Housing Australia (DHA) is to provide housing and related services to members of the Australian Defence Force (ADF) and their families in response to Defence requirements. In fulfilling its role, DHA contributes to Defence retention, recruitment and operational goals.

DHA’s total housing portfolio primarily accommodates ADF members with dependents and their families, but also includes off-base accommodation for ADF singles, newly acquired properties coming on-line, properties being refurbished or off-line for maintenance, and those at the end of lease about to be disposed from the portfolio. DHA manages:

• About 19,000 dwellings in all States and Territories of Australia valued at about $10 billion;

• The allocation of dwellings to 16,500 ADF members (Married with Dependants and Defence members who are single);

• 14,000 ADF members on Rental Assistance; and

• The allocation of on-base accommodation for about 11,000 ADF members (31,000 rooms/40,000 beds).

DHA is active in Australian residential housing markets, constructing, purchasing and leasing houses for Defence personnel and raising capital through the sale of properties. DHA is a large property manager, responsible for managing the allocation of dwellings to Defence members and the resulting tenancies. DHA manages a large portfolio of land developments. We acquire and develop land to build enduring and sustainable communities of mixed military and private owners and tenants. DHA helps to finance its activities by selling and leasing back dwellings through its Property Investment program. This is achieved through:

• Land acquisitions.

• The management of land development and dwelling construction.

• Property and tenancy management comprising repairs and maintenance, property allocations and tenancy management.

• Capital raising through the disposal of excess retail land, the disposal of excess property and a property investment program.

DHA is a Government Business Enterprise (GBE) operating under the provisions of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). It is required to maintain a strong balance sheet and to meet shareholder return obligations. DHA is within the Defence portfolio and reports to the Minister for Defence and the Minister for Finance as joint Shareholder Ministers.

DHA is not funded from the Budget. As a full tax paying entity, it contributes 60% of Net Profit after Tax as an annual dividend.


191

DHA Organisational Structure

DHA advises that there are no significant changes to targets published in the Portfolio Budget Statements 2015-16. However, the composition of DHA’s Board of Directors and associated committees has changed and is detailed below.

As at 31 March 2016, the DHA Board members are:

Chairman Hon J.A.L. (Sandy) Macdonald

Acting Managing Director Ms Jan Mason

Commercial Director Hon Alan Ferguson

Commercial Director Mr Robert Fisher AM

Commercial Director Vacant

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

The DHA Board also has the following subcommittees, Board Audit Committee, Board Property Committee and Nomination and Remuneration Committee.

DHA has an Advisory Committee that has the following members as at 31 March 2016:

Chairperson Commodore Vicki McConachie CSC RANR

Convenor of Defence Families Australia Ms Robyn Ritchie

Appointee of Chief of Navy RADM Michael Noonan AM RAN (Deputy Chief of Navy)

Appointee of Chief of Army MAJGEN Rick Burr DSC AM MVO (Deputy Chief of Army)

Appointee of Chief of Air Force AVM Warren McDonald AM CSC (Deputy Chief of Air Force)

Appointee of Defence Housing Australia Ms Jan Mason

DHA’s wholly owned subsidiary entity, DHA Investment Management Limited, has a Board comprising a Chairperson and two directors.

As at 31 March 2016, the DHA Investment Management Limited Board members are:

Chairperson Mr Martin Brady AO

Director Ms Jan Mason

Director Mr Jon Brocklehurst


192

1.2 DHA RESOURCE STATEMENT

Table 77: DHA Resource Statement – Budget Estimates for 2016-17

2015-16 estimated

actual$'000

2016-17 estimate

$'000Opening balance/cash reserves at 1 July (a) 263,517 229,877

Funds from GovernmentAmounts received from related entities

Amounts from Department of Defence 580,819 657,094Total amounts received from related entities 580,819 657,094

Total funds from Government 580,819 657,094

Funds from industry sources

Funds from other sourcesInterest 6,902 3,546Sale of goods and services 767,029 857,893

Total funds from other sources 773,931 861,439Total net resourcing for DHA 1,354,750 1,518,533

2015-16 2016-17Average staffing level (number) 650 650

Notes1. DHA is not directly appropriated. Appropriations are made to Department of Defence w hich are then paid to DHA for services provided.


193

1.3 BUDGET MEASURES

There are no measures relating to DHA for the May 2016 Budget.


194

Section 2: DHA Outcomes and Planned Performance

DHA advises no significant changes to targets published in the Portfolio Budget Statements 2015-16.

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

Each outcome is described below together with its related programs. The following provides detailed information on expenses for each outcome and program, further broken down by funding source.

Note:

From 1 July 2015, performance reporting requirements in the Portfolio Budget Statements sit alongside those required under the enhanced commonwealth performance framework. It is anticipated that the performance criteria described in Portfolio Budget Statements will be read with broader information provided in an entity’s corporate plans and annual performance statements – included in Annual Reports from October 2016 – to provide an entity’s complete performance story.


197

Section 3: DHA Explanatory Tables and Budgeted Financial Statements

Section 3 presents budgeted financial statements which provide a comprehensive snapshot of entity finances for the 2016-17 budget year, including the impact of budget measures and resourcing on financial statements.

3.1 EXPLANATORY TABLES

Not applicable to DHA.


198

3.2 BUDGETED FINANCIAL STATEMENTS

3.2.1 Budgeted Financial Statements

Table 79: Comprehensive Income Statement (showing net cost of services) for the period ended 30 June

2015-16 Estimated

actual$'000

2016-17Budget

$'000

2017-18 Forward estimate

$'000


$'000

2019-20Forward estimate

$'000INCOME

RevenueSale of goods and rendering of services 1,324,676 1,443,472 1,566,310 1,496,227 1,426,793Interest 6,902 3,546 2,995 6,365 8,200Total revenue 1,331,578 1,447,018 1,569,305 1,502,592 1,434,993

GainsSale of assets (2,400) (3,452) (2,484) (2,823) (965)Total gains (2,400) (3,452) (2,484) (2,823) (965)

Total income 1,329,178 1,443,566 1,566,821 1,499,769 1,434,028

EXPENSESEmployee benefits 70,006 73,082 75,799 78,621 81,549Suppliers 1,097,599 1,248,957 1,357,644 1,269,648 1,218,919Depreciation and amortisation 15,326 15,268 15,373 16,131 15,556Finance costs 28,027 28,027 28,027 28,027 28,027Write-dow n and impairment of assets 9,513 7,500 7,500 7,500 7,500Total expenses 1,220,471 1,372,834 1,484,343 1,399,927 1,351,551

Profit/(loss) before income tax 108,707 70,732 82,478 99,842 82,477Income tax expense 30,026 24,088 26,549 32,033 23,135Net profit/(loss) 78,681 46,644 55,929 67,809 59,342Profit/(loss) attributable to the Australian Government 78,681 46,644 55,929 67,809 59,342Total comprehensive income attributable to the Australian Government 78,681 46,644 55,929 67,809 59,342

Notes1. DHA's Portfolio Budget Statement submission for 2016-17 through to 2019-20 is based on DHA's Shareholder approved 2015-16 Corporate Plan. The DHA Corporate Plan is prepared on a cost basis, w hilst this Budget Statement submission has been prepared on a fair value basis, in line w ith the PGPA Act Financial Reporting Rules


199

Table 80: Budgeted Departmental Balance Sheet (as at 30 June)

2015-16 Estimated

actual$'000

2016-17Budget

$'000


$'000


$'000


$'000ASSETS

Financial assetsCash and cash equivalents 229,877 118,864 172,541 300,700 270,393Trade and other receivables 41,096 99,001 151,274 144,791 157,420Other investments 1,177 1,177 1,177 1,177 1,177Other f inancial assets 44,635 47,153 50,140 53,268 55,586

Total financial assets 316,785 266,195 375,132 499,936 484,576

Non-financial assetsLand and buildings 1,570,624 1,499,890 1,484,154 1,461,121 1,480,837Property, plant and equipment 15,841 19,757 22,605 25,347 28,169Tax assets 24,496 24,217 26,045 28,385 30,223Inventories 1,196,840 1,351,657 1,327,623 1,308,261 1,353,839

Total non-financial assets 2,807,801 2,895,521 2,860,427 2,823,114 2,893,068 Assets held for sale 27,215 27,215 27,215 27,215 27,215

Total assets 3,151,801 3,188,931 3,262,774 3,350,265 3,404,859

LIABILITIES

PayablesSuppliers 13,377 13,618 14,229 14,670 15,158Dividends 63,049 53,601 52,786 62,152 44,808Other payables 112,101 115,048 120,670 129,376 126,936

Total payables 188,527 182,267 187,685 206,198 186,902

Interest bearing liabilitiesLoans 509,580 509,580 509,580 509,580 509,580

Total interest bearing liabilities 509,580 509,580 509,580 509,580 509,580

ProvisionsEmployee provisions 19,443 20,058 20,792 21,553 22,332Other provisions 103,652 105,861 107,988 106,294 104,728

Total provisions 123,095 125,919 128,780 127,847 127,060

Total liabilities 821,202 817,766 826,045 843,625 823,542

Net assets 2,330,599 2,371,165 2,436,729 2,506,640 2,581,317

EQUITY*

Parent entity interestContributed equity 396,148 396,148 396,148 396,148 396,148Reserves 1,894,392 1,939,081 1,998,668 2,060,088 2,117,397Retained surplus (accumulated deficit) 40,059 35,936 41,913 50,404 67,772

Total parent entity interest 2,330,599 2,371,165 2,436,729 2,506,640 2,581,317

Attributed to non-controlling interestTotal non-controlling interest - - - - -

Total equity 2,330,599 2,371,165 2,436,729 2,506,640 2,581,317

* Equity is the residual interest in assets after the deduction of liabilities.


200

Table 81: Budgeted Departmental Statement of Cash Flows (for the period ended 30 June)

2015-16 Estimated

actual$'000

2016-17Budget

$'000


$'000


$'000


$'000OPERATING ACTIVITIES

Cash receivedSale of goods and rendering of services 1,287,848 1,428,695 1,600,278 1,518,987 1,476,765Interest 6,902 3,546 2,995 6,365 8,200Other 23,361 21,591 19,053 18,958 20,345

Total cash received 1,318,111 1,453,832 1,622,326 1,544,310 1,505,310

Cash usedEmployees 73,987 77,103 78,897 83,011 84,664Suppliers 1,199,363 1,436,359 1,424,222 1,274,038 1,332,812Borrow ing costs 28,027 28,027 28,027 28,027 28,027Other 50,737 44,433 43,838 46,708 49,921

Total cash used 1,352,114 1,585,922 1,574,984 1,431,784 1,495,424Net cash from/(used by) operating activities (34,003) (132,090) 47,342 112,526 9,886

INVESTING ACTIVITIES

Cash receivedProceeds from sales of property, plant and equipment

60,000 86,292 62,102 70,585 24,125

Total cash received 60,000 86,292 62,102 70,585 24,125

Cash usedPurchase of property, plant and equipment and intangibles

5,000 5,000 5,000 5,000 5,000

Total cash used 5,000 5,000 5,000 5,000 5,000Net cash from/(used by) investing activities 55,000 81,292 57,102 65,585 19,125

FINANCING ACTIVITIES

Cash receivedOther - - - - -

Total cash received - - - - -

Cash usedDividends paid 54,637 60,215 50,767 49,952 59,318

Total cash used 54,637 60,215 50,767 49,952 59,318Net cash from/(used by) financing activities (54,637) (60,215) (50,767) (49,952) (59,318)

Net increase/(decrease) in cash held (33,640) (111,013) 53,677 128,159 (30,307)Cash and cash equivalents at the beginning of the reporting period 263,517 229,877 118,864 172,541 300,700Cash and cash equivalents at the end of the reporting period 229,877 118,864 172,541 300,700 270,393


201

Table 82: 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 2016Balance carried forw ard from previous period

40,059 1,894,392 - 396,148 2,330,599

Adjustment for changes in accounting policies

- - - - -

Adjusted opening balance 40,059 1,894,392 - 396,148 2,330,599

Comprehensive incomeSurplus/(deficit) for the period 46,644 - - - 46,644

Total comprehensive income 46,644 - - - 46,644

Transactions with ownersDistributions to owners

Returns on capital:Dividends (50,767) - - - (50,767)

Contributions by ownersOther - 44,689 44,689

Sub-total transactions with owners (50,767) 44,689 - - (6,078)

Estimated closing balance as at 30 June 2017 35,936 1,939,081 - 396,148 2,371,165Closing balance attributable to the Australian Government 35,936 1,939,081 - 396,148 2,371,165


202

Table 83: Departmental Capital Budget Statement

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.

Table 84: Statement of Asset Movements (2016-17)

Land$'000

Buildings$'000

Other property, plant and

equipment$'000

L&B, IP&E held for

sale$'000

Total$'000

As at 1 July 2016Gross book value 849,034 721,596 38,120 27,215 1,635,965

Accumulated depreciation/amortisation and impairment - (6) (22,279) - (22,285)

Opening net book balance 849,034 721,590 15,841 27,215 1,613,680CAPITAL ASSET ADDITIONS

Estimated expenditure on new or replacement assetsBy purchase - other 1,000 15,000 6,054 - 22,054Total additions 1,000 15,000 6,054 - 22,054Other movements

Assets held for sale or in a disposal grou held for sale (43,147) (43,146) - - (86,293)Reclassifications (2,000) (30,000)Revaluation 26,747 4,812 - - 31,559Depreciation written back on revaluation - 13,130 - - 13,130Depreciation/amortisation expense - (13,130) (2,138) - (15,268Total other movements (18,400) (68,334) (2,138) - (56,872)

As at 30 June 2017Gross book value 831,634 681,392 44,174 27,215 1,616,41

Accumulated depreciation/ amortisation and impairment - (13,136) (24,417) - (37,553)

Closing net book balance 831,634 668,256 19,757 27,215 1,578,862

Glossary

203

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.


204

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 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 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.

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.

Financial Management and Accountability Act 1997

The Act establishes the regulatory framework for financial management within Defence and other public sector agencies.

Glossary

205

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 (eg 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.

Listed entity An entity established by regulation under the Public Governance, Performance and Accountability Act 2013. The Act provides financial management authority to, and requires accountability by the Chief Executive of an agency. This used to be called ‘Prescribed agency’ under the former Financial Management and Accountability Act 1997.

Materiel Acquisition Agreements

Materiel Acquisition Agreements cover the Capability Acquisition and Sustainment Group’s (formerly known as Defence Materiel Organisation) 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 Capability Acquisition and Sustainment Group. These agreements cover the sustainment of current capability, including good and services such as repairs, maintenance, fuel and explosive ordnance.


206

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.

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.

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.

Glossary

207

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, 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 Public Governance, Performance and Accountability Act 2013) or through an Act of Parliament (referred to in s.80 of the Public Governance, Performance and Accountability Act 2013).

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.

System Program Office

The office of the Program 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.


208

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.

Acronyms

209

ACRONYMS

A AADC Armidale Class Patrol Boats

AAF Army Amenities Fund

AAFCANS Army and Air Force Canteen Service

ACPB Armidale Class Patrol Boats

ADF Australian Defence Force

ADFA Australian Defence Force Academy

ADFHQ Australian Defence Force Headquarters

ADO Australian Defence Organisation

AFATDS Advanced Field Artillery Tactical Data System

AFS Average Funded Strength

AGIMO Australian Government Information Management Office

AIS Aeronautical Information System

AMCIP Approved Major Capital Investment Program

AMSO Australian Military Sales Office

ANAO Australian National Audit Office

AO Amphibious and Afloat Support – Oil Tanker

AOR Amphibious and Afloat Support – Replenishment Ship

APS Australian Public Service

APRCC Australian Protected Route Clearance Capability

ASEC Associate Secretary

ASMD Anti-Ship Missile Defence

ASPI Australian Strategic Policy Institute

AWD Air Warfare Destroyer

B BAU Business as Usual

C CASG Capability Acquisition and Sustainment Group

C-RAM Counter Rocket, Artillery & Mortar

CCSM Collins class Submarine

CDF Chief of the Defence Force

CDG Capability Development Group


210

CDIP Capability Development Improvement Program

CEO Chief Executive Officer

CFOG Chief Finance Officer Group

CIR Capability Investment and Resources

CIOG Chief Information Officer Group

CJOPS Chief of Joint Operations

CPTs Crew Procedural Trainers

D DACC Defence Assistance to the Civil Community

DCBs Departmental Capital Budget

DCEO Deputy Chief Executive Officer

DCP Defence Capability Plan

DDG Hobart Class Air Warfare Destroyers

DES Defence Executive Support

DFACA Defence Force Aid to the Civil Authority

DFAT Department of Foreign Affairs and Trade

DFRB Defence Force Retirement Benefits

DFRDB Defence Force Retirement and Death Benefits Scheme

DHA Defence Housing Australia

DHF Defence Housing Forecast

DHFCS Defence High Frequency Communications System

DMO Defence Materiel Organisation

DPG Defence People Group

DSTG Defence Science & Technology Group

DSTO Defence Science & Technology Organisation

E EIG Estate & Infrastructure Group

ELF Enhanced Land Force

ES Electronic Support

ESSM Evolved Sea Sparrow Missiles

F FFG Adelaide Class Frigate

FFG Guided Missile Frigate

FFH Anzac Class Frigate

Acronyms

211

FMA Financial Management and Accountability

FOC Full Operational Capability

FTE Full Time Equivalent

H HF High Frequency

HMAS Her Majesty's Australian Ship

HQ Headquarters

HQJOC Headquarters Joint Operations Command

I ICT Information and Communications Technology

IFR International Fleet Review

IISS International Institute for Strategic Studies

ILMF Intermediate Level Maintenance Facility

IOC Initial Operational Capability

IPA Independent Project Analysis

ISPE Industry Skilling Program Enhancement

ISSC In-Service Support Contract

J JLC Joint Logistics Command

JOC Joint Operations Command

JORN Jindalee Operational Radar Network

JP Joint Project

JPD Joint Project Directive

JSF Joint Strike Fighter

L LAIRCM Large Aircraft Infra Red Counter Measure

LEAP Living Environment and Accommodation Precinct

LHD Landing Helicopter/Heavy Dock

LOGIS Logistics Information Systems

LSD Landing Ship Dock


212

M MAA Materiel Acquisition Agreement

METOC Mobile Meteorological and Oceanographic

MFO Multi-National Force Observers

MHC Coastal Mine Hunter

MHFCS Modernised High Frequency (HF) Communications System

MIMT Moorebank Intermodal Freight Terminal

MRH Multi-Role Helicopter

MRTT Multi-Role Tanker Transport

MSA Materiel Sustainment Agreement

MSBS Military Superannuation and Benefits Scheme

N NACC-ISP New Air Combat Capability – Industry Support Program

NAVWAR Navigation Warfare

NPOC Net Personnel & Operating Costs

O OPA Official Public Account

P PAES Portfolio Additional Estimates Statements

PBS Portfolio Budget Statements

PGPA Public Governance Performance and Accountability

PIC Priority Industry Capability

PICIP Priority Industry Capability Innovation Program

PRM Project Realisation Manager

PTS Post Traumatic Stress

PWC Committee on Public Works

PWEA Point Wilson Explosive Area

R RAAF Royal Australian Air Force

RADM Rear Admiral

RANCCF Royal Australian Navy Central Canteens Fund

Acronyms

213

S SADI Skilling Australia’s Defence Industry

SAR Search and Rescue

SATCOM Satellite Communications

SERAS Submarine Escape Rescue and Abandonment Systems

S&T Science & Technology

SIE Single Information Environment

SOETM Services for Other Entities and Trust Moneys

SME Specialist Military Equipment

SPI Strategic Policy and Intelligence

SPO System Program Office

T TACAN Tactical Air Control and Navigation

U UAD Unit Availability Days

URD Unit Ready Days

USAF United States Air Force

USN United States Navy

V VCDF Vice Chief of the Defence Force

VRs Voluntary Redundancies

W WGS Wideband Global SATCOM System

WTSS Weapons Training Simulation System

portfolio budget statements 2016-17 budget related paper no. 1 · defence portfolio budget...

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