Defence department raids big-ticket ‘ATM’ for sundries

Budget pressures have forced Defenc­e to raid its $200bn capital investment program to pay salaries and sexual assault victims.

Defence Minister Linda Reynolds. Picture: Getty Images

Budget pressures have forced Defenc­e to raid its $200bn capital investment program — meant for new equipment, technology and infrastructure — to pay salaries and sexual assault victims, clean up pollution and keep the department’s IT systems running.

Defence has refused to provide details of hundreds of projects funded through its Integrated Investm­ent Program, but revealed to the Senate’s foreign affairs and defence committee that the IIP has been used to pay more than $1.75bn in non-capital costs.

This included $560m for un­anticipated military salaries, while $465m in funds earmarked for new IT systems was transferred to Defence’s IT sustainment program. A further $566m was used to fund the remediation of Defence sites and nearby land affected by PFAS — a chemical previously used in firefighting foams that builds up in the human body.

Defence also used the IIP for a $165m contribution to the national redress scheme for sur­viv­­ors of institution­al child sex abuse.

Despite rising strategic challenges, the department revealed a further $1.16bn worth of IIP spending had been “reprioritised” – pushing it off into future years.

It said 106 capability projects were affected by the budget shuffling, but “the majority of these project changes are assessed as carrying only low to medium level of impact and all have effective risk mitigation strategies in place”.

“Where possible, divested capability requirements are being delivered through other projects,” Defence said.

The IIP, unveiled with the defence white paper in 2016, was supposed to be updated period­ically online to give the defenc­e industry a clear picture of future procurement plans, allowing it to align its research and develop­ment programs with the government’s priorities.

The government is yet to refres­h the 10-year plan, leaving industry and taxpayers in the dark about billions in planned Defence spending.

In response to a Labor question, the department said 378 capability projects worth $116.2bn had been approved under the IIP, but would only disclose 82 already made public by the government. It cited “security, strategic and commercial” reasons to keep the other 296 approved projects secret.

Defence Minister Linda Rey­nolds talked up the government’s “record” levels of investment in new defence kit this week, telling parliament: “We’re going to deliver on that $200bn that we’ve committed to determine our defence­ capability.”

Labor defence spokesman Richard Marles said the Coalition was “robbing Peter to pay Paul” by using the crucial capability prog­ram to fund general operating costs. “This $200bn program is meant to be used to ensure our defence­ personnel have the equipment and capabilities they need in the future to keep us safe and protect our national interests,” Mr Marles said.

“Instead, the Morrison government has quietly siphoned off nearly $2bn from the Integrated Investment Program to cover other Defence expenses.”

He urged the government to release details of all IIP projects, saying “taxpayers deserve to know what their money is being spent on”.

While Defence spending is forecast to hit 2 per cent of GDP in 2020-21 and go above that in future­ years, the department’s budget is under pressure from new capability acquisitions including submarines and ships, a range of costly army vehicles, and rising costs as Joint Strike Fighters are delivered.

Australian Strategic Policy Institut­e analyst Marcus Hellyer, an expert on the Defence budget, said the department’s capital program tended to be “the ATM that Defence and government go to in order to find cash”.

“The present government was extremely critical of the previous Labor government for making similar kinds of adjustments to its investment program,” Dr Hellyer said. He called on the government to be “open and honest” about its Defence investment plans.