Biggest hit strips $5.5 billion from military's spending
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FIVE-AND-A-HALF billion dollars will be ripped from Defence over the next four years by stalling a series of multibillion-dollar projects and slashing its civilian workforce.
In what was the single-biggest cut in the budget, Defence will be forced to reduce its non-military workforce by 1000 over the next two years, as well as delay or cut about $3 billion in big-ticket hardware acquisitions and $1.2 billion in capital works.
The cuts not only allowed the Treasurer his much-vaunted surplus, but they also allow the government to delay critical decisions about the shape of the military until the delivery of the 2013 white paper.
It was understandable given the financial downturn, Australian Strategic Policy Institute defence analyst Mark Thomson said.
"The real question is what kind of commitment they will make to defence when the global economic situation improves," he said.
The budget also revealed the value of the "peace dividend" — an end to Australia's military commitment in Afghanistan, East Timor and the Solomon Islands — with figures showing the $1.7 billion-a-year effort will drop to virtually nothing by mid-2015.
Australia will bring troops home from Timor in December, and the mission in the Solomons will end six months later. Australians fighting in Oruzgan in Afghanistan's south are expected to finish their mission by the middle of next year.
Over the next two years, Australia's reduced footprint there will cut the cost to $50 million by 2015.
About $360 million will be saved by reducing the number of civilian staff within Defence, from 22,355 this year to 21,347 by 2014. While the government suggests this can be "primarily" achieved through reduced recruitment and natural attrition, it does not rule out redundancies.
Money will also be saved by warehousing some of the army's 49 Abrams tanks, a controversial purchase in the middle of last decade at a cost of about $500 million.
Mr Thomson said many of the cuts over the past two budgets were indicative of the different views of the Defence Force taken by Labor compared with the Coalition under John Howard.
"The expanded army was essentially Howard's baby and it was always going to take a hit. It was just a matter of when," he said.
The government also announced that it might not go ahead with a plan to upgrade a dozen Super Hornet fighter jets. That decision comes despite more than $20 million being spent this year on the plan.
The budgets of Australia's six intelligence agencies will also stall, with just under $82 million cut over the next four years and long-standing plans to increase the staff of Australia's domestic security service, ASIO, put on hold.
The national security branch of the Department of Prime Minister and Cabinet will be cut by more than 20 per cent over the next financial year.
The federal police will also feel the bite of the efficiency dividend, with a plan to recruit 500 officers by 2015 delayed by a year, at a saving of $26 million.
More than $8 million will also be cut from the AFP program that manages overseas posts.
The government will also earn an expected $118.1 million over the three years, from July 1 next year, when it starts charging major airports for provision of federal police officers.