Defence Force Chief David Hurley says the military's personnel is pared to the bone and warned that the force's ability to perform will suffer if too many staff ditch their uniforms and pursue other careers.
As Australia withdraws from East Timor and the Solomon Islands and prepares to wind down in Afghanistan, General Hurley said the lure of the lucrative private sector, such as the mining industry, could hurt Defence.
Nuclear jolt to defence spend
In the wake of North Korea's third confirmed nuclear test, chief government whip Joel Fitzgibbon and Liberal MP Josh Frydenberg discuss the importance of minimising defence budget cuts.
With 58,000 full-timers and 21,000 reserves, the military's numbers could not afford to drop, he said.
''In my view there is no fat in these numbers,'' he told the Australian Defence Magazine conference in Canberra. Of possible defections to the private sector, General Hurley added, ''There would be a risk to capability if that occurs.''
His comments come amid continuing worry within the Australian Defence Force about spending cuts, after the government slashed the Defence budget by $5.5 billion over the next four years.
Defence Minister Stephen Smith refused to rule out further cuts, saying he would not pre-empt the May 14 budget. The government's budget cuts have ringfenced personnel numbers and equipment for existing foreign deployments.
The government is locked into a stoush with the opposition over Defence spending. The Coalition has pledged not to make any further cuts, but will only commit to an ''aspiration'' of boosting the Defence budget by 3 per cent a year.
As the security focus shifts to the Asia-Pacific region - and with tight finances expected to continue in years to come - Defence is talking up the benefits of greater military co-operation with neighbours.
Defence Department secretary Dennis Richardson told the conference Australia would seek to deepen military relations with neighbours, perhaps one day even forming a defence partnership with Indonesia.