Angus Campbell's tenure as Chief of the Defence Force will be extended by two years as the Albanese attempts to avoid delays in the delivery of the next generation of submarines.
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The government has appointed a new team of service chiefs in a shakeup of the Defence Force's top brass, which comes amid the most "strategically complex" circumstances since the end of World War II.
Defence Minister Richard Marles on Tuesday announced General Campbell, Vice Chief of the Defence Force, Vice Admiral David Johnston and the Chief of Joint Operations, Lieutenant General Greg Bilton had agreed to have their terms extended for another two years.
General Campbell's term was set to finish next month, however, Mr Marles said the Albanese government was "putting a premium on continuity".
"This applies to strategic advice and the timely and effective delivery of key procurements including through the AUKUS framework," he said.
"Australia cannot afford any further delay in the next generation of submarines.
"General Campbell and Admiral Johnston are a team which offer stability in command, and continuity in the delivery of advice and defence capability for the government. General Bilton's continued leadership in the planning and conduct of our military campaigns and exercises will provide ongoing stability and certainty."
Delays in the procurement of major defence projects plagued the former Coalition government.
In the most significant decision, it scrapped a $90 billion contract with French shipbuilder Naval in favour of pursuing nuclear-powered submarines under the AUKUS pact with the US and UK.
Mr Marles said the Coalition was to blame for the project delays, not the Defence leaders whose terms are now being extended.
"We have seen a number of key procurements fall behind time. We do have real challenges facing the country, most significantly delivering the next generation of submarines," Mr Marles said.
"It is the responsibility of the former government that we have seen those procurements fall behind. This new Albanese government intends to govern. It's why we actually made the decision to extend the senior leadership force and I think a continuity of advice puts us in the best position to make sure that we can get those procurements back on track.
"The way in which the submarine contract with France was handled is a responsibility of the former government. And what it has done is left our nation with the potential of a very significant capability gap."
In August, General Campbell conceded there had been failings within Defence following allegations of war crimes committed in Afghanistan outlined in the Brereton report.
"I feel that we have been very lucky to have General Campbell in place whilst this really difficult issue faces our country and there remains work to be done," Mr Marles said.
"We will continue working that through and to that end, extension of General Campbell's term. I think it's completely appropriate and will serve the nation well in the full implementation of the Brereton recommendations."
Rear-Admiral Mark Hammond will be the new Chief of Navy, replacing Vice-Admiral Michael Noonan.
Major-General Simon Stewart will replace Lieutenant General Rick Burr as the new Chief of Army.
The new Chief of Air Force is Air-Vice Marshal Rob Chipman, taking over from Air Marshal Mel Hupfeld.
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Mr Marles said the new appointments had come at a "strategically complex" time for Australia's national security.
"We arrive at a time which is as strategically complex as any since the end of the Second World War in terms of our national security and the needs of our defence procurement," he said.
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