PORTFOLIO ADDITIONAL - Department of Defence · Web viewThe purpose of the Portfolio Additional Estimates Statements (PAES), like that of the Portfolio Budget Statements (PB Statements),

Portfolio AdditionalEstimates Statements 2014-15

Defence Portfolio

Defence Portfolio Additional Estimates Statements 2014-15

Explanations of Additional Estimates 2014-15

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© Commonwealth of Australia 2015

ISBN 978-0-9925662-9-6

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:

Director Financial PolicyR1-2-B028Department of DefencePO Box 7900 Canberra BC ACT 2610

Telephone: (02) 6265 3899Email: [email protected]

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Abbreviations and Conventions

The following notations may be used:

NEC/nec not elsewhere classified- nil.. not zero, but rounded to zerona not applicable (unless otherwise specified)nfp not for publication$m $ million

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.

EnquiriesShould you have any enquiries regarding this publication please contact Director Financial Policy, Chief Finance Officer Group, Department of Defence on (02) 6265 3899.A copy of this document can be located on the Australian Government Budget website at: http://www.budget.gov.au.

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Table of Contents

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

DEFENCE PORTFOLIO OVERVIEW......................................................................3

Ministers and their Portfolio Responsibilities....................................................4

Changes affecting the Portfolio............................................................................................4

Portfolio Structure and Outcomes.........................................................................................5

DEPARTMENT OF DEFENCE.............................................................................13

Section 1: Defence Overview and Resources...................................................13

1.1 Strategic Direction Statement......................................................................................13

1.2 Defence Resource Statement.......................................................................................14

1.3 Budget Measures..........................................................................................................17

1.4 Capital Investment Programme....................................................................................19

1.5 People..........................................................................................................................21

Section 2: Defence Outcomes and Planned Performance..................................25

2.1 Outcomes and Performance Information......................................................................25

Section 3: Defence Explanatory Tables and Budgeted Financial Statements.....57

3.1 Explanatory Tables.......................................................................................................57

3.2 Resource Summary......................................................................................................61

3.3 Budgeted Financial Statements....................................................................................66

3.4 Consolidated Budgeted Financial Statements for the Department of Defence (including DMO)..................................................................................................................................82

APPENDICES..................................................................................................89

Appendix A: Defence Cooperation Programme...................................................................90

Appendix B: The Unapproved Major Capital Investment Programme (also known as the Defence Capability Plan)....................................................................................................91

Appendix C: Major Capital Facilities Programme................................................................92

Appendix D: Approved Projects Being Developed for Private Financing Arrangements....103

Appendix E: Status of Major Projects Foreshadowed for Government and Parliamentary Standing Committee on Public Works Consideration (PWC) in 2014-15............................104

DEFENCE MATERIEL ORGANISATION..............................................................109

Section 1: DMO Overview and Resources......................................................109

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1.1 Strategic Direction Statement....................................................................................109

1.2 DMO Resource Statement..........................................................................................112

1.3 DMO Measures and Other Adjustments......................................................................114

1.4 Breakdown of Additional Estimates by Appropriation Bill...........................................115

1.5 People........................................................................................................................116

Section 2: DMO Outcomes and Planned Performance.....................................118

2.1 Outcomes and Performance Information....................................................................119

Section 3: DMO Explanatory Tables and Budgeted Financial Statements........156

3.1 Explanatory Tables.....................................................................................................156

3.2 DMO Budgeted Financial Statements.........................................................................159

DEFENCE HOUSING AUSTRALIA.....................................................................171

Section 1: DHA Overview and Resources.......................................................171

1.1 Strategic Direction Statement....................................................................................171

1.2 DHA Resource Statement...........................................................................................172

1.3 Budget Measures........................................................................................................173

1.4 Additional Estimates and Variations...........................................................................174

1.5 Breakdown of Additional Estimates by Appropriation Bill...........................................175

Section 2: DHA Outcomes and Planned Performance.....................................176

2.1 Outcome and Performance Information......................................................................176

Section 3: DHA Explanatory Tables and Budgeted Financial Statements.........179

3.1 Explanatory Tables.....................................................................................................179

3.2 Budgeted Financial Statements..................................................................................179

GLOSSARY...................................................................................................184

Acronyms.........................................................................................................................190

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USER GUIDETO THE

PORTFOLIO ADDITIONALESTIMATE STATEMENTS

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User Guide

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USER GUIDEThe purpose of the Portfolio Additional Estimates Statements (PAES), like that of the 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. The focus of the PAES differs from the PB Statements in one important aspect. While the PAES include an Entity Resource Statement to inform Parliament of the revised estimate of the total resources available to an entity, the focus of the PAES is on explaining the changes in resourcing by outcome(s) since the Budget. As such, the PAES provides information on new measures and their impact on the financial and/or non-financial planned performance of programmes supporting those outcomes.

The PAES facilitate understanding of the proposed appropriations in Appropriation Bills (Nos. 3 and 4) 2014-15. In this sense the PAES is declared by the Additional Estimates Appropriation Bills to be a ‘relevant document’ to the interpretation of the Bills according to section 15AB of the Acts Interpretation Act 1901.

Whereas the Mid-Year Economic and Fiscal Outlook (MYEFO) 2014-15 is a mid-year budget report which provides updated information to allow the assessment of the Government’s fiscal performance against its fiscal strategy, the PAES update the most recent budget appropriations for entities within the portfolio.

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User Guide

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Portfolio Overview

1


2

Portfolio Overview

DEFENCE PORTFOLIO OVERVIEWThe Defence Portfolio consists of a number of component organisations that together are responsible for enabling 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

the Australian Defence Force (ADF): commanded by the Chief of the Defence Force (CDF) and consisting of the three Services, which are commanded by Service Chiefs

the Defence Materiel Organisation (DMO): a Listed Entity within Defence, headed by a Chief Executive Officer.

The portfolio contains some smaller entities, including a number of statutory offices, trusts and companies created by the 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, among others, the Defence Housing Australia (DHA) and the Australian Strategic Policy Institute (ASPI).

The Minister for Defence’s Portfolio also contains the Department of Veterans’ Affairs and associated bodies, as it is designated as part of the Defence Portfolio 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.

3


Ministers and their Portfolio Responsibilities

CHANGES AFFECTING THE PORTFOLIO

On 23 December 2014 the Hon Kevin Andrews MP was sworn in as the Minister for Defence.

4

Portfolio Overview

PORTFOLIO STRUCTURE AND OUTCOMES

Figure 1: Defence Portfolio Structure and Outcomes

Figure 2: Defence Organisational Chart

5

Department of Defence

Secretary: Dennis Richardson AO

Chief of the Defence Force: Air Chief Marshal Mark Binskin AC

Outcome 1: The protection and advancement of Australia’s national interests through the

provision of military

capabilities and the promotion of security and stability.

Outcome 2: The advancement of Australia’s strategic interests through the conduct of military

operations and

other tasks directed by Government.

Outcome 3: Support for the Australian community and civilian authorities as requested by

Government.

Minister for DefenceThe Hon Kevin Andrews MP

Assistant Minister for Defence The Hon Stuart Robert MP

Parliamentary Secretary to the Minister for Defence

The Hon Darren Chester MP

Chief of the Defence ForceAir Chief Marshal Mark Binskin AC

Secretary Dennis Richardson AO

Australian Defence Force

Navy ArmyDepartment of Defence

includingDefence Materiel

Organisation

Air Force

Navy Reserves

Army Reserves

Air Force Reserves

Navy Cadets

Army Cadets

Air Force Cadets

Disciplinary appointments

(DFDA)

DefenceHousingAustralia

Various small trusts and companies

Minister for Defence The Hon Kevin Andrews MP


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Assistant Minister for Defence

The Hon Stuart Robert MP

Parliamentary Secretary to the Minister for Defence

The Hon Darren Chester MP

Secretary Mr Dennis Richardson

Chief of the Defence ForceAir Chief Marshal Mark

BinskinEnabling functions

Capability and output managers

Chief Operating Officer Mr Brendan Sargeant

Chief Information Officer Dr Peter LawrenceDeputy SecretaryDefence PeopleMs Rebecca SkinnerDeputy SecretaryDefence Support and ReformMr Steve Grzeskowiak Chief Finance Officer

Mr Phillip PriorDeputy Secretary StrategyMr Peter BaxterChief Defence ScientistDr Alex ZelinskyChief Capability Development Lieutenant General John Caligari*** Chief Executive OfficerDefence Materiel OrganisationMr Warren KingGeneral Manager

Land and Maritime Mr Colin ThorneGeneral Manager SubmarinesMr David Gould

Deputy Chief Executive Officer and General Manager CommercialMr Harry Dunstall

General ManagerJoint Systems and AirMs Shireane McKinnie

Stars (*) refer to ADF Star Rank

Vice Chief of the Defence ForceVice Admiral Raymond GriggsChief of NavyVice Admiral Timothy Barrett***Chief of ArmyLieutenant General David MorrisonChief of Air ForceAir Marshal Geoff Brown***Chief of Joint OperationsVice Admiral David Johnston***Deputy Secretary Intelligence and SecurityMr Stephen Meekin

Portfolio Overview

Senior Executive Changes

The following changes have taken place since the Portfolio Budget Statements (PBS) 2014-15:

On 4 April 2014, Rear Admiral David Johnston AM RAN was promoted to Vice Admiral. On 20 May 2014, Vice Admiral David Johnston AM RAN was appointed as Chief of Joint Operations, replacing Lieutenant General Brian Power AO CSC, who transferred to the Army Reserve on 19 July 2014.

On 1 July 2014, Air Chief Marshal Mark Binskin AC was promoted and appointed to the Chief of the Defence Force, replacing General David Hurley AC DSC who transferred to the Army Reserve.

On 1 July 2014, Vice Admiral Raymond Griggs AO CSC RAN, was appointed Vice Chief of the Defence Force.

On 24 June 2014, Rear Admiral Timothy Barrett AO CSC RAN was promoted to Vice Admiral. On 1 July 2014, Vice Admiral Timothy Barrett AO CSC RAN was appointed to Chief of Navy.

On 3 October 2014, Lieutenant General John Caligari AO DSC, was promoted and appointed to Chief of Capability Development Group, replacing Vice Admiral Peter Jones AO DSC RAN, who transferred to the Royal Australian Navy Reserve on 2 November 2014.

With effect 12 May 2014, Ms Rebecca Skinner was promoted to the position of Deputy Secretary Defence People, replacing Ms Carmel McGregor, who retired from the Australian Public Service (APS) on 17 July 2014.

Dr Ian Sare, the previous Deputy Chief Defence Scientist (Strategy & Programmes), retired from the APS on 29 August 2014.

Organisational Structure

The following changes have taken place since the PBS 2014-15:

The Australian Defence Force Investigative Service, headed by Provost Marshal Australian Defence Force, transferred from Vice Chief of the Defence Force Group (VCDF Group) to Office of the Secretary and Chief of the Defence Force Group (OSCDF Group) on 1 July 2014.

The Logistics Systems Branch, headed by Director General Logistics Systems, was established in Vice Chief of the Defence Force Group on 1 July 2014.

The Combined Federated Battle Laboratories Network (CFBLNet) transferred from Chief Information Officer Group (CIOG) to Headquarters Joint Operations Command Australian Defence Simulation Training Centre to provide greater efficiencies in the sharing of technical expertise and knowledge and to enable the networks to develop along converging lines into one Defence training and experimentation network.

7


Defence Portfolio Bodies

The following changes have taken place since the PBS 2014-15:

Australian Military Forces Relief Trust Fund

Brigadier Peter Daniel AM CSC replaced Brigadier Gavan Reynolds AM CSC as Chairman of Australian Military Forces Relief Trust Fund.

Royal Australian Navy Central Canteens Board

Commodore Ian Murray replaced Rear Admiral Clinton Thomas AM CSC as Chairman of the Royal Australian Navy Central Canteens Board.

Royal Australian Navy Relief Trust Fund

Commodore Brett Wolski replaced Commodore Paul Kinghorne as Chairman of the Royal Australian Navy Relief Trust Fund.

AAF Company

Brigadier Peter Daniel AM CSC replaced Brigadier Paul Nothard as President of AAF Company.

8

Portfolio Overview

Portfolio Resource Statement

Table 1: Portfolio Resources[1]

DepartmentalBill No. 3

$m


$m

AppropriationAct (No.1)

2014-15

$m

AppropriationAct (No.2)2014-15[2]

$m

Return to the OPA

$m

Special Appropriation

$m

Total Appropriation

$m

Non-Appropriation

Receipts

$m

Other Non-Appropriated

Items

$m

TotalResources

Available

$mDepartment of Defence

Administered appropriations - - - - 49.6 1,085.8 1,135.4 -49.6 - 1,085.8Departmental appropriations 557.7 - - -116.9 -71.4 - 369.5 106.1 - 475.5

Total Department of Defence 557.7 - - -116.9 -21.8 1,085.8 1,504.8 56.5 - 1,561.3


$m


$m


$m


2014-15

$m

Return to the OPA

$m


$m

Total Appropriation

$m

Non-Appropriation

Receipts

$m


Items

$m

TotalResources

Available

$mDefence Materiel Organisation

Administered appropriations - - - - - - - - - -Departmental appropriations - - -1.4 - - - -1.4 -257.0 - -258.5

Total Defence Materiel Organisation - - -1.4 - - - -1.4 -257.0 - -258.5


$m


$m


2014-15

$m


2014-15

$m

Return to the OPA

$m


$m

Total Appropriation

$m

Non-Appropriation

Receipts

$m


Items

$m

TotalResources

Available

$mDefence Housing Australia

Administered appropriations - - - - - - - - - -Departmental appropriations - - - - - - - 64.5 - 64.5

Total Defence Housing Australia - - - - - - - 64.5 - 64.5

Total Portfolio 557.7 - -1.4 -116.9 -21.8 1,085.8 1,503.4 -136.0 - 1,367.4 Notes1. Figures shown include inter-agency transactions.

2. Defence will seek a determination by the Minister of Finance, under the Appropriation Act (No.2) 2014-15, to decrease the Departmental outcome appropriation.3. DMO will seek a determination by the Minister of Finance, under the Appropriation Act (No.1) 2014-15, to decrease the Departmental outcome appropriation.

9


10


Agency 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 Programme

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

3.4 Consolidated Budgeted Financial Statements for the Department of Defence (including DMO)

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12


DEPARTMENT OF DEFENCE

Section 1: Defence Overview and Resources

1.1 STRATEGIC DIRECTION STATEMENT

The following changes have been made to 1.1 Strategic Direction Statement since the Portfolio Budget Statements 2014-15:

Defence’s primary focus continues to be to protect and advance Australia's strategic interests through the provision of an appropriately prepared and equipped Defence force. To achieve this, Defence prepares for and conducts military operations and other tasks as directed by the Government.

The need to sustain operations in the Middle East, capitalise on the opportunities and manage the challenges of strategic transformation in our region, while maximising Defence capability within fiscal guidance, are some of the key elements driving Defence strategy and activities.

The development of a new Defence White Paper has commenced and will be finalised in 2015. The White Paper will set out the Government’s strategic direction and plan for Defence, and will be accompanied by a ten-year Defence Capability Plan.

Enhancing Defence engagement with allies and security partners in the Indo-Pacific region will remain a priority this year. Over 2014-15, the ADF will also continue to contribute to security in the Middle East and Afghanistan, including through operations in Iraq as part of the US-led coalition, through assistance to the Afghan National Security Forces as part of the NATO-led ‘train, advise and assist’ mission, and through the tasking of a major fleet unit to promote maritime security in the Middle East region.

Defence will continue to build capacity to protect Australia’s interests through the introduction of new capabilities such as the HMAS Canberra which was commissioned into service on 28 November 2014 as the first of two Landing Helicopter Docks (LHD) for the Navy. Australia's first two F-35 aircraft were also completed in the third quarter of 2014. Australia's first two F-35 aircraft were also completed in the third quarter of 2014 and Australian aircrew have begun training to fly the F-35. Army's Plan BEERSHEEBA is continuing to maximise Army's capabilities to best posture Army to respond to the full spectrum of possible operational commitments.

Australia continues to enhance cooperation with the United States, including under the Force Posture Initiative, with around 1,150 US Marines rotating through Northern Australia, for training and other engagement activity in 2014. Defence is also continuing to enhance its presence in Northern Australia and the visibility of Defence activity in the Asia-Pacific.

13


1.2 DEFENCE RESOURCE STATEMENT

Table 2: Total Defence Resourcing

Seria

l No.

2013-14Actual$'000

2014-15Budget

Estimate$'000

2014-15Revised Estimate

$'000Variation

$'000Variation

%

2015-16Forward Estimate

$'000


$'000


$'000Defence resourcing

1 24,272,707 Appropriation for departmental outcomes 25,882,986 26,440,723 557,737 2.2 27,016,201 27,272,684 28,582,5352 1,418,385 Equity injection appropriation 2,463,678 2,346,764 -116,914 -4.7 2,440,165 2,161,003 3,326,5303 - Prior year appropriation - - - - - - -4 25,691,092 Current year's appropriation (1 + 2 + 3) 28,346,664 28,787,487 440,823 1.6 29,456,366 29,433,687 31,909,0655 - Draw down of appropriations carried forward - - - - - - -6 - Other appropriation receivable movements - -71,357 -71,357 - - - -7 -32,441 Return to the Official Public Account[1] -853 -853 - - -875 -897 -9198 -32,441 Funding from / to the OPA (5 + 6 +7) -853 -72,210 -71,357 8,365.4 -875 -897 -9199 25,658,651 Funding from Government (4 + 8) 28,345,811 28,715,277 369,466 1.3 29,455,491 29,432,790 31,908,146

10 78,252 Capital receipts 97,224 128,153 30,929 31.8 229,908 43,476 73,20511 968,347 Own source revenue (s74 receipts)[2] 859,673 934,800 75,127 8.7 860,058 880,042 915,55812 - Prior year receipts - - - - - - -13 1,046,599 Funding from other sources (10 + 11 + 12) 956,897 1,062,953 106,056 11.1 1,089,966 923,518 988,76314 26,705,250 Total Defence funding (9 + 13) 29,302,708 29,778,230 475,522 1.6 30,545,457 30,356,308 32,896,909

Administered15 2,098,636 Administered special appropriations 4,916,602 6,002,415 1,085,813 22.1 5,120,549 5,218,594 5,362,66316 1,467,573 Own source revenue 1,474,120 1,424,559 -49,561 -3.4 1,459,075 1,356,350 1,309,96717 -1,467,573 Returns to the Official Public Account -1,474,120 -1,424,559 49,561 -3.4 -1,459,075 -1,356,350 -1,309,96718 2,098,636 Total Administered funding (15 + 16 + 17) 4,916,602 6,002,415 1,085,813 22.1 5,120,549 5,218,594 5,362,66319 28,803,886 Total Defence resourcing (14 + 18) 34,219,310 35,780,645 1,561,335 4.6 35,666,006 35,574,902 38,259,572

Appropriation carried forward

20 414,742Appropriation receivable including previous year's outputs - - - - - - -

21 35,490 Cash in bank 466 12,732 12,266 - 12,732 12,732 12,73222 450,232 Total appropriations carried forward (20 + 21) 466 12,732 12,266 - 12,732 12,732 12,732

Notes1. Represents net transfers to and from the Official Public Account.2. All figures are net of GST.

14


Annual Appropriations

Table 3: Appropriation Bill (No 3) 2014-15

2013-14 Available

$'000

2014-15 Budget

Estimate $'000

2014-15 Revised

Estimate $'000

Increase in Estimates

$'000

Decrease in Estimates

$'000Departmental OutputsOutcome 1Australia's national interests are protected and advanced through the provision of military capabilities and the promotion of security and stability 23,440,073 25,462,517 25,584,124 121,607 -Outcome 2Military operations and other tasks directed by the Government to achieve the desired results 1,022,827 352,729 788,859 436,130 -Outcome 3Defence's support to the Australian community and civilian authorities to achieve the desired results 54,097 67,740 67,740 - -Total 24,516,997 25,882,986 26,440,723 557,737 -

Table 4: Appropriation Bill (No 4) 2014-15

2013-14 Available

$'000

2014-15 Budget

Estimate $'000

2014-15 Revised

Estimate $'000

Increase in Estimates

$'000

Decrease in Estimates

$'000Non-operating Equity injections 1,521,488 2,463,678 2,346,764 - 116,914Total non-operating 1,521,488 2,463,678 2,346,764 - 116,914

Note1. No additional appropriation is provided in Appropriation Bill (No.4) as the net funding change is negative. $116.9m will be extinguished against Appropriation Bill (No.2).

Drawdown of Appropriations Carried Forward

Table 5: Revised Appropriation Receivable


$'000


$'000


$'000


$'000Portfolio Budget Statements 2014-15 Estimates - - - -

Net Drawdown - - - -Closing balance appropriation receivable - - - -

15


Funding from Other Sources

Own Source Revenue

Table 6: Variation in Own Source Revenue


$'000


$'000


$'000


$'000Portfolio Budget Statements 2014-15 Estimates 859,673 873,367 893,714 929,612Variation in own source revenue 75,127 -13,309 -13,672 -14,054Own source revenue revised estimates 934,800 860,058 880,042 915,558Prior year receipts - - - -Total 934,800 860,058 880,042 915,558

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1.3 BUDGET MEASURES

2014-15 Budget Measures and Other Budget Adjustments

Table 7: Variation to Defence Funding

Programme2014-15

$m2015-16

$m2016-17

$m2017-18

$mDepartmental Budget measuresExpenditure measuresOperation Slipper Heron Remotely Piloted Aircraft 2.2 26.7 - - -Operation Highroad [1] 2.2 82.4 - - -Operation Accordion – Extension 2.2 63.2 - - -Operation Okra 2.2 260.8 30.9 5.8 -Total Departmental Budget Measures 433.1 30.9 5.8 -Other budget adjustmentsDMO Direct Appropriation Adjustments Various 1.5 1.5 1.6 1.7Foreign Exchange Various 6.3 74.4 23.8 -30.4Carried Forward Appropriation Receivable movement 1.13 -71.4 - - -Total Other Departmental Budget Adjustments -63.6 75.9 25.4 -28.7Variation to Defence Departmental Funding 369.5 106.9 31.2 -28.7

Note1. Provision for this funding was included in the Mid-Year Economic and Fiscal Outlook 2014-15.

17


Operations Summary

Table 8: Net Additional Cost of Operations from 1999-00 to 2017-18

1999-00 to 2013-14

Actual Result$m

2014-15Revised

Estimate$m

2015-16ForwardEstimate

$m


$m


$mTotal

$mOperation Astute 4,311.9 - - - - 4,311.9Operation Bel Isi 47.7 - - - - 47.7Operation Slipper 6,924.8 267.5 121.9 103.9 - 7,418.1Operation Manitou - 52.0 2.9 1.7 - 56.6Operation Accordion - 120.2 1.7 - - 121.9Operation Highroad - 82.4 - - - 82.4Operation Resolute 175.0 59.7 0.6 - - 235.3Operation Catalyst 2,364.5 - - - - 2,364.5Operation Okra - 260.8 30.9 5.8 - 297.5Operation Anode 355.2 0.1 - - - 355.3Operation 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 10.8 3.0 - - - 13.7Enhanced Force Protection in Afghanistan 540.0 16.2 - - - 556.2Defence Support to 2014 G20 Summit 0.1 8.0 - - - 8.2

Total Net Additional Costs 14,861.5 869.9 158.0 111.4 - 16,000.8Sources of Funding for Operations

Government Supplementation 13,230.7 845.5 158.0 111.4 - 14,345.6Department of Foreign Affairs and Trade 9.1 - - - - 9.1Department of Defence (Absorbed) 1,621.7 24.3 - - - 1,646.0

Total Cost 14,861.5 869.9 158.0 111.4 - 16,000.8

18


1.4 CAPITAL INVESTMENT PROGRAMME

Table 9: Capital Investment Programme

Defence Capability Plan Budget Update

Seria

l No. 2014-15

BudgetEstimate

$m

2014-15RevisedEstimate

$mVariation

$mDefence Capability Plan (DCP)

1 DMO Delivered 770.8 136.6 -634.22 Group and Services delivered 85.6 191.2 105.63 Total Defence Capability Plan (1+2) 856.4 327.8 -528.64 Remaining DCP approvals in 2013-14 274.2 31.2 -243.05 DCP available from 1 July 2014 397.3 640.3 243.06 Total Unapproved DCP (4+5) 671.5 671.5 -

Total Capital Investment Programme

Seria

l No. 2014-15

BudgetEstimate

$m


$mVariation

$mDefence Capability Plan (DCP) - remaining approvals

1 DMO Delivered 604.4 136.6 -467.82 Group and Services delivered 67.2 191.2 124.13 Total Defence Capbility Plan (1+2) 671.5 327.8 -343.7

Approved Major Capital Investment Programme4 DMO delivered 5,108.6 5,406.4 297.85 Group and Services delivered (excludes Capital Facilities and ICT Investment

Plan) 95.0 346.2 251.26 Government approved DCP projects in 2013-14 yet to be allocated to Groups,

Services or the DMO 184.9 - -184.97 Government approved DCP projects in 2014-15 yet to be allocated to Groups,

Services or the DMO - - -8 Total Approved Major Capital Investment Programme (4+5+6+7) 5,388.5 5,752.6 364.1

Capital Facilities9 Approved capital facilities projects 935.3 1,071.4 136.1

10 Unapproved capital facilities projects 254.6 232.1 -22.511 Total Capital Facilities Programme (9+10) 1,189.9 1,303.5 113.612 ICT Investment Plan (1) 375.6 400.1 24.5

Minors Programme13 Approved DMO delivered 23.3 36.6 13.314 Approved Group and Services delivered 7.6 9.3 1.715 Unapproved DMO delivered 112.8 49.1 -63.716 Unapproved Group and Services delivered 5.7 5.7 -0.017 Total Minors Programme (13+14+15+16) 149.4 100.7 -48.718 Other Investment (2) 809.9 753.6 -56.319 Total Capital Investment Programme (3+8+11+12+17+18) 8,584.8 8,638.3 53.5

Capital component 7,496.2 7,644.0 147.8Operating component 1,088.7 994.3 -94.4

Notes1 Only includes activities delivered by the Chief Information Officer Group.2 Includes the capital component of Repairable Items within the Capability Sustainment Programme.

19


Table 10: Capability Sustainment Programme

Seria

l No. 2014-15

BudgetEstimate

$m

2014-15 RevisedEstimate

$mVariation

$mCurrent Sustainment

1 Navy Sustainment 1,969.7 1,968.3 -1.52 Army Sustainment 1,511.0 1,486.6 -24.43 Air Force Sustainment 1,855.0 1,967.0 112.04 Chief Information Officer Sustainment 488.6 737.9 249.35 Vice Chief of the Defence Force Sustainment 43.5 45.9 2.46 Office of the Secretary and CDF Sustainment 20.3 20.9 0.67 Joint Operations Command Sustainment 5.6 5.7 0.18 Defence Support and Reform Group Sustainment 784.6 770.2 -14.4

Future Sustainment9 Future Sustainment Costs associated with AMCIP, ICT and Facilities 164.4 106.8 -57.6

10 Total Sustainment 6,842.8 7,109.4 266.6

Table 11: Retained Capital Receipts

Seria

l No. 2014-15

BudgetEstimate

$m


$mVariation

$mProperty Sales

Proceeds from the sale of land and buildings 49.3 79.9 30.6Proceeds from the sale of housing 12.4 12.4 -Total proceeds from the sale of property 61.7 92.3 30.6Costs from the sale of property -23.8 -11.1 12.7

1 Proceeds retained by Defence 37.9 81.2 43.4

2 Proceeds from sale of specialist military equipment 7.5 7.5 -

3Proceeds from sale of infrastructure, plant and equipment 28.0 28.0 -

4 Proceeds from sale of other assets - 0.3 0.35 Retained Capital Receipts (1+2+3+4) 73.4 117.1 43.6

Table 12: Variation in Estimates of Net Capital Receipts


$m


$m


$m


$mPortfolio Budget Statements 2014-15 Estimates 73.4 78.7 22.7 60.8

Movement in proceeds from sales associated with the capital disposals programme 43.6 124.8 -68.2 -79.0Variation in Net Capital Receipts 43.6 124.8 -68.2 -79.0Total Net Capital Receipts 117.1 203.5 -45.5 -18.1

20


1.5 PEOPLE

Workforce Overview

ADF Workforce

No significant change from the PBS 2014-15.

Civilian Workforce

In line with Government commitments, the Australian Public Service continues to reduce in size through natural attrition and tightly controlled recruiting practices. As a result, Defence is also reducing its APS workforce, maintaining standards necessary for the delivery of capability.

As at 20 November 2014, the Defence APS workforce had reduced from 19,963 full time equivalents at the beginning of the financial year to 19,385, a reduction of 578. By the end of the financial year this is expected to reduce further to approximately 18,950—an overall reduction of some 1,013 as illustrated in Table 13 below. In average terms, this equates to an annual achievement of 19,371.

Table 13: End of Financial Year Full Time Equivalent (FTE) Estimates for 2014-15 and the Forward Estimates.

Actual Full

Time Equivalent as at 3 July 2014

2014-15 Full Time

Equivalent Forecast Outcome

Forecast Annual

Change

2015-16 Forward estimate



Total APS 19,963 18,950 -1,013 18,600 18,300 18,145

It is important to note that Defence’s APS achievement is affected by the Defence Materiel Organisation’s combined workforce management model, under which the DMO can utilise funding from military positions that cannot be filled, to hire civilian staff to fill the gaps. This is illustrated in the APS section of Table 14 below, and has the effect of increasing Defence’s APS workforce at a Portfolio level as well as within DMO.Workforce Summary

The total Defence fulltime workforce, including the DMO, is now forecast to be 77,426 in 2014-15, comprising:

Permanent Forces (75 per cent) of:

14,125 Navy Personnel

29,463 Army Personnel

14,100 Air Force Personnel

19,371 APS staff (25 per cent)

367 Contractors (less than 1 per cent)

The revised forecast strength of the Reserve Forces in 2014-15 is 19,450.

21


Over the forward estimates period, the total fulltime workforce will grow by 775 from the forecast of 77,426 in 2014-15 to 78,201 in 2017-18, while the Reserve workforce reduces by 175 from 19,450 to 19,275.

The total planned strength of the Defence workforce is shown in Tables 14 and 15, while a breakdown by Service and rank or level appears at Table 16.

Defence People

No changes have been made to the Defence People section since the PBS 2014-15.

Table 14: Planned Workforce Allocation for the 2014-15 Budget and Forward Estimates—Average Fulltime[1]

2014-15 Budget

estimate

2014-15 Revised

estimate[2

]

Variation2015-16

Forward estimate[2

]

2016-17 Forward

estimate[2

]

2017-18 Forward

estimate[2

]

ADF Permanent Force [3]

Navy 14,318 14,125 -193 14,254 14,368 14,416

Army 30,383 29,463 -920 29,694 30,775 31,018

Air Force 14,138 14,100 -38 14,183 14,235 14,125

1 Total Permanent Force 58,839 57,688 -1,151 58,131 59,378 59,559Civilian EmployeesAPS – Defence 14,883 14,426 -457 13,692 13,312 13,045

APS – DMO [4] 4,777 4,539 -238 5,108 5,143 5,100

APS – DMO – ADF backfill 432 406 -26 – – –

2 Total APS 20,092 19,371 -721 18,800 18,455 18,145Contractors – Defence[5] 445 319 -126 447 453 453

Contractors – DMO 48 48 - 46 46 44

3 Total Contractors 493 367 -126 493 499 4974 Total Civilian Employees (2 + 3) 20,585 19,738 -847 19,293 18,954 18,642

Total Workforce Strength (1 + 4) 79,424 77,426 -1,998 77,424 78,332 78,201

22


Table 15: Planned Workforce Allocation for the 2014-15 Budget and Forward Estimates—Reserve[1]

2014-15 Budget

estimate

2014-15 Revised estimate Variation




Active Reserve ForceNavy 2,150 2,150 0 2,175 2,210 2,175

Army 15,000 14,200 -800 14,000 14,000 14,000

Air Force 2,800 2,850 50 2,760 2,720 2,680

1 Sub-total Active Reserve Force 19,950 19,200 -750 18,935 18,930 18,855High Readiness ReserveNavy – – – – – –

Army[6] 250 0 -250 – – –

Air Force 300 250 -50 340 380 420

2 Sub-total High Readiness Reserve Force 550 250 -300 340 380 420

Total Reserves (1 + 2) 20,500 19,450 -1,050 19,275 19,310 19,275

Notes to Tables 14 and 15:

1. All numbers for the fulltime workforce elements represent average fulltime equivalents. Due to the nature of Reserve service, numbers for the Reserve Force represent headcounts.

2. Revised Estimates figures for the fulltime workforce elements represent forecast 2014-15 achievement for each element, while Forward Estimates figures represent the Government approved strength for each year.

3. Numbers for ADF Permanent Force include ADF members in the DMO, and Reservists on full-time service.

4. Pending the Government's direction resulting from the Defence First Principles Review and the 2015 Defence White Paper, the basis for workforce planning for the DMO continues to be the extant workforce budget published in the 2014-15 Portfolio Budget Statements to deliver the Defence Capability Plan.

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

6. Army High Readiness Reserve is being phased out.

23


Table 16: Breakdown of Average Personnel Numbers by Service and Rank

2014-15 Budget Estimate

2014-15 Revised Estimate

Navy[1]

One Star and above 55 57Senior Officers[2] 620 617Officers 2,930 2,859Other Ranks 10,713 10,592Total Navy 14,318 14,125Army[1]

One Star and above 82 81Senior Officers[2] 851 833Officers 5,716 5,607Other Ranks 23,734 22,942Total Army 30,383 29,463Air Force[1]

One Star and above 52 53Senior Officers[2] 655 660Officers 4,216 4,190Other Ranks 9,215 9,197Total Air Force 14,138 14,100APS[1]

Senior Executives[3] 171 162Senior Officers[2] 6,489 6,242Other APS Staff 13,432 12,967Total APS 20,092 19,371Contractors[1]

Contractors[4] 493 367

Total Workforce 79,424 77,426

Notes

1. ADF, APS and Contractor numbers are forecasts of the average strength for 2014-15, and include the DMO.

2. Senior Officers are of Lieutenant Colonel and Colonel rank equivalent, and APS Executive Level 1 and 2.

3. The figures for the Senior Executive Service include the Secretary of the Department of Defence, 14 Chiefs of Division and 2 Medical Officers Grade 6.


24


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 programmes are the primary vehicle by which Government agencies achieve the intended results of their outcome statements. Agencies are required to identify the programmes which contribute to Government outcomes over the Budget and forward years.

Each outcome is described below together with its related programmes, specifying the performance indicators and targets used to assess and monitor the performance of the Department of Defence in achieving Government outcomes.

Figure 3: Structure of Defence’s Outcomes

25


Outcome 1: The protection and advancement of Australia’s national interests through the provision of military capabilities and the promotion of security and stability

Outcome 1 Strategy

The following changes have been made to the Outcome 1 Strategy since the Portfolio Budget Statements 2014-15.

Outcome 1 addresses the following strategic objectives:

maintaining and building a Defence capability that underpins Australia’s security and prosperity and provides options for a credible response wherever Australia's security interests are engaged

strengthening Australia’s Defence partnerships with our allies and regional partners and globally.

Defence strategy guides the Department in developing and maintaining the capacity to deter and defeat attacks on Australia, and defend our interests elsewhere in the world.

Increasingly, this is not just a function of the military capabilities Australia has at its disposal, but also the quality of our international relationships with both our long-term security partners and with emerging powers in the region. It is important to build bilateral and multilateral Defence and security relationships to enable regional Defence and security forces to develop habits of cooperation with Australia and each other.

A critical challenge under Outcome 1 lies in finding the balance between our priority of effort on supporting current operations, and the need to position the Department for long-term success with the strategy and capability to manage a rapidly-changing strategic environment.

The primary focus of Outcome 1 is on maintaining the capacity to support current commitments and provide strategic response options to the Government to meet the range of potential future security contingencies. It also covers working collaboratively with our neighbours and the broader international Defence community, and contributing to coalition operations in support of Australia's national interests. As well as the provision of military capabilities, this outcome encompasses all of the policy, command and support functions undertaken by the organisation. This includes the provision of policy advice to guide and support ADF operations, including in Iraq and Afghanistan.

Defence's administered appropriations relating to superannuation, housing support services for current and retired Defence personnel and Other Administered are covered by Outcome 1. Apart from supporting current operations, which are described in detail under Outcomes 2 and 3, the priorities that will be progressed under Outcome 1 in 2014-15 are:

to increase the professional and personal accountability of Defence personnel, and to improve Defence management and decision-making processes

delivering on the Government’s commitment to release a 2015 Defence White Paper

implementing the recommendations of the Cultural Reviews under the Pathway to Change

supporting the programme of efficiency and economy measures to ensure that all areas of Defence are best able to support and deliver future military capability requirements

continuing the commitment to the recruitment and retention of ADF personnel.

26


Outcome 1 Resources

Table 17: Total Budgeted Resources Available for Outcome 1

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Programme 1.1 Office of the Secretary and CDFRevenues from other sources 538 538 - 540 534 531Departmental outputs 160,008 165,654 5,646 186,765 183,043 195,361Programme 1.2 Navy CapabilitiesRevenues from other sources 128,840 121,579 -7,261 126,871 131,039 136,110Departmental outputs 4,797,105 5,048,012 250,907 5,062,488 4,944,710 4,961,918Programme 1.3 Army CapabilitiesRevenues from other sources 108,015 103,328 -4,687 106,339 105,954 126,529Departmental outputs 5,986,472 6,563,726 577,254 6,556,389 6,395,843 6,338,726Programme 1.4 Air Force CapabilitiesRevenues from other sources 194,350 165,903 -28,447 192,903 201,804 211,010Departmental outputs 4,761,993 5,032,649 270,656 5,102,557 4,930,762 5,050,954Programme 1.5 Intelligence CapabilitiesRevenues from other sources 11,478 11,497 19 11,990 12,263 12,395Departmental outputs 537,966 557,885 19,919 628,399 605,940 631,836Chief Operating Officer (COO)Revenues from other sources 356,600 382,631 26,031 372,161 355,856 376,420Departmental outputs 5,548,196 5,682,685 134,489 5,779,620 5,603,121 6,172,525

Programme 1.6 Chief Operating Officer - Defence Support and ReformRevenues from other sources 351,297 377,713 26,416 370,066 348,919 373,924Departmental outputs 4,085,667 3,960,740 -124,927 4,072,090 3,953,120 4,598,810Programme 1.7 Chief Operating Officer - Chief Information OfficerRevenues from other sources 5,303 4,918 -385 2,095 6,937 2,496Departmental outputs 979,344 1,251,854 272,510 1,263,884 1,196,879 1,126,286Programme 1.8 Chief Operating Officer - Defence PeopleRevenues from other sources - - - - - -Departmental outputs 483,185 470,091 -13,094 443,646 453,122 447,429

Programme 1.9 Defence Science and TechnologyRevenues from other sources 35,159 35,300 141 36,155 37,190 38,317Departmental outputs 408,191 417,148 8,957 435,711 411,563 391,230Programme 1.10 Vice Chief of the Defence ForceRevenues from other sources 346,506 360,474 13,968 342,095 353,437 366,930Departmental outputs 1,230,805 1,168,975 -61,830 1,202,844 1,235,254 1,255,634Programme 1.11 Joint Operations CommandRevenues from other sources 336 - -336 604 614 623Departmental outputs 52,168 50,297 -1,871 51,214 52,234 56,490Programme 1.12 Capability DevelopmentRevenues from other sources 26,224 16,943 -9,281 21,416 25,509 30,044Departmental outputs 1,423,081 786,404 -636,677 1,792,424 2,769,288 3,490,579Programme 1.13 Chief Finance OfficerRevenues from other sources 805,333 802,930 -2,403 832,337 875,860 900,854Departmental outputs 556,532 110,689 -445,843 59,806 29,521 37,282

Table 17 (Continued): Total Budgeted Resources Available for Outcome 1

27


2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000

Defence 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) 105,382 154,000 48,618 92,819 81,150 70,712Military Superannuation and Benefits Act, 1991 Part V, s.17 1,318,868 2,337,883 1,019,015 1,367,676 1,305,468 1,285,518Total Administered expenses 1,424,250 2,491,883 1,067,633 1,460,495 1,386,618 1,356,230Administered revenues from other sources 1,324,094 1,288,892 -35,202 1,331,754 1,231,718 1,184,913Total Programme 1.14 100,156 1,202,991 1,102,835 128,741 154,900 171,317Programme 1.15 Defence Force Superannuation Nominal InterestDefence Force Retirement Benefits Act, 1948 Part 1, s.15D and VIC, s.82ZJ (1) 28,598 23,000 -5,598 27,203 25,858 24,565Defence Force Retirements and Death Benefits Act, 1973 Part XII, s.125 (3) 1,782,778 1,640,000 -142,778 1,801,001 1,817,114 1,829,951Military Superannuation and Benefits Act, 1991 Part V, s.17 1,567,812 1,743,000 175,188 1,710,208 1,850,688 2,000,140Total Administered expenses 3,379,188 3,406,000 26,812 3,538,412 3,693,660 3,854,656Administered revenues from other sources - - - - - -Total Programme 1.15 3,379,188 3,406,000 26,812 3,538,412 3,693,660 3,854,656Programme 1.16 Housing AssistanceDefence Force (Home Loan Assistance) Act , 1990 Part IV, s.38 1,511 1,357 -154 1,129 938 778Defence Home Ownership Assistance Scheme Act 2008 Part VI, s.84 111,653 103,175 -8,478 120,513 137,378 150,999Total Administered expenses 113,164 104,532 -8,632 121,642 138,316 151,777Administered revenues from other sources 13,335 13,953 618 14,511 15,092 15,695Total Programme 1.16 99,829 90,579 -9,250 107,131 123,224 136,082Programme 1.17 Other AdministeredAdministered revenues from other sources 133,463 109,481 -23,982 112,814 116,149 108,845Total Programme 1.17 -133,463 -109,481 23,982 -112,814 -116,149 -108,845Total resourcingTotal Departmental outputs 25,462,517 25,584,124 121,607 26,858,217 27,161,279 28,582,535Total Administered 3,445,710 4,590,089 1,144,379 3,661,470 3,855,635 4,053,210Total Departmental revenue from other sources 2,013,379 2,001,123 -12,256 2,043,411 2,100,060 2,199,763Total Administered revenue from other sources 1,470,892 1,412,326 -58,566 1,459,079 1,362,959 1,309,453Equity injection 2,463,678 2,346,764 -116,914 2,440,165 2,161,003 3,326,530Total resources for Outcome 1 34,856,176 35,934,426 1,078,250 36,462,342 36,640,936 39,471,491

Programme 1.14 Defence Force Superannuation Benefits

28


Contributions to Outcome 1

Programme 1.1: Office of the Secretary and CDF

Performance information is as reported in the Portfolio Budget Statements 2014-15 except for the following revisions.

Programme 1.1 Objective

The Group comprises the small personal offices of the Secretary and CDF, the Strategy Executive, the Audit and Fraud Control Division, the ADF Investigative Service (ADFIS) and a number of Military Justice agencies.

Table 18: Cost Summary for Programme 1.1 Office of the Secretary and CDF

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 36,078 35,482 -596 36,856 37,327 36,735Suppliers 118,534 124,508 5,974 144,820 140,988 154,029Grants 4,759 4,766 7 4,309 4,418 4,482Depreciation and amortisation 1,175 1,436 261 1,320 844 646Finance cost - - - - - -Write-down of assets and impairment of assets - - - - - -Net losses from sale of assets - - - - - -Other expenses - - - - - -

Total expenses 160,546 166,192 5,646 187,305 183,577 195,892Income

RevenuesGoods and services 435 435 - 434 426 420Other revenue 103 103 - 106 108 111Total revenue 538 538 - 540 534 531GainsReversal of previous asset write-downs - - - - - -Net gains from sale of assets - - - - - -Other gains - - - - - -Total gains - - - - - -

Total income 538 538 - 540 534 531Programme 1.1 Office of the Secretary and CDF 160,008 165,654 5,646 186,765 183,043 195,361

Programme 1.1 Deliverables

Provide investigative and policing advice and deliver investigative services to support discipline within the ADF.

29


Programme 1.2: Navy Capabilities


Table 19: Cost Summary for Programme 1.2 Navy Capabilities

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 1,866,271 1,945,844 79,573 2,072,755 1,994,754 2,018,427Suppliers 2,117,819 2,143,988 26,169 2,217,704 2,196,497 2,242,830Grants - 400 400 - - -Depreciation and amortisation 824,934 921,228 96,294 741,995 730,645 681,571Finance cost 28,584 28,440 -144 30,162 28,632 32,118Write-down of assets and impairment of assets 88,337 129,691 41,354 126,743 125,221 123,082Net losses from sale of assets - - - - - -Other expenses - - - - - -

Total expenses 4,925,945 5,169,591 243,646 5,189,359 5,075,749 5,098,028Income

RevenuesGoods and services 67,162 68,092 930 71,973 75,312 78,859Other revenue 31,241 30,484 -757 31,623 31,839 32,777Total revenue 98,403 98,576 173 103,596 107,151 111,636GainsReversal of previous asset write-downs 30,437 23,003 -7,434 23,275 23,888 24,474Net gains from sale of assets - - - - - -Other gains - - - - - -Total gains 30,437 23,003 -7,434 23,275 23,888 24,474

Total income 128,840 121,579 -7,261 126,871 131,039 136,110Programme 1.2 Navy Capabilities 4,797,105 5,048,012 250,907 5,062,488 4,944,710 4,961,918

30


Table 20: Navy Deliverables (Unit Ready Days)[1]

Deliverables

2014-15 Budget

Estimate


20 Major Combatants[2] 2,986 3,02820 Minor Combatants[3] 4,837 4,4179 Amphibious and Afloat Support[4] 1,508 1,4829 Hydrographic Force[5] 2,810 2,971

Notes

1. Unit Ready Days (URD) are the aggregate number of days that constituent force elements are available for tasking.

2. Major Combatants comprises Adelaide class frigates, Anzac class frigates, submarines and Hobart class air warfare destroyers (from 2016-17). The increase in URD is due to the extension in operational service of HMAS Sydney until 1 March 2015, changes to HMAS Darwin’s scheduled maintenance and adjustment to Waller’s schedule for return to operational service. HMAS Sydney will not accrue URD while being used as a harbour training ship March-December 2015.

3. Minor Combatants comprises Armidale class patrol boats (ACPB) and coastal minehunters. The decrease in URD is attributable to ongoing ACPB maintenance and reliability issues and HMAS Bundaberg fire.

4. Amphibious and Afloat Support comprises the oil tanker, replenishment ship, landing ship dock, heavy landing ship, heavy landing craft and Canberra class landing helicopter dock (from 2015-16). Although there are additional URD associated with the decision to retain Tobruk in operational service until July 2015, there is an overall net decrease in URD for amphibious and afloat support due to the programming of additional scheduled maintenance for Sirius and Choules.

5. Hydrographic Force comprises the hydrographic ships, survey motor launches, chart production office and meteorological and oceanographic centres. The increase in URD is due to changes in scheduled maintenance and associated trials periods.

Table 21: Navy Deliverables (Unit Availability Days)[1]

Deliverables 2014-15 Budget

Estimate


20 Major Combatants[2] 2,830 2,951

20 Minor Combatants[3] 4,273 3,606

9 Amphibious and Afloat Support[4] 1,298 1,374

9 Hydrographic Force[5] 2,352 2,283

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 units normal operating environment, immediately. UAD differs from URD in that for a UAD minor maintenance periods, defects, training and personnel state of a unit are taken into account.

2. Major Combatants comprises Adelaide class frigates, Anzac class frigates, submarines and Hobart class air warfare destroyers (from 2016-17). The increase in UAD is due to the extension in operational service of HMAS Sydney until 1 March 2015, changes to HMAS Darwin’s scheduled maintenance and adjustment to Waller’s schedule for return to operational service. HMAS Sydney will not accrue UAD while being used as a harbour training ship March-December 2015.

3. Minor Combatants comprises Armidale class patrol boats and coastal minehunters. The decrease in UAD is attributable to ongoing ACPB ship maintenance and reliability issues and HMAS Bundaberg fire.

4. Amphibious and Afloat Support comprises the oil tanker, replenishment ship, landing ship dock, heavy landing ship, heavy landing craft and Canberra class landing helicopter dock (from 2015-16). The increase in UAD is attributable to Choules and Sirius schedule changes and the decision to retain Tobruk in operational service until July 2015.

5. Hydrographic Force comprises the hydrographic ships, survey motor launches, chart production office and meteorological and oceanographic centres. The decrease in UAD is due to changes in scheduled maintenance and associated trials periods.

31


Table 22: Navy Deliverables (Products)

Deliverables

2014-15 Budget

Estimate


Charting Projects[1] 20 17

Notes

1. A Charting Project includes all priority elements involved in producing paper and electronic charts for particular geographic area projects. Staffing pressures have resulted in the inability to complete three of the scheduled projects for 2014-15.

Table 23: Navy Deliverables (Flying Hours)

Deliverables

2014-15 Budget

Estimate


16 S-70B-2 (Seahawk)[1] 2,800 3,200

13 AS350BA (Squirrel)[2] 3,600 3,000

1 Laser airborne depth sounder aircraft (LADS)[3]

980 935

Notes

1. S-70B-2 Seahawk target increased from 2,800 to 3,200 to enable additional aircrew to be trained prior to transfer to the MH-60R.

2. A portion of the training conducted on the AS350BA has been transferred to leased helicopters as part of a plan to reduce reliance on the ageing platform.

3. LADS target decreased due to loss of hours due to inclement weather July-October 2014.

32


Programme 1.3: Army Capabilities



Army will continue its cultural reform journey through a range of initiatives focused on culture and diversity and inclusion. These initiatives are designed to ensure that Army reflects modern community standards and attitudes while maintaining its focus on capability and winning the land battle. These initiatives include our ‘Contract with Australia’, ‘A Matter of Respect’ training package, increased workforce participation for female and Indigenous members, seeking White Ribbon Australia accreditation and the removal of gender restrictions.

Table 24: Cost Summary for Programme 1.3 Army Capabilities

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 3,563,631 3,727,928 164,297 4,017,846 3,910,837 3,964,591Suppliers 1,779,241 1,784,336 5,095 1,763,094 1,793,290 1,841,978Grants 84 484 400 88 90 93Depreciation and amortisation 684,735 1,055,888 371,153 783,982 697,613 560,571Finance cost 3,554 3,798 244 4,225 3,948 4,769Write-down of assets and impairment of assets 63,242 94,620 31,378 93,493 93,717 93,253Net losses from sale of assets - - - - 2,302 -Other expenses - - - - - -


RevenuesGoods and services 78,065 77,065 -1,000 81,375 85,244 89,821Other revenue 3,953 3,666 -287 4,052 617 633Total revenue 82,018 80,731 -1,287 85,427 85,861 90,454GainsReversal of previous asset write-downs 22,099 18,412 -3,687 19,014 20,093 21,016Net gains from sale of assets 3,898 4,185 287 1,898 - 15,059Other gains - - - - - -Total gains 25,997 22,597 -3,400 20,912 20,093 36,075

Total income 108,015 103,328 -4,687 106,339 105,954 126,529Programme 1.3 Army Capabilities 5,986,472 6,563,726 577,254 6,556,389 6,395,843 6,338,726


Develop programmes to increase diversity within Army’s workforce including clear milestones for improving participation rates for females and Indigenous members. Specific targets have been issued by the Chief of Army, which are: women 13% by July 2015; and, Indigenous participation 2.7% by December 2015 (this is a Departmental target agreed at the Council of Australian Governments).

33


Table 25: Army Deliverables (Rate of Effort – Flying Hours)

Deliverables

2014-15 Budget

Estimate


2015-16 Forward

Year 1

2016-17Forward

Year 2

2017-18 Forward

Year 36 CH-47D Chinook 1,700 1,657 380 - -7 CH-47F Chinook[1] - 43 1,320 1,700 2,00034 S-70A Black Hawk 5,090 5,090 4,230 3,730 2,00041 B-206 Kiowa[2] 6,150 6,000 6,000 6,000 6,00022 ARH Tiger[3] 4,726 4,151 5,846 6,227 6,22747 MRH90 Taipan 5,400 5,400 7,100 8,400 9,300Notes

1. The Chinook 2014-15 Rate of Effort comprised 1,700 hours Baseline which has been split into two lines to reflect transition of six CH-47D to seven CH-47F. Chinook ROE will be increased by 300 hours to 2,000 flying hours from 2017-18 as a result of successive Airworthiness Board Findings relating to low flying experience, a shortfall in the experience of flying supervisors and the requirement to balance flying hours against revised Unit Establishment and Unit Training and Assessment Plan requirements.

2. B-206 Kiowa hours have been revised down by 150 hours from the 2014-15 Budget Estimate of 6,150 hours. 6,000 hours is the limit that the Army Aviation Training System contract can support.

3. The Tiger rate of effort continues to be impacted by poor but improving sustainment support and the requirement for unscheduled maintenance.

34


Programme 1.4: Air Force Capabilities


Table 26: Cost Summary for Programme 1.4 Air Force Capabilities

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 1,866,901 1,931,416 64,515 2,052,862 1,989,490 2,010,104Suppliers 2,041,211 2,033,130 -8,081 2,169,552 2,094,273 2,222,007Grants - 50 50 50 50 -Depreciation and amortisation 926,454 1,062,908 136,454 904,101 883,046 864,014Finance cost 12,506 13,547 1,041 15,073 14,082 17,012Write-down of assets and impairment of assets 109,271 157,501 48,230 153,822 151,625 148,827Net losses from sale of assets - - - - - -Other expenses - - - - - -


RevenuesGoods and services 151,537 132,856 -18,681 159,356 167,469 175,854Other revenue 5,086 5,086 - 5,213 5,333 5,465Total revenue 156,623 137,942 -18,681 164,569 172,802 181,319GainsReversal of previous asset write-downs 37,727 27,961 -9,766 28,334 29,002 29,691Net gains from sale of assets - - - - - -Other gains - - - - - -Total gains 37,727 27,961 -9,766 28,334 29,002 29,691

Total income 194,350 165,903 -28,447 192,903 201,804 211,010Programme 1.4 Air Force Capabilities 4,761,993 5,032,649 270,656 5,102,557 4,930,762 5,050,954

35


Table 27: Air Force Deliverables (Flying Hours)

Deliverables 2014-15 Budget

Estimate


2015-16 Forward

Year 1

2016-17Forward

Year 2

2017-18 Forward

Year 363 PC-9[1] 17,852 16,552 16,352 16,552 17,20216 B300 King Air 350[2] 11,400 10,000 10,700 10,700 10,70012 C-130J Hercules[3] 7,350 7,350 7,350 7,350 7,3506 C-17A Globemaster III[4] 5,200 6,000 5,200 5,200 5,200

10 C-27J Spartan 1,000 1,000 2,500 5,000 7,5005 KC-30A MRTT[5] 3,100 4,100 3,100 3,100 3,1002 B737 BBJ 1,600 1,600 1,600 1,600 -3 CL604 Challenger 2,403 2,200 2,403 2,403 -

16 AP-3C Orion[6] 7,900 7,300 6,770 6,465 4,6606 E-7A Wedgetail 3,600 3,000 3,600 3,600 3,600

71 F/A-18A/B Hornet[7] 13,000 13,000 13,000 12,000 12,00024 F/A-18F Super Hornet[8] 5,050 7,050 5,200 4,000 4,0008 P-8A Poseidon - - - 450 2,762

33 Hawk 127[9] 7,500 7,000 7,000 7,000 7,00012 E/A-18G Growler - - - 800 1,6002 F-35A Lightning II[10] - 230 500 500 752

Notes1. PC-9 hours for FY 14-15 expected to reduce by 1,000 hours due to lower student throughput at No.2 Flying Training

School (2FTS). PC-9 hours expected to reduce over FY 15-16 to FY 17-18 due lower student throughput at 2FTS, fewer Flying Instructor Course students and public relations tasks planned at Central Flying School.

2. B300 hours for FY 14-15 expected to reduce by 1,400 hours and for FY 15-16 to FY 17-18 by 700 hours a year due to a reduced training liability.

3. C-130J hours for FY 16-17 and FY 17-18 expected to reduce by 900 hours (from the original Portfolio Budget Statements forward year estimate) due to the introduction of C-27J and additional C-17A aircraft. The acquisition of a C-130J fuselage trainer has also reduced the flying hours required for training.

4. C-17A hours for FY 14-15 expected to increase by 800 hours due to operational assignment.

5. KC-30A hours for FY 14-15 expected to increase by 1,000 hours due to operational assignment.

6. AP-3C hours for FY 14-15 expected to reduce by 600 hours due to aircraft serviceability.

7. F/A-18A/B hours reduced to 12,000 hours a year over FY 16-17 to FY 17-18 due structural life / fatigue management necessary to support aircraft ops until planned withdrawal date.

8. F/A-18F hours for FY 14-15 expected to increase by 2,000 hours due to operational assignment.

9. Hawk 127 hours expected to reduce by 500 hours a year over FY 14-15 to FY 17-18 due to reduced student throughput to achieve F/A-18A/B/F conversions.

10. F-35A Lightning II hours added for project pilot training.

36


Programme 1.5: Intelligence Capabilities

Performance information is as reported in the Portfolio Budget Statements 2014-15.

Table 28: Cost Summary for Programme 1.5 Intelligence Capabilities

2014-15Budget

Estimate$'000

2014-15Revised

Estimate$'000

Variation$'000


$'000


$'000


$'000Expenses

Employees 260,009 255,088 -4,921 271,278 271,093 269,465Suppliers 241,111 255,204 14,093 316,472 293,218 315,218Grants - - - - - -Depreciation and amortisation 45,320 57,370 12,050 50,805 51,860 57,249Finance cost - - - - - -Write-down of assets and impairment of assets 3,004 1,720 -1,284 1,834 2,032 2,299Net losses from sale of assets - - - - - -Other expenses - - - - - -


RevenuesGoods and services 10,134 10,134 - 10,536 10,652 10,572Other revenue - - - - - -Total revenue 10,134 10,134 - 10,536 10,652 10,572GainsReversal of previous asset write-downs 1,344 1,363 19 1,454 1,611 1,823Net gains from sale of assets - - - - - -Other gains - - - - - -Total gains 1,344 1,363 19 1,454 1,611 1,823

Total income 11,478 11,497 19 11,990 12,263 12,395Programme 1.5 Intelligence Capabilities 537,966 557,885 19,919 628,399 605,940 631,836

37


Chief Operating Officer


Table 29: Cost Summary for Chief Operating Officer

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 1,410,334 1,391,928 -18,406 1,414,153 1,438,024 1,468,607Suppliers 3,161,384 3,385,063 223,679 3,436,161 3,208,733 3,733,772Grants 1,614 1,614 - 1,521 1,553 1,586Depreciation and amortisation 1,105,452 1,129,288 23,836 1,128,453 1,152,698 1,176,452Finance cost 102,000 102,395 395 103,729 106,972 106,573Write-down of assets and impairment of assets 79,129 30,015 -49,114 31,286 32,295 33,231Net losses from sale of assets - - - - 4,307 -Other expenses 44,883 25,013 -19,870 36,478 14,395 28,724


RevenuesGoods and services 315,964 352,843 36,879 334,437 338,180 350,549Other revenue 9,508 17,862 8,354 8,771 9,209 9,670Total revenue 325,472 370,705 45,233 343,208 347,389 360,219GainsReversal of previous asset write-downs 10,120 7,218 -2,902 7,970 8,467 8,914Net gains from sale of assets 21,008 4,708 -16,300 20,983 - 7,287Other gains - - - - - -Total gains 31,128 11,926 -19,202 28,953 8,467 16,201

Total income 356,600 382,631 26,031 372,161 355,856 376,420Chief Operating Officer (COO) 5,548,196 5,682,685 134,489 5,779,620 5,603,121 6,172,525

38


Programme 1.6: Chief Operating Officer – Defence Support and Reform


Table 30: Cost Summary for Programme 1.6 Chief Operating Officer – Defence Support and Reform

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 1,118,399 1,117,701 -698 1,172,127 1,198,553 1,232,884Suppliers 2,196,114 2,126,711 -69,403 2,171,434 1,993,465 2,583,384Grants - - - - - -Depreciation and amortisation 911,667 948,863 37,196 940,015 969,743 1,001,213Finance cost 101,956 102,351 395 103,719 106,972 106,573Write-down of assets and impairment of assets 63,945 17,814 -46,131 18,383 19,121 19,956Net losses from sale of assets[1] - - - - -210 -Other expenses 44,883 25,013 -19,870 36,478 14,395 28,724

Total expenses 4,436,964 4,338,453 -98,511 4,442,156 4,302,039 4,972,734Income

RevenuesGoods and services 315,964 352,843 36,879 334,437 338,180 350,549Other revenue 9,508 17,862 8,354 8,771 9,209 9,670Total revenue 325,472 370,705 45,233 343,208 347,389 360,219GainsReversal of previous asset write-downs 3,825 1,308 -2,517 1,358 1,530 1,766Net gains from sale of assets 22,000 5,700 -16,300 25,500 - 11,939Other gains - - - - - -Total gains 25,825 7,008 -18,817 26,858 1,530 13,705

Total income 351,297 377,713 26,416 370,066 348,919 373,924Programme 1.6 Chief Operating Officer - Defence Support and Reform 4,085,667 3,960,740 -124,927 4,072,090 3,953,120 4,598,810

Note1. At the Portfolio level Defence has budgeted for a total net loss from the sale of assets in 2016-17. Whilst the amount shown in the 2016-17 forward estimate represents a gain for the programme, the overall Portfolio budget outcome is a loss.

39


Programme 1.7: Chief Operating Officer – Chief Information Officer


Table 31: Cost Summary for Programme 1.7 Chief Operating Officer - Chief Information Officer

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 123,267 118,478 -4,789 94,986 88,741 87,310Suppliers 654,918 949,300 294,382 973,766 918,654 857,332Grants - - - - - -Depreciation and amortisation 191,234 176,749 -14,485 184,314 178,730 170,865Finance cost 44 44 - 10 - -Write-down of assets and impairment of assets 15,184 12,201 -2,983 12,903 13,174 13,275Net losses from sale of assets - - - - 4,517 -Other expenses - - - - - -

Total expenses 984,647 1,256,772 272,125 1,265,979 1,203,816 1,128,782Income

RevenuesGoods and services - - - - - -Other revenue - - - - - -Total revenue - - - - - -GainsReversal of previous asset write-downs 6,295 5,910 -385 6,612 6,937 7,148Net gains from sale of assets [1] -992 -992 - -4,517 - -4,652Other gains - - - - - -Total gains 5,303 4,918 -385 2,095 6,937 2,496

Total income 5,303 4,918 -385 2,095 6,937 2,496Programme 1.7 Chief Operating Officer - Chief Information Officer 979,344 1,251,854 272,510 1,263,884 1,196,879 1,126,286

Note1. At the Portfolio level Defence has budgeted for a total net gain from the sale of assets in 2014-15, 2015-16 and 2017-18. Whilst the amount shown in these forward estimates represents a loss for the programme, the overall Portfolio budget outcome is a gain.

40


Programme 1.8: Chief Operating Officer – Defence People


Table 32: Cost Summary for Programme 1.8 Chief Operating Officer – Defence People

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 168,668 155,749 -12,919 147,040 150,730 148,413Suppliers 310,352 309,052 -1,300 290,961 296,614 293,056Grants 1,614 1,614 - 1,521 1,553 1,586Depreciation and amortisation 2,551 3,676 1,125 4,124 4,225 4,374Finance cost - - - - - -Write-down of assets and impairment of assets - - - - - -Net losses from sale of assets - - - - - -Other expenses - - - - - -

Total expenses 483,185 470,091 -13,094 443,646 453,122 447,429Income

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 - - - - - -Programme 1.8 Chief Operating Officer - Defence People 483,185 470,091 -13,094 443,646 453,122 447,429


Deliver a more flexible workforce model that encompasses all ADF members’ ability to serve.

Programme 1.8 Key Performance Indicators

Implementation of the ADF total Workforce Model to deliver a more flexible workforce that encompasses all ADF members’ ability to serve.

41


Programme 1.9: Defence Science and Technology


Table 33: Cost Summary for Programme 1.9 Defence Science and Technology

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 293,746 277,897 -15,849 297,384 286,948 271,549Suppliers 123,099 144,035 20,936 146,291 134,246 133,716Grants - - - - - -Depreciation and amortisation 24,190 29,038 4,848 26,610 25,767 22,253Finance cost - - - - - -Write-down of assets and impairment of assets 2,315 1,478 -837 1,581 1,792 2,029Net losses from sale of assets - - - - - -Other expenses - - - - - -


RevenuesGoods and services 34,123 33,942 -181 34,710 35,574 36,507Other revenue - 186 186 191 195 201Total revenue 34,123 34,128 5 34,901 35,769 36,708GainsReversal of previous asset write-downs 1,036 1,172 136 1,254 1,421 1,609Net gains from sale of assets - - - - - -Other gains - - - - - -Total gains 1,036 1,172 136 1,254 1,421 1,609

Total income 35,159 35,300 141 36,155 37,190 38,317Programme 1.9 Defence Science and Technology 408,191 417,148 8,957 435,711 411,563 391,230


DSTO’s Science and Technology (S&T) capability is contributed to by:

A workforce with world-class expertise and facilities, measured through external benchmarking and client feedback.

Appropriately leveraged S&T engagement and partnerships with research organisations, industry and academia, including international government agencies.

42


Programme 1.10: Vice Chief of the Defence Force



The Australian Defence Force Investigative Service (ADFIS) has transferred from the Vice Chief of the Defence Force Group (VCDF Group) to the Office of the Secretary and CDF (OSCDF).

Table 34: Cost Summary for Programme 1.10 Vice Chief of the Defence Force

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 543,809 534,406 -9,403 604,802 613,144 608,847Suppliers 602,881 613,529 10,648 541,957 562,680 584,925Grants 25 25 - 25 - -Depreciation and amortisation 28,269 19,499 -8,770 22,003 22,126 22,601Finance cost - - - - - -Write-down of assets and impairment of assets 402,327 361,990 -40,337 376,152 390,741 406,191Net losses from sale of assets - - - - - -Other expenses - - - - - -

Total expenses 1,577,311 1,529,449 -47,862 1,544,939 1,588,691 1,622,564Income

RevenuesGoods and services 137,560 143,398 5,838 116,609 119,200 123,425Other revenue - 152 152 68 70 71Total revenue 137,560 143,550 5,990 116,677 119,270 123,496GainsReversal of previous asset write-downs 208,946 216,924 7,978 225,418 234,167 243,434Net gains from sale of assets - - - - - -Other gains - - - - - -Total gains 208,946 216,924 7,978 225,418 234,167 243,434

Total income 346,506 360,474 13,968 342,095 353,437 366,930Programme 1.10 Vice Chief of the Defence Force 1,230,805 1,168,975 -61,830 1,202,844 1,235,254 1,255,634

43



Provide investigative and policing advice and deliver investigating services to maintain discipline within the ADF. This is no longer a VCDF Group Deliverable as ADFIS transferred from VCDF Group to OSCDF on 1 July 2014.


Delivery of best practice policing and investigative service to the ADF. This is no longer a VCDF Group Key Performance Indicator as ADFIS transferred from VCDF Group to OSCDF on 1 July 2014.

44


Programme 1.11: Joint Operations Command


Table 35: Cost Summary for Programme 1.11 Joint Operations Command

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 6,577 6,770 193 6,599 6,228 6,278Suppliers 42,357 39,264 -3,093 42,424 42,815 46,139Grants - - - - - -Depreciation and amortisation 3,570 4,263 693 2,795 3,805 4,696Finance cost - - - - - -Write-down of assets and impairment of assets - - - - - -Net losses from sale of assets - - - - - -Other expenses - - - - - -


RevenuesGoods and services 336 - -336 604 614 623Other revenue - - - - - -Total revenue 336 - -336 604 614 623GainsReversal of previous asset write-downs - - - - - -Net gains from sale of assets - - - - - -Other gains - - - - - -Total gains - - - - - -

Total income 336 - -336 604 614 623Programme 1.11 Joint Operations Command 52,168 50,297 -1,871 51,214 52,234 56,490

45


Programme 1.12: Capability Development


Table 36: Cost Summary for Programme 1.12 Capability Development

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 70,076 40,874 -29,202 59,691 117,843 150,603Suppliers 776,948 650,670 -126,278 854,690 1,353,451 1,591,812Grants - - - - - -Depreciation and amortisation 524,380 9,777 -514,603 770,497 1,169,958 1,597,391Finance cost - - - - - -Write-down of assets and impairment of assets 77,901 102,026 24,125 128,962 153,545 180,817Net losses from sale of assets - - - - - -Other expenses - - - - - -

Total expenses 1,449,305 803,347 -645,958 1,813,840 2,794,797 3,520,623Income

RevenuesGoods and services - - - - - -Other revenue - - - - - -Total revenue - - - - - -GainsReversal of previous asset write-downs 26,224 16,943 -9,281 21,416 25,509 30,044Net gains from sale of assets - - - - - -Other gains - - - - - -Total gains 26,224 16,943 -9,281 21,416 25,509 30,044

Total income 26,224 16,943 -9,281 21,416 25,509 30,044Programme 1.12 Capability Development 1,423,081 786,404 -636,677 1,792,424 2,769,288 3,490,579

46


Programme 1.13: Chief Finance Officer


Table 37: Cost Summary for Programme 1.13 Chief Finance Officer

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees[1] 550,476 86,884 -463,592 34,219 -879 8,813Suppliers 798,647 817,165 18,518 841,600 885,444 908,772Grants - - - - - -Depreciation and amortisation 9,671 7,257 -2,414 13,412 17,983 17,807Finance cost - - - - - -Write-down of assets and impairment of assets 3,071 2,313 -758 2,912 2,833 2,744Net losses from sale of assets - - - - - -Other expenses - - - - - -

Total expenses 1,361,865 913,619 -448,246 892,143 905,381 938,136Income

RevenuesGoods and services - - - - - -Other revenue 798,921 797,075 -1,846 826,260 869,657 894,520Total revenue 798,921 797,075 -1,846 826,260 869,657 894,520GainsReversal of previous asset write-downs 1,158 601 -557 691 683 676Net gains from sale of assets - - - - - -Other gains 5,254 5,254 - 5,386 5,520 5,658Total gains 6,412 5,855 -557 6,077 6,203 6,334

Total income 805,333 802,930 -2,403 832,337 875,860 900,854Programme 1.13 Chief Finance Officer 556,532 110,689 -445,843 59,806 29,521 37,282

Note1. The negative amount in 2016-17 is due to a Defence wide reduction in employees which is being held centrally and will be allocated in conjunction with the Force Structure and First Principles Review.

47


Administered Programme 1.14: Defence Force Superannuation Benefits


Table 38: Cost Summary for Administered Programme 1.14 Defence Force Superannuation Benefits

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Net foreign exchange losses - - - - - -Retention benefits 95,883 95,883 - 77,940 93,000 105,540Military superannuation benefits 1,328,367 2,396,000 1,067,633 1,382,555 1,293,618 1,250,690

Total expenses 1,424,250 2,491,883 1,067,633 1,460,495 1,386,618 1,356,230Income

RevenuesInterest - - - - - -Net foreign exchange gain - - - - - -Military superannuation contributions 1,324,094 1,288,892 -35,202 1,331,754 1,231,718 1,184,913

Total income 1,324,094 1,288,892 -35,202 1,331,754 1,231,718 1,184,913Programme 1.14 Defence Force Superannuation Benefits 100,156 1,202,991 1,102,835 128,741 154,900 171,317

48


Administered Programme 1.15: Defence Force Superannuation Nominal Interest


Table 39: Cost Summary for Administered Programme 1.15 Defence Force Superannuation Nominal Interest

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Net foreign exchange losses - - - - - -Retention benefits - - - - - -Military superannuation benefits 3,379,188 3,406,000 26,812 3,538,412 3,693,660 3,854,656


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

Total income - - - - - -Programme 1.15 Defence Force Superannuation Nominal Interest 3,379,188 3,406,000 26,812 3,538,412 3,693,660 3,854,656

49


Administered Programme 1.16: Housing Assistance


Table 40: Cost Summary for Administered Programme 1.16 Housing Assistance

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Net foreign exchange losses - - - - - -Housing subsidies 113,164 104,532 -8,632 121,642 138,316 151,777


RevenuesInterest - - - - - -Net foreign exchange gains - - - - - -Dividends - - - - - -License fees 13,335 13,953 618 14,511 15,092 15,695Other - - - - - -

Total income 13,335 13,953 618 14,511 15,092 15,695Programme 1.16 Housing Assistance 99,829 90,579 -9,250 107,131 123,224 136,082

50


Administered Programme 1.17: Other Administered


Administered Programme 1.17 Objective

Other Administered comprises three elements:

Interest earned on overdue accounts and on official bank accounts held to facilitate operational requirements.

Interest on Government loans to fund the building of new accommodation, dividends and tax equivalent payments received from the DHA.

Revenue received from science and technology royalties where the royalties offset Departmental cost of an activity, to the extent there was no appropriation for the activity.

Table 41: Cost Summary for Administered Programme 1.17 Other Administered

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000ExpensesTotal expenses - - - - - -Income

RevenuesInterest 34,791 29,636 -5,155 30,936 32,866 34,175Dividends 47,795 50,128 2,333 50,476 57,390 54,331Other 50,877 29,717 -21,160 31,402 25,893 20,339

Total income 133,463 109,481 -23,982 112,814 116,149 108,845Programme 1.17 Other Administered -133,463 -109,481 23,982 -112,814 -116,149 -108,845

51


Outcome 2: The advancement of Australia’s strategic interests through the conduct of military operations and other tasks as directed by Government

Outcome 2 Strategy

No changes have been made to this outcome strategy since the Portfolio Budget Statements 2014-15.

Outcome 2 Resources


2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Programme 2.1 - Operations Contributing to the Security of the Immediate NeighbourhoodRevenue from other sources - - - - - -Departmental outputs 3,008 4,020 1,012 - - -Programme 2.2 - Operations Supporting Wider InterestsRevenue from other sources 3,269 3,856 587 - - -Departmental outputs 349,721 784,839 435,118 157,410 111,405 -Total resourcingTotal Departmental outputs 352,729 788,859 436,130 157,410 111,405 -Total Departmental revenue from other sources 3,269 3,856 587 - - -Total resources for Outcome 2 355,998 792,715 436,717 157,410 111,405 -

52



Programme 2.1: Operations Contributing to the Security of the Immediate Neighbourhood


Table 43: Cost Summary for Programme 2.1 Operations Contributing to the Security of the Immediate Neighbourhood

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees - - - - - -Suppliers 3,008 4,020 1,012 - - -Grants - - - - - -Depreciation and amortisation - - - - - -Finance cost - - - - - -Write-down of assets and impairment of assets - - - - - -Net losses from sale of assets - - - - - -Other expenses - - - - - -

Total expenses 3,008 4,020 1,012 - - -Income


Total income - - - - - -Programme 2.1 Operations Contributing to the Security of the Immediate Neighbourhood 3,008 4,020 1,012 - - -


The following has been added to the Programme Deliverables since the PBS 2014-15:

Operation Commenced Objective

SAVILLE 2014 Responses to non-allied foreign military activity in Australia’s maritime approaches.

53


Programme 2.2: Operations Supporting Wider Interests


Table 44: Cost Summary for Programme 2.2 Operations Supporting Wider Interests

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 43,814 103,572 59,758 - - -Suppliers 223,551 599,463 375,912 70,849 23,338 -Grants 85,079 85,079 - 86,561 88,067 -Depreciation and amortisation - - - - - -Finance cost - - - - - -Write-down of assets and impairment of assets 40 40 - - - -Net losses from sale of assets - - - - - -Other expenses 506 541 35 - - -

Total expenses 352,990 788,695 435,705 157,410 111,405 -Income

RevenuesGoods and services 3,269 3,856 587 - - -Other revenue - - - - - -Total revenue 3,269 3,856 587 - - -GainsReversal of previous asset write-downs - - - - - -Net gains from sale of assets - - - - - -Other gains - - - - - -Total gains - - - - - -

Total income 3,269 3,856 587 - - -Programme 2.2 Operations Supporting Wider Interests 349,721 784,839 435,118 157,410 111,405 -




HIGHROAD 2015 The International Security Assistance Force Mission in Afghanistan provided under Operation SLIPPER ceased 31 December 2014. Operation HIGHROAD commenced 1 January 2015 in support of the NATO-led ‘train, advise, assist’, Resolute Support Mission, which supports Afghanistan’s security, development and governance.

OKRA 2014 Operations in support of the coalition response to the Iraq Crisis.

54


Outcome 3: Support for the Australian community and civilian authorities as requested by Government

Outcome 3 Strategy


Outcome 3 Resources


2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Programme 3.1 - Defence Contribution to National Support Tasks in AustraliaRevenues from other sources - - - - - -Departmental outputs 67,740 67,740 - 574 - -Total resourcing 67,740 67,740 - 574 - -Total Departmental outputs 67,740 67,740 - 574 - -Total Departmental revenue from other sources - - - - - -Total resources for Outcome 3 67,740 67,740 - 574 - -

55



Programme 3.1: Defence Contribution to National Support Tasks in Australia


Table 46: Cost Summary for Programme 3.1 Defence Contribution to National Support Tasks in Australia

2014-15Budget

Estimate$'000


$'000Variation

$'000


$'000


$'000


$'000Expenses

Employees 22,856 22,476 -380 - - -Suppliers 44,884 45,264 380 574 - -Grants - - - - - -Depreciation and amortisation - - - - - -Finance cost - - - - - -Write-down of assets and impairment of assets - - - - - -Net losses from sale of assets - - - - - -Other expenses - - - - - -

Total expenses 67,740 67,740 - 574 - -Income


Total income - - - - - -Programme 3.1 Defence Contribution to National Support Tasks in Australia 67,740 67,740 - 574 - -




PARAPET 2013 Contribute security assistance to the whole-of-government effort as host of the G20 Summit in 2014.

SOUTHERN INDIAN OCEAN

2014 Contribute to the whole-of-government search effort for Malaysian Airlines Flight MH370.

HAWICK 2014 Contribute to the whole-of-government Operation Bring Them Home, the search and recovery effort for Malaysian Airlines Flight MH17.

56


Section 3: Defence Explanatory Tables and Budgeted Financial Statements

3.1 EXPLANATORY TABLES

Special Accounts provide a means to set aside and record amounts used for specified purposes. Table 47 shows the expected additions (receipts) and reductions (payments) for each account used by the Department of Defence. The corresponding table in the PBS 2014-15 is Table 42.

Table 47: Summary of Estimated Special Account Balances[1][2]

Outcome

Opening2014-15

2013-14 [3]

$'000

Receipts2014-15

2013-14 [3]

$'000

Payments2014-15

2013-14 [3]

$'000

Adjustments2014-15

2013-14 [3]

$'000

Closing Balance2014-15

2013-14 [3]

$'000

1 66,553 26,840 -28,842 - 64,551

73,363 33,597 -40,407 - 66,553

1 324 27 -22 - 329

322 37 -35 - 324

1 167 6 -4 - 169

166 5 -4 - 167

1 1,338 68 -15 - 1,391

1,274 162 -98 - 1,338

Total Special Accounts 2014-15 68,382 26,941 -28,883 - 66,4402013-14 actual 75,125 33,801 -40,544 - 68,382

Notes

2. 2013-14 actuals in italics.3. These are all Special Public Monies under the FMA Act 1997 .

1. 2014-15 estimates in bold.

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 Programme Special Account – Public Governance, Performance and Accountability Act 2013

57


3.1.1 Australian Government Indigenous Expenditure

Table 48: Australian Government Indigenous Expenditure

ProgrammeBill No. 1

$'000Outcome 1Defence Indigenous Employment Strategy[1][2] 1.8 Departmental 2014-15 Revised Estimate 3,838 Departmental 2014-15 Budget Estimate 3,878 Army Aboriginal Community Assistance Programme[1][3] 1.3 Departmental 2014-15 Revised Estimate 5,700 Departmental 2014-15 Budget Estimate 5,750 Total 2014-15 Revised Estimate 9,538Total 2014-15 Budget Estimate 9,628

Notes1. All amounts are GST exclusive. Revised Estimate and Budget Estimate are direct costs.2. The Defence Indigenous Development Programme, 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 Outcome 2.2.1 Indigenous Indigenous Housing and Infrastructure Appropriation.

Defence Indigenous Employment Strategy

No changes have been made to the Defence Indigenous Employment Strategy since the PBS 2014-15.

Army Aboriginal Community Assistance Programme

No changes have been made to the Army Aboriginal Community Assistance Programme since the PBS 2014-15.

58


3.1.2 Grants

The following changes to the grants programme since the PBS 2014-15 total $6,193,640, with two grant programmes and five individual grants approved.

Table 49: Grants approved since the 2014-15 Budget

Total Approvals

$'000[1]


$'000[1]

66 661,490 1,490

59 59130 13030 30

3,276 3,276400 400400 400150 50131 4062 21

Total additional grants 6,194 5,962

Note1. Approvals and Revised Estimate are as at 12 January 2015 and exclude GST.

The Sir Richard Williams FoundationRoyal Melbourne Institute of TechnologyUniversity of Melbourne

Army History Research Grants SchemeFamily Support Funding Programme

Australian Member Committee of the Council for Security Cooperation in the Asia-Pacific (AUS-CSCAP)Kokoda Foundation - Australia-United States Trilogy DialogueKokoda Foundation - Young Leaders Strategic programmeAustralian Strategic Policy Institute (ASPI)Army and Air Force Canteen Service (AAFCANS)The Australian Sailor Pty Ltd

The following are grants that have been approved since the Portfolio Budget Statements 2014-15.

Army History Research Grants Scheme

Grants to the total of $65,718 were approved for the Army Military History Research Grants Scheme. These grants promote the study and understanding of Army, its history and traditions, which in turn assists in the achievement of Government’s Defence policy objectives through the provision of capabilities for land and special operations. The scheme has been in operation since 1992.

Family Support Funding Programme

Since the publication of the PBS 2014-15, the Family Support Funding Programme has approved grants to the total of $1,490,439 (plus GST of $52,068, where applicable). This programme provides funds to support projects and services initiated by Defence families. It is also available to existing groups in the community composed of or benefiting Defence families.

Australian Member Committee of the Council for Security Cooperation in the Asia-Pacific (AUS-CSCAP)

A grant of $59,091 (plus GST of $5,909) was approved for the AUS-CSCAP, to facilitate and promote dialogue on security issues in the Asia-Pacific. This grant is for administration and publication costs.

59


Kokoda Foundation

Two grants were approved for the Kokoda Foundation. This is an independent, not-for-profit think-tank that conducts research and fosters independent thinking on Australia’s security challenges in its activities including research publications, hosting events and the Young Leaders Strategic Congresses.

A grant of $130,000 (plus GST of $13,000) was approved to support the Australia-United States Trilogy Dialogue.

A grant of $30,000 (plus GST of $3,000) was approved for two weekend congresses of the Young Leaders Strategic programme.

ASPI

A grant of $3,276,000 was approved for the ASPI. ASPI's purpose is to provide fresh, independent and non-partisan ideas, and to promote discussion within government, academia and the wider public on Australia's Defence and strategic policy issues.

Army and Air Force Canteen Service (AAFCANS)

A grant to the value of $400,000 (plus GST of $40,000) has been approved for AAFCANS. The funding is to support the improvement of the amenities of canteens and convenience stores run by the Service.

The Australian Sailor Pty Ltd

A grant of $400,000 was approved for the Australian Sailor Charitable Trust as a contribution to the construction of the Australian Sailor Centenary Monument to be erected at Rous Head precinct in Fremantle, Western Australia.

The Sir Richard Williams Foundation

A multi-year grant (2014-15 to 2016-17) of $150,000 was approved for the Sir Richard Williams Foundation, to undertake independent research and analysis of contemporary issues facing Defence in today’s complex security environment. The Sir Richard Williams Foundation is an independent research organisation, which intends to take a more active and public role in the strategic Defence debate.

Royal Melbourne Institute of Technology

A grant to the value of $130,657 has been approved to fund a PhD study for a period of three years. The study is titled 'Ensuring the suitability of Computer models for integration into heterogeneous simulation environments.'

University of Melbourne

A grant to the value of $61,735 has been approved to fund a PhD study for a period of two years. The study is titled 'Sense and Avoid Utilising Radar on a Chip'.

60


3.2 RESOURCE SUMMARY

Table 50: Budgeted Departmental Net Cost of Service (cash) (for the period ended 30 June)

2013-14ActualResult

$'000

2014-15Revised

Estimate$'000


$'000


$'000


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

Employee payments 10,052,671 10,328,234 10,859,765 10,639,388 10,781,553Supplier payments 9,252,251 10,670,625 10,472,223 10,652,907 11,567,504Purchase of specialist military equipment 4,397,336 5,552,648 6,079,955 5,740,763 6,804,961Purchase of inventory 1,088,078 1,156,823 1,336,675 1,388,051 1,347,776Purchase of other property, plant and equipment 1,662,996 1,781,745 1,513,250 1,667,589 2,203,041Other cash used 925,004 1,055,024 1,014,447 1,011,078 999,373

Total cash used 27,378,336 30,545,099 31,276,315 31,099,776 33,704,208Own source receipts 1,689,296 1,807,064 1,820,824 1,666,986 1,796,062

Total cash received 1,689,296 1,807,064 1,820,824 1,666,986 1,796,062Net cost of service (cash) 25,689,040 28,738,035 29,455,491 29,432,790 31,908,146FUNDED BY

Appropriation Bill 1/3/5 (price of outcomes) 24,272,707 26,440,723 27,016,201 27,272,684 28,582,535Appropriation carried forward from previous year - -71,357 - - -Appropriation Bill 2/4/6 (equity injection) 1,418,385 2,346,764 2,440,165 2,161,003 3,326,530Net cash to the Official Public Account -32,441 -853 -875 -897 -919

Total funding source 25,658,651 28,715,277 29,455,491 29,432,790 31,908,146

Change in cash -30,389 -22,758 - - -

61


Portfolio Resource Statement

Table 51: Portfolio Resources[1]


$m


$m


2014-15

$m


$m

Return to the OPA

$m


$m

Total Appropriation

$m

Non-Appropriation

Receipts

$m


Items

$m

TotalResources

Available

$mDepartment of Defence

Administered appropriations - - - - 49.6 1,085.8 1,135.4 -49.6 - 1,085.8Departmental appropriations 557.7 - - -116.9 -71.4 - 369.5 106.1 - 475.5

Total Department of Defence 557.7 - - -116.9 -21.8 1,085.8 1,504.8 56.5 - 1,561.3


$m


$m


$m


2014-15

$m

Return to the OPA

$m


$m

Total Appropriation

$m

Non-Appropriation

Receipts

$m


Items

$m

TotalResources

Available

$mDefence Materiel Organisation

Administered appropriations - - - - - - - - - -Departmental appropriations - - -1.4 - - - -1.4 -257.0 - -258.5

Total Defence Materiel Organisation - - -1.4 - - - -1.4 -257.0 - -258.5


$m


$m


2014-15

$m


2014-15

$m

Return to the OPA

$m


$m

Total Appropriation

$m

Non-Appropriation

Receipts

$m


Items

$m

TotalResources

Available

$mDefence Housing Australia

Administered appropriations - - - - - - - - - -Departmental appropriations - - - - - - - 64.5 - 64.5

Total Defence Housing Australia - - - - - - - 64.5 - 64.5

Total Portfolio 557.7 - -1.4 -116.9 -21.8 1,085.8 1,503.4 -136.0 - 1,367.4 Notes1. Figures shown include inter-agency transactions.

2. Defence will seek a determination by the Minister of Finance, under the Appropriation Act (No.2) 2014-15, to decrease the Departmental outcome appropriation.3. DMO will seek a determination by the Minister of Finance, under the Appropriation Act (No.1) 2014-15, to decrease the Departmental outcome appropriation.

62


Table 52: Total Departmental and Administered Consolidated Cash Budget for the Department of Defence (including DMO)[1]

2014-15Budget

Estimate$m

APPROPRIATIONS AND CAPITALAppropriation (Bill 1)[2] 26,758.5Appropriation (Bill 3) 557.7Appropriation - Contributed Equity (Bill 2)[3] 2,346.8Appropriations for military superannuation[4] 2,242.3less Returns to the OPA -1,497.0Total cash available 30,408.3OPERATING ACTIVITIESCash received

Goods and services 550.0Net GST received 1,571.2Interest 29.6Other cash 151.4Fees 14.0

Total cash received 2,316.2Cash used

Employees 9,566.6Suppliers 10,728.0Net GST paid 1,571.2Grants 102.9Other cash 25.1Subsidies paid 104.5Military benefits 2,137.8

Total cash used 24,236.0Net cash from or (used by) operating activities -21,919.9INVESTING ACTIVITIESCash received

Proceeds from sales of land and buildings 92.3Proceeds from sales of infrastructure, plant and equipment 28.0Proceeds from sales of specialist military equipment 7.5Dividends 54.0Other cash received 0.3

Total cash received 182.1Cash used

Purchase of land and buildings 1,080.8Purchase of infrastructure, plant and equipment 583.8Purchase of specialist military equipment 5,552.6Purchase of intangibles 118.4Purchase of inventory 1,156.8Selling costs on sale of assets 6.4Finance costs 110.5Loans -

Total cash used 8,609.4Net cash from or (used by) investing activities -8,427.3FINANCING ACTIVITIESCash used

Repayment of debt 76.5Total cash used 76.5Net cash from or (used by) financing activities -76.5Net increase or (decrease) in cash and cash equivalents held -15.4

Cash and cash equivalents at the beginning of the reporting period 158.1Effect of exchange rate movements on cash and cash equivalents -

Cash and cash equivalents at the end of the reporting period 142.7

Notes1. Figures shown eliminate interagency transactions and transactions flowing between Departmental and Administered funding. 2. Includes $875.5m of appropriation planned to be drawn down by DMO.3. $116.9m will be extinguished against Appropriation Bill (No. 2).4. Cross reference with Table 76 Consolidated Budgeted Administered Statement of Cash Flows for the Department of Defence (including DMO) for the period ended 30 June.

63


Table 53: Defence Resource Statement Se

rial N

o.

Estimate as at

Budget2014-15

$'000

+

Proposed Additional Estimates

2014-15$'000

=

Total Estimate at Additional

Estimates2014-15

$'000

TotalAvailable

Appropriation 2013-14

$'000ORDINARY ANNUAL SERVICES

Outcome 1 25,462,517 121,607 25,584,124 23,440,073Outcome 2 352,729 436,130 788,859 1,022,827Outcome 3 67,740 - 67,740 54,097

1 Total Departmental outputs 25,882,986 557,737 26,440,723 24,516,9972 Total ordinary annual services (1) 25,882,986 557,737 26,440,723 24,516,997

OTHER SERVICESDepartmental non-operating

Equity injections 2,463,678 -116,914 2,346,764 1,521,4883 Total Departmental non-operating 2,463,678 -116,914 2,346,764 1,521,4884 Total other services (3) 2,463,678 -116,914 2,346,764 1,521,4885 Total available annual appropriation (2+4) 28,346,664 440,823 28,787,487 26,038,485

SPECIAL APPROPRIATIONSSpecial appropriations limited by criteria/entitlement

Defence Forces Retirement Benefits Act, 1948 Part 1 s.15D and VIC, s.82ZJ 28,598 -5,598 23,000 53,362Defence Force Retirement and Death Benefits Act, 1973 Part XII, s.125 1,888,160 -94,160 1,794,000 1,451,263Military Superannuation and Benefits Act, 1991 Part V, s.17 2,886,680 1,194,203 4,080,883 500,457Defence Force (Home Loan Assistance) Act, 1990 Part IV, s.38 1,511 -154 1,357 1,577Defence Home Ownership Assistance Scheme Act 2008 Part VI, s.84 111,653 -8,478 103,175 91,977

6 Total special appropriations 4,916,602 1,085,813 6,002,415 2,098,6367 Total appropriations (5+6) 33,263,266 1,526,636 34,789,902 28,137,121

Funding from other sources 2,431,017 56,495 2,487,512 2,514,172Returns from the OPA (net) -1,474,973 -21,796 -1,496,769 -1,500,014Previous years' outputs (appropriation receivable) - - - 67,349Cash available 466 12,266 12,732 68,460

8 Total other available resources 956,510 46,965 1,003,475 1,149,9679 Total resourcing (7+8) 34,219,776 1,573,601 35,793,377 29,287,088

Special AccountsOpening Balance 73,071 -4,689 68,382 75,125Appropriation Receipts - - - -Appropriation Receipts - other agencies - - - -Non-Appropriation Receipts to Special Accounts 26,941 - 26,941 33,801

10 Total special accounts 100,012 -4,689 95,323 108,926

64


Table 54: Third Party Payments to and from other Agencies

2014-15Budget

Estimate$'000


$'000Variation

$'000Revenue received from Defence Housing Australia for interest on loans, dividends and competitive neutrality payments (Administered) 135,945 115,815 -20,130Payments made to Defence Housing Australia for the provision of services (Departmental) 561,491 618,540 57,049Payments made to Department of Foreign Affairs and Trade for the provision of services (Departmental) 21,713 21,713 -Payments made to the Attorney-General's Department for the provision of services (Departmental) 23,337 23,337 -Payments made to Comsuper for the provision of services (Departmental) 32,150 33,266 1,116Payments made to the Department of Finance for the provision of services (Departmental) 64,095 64,095 -Payments made to the Australian Federal Police for the provision of services (Departmental) 41,299 36,657 -4,642

65


3.3 BUDGETED FINANCIAL STATEMENTS

3.3.1 Departmental and Administered Budgeted Financial Statements

Table 55: Variation in Budgeted Departmental Comprehensive Income Statement (Showing Net Cost of Services) (for the period ended 30 June)

2014-15Budget

Estimate$'000


$'000Variation

$'000Variation

%EXPENSES

Employee benefits 10,534,578 10,360,565 -174,013 -1.7Supplier expenses 12,074,675 12,639,639 564,964 4.7Grants 91,561 92,418 857 0.9Depreciation and amortisation 4,178,150 4,297,952 119,802 2.9Finance costs 146,644 148,180 1,536 1.0Write-down of assets and impairment of assets 828,637 881,394 52,757 6.4Losses from sale of assets - - - -Other 45,389 25,554 -19,835 -43.7

Total expenses 27,899,634 28,445,702 546,068 2.0LESS:OWN-SOURCE INCOMEOwn-source revenue

Sales of goods and rendering of services 798,585 822,621 24,036 3.0Other revenue 848,812 854,614 5,802 0.7

Total own-source revenue 1,647,397 1,677,235 29,838 1.8Gains

Reversals of previous asset write-downs 339,091 313,597 -25,494 -7.5Sale of assets 24,906 8,893 -16,013 -64.3Other gains 5,254 5,254 - -

Total gains 369,251 327,744 -41,507 -11.2Total own-source income 2,016,648 2,004,979 -11,669 -0.6Net cost of (contribution by) services 25,882,986 26,440,723 557,737 2.2

Revenue from Government 25,882,986 26,440,723 557,737 2.2Surplus (Deficit) attributable to the Australian Government - - - -Total comprehensive income attributable to the Australian Government - - - -

66


Table 56: Variation in Budgeted Departmental Balance Sheet (as at 30 June)

2014-15Budget

Estimate$'000


$'000Variation

$'000Variation

%ASSETSFinancial assets

Cash and cash equivalents 466 12,732 12,266 2,632.2Trade and other receivables 110,402 82,542 -27,860 -25.2Tax assets 58,205 89,757 31,552 54.2Appropriation receivable - - - -Other receivables 422,986 278,311 -144,675 -34.2

Total financial assets 592,059 463,342 -128,717 -21.7Non-financial assets

Land and buildings 16,282,730 17,373,502 1,090,772 6.7Infrastructure, plant and equipment 7,377,422 7,116,183 -261,239 -3.5Specialist military equipment 43,842,701 43,298,649 -544,052 -1.2Intangibles 553,916 832,868 278,952 50.4Heritage and cultural 1,023,969 1,002,315 -21,654 -2.1Inventories 5,941,559 6,323,134 381,575 6.4Prepayments 148,105 218,262 70,157 47.4

Total non-financial assets 75,170,402 76,164,913 994,511 1.3Assets held for sale 52,399 28,693 -23,706 -45.2

Total assets 75,814,860 76,656,948 842,088 1.1LIABILITIESPayables

Suppliers 1,027,328 1,106,242 78,914 7.7Other 463,067 378,524 -84,543 -18.3

Total payables 1,490,395 1,484,766 -5,629 -0.4Interest bearing liabilities

Leases 1,321,565 1,427,990 106,425 8.1Total interest bearing liabilities 1,321,565 1,427,990 106,425 8.1Provisions

Employee provisions 2,332,987 2,313,246 -19,741 -0.8Restoration, decontamination and decommissioning 934,431 955,283 20,852 2.2Other 3,014 2,294 -720 -23.9

Total provisions 3,270,432 3,270,823 391 -Total liabilities 6,082,392 6,183,579 101,187 1.7NET ASSETS 69,732,468 70,473,369 740,901 1.1EQUITY

Contributed equity 21,703,066 21,587,441 -115,625 -0.5Reserves 14,729,722 14,892,351 162,629 1.1Retained surplus (accumulated deficit) 33,299,680 33,993,577 693,897 2.1

Total equity 69,732,468 70,473,369 740,901 1.1

67


Table 57: Variation in Budgeted Departmental Statement of Cash Flows (for the period ended 30 June)

2014-15Budget

Estimate$'000


$'000Variation

$'000Variation

%OPERATING ACTIVITIESCash received

Appropriations 25,882,986 26,440,723 557,737 2.2Goods and services 798,585 822,621 24,036 3.0Net GST received 697,148 744,111 46,963 6.7Other cash received 61,088 112,179 51,091 83.6Cash transfer from the Official Public Account (receivables) - - - -

Total cash received 27,439,807 28,119,634 679,827 2.5Cash used

Employees 10,491,430 10,328,234 -163,196 -1.6Suppliers 10,090,184 10,670,625 580,441 5.8Net GST paid 697,148 744,111 46,963 6.7Grants 91,561 92,418 857 0.9Other cash used 45,389 25,054 -20,335 -44.8Cash transfer to the Official Public Account (receivables) 853 72,210 71,357 8,365.4

Total cash used 21,416,565 21,932,652 516,087 2.4Net cash from (used by) operating activities 6,023,242 6,186,982 163,740 2.7INVESTING ACTIVITIESCash received

Proceeds from sales of land and buildings 61,675 92,317 30,642 49.7Proceeds from sales of infrastructure, plant and equipment 28,000 28,000 - -Proceeds from sales of specialist military equipment 7,549 7,549 - -Other cash received - 287 287 -

Total cash received 97,224 128,153 30,929 31.8Cash used

Purchase of land and buildings 961,469 1,080,827 119,358 12.4Purchase of infrastructure, plant and equipment 518,695 582,486 63,791 12.3Purchase of specialist military equipment 5,677,403 5,552,648 -124,755 -2.2Purchase of intangibles 75,210 118,432 43,222 57.5Purchase of inventory 1,161,511 1,156,823 -4,688 -0.4Selling costs on sale of assets 2,787 6,372 3,585 128.6Finance costs 110,532 110,532 - -

Total cash used 8,507,607 8,608,120 100,513 1.2Net cash from (used by) investing activities -8,410,383 -8,479,967 -69,584 0.8FINANCING ACTIVITIESCash received

Appropriations - contributed equity 2,463,678 2,346,764 -116,914 -4.7Total cash received 2,463,678 2,346,764 -116,914 -4.7Cash used

Repayment of debt 76,537 76,537 - -Cash to the Official Public Account - - - -

Total cash used 76,537 76,537 - -Net cash from (used by) financing activities 2,387,141 2,270,227 -116,914 -4.9Net increase (decrease) in cash and cash equivalents held - -22,758 -22,758 -

Cash and cash equivalents at the beginning of the reporting period 466 35,490 35,024 7,515.9

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 466 12,732 12,266 2,632.2

68


Table 58: Budgeted Departmental Comprehensive Income Statement (Showing Net Cost of Services) (for the period ended 30 June)

2013-14ActualResult

$'000


$'000


$'000


$'000


$'000EXPENSES

Employee benefits 10,172,387 10,360,565 10,868,445 10,664,809 10,814,019Supplier expenses 10,566,252 12,639,639 12,546,188 12,728,973 13,775,198Grants 48,796 92,418 92,554 94,178 6,161Depreciation and amortisation 3,867,716 4,297,952 4,445,973 4,756,345 5,005,251Finance costs 129,106 148,180 153,189 153,634 160,472Write-down of assets and impairment of assets 852,653 881,394 916,785 953,801 992,473Foreign exchange losses 3,502Losses from sale of assets 4,340 - - 6,609 -Other 89,137 25,554 36,478 14,395 28,724

Total expenses 25,733,889 28,445,702 29,059,612 29,372,744 30,782,298LESS:OWN-SOURCE INCOME

Own-source revenueSales of goods and rendering of services 827,287 822,621 810,034 832,671 866,630Other revenue 865,459 854,614 876,284 917,028 943,448

Total own-source revenue 1,692,746 1,677,235 1,686,318 1,749,699 1,810,078Gains

Foreign exchange - - - - -Reversals of previous asset write-downs 293,384 313,597 328,826 344,841 361,681Sale of assets - 8,893 22,881 - 22,346Other gains 37,863 5,254 5,386 5,520 5,658

Total gains 331,247 327,744 357,093 350,361 389,685Total own-source income 2,023,993 2,004,979 2,043,411 2,100,060 2,199,763Net cost of (contribution by) services 23,709,896 26,440,723 27,016,201 27,272,684 28,582,535

Revenue from Government 24,197,161 26,440,723 27,016,201 27,272,684 28,582,535Surplus (Deficit) attributable to the Australian Government 487,265 - - - -OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Changes in asset revaluation reserves 162,629 - - - -Total other comprehensive income/(loss) 162,629 - - - -

Total comprehensive income attributable to the Australian Government 649,894 - - - -

69


Table 59: Budgeted Departmental Balance Sheet (as at 30 June)

2013-14ActualResult

$'000


$'000


$'000


$'000


$'000ASSETSFinancial assets

Cash and cash equivalents 35,490 12,732 12,732 12,732 12,732Trade and other receivables 71,906 82,542 82,542 82,542 82,542Tax assets 89,757 89,757 89,757 89,757 89,757Appropriation receivable 414,742 - - - -Other receivables 479,312 278,311 241,764 205,892 140,910

Total financial assets 1,091,207 463,342 426,795 390,923 325,941Non-financial assets

Land and buildings 16,976,931 17,373,502 18,093,955 18,663,926 19,669,742Infrastructure, plant and equipment 7,118,912 7,116,183 7,022,391 6,868,944 6,815,533Specialist military equipment 41,270,763 43,298,649 45,773,813 47,595,577 50,263,123Intangibles 819,577 832,868 798,009 757,715 702,175Heritage and cultural 1,002,312 1,002,315 1,002,315 1,002,315 1,002,315Inventories 6,385,571 6,323,134 6,265,960 6,204,022 6,130,013Prepayments 218,282 218,262 218,244 218,225 218,206

Total non-financial assets 73,792,348 76,164,913 79,174,687 81,310,724 84,801,107Assets held for sale 28,692 28,693 28,693 28,693 28,693

Total assets 74,912,247 76,656,948 79,630,175 81,730,340 85,155,741LIABILITIESPayables

Suppliers 1,700,866 1,106,242 1,110,276 1,092,638 1,189,847Other 384,162 378,524 384,019 320,668 284,612

Total payables 2,085,028 1,484,766 1,494,295 1,413,306 1,474,459Interest bearing liabilities

Leases 1,492,541 1,427,990 1,389,392 1,349,559 1,309,701Total interest bearing liabilities 1,492,541 1,427,990 1,389,392 1,349,559 1,309,701Provisions

Employee provisions 2,287,291 2,313,246 2,316,431 2,337,900 2,368,170Restoration, decontamination and decommissioning 917,635 955,283 997,958 1,037,370 1,085,595Other 2,294 2,294 2,294 2,294 2,294

Total provisions 3,207,220 3,270,823 3,316,683 3,377,564 3,456,059Total liabilities 6,784,789 6,183,579 6,200,370 6,140,429 6,240,219NET ASSETS 68,127,458 70,473,369 73,429,805 75,589,911 78,915,522EQUITY

Contributed equity 19,241,530 21,587,441 24,026,731 26,186,837 29,512,448Reserves 14,892,351 14,892,351 14,892,351 14,892,351 14,892,351Retained surplus (accumulated deficit) 33,993,577 33,993,577 34,510,723 34,510,723 34,510,723

Total equity 68,127,458 70,473,369 73,429,805 75,589,911 78,915,522

70


Table 60: Budgeted Departmental Statement of Cash Flows (for the period ended 30 June)

2013-14ActualResult

$'000

2014-15Revised

Estimate$'000


$'000


$'000


$'000OPERATING ACTIVITIESCash received

Appropriations 24,272,707 26,440,723 27,016,201 27,272,684 28,582,535Goods and services 874,490 822,621 810,034 832,671 866,630Net GST received 642,697 744,111 730,858 743,468 807,299Interest 2 - - - -Other cash received 93,855 112,179 50,024 47,371 48,928Cash transfer from the Official Public Account (receivables) 1,364,882 - - - -

Total cash received 27,248,633 28,119,634 28,607,117 28,896,194 30,305,392Cash used

Employees 10,052,671 10,328,234 10,859,765 10,639,388 10,781,553Suppliers 9,252,251 10,670,625 10,472,223 10,652,907 11,567,504Net GST paid 682,230 744,111 730,858 743,468 807,299Grants 48,996 92,418 92,554 94,178 6,161Other cash used 35,528 25,054 36,478 14,395 28,724Cash transfer to the Official Public Account (receivables) 1,397,323 72,210 875 897 919

Total cash used 21,468,999 21,932,652 22,192,753 22,145,233 23,192,160Net cash from (used by) operating activities 5,779,634 6,186,982 6,414,364 6,750,961 7,113,232INVESTING ACTIVITIESCash received

Proceeds from sales of land and buildings 30,223 92,317 196,359 14,127 26,495Proceeds from sales of infrastructure, plant and equipment 18,482 28,000 26,000 21,800 39,161Proceeds from sales of specialist military equipment 28,853 7,549 7,549 7,549 7,549Proceeds from sales of heritage and cultural assets - - - - -Other cash received 694 287 - - -

Total cash received 78,252 128,153 229,908 43,476 73,205Cash used

Purchase of land and buildings 1,111,175 1,080,827 971,299 1,213,817 1,680,147Purchase of infrastructure, plant and equipment 508,430 582,486 468,817 393,441 473,949Purchase of specialist military equipment 4,397,336 5,552,648 6,079,955 5,740,763 6,804,961Purchase of heritage and cultural assets - - - - -Purchase of intangibles 43,391 118,432 73,134 60,331 48,945Purchase of inventory 1,088,078 1,156,823 1,336,675 1,388,051 1,347,776Selling costs on sale of assets 6,709 6,372 5,445 4,982 5,084Finance costs 95,270 110,532 110,514 114,222 112,247

Total cash used 7,250,389 8,608,120 9,045,839 8,915,607 10,473,109Net cash from (used by) investing activities -7,172,137 -8,479,967 -8,815,931 -8,872,131 -10,399,904FINANCING ACTIVITIESCash received

Appropriations - contributed equity 1,418,385 2,346,764 2,440,165 2,161,003 3,326,530Total cash received 1,418,385 2,346,764 2,440,165 2,161,003 3,326,530Cash used

Repayment of debt 56,271 76,537 38,598 39,833 39,858Cash to the Official Public Account - - - - -

Total cash used 56,271 76,537 38,598 39,833 39,858Net cash from (used by) financing activities 1,362,114 2,270,227 2,401,567 2,121,170 3,286,672Net increase (decrease) in cash and cash equivalents held -30,389 -22,758 - - -

Cash and cash equivalents at the beginning of the reporting period 68,460 35,490 12,732 12,732 12,732Effect of exchange rate movements on cash and cash equivalents at beginning of the reporting period -2,581 - - - -

Cash and cash equivalents at the end of the reporting period 35,490 12,732 12,732 12,732 12,732

71


Table 61: Departmental Statement of Changes in Equity — Summary of Movement (Budget year 2014-15)

Retained Earnings

$'000

Asset Revaluation

Reserve$'000

Contributed Equity/Capital

$'000

Total Equity

$'000Opening balance as at 1 July 2014

Balance carried forward from previous period 33,993,577 14,892,351 19,241,530 68,127,458Adjustment for changes in accounting policies - - - -

Adjusted opening balance 33,993,577 14,892,351 19,241,530 68,127,458Comprehensive 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 - - -853 -853

Contributions by ownersAppropriation (equity injection) - - 2,346,764 2,346,764Other - - - -

Sub-total transaction with owners - - 2,345,911 2,345,911Transfers between equity components - - - -

Estimated closing balance as at 30 June 2015 33,993,577 14,892,351 21,587,441 70,473,369

72


Table 62: Departmental Capital Budget Statement

2013-14ActualResult

$'000


$'000


$'000


$'000


$'000CAPITAL APPROPRIATIONS

Equity injection 1,418,385 2,346,764 2,440,165 2,161,003 3,326,530Total capital appropriations 1,418,385 2,346,764 2,440,165 2,161,003 3,326,530Represented by:

Purchase of non-financial assets 1,362,114 2,270,227 2,401,567 2,121,170 3,286,672Annual finance lease costs 56,271 76,537 38,598 39,833 39,858Other items - - - - -

Total Items 1,418,385 2,346,764 2,440,165 2,161,003 3,326,530PURCHASE OF NON-FINANCIAL ASSETS

Funded by capital appropriations 1,418,385 2,346,764 2,182,784 1,795,912 2,829,658Funded by finance lease costs 571,376 - - - -Funded internally from departmental resources[1] 4,641,947 4,987,629 5,410,421 5,612,440 6,178,344

Total 6,631,708 7,334,393 7,593,205 7,408,352 9,008,002Reconciliation of cash used to acquire assets to asset movement table

Total purchases 6,631,708 7,334,393 7,593,205 7,408,352 9,008,002less additions by finance lease 571,376 - - - -less additions by creditors/borrowings - - - - -plus borrowing/finance costs 95,270 110,532 110,514 114,222 112,247plus annual finance lease costs 56,271 76,537 38,598 39,833 39,858less gifted assets - - - - -less s75/restructuring - - - - -

Total cash used to acquire assets 6,211,873 7,521,462 7,742,317 7,562,407 9,160,107

Note1. Includes the following sources of funding: - annual and prior year appropriations - donations and contributions - gifts - internally developed assets - s74 relevant agency receipts - proceeds from the sale of assets.

73


Table 63: Statement of Departmental Asset Movements (2014-15)

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 2014Gross book value 4,947,963 12,307,445 77,416,060 7,510,543 1,551,774 1,002,315 28,693 104,764,793Accumulated depreciation/amortisation and impairment - 278,472 36,145,300 391,578 732,204 - - 37,547,554Opening net book balance 4,947,963 12,028,973 41,270,760 7,118,965 819,570 1,002,315 28,693 67,217,239CAPITAL ASSET ADDITIONSEstimated expenditure on new or replacement assets

By purchase - appropriation equity 9,193 1,071,634 5,483,723 582,486 118,432 - - 7,265,468By purchase - donated funds - - - - - - - -By finance lease - - - - - - - -

Total additions 9,193 1,071,634 5,483,723 582,486 118,432 - - 7,265,468Other movementsAssets held for sale - - - - - - - -Reclassifications[1] - - 79,055 11,711 - - - 90,766Depreciation and amortisation - 586,860 3,055,442 550,516 105,134 - - 4,297,952Disposal of entities or other operations (including restructuring) 69,130 12,107 - 31,651 - - - 112,888Other disposals[2] - 16,164 479,447 14,812 - - - 510,423Total other movements 69,130 615,131 3,455,834 585,268 105,134 - - 4,830,497As at 30 June 2015Gross book value 4,888,026 13,350,808 82,499,391 8,058,277 1,670,206 1,002,315 28,693 111,497,716Accumulated depreciation/amortisation and impairment - 865,332 39,200,742 942,094 837,338 - - 41,845,506Closing net book value 4,888,026 12,485,476 43,298,649 7,116,183 832,868 1,002,315 28,693 69,652,210

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

74


Table 64: Variation in Schedule of Budgeted Income and Expenses Administered on Behalf of Government (for the period ended 30 June)

2014-15Budget

Estimate$'000


$'000Variation

$'000Variation

%INCOME ADMINISTERED ON BEHALF OF GOVERNMENTRevenueNon-taxation

Interest 34,791 29,636 -5,155 -14.8Dividends 47,795 50,128 2,333 4.9Military superannuation contributions 1,324,094 1,288,892 -35,202 -2.7Fees 13,335 13,953 618 4.6Other 50,877 29,717 -21,160 -41.6

Total non-taxation 1,470,892 1,412,326 -58,566 -4.0Total revenues administered on behalf of Government 1,470,892 1,412,326 -58,566 -4.0EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT

Subsidies 113,164 104,532 -8,632 -7.6Military retention benefits 95,883 95,883 - -Military superannuation benefits 4,707,555 5,802,000 1,094,445 23.2

Total expenses administered on behalf of Government 4,916,602 6,002,415 1,085,813 22.1

75


Table 65: Variation in Schedule of Budgeted Assets and Liabilities Administered on Behalf of Government (as at 30 June)

2014-15Budget

Estimate$'000

2014-15Revised

Estimate$'000

Variation$'000

Variation%

ASSETS ADMINISTERED ON BEHALF OF GOVERNMENTFinancial assets

Cash and cash equivalents - - - -Trade and other receivables 64,709 63,046 -1,663 -2.6Investments accounted for using the equity method 2,270,046 2,317,032 46,986 2.1Loans 594,580 509,580 -85,000 -14.3

Total financial assets 2,929,335 2,889,658 -39,677 -1.4Non-financial assets

Prepayments 153,890 161,036 7,146 4.6Total non-financial assets 153,890 161,036 7,146 4.6Total assets administered on behalf of Government 3,083,225 3,050,694 -32,531 -1.1LIABILITIES ADMINISTERED ON BEHALF OF GOVERNMENTPayables

Other 5,543 5,630 87 1.6Total payables 5,543 5,630 87 1.6Provisions

Superannuation - DFRB[1] 477,100 477,100 - -Superannuation - DFRDB[2] 30,756,000 30,756,000 - -Superannuation - MSBS[3] 28,101,878 28,101,878 - -

Total provisions 59,334,978 59,334,978 - -Total liabilities administered on behalf of Government 59,340,521 59,340,608 87 -

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

76


Table 66: Variation in Schedule of Budgeted Administered Cash Flows (for the period ended 30 June)

2014-15Budget

Estimate$'000


$'000Variation

$'000Variation

%OPERATING ACTIVITIESCash received

Interest 34,791 29,636 -5,155 -14.8Military superannuation contributions 1,324,094 1,288,892 -35,202 -2.7Fees 13,335 13,953 618 4.6Other 51,375 38,087 -13,288 -25.9

Total cash received 1,423,595 1,370,568 -53,027 -3.7Cash used

Subsidies paid 113,164 104,532 -8,632 -7.6Military benefits 2,120,422 2,137,800 17,378 0.8

Total cash used 2,233,586 2,242,332 8,746 0.4Net cash from or (used by) operating activities -809,991 -871,764 -61,773 7.6INVESTING ACTIVITIESCash received

Dividends 50,525 53,991 3,466 6.9Total cash received 50,525 53,991 3,466 6.9Cash used

Loans 85,000 - -85,000 -100.0Total cash used 85,000 - -85,000 -100.0Net cash from or (used by) investing activities -34,475 53,991 88,466 -256.6Net increase (decrease) in cash held -844,466 -817,773 26,693 -3.2

Cash at the beginning of the reporting period - - - -Cash from the Official Public Account for appropriations 2,318,586 2,242,332 -76,254 -3.3Cash to the Official Public Account -1,474,120 -1,424,559 49,561 -3.4Effect of exchange rate movements on cash and cash equivalents - - - -

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

77


Table 67: Schedule of Budgeted Income and Expenses Administered on Behalf of Government (for the period ended 30 June)

2013-14ActualResult

$'000

2014-15RevisedBudget

$'000


$'000


$'000


$'000INCOME ADMINISTERED ON BEHALF OF GOVERNMENTRevenueNon-taxation

Interest 30,000 29,636 30,936 32,866 34,175Dividends 53,991 50,128 50,476 57,390 54,331Military superannuation contributions 1,242,121 1,288,892 1,331,754 1,231,718 1,184,913Fees 13,448 13,953 14,511 15,092 15,695Foreign exchange 453 - - - -Other 69,756 29,717 31,402 25,893 20,339

Total non-taxation 1,409,769 1,412,326 1,459,079 1,362,959 1,309,453Total revenues administered on behalf of Government 1,409,769 1,412,326 1,459,079 1,362,959 1,309,453EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT

Write-down and impairment of assets 157 - - - -Subsidies 93,641 104,532 121,642 138,316 151,777

Military retention benefits 65,570 95,883 77,940 93,000 105,540

Military superannuation benefits 12,851,141 5,802,000 4,920,967 4,987,278 5,105,346

Other 406 - - - -Total expenses administered on behalf of Government 13,010,915 6,002,415 5,120,549 5,218,594 5,362,663

78


Table 68: Schedule of Budgeted Assets and Liabilities Administered on Behalf of Government (as at 30 June)

2013-14ActualResult

$'000


$'000


$'000


$'000


$'000ASSETS ADMINISTERED ON BEHALF OF GOVERNMENTFinancial assets

Cash and cash equivalents - - - - -Trade and other receivables 75,278 63,046 63,050 69,659 69,145Investments accounted for using the equity method 2,337,796 2,317,032 2,373,768 2,432,907 2,496,965Loans 509,580 509,580 529,580 569,580 569,580

Total financial assets 2,922,654 2,889,658 2,966,398 3,072,146 3,135,690Non-financial assets

Prepayments 163,019 161,036 189,496 237,896 253,956Total non-financial assets 163,019 161,036 189,496 237,896 253,956Total assets administered on behalf of Government 3,085,673 3,050,694 3,155,894 3,310,042 3,389,646LIABILITIES ADMINISTERED ON BEHALF OF GOVERNMENTPayables

Other 5,630 5,630 5,630 5,630 5,630Total payables 5,630 5,630 5,630 5,630 5,630Provisions

Superannuation - DFRB[1] 587,100 477,100 454,200 431,600 409,500Superannuation - DFRDB[2] 40,692,000 30,756,000 31,048,000 31,300,000 31,507,000Superannuation - MSBS[3] 41,598,000 28,101,878 30,627,149 33,043,115 35,637,000

Total provisions 82,877,100 59,334,978 62,129,349 64,774,715 67,553,500Total liabilities administered on behalf of Government 82,882,730 59,340,608 62,134,979 64,780,345 67,559,130


79


Table 69: Schedule of Budgeted Administered Cash Flows (for the period ended 30 June)

2013-14ActualResult

$'000


$'000


$'000


$'000



Interest 30,000 29,636 30,936 32,866 34,175Military superannuation contributions 1,303,030 1,288,892 1,331,754 1,231,718 1,184,913Fees 13,233 13,953 14,511 15,092 15,695Other 70,237 38,087 31,746 26,198 17,794


Subsidies paid 93,553 104,532 121,642 138,316 151,777Military benefits 2,005,083 2,137,800 2,222,044 2,354,750 2,439,598

Total cash used 2,098,636 2,242,332 2,343,686 2,493,066 2,591,375Net cash from or (used by) operating activities -682,136 -871,764 -934,739 -1,187,192 -1,338,798INVESTING ACTIVITIESCash received

Dividends 51,073 53,991 50,128 50,476 57,390Total cash received 51,073 53,991 50,128 50,476 57,390Cash used

Loans - - 20,000 40,000 -Total cash used - - 20,000 40,000 -Net cash from (used by) investing activities 51,073 53,991 30,128 10,476 57,390Net increase (decrease) in cash held -631,063 -817,773 -904,611 -1,176,716 -1,281,408

Cash at the beginning of reporting period - - - - -Cash from the Official Public Account for appropriations 2,098,636 2,242,332 2,363,686 2,533,066 2,591,375Cash to the Official Public Account -1,467,573 -1,424,559 -1,459,075 -1,356,350 -1,309,967Effect of exchange rate movements on cash and cash equivalents - - - - -

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

80


3.3.2 Notes to the Financial Statements

The financial statements have been prepared in accordance with the Australian Accounting Standards and the Finance Minister’s Orders.

81


3.4 CONSOLIDATED BUDGETED FINANCIAL STATEMENTS FOR THE DEPARTMENT OF DEFENCE (INCLUDING DMO)

Table 70: Consolidated Budgeted Departmental Net Cost of Service (cash) for the Department of Defence (including DMO) (for the period ended 30 June)

2013-14ActualResult

$'000

2014-15Revised

Estimate$'000


$'000


$'000


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

Employee payments 10,604,533 10,855,514 11,430,127 11,202,377 11,352,735Supplier payments 9,204,980 10,727,998 10,483,716 10,624,608 11,588,072Purchase of specialist military equipment 4,397,336 5,552,648 6,079,955 5,740,763 6,804,961Purchase of inventory 1,088,078 1,156,823 1,336,675 1,388,051 1,347,776Purchase of other property, plant and equipment 1,664,120 1,783,058 1,514,596 1,668,969 2,204,456Other cash used 1,567,392 1,892,534 1,904,424 1,879,508 1,973,418

Total cash used 28,526,439 31,968,575 32,749,493 32,504,276 35,271,418Own source receipts 1,960,186 2,362,408 2,369,659 2,193,251 2,419,996

Total cash received 1,960,186 2,362,408 2,369,659 2,193,251 2,419,996Net cost of service (cash) 26,566,253 29,606,167 30,379,834 30,311,025 32,851,422FUNDED BY

Appropriation Bill 1/3/5 (price of outcomes) 25,178,206 27,316,227 27,940,544 28,218,222 29,564,048Appropriation Bill 2/4/6 (equity injection) 1,418,385 2,346,764 2,440,165 2,161,003 3,326,530Net cash to the Official Public Account -32,441 -72,210 -875 -68,200 -39,156

Total funding source 26,564,150 29,590,781 30,379,834 30,311,025 32,851,422

Change in cash -2,103 -15,386 - - -

82


Table 71: Consolidated Comprehensive Departmental Income Statement (Showing Net Cost of Services) for the Department of Defence (including DMO) (for the period ending 30 June)

2013-14ActualResult

$'000

2014-15Revised

Estimate$'000


$'000


$'000


$'000EXPENSES

Employee benefits 10,731,306 10,891,933 11,426,115 11,236,944 11,392,100Supplier expenses 9,944,775 11,907,238 11,732,499 11,891,937 12,935,019Grants 61,796 102,888 101,153 104,048 14,759Depreciation and amortisation 3,868,705 4,299,278 4,447,319 4,757,725 5,006,666Finance costs 129,106 148,180 153,189 153,634 160,472Write-down of assets and impairment of assets 856,114 881,394 916,785 953,801 992,473Foreign exchange 21,559 - - - -Losses from sale of assets 4,340 - - 6,609 -Other 85,618 25,554 36,478 14,395 28,724

Total Expenses 25,703,319 28,256,465 28,813,538 29,119,093 30,530,213LESS:Own-source revenue

RevenueSales of goods and rendering of services 498,368 548,873 476,552 490,297 518,590Other revenue 328,446 59,533 52,041 51,067 50,991

Total own-source revenue 826,814 608,406 528,593 541,364 569,581Gains

Foreign exchange - - - - -Reversals of previous asset write-downs 293,388 313,597 328,826 344,841 361,681Sale of assets - 8,893 22,881 - 22,346Other gains 37,863 5,254 5,386 5,520 5,658

Total gains 331,251 327,744 357,093 350,361 389,685Total own-source income 1,158,065 936,150 885,686 891,725 959,266Net cost of (contribution by) services 24,545,254 27,320,315 27,927,852 28,227,368 29,570,947

Revenue from Government 25,104,952 27,320,315 27,927,852 28,227,368 29,570,947Surplus (Deficit) attributable to the Australian Government 559,698 - - - -OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Changes in asset revaluation reserves 162,667 - - - -Total other comprehensive income/(loss) 162,667 - - - -

Total Comprehensive income attributable to the Australian Government 722,365 - - - -

83


Table 72: Consolidated Budgeted Departmental Balance Sheet for the Department of Defence (including DMO) (as at 30 June)

2013-14ActualResult

$'000

2014-15Revised

Estimate$'000


$'000


$'000



Cash and cash equivalents 158,118 142,732 142,732 142,732 142,732Trade and other receivables 73,649 91,240 91,240 91,240 91,240Tax assets 196,637 196,637 196,637 196,637 196,637Appropriation receivable 589,235 171,222 158,530 199,620 244,756Other receivables 445,394 278,298 241,751 205,879 140,897

Total financial assets 1,463,033 880,129 830,890 836,108 816,262Non-financial assets

Land and buildings 16,976,931 17,373,502 18,093,955 18,663,926 19,669,742Infrastructure, plant and equipment 7,123,973 7,121,244 7,027,452 6,874,005 6,820,594Specialist military equipment 41,270,763 43,298,649 45,773,813 47,595,577 50,263,123Intangibles 819,590 832,868 798,009 757,715 702,175Heritage and cultural 1,002,312 1,002,315 1,002,315 1,002,315 1,002,315Inventories 6,385,571 6,323,134 6,265,960 6,204,022 6,130,013Prepayments 1,601,632 1,757,021 1,757,003 1,756,984 1,756,980

Total non-financial assets 75,180,772 77,708,733 80,718,507 82,854,544 86,344,942Assets held for sale 28,692 28,693 28,693 28,693 28,693


Suppliers 2,781,457 2,487,239 2,491,273 2,473,635 2,570,844Other 405,239 297,932 284,419 290,995 293,356

Total payables 3,186,696 2,785,171 2,775,692 2,764,630 2,864,200Interest bearing liabilities

Leases 1,492,541 1,427,990 1,389,392 1,349,559 1,309,701Total interest bearing liabilities 1,492,541 1,427,990 1,389,392 1,349,559 1,309,701Provisions

Employee provisions 2,467,706 2,495,281 2,504,782 2,532,773 2,569,777Restoration, decontamination and decommissioning 917,635 955,283 997,958 1,037,370 1,085,595Other 5,318 5,318 5,318 5,318 5,318

Total provisions 3,390,659 3,455,882 3,508,058 3,575,461 3,660,690Total liabilities 8,069,896 7,669,043 7,673,142 7,689,650 7,834,591NET ASSETS 68,602,601 70,948,512 73,904,948 76,029,695 79,355,306EQUITY

Contributed equity 19,396,898 21,742,809 24,182,099 26,342,205 29,667,816Reserves 14,892,641 14,892,641 14,892,641 14,892,641 14,892,641Retained surplus (accumulated deficit) 34,313,062 34,313,062 34,830,208 34,794,849 34,794,849

Total equity 68,602,601 70,948,512 73,904,948 76,029,695 79,355,306

84


Table 73: Consolidated Budgeted Departmental Statement of Cash Flows for the Department of Defence (including DMO) (for the period ended 30 June)

2013-14ActualResult

$'000

2014-15Revised

Estimate$'000


$'000


$'000



Appropriations 25,178,206 27,316,227 27,940,544 28,218,222 29,564,048Goods and services 512,278 550,031 476,574 497,780 524,154Net GST received 1,270,453 1,571,151 1,612,236 1,602,028 1,772,746Other cash received 98,675 113,073 50,941 49,967 49,891Cash transfer from the Official Public Account (receivables) 1,364,882 - - - -


Employees 10,604,533 10,855,514 11,430,127 11,202,377 11,352,735Suppliers 9,204,980 10,727,998 10,483,716 10,624,608 11,588,072Net GST paid 1,312,239 1,571,151 1,612,236 1,602,028 1,772,746Grants 61,374 102,888 101,153 104,048 14,759Other cash used 35,529 25,054 36,478 14,395 28,724Cash transfer to the Official Public Account (receivables) 1,397,323 72,210 875 68,200 39,156

Total cash used 22,615,978 23,354,815 23,664,585 23,615,656 24,796,192Net cash from (used by) operating activities 5,808,516 6,195,667 6,415,710 6,752,341 7,114,647INVESTING ACTIVITIESCash received

Proceeds from sales of land and buildings 30,223 92,317 196,359 14,127 26,495Proceeds from sales of infrastructure, plant and equipment 19,010 28,000 26,000 21,800 39,161Proceeds from sales of specialist military equipment 28,853 7,549 7,549 7,549 7,549Other cash received 694 287 - - -


Purchase of land and buildings 1,111,175 1,080,827 971,299 1,213,817 1,680,147Purchase of infrastructure, plant and equipment 509,554 583,799 470,163 394,821 475,364Purchase of specialist military equipment 4,397,336 5,552,648 6,079,955 5,740,763 6,804,961Purchase of intangibles 43,391 118,432 73,134 60,331 48,945Purchase of inventory 1,088,078 1,156,823 1,336,675 1,388,051 1,347,776Selling costs on sale of assets 6,709 6,372 5,445 4,982 5,084Finance costs 95,270 110,532 110,514 114,222 112,247

Total cash used 7,251,513 8,609,433 9,047,185 8,916,987 10,474,524Net cash from (used by) investing activities -7,172,733 -8,481,280 -8,817,277 -8,873,511 -10,401,319FINANCING ACTIVITIESCash received

Appropriations - contributed equity 1,418,385 2,346,764 2,440,165 2,161,003 3,326,530Total cash received 1,418,385 2,346,764 2,440,165 2,161,003 3,326,530Cash used

Repayment of debt 56,271 76,537 38,598 39,833 39,858Cash to the Official Public Account - - - - -

Total cash used 56,271 76,537 38,598 39,833 39,858Net cash from (used by) financing activities 1,362,114 2,270,227 2,401,567 2,121,170 3,286,672Net increase (decrease) in cash and cash equivalents held -2,103 -15,386 - - -

Cash and cash equivalents at the beginning of the reporting period 162,802 158,118 142,732 142,732 142,732Effect of exchange rate movements on cash and cash equivalents at beginning of the reporting period -2,581 - - - -


85


Table 74: Consolidated Budgeted Income and Expenses Administered on Behalf of Government for the Department of Defence (including DMO) (for the period ended 30 June)

2013-14ActualResult

$'000

2014-15Revised

Estimate$'000


$'000


$'000



Interest 30,067 29,636 30,936 32,866 34,175Dividends 53,991 50,128 50,476 57,390 54,331Military superannuation contributions 1,242,121 1,288,892 1,331,754 1,231,718 1,184,913Fees 13,448 13,953 14,511 15,092 15,695Foreign exchange 415 - - - -Other 71,717 29,967 31,652 26,143 20,589

Total non-taxation 1,411,759 1,412,576 1,459,329 1,363,209 1,309,703Total revenues administered on behalf of Government 1,411,759 1,412,576 1,459,329 1,363,209 1,309,703EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT

Write-down and impairment of assets 563 - - - -Subsidies 93,641 104,532 121,642 138,316 151,777Military retention benefits 65,570 95,883 77,940 93,000 105,540Military superannuation benefits 12,851,141 5,802,000 4,920,967 4,987,278 5,105,346

Total expenses administered on behalf of Government 13,010,915 6,002,415 5,120,549 5,218,594 5,362,663

86


Table 75: Consolidated Budgeted Assets and Liabilities Administered on Behalf of Government for the Department of Defence (including DMO) (as at 30 June)

2013-14ActualResult

$'000

2014-15Revised

Estimate$'000


$'000


$'000



Cash and cash equivalents - - - - -Trade and other receivables 76,780 64,548 64,552 71,161 70,647Investments accounted for using the equity method 2,337,796 2,317,032 2,373,768 2,432,907 2,496,965Loans 509,580 509,580 529,580 569,580 569,580

Total financial assets 2,924,156 2,891,160 2,967,900 3,073,648 3,137,192Non-financial assets

Prepayments 163,019 161,036 189,496 237,896 253,956Total non-financial assets 163,019 161,036 189,496 237,896 253,956Total assets administered on behalf of Government 3,087,175 3,052,196 3,157,396 3,311,544 3,391,148

PayablesOther 7,169 7,169 7,169 7,169 7,169

Total payables 7,169 7,169 7,169 7,169 7,169Provisions

Superannuation - DFRB[1] 587,100 477,100 454,200 431,600 409,500Superannuation - DFRDB[2] 40,692,000 30,756,000 31,048,000 31,300,000 31,507,000Superannuation - MSBS[3] 41,598,000 28,101,878 30,627,149 33,043,115 35,637,000

Total provisions 82,877,100 59,334,978 62,129,349 64,774,715 67,553,500Total liabilities administered on behalf of Government 82,884,269 59,342,147 62,136,518 64,781,884 67,560,669


LIABILITIES ADMINISTERED ON BEHALF OF GOVERNMENT

87


Table 76: Consolidated Budgeted Administered Statement of Cash Flows for the Department of Defence (including DMO) (for the period ended 30 June)

2013-14ActualResult

$'000

2014-15Revised

Estimate$'000


$'000


$'000



Interest 30,073 29,636 30,936 32,866 34,175Military superannuation contributions 1,303,030 1,288,892 1,331,754 1,231,718 1,184,913Fees 15,707 13,953 14,511 15,092 15,695Other 71,776 38,337 31,996 26,448 18,044


Subsidies paid 93,553 104,532 121,642 138,316 151,777Military benefits 2,005,083 2,137,800 2,222,044 2,354,750 2,439,598

Total cash used 2,098,636 2,242,332 2,343,686 2,493,066 2,591,375Net cash from or (used by) operating activities -678,050 -871,514 -934,489 -1,186,942 -1,338,548INVESTING ACTIVITIESCash received

Dividends 51,264 53,991 50,128 50,476 57,390Total cash received 51,264 53,991 50,128 50,476 57,390Cash used

Loans - - 20,000 40,000 -Total Cash used - - 20,000 40,000 -Net cash from (used by) investing activities 51,264 53,991 30,128 10,476 57,390Net increase (decrease) in cash held -626,786 -817,523 -904,361 -1,176,466 -1,281,158

Cash at the beginning of reporting period - - - - -Cash from the Official Public Account for appropriations 2,098,636 2,242,332 2,363,686 2,533,066 2,591,375Cash to the Official Public Account -1,471,850 -1,424,809 -1,459,325 -1,356,600 -1,310,217Effect of exchange rate movements on cash and cash equivalents - - - - -

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

88


APPENDICES

Appendix A Defence Cooperation Programme

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

Appendix C Major Capital Facilities Programme

Appendix D Approved Projects Being Developed for Private Financing Arrangements

Appendix E Status of Major Projects Foreshadowed for Government and Parliamentary Standing Committee on Public Works Consideration (PWC) in 2014-15

89


APPENDIX A: DEFENCE COOPERATION PROGRAMME

No changes have been made to the Defence Cooperation Programme since the Portfolio Budget Statements 2014-15.

90


APPENDIX B: THE UNAPPROVED MAJOR CAPITAL INVESTMENT PROGRAMME (ALSO KNOWN AS THE DEFENCE CAPABILITY PLAN)

No changes have been made to the Unapproved Major Capital Investment Programme since the Portfolio Budget Statements 2014-15.

Major Projects Recently Approved by Government

Tables 77, 78 and 79 identify major projects that have been approved since publication of the PBS 2014-15.

Table 77: Significant Defence Capability Plan Projects with First Pass Approval

Project Number Project TitleLAND 154 Phase 2 Joint Counter Improvised Explosive Device CapabilityLAND 400 Phase 2 Land Combat Vehicle SystemSEA 1397 Phase 5B Nulka Missile Decoy EnhancementsSEA 1352 Phase 1 Evolved Sea Sparrow Missile Upgrade and Inventory Replacement

Table 78: Significant Defence Capability Plan Projects with Second Pass Approval

Project Number Project TitleAIR 5349 Phase 3 EA-18G Growler Enabling CapabilitiesAIR 5431 Phase 1 Deployable Defence Air Traffic Management and Control SystemAIR 5431 Phase 2 Fixed Base Defence Air Traffic Management System: SensorsAIR 5431 Phase 3 Civilian Military Air Traffic Management SystemJP 2097 Phase 1B Enhancements to Special Operations CapabilityJP 5408 Phase 3 ADF Navigation Warfare Capability (Platforms) Tranche 2JP 9000 Phase 7 Helicopter Aircrew Training SystemLAND 17 Phase 1C.1 Lightweight Towed Howitzer Capability Assurance ProgrammeLAND 125 Phase 3B Soldier Enhancement Version 2 - SurvivabilityLAND 998 Phase 1 Replacement Aviation FiretrucksLAND 2089 Phase 3B Data Links – Armed Reconnaissance Helicopter

Table 79: Other Defence Capability Plan Projects with an Approval

Project Number Project TitleLAND 17 Phase 1C.2 Future Artillery AmmunitionSEA 1000 Future Submarine (Interim Funding)SEA 1439 Phase 6 Collins Sonar ObsolescenceSEA 3036 Phase 1 Pacific Patrol Boat ReplacementSEA 5000 Phase 1 Future Frigate

91


APPENDIX C: MAJOR CAPITAL FACILITIES PROGRAMME Information is as reported in the PBS 2014-15.Approved Major Capital Facilities Projects

Table 80: Approved Major Capital Facilities Projects by State and Federal Electorate

State and Electorate

TotalEstimated

Expenditure$m

EstimatedCumulative

Expenditureto 30 J une 2014

$m

2014-15Budget

Estimate$m


$mVariation

$m Project Performance Update and Explanation of VariationFacilities in support of the New Air Combat Capability [5]

RAAF Williamtown NSW - Newcastle 1,460.4 - - 63.0 63.0 Project has been approved since the Portfolio Budget Statements 2014-15Enhanced Land Force Stage 2 Works [1]

Lone Pine Barracks NSW - Hunter - 111.6 9.9 9.4 -0.6The financial variation is a result of reduced activity onsite due to higher than expected rainfall.

Puckapunyal Training Area VIC - McEwan - 0.0 7.9 1.0 -6.9 The financial variation is a result of savings realised in the delivery of the works.

Simpson Barracks, Watsonia VIC - Jagajaga - 21.2 - 0.1 0.1 The financial variation is a result of contract completion.

RAAF Amberley QLD - Blair - 9.6 - -

Lavarack Barracks, Townsville QLD - Herbert - 65.1 - -

Townsville Training Area QLD - Kennedy - 3.9 - -

Greenbank Training Area QLD - Rankin- 119.3 2.1 3.3 1.2

The financial variation is the result of additional infrastructure design and construction necessary to meet approved capability requirements.

Gallipoli Barracks, Enoggera QLD - Ryan- 794.6 22.1 26.5 4.5

The financial variation is a result of the opportunity to deliver construction works earlier than planned.

Wide Bay Training Area QLD - Wide Bay- 68.6 18.8 17.1 -1.7

The financial variation is the result of reduced construction onsite while environmental assessment outcomes were addressed.

Kokoda Barracks, Canungra QLD - Wright- 67.1 0.0 1.8 1.8

The financial variation is a result of additional costs to deliver Information Communications Technology works.

Cultana Training Area SA - Grey- 0.3 0.8 6.1 5.3

The financial variation is a result of the opportunity to deliver construction works earlier than planned.

RAAF Edinburgh SA - Wakefield - 35.3 - 0.2 0.2 The financial variation is a result of contract completion.

Majura Field Training Area ACT - Fraser - 22.4 - -Total 1,457.8 1,319.1 61.7 65.5 3.9

92


Table 80 (Continued): Approved Major Capital Facilities Projects by State and Federal Electorate


TotalEstimated

Expenditure$m

EstimatedCumulative


$m

2014-15Budget

Estimate$m


$mVariation

$m Project Performance Update and Explanation of Variation

Defence Logistics Transformation Programme [1]

Defence National Storage & Distribution Centre, Moorebank NSW - Hughes -

188.8 27.7 12.0 -15.7 The financial variation is a result of savings realised in the delivery of the works.

Wadsworth Barracks, Bandiana VIC - Indi -21.5 43.2 49.6 6.4

The financial variation is the result of additional work undertaken to meet approved capability requirements.

RAAF Amberley QLD - Blair- 89.8 59.9 51.0 -8.9 The financial variation is a result of savings realised in the delivery of the works.

Townsville QLD - Herbert -35.1 59.0 54.5 -4.5 The financial variation is a result of savings realised in the delivery of the works.

RAAF Edinburgh SA - Wakefield- 0.5 16.2 21.2 5.1

The financial variation is the result of additional work undertaken to deliver an associated and separately approved capability requirement.

HMAS Stirling, Rockingham WA - Brand- - - 10.1 10.1

The financial variation is the result delivery schedule reprogramming allowing work at this site to be brought forward to financial year 2014-15.

Robertson Barracks NT - Solomon- 109.6 27.1 23.1 -4.0 The financial variation is a result of savings realised in the delivery of the works.

Total 752.7 445.3 233.1 221.5 -11.6Moorebank Units Relocation [2]

Steele Barracks, Moorebank NSW - Hughes 352.9 163.0 121.7 105.2 -16.6 The financial variation is a result of savings realised in the delivery of the works.

Albatross Redevelopment Stage 3

HMAS Albatross, Nowra NSW - Gilmore192.0 22.7 62.6 51.0 -11.6

The financial variation is a result of changes to the forecast phasings that has allowed better synchronisation with other projects being delivered at HMAS Albatross.

Facilities for MH-60R Seahawk Maritime Combat Helicopters [1]

HMAS Albatross, Nowra NSW - Gilmore 71.4 73.5 73.8 0.3The financial variation is the result of remediation of unforeseen in-ground conditions.

HMAS Stirling, Rockingham WA - Brand 5.2 5.8 6.0 0.2The financial variation is the result of additional construction work to fully meet the approved capability requirement.

Total 189.0 76.6 79.3 79.8 0.5


93



TotalEstimated

Expenditure$m

EstimatedCumulative


$m

2014-15Budget

Estimate$m


$mVariation

$m Project Performance Update and Explanation of VariationEast Sale Redevelopment

RAAF East Sale VIC - Gippsland 185.6 65.3 102.1 100.9 -1.2 The financial variation is a result of delays in finalising subcontracts.

JP2047 Phase 3 Defence Terrestrial Communications Network Facilities Upgrade [3][5]

National 131.1 - - 60.3 60.3 Project has been approved since the Portfolio Budget Statements 2014-15.

Facilities for Air Warfare Destroyer (SEA 4000)

Garden Island NSW - Wentworth 109.9 16.0 79.9 74.4 -5.5The financial variation reflects the required expenditure phasing based on the current delivery programme.

Defence Force School of Signals

Simpson Barracks, Watsonia VIC - Jagajaga 101.3 92.3 8.9 0.3 -8.6The financial variation is a result of delays due to investigation of value for money delivery options for the final scope element.

ADFA Redevelopment

ADFA ACT - Fraser 98.5 73.0 20.9 17.3 -3.6 The financial variation is a result of savings realised in the delivery of the works.

Airfield Capital Works [1]

RAAF Base Williams VIC - Lalor - - 14.0 6.2 -7.8 The financial variation is a result of savings realised in the delivery of the works.

Woomera Aerodrome SA - Grey - - 27.0 32.0 5.0The financial variation is the result of remediation of unforseen in-ground conditions.

RAAF Base Edinburgh SA - Wakefield - - 25.0 13.4 -11.6 The financial variation is a result of savings realised in the delivery of the works.

Total 66.0 - 66.0 51.6 -14.4


94



TotalEstimated

Expenditure$m

EstimatedCumulative


$m

2014-15Budget

Estimate$m


$mVariation


Joint Project (JP) 3029 Phase 2 Space Telescope [5]

Harold E Holt, Exmouth WA - Durack 63.0 - - 4.2 4.2 Project has been approved since the Portfolio Budget Statements 2014-15.

Facilities for Landing Helicopter Dock ships (JP2048)

Garden Island NSW - Wentworth 60.3 5.0 39.6 45.5 5.9The financial variation is the result of additional work undertaken to meet approved capability requirements.

AIR 9000 Phase 5C Replacement Chinook Facilities Project [5]

RAAF Townsville QLD - Herbert 49.8 - - 13.4 13.4 Project has been approved since the Portfolio Budget Statements 2014-15.DSTO Fishermans Bend - Human Protection and Performance Division Security and Facilities Upgrade [5]

Fishermans Bend VIC - Melbourne Ports 41.1 - - 14.5 14.5

The financial variation is a result of earlier than expected contract award and construction start up.

Liverpool Military Area High Voltage Reticulation Systems Upgrade

Liverpool Military Area NSW - Hughes 19.6 16.6 2.1 5.0 2.8The financial variation is a result of the opportunity to deliver construction works earlier than planned.

JP 154 Facilities for Joint Counter Improvised Explosive Device Capability Stage 2 - Nurrungar [5]

Woomera SA - Grey14.2 - - 4.5 4.5 Project has been approved since the Portfolio Budget Statements 2014-15.


95



TotalEstimated

Expenditure$m

EstimatedCumulative


$m

2014-15Budget

Estimate$m


$mVariation


JP 154 Facilities for Joint Counter Improvised Explosive Device Capability Stage 2 - Other Sites [1]

Defence National Storage & Distribution Centre, Moorebank NSW - Hughes - - 1.3 - -1.3

Holsworthy Barracks, Holsworthy NSW - Hughes - - - 1.2 1.2

Singleton Training Area NSW - Hunter - - 0.5 0.6 0.1

Wadsworth Barracks, Bandiana VIC - Indi - - 0.5 0.8 0.3

Simpson Barracks, Watsonia VIC - Jagajaga - 1.5 0.8 2.3 1.5

Kokoda Barracks, Canungra QLD - Forde - - 0.8 - -0.8

Townsville Training Area QLD - Herbert - - 0.9 1.0 0.1

Gallipoli Barracks, Enoggera QLD - Ryan - - - 0.6 0.6

Cultana Training Area SA - Grey - - 0.7 - -0.7

Edinburgh Defence Precinct SA - Wakefield - 1.8 0.8 - -0.8

Campbell Barracks, Perth WA - Curtin - - 0.7 1.0 0.3

RAAF Darwin NT - Solomon - - 1.0 0.7 -0.3Total 13.4 3.3 8.0 8.0 0.0

The financial variations across multiple sites are as a result of numerous minor changes to the delivery of the approved capability requirement.


96



TotalEstimated

Expenditure$m

EstimatedCumulative


$m

2014-15Budget

Estimate$m


$mVariation


Low Level Bridge Repair

Fleet Base West, Stirling WA - Brand 12.8 - 8.1 2.5 -5.6The financial variation is the result of delays due to reassessment of the contracting methodology in order to reduce delivery risk.

2nd Cavalry Regiment Relocation Facilities [5]

Lavarack Barracks, Townsville QLD - Herbert 12.6 - - 12.6 12.6 Project has been approved since the Portfolio Budget Statements 2014-15.

Flood Mitigation [5]

RAAF Darwin NT - Solomon 9.9 0.1 2.5 2.6 0.1The financial variation is the result of additional investigations required to finalise site selection.

Land 998 Phase 1 Replacement Aviation Fire Truck [1][5]

RAAF Richmond NSW - Greenway - - - 0.3 0.3

RAAF Williamtown NSW - Newcastle - - - 0.3 0.3

RAAF Amberley QLD - Blair - - - 0.3 0.3

Lavarack Barracks, Townsville QLD - Herbert - - - 0.3 0.3


Robertson Barracks NT - Solomon - - - 0.3 0.3

RAAF Tindal NT - Lingiari - - - 0.3 0.3

Total 9.6 - - 1.8 1.8 Project has been approved since the Portfolio Budget Statements 2014-15.


97



TotalEstimated

Expenditure$m

EstimatedCumulative


$m

2014-15Budget

Estimate$m


$mVariation

$m Project Performance Update and Explanation of VariationThermal Test Facility

Fishermans Bend VIC - Melbourne Ports 9.2 0.3 8.4 6.0 -2.4

The financial variation is a result of delays in negotiation of delivery phase contracts.

Australian Operational Concept Contingency and Stores [1]

RAAF Williams VIC - Lalor - - 0.8 0.5 -0.3 The financial variation is a result of delays in finalising delivery phase contracts.

RAAF Amberley QLD - Blair - 0.1 0.9 - -0.9This work package is no longer required as the Defence Logistics Transformation Programme satisfies the facilities requirement at this location.

RAAF Townsville QLD - Herbert - 0.2 1.5 0.5 -1.0 The financial variation is a result of delays in finalising delivery phase contracts.

RAAF Edinburgh SA - Wakefield - 0.1 0.9 - -0.9This work package is no longer required as the Defence Logistics Transformation Programme satisfies the facilities requirement at this location.

Derwent Barracks, Glenorchy TAS - Denison - 0.8 0.6 0.5 -0.1 The financial variation is a result of savings realised in the delivery of the works.

RAAF Darwin NT - Solomon - - 2.0 0.5 -1.5 The financial variation is a result of delays in finalising delivery phase contracts.

Total 7.9 1.2 6.7 2.1 -4.6


98



TotalEstimated

Expenditure$m

EstimatedCumulative


$m

2014-15Budget

Estimate$m


$mVariation


AIR 8000 Battlefield Airlifter Interim Facilities [5]

RAAF Base Richmond NSW - Greenway 6.1 0.2 5.4 5.4 0.0

Gallipoli Barracks New Entrance [5]

Gallipoli Barracks, Enoggera QLD - Ryan 4.8 - - 2.6 2.6 Project has been approved since the Portfolio Budget Statements 2014-15.

Potable Water Supply Upgrade

RAAF Pearce WA - Pearce 4.6 0.8 2.2 0.6 -1.6

The financial variation is a result of delays due to additional surveys undertaken to ensure design meets the requirement.

RAAF Amberley Behms Road Upgrade [5]

RAAF Amberley QLD - Blair 4.5 - - 4.5 4.5 Project has been approved since the Portfolio Budget Statements 2014-15.

Porton Barracks Redevelopment [5]

Porton Barracks, Edmonton QLD - Edmonton 4.3 - - 1.4 1.4 Project has been approved since the Portfolio Budget Statements 2014-15.Support Facilities Landing Helicopter Dock (LHD) Landing Crafts

HMAS Waterhen NSW - Wentworth 3.9 1.2 2.5 2.3 -0.2The financial variation is the result of changed site conditions and subsequent delays to reassess and confirm the approved scope elements.


99



TotalEstimated

Expenditure$m

EstimatedCumulative


$m

2014-15Budget

Estimate$m


$mVariation

$m Project Performance Update and Explanation of VariationJP154 Phase 3A Ningaui Australian Protected Route Clearance [1][5]

Holsworthy Barracks, Holsworthy NSW - Hughes - - - 0.5 0.5

Lavarack Barracks, Townsville QLD - Herbert - - - 1.0 1.0


Robertson Barracks NT - Solomon - - - 0.9 0.9

Total 3.3 - - 3.3 3.3Projects in or about to enter Defects Liability Period [4] 13.8 38.1 24.3Total 5,452.0 2,301.9 935.3 1,071.4 136.0Notes

Project has been approved since the Portfolio Budget Statements 2014-15.

1. These projects cross state and electoral boundaries. Estimated cumulative expenditure to 30 J une 2014 and expenditure estimates for 2014-15 are provided in the table per location.

3. This project is delivering facilities at over 200 locations that cross state and electoral boundaries.

2. This amount represents the Defence funded element of the Moorebank Units Relocation Project. The Department of Finance are funding the remaining element of $517.1m with a total approved project value of $870.0m.

5. Project has been approved since publication of Portfolio Budget Statements 2014-15.

4. This amount represents the expenditure estimates for contract administration of 38 completed projects during their first year in-use and construction completion of five medium works projects that are under the $2m reporting threshold to the Public Works Committee.

100


New South Wales

Information is as reported in the PBS 2014-15.

Queensland

Facilities for Chinook Helicopter (AIR 9000 Phases 5B and 5C)

The 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, QLD. Construction commenced in late 2014 and is scheduled for completion by mid 2017.

Victoria

Watsonia - Defence Force School of Signals

This project will provide new working accommodation, improved security arrangements and upgraded living-in accommodation for the Defence Force School of Signals at Simpson Barracks. Construction commenced in October 2008. The Living-In Accommodation and other major components of the project are now complete. Remaining scope elements are scheduled for completion by late 2017.

DSTO Fishermans Bend - Human Protection Performance and Security

The project will provide new and upgraded site security and will rectify identified working accommodation shortfalls within Human Protection Performance Division facilities located at the Defence Science and Technology Organisation site at Fishermans Bend (Melbourne, VIC). The project is scheduled for completion by early 2016.

South Australia

Joint Project (JP) 154 Facilities for Joint Counter Improvised Explosive Device Capability – Phase 1 Stage 1 - Nurrungar

The project will provide test and evaluation facilities at Nurrungar (Woomera, SA). Construction is planned to commence in mid 2015 and be completed in mid 2016.

Australian Capital Territory

Information is as reported in the PBS 2014-15.

Western Australia

JP 3029 Phase 2 Space Telescope

The project will provide new facilities and infrastructure at the Harold E. Holt Naval Communications Station to house a space surveillance telescope which is being provided by the US. Construction is planned to commence in mid 2015 and be completed in late 2016.

101


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 and seven forward operating bases. Construction commenced in early 2015 and be completed by late 2022.

Defence Terrestrial Communications Network Facilities Upgrade (JP 2047)

The 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. Construction commenced in late 2014 and is scheduled for completion by mid 2016.

JP 154 Facilities for Joint Counter Improvised Explosive Device Capability – Phase 1 Stage 2 - Other sites

The project will provide test and evaluation facilities at Edinburgh (Adelaide, South Australia), plus storage and training facilities at 14 other sites across Australia in support of the ADF’s counter IED capability. The project is scheduled for completion by mid 2016.

102


APPENDIX D: APPROVED PROJECTS BEING DEVELOPED FOR PRIVATE FINANCING ARRANGEMENTS

Project Single Living Environment and Accommodation Precinct (Single LEAP Phase 2)

Information is as reported in the Portfolio Budget Statements 2014-15.

103


APPENDIX E: STATUS OF MAJOR PROJECTS FORESHADOWED FOR GOVERNMENT AND PARLIAMENTARY STANDING COMMITTEE ON PUBLIC WORKS CONSIDERATION (PWC) IN 2014-15

During 2014-15, Defence expects to present a number of facilities proposals to the Government and the Parliamentary Standing Committee on Public Works (PWC). Table 81 provides details of the eighteen proposed major and medium capital projects expected to be referred to the PWC in 2014-15 or seek Government approval in 2014-15. In some cases, the projects may require the Government's approval before referral to the PWC.

Table 81: Programme of Works Foreshadowed for Consideration and Approval

State/Electorate

Actual/IndicativePWC Referral

Date

Actual/IndicativePWC Hearing

Date[1] Current StatusCapital Facilities Projects Foreshadowed for PWC Consideration in 2014-15

RAAF Base Williamtown Redevelopment Stage 2 NSW - Newcastle Early 2015 Mid 2015 In development

Facilities for Chinook Helicopter (Air 9000 Phases 5B and 5C) QLD - Herbert Early 2014 Mid 2014 Approved

AIR 6000 New Air Combat Capability (NACC) Multiple Mid 2014 Mid 2014 Approved

Defence Terrestrial Communications Network Upgrade (Joint Project (JP) 2047) Multiple Mid 2014 Mid 2014 ApprovedFacilities for Joint Counter Improvised Explosive Device Capability - Phase 1 Stage 1 - Nurrungar (Joint Project (JP) 154) SA - Grey Mid 2014 Mid 2014 Approved

Space Telescope (Joint Project (JP) 3029) Multiple Late 2014 Late 2014 Approved

AIR 9000 Helicopter Aircrew Training System Multiple Late 2014 Early 2015 Referred

AIR 7000 Phase Maritime Patrol Aircraft Multiple Late 2014 Early 2015 Referred

Campbell Barracks Redevelopment WA - Curtin Late 2014 Early 2015 In development

Darwin Hardened Barge Ramp NT - Solomon Early 2015 Mid 2015 In developmentAir Traffic Control Complex Infrastructure Project and AIR5431 ph2/3 Fixed Base Defence Air Traffic Management and Control System Multiple Early 2015 Mid 2015 In development

17th Construction Squadron Relocation Project QLD - Blair Mid 2015 Mid 2015 In development

Medium Projects Foreshadowed to Seek Approval in 2014-15

Army Emergency Response Facilities, Luscombe Airfield - Holsworthy NSW - Hughes In development

Samford Road - Gallipoli Barracks EnoggeraQLD - Ryan

Approved

Cyber Security Operational Centre (COSC) Refurbishment - Russell Offices

ACT - FraserApproved

Proof & Experimental Establishment (P&EE) Road and Car Park Upgrade - Graytown

VIC - MurrayIn development

Proof & Experimental Establishment (P&EE) Vibration Test Facility - Port Wakefield

SA - WakefieldIn development

Joint Project (JP) 154 Phase 3A (Project Nigaui) Australian Protected Route Clearance Capability

MultipleApproved

Note1. Hearing dates will be subject to the Committee's consideration and agreement.

104


RAAF Base Williamtown Redevelopment Stage 2

The project will sustain and improve the functionality and capability of RAAF Base Williamtown (Newcastle, NSW) including upgrades or replacement of critical ageing infrastructure to meet future requirements. Subject to Government and Parliamentary approval, construction is scheduled to commence in mid 2016 and be completed by mid 2021.

Facilities for Chinook Helicopter (Air 9000 Phases 5B and 5C)

The 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, QLD. Construction commenced in late 2014 and is scheduled for completion in mid 2017.

AIR 6000 New Air Combat Capability

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 and seven forward operating bases. Construction commenced in early 2015 and is scheduled for completion by late 2022.

Defence Terrestrial Communications Network Facilities Upgrade (Joint Project (JP) 2047)

The 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. Construction commenced in late 2014 and is scheduled for completion by mid 2016.

JP 154 Facilities for Joint Counter Improvised Explosive Device Capability – Phase 1 Stage 1 - Nurrungar

The project will provide test and evaluation facilities at Nurrungar (Woomera, SA). Construction is planned to commence in mid 2015 and is scheduled for completion in mid 2016.

JP 3029 Phase 2 Space Telescope

The project will provide new facilities and infrastructure at the Harold E. Holt Naval Communications Station to house a space surveillance telescope from the US. Subject to Government and Parliamentary approval, construction is planned to commence in mid 2015 and be completed in late 2016.

AIR 9000 Phase 7 Helicopter Aircrew Training System

The 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, Nowra NSW as well as communication rooms and helicopter operation areas at Jervis Bay Air field, ACT. Subject to Parliamentary approval, construction is scheduled to commence in mid 2015 and be completed in mid 2017.

105


AIR 7000 Maritime Patrol Aircraft Phase 2B

The project will provide new and upgraded facilities and infrastructure to support the introduction of the P-8A aircraft at RAAF Base Edinburgh, RAAF Base Townsville, RAAF Base Pearce and RAAF Base Darwin. Subject to Parliamentary approval, construction is planned to commence in late 2015 and be completed by mid 2020.

Campbell Barracks Redevelopment

The 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. Subject to Government and Parliamentary approval, construction is planned to commence in late 2015 and be completed by late 2018.

Darwin Hardened Barge Ramp

The project will provide funding to the Northern Territory Government’s Land Development Corporation for the construction and sustainment of a multi-user barge ramp facility at East Arm Port in Darwin. The Facility will support mounting operations for the new Canberra Class Landing Helicopter Dock Ships. Subject to Government and Parliamentary approval, construction is planned to commence in mid 2015 and be completed by mid 2016.

Air Traffic Control Complex Infrastructure Project and AIR5431 ph2/3 Fixed Base Defence Air Traffic Management and Control System

The project will provide facilities in support of replacement Air Traffic Management Surveillance, Command and Control Systems under AIR5431 Phases 2 and 3, including the replacement of aged and degraded Air Traffic Control Towers. Subject to Government and Parliamentary approval, construction is planned to commence in late 2015 and be completed by late 2021.

17th Construction Squadron Relocation Project

The project will provide facilities to collocate 17th Construction Squadron with 6th Engineer Support Regiment and 21st Construction Squadron at RAAF Base Amberley. Subject to Government and Parliamentary approval, construction is planned to commence in late 2015 and be completed by late 2016.

106

Defence Materiel Organisation


Section 1: DMO Overview and Resources

1.1 Strategic Direction Statement

1.2 DMO Resource Statement

1.3 DMO Measures and Other Adjustments

1.4 Breakdown of Additional Estimates by Appropriation Bill

1.5 People

Section 2: DMO Outcomes and Planned Performance

2.1 Outcomes and Performance Information

Section 3: DMO Explanatory Tables and Budgeted Financial Statements

3.1 Explanatory Tables

3.2 DMO Budgeted Financial Statements

107


108


DEFENCE MATERIEL ORGANISATION

Section 1: DMO Overview and Resources


The DMO is continuing to implement key elements of the DMO 2013-15 Strategic Framework through pursuit of the following four change priorities:

1 Deliver acquisition and sustainment more efficiently.

2 Interact with reviews.

3 Streamline internal processes.

4 Reform the DMO.

These priorities are used to focus the DMO’s improvement activities on the means to sustainably deliver the outcomes agreed with capability managers, without compromising safety and within available resourcing.

In August 2014, the Minister announced the Defence First Principles Review. The DMO is supporting and participating in this Review which will consider many of Defence's current and future challenges. The Review will also seek to find further improvements in the DMO's delivery of capability to the Australian Defence Force (ADF).

109


Figure 4: The DMO Organisational Structure as at 5 January 2015

110


Organisational Structure

The following changes have taken place since the Portfolio Budget Statements 2014-15:

Helicopter Systems Division has been renamed Helicopters, Tactical Unmanned Aerial Systems and Guided Weapons Division and remains reporting to General Manager Joint, Systems and Air.

Guided Weapons Branch has been incorporated into Helicopters, Tactical Unmanned Aerial Systems and Guided Weapons Division.

Munitions Branch has been incorporated into Land Systems Division.

Senior Executive Changes

The following changes have taken place since the Portfolio Budget Statements 2014-15:

In August 2014, Mr Mark Reynolds, Head Business Operations Division, returned from extended leave.

In November 2014, Mr Michael Aylward vacated the position of Head Electronic Systems Division.

111


1.2 DMO RESOURCE STATEMENT

Resourcing For 2014-15

The following table shows the total resources from all sources to support the delivery of the DMO Outcome.

Table 82: DMO Resource Statement- for the 2014-15 Additional Estimates

Estimateas at Budget

2014-15$'000

+ProposedAdditional Estimate2014-15

$'000

=

TotalEstimate at Additional Estimates

2014-15$'000

TotalAvailable

Appropriation2013-14

$'000ORDINARY ANNUAL SERVICESDepartmental appropriation

Prior year departmental appropriation[1] 250,203 78,913 329,116 247,136Departmental appropriation[2] 881,031 -1,439 879,592 907,791

Total Departmental appropriation 1,131,234 77,474 1,208,708 1,154,927A Total Ordinary Annual Services 1,131,234 77,474 1,208,708 1,154,927

Total Available Annual Appropriations 1,131,234 77,474 1,208,708 1,154,927Special Accounts

Opening balance[3] 250,203 78,913 329,116 247,136Appropriation receipts[4] 881,031 -1,439 879,592 907,791Appropriation receipts - other agencies[5] 11,664,460 -198,586 11,465,874 9,988,618Non-Appropriation receipts to Special Accounts 60,525 -58,460 2,065 96,413

B Total Special Accounts 12,856,219 -179,572 12,676,647 11,239,958Total Resourcing (A + B) 13,987,453 -102,098 13,885,355 12,394,885Less appropriations drawn from annual appropriations above and credited to special accounts 1,131,234 77,474 1,208,708 1,154,927Total Net Resourcing for DMO 12,856,219 -179,572 12,676,647 11,239,958

Notes

Reader Note: All figures are GST exclusive

4. Direct appropriation for Workforce and Operating Expenses. 5. Appropriation receipts from Defence credited to the DMO's special account.

1. Estimated adjusted balance carried forward from previous year. 2. Appropriation Bill (No. 1) 2014-15. 3. Estimated opening balance for special account.

112


Table 83: Third Party Payments from and on Behalf of Other Agencies

Estimate as at Budget 2014-

15$'000

Estimate as at Additional

Estimates 2014-15

$'000Receipts received from the Department of Defence for the provision of goods and services 11,664,460 11,465,874

Payments made to the Department of Defence for the provision of services[1] 273,102 273,748

Note

1. Primarily relates to the payment of military staff posted to the DMO and services provided by the Department of Defence to the DMO in accordance with the Defence Services Agreement.

113


1.3 DMO MEASURES AND OTHER ADJUSTMENTS

Table 84: DMO 2014-15 Measures and Other Adjustments

Programme Impacted

2014-15$'000

2015-16$'000

2016-17$'000

2017-18$'000

Outcome 1

Other AdjustmentsChange in Estimates (Departmental)

Adjustments to agreed level of activity All -1,439 -1,540 -1,649 -1,707Total -1,439 -1,540 -1,649 -1,707

114


1.4 BREAKDOWN OF ADDITIONAL ESTIMATES BY APPROPRIATION BILL

The following table details changes sought by the DMO during the 2014-15 Additional Estimates. The DMO will decrease the Departmental appropriation by $1.439m due to transfers to Defence.

Table 85: Appropriation Bill (No.3) 2014-15

2013-14Available

$'000

2014-15 Budget

$'000

2014-15 Revised

$'000

Additional Estimates

$'000

Reduced Estimates

$'000Departmental ProgrammesOutcome 1Contributing to the preparedness of Australian Defence Organisation through acquisition and through-life support of military equipment and supplies 907,791 881,031 879,592 - 1,439Total 907,791 881,031 879,592 - 1,439

115


1.5 PEOPLE

Workforce Summary

The DMO combined APS, ADF, and Contractor workforce forecast is 6,366. This is a decrease of 238 in comparison with the 2014-15 budget estimates of 6,604. It is important to note that the DMO manages its workforce under a total workforce model in which the DMO workforce comprises a combined ADF, APS, and Contractor total. Under DMO’s approved total workforce model it is able to employ additional civilian staff to fill positions that cannot be filled by ADF members with appropriate skills and experience, which may lead to DMO exceeding its budgeted APS workforce even though its overall workforce (civilian + military + contractors) is within agreed parameters. Therefore, the overall total workforce should be viewed in its entirety.

Table 86: DMO Consolidated Workforce Statement

2014-15 Budget

estimate

2014-15 Revised estimate

Variation 2015-16 Forward estimate



ADF Permanent Force[1]

Navy 314 325 11 364 368 368

Army 364 365 1 492 497 494

Air Force 669 683 14 944 957 956

1 Sub Total Permanent Force 1,347 1,373 26 1,800 1,822 1,818 Civilian Employees

APS[2] 4,777 4,539 -238 5,108 5,143 5,100

APS – ADF backfill 432 406 -26 – – –

2 Total APS 5,209 4,945 -264 5,108 5,143 5,100 3 Contractors[3] 48 48 - 46 46 44

4 Total Civilian Employees (2 + 3) 5,257 4,993 -264 5,154 5,189 5,144

Total Workforce Strength (1 + 4) 6,604 6,366 -238 6,954 7,011 6,962

Notes

1. Numbers for ADF Permanent Force include Reservists on full-time service.

2. Pending the Government's direction resulting from the Defence First Principles Review and the 2015 Defence White Paper, the basis for workforce planning for the DMO continues to be the extant workforce budget published in the Portfolio Budget Statements 2014-15 to deliver the Defence Capability Plan.


116


Table 87: Breakdown of Personnel Numbers by Service and Rank Including APS and Contractors.

2014-15 Budget Estimate


Navy[1] One Star and above[2] 9 9 Senior Officers[3] 56 58

Officers 132 134 Other Ranks 117 124 Total Navy 314 325 Army[1] One Star and above[2] 5 6 Senior Officers[3] 62 60

Officers 156 152 Other Ranks 141 147 Total Army 364 365 Air Force[1] One Star and above[2] 8 8 Senior Officers[3] 90 91 Officers 329 340 Other Ranks 242 244 Total Air Force 669 683 APS[1] Senior Executives[2] 35 35 Senior Officers[3] 1,660 1,458 Other APS Staff 3,082 3,046 Sub-total APS 4,777 4,539 APS – ADF Backfill 432 406 Total APS 5,209 4,945 Contractors[1] Contractors[4] 48 48

Total Workforce 6,604 6,366

Notes

1. ADF, APS and Contractor numbers are forecasts of the average strength for 2014-15.

2. “One Star and above” officers are of Brigadier to General rank equivalent; “Senior Executives” are Senior Executive Band 1 to 3.

3. Senior Officers are of Lieutenant Colonel and Colonel rank equivalent, and APS Executive Level 1 and 2.


117


Section 2: DMO Outcomes and Planned Performance

Outcome 1 encapsulates the entire business of the DMO, the activities it undertakes as part of Defence in acquisition and sustainment of materiel and the advice it provides on contracting policy and industry policy.

Figure 5: Contributions to Outcomes and Programmes

The outcome is described in Section 2.1 together with its related programmes, specifying the performance indicators and targets used to assess and monitor the performance of the DMO in achieving Government outcomes.

118


Total Price of Programmes: $12,225.941m

(PBS 2014-15: $12,580.096m)

Total Departmental Appropriation: $879.592m

(PBS 2014-15: $881.031m)

Outcome 1Contributing to the preparedness of Australian Defence Organisation through acquisition and through-life support of military equipment and

supplies

Total Price: $12,225.941m

(PBS 2014-15: $12,580.096m)

Total Departmental Outcome Appropriation:

Programme 1.1

Management of Capability Acquisition


(PBS 2014-15: $6,308.674m)

Total Departmental Programme Appropriation:

$295.258m

Programme 1.2

Management of Capability Sustainment


(PBS 2014-15: $6,165.960m)


$487.238m

Programme 1.3

Provision of Policy Advice and Management Services

Total Price: $109.251m

(PBS 2014-15: $105.462m)


$97.096m


2.1 OUTCOMES AND PERFORMANCE INFORMATION

Outcome 1: Contributing to the preparedness of Australian Defence Organisation through acquisition and through-life support of military equipment and supplies

Outcome 1 Strategy


119


STRATEGY HIGHLIGHT: DMO Change Priorities 2014-15


120


Outcome Expenses and Resource Statement

The following table provides an overview of the total expenses for Outcome 1 by Programme.

Table 88: Budgeted Expenses and Resources for Outcome 1

Outcome 1: Contributing to the preparedness of Australian Defence Organisation through acquisition and through-life support of military equipment and supplies

2013-14Actual

Expenses

$'000

2014-15Revised

EstimatedExpenses

$'000Programme 1.1 Management of Capability AcquisitionDepartmental expenses

Departmental appropriation[1] 218,645 295,258Special Accounts 4,146,203 5,628,793Expenses not requiring appropriation in the Budget year[2] 5,906 7,191

Total for Programme 1.1 4,370,754 5,931,242Programme 1.2 Management of Capability SustainmentDepartmental expenses


Total for Programme 1.2 5,857,452 6,185,448Programme 1.3 Provision of Policy Advice and Management ServicesDepartmental expenses

Departmental appropriation[1] 93,581 97,096Special Accounts - 894Expenses not requiring appropriation in the Budget year[2] 11,653 11,261

Total for Programme 1.3 105,234 109,251Outcome 1 Total by appropriation typeDepartmental expenses


Total Expenses for Outcome 1 10,333,440 12,225,941

2013-14 2014-15Average Staffing Level (number)[3] 5,216 4,945

Notes

1. Departmental Appropriation combines "Ordinary annual services (Appropriation Bill no 1)" and "Retained Revenue Receipts under s74 of the PGPA Act 2013".

2. Expenses not requiring appropriation in the Budget year is made up of resources received free of charge.3. Average staffing levels do not include military staff posted to the DMO, as military staff remain employees of the Department of Defence and are included in its staffing.

121



Programme 1.1: Management of Capability Acquisition


No changes have been made to the Programme Objective since the Portfolio Budget Statements 2014-15.

Programme 1.1 Expenses

The nature and costs of Programme 1.1 remains as described in the Portfolio Budget Statements 2014-15.

The planned resource use for Programme 1.1 is $5,931.2m which represents approximately 49 per cent of the DMO’s total expenses. The revised planned resource use for Programme 1.1 includes:

The DMO major capital equipment programme of $5,543.1m which comprises $5,406.4m of the approved major capital investment programme and a further $136.6m of work planned to be transferred to the DMO during the remainder of 2014-15 from Defence.

The DMO minor capital investment programme of $85.7m, including the approved minor programmme of $36.6m and $49.1m of work planned to be transferred to the DMO during the remainder of 2014-15.

Direct appropriation of $295.3m relating to acquisition workforce and operating expenses.

Resources received free of charge from Defence of $7.2m.

The estimates for Programme 1.1 reduced by $377.4m since the Portfolio Budget Statements 2014-15 as a result of the following:

The DMO major capital equipment programme decreased by $336.4m as a result of:

a net reduction of $196.0m by Defence of the estimated value of major projects to be approved and transferred to the DMO for delivery during the remainder of 2014-15

a reduction in payments required from Defence for approved major projects of $144.4m for the higher outcome achieved in 2013-14

supplementation due to foreign exchange movements of $4.0m.

The DMO minor capital investment programme decreased by $50.4m largely reflecting a reduction by Defence of the estimated value of projects to be approved and transferred to DMO for the remainder of 2014-15.

The direct appropriation relating to Programme 1 increased by $9.3m as a result of the net effect of a reallocation of Workforce and Operating Expenses between programmes to cater for variations in work effort and priorities and functional transfers to Defence.

122


Table 89: Programme 1.1 Management of Capability Acquisition

2013-14Actual$'000

2014-15Revised Budget

$'000

2015-16Forward

year 1$'000

2016-17Forward

year 2$'000

2017-18Forward

year 3$'000

Special Account Expenses:Defence Materiel Special Account 4,146,203 5,628,793 6,375,236 5,674,013 6,879,641

Annual Departmental Expenses:Ordinary Annual Services (Appropriation Bill No. 1) 218,645 295,258 306,924 338,206 360,092

Expenses not requiring appropriation in the Budget year[1] 5,906 7,191 7,371 7,555 7,744

Total Programme Expenses 4,370,754 5,931,242 6,689,531 6,019,774 7,247,477

Note1. Expenses not requiring appropriation in the Budget year is made up of resources received free of charge.


Changes to the detailed descriptions of deliverables for the Top 30 Acquisition DMO projects is contained in Table 90 Top 30 Acquisition Projects by 2014-15 Forecast Expenditure (Gross Plan). A status update on other major projects that are no longer included in the Top 30, but were included in the previous five years, is provided at Table 92.


No changes have been made to the Programme Key Performance Indicators since the Portfolio Budget Statements 2014-15.

123


Top 30 Acquisition Projects by 2014-15 Forecast Expenditure

Table 90: Top 30 Acquisition Projects by 2014-15 Forecast Expenditure (Gross Plan)

ProjectNumber/Phase

ApprovedProject

Expenditure$m

CumulativeExpenditure

to 30 J une 2014

$m

BudgetEstimate2014-15

$m

Revised Estimate2014-15

$mVariation


Growler Airborne Electronic Attack Capability AIR 5349 Phase 3 3,262 407 797 729 -69

The first two aircraft currently in production remain on schedule for completion in the third quarter of 2015. The first five Growler Aircrew students are on track to graduate in February 2015 and commence operational tours with the United States Navy expeditionary Growler Squadrons. Key software development and test activity is underway with ALQ-99 Tactical Jamming System and training missile production continuing through the financial year.

The variation is primarily driven by moderated forecast Foreign Military Sales case expenditure.

Maritime Patrol and Response Aircraft System AIR 7000 Phase 2 3,548 123 324 451 127

This project has authorised the United States Navy (USN) to sign contracts for: long-lead time components for the first four production aircraft; the Aircrew Training System; acquisition of components for use in aircraft production; and initial aircraft spares. The project also released a Procurement Request detailing requirements for its Mission Support System.

The variation is primarily due to bringing forward spend against initial aircraft spares and long-lead aircraft components to align with the USN contract to better support the P-8A on delivery.

Battlefield Airlift - Caribou Replacement AIR 8000 Phase 2 1,295 424 314 255 -58

A Special Flight Permit was awarded in October 2014 to enable the aircraft to be registered and flown.

The first two aircraft have been accepted and are operating at L-3 in Waco, Texas, to support aircrew and maintainer training.

Training of the first cadre of Air Force maintainers commenced in December 2014 and training of the first cadre of aircrew is scheduled to commence in January 2015.

Aircraft deliveries to 35 Squadron at RAAF Base Richmond, New South Wales, are scheduled for May 2015 and the project remains on track to achieve Initial Operating Capability by December 2016. However, some early delays are being identified with the production schedule for later aircraft.

The variation is a result of a Foreign Military Sales case Termination Liability payment brought forward into 2013-14 from 2014-15 at the request of the United States Government, as well as some delays in production and invoicing by suppliers.

General Manager Joint, Systems and AirAerospace Systems

124


ProjectNumber/Phase

ApprovedProject

Expenditure$m


to 30 June 2014

$m


$m


$mVariation


Air to Air Refuelling Capability AIR 5402 1,818 1,588 142 104 -38

This project has successfully completed development, certification and qualification testing of the Aerial Refuelling Boom System.

Refurbishment of the prototype aircraft was completed in December 2014 with the aircraft due to return to Australia in March 2015. The upgrade of the aerial refuelling pods and simulation training devices are well under way.

The project will begin Introduction Into Service of the Aerial Refuelling Boom System and updated Mission System in early 2015.

The key risk for the project is now the timely completion of the aircraft modification program.

The variation is primarily due to prime contract milestone slipping from 2014-15 to 2015-16; cost savings associated to contract changes; spares no longer required; as well as the delay in the delivery of spares.

Airborne Early Warning and Control Aircraft AIR 5077 Phase 3 3,876 3,514 64 51 -13

This project has delivered the final remediation software for the radar, mission computing, and communication subsystems, in addition to selected changes to the electronic support measures subsystem identified as essential for Final Materiel Release. Residual logistics support elements have also been delivered.

The project also planned to initiate remediation of the fire detection system to better support safe operations across the life of the platform. This has not progressed as scheduled due to delays in the maturity of the design solution and cost.

The variation is due to reprogramming of improvements to the fire detection system.

C-17 Globemaster III AIR 8000 Phase 3 1,698 1,368 57 56 -1

This project finalised the delivery and transition of the C-17 Cargo Compartment Trainer and progressed the remaining C-17 sustainment support requirements, including spares, role expansion equipment, ground support equipment and materiel handling equipment. Residual project tasks have transitioned to their respective in service management/sustainment agency for completion by the end of 2014-15, as planned.


125


ProjectNumber/Phase

ApprovedProject

Expenditure$m


to 30 June 2014

$m


$m


$mVariation


Lead-In Fighter Capability Assurance Program AIR 5438 Phase 1A 263 67 49 48 -2

Two Hawk 127 validation and verification aircraft have been modified with the subsequent ground testing supporting the submission for a Special Flight Permit.

A contract for the procurement of Air Combat Manoeuvring Instrumentation (ACMI) pods has been placed with the vendor, with deliveries scheduled to commence in 2015-16.

A tender for the construction of new simulator facilities at RAAF Bases Williamtown, New South Wales, and Pearce, Western Australia, has been released, significantly reducing the associated risk to the program.

The variation is largely driven by cost savings through negotiated outcomes from the ACMI contract; offset by additional project management support activities.

Battlefield Command Systems LAND 75 Phase 4

331 17 158 140 -19

This project is well advanced in the manufacture of kits for the installation of systems into selected Protected Mobility Vehicles and G-Wagons.

First to second pass risk reduction activities were contracted in December 2013 and are planned to complete on schedule in 2015. These activities will generate the information required for a future project approval consideration by Government.

The variation is due to reductions in costs and revised schedules to complete the work. Variation is due to reprogramming of funds to align the Price and Payments Schedule in the final contract.

Battlespace Communications System (LAND) JP 2072 Phase 3 177 35 126 90 -36

Work Package A will continue to digitise and enhance the Command, Control and Communications systems for land tactical forces. The project is receiving the final deliveries of Tactical Data and Voice radios in preparation for installations by project LAND 75, Battlefield Management System, in quarter two 2015.

Following a review of industry comments on the draft functional performance specifications for new communications capabilities required under this project, a request for tender is planned for release in early 2015.

The variation is due to a combination of savings achieved through economies of scale (bulk ordering of materiel) and the accelerated delivery of combat net radio equipment to 2013-14 from 2014-15 .

Electronic Systems

126


ProjectNumber/Phase

ApprovedProject

Expenditure$m


to 30 June 2014

$m


$m


$mVariation


Battlespace Communications System (LAND) JP 2072 Phase 2A 459 280 73 17 -57

This project has now delivered the majority of the new digital radios to Army units for use in the dismounted role. Withdrawal of legacy analogue radio fleets is occurring in alignment with the issue of new equipment.

The mature support contracts that will support the new radios through life-of-type acquired under JP2072 Phases 1, 2A and 3A as well as other major projects are undergoing solicitation activities through 2014-15. Interim support arrangements will continue while this is finalised.

The key risks are: finalising design acceptance for the combinations of off-the-shelf equipment used by various end-users; establishment of performance based support contracts for the new fleets; and the smooth transition into sustainment in alignment with the withdrawal of legacy fleets.

The variation is a combination of: savings achieved through economies of scale (bulk ordering of materiel); the accelerated delivery of combat net radio equipment to 2013-14 from 2014-15; reductions in required ancillaries; and delays to acquisition of spares and other follow-on procurements pending finalisation of mature support contract arrangements.

Anzac Electronic Support System Improvements SEA 1448 Phase 4A 270 31 58 37 -21

This project will provide the Anzac Class Frigates with an improved tactical Electronic Support mission system for improved passive situational awareness and early threat warning. The project includes the provision of an Electronic Support mission system and emulators for training and a ground based support segment for Electronic Support mission system programming.

The project has completed the required system reviews including Preliminary Design Review and Critical Design Review; and has commenced system level testing. During 2014-15 the project will deliver up to three systems and commence installation on the Anzac Class Frigates.

The variation is due to the contractor, Exelis, delaying the order of some electronic components pending satisfactory testing of a related system which resulted in the re-scheduling of some major milestones. Invoicing and payment is expected to be finalised early next financial year pending final acceptance.

127


ProjectNumber/Phase

ApprovedProject

Expenditure$m


to 30 June 2014

$m


$m


$mVariation


Battle Management System LAND 75 Phase 3.4 316 203 38 15 -23

Engineering design documentation for all vehicle installations except the M113 is nearing finalisation, and in 2014-15 the project is planning to deliver all supplies required for Final Materiel Release. The M113 design work has experienced commercial and technical difficulties with the integration of the Battle Management System into the platform which resulted in the final acceptance milestone being moved into 2015-16. These issues have been since rectified with design acceptance now planned for 2015-16.

The variation is due to reprogramming of the Final Acceptance Milestone into2015-16.

Joint Command Support Environment JP 2030 Phase 8 256 169 33 21 -12

Evolution 2 Releases 1 to 4 have been completed. The final operational releases are planned for the first quarter of 2015. Operational test and evaluation will commence in the first half of 2015 leading to a planned Final Operating Capability in December 2015.

The variation is due to reprogramming of contract milestones to 2015-16 in accordance with revised schedule.

C-130J Large Aircraft Infrared Countermeasures (LAIRCM) AIR 5416 Phase 4B2 206 20 31 12 -19

Delivery of the C-130J Large Aircraft Infrared Countermeasures (LAIRCM) capability is underway with both the United States Air Force (USAF) prime contracts underpinning the two acquisition Foreign Military Sales (FMS) cases now awarded. The project is on track to complete systems engineering design reviews in 2014-15, in preparation for the modification program commencing in late 2015.

The aircraft modification schedule may be at risk due to recently advised quality issues with the aircraft modification kits supplied by Lockheed Martin. Some of the replacement parts have long lead times. Efforts are underway by the USAF and Lockheed Martin to resolve this matter. No schedule change has been formally advised by the USAF at this point in time and Initial Operating Capability is still planned for the second quarter of 2017.

Higher fidelity in the FMS payment schedule following award of USAF contracts has led to a significant decrease in FMS payments in 2014-15.

Replenish Nulka Warstock SEA 1397 Phase 5A 85 38 27 21 -6

During 2014, this project took final delivery of rounds ordered under Batch 3. Initial delivery of rounds ordered under Batch 4 are on schedule to be received by the project in late quarter one of 2015.

The risk profile for this project is low, with a contract awarded in the third quarter of 2014 for the final production contract (Batch 5) under this project.

The project was able to negotiate a greater than anticipated reduction in the per unit contract price.

128


ProjectNumber/Phase

ApprovedProject

Expenditure$m


to 30 June 2014

$m


$m


$mVariation


High Frequency ModernisationJP 2043 Phase 3A 580 448 25 17 -8

Contract signature for procurement of the High Frequency Direction Finding and Signal Improvement, Nullarbor, capability was achieved on 20 June 2014.

Work to address obsolescence issues resulting from delays to delivery of the final system continues in 2014-15, with a number of areas already mitigated and under contract.

A number of payments planned for 2014-15 have been reprogrammed to 2015-16 following finalisation of agreed delivery schedules. Other variations were caused by the establishment of a Memorandum of Understanding with the Australian Communications and Media Authority to give effect to their requirements which were able to be incorporated in the Nullarbor contract and which produced an overall cost saving to the Government in the order of $7m.

Future Naval Aviation Combat System Helicopter AIR 9000 Phase 8 3,221 921 505 512 7

This project is on schedule. The training detachment at the United States Naval Air Station in Jacksonville, Florida has been completed, with the aircraft transported to Australia. The first training devices have been delivered and set to work at the Naval Air Station in Nowra, New South Wales. Training will commence in Australia as scheduled in early 2015.

The variation is primarily due to an acceleration of Foreign Military Sales payments to align with MH-60R aircraft production schedule, offset by a transfer of funds out of the project for infrastructure works and cost savings identified in the construction and maintenance of training devices and transportation costs.

Multi Role Helicopter AIR 9000 Phase 2 3,747 2,430 286 267 -19

Aircraft deliveries from both the production and retrofit lines are running ahead of the revised schedule. Chief of Army has now declared a MRH90 operational capability for the Army. An initial MRH90 operational capability for the Navy is now anticipated to be achieved in early 2015.

The variation is due to foreign exchange reduction and reprogramming of prime contract milestone deliverables.

Medium Lift Helicopter AIR 9000 Phase 5C 617 247 166 133 -33

The first Australian CH-47F has been assembled and rolled off the Boeing production line in December 2014. This aircraft remains on schedule for a March 2015 delivery. The project remains on schedule to deliver all seven CH-47F aircraft by August 2015.


Helicopters, Tactical Unmanned Weapon Systems and Guided Weapons

129


ProjectNumber/Phase

ApprovedProject

Expenditure$m


to 30 June 2014

$m


$m


$mVariation


Bridging Air Combat Capability AIR 5349 Phase 2 290 145 32 8 -24

Initial delivery of the AIM-120 Advanced Medium Range Air to Air Missiles (AMRAAM) being acquired under this project have been delayed by 18 months due to production and weapon to aircraft integration issues.

The variation is due to delay in payment for AIM-120 AMRAAM in line with their revised delivery schedule.

Joint Strike Fighter AircraftAIR 6000 Phase 2A/B 13,692 451 238 278 40

Australia’s first two F-35A aircraft completed production and were accepted during November 2014. The project is on schedule to support the commencement pilot training in 2015.

The project’s facility program gained Government approval on 29 October 2014 and is on schedule to support the commencements of work in 2015.

On 18 December 2014, the United States (US) Government announced that Australia would provide support to F-35 aircraft in the Asia Pacific region.

Major risks include software, integration into the ADF environment and the establishment of a sustainment capability in Australia. The development of an integrated solution into the ADF environment is maturing with the finalisation of the aircraft support system design and development of the sustainment concepts.

US contracting and invoicing is not yet mature and has led to variations in forecasts. The revised estimate is based on latest available data and reflects anticipated billing associated with contracted and planned activity.

Joint Strike Fighter

130


ProjectNumber/Phase

ApprovedProject

Expenditure$m


to 30 June 2014

$m


$m


$mVariation


Air Warfare Destroyer Build SEA 4000 Phase 3 7,843 5,224 616 759 144

The float-off of Ship 01, Hobart, and the keel-laying ceremony for Ship 03, Sydney, are scheduled to take place in mid 2015. Combat system equipment will continue to be installed into Ship 01 Hobart . Consolidation of Ship 02 Brisbane , will continue as will Ship 03 Sydney block production at BAE Systems, Williamstown, and Forgacs, Newcastle. The Winter Report was delivered to Government in early 2014 and implementation of the Interim Phase of the AWD Reform Strategy has commenced. The key objective of inserting experienced shipbuilding expertise into the management team of ASC Shipbuilder has been agreed and will start in January 2015. The program will be re-baselined, with a new schedule and associated cost profile. The final phase of the reform is expected to be implemented by mid-2015 in accordance with the new baseline.

The key challenge for this project is to increase shipbuilder productivity and thereby control costs.

This variation reflects the current challenges of the program resulting from increases associated with low shipbuilding productivity activities and consequential cost over-runs.

Field Vehicles and Trailers - Overlander Program LAND 121 Phase 3A/5A 1,016 609 171 127 -43

This project continues to progress the Introduction Into Service of G-Wagons, with 3 Brigade completed on schedule in October 2014. As at 3 December 2014 the project has issued 1,352 vehicles and 1,005 trailers to units.

Introduction Into Service will continue at around 60 vehicles and 30 trailers per month. Training for vehicle operators will be completed in 2014-15.

The first of the specialist variants, the Surveillance and Reconnaissance vehicle, was issued to 51 Far North Queensland Regiment in July 2014. The key risks for this project are the finalisation of the Command Post Mobile (CPM) module requirements and meeting subsequent production targets for both the CPM module and Ambulance variants.

The variation is a result of vehicles and support equipment deliveries and payments being brought forward to 2013-14 from 2014-15, a reduction to expected price escalation, a reduced estimate for the ambulance module redevelopment, together with rescheduled contractual milestones for the remaining batch deliveries of vehicles and modules.

Land Systems

Air Warfare DestroyerGeneral Manager Land and Maritime

131


ProjectNumber/Phase

ApprovedProject

Expenditure$m


to 30 June 2014

$m


$m


$mVariation


Overlander - Medium Heavy Capability, Field Vehicles, Modules and Trailers

LAND 121 Phase 3B 3,404 41 119 107 -11

The prime contractors are currently in the design phase and prototype testing has commenced. The Medium/Heavy Vehicle and Module Capability Prime Contractor has now finalised arrangements with its subcontractors. Introduction Into Service for the Medium/Heavy Capability is on schedule to begin in the second half of 2016.

The revised estimate reflects the contracted delivery and payment schedule that was negotiated post second pass Government approval. The variation includes rescheduling of system engineering reviews, foreign exchange adjustments and re-programming of minor contract activities.

Bushmaster Protected Mobility Vehicles LAND 116 Phase 3 1,250 917 68 67 -1

Vehicle production is proceeding on schedule to deliver 66 Production Period 5 vehicles in 2014-15. As at 1 December 2014, 30 vehicles have been delivered this financial year. Installation of External Composite Armour mounting points has commenced and will proceed in accordance with the Army plan.

The variation is due to foreign exchange adjustment.

Amphibious Deployment and Sustainment JP 2048 Phase 4A/B 3,087 2,638 143 86 -57

LHD01 was delivered to the Navy in October 2014 and commissioned as HMAS Canberra in November 2014. The fitting-out of LHD02 Adelaide continues on schedule.

The variation is primarily due to a combination of cost savings, risk reduction strategies and the movement of activities and milestones associated with LHD01 acceptance.

Anzac Ship Anti-Ship Missile Defence SEA 1448 Phase 2B 678 476 77 72 -5

This project continues with the Anti-Ship Missile Defence (ASMD) Follow-On Ship upgrade work. HMAS Anzac returned to service following completion of upgrade work. HMA Ships Warramunga and Ballarat are currently undergoing upgrade work.

The variation is due to minor reduction of ASMD work due to the extent of concurrent maintenance for Anzac ships.

Amphibious Watercraft Replacement JP 2048 Phase 3 236 94 55 50 -5

The first four landing craft were delivered to the Navy in October 2014 and are now embarked on HMAS Canberra . The second group of four craft are on schedule for delivery in early 2015.

The variation is due to a reduction in escalation exposure, and reprogramming of logistics support activities.

Anzac Ship Anti-Ship Missile Defence SEA 1448 Phase 2A 387 306 28 25 -3

This project continues with the Anti-Ship Missile Defence (ASMD) Follow-On Ship upgrade work. HMAS Anzac returned to service following completion of upgrade work. HMA Ships Warramunga and Ballarat are currently undergoing upgrade work.

The variation is due to minor reduction of ASMD work due to extent of concurrent maintenance for Anzac ships.

Maritime Systems

132


ProjectNumber/Phase

ApprovedProject

Expenditure$m


to 30 June 2014

$m


$m


$mVariation


Future Submarine - Acquisition SEA 1000 Phase 1A 296 58 98 74 -23

This project will deliver Australia’s future submarine capability.

During 2014-15, the strategic direction of this project has continued to be reviewed by the Government. The project is focussed on options that will deliver a regionally superior conventional submarine capability, and is engaging with a number of countries, including Japan. The refinement of options is progressively clarifying budget requirements over the remainder of the current financial year and beyond. Key functions within the project team have also been revised, and longer-term roles for industry members of the team are being established.

The mobilisation of appropriate national resources necessary to manage the Future Submarine Program with the international support remains a major focus for the project.

As options for the Future Submarine continue to be refined, budget requirements for the remainder of 2014-15 have been further clarified.

58,206 23,289 4,919 4,630 -289Total -Top 30 Projects (Gross Plan)

Future Submarine ProgramGeneral Manager Submarines

133


Table 91: Major Capital Investment Programme by 2014-15 Forecast Expenditure

2014-15Budget

Estimate$m


$mVariation

$mA Top 30 Projects Gross Plans 4,919 4,630 -289B Other Approved Project Gross Plans 621 855 234C Total Gross Plan Project Estimates (A+B) 5,540 5,485 -54D Management Margin: Slippage[1] -432 -79 353

EPayments Required from Defence for the Approved Programme (C+D) 5,109 5,406 298

FProjects Planned for Government Consideration and Transfer to the DMO 771 137 -634Total Estimated Funds Available (E+F) 5,879 5,543 -336

Note 1. Management margin is an estimate of possible overall approved capital programme expenditure slippage that may occur as the 2014-15 financial year progresses.

134


Acquisition Projects previously included in the Top 30 Projects - Current Status

Table 92 provides an update on the status of major projects reported in previous financial years. These projects were not ranked in the Top 30 projects by expenditure in 2014-15.Table 92: Current Status of Previously Reported Top 30 Projects (Projects Reported in the Last Five Financial Years)

Projectnumber/phase

LastFinancial

YearReported in

Top 30

ApprovedProject

Expenditure$m


to 30 J une 2014

$m


$m

RevisedEstimate2014-15

$mVariation

$m Status Report

Bridging Air Combat Capability

AIR 5349 Phase 1

2012-13 3,311 2,737 15 14 -1 Residual acquisition activities continue under Phase 1, including spares and support equipment procurement support to the maintenance network, through Chief Information Officer Group, and weapons integration activity.

AP-3C Electronic Support Measure Upgrade

AIR 5276 Phase 8B

2009-10 130 105 13 11 -2 All ground systems have been upgraded and accepted and three aircraft have been modified. All remaining BAE Systems Australia deliverables remain on schedule for acceptance, and a further three aircraft will be modified allowing the achievement of Initial Operational Capability by mid 2015.

Additional C-17A Globemaster III

AIR 8000 Phase 4

2012-13 560 439 9 13 4 This project continues the procurement and delivery of spares and support equipment for Australia’s fifth and sixth aircraft delivered under the project. The project is progressing transition of these activities to the relevant sustainment agencies.

F/A-18 Hornet Upgrade

AIR 5376 Phase 2

2011-12 1,881 1,646 8 10 2 The Electronic Warfare Self Protection Suite upgrade, Phase 2.3, of this project is complete with Final Operational Capability achieved in October 2014. The Hornet simulators improvement program is under contract and on schedule for installation and testing during 2015 and for completion in 2016, with Final Operational Capability scheduled for 2017.

Airborne Surveillance for Land Operations

JP 129 Phase 2

2012-13 96 72 7 5 -2 Final Materiel Release and Final Operational Capability were declared on 26 May 2014 and 31 August 2014 respectively. Additional equipment deliveries, including six attrition air vehicles, are scheduled to occur in early 2015.

AP-3C Capability Assurance Program

AIR 5276 CAP1

2009-10 88 71 1 0 -1 The project has upgraded the final two AP-3C aircraft with the Capability Assurance Program 1 system. This represents the final deliverable of the project supporting project closure in 2015.

General Manager Joint, Systems and AirAerospace Systems

135


Projectnumber/phase

LastFinancial

YearReported in

Top 30

ApprovedProject

Expenditure$m


to 30 J une 2014

$m


$m


$mVariation

$m Status Report

Battlespace Communications Systems

JP 2072 Phase 1

2011-12 259 222 18 5 -13 The tactical data and voice communications radios have been delivered to the units in accordance with the approved Basis of Issue. Documentation for achieving Final Operational Capability is currently in progress and is expected to be completed by mid 2015.

Activities to support project closure have commenced, and are expected to be completed by mid 2015.

Ultra High Frequency (UHF) Satellite Communications System

JP 2008 Phase 5A

2012-13 419 337 11 5 -6 This project has delivered an upgraded Ultra High Frequency Satellite capability to the ADF. The associated network management system has experienced delays associated with deficiencies experienced during testing.

System acceptance has slipped but remains within 2014-15.

Tactical Information Exchange Domain

JP 2089 Phase 2A

2010-11 104 80 8 7 -1 The Anzac Multi Link Upgrade First of Class ship was accepted by the Commonwealth in November 2014. The claim for Initial Materiel Certification and Initial Operational Release is being progressed through the Navy.

The initial common support infrastructure has completed testing and is preparing to transition the first associated Materiel Release into Operational Service.

Next Generation Satellite Communications (SATCOM) System

JP 2008 Phase 4

2013-14 869 565 3 4 1 The six satellites that make up the Wideband Global Satellite Communications System constellation have all launched successfully and are fully operational. The project has achieved Final Materiel Release.

Work continues to manage the upgrade of the United States supplied satellite control equipment. The project expects to complete transition to sustainment and project closure during 2015.

Electronic Systems

136


Projectnumber/phase

LastFinancial

YearReported in

Top 30

ApprovedProject

Expenditure$m


to 30 J une 2014

$m


$m


$mVariation

$m Status ReportDismounted Battlegroup and Below Command, Control Communication System

LAND 125 Phase 3A

2011-12 107 91 – 1 1 The focus continues on project closure activities.

Military Satellite Capability (SATCOM) – Wideband Terrestrial Terminals

JP 2008 Phase 3H

2013-14 45 33 – 5 5 This project has been delayed whilst an issue with electrical safety of the Wideband Terrestrial Terminals non conformance was rectified by the contractor. All of the supplies have been remediated and achieved compliance in December 2014.

Initial Operational Capability has been delayed and is now expected to be achieved in March 2015 with Final Operational Capability in the second quarter of 2015, once all terminals and a revised training package have been delivered to units.

Detailed Analysis and Acquisition Planning

AIR 6000 Phase 1B

2009-10 103 98 – – – Project has been completed.

Armed Reconnaissance Helicopter

AIR 87 Phase 2

2012-13 2,033 1,864 4 – -4 Administrative actions for project closure are progressing.

Standard Missile-2 Conversion and Upgrade

SEA 4000 Phase 3.2

2013-14 105 56 25 6 -19 Standard Missile 2 Block IIIB modification kits have been supplied and the upgrading of missiles in the United States has commenced. Upgrading of the Australian Intermediate Level Maintenance Facility was completed in November 2014. Testing of new configuration missiles in Australia will commence in March 2015.

Lightweight Torpedo Replacement

JP 2070 Phase 2

2013-14 342 300 12 13 1 This project is funding the initial in-service support of the MU90 lightweight torpedo. The project remains on track for closure in 2017.

Joint Strike Fighter


137


Projectnumber/phase

LastFinancial

YearReported in

Top 30

ApprovedProject

Expenditure$m


to 30 J une 2014

$m


$m


$mVariation

$m Status ReportLightweight Torpedo Replacement

JP 2070 Phase 3

2011-12 303 275 2 1 -1 Progressing to project closure in 2015.

Evolved Sea Sparrow Missiles (ESSM)

SEA 1428 Phase 4

2009-10 88 84 – – – Final delivery of missiles and missile canisters occurred in August 2014. Progressing to project closure in 2015.

Follow-On Stand Off Weapon

AIR 5418 Phase 1

2011-12 317 284 – – – Progressing to project closure in 2015.

Mulwala Redevelopment Project

JP 2086 Phase 1

2013-14 370 342 22 19 -3 The project is working with the contractor to address the outstanding issues associated with the qualification of propellants and to resolve plant issues, necessary to achieve Final Acceptance (FA) of the propellant manufacturing facility. Upon achievement of FA, control of the plant will transfer to Thales to operate.

This project continues to be managed as a Project of Concern.

Digital Terminal Control System

LAND 17 Phase 1B

2013-14 121 82 15 11 -4 The next version of control terminal software has been reviewed at a configuration control board and the final version remains on schedule for delivery in 2014-15. Upgrades of the previously delivered systems to the final configuration baseline have commenced.

Artillery Replacement 155MM Howitzer

LAND 17 Phase 1A

2013-14 337 158 12 8 -4 Government approval has been received to transfer the course correcting fuze element to LAND 17 Phase 1C1, Lightweight Howitzer. This project will be closed in 2015.

Additional Lightweight Towed Howitzers

LAND 17 Phase 1C1

2013-14 147 52 12 4 -8 The delivery of 19 Lightweight Towed Howitzers to Australia was completed ahead of schedule in April 2014 and the associated Materiel Release milestone has been achieved. The follow-on Capability Assurance Program has been approved by Government.

General Manager Land and MaritimeLand Systems

138


Projectnumber/phase

LastFinancial

YearReported in

Top 30

ApprovedProject

Expenditure$m


to 30 J une 2014

$m


$m


$mVariation

$m Status ReportCounter - Rocket, Artillery and Mortar (C-RAM)

LAND 19 Phase 7A

2012-13 260 176 3 6 3 The counter-rocket, artillery and mortar system continues to be sustained within the current project budget. Discussions with the preferred tenderer for the ongoing support contract have commenced.

Australian Protected Route Clearance Capability (APRCC)

JP 154 Phase 3A

2012-13 74 35 3 2 -1 The integration of the Communications and Battle Management System onto the major platforms has been completed. The Australian-based support are on schedule for establishment in 2014-15.

Upgrade of M-113 Armoured Vehicles

LAND 106 2012-13 885 791 – – – All deliveries and certifications are complete. The project will close in early 2015.

Direct Fire Support Weapons

LAND 40 Phase 2

2010-11 145 39 – – – A new tender for the Light Weight Automatic Grenade Launcher was released in July 2014 and closed for evaluation in October 2014.

The project continues to be managed as a Project of Concern.

Guided Missile Frigate Upgrade Implementation

SEA 1390 Phase 2.1

2010-11 1,453 1,366 18 8 -10 Completion of the Navy directed Panorama sonar processing solution will enable progression to full Operational Release. Panorama successfully exited critical design review in early December 2014 and is progressing on schedule for planned closure in 2015-16.

SM-1 Missile Replacement

SEA 1390 Phase 4B

2013-14 408 332 14 13 -1 United States Foreign Military Sales initial support for the Ship SM-2 Weapon System has been established, while the corresponding direct commercial arrangements have not advanced as expected. The establishment of the commercial arrangements is expected to be completed in 2014-15, with subsequent project closure.

Maritime Systems

139


Projectnumber/phase

LastFinancial

YearReported in

Top 30

ApprovedProject

Expenditure$m


to 30 J une 2014

$m


$m


$mVariation

$m Status Report

New Heavyweight Torpedo

SEA 1429 Phase 2

2009-10 427 302 8 5 -3 Heavyweight torpedo installations continue. The last submarine, HMAS Collins , is scheduled for completion in 2018. Torpedo trials will be conducted during early 2015 to validate software upgrades, including upgrades to the Defence Science and Technology Organisation Torpedo Analysis Facility, which continues to be used for simulation activities and to analyse practice torpedo firings.

15,787 13,035 243 175 -68

General Manager Submarines

Total -Top 30 Previously Report Projects (Gross Plan)

Collins

140


Top 10 Minor Capital Investment Projects by 2014-15 Forecast Expenditure

Table 93: Top 10 Approved Minor Acquisition Projects by 2014-15 Forecast Expenditure[1]

ProjectNumber/

Phase

ApprovedProject

Expenditure$m

EstimatedCumulative


$m


$m


$mVariation


Typhoon Training System for the DDG and LHD at West Head Gunnery Range (WHGR) NMP1928 3 0 2 - -2

Procurement was aligned with the existing Air Warfare Destroyer Alliance contracts which provided overall financial savings, however it also required rescheduling to 2015-16.

The variation is due to a procurement initiative under existing contracts and the subsequent milestone rescheduling to 2015-16.

Digital Voice Recording System Equipment NMP1822 16 10 2 2 -Installation of all eight minor war vessels is complete and equipment design for the Anzac Class vessels has commenced on schedule.

Naval Aviation Night Vision Capability - FFG NMP1846 4 3 1 1 -The Navy approved scope is for two ships to be completed in 2014-15. Ship installation is complete and flight trials programmed for mid 2015.

Navy Minor Projects Business Process - Project Development Funding NMB8000 2 0 1 - -1

A reduction in the number of Navy minor projects in 2014-15 reduced the forecast expenditure amount.

The variation is due to the reduced number of Navy projects.

Enhanced Land Force Weapons Training Simulation System

AMP029.44 36 19 5 6 1

The detailed design review has been completed encompassing weapon simulator prototypes and design documentation. Production of the simulator systems for the 12.7mm Heavy Machine Gun and the Carl Gustav 84mm Medium Direct Fire Support Weapon has commenced.

The variation is due to the planned delivery of the 84mm Simulator which has been brought forward to May 2015 from July 2015.

Kiowa Pilot Seating AMP015.58 7 3 2 2 -

Eight out of 24 Kiowa have been fitted with the new pilot seats and returned to service at the Army Aviation Training Centre, Oakey, Queensland. The modification of the remaining aircraft is scheduled for completion by end of 2015.

Army

Navy

141


ProjectNumber/

Phase

ApprovedProject

Expenditure$m

EstimatedCumulative


$m


$m


$mVariation


Line Laying Capability (LLC) AMP031.09 3 2 1 1 -

Delivery of two Line Laying Modules and training was completed ahead of schedule. Transition of Contract to LAND 121 Phase 3A, Field Vehicles and Trailers - Overlander Program, was completed and ordering of additional modules is underway.

Final Materiel Release was achieved in accordance with the Materiel Acquisition Agreement. Delivery of spares, support and test equipment is scheduled for late January 2015.

Project closure is on track for 2014-15.

Deployable Tactical Air Control and Navigation AFM01006 6 - 3 - -3

This project has been working toward progressing the award of the contract for the acquisition and support of the Deployable Tactical Air Control and Navigation systems.

This project is not in contract. The tendered price significantly exceeded budget and the project has been delayed and is awaiting Air Force guidance.

Multi-Band, Multi-Mode Radio Capability AFM00975 5 2 3 3 -

This project was delayed negotiating the vendor agreement to an amended set of Terms and Conditions, specifically the work health and safety aspects and obtaining hazardous materials statements. The prototype has since been purchased, hazardous materials information supplied and the required testing verification and validation successfully undertaken.

Traffic Alert and Collision Avoidance System (TCAS) AFM01001 25 21 2 1 -1

The project has upgraded the final five AP-3C aircraft with the Traffic Collision Avoidance System. This represents the final deliverable of the project supporting project closure in 2015.

The variation is due to savings associated with design of the Traffic Collision Avoidance System and installation onto the AP-3C.

107 58 22 15 -6

Note1. The Top 10 Minor Projects are based on a review of expenditure plans for 2014-15 and the following years conducted in December 2013.

Air Force

Total - Top 10 Minor Projects

Navy

142


Table 94: Minor Capital Investment Programme by 2014-15 Forecast Expenditure

2014-15Budget

Estimate$m


$mVariation

$mA Top 10 Projects Gross Plans 21 15 -6B Other Approved Project Gross Plans 2 20 18C Total Gross Plan Project Estimates (A+B) 23 35 12D Management Margin: Slippage[1] - 2 2

EPayments Required from Defence for Approved Programmes (C+D) 23 37 14

FProjects Planned for Government Consideration and Transfer to the DMO 113 49 -64Total Estimated Funds Available (E+F) 136 86 -50

Note 1. The positive management margin is due to adjustments yet to be processed in Defence Corporate Budget Management System.

143


Programme 1.2: Management of Capability Sustainment




The nature of the costs of Programme 1.2 remains as described in the Portfolio Budget Statements 2014-15.

The revised planned resource use for Programme 1.2 is $6,185.4m which represents approximately 50 per cent of the DMO’s total expenses. The revised planned resource use for Programme 1.2 includes:

The cost of contracted sustainment services of $5,283.4m.

Support for current ADF operations of $314.6m.

Direct appropriation of $487.2m relating to Sustainment workforce and operating expenses.

Net Personnel and Operating Costs of $85.0m in support of new capabilities expected to enter service.

Resources received free of charge from Defence of $15.3m.

The estimates for Programme 1.2 increased by $19.5m since the Portfolio Budget Statements 2014-15 as a result of the following:

The cost of contracted sustainment services decreased by $95.5m as a result of:

a decrease of $96.6m relating to adjustments in planned sustainment activities as agreed by Defence Capability Managers

an increase due to supplementation for foreign exchange movements of $1.1m.

The support for current ADF operations increased by $175.2m.

The direct appropriation relating to Programme 1.2 decreased by $14.5m due to a reallocation of Workforce and Operating Expenses between programmes to cater for variations in work effort and priorities.

The Net Personnel and Operating Costs in support of new capabilities expected to enter service decreased by $45.7m due to adjustments to the provision by Defence.

144


Table 95: Programme 1.2 Management of Capability Sustainment

2013-14Actual$'000


$'000

2015-16Forward

year 1$'000

2016-17Forward

year 2$'000

2017-18Forward

year 3$'000

Special Account Expenses:Defence Materiel Special Account 5,318,482 5,682,951 5,862,298 6,192,387 6,491,438


Expenses not requiring appropriation in the Budget year[1]

13,914 15,259 15,640 16,031 16,432

Total Programme Expenses 5,857,452 6,185,448 6,389,785 6,728,966 7,027,892



Information relating to Programme 1.2 Deliverables remains as reported in the Portfolio Budget Statements 2014-15. Changes to the detailed descriptions of deliverables for the Top 30 DMO Sustainment products are contained in Table 96.



145


Top 30 Sustainment Products by 2014-15 Forecast Expenditure

Table 96: Top 30 Sustainment Products by End of Financial Year Outcome 2014-15


$m

Revised Budget

Estimate2014-15

$mVariation

$m Product Performance Update and Explanation of VariationGeneral Manager Joint, Systems and AirAerospace Systems

F/A-18A Hornet Weapons System 204 194 -10

The Defence Materiel Organisation, the Air Force and Industry maintain a strong working relationship, successfully delivering high levels of serviceability ahead of schedule. The Radar support extension contract was completed late 2014, with the Hydraulics and Undercarriage Support contract to be established in early 2015.

Remediation of ageing aircraft issues continues to be a priority.

The variation is primarily attributed to planned wiring rectification no longer being required, and rephasing of the software upgrade program, in line with the contract signed post Portfolio Budget Statements 2014-15 .

Airborne Early Warning and Control 185 186 1

The Follow-On Sustainment Support Services contract with Boeing Defence Australia is maintaining Wedgetail fleet serviceability and delivering effective support to deployed aircraft. The contract’s fee-at-risk arrangement with annual extensions based on performance is supporting improved efficiency in Wedgetail sustainment.

The variation is due to foreign exchange updates.

F/A-18F Block II Super Hornet Weapons System 162 152 -10

The deployment of the Air Force Super Hornets to Operation OKRA refocused sustainment to supporting aircrew training while maintaining commitment to Operations and preparedness directives.

While deeper maintenance and capability upgrades commenced, recontracting of prime sustainment contract was delayed due to the need for additional tender activity in order to settle on the preferred tenderer. The need to support deployment to operation OKRA has also required the reallocation of resources.

The variation is due to early completion of classified software requirement which was realised in 2013-14 and delays in awarding the prime sustainment contract.

146



$m

Revised Budget

Estimate2014-15

$mVariation

$m Product Performance Update and Explanation of Variation

P-3C/AP-3C Orion Weapons System 125 111 -14

AP-3C sustainment continues to enable achievement of an intense flying program. Disposal through harvesting of spares and subsequent destruction to scrap of three aircraft has occurred. Re-utilisation of spares has reduced the need for future spares procurement, eased critical item management and improved supportability of the remaining AP-3C fleet.

The variation is due to reduced Sonobuoy purchases and savings from adjustments in several contracts, disposal activities, and minor sustainment activities.

C-130J-30 Weapons System 98 100 2

C-130J propulsion systems support successfully transitioned to a new performance based contract with Standard Aero Limited. Certification of the new carbon brake and wheel assemblies has now been achieved. A successful trial was conducted and Air Lift Systems Program Office and Airbus are working towards Service Release and fleet embodiment in late 2014-15. Efforts have been directed towards high priority new operator requirements introducing a satellite communications system and crashworthy loadmaster seating, as well as upgrading the global terrain data for the full flight mission simulator.

The variation is the net result of funding transfer to address improvements to C-130J training system; Systems Program Office procurement of a satellite communications system; as well as the affect of foreign exchange variations and achievement of in-year contract savings.

Lead-in Fighter Hawk 127 Weapons System 91 86 -5

Ongoing support by BAE Systems Australia Limited to the Lead-in Fighter fleet through the In-Service Support contract remains good, with a strong working relationship between Tactical Fighter Systems Program Office, Headquarters 78 Wing and BAE Systems continuing.

The fleet corrosion control and re-paint program continues as planned with planning underway to accommodate AIR 5438 Phase 1A, Lead-In-Fighter Capability Assurance Program.

The variation is a result of negotiated savings for an engine repair.

147



$m

Revised Budget

Estimate2014-15

$mVariation


KC-30A Weapon System 63 66 3

KC-30A remains in transition from the project phase to sustainment, with reduced fleet availability due to acquisition generated modification programs. One aircraft has deployed on operations to the Middle East. Despite the reduced aircraft numbers, an increased rate of effort is anticipated, primarily associated with operations.

The variation is due to the procurement of an undercarriage set to support the KC-30A heavy maintenance program.

C-17 Heavy Air Lift Weapons System 61 61 0

The weapon system is mature and performing to expectations. The Commonwealth has continued to develop reform plans for C-17 sustainment and training and these proposals are actively in discussion with the Air Force. An increased rate of effort is anticipated due to the engagement of the aircraft in support to operations.

Special Purpose Aircraft Weapon System 48 48 0

Special Purpose Aircraft fleet performance and serviceability have been maintained at a very high level. In accordance with Government direction, aircraft lease and maintenance support arrangements have been extended with extant contractors until mid 2017.

Electronic Systems

Wide Area Surveillance Capability 98 101 3

Replacement of cooling systems using R22 refrigerant gas; Defence Fuel Installation Audit activities at remote radar sites; and continuation of the Jindalee Operational Radar Network (JORN) Priority Industry Capability Support Program, are being successfully progressed.

The variation includes additional funding brought forward into 2014-15 from 2015-16 for the JORN Priority Industry Capability Support Program to maintain a constant industry workforce, plus inclusion of the JORN solar powered generation initiative.

Command and Intelligence Systems 52 66 14

The development of the next generation deployable systems for Land and Special Forces has continued on budget and on schedule. There has also been a significant expansion of support to ADF operational commitments.

The variation is due to funding provided to extend the life of type of deployable networks Nexus and Wyvern as replacements are not currently available.

Tactical Electronic Warfare Fleet 52 52 0

The provision of support to tactical electronic warfare capabilities has met all performance indicators, and the capabilities have been used successfully in training and operations. The technical refresh of air and maritime platform mission systems and smaller land capabilities continues. Technical refresh activities will address obsolescence issues and changes in target technologies.

148



$m

Revised Budget

Estimate2014-15

$mVariation


Battlespace Communication Systems 46 20 -26

The key focus remains on planning and executing the transition of the first phase of the JP 2072, Battlespace Communications Systems (LAND), generation of communications equipment from acquisition to sustainment. A major aspect of this transition remains the establishment of mature maintenance and support contracts with Harris Corporation and Raytheon Australia. Consultation with all stakeholders is occurring to enable the timely withdrawal of current fleets as the new radios are Introduced Into Service. The current fleet is being carefully managed for cost effective support during phase out and retirement from service.

The variation is a result of delays to the establishment of mature support contract arrangements, slippage to upgrade of the Long Range Patrol Radio, and a reduced requirement to support Combat Net Radio legacy fleets as new digital radio fleets are being Introduced Into Service.


Multi Role Helicopter - MRH90 157 153 -4

Recent improvements in overall spares availability has been positive enabling a substantial increase in flying rate of effort. Aircraft availability is anticipated to further improve through a reduction in the aircraft maintenance burden and resolution of reliability issues during 2014-15.

The reduction in forecast is mainly due to foreign exchange rate movement.

Guided Weapons - Navy, Army, Air Force 146 101 -45

Achieving the supply and support of guided weapons for the Navy, Army and Air Force operations and raise/train/sustain activities.

The variation is due to later deliveries against Navy Missile Test Sets and Test Set Facilities plus changes in delivery schedules for Navy and Army Guided Weapons.

Armed Reconnaissance Helicopter Weapons System 114 117 3

The Tiger Through Life Support Contract Strategic Review has concluded with a Deed signed in December 2014 with Airbus Group Australia Pacific. Implementation of the new contractual provisions in early 2015 will improve support and ultimately reduce the cost of ownership.

The variation in forecast is due to additional funding provided by the Army to procure additional Hellfire launchers to meet fleet requirements and other engineering requirements, offset by reductions for foreign exchange rate movement.

149



$m

Revised Budget

Estimate2014-15

$mVariation


S70A-9 Black Hawk Weapons System 71 57 -14

The operational Black Hawk fleet now stands at 20, with 18 aircraft assigned to the 6th Aviation Regiment at Holsworthy Barracks, New South Wales, and two aircraft are operated in the crash response role at the Army Aviation Training Centre at Oakey, Queensland. The remaining 14 aircraft are in storage.

The variation in forecast is mainly due to savings achieved from the relocation of aircrew training from Oakey to Holsworthy and a reduction in forecasts for Crash Data recorder repairs and purchases following reassessment of requirements.

MH-60R Seahawk Romeo Helicopter 62 46 -16

Five MH-60R ‘Romeo’ helicopters are currently operating from HMAS Albatross, New South Wales, with two further aircraft due to be delivered before the end of 2014-15.

The Maritime Helicopter Support Company has commenced in-country support to the MH-60R capability.

The variation results from improved Foreign Military Sales budget information from the United States Government for support of this new capability.

S70B-2 Seahawk Weapons System 56 57 1

The ‘Classic’ Seahawk continues to perform as expected across 2014-15. A planned increase to the rate of effort in 2014-15 has been achieved through careful management of spares and servicing. The transition out of service has commenced with four Seahawks being withdrawn from flying operations.

The variation is due to foreign exchange rate movement.

General Manager Land and MaritimeLand Systems

Munitions - Navy, Army, Air Force 362 313 -49

The Strategic Munitions Interim Contract, replacing the Strategic Agreement for Munitions Supply (SAMS) and the Mulwala Agreement (MA), was signed with Australian Munitions on 25 November 2014.

The variation reflects that a majority of the potential liabilities associated with transition out of the SAMS and MA were not realised and have been removed from the estimate.

150



$m

Revised Budget

Estimate2014-15

$mVariation


Australian Defence Organisation Commercial Vehicles Fleet 71 69 -2

The Commercial Vehicle fleet continues to focus on asset utilisation. A number of under utilised vehicles have been identified for possible reallocation or disposal. Delivery of nine touring coaches is on schedule for completion this financial year.

The variation is primarily due to the improved asset utilisation and reduced fleet size.

General Service B Vehicle Fleet 56 66 10

The B Vehicles fleet continues to focus on the phase-out of the Land Rovers, from 3,600 vehicles down to approximately 2,275, and the remediation of vehicles returning from Operations. In consultation with the Army, the fleet continues to implement Plan BEERSHEBA vehicle requirements and support emerging operations.

The variation is due to increased funding to support and maintain the required B Vehicles capability and to procure an additional ten Up-Armoured Vehicles.

ADF Clothing 50 51 1

During 2014-15, this product has met ADF’s clothing and footwear requirements and:

• delivered the new Australian multicam combat uniforms and combat boots to 1,500 soldiers;• taken delivery of 28,000 uniforms and issued the Air Force’s general purpose uniform ahead of schedule to selected Air Force elements;• issued over 28,500 pairs of the new Army parade boots;• taken delivery of 16,000 Army general purpose jackets; • completed the design for the Air Force general purpose jacket with initial deliveries expected in late April 2015.

The variation is due to increased funding for Air Force ceremonial items, Navy skivvies and other minor procurements.

Maritime Systems

Fuels and Lubricants - Navy, Army, Air Force 576 524 -52

Assistance with the development of fuel installation remediation is ongoing. Long term product contracts continue to develop and the transition of fuel card contractual arrangements is progressing.

The variation is due to lower than forecasted consumption, reduced purchases and fuel price reductions.

151



$m

Revised Budget

Estimate2014-15

$mVariation


Anzac Class Frigate 280 294 14

Ongoing support has achieved the required materiel capability of the Anzac Class Frigates.

Planning effort has the Anzac Class Block Upgrade Program on schedule to commence in 2016. Planning for incorporation of the Maritime Communications Modernisation Project, SEA 1442 Phase 4; proposed Anzac Air Search Radar Replacement, SEA 1448 Phase 4B; and the Platform Systems Remediation program is progressing.

The variation is due to authorised increased work at West Head Gunnery Range, Victoria, and Anti-Ship Missile Defence upgrade work on HMAS Parramatta .

Adelaide Class Frigate 125 134 9

Materielly seaworthy ships have been maintained to meet the Navy’s operational requirements.

Work will be undertaken to extend HMAS Sydney as an alongside harbour training ship, pending delivery of the first Air Warfare Destroyer Ship 01 Hobart .

The variation is due to increased requirement for maintenance work.

Canberra Class Landing Helicopter Dock (LHD) 71 69 -2

The first LHD and the first four landing craft were delivered to the Navy in October 2014. All necessary contracts have been established for the effective introduction and sustainment of the LHD and associated landing craft.

The variation resulted from a refinement of sustainment costs following acceptance of HMAS Canberra in October 2014.

Mine Hunter Coastal 65 67 2

Scheduled ship maintenance was completed to meet operational requirements. Detailed design for incorporation of a Watermist ships fire fighting system, is progressing on schedule. The combat system upgrade is on schedule with first-of-class installation completed.

The variation is due to approved adjustments in workforce augmentation and common procurement item costs associated with a major engine overhaul brought forward to 2014-15.

152



$m

Revised Budget

Estimate2014-15

$mVariation


Auxiliary Oiler Replenishment 48 45 -3

The completion of two scheduled ship maintenance periods enabled HMAS Success to meet all Navy operational commitments. The significant maintenance effort invested in the ship since 2012, and the conduct of corrective maintenance requirements without detriment to the ship’s program resulted in an exceptional level of operational availability.

The variation is due to costs for two maintenance periods being lower than expected.

General Manager SubmarinesCollins

Collins Class Submarines 560 560 0

The Defence Materiel Organisation, ASC Pty Ltd and the Navy are working closely to achieve the agreed Collins Class Submarine performance outcomes within the allocated budget. Unscheduled repairs to HMAS Waller during 2014-15 and extending into 2015-16 are, however, challenging the Collins sustainment program.

Total - Top 30 Products 4,153 3,966 -187Other Approved Sustainment Product Estimates 1,226 1,317 91Total Sustainment Product Funds Available 5,379 5,283 -96Support to Operations 139 315 176Total Sustainment and Operations Funding 5,518 5,598 80

153


Programme 1.3 Provision of Policy Advice and Management Services




The nature of the costs of Programme 1.3 remains as described in the Portfolio Budget Statements 2014-15.

The revised planned resource use for Programme 1.3 is $109.3m which continues to represent approximately one per cent of the DMO’s total expenses. The planned resource use for Programme 1.3 includes:

Direct appropriation of $70.0m for policy advice and management services.

Direct appropriation of $27.1m relating to industry programs.

Resources received free of charge from Defence and the Australian National Audit Office of $11.3m.

Other revenue of $0.9m.

The estimates for Programme 1.3 increased by $3.8m since the Portfolio Budget Statements 2014-15 largely as a result of a reallocation of Workforce and Operating Expenses between programmes to cater for variations in work effort and priorities.

Table 97: Programme 1.3 Provision of Policy Advice and Management Services

2013-14Actual$'000


$'000

2015-16Forward

year 1$'000

2016-17Forward

year 2$'000

2017-18Forward

year 3$'000

Special Account Expenses:Defence Materiel Special Account - 894 917 2,596 963


Expenses not requiring appropriation in the Budget year[1]

11,653 11,261 11,515 11,776 12,043

Total Programme Expenses 105,234 109,251 105,312 110,302 121,304


154



No changes have been made to the Programme Deliverables since the Portfolio Budget Statements 2014-15.



155


Section 3: DMO Explanatory Tables and Budgeted Financial Statements


3.1.1 Special Accounts

Special Accounts provide a means to set aside and record amounts used for specified purposes. Table 98 shows the expected additions (receipts) and reductions (payments) for each account used by the DMO. The corresponding table in the 2014-15 PB Statements is Table 92.

Table 98: Estimates of Special Account Flows and Balances

Outcome

Opening2014-152013-14

$'000

Receipts2014-152013-14

$'000

Payments2014-152013-14

$'000

Adjustments2014-152013-14

$'000

Closing Balance2014-152013-14

$'000

1 329,116 12,407,412 12,403,311 - 333,217247,136 10,992,822 10,910,842 - 329,116

Total Special Accounts 2014-15 329,116 12,407,412 12,403,311 - 333,2172013-14 actual 247,136 10,992,822 10,910,842 - 329,116

Notes

Receipts and payments for 2014-15 includes $59.631m on behalf of foreign Governments.

Defence Materiel Special Account (A & D)

(A) = Administered(D) = Departmental

156


3.1.2 Australian Government Indigenous Expenditure

The 2014-15 Australian Indigenous Statement is not applicable to the DMO as it has no specific indigenous expenditure. The DMO participates in the wider Departmental Indigenous Programmes.

157


3.1.3 Grants

Table 99 shows Approved Grants for 2014-15. Detailed information on Grant Programmes and recipients can be found at:

<www.defence.gov.au/dmo/DoingBusiness/Industry/SkillingDefenceIndustry/SkillingAustralianDefenceIndustry/Default >

<www.defence.gov.au/dmo/DoingBusiness/Industry/IndustrySupportPrograms/PriorityIndustryCapabilityInnovationProgram/>

<www.defence.gov.au/dmo/DoingBusiness/Industry/SkillingDefenceIndustry/IndustrySkillingProgramEnhancement/Default.>

<www.defence.gov.au/dmo/DoingBusiness/Industry/IndustrySupportPrograms/NACC-ISP/default>

Table 99: Approved Grants for 2014-15

2013-14Actual

Expenses$’000

2014-15Revised

Estimated Expenses

$’000Skilling Australia’s Defence Industry (SADI) 7,348 5,300Priority Industry Capability Innovation Program (PIC IP) 3,545 2,763Industry Skilling Programme Enhancement (ISPE) 1,478 894New Air Combat Capability Industry Support Program (NACC ISP) 629 1,513Total 13,000 10,470

158


3.2 DMO BUDGETED FINANCIAL STATEMENTS

3.2.1 Budgeted Financial Statements Tables

Table 100: Comprehensive Income Statement (Showing Net Cost of Services) for the Period Ended 30 June

2013-14Actual Result

$'000

2014-15Revised

Estimate$'000


$'000


$'000


$'000EXPENSES

Employee benefits 558,919 531,368 557,670 572,135 578,081Supplier expenses 9,738,994 11,682,777 12,617,013 12,275,657 13,808,579Grants 13,000 10,470 8,599 9,870 8,598Depreciation and amortisation 989 1,326 1,346 1,380 1,415Write-down and impairment of assets 3,461 - - - -Foreign Exchange Losses 18,057 - - - -Other Expenses 20 - - - -

Total expenses 10,333,440 12,225,941 13,184,628 12,859,042 14,396,673LESS:OWN-SOURCE INCOME

Own-source revenueSales of goods and rendering of services 9,464,685 11,311,744 12,237,534 11,866,400 13,371,079Interest 1,251 - - - -Other revenue 32,142 34,605 35,443 37,958 37,182

Total own-source revenue 9,498,078 11,346,349 12,272,977 11,904,358 13,408,261Gains

Other gains 4 - - - -Total gains 4 - - - -

Total own-source income 9,498,082 11,346,349 12,272,977 11,904,358 13,408,261Net cost of (contribution by) services 835,358 879,592 911,651 954,684 988,412

Revenue from Government 907,791 879,592 911,651 954,684 988,412Surplus (Deficit) attributable to the Australian Government 72,433 - - - -OTHER COMPREHENSIVE INCOME

Changes in asset revaluation reserves 38 - - - -Total other comprehensive income 38 - - - -Total comprehensive income (loss) attributable to the Australian Government 72,471 - - - -

159



2013-14ActualResult

$'000

2014-15Revised

Estimate$'000


$'000


$'000



Cash and cash equivalents 122,628 130,000 130,000 130,000 130,000Trade and other receivables 733,299 465,834 422,935 366,515 362,009

Total financial assets 855,927 595,834 552,935 496,515 492,009Non-financial assets

Property, plant and equipment 5,061 5,061 5,061 5,061 5,061Intangibles 13 - - - -Other non-financial assets 1,383,350 1,538,759 1,538,759 1,538,759 1,538,774

Total non-financial assets 1,388,424 1,543,820 1,543,820 1,543,820 1,543,835Total assets 2,244,351 2,139,654 2,096,755 2,040,335 2,035,844LIABILITIESPayables

Suppliers 1,341,482 1,380,997 1,380,997 1,380,997 1,380,997Grants 5,733 5,733 5,733 5,733 5,733Other payables 238,554 92,722 43,507 15,924 4,699

Total payables 1,585,769 1,479,452 1,430,237 1,402,654 1,391,429Provisions

Employee provisions 180,415 182,035 188,351 194,873 201,607Other provisions 3,024 3,024 3,024 3,024 3,024

Total provisions 183,439 185,059 191,375 197,897 204,631Total liabilities 1,769,208 1,664,511 1,621,612 1,600,551 1,596,060NET ASSETS 475,143 475,143 475,143 439,784 439,784EQUITY

Contributed equity 155,368 155,368 155,368 155,368 155,368Reserves 290 290 290 290 290Retained surplus (accumulated deficit) 319,485 319,485 319,485 284,126 284,126

Total parent entity interest 475,143 475,143 475,143 439,784 439,784Total equity 475,143 475,143 475,143 439,784 439,784

160


Table 102: Departmental Statement of Changes in Equity – Summary of Movement (Budget Year 2014-15)

Retained Earnings

$'000

Asset Revaluation

Reserve$'000

Contributed Equity/Capital

$'000

Total Equity

$'000Opening balance as at 1 July 2014

Balance carried forward from previous period 319,485 290 155,368 475,143Adjustment for changes in accounting policies - - - -

Adjusted opening balance 319,485 290 155,368 475,143Surplus (Deficit) for the period - - - -

Total comprehensive income recognised directly in equity - - - -Transactions with owners

Contributions by ownersAppropriation (equity injection) - - - -Departmental Capital Budget (DCB) - - - -

Sub-total transaction with owners - - - -Estimated closing balance as at 30 June 2015 319,485 290 155,368 475,143

161


Table 103: Budgeted Departmental Statement of Cash Flows (for the Period Ended 30 June)


$'000

2014-15Revised

Estimate$'000


$'000


$'000



Goods and services 9,997,310 11,474,404 12,237,556 11,948,691 13,420,480Appropriations 905,499 875,504 924,343 945,538 981,513Net GST received 627,756 827,040 881,378 858,560 965,447Other cash received 4,818 894 917 2,596 963


Employees 551,862 527,280 570,362 562,989 571,182Suppliers 9,820,589 11,804,367 12,582,509 12,255,283 13,783,524Grants 12,378 10,470 8,599 9,870 8,598Net GST paid 630,009 827,040 881,378 858,560 965,447Funds returned to Defence and OPA 491,662 - - - -Other cash used 1 - - 67,303 38,237

Total cash used 11,506,501 13,169,157 14,042,848 13,754,005 15,366,988Net cash from (used by) operating activities 28,882 8,685 1,346 1,380 1,415INVESTING ACTIVITIESCash Received

Proceeds from sale of property, plant and equipment 528 - - - -Total cash Received 528 - - - -Cash used

Purchase of property, plant and equipment 1,124 1,313 1,346 1,380 1,415Total cash used 1,124 1,313 1,346 1,380 1,415Net cash from (used by) investing activities -596 -1,313 -1,346 -1,380 -1,415Net increase (decrease) in cash held 28,286 7,372 - - -

Cash and cash equivalents at the beginning of the reporting period 94,342 122,628 130,000 130,000 130,000


162




$'000

2014-15Revised

Estimate$'000


$'000


$'000


$'000PURCHASE OF NON-FINANCIAL ASSETS

Funded internally from departmental resources[1] 1,124 1,313 1,346 1,380 1,415Total 1,124 1,313 1,346 1,380 1,415Reconciliation of cash used to acquire assets to asset movement table

Total purchases 1,124 1,313 1,346 1,380 1,415Total cash used to acquire assets 1,124 1,313 1,346 1,380 1,415

Note1. Includes the following sources of funding:

- annual and prior year appropriations- donations and contributions- gifts- internally developed assets- s74 Retained Revenue Receipts- proceeds from the sale of assets.

Table 105: Statement of Asset Movements (2014-15)

Other Property, Plant and

Equipment$'000

Intangibles$'000

Total$'000

As at 1 July 2014Gross book value 7,218 292 7,510Accumulated depreciation/amortisation and impairment -2,157 -279 -2,436Opening net book balance 5,061 13 5,074CAPITAL ASSET ADDITIONSEstimated expenditure on new or replacement assets

By purchase - internal sources 1,313 - 1,313Total Additions 1,313 - 1,313Other MovementsDepreciation and amortisation -1,313 -13 -1,326Total other movements -1,313 -13 -1,326

As at 30 June 2015Gross book value 8,531 292 8,823Accumulated depreciation/amortisation and impairment -3,470 -292 -3,762Closing net book value 5,061 - 5,061

Asset Category

163


3.2.2 Analysis of Budgeted Financial Statements

Revisions to the budgeted financial statements for the DMO since Portfolio Budget Statements 2014-15 are presented in this section.

Income Statement

Analysis of the comprehensive income statement (Table 100) shows a difference of $1,892.5m between the revised estimate of $12,225.9m, and the 2013-14 actual expenses of $10,333.4m. This difference is a result of increased capital investment and sustainment activity and supplementation of foreign exchange movements.

There has been a decrease in DMO’s total estimated income for 2014-15 of $354.1m since the Portfolio Budget Statement 2014-15 largely as a result of the following:

a reduction of $246.4m by Defence of the estimated value of major and minor projects to be approved and transferred to the DMO for delivery during the remainder of 2014-15

a reduction in payments required from Defence for approved major projects of $144.4m reflecting the higher outcome achieved in 2013-14

a net decrease in sustainment funding of $96.6m reflecting changed customer demand and requirements

a $45.7m reduction to the provision for Net Personnel and Operating costs in support of new capabilities expected to enter service

a reduction to estimates for directly appropriated workforce and operating expenses of $1.4m due to minor functional transfers to Defence.

These decreases were offset by:

additional funding of $175.2m for support of current ADF operations

additional funding of $5.1m due to foreign exchange rate movements.

Balance Sheet

The balance sheet has been updated to reflect the 2013-14 audited financial statements and adjustments to the income statement as described above.

Statement of Cash Flows

The estimated cash flow has been updated to reflect changes in the income statement and balance sheet as noted above.

164


3.2.3 Administered Budgeted Financial Statements Tables

Table 106: Schedule of Budgeted Income and Expenses Administered on Behalf of Government (for the Period Ended 30 June)


$'000


$'000


$'000


$'000



Interest 67 - - - -Other 1,961 250 250 250 250

Total Non-taxation 2,028 250 250 250 250Total own-sourced income administered on behalf of Government 2,028 250 250 250 250EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT

Foreign Exchange losses 38 - - - -

Total expenses administered on behalf of Government 38 - - - -

Table 107: Schedule of Budgeted Assets and Liabilities on Behalf of Government (as at 30 June)


$'000

2015-16 Revised Budget

$'000


$'000


$'000



Receivables 1,502 1,502 1,502 1,502 1,502Total Financial assets 1,502 1,502 1,502 1,502 1,502

Total Assets administered on behalf of Government 1,502 1,502 1,502 1,502 1,502LIABILITIES ADMINISTERED ON BEHALF OF GOVERNMENTPayables

Other Payables 1,539 1,539 1,539 1,539 1,539Total Financial assets 1,539 1,539 1,539 1,539 1,539

Total Assets administered on behalf of Government 1,539 1,539 1,539 1,539 1,539

165


Table 108: Schedule of Budgeted Administered Cash Flows (for the Period 30 June)


$'000


$'000


$'000


$'000



Interest 73 - - - -Levies 2,474 - - - -Other 1,539 250 250 250 250

Total Cash received 4,086 250 250 250 250

Net cash from or (used by) operating activities 4,086 250 250 250 250Net increase (decrease) in cash held and cash equivalents held 4,086 250 250 250 250

Cash and cash equivalents at the beginning of reporting period - - - - -Cash from the Official Public Account for return of administrative recepits 191 - - - -Cash to the Official Public Account for:

- Transfers to other entities (Finance -Whole of Government) 4,277 250 250 250 250

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

166


3.2.3 Notes to the Financial Statements

The notes on the budgeted financial statements (income, balance sheet, cash flows and capital budget statement) remain as reported in the Portfolio Budget Statements 2014-15.

167

168

Defence Housing Australia


Section 1: DHA Overview and Resources

Section 2: DHA Outcomes and Planned Performance

Section 3: DHA Explanatory Tables and Budgeted Financial Statements

169


170


DEFENCE HOUSING AUSTRALIA

Section 1: DHA Overview and Resources


DHA Organisational Structure

DHA advises no significant changes to targets published in the Portfolio Budget Statements 2014-15. However, the DHA Board composition has changed and is detailed below.

The DHA Board members are:

Chairman (Acting) The Hon J.A.L. (Sandy) Macdonald

Managing Director Mr Peter Howman

Commercial Director Ms Margaret Walker

Commercial Director Ms Carol Holley

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

DHA advises no change to the Advisory Committee or the DHA Investment Management Ltd Board since the Portfolio Budget Statements 2014-15.

171


1.2 DHA RESOURCE STATEMENT

Table 109: DHA Resource Statement – Budget Estimates for 2014-15 as at Additional Estimates February 2015[1]

Estimate Proposed Totalas at + Additional = estimate at

Budget Estimates AdditionalEstimates

2014-15 2014-15 2014-15Source $'000 $'000 $'000

Opening balance/Reserves at bank 127,016 154,986 282,002

REVENUE FROM GOVERNMENTOther services

Non-operating - - -

Total other services - - -

Total annual appropriations - - -

Payments from related entitiesDepartment of Defence 561,491 (12,811) 548,680 Total 561,491 (12,811) 548,680

Total funds from Government 561,491 (12,811) 548,680 FUNDS FROM INDUSTRY SOURCESFUNDS FROM OTHER SOURCES

Interest 4,299 3,071 7,370 Sale of goods and services 578,283 74,266 652,549 Total 582,582 77,337 659,919

Total net resourcing for agency 1,144,073 64,526 1,208,599

Notes1. 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.

172


1.3 BUDGET MEASURES

There are no measures relating to the 2014-15 Additional Estimates.

173


1.4 ADDITIONAL ESTIMATES AND VARIATIONS

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.

174


1.5 BREAKDOWN OF ADDITIONAL ESTIMATES BY APPROPRIATION BILL

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.

175


Section 2: DHA Outcomes and Planned Performance

DHA advises no significant changes to targets published in the Portfolio Budget Statements 2014-15.

2.1 OUTCOME AND PERFORMANCE INFORMATION

176


Outcome 1: To contribute to Defence outcomes by providing total housing services that meet Defence Operational and client needs through a strong customer and business focus

Outcome 1 Strategy

Outcome Expense Statement

Table 110: Budgeted Expenses for Outcome 1

2013-14 2014-15Actual Revised

expenses estimatedexpenses

$'000 $'000Programme 1.1: (Other Departmental - DHA)Revenue from Government

Payment from related entities 593,967 618,540Revenues from other independent sources 551,791 625,016

Total for Programme 1.1 1,145,758 1,243,556Total expenses for Outcome 1 1,145,758 1,243,556

Outcome 1: (To contribute to Defence outcomes by providing total housing services that meet Defence operational and client needs through a strong customer and business focus)

177



Programme 1.1: The provision of Defence housing and housing related services


178


Section 3: DHA Explanatory Tables and Budgeted Financial Statements

DHA advises no significant changes to targets published in the Portfolio Budget Statements 2014-15.


Not applicable to DHA.

3.2 BUDGETED FINANCIAL STATEMENTS

3.2.1 Budgeted Financial Statements

Table 111: Comprehensive Income Statement (showing net cost of services) for the period ended 30 June

Actual Revised Forward Forward Forwardbudget estimate estimate estimate

2013-14 2014-15 2015-16 2016-17 2017-18$'000 $'000 $'000 $'000 $'000

INCOMERevenueSale of goods and rendering of services 1,131,959 1,236,086 1,295,439 1,448,884 1,497,117Interest 13,799 7,470 3,147 2,059 3,967Total revenue 1,145,758 1,243,556 1,298,586 1,450,943 1,501,084GainsSale of assets 1,214 (2,064) (1,702) (2,200) (1,315)Total gains 1,214 (2,064) (1,702) (2,200) (1,315)Total income 1,146,972 1,241,492 1,296,884 1,448,743 1,499,769EXPENSESEmployee benefits 65,993 72,460 75,135 77,906 80,799Suppliers 946,965 1,028,423 1,081,772 1,214,877 1,260,971Depreciation and amortisation 14,604 14,312 14,670 15,037 14,936Finance costs 28,703 29,636 30,936 32,866 34,175Write-down and impairment of assets 11,337 11,500 7,500 7,500 7,500Total expenses 1,067,602 1,156,331 1,210,013 1,348,186 1,398,381Profit (Loss) before income tax on continuing operations 79,370 85,161 86,871 100,557 101,388Income tax expense 23,381 26,383 26,566 30,205 28,595

Profit (Loss) after income tax from continuing operations 55,989 58,778 60,305 70,352 72,793

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2013-14 2014-15 2015-16 2016-17 2017-18$'000 $'000 $'000 $'000 $'000

ASSETSFinancial assets

Cash and cash equivalents 282,002 136,236 22,793 40,119 103,740Trade and other receivables 52,733 105,001 180,134 207,181 208,011Other investments 2,474 3,502 3,502 - -Other financial assets 47,589 59,467 62,929 62,963 62,668

Total financial assets 384,798 304,206 269,358 310,263 374,419Non-financial assets

Land and buildings 1,498,768 1,491,243 1,494,101 1,483,527 1,494,705Property, plant and equipment 13,511 14,978 18,978 22,978 24,874Tax assets 4,253 22,558 23,122 23,700 4,547Other non-financial assets 39,018 39,018 39,018 39,018 39,023

Total non-financial assets 1,555,550 1,567,797 1,575,219 1,569,223 1,563,149Assets held for sale 1,026,098 1,140,641 1,261,024 1,338,671 1,393,562


Suppliers 11,448 14,091 13,049 12,125 19,838Dividends 54,037 50,128 50,476 57,390 54,331Tax liabilities (5,202) 8,159 8,397 8,163 7,998Other payables 93,736 61,505 63,303 61,541 96,180

Total payables 154,019 133,883 135,225 139,219 178,347

Interest bearing liabilitiesLoans 509,580 509,580 529,580 569,580 569,580

Total interest bearing liabilities 509,580 509,580 529,580 569,580 569,580

ProvisionsEmployee provisions 23,124 32,096 33,138 34,062 26,327Other provisions 101,117 93,446 96,177 93,501 99,710

Total provisions 124,241 125,542 129,315 127,563 126,037Total liabilities 787,840 769,005 794,120 836,362 873,964

Net assets 2,178,606 2,243,639 2,311,481 2,381,795 2,457,166EQUITYParent entity interest

Contributed equity 396,148 396,148 396,148 396,148 396,148Reserves 1,754,319 1,810,702 1,868,715 1,926,067 1,982,976Retained surplus

(accumulated deficit) 28,139 36,789 46,618 59,580 78,042Total parent entity interest 2,178,606 2,243,639 2,311,481 2,381,795 2,457,166

Attributed to Non-ControllingInterest*

Total non-controlling interest - - - - -Total Equity 2,178,606 2,243,639 2,311,481 2,381,795 2,457,166

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Table 113: Budgeted Departmental Statement of Cash Flows (for the period ended 30 June)


2013-14 2014-15 2015-16 2016-17 2017-18$'000 $'000 $'000 $'000 $'000

OPERATING ACTIVITIESCash received

Sale of goods and rendering of services 1,086,896 1,200,613 1,229,049 1,421,893 1,494,954Interest 13,127 7,370 3,047 2,099 3,968Other 34,217 24,254 24,859 25,481 28,639


Employees 70,625 72,460 75,136 77,906 74,003Suppliers 1,043,230 1,134,934 1,140,769 1,221,577 1,185,362Borrowing costs 29,330 29,636 29,836 29,566 34,175Other 58,386 64,876 63,881 66,916 75,777

Total cash used 1,201,571 1,301,906 1,309,622 1,395,965 1,369,317Net cash from (used by)

operating activities (67,331) (69,669) (52,667) 53,508 158,244INVESTING ACTIVITIESCash received

Proceeds from sales of property,plant and equipment 83,063 51,600 42,538 54,995 32,887


Purchase of property, plant,equipment and intangibles 15,805 73,706 73,186 80,701 70,120

Investments (3,720) - - - -Total cash used 12,085 73,706 73,186 80,701 70,120Net cash from (used by)

investing activities 70,978 (22,106) (30,648) (25,706) (37,233)FINANCING ACTIVITIESCash received

Other - - 20,000 40,000 -Total cash received - - 20,000 40,000 -

Cash usedDividends paid 51,073 53,991 50,128 50,476 57,390

Total cash used 51,073 53,991 50,128 50,476 57,390Net cash used by

financing activities (51,073) (53,991) (30,128) (10,476) (57,390)Net increase (decrease)

in cash held (47,426) (145,766) (113,443) 17,326 63,621Cash and cash equivalents at the

beginning of the reporting period 329,428 282,002 136,236 22,793 40,119Cash and cash equivalents at the

end of the reporting period 282,002 136,236 22,793 40,119 103,740

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Table 114: Departmental Statement of Changes in Equity – Summary of Movement (Budget Year 2014-15)

Retained Asset Other Contributed Totalearnings revaluation reserves equity/ equity

reserve capital$'000 $'000 $'000 $'000 $'000

Opening balance as at 1 July 2014Balance carried forward from

previous period 28,139 1,754,319 - 396,148 2,178,606Adjusted opening balance 28,139 1,754,319 - 396,148 2,178,606Comprehensive income

Surplus (deficit) for the period 58,778 - - - 58,778

Total comprehensive income 58,778 - - - 58,778Transactions with owners

Distributions to ownersReturns on capital:

Dividends (50,128) - - - (50,128)Contributions by owners

Other - 56,383 - - 56,383Sub-total transactions with owners (50,128) 56,383 - - 6,255Estimated closing balance

as at 30 June 2015 36,789 1,810,702 - 396,148 2,243,639

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2013-14 2014-15 2015-16 2016-17 2017-18$'000 $'000 $'000 $'000 $'000

PURCHASE OF NON-FINANCIALASSETSFunded internally from 159,556 144,511 113,161 22,778

departmental resources(3)TOTAL AMOUNT SPENT 159,556 144,511 113,161 22,778 -RECONCILIATION OF CASH

USED TO ACQUIRE ASSETSTO ASSET MOVEMENT TABLE

Total purchases 159,556 144,511 113,161 22,778 -Total cash used to

acquire assets 159,556 144,511 113,161 22,778 -

Table 116: Statement of Asset Movements (2014-15)

Land Buildings Other property, L&B, IP&E Totalplant and held for sale

equipment$'000 $'000 $'000 $'000 $'000

As at 1 July 2014Gross book value 811,838 686,975 30,897 39,018 1,568,728Accumulated depreciation/amortisation

and impairment - (45) (17,386) - (17,431)Opening net book balance 811,838 686,930 13,511 39,018 1,551,297-CAPITAL ASSET ADDITIONSEstimated expenditure on

new or replacement assetsBy purchase - other - - 3,471 - 3,471Total additions - - 3,471 - 3,471Other movementsAssets held for sale or in a disposal

group held for sale (240) (7,285) - - (7,525)Depreciation/amortisation expense - - (2,004) - (2,004)Total other movements (240) (7,285) (2,004) - (9,529)As at 30 June 2015Gross book value 811,598 679,690 34,368 39,018 1,564,674Accumulated depreciation/amortisation

and impairment - (45) (19,390) - (19,435)Closing net book balance 811,598 679,645 14,978 39,018 1,545,239

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GLOSSARYAccumulated 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.

184

Glossary

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 Capability Plan

The Defence Capability Plan is a costed, detailed development plan for Australia’s military capabilities over a ten-year period. The plan is reviewed regularly to take account of changing strategic circumstances, new technologies and changed priorities, in the context of the overall Defence budget.

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 Management and Finance Plan

The Defence Management and Finance Plan provide Ministers and central agencies with a clear oversight of Defence planning and financing strategies. It describes the strategies agreed through the 2000 Defence White Paper and subsequent Strategic Review papers. As a compendium of information attached to Defence’s annual Portfolio Budget Submission, it is intended to help Ministers make informed strategic and budgetary decisions on Defence, by bringing into one document the expected financial position of the portfolio taking into account existing commitments and proposed new investments. The Plan also provides the Government with the information necessary to ensure that its investment in Defence is both affordable and sustainable.

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

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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 established the regulatory framework for financial management within Defence and other public sector agencies between 1997 and 2014.

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 (e.g. 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.

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Glossary

Listed Entity (a) any body (except a body corporate), person, group of persons or organisation;

(b) any combination of bodies (except bodies corporate), persons, groups of persons or organisations (whether or not part of a Department of State);

that is prescribed by an Act or the Public Governance, Performance and Accountability Rule 2014 to be a listed entity.

Materiel Acquisition Agreements

Materiel Acquisition Agreements cover the Defence Materiel Organisation’s 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 Defence Materiel Organisation. These agreements cover the sustainment of current capability, including good and services such as repairs, maintenance, fuel and explosive ordnance.

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

The Public Governance, Performance and Accountability Act 2013 replaced the Financial Management and Accountability Act 1997 and the Commonwealth

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2013 Authorities and Companies Act 1997 on 1 July 2014.

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.

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 (PGPA Act), 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 PGPA Act) or through an Act of Parliament (referred to in s.80 of the PGPA Act).

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 Programme Office

The office of the Programme Manager. It serves as the single point of contact with industry, government agencies, and other activities participating in the acquisition

188

Glossary

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.

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.

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ACRONYMS AAAFCANS Army and Air Force Canteen ServiceACMI Air Combat Manoeuvring InstrumentationACPB Armidale Class Patrol BoatADF Australian Defence ForceADFA Australian Defence Force AcademyADFHQ Australian Defence Force HeadquartersADFIS Australian Defence Force Investigative Service ADO Australian Defence OrganisationAFS Average Funded StrengthAIS Aeronautical Information SystemAMCIP Approved Major Capital Investment ProgrammeAMRAAM Advanced Medium Range Air to Air MissilesANAO Australian National Audit OfficeAPS Australian Public ServiceAPRCC Australian Protected Route Clearance CapabilityASMD Anti-Ship Missile DefenceASPI Australia Strategic Policy InstituteAUS-CSCAP Australian Member Committee of the Council for Security Cooperation in the

Asia-PacificAWD Air Warfare Destroyer

CC-RAM Counter Rocket, Artillery & MortarCCSM Collins Class SubmarineCDF Chief of the Defence ForceCDG Capability Development GroupCEO Chief Executive OfficerCFBLNet Combined Federated Battle Laboratories NetworkCFOG Chief Finance Officer GroupCIR Capability Investment and ResourcesCIOG Chief Information Officer GroupCJOPS Chief of Joint OperationsCOO Chief Operating Officer190

Acronyms

COSC Cyber Security Operational CentreCPM Command Post Mobile

DDACC Defence Assistance to the Civil CommunityDCB Departmental Capital BudgetDCEO Deputy Chief Executive OfficerDCP Defence Capability PlanDFAT Department of Foreign Affairs and TradeDHA Defence Housing AustraliaDHF Defence Housing ForecastDMO Defence Materiel OrganisationDPG Defence People GroupDSRG Defence Support and Reform GroupDSTO Defence Science & Technology Organisation

EELF Enhanced Land ForceES Electronic SupportESSM Evolved Sea Sparrow Missiles

FFFG Guided Missile FrigateFMS Foreign Military SalesFOC Full Operational Capability

GGMCOM General Manager CommercialGM LM General Manager Land and MaritimeGM JSA General Manager Joint, Systems and Air

191


HHF High FrequencyHMAS Her Majesty's Australian ShipHQ HeadquartersHQJOC Headquarters Joint Operations Command

IICT Information and Communications TechnologyIISS International Institute for Strategic StudiesILMF Intermediate Level Maintenance FacilityIOC Initial Operational Capability

JJLC Joint Logistics CommandJOC Joint Operations CommandJORN Jindalee Operational Radar NetworkJP Joint ProjectJSF Joint Strike Fighter

LLADS Laser Airborne Depth Sounder AircraftLAIRCM Large Aircraft Infra Red Counter MeasureLEAP Living Environment and Accommodation PrecinctLHD Landing Helicopter/Heavy DockLLC Line Laying CapabilityLOGIS Logistics Information Systems

MMA Mulwala AgreementMAA Materiel Acquisition AgreementMFO Multi-National Force ObserversMHC Mine Coastal HunterMIMT Moorebank Intermodal Freight TerminalMRH Multi-Role HelicopterMRTT Multi-Role Tanker TransportMSA Materiel Sustainment AgreementMSBS Military Superannuation and Benefits Scheme192

Acronyms

MYEFO Mid Year Economic Fiscal Outlook

NNACC New Air Combat CapabilityNATO North Atlantic Treaty Organisation NPOC Net Personnel & Operating Costs

OOPA Official Public AccountOSCDF Office of the Secretary & CDF

PPAES Portfolio Additional Estimates StatementsPBS Portfolio Budget StatementsP&EE Proof & Experimental EstablishmentPGPA Public Governance Performance and AccountabilityPIC Priority Industry CapabilityPICIP Priority Industry Capability Innovation ProgrammePRM Project Realisation ManagerPWC Public Works ConsiderationPWC Parliamentary Standing Committee on Public WorksPWEA Point Wilson Explosive Area

RRAAF Royal Australian Air ForceRADM Rear AdmiralRANCCF Royal Australian Navy Central Canteens Fund

SSAR Search and RescueSATCOM Satellite CommunicationsS&T Science & TechnologySIE Single Information EnvironmentSOETM Services for Other Entities and Trust MoneysSME Specialist Military EquipmentSPO System Programme Office

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TTACAN Tactical Air Control and Navigation

UUAD Unit Availability DaysURD Unit Ready DaysUS United StatesUSAF United States Air ForceUSN United States Navy

VVCDF Vice Chief of the Defence ForceVRs Voluntary Redundancies

WWHGR West Head Gunnery Range

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Documents

PORTFOLIO ADDITIONAL - Department of Defence · Web viewThe purpose of the Portfolio Additional Estimates Statements (PAES), like that of the Portfolio Budget Statements (PB Statements),