Australian defence budget is at a record high, but how that money will be spent, and on what, still provides challenges.
Australia announced its 2024/25 federal budget in mid-May, allocating a record $36.8 billion (A$55.7 billion) to defence. The figure represented a 6.3 percent increase from last year, and included $11 billion (A$16.7 billion) for equipment purchases.
However, the really significant spending boost – as promised in April’s National Defence Strategy – will not start until 2027-28, when defence expenditure is slated to reach $44.4 billion (A$67.4 billion), before ramping up to $65.8 billion (A$100 billion) by 2033-34.
Despite growing defence expenditure, Jennifer Parker, an expert associate at the Australian National University, warned of “a significant gap in Australian Defence Force (ADF) capability over the next ten, maybe 15, years. This gap coincides with the most strategically unstable geopolitical situation since WWII,” she said. “This remains a large risk.”
A catalyst for elevated spending is China’s “coercive tactics in pursuit of its strategic objectives”, the National Defence Strategy explained. The document said the ADF needs to “hold an adversary at risk farther from our shores” by defending Australia’s northern approaches, transmogrifying to a strategy of denial, and moving from a balanced/joint force to a focused/integrated one.
The strategy urged six immediate actions: invest in nuclear-powered submarines (SSN); develop long-range precision strike capabilities and manufacture munitions domestically; improve the ability to operate from northern bases; better introduce disruptive, new technologies; grow the defence workforce; and deepen Indo-Pacific partnerships.
Royal Australian Navy
The Royal Australian Navy (RAN) receives $7.12 billion (A$10.7 billion) in the coming fiscal year, dominated by $1.4 billion (A$2.8 billion) for expensive SSNs. A critical issue is that a viable fleet of SSNs is many years away, creating a capability gap as six existing Collins-class submarines soldier on.
Malcolm Davis, senior analyst at the Australian Strategic Policy Institute (ASPI), told Asian Military Review: “What we needed to be doing was essentially replacing the Collins class much earlier than we’re planning to. Then we’d have an advanced air-independent propulsion-equipped conventional submarine that can then operate alongside the SSNs once they are available. I know navy was concerned that if we went down the path of an interim gap-filler capability with a conventional boat, that the SSNs would then be scrapped. But I think that the case could have been made to government to have both, and that would have solved our problem. But instead, now we’re facing this risk of a serious capability gap as the SSNs really don’t start turning up until the mid-2030s.”
Autonomous underwater systems will become more prominent, especially under AUKUS Pillar II, with April’s Integrated Investment Plan (IIP) stating, “The development and acquisition of uncrewed surface vessels and uncrewed undersea vehicles will take advantage of technological advancements in autonomous, robotic and uncrewed systems. This will include investments in expendable, low‑cost systems that can be produced at scale and deployed in larger groups on operational missions.”
Davis concurred that the RAN needs to consider exploiting autonomous systems to create mass. For instance, he suggested the navy could build 20-30 Anduril Ghost Sharks equipped with torpedoes or mines, “But are we prepared to put our trust in an autonomous system to be able to operate that effectively in a challenging environment?”
The Enhanced Lethality Surface Combatant Fleet review appeared in February, advocating a future flotilla of 26 surface warships. This figure comprises Tier 1 with three Hobart-class destroyers and six Hunter-class frigates (BAE Systems Australia recently started constructing the first-of-class, but the programme was cut from nine warships to six), plus 11 smaller Tier 2 general-purpose frigates and six large optionally crewed surface vessels. The latter, based on a U.S. design and featuring 32 missile cells, will be built in Henderson ready to enter service from the mid-2030s.
These 11 off-the-shelf frigates will be at least Anzac-class size to “provide maritime and land strike, air defence and escort capabilities”. The first three will be constructed overseas, and the remainder in Western Australia. In a mysterious selection process, the navy narrowed contenders to the Germany ThyssenKrupp Marine Systems MEKO A-200, Japanese Mitsubishi Heavy Industries 30FFM, South Korean Hyundai Heavy Industries and Hanwha Ocean FFX Batch II/III, and Spanish Navantia Alfa 3000.
Responses to the stage 1 tender (overseas construction of three ships) were due on 22 June, while stage 2 (Australian construction of the next six ships) bids were due in July. Shortlisting of two designs will occur in around November, ahead of selection later in 2025. First steel should be cut in 2026, ahead of first delivery in 2030.
However, this whole acquisition reeks of being knee-jerk. Davis commented: “We should have had the fleet review five years ago. We should have been planning for a larger navy at that point … Instead, we’ve kind of gone down the path of the Hunter-class frigates which have blown out in terms of costs and fallen back in terms of schedule. And so we’ve bet all on this one programme.” He blamed the unwillingness of successive governments to face the prospect of a bleaker future strategic environment.
By rushing a foreign design into service, the frigates will possess sensors, weapons and systems unfamiliar to the RAN, particularly Saab’s 9LV combat management system and CEA Technologies radars. Davis added, “I’m sceptical that it’ll go on schedule and on budget. I think it’ll be delayed, and so we could be going into the next war with nine or eight service combatants, which is the lowest we’ve ever had.”
With Australia’s focus on SSNs and frigates, casualties include two sealift/replenishment vessels, as well as two Arafura-class-based mine warfare vessels.
The RAN’s UAV capability is figuratively up in the air too, after its S-100 Camcopter contract with Schiebel Pacific expired in June. The navy must now rely on Project DEF129 – a merger of army and navy UAV programmes – to provide a solution. Some insiders suggest the RAN will select Insitu’s Integrator, as it is currently being introduced by the army.
Australian Army
The Australian Army will benefit from $7.8 billion (A$11.8 billion) of investment in the year ahead, though many of its procurements have already been decided. Indeed, money is allocated to expensive assets like Rheinmetall Boxer 8×8 armoured vehicles, Hanwha AS21 Redback infantry fighting vehicles, Hanwha AS9 Huntsman self-propelled howitzers, Lockheed Martin HIMARS rocket launchers, General Dynamics M1A2 SEPv3 Abrams tanks, Kongsberg NASAMS air defence systems, Sikorsky UH-60M Black Hawks and Boeing AH-64E Apache helicopters.
Project Land 400 Phase 3 slashed 450 Hanwha Redback IFVs to just 129, and Australian planners have apparently dismissed Ukrainian battlefield evidence demonstrating the importance of artillery. Project Land 8116 Phase 2’s second regiment of AS9 howitzers was cancelled, with the army instead putting its eggs in the HIMARS basket, of which Australia wants 42.
In this way, the army will boost its long-range fires, with Davis sharing: “Obviously, it’s welcome that army is getting a long-range fires capability with HIMARS and Precision Strike Missile (PrSM), but remember that HIMARS’ maximum range is 186 miles (300km) – or 43 miles (70km) if you’re firing Guided Multiple Launch Rocket System (GMLRS) – and PrSM at the moment is 310 miles (500km), potentially expanding to 621 miles (1,000km). When you look at our geography, in terms of defending our air and maritime approaches, you could equip PrSM with an anti-ship role and extend this range out to 621 miles (1,000km). You know, that might do some good, but it’s still not a response to the sorts of threats that China can place against us with the DF-26 with a 3,100 (5,000km) range that can strike targets in northern Australia…”
The army is betting heavily on a littoral capability to move its long-range fires capability forward regionally, but this is contingent upon host-nation support and the requisite air and sea control to do so. “If we can’t, if army is stuck in northern Australia, then their engagement envelope is limited to the range of ammunition they’re buying, which is between 186 miles (300km) and, say, 621 miles) 1,000km. An adversary can pound away against us outside that range.” Davis raises an important point, for, against a Chinese missile onslaught, Australia’s proposed “impactful projection” does not reach far.
The army is investing heavily in landing craft to enhance littoral manoeuvrability. Austal is contracted to build 18 of Birdon’s 50m-long Landing Craft Medium under Project Land 8710 Phase 1A, but Phase 2 for eight Landing Craft Heavy remains undecided. The LC-H could displace anywhere from 3,000-5,000 tonnes, with the first optimistically slated for delivery in 2028. Also undecided is Land 8710 Phase 1B, replacement of LARC-V amphibious logistics vehicles.
For Project Land 4100 Phase 2’s requirement for land-based maritime strike, Thales Australia and Kongsberg have created the StrikeMaster, a Bushmaster vehicle that launches Naval Strike Missiles. Likewise, Lockheed Martin is proposing HIMARS with the AGM-158C Long Range Anti-Ship Missile (LRASM).
Turning to infantry equipment, Nioa is delivering Project Land 159 Tranche 1, encompassing SIG Sauer’s P320 XCarry Pro 9mm pistol and MCX Rattler personal defence weapon; Benelli M3A1 shotguns; and Accuracy International’s multi-calibre AX-SR, and Barrett’s M107A1 sniper rifles.
Tranche 2 kicks off in FY2024/25 and ends two years later. Among this tranche’s key capabilities are close-combat assault rifles, grenades and a family of light, medium and heavy machine guns. The former will replace the Thales Australia 5.56mm EF88 bullpup, the ADF’s standard assault rifle. Whereas the U.S. Army selected SIG Sauer’s 6.8mm XM7 (MCX Spear) to replace its M4/M4A1 carbines, Australia may well plump for a locally manufactured weapon. Indeed, Thales Australia has developed the Australian Combat Assault Rifle (ACAR) in 5.56mm and 7.62mm calibres, plus a 6.8mm variant. This latter calibre is growing in popularity owing to concerns about the stopping power of 5.56mm rounds.
The machine gun requirement will replace the incumbent 5.56mm and 7.62mm Minimi, 7.62mm FN MAG and 12.7mm M2HB. Australia may consider the SIG Sauer 6.8mm XM250, which is succeeding M249 Squad Automatic Weapons in the U.S. Army, or perhaps a light machine gun variant of its ACAR.
There is also a Land 159 Tranche 3. Due to start in FY2026/27, it encompasses lightweight automatic grenade launchers, less-than-lethal munitions and command-detonated munitions.
In fact, Australia recently moved this Land 159 project, plus Land 125 Phase 4 integrated soldier systems and Land 53 Phase 1 night vision equipment, under a single umbrella called the Land 300 dismounted combat programme. Rheinmetall Defence Australia is rumoured to have been selected for the integrated soldier systems portion, which will deliver body armour, helmets, hearing and eye protection, field equipment (e.g. water purifiers, helmet torches, storage bags, cooking gear, sleeping bags) and load carriage equipment to soldiers.
There is also a need for loitering munitions, which combat in Ukraine has proven to be an indispensable weapon category. Later this year, the ADF will introduce its first long-range loitering munition in the shape of Innovaero’s One-Way Loitering (OWL) UAV. Initially, the OWL is being trialled by an Australian Army special operations unit.
Another capability gap needing attention is counter-UAS systems. Project Land 156 is intended to rectify the threat posed by group 1 and 2 UAVs weighing up to 120 pounds (55 kilograms). Australia has a vibrant C-UAS industry, and potential vendors include Acacia, Boresight, Codarra, Department 13, Droneshield, EOS and Silentium.
Unmanned ground systems will become more prominent too. “Army will continue to explore the utility of uncrewed ground vehicles, including integrating uncrewed systems into combat missions and support roles, in order to enhance operational effectiveness and reduce risks to personnel,” said the recent IIP.
Davis of ASPI said electromagnetic operations are another area where the ADF should be investing. “There was severe underfunding of that, and that’s really critical. If you look at what’s happening in Ukraine, electronic warfare is becoming really key. So government needs to take that seriously because, if we don’t, a lot of our capabilities could fall apart on the first day of the war.”
Royal Australian Air Force
Of the three armed services, the Royal Australian Air Force (RAAF) appears to have the most assured procurement schedule. In 2024/25, the force will receive $6.27 billion (A$9.5 billion), with Lockheed Martin F-35As being its single-most expensive acquisition. Nine out of 72 of these fighters remain undelivered as Lockheed Martin scrambles to conclude its Technology Refresh 3 software upgrade. The arrival of four Gulfstream/L3Harris MC-55A Peregrine electronic warfare aircraft is running two years behind schedule too.
The RAAF is heartily pursuing long-range strike, and so F-35A and Boeing F/A-18F fighters will receive the Lockheed Martin AGM-158C LRASM, and Kongsberg’s Joint Strike Missile will be integrated onto the F-35A. The RAAF appears disinterested in a fourth F-35A squadron, but it will need to start contemplating how to replace its Super Hornets and Growlers in the late 2030s. The sixth-generation UK-Italy-Japan Global Combat Air Programme is a possibility, or the US Next Generation Air Dominance (NGAD) fighter, if it progresses.
Fielding of Boeing’s MQ-28A Ghost Bat uncrewed loyal wingman will be prioritised, as the programme moves into capability demonstrations next year. However, another major capability gap remains after the government suddenly cancelled its General Atomics MQ-9B Reaper buy in 2022.
According to the IIP, $11.8 billion (A$18 billion) will go to integrated air and missile defence (IAMD), whose underpinning architecture will come from the Lockheed Martin Australia-led Project Air 6500 Joint Air Battle Management System. Yet to proceed is the acquisition of deployable, medium-range, ground-based, air defence systems under Project Air 6502 Phase 1. This will form the middle defensive layer of Australia’s IAMD effort.
However, ASPI’s analyst Davis was critical of the fact that there is currently no integrated air defence umbrella beyond the short-range NASAMS, which is wholly inadequate against ballistic missiles arriving from China. Currently, the ADF is relying on the likes of SM-6-equipped destroyers or F-35As for air defence. “That’s not the way you do integrated air and missile defence. You can’t basically assume that we’ll just have those sorts of capabilities in the right place at the right time. So what government needs to be doing here is recognise that there are actually options on the shelf now that could be acquired, such as Raytheon’s Patriot and Lockheed Martin’s Terminal High Altitude Area Defense (THAAD), to start to close that gap and allow Australia to have greater protection against longer-range threats.” Other non-American contenders, such as MBDA, will doubtless be interested in Air 6502 too.
Davis also highlighted the need for greater investment in space and deeper recognition of the commercial space sector. For example, an Australian-based launch capability would “boost resilience and provide sovereign space capabilities”.
Production and personnel
Canberra touts the Guided Weapons and Explosive Ordnance (GWEO) Enterprise, established in May 2023, as being critical to achieving sovereign production of missiles and munitions. However, GWEO’s main fruit so far is Lockheed Martin locally assembling – not even manufacturing – GMLRS rockets from 2025.
Critical of GWEO’s tunnel vision, Travis Reddy, CEO of Australian firm DefendTex, told AMR, “They’re not taking any steps to develop a domestic, sovereign alternative to the kind of weapons they need. In the event of high-intensity conflict, will Australia as a nation have the ability to manufacture the ordnance that it needs to keep the ADF capable of conducting its mission? The overwhelming answer is no.”
The ADF might be spending big on equipment, but it is facing a personnel crunch. Defence wants 63,597 uniformed personnel in the year ahead, but it currently has only 58,600. The budget admitted, “Defence is forecasting to be below the required ADF fulltime workforce for 2024-25 due to high separation rates and lower than expected achievement of recruitment targets over recent years.”
by Gordon Arthur
