Defence

Outlook

Defence investment in the Territory is expected to increase over the outlook period as a result of increased geopolitical uncertainty and the Northern Territory’s important strategic location in the Indo-Pacific region.

The Territory’s vast distances and low population density mean investment decisions by defence have a significant effect on the economy of the Territory. The associated supply and maintenance activities support the growth of local businesses and industries, while relocating families leads to an increase in population.

Conducting defence training exercises alongside international partners and stationing allied personnel and equipment in the Territory generates supplementary revenue that extends beyond defence-linked industries. These exercises benefit a diverse range of local industries such as hospitality, retail and tourism.

Australia’s strategic outlook is changing due to the shift in global economic and political power to the Indo-Pacific region, which presents both opportunities and challenges. In response to this changing dynamic, the Commonwealth is strengthening ties with allies and partners, increasing defence capabilities and reprioritising its force posture.

The 14 March 2023 announcement by the Prime Minister that Australia, the United Kingdom and United States (AUKUS) would work together in partnership to develop new nuclear-powered submarines for the Royal Australian Navy is an example of this shifting dynamic. Australia will purchase at least three United States (US)-manufactured nuclear submarines as part of a new program, costing up to $368 billion over 30 years.

The Defence Strategic Review, released on 24 April 2023, outlines how the Defence Force’s structure, posture and preparedness need to change in order to meet the nation’s future security challenges. The recommendations of the Review indicate there is potential for even greater Defence investment in the Territory. One of the priority areas for immediate action identified by the Review is to improve the Defence Force’s capability to operate from Australia’s northern bases. Accordingly the Review recommends that work to upgrade and develop Australia’s northern bases, ports and barracks should commence immediately.

Employment

National defence expenditure in the Territory has steadily increased since 2017-18, reaching $2.7 billion in 2021-22, up 8.7% on the previous year (Chart 9). This represents 5% of national defence expenditure. The share of the national defence expenditure increased by 0.1 percentage points from the previous year and is down by 1.4 percentage points from the height of 6.4% in 2014.

Chart 9: Defence expenditure in the Territory

Source: ABS unpublished data; Department of Treasury and Finance

The number of defence personnel stationed in the Territory decreased by 0.9% (50) in 2021-22 to a total of 5,395. The growth was in the reserve forces (up by 7% to 918), with the number of permanent forces decreasing by 2.5% to 4,273. The number of Department of Defence public servants was unchanged at 204.

Chart 10: Defence employment in the Territory

RHS: right-hand side
Source: Defence Annual Report 2021-22

In the permanent forces, the army numbers decreased by 0.4% to 3,357 while the number of navy personnel fell by 4.9% to 782. This was partially offset by a 0.4% increase in air force personnel to 1,052. The Territory’s share of total defence personnel remained unchanged at 5.1%.

The number of Defence Housing Australia properties in the Territory decreased by 2.1% to 1,710 in 2021-22, continuing the downward trend from a peak of 2,638 in 2013-14. The Territory’s proportion of total defence housing stock increased by 0.9 percentage points to 10.1%.

International cooperation

Australia maintains international cooperation with a range of defence partners. Together with its main defence partner, the US, Australia participates in the United States Force Posture Initiatives (USFPI).

To strengthen its defence alliances and enhance the skills of its military personnel, Australia routinely participates in military exercises. Given its location in the Indo-Pacific region, the Territory frequently collaborates with various international partners and often hosts these exercises.

In 2022, the exercises included:

• Exercise Pitch Black, with 17 nations participating in August and September
• Exercise Kakadu, a Royal Australian Navy-led exercise in September
• Exercise Predators Run, with the Philippines, Malaysia and the US in September
• Exercise Koolendong, a combined exercise alongside the US Marine Corp in July
• Exercise Singaroo, with the Singapore Navy in September
• Exercise Diamond Storm, operating from RAAF bases Darwin and Tindal in June.

The Territory is home to two large biennial defence exercises: an international air combat exercise, Exercise Pitch Black; and an international maritime engagement exercise, Exercise Kakadu. These exercises bring together numerous defence partners ranging from the US and the United Kingdom (UK) to Malaysia and Singapore.

The Royal Australian Navy also participated in a major multinational maritime warfighting exercise. In October 2022, HMAS Adelaide and ANZAC departed Darwin, signalling the launch of the Indo-Pacific Endeavour 2022 (IPE22), Australia’s flagship regional engagement activity. The IPE22 featured a fleet of five ships, 11 helicopters, and about 1,800 personnel who collaborated with Australia’s regional partners across 14 countries spanning from India to Indonesia and the Philippines, which strengthen Australia’s engagement and partnerships with regional security forces.

Defence relationships with India and Japan are vital for the security of the Indo-Pacific region. In 2022, the RAAF conducted two maritime surveillance operations with the Indian Navy. Indian P-8I visited Darwin in April 2022, while an Australian P-8A was deployed to Goa, India in June 2022.

The engagement with international partners reaches a wide range of local industries including the hospitality, retail and tourism sectors.

Projects

Defence tenders offer the incentive for large international firms to invest in the Territory. International firms bring with them expertise and experience that support the growing local defence industry. Defence, by fostering links between international and local firms, provides the opportunity for local businesses to integrate into the global supply chain. For example, Territory companies such as Fuel Calibration Services, Territory Instruments, RAM Services and RGM Maintenance are subcontracted by Lockheed Martin to provide ground support equipment capability.

The defence projects being delivered in the Territory are extensive and extend across the air force, navy and army. This includes upgrades to training facilities, enhanced defence logistical capability, housing expansion and new strategic infrastructure to support the Australian Defence Force’s operation in the north. Specific projects under development across various facilities in the Territory include (Map 3):

• $298 million to upgrade the Delamere air weapons range
• $55 million for the Jindalee operational radar network facilities
• $270 million for HMAS Coonawarra N2263 Sea1180 facilities and infrastructure to support and sustain the offshore patrol vessel
• $59 million for the new Larrakeyah Health Centre and refurbishments to Robertson Health Centre
• $520 million for the Larrakeyah Defence Precinct redevelopment program
• $170 million for RAAF Base Darwin P-8A Poseidon forward operating base
• $270 million for the US bulk fuel storage facility, including 11 storage tanks at East Arm
• $92 million for two bulk fuel storage tanks to support US Air Force missions at RAAF Base Darwin
• $747 million to upgrade major defence training ranges and infrastructure to support USFPI
• $1.12 billion for RAAF Base Tindal stage 6 redevelopment and USFPI airfield works and associated infrastructure to support KC-30A platform
• $3.7 million for the RAAF Base Darwin offshore patrol vessel facilities
• $7 million for the AIR 555 phase 1 airborne intelligence surveillance reconnaissance electronic warfare capability facilities works in the Territory of Cocos (Keeling) Islands and RAAF Base Darwin
• $12.3 million to upgrade the Joint Health Command garrison facilities at RAAF Base Darwin
• $6.8 million to upgrade the military working dogs kennel facility.

Projects proposed and subject to approval:

• Robertson Barracks base improvements project
• the defence Renewable Energy and Energy Security Program to deliver solar energy generation and battery storage systems at RAAF bases Darwin and Tindal.

Further defence investment in the Territory is possible in light of the recommendations of the recently released Defence Strategic Review. Following the release of the Review, the Commonwealth Government announced $3.8 billion in investment funding to upgrade military bases in Australia’s north. To the extent this is new investment, it represents further upside to the Defence outlook in the Territory.

For the latest data on the Territory’s defence sector, refer to the Territory Economy website.

Map 3: Major defence sites in the Territory¹

1 This map is produced from various sources. Department of Treasury and Finance cannot guarantee the accuracy, currency, or completeness of the information. To be used as a guide only.

2 The Jindalee Operational Radar Network has 2 operating facilities within the Alice Springs region, at Harts Range and Mount Everard.

Source: Department of Treasury and Finance; Department of Industry, Tourism and Trade; Department of Defence