Defence is to sell off a good portion of its vast property estate, using proceeds to fund personnel and new capabilities. An audit of the vast defence property portfolio released on Wednesday concluded that the Defence estate was not fit for purpose. It said a focused program of estate consolidation and rationalisation could generate sales revenue of approximately $3 billion, based on the divestment of 68 properties. Most of that would be generated by sale of 26 large metropolitan sites, with an estimated market value of $2.2-2.4 billion. However, Defence was likely to incur costs around $1.2 billion for relocating staff, remediating contamination, fulfilling heritage obligations and administration expense.
By Ed. Defence Estate assets currently used by Navy which are to be divested in full or in part are:
- HMAS Cerberus – part divestment – golf course and vacant land
- HMAS Penguin – part divestment – to be defined
- Leeuwin Barracks – full divestment
- Stokes Hill Darwin Fuel installation – full divestment
- Spectacle Island – full divestment
- Training ships – leased sites – cancellation of leases:
- St. Helens Tasmania – TS Argonaut
- Launceston – TS Tamar
- Hobart – TS Derwent
- Geelong – TS Barwon
- George Town Tasmania – TS York
- Devonport – TS Sheean
Defence Minister Richard Marles said the Audit found that Defence held a large and costly estate portfolio, which was fast decaying, increasingly irrelevant and would cost billions of dollars to maintain over coming decades, while not reflecting the current or future capability needs of the Australian Defence Force (ADF). “The Government welcomes the Audit’s recommendations and endorses a targeted program of consolidation and divestment of properties from Defence. This approach, taken on a capability-basis, will ensure Defence has a fit-for-purpose estate that serves current and future strategic needs,” he said.
Defence chiefs said they needed to ensure that defence personnel had the necessary facilities to respond to the nation’s strategic needs, including the financial resources required to sustain the Defence estate.
“That is why we are making the difficult decisions required to facilitate the biggest reform to the Defence estate for decades. This is a whole-of-Defence mission that we – the leadership of Defence – are committed to executing,” they said in the review. The Defence property estate is the largest Commonwealth land holding, covering more than 3.8 million hectares. It comprises 70 major bases, more than 100 training ranges, more than 1,000 leased or owned properties and 30,000 built assets.
The nation’s Defence organisation began accumulating property not long after the First Fleet arrived in 1788, some of it of greater defence utility in colonial times than it is today.
Over the years, Defence, under pressure from state governments to free up desirable city land, has made fitful efforts to sell off some of its property. The latest audit was launched following the 2023 Defence Strategic Review (DSR) which said the government would benefit from an enterprise wide audit to baseline estate and infrastructure, focusing on workplace health and safety and also protective security. That was conducted by former Defence Housing Australia Managing Director Jan Mason and Infrastructure Victoria Board Chair, Jim Miller.
“Our report aims to enable Defence to avoid unnecessary costs and free up financial and operational resources to support future capability, particularly in northern Australia. It includes recommendations to assist in making the necessary cultural changes in the use and ongoing management of the estate,” they said.
In their report, they said it was very clear and widely acknowledged that defence did not need and could not afford all the current estate.“This conclusion is validated by data. The greatest challenge will be delivering the necessary change,” they said. “Underutilised portions of the Defence estate are draining resources from higher priority needs. Sustainment budgets as they relate to this part of the estate are stretched too thinly, resulting in critical failures and costly unscheduled repairs.”
The size of the estate must decrease and rebalance towards current and future needs, they said.
“Resources should be prioritised to the areas of greatest possible impact. Difficult decisions will be required to address years of under-investment and entrenched behaviours that treat the estate as a free and uncapped resource. The proposed changes to the estate are likely to evoke strong emotions associated with its history, scale and diversity.” “However, the case for change is compelling given the need to support emerging capabilities and associated regulatory requirements.” Those emerging and expensive capabilities are nuclear powered submarines, new warships, new guided weapons and investments in the space and cyber domains.
Within the defence property portfolio are sites with heritage value, though Defence spending on those sites had no clear link to current or future capability needs. These sites were not broadly accessible to the public. The audit said Defence should release capital through divestment and reduce its overheads and expenses accordingly. “The proceeds of sales and resources must be retained in Defence to allow for further divestments and priorities outlined in the DSR,” it said.
“Some sites identified as surplus have potential to be developed for housing purposes, consistent with the National Housing Accord. A number of sites are contaminated and this will need to be addressed as part of the divestment process.”