Federal Budget 2022: Defence diverts $9.9 billion to cyber 'strike back' capabilities

The centrepiece of the national security pitch to voters at the May election will be a $9.9 billion investment over 10 years in new cyber and intelligence capabilities to "strike back" at adversaries in cyberspace.

The money will be diverted from existing Defence projects to hire more data analysts, computer programmers, and software engineers in new frontiers.

Project REDSPICE, which stands for resilience, effects, Defence, space, intelligence, cyber and enablers, was "a game-changer" that would take Australia's capabilities to the next level, said Treasurer Josh Frydenberg to reporters ahead of the budget's release.

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The size of the measure was a reflection of the threats Australia faced, he said, and the need for "the latest and best technology" to keep Australia safe.

Australian Signals Directorate will triple its offensive cyber capabilities and double its cyber hunt and response activities with a downpayment of $688.7 million in 2022-23.

Air Force's acquisition of fifth-generation F-35 fighter jets is well advanced, but the much-touted nuclear-powered submarines from the new AUKUS pact are not yet purchased, have not been budgeted and will be decades away from delivery.

Defence Minister Peter Dutton's 18-year plan to boost the Defence Force and national security workforce aimed for 18,500 additional personnel, including at the ASD. The agency would almost double in size over 10 years, he confirmed on Tuesday, growing by more than 1900 new personnel.

The deteriorating strategic situation in the Indo-Pacific region, characterised by rapid military expansion, and growing coersive behaviour was also seeing increased cyber-attacks, he said.

Australia needed to keep pace with adversaries, he said, while the budget measure "acknowledges the nature of conflict has changed, with cyber-attacks now commonly preceeding other forms of military intervention - most recently demonstrated by offensive cyber activity against Ukraine."

Defence's total budget will increase by 3.1 per cent in real terms this year to $48 billion, which reflects 6.1 per cent of all government spending and above 2 per cent of Australia's gross domestic product. Its budget rise will continue through the forward estimates, climbing 7.1 per cent in real terms by 2025-26.

The new cyber capabilities will be funded by shuffling payments in the mammoth Defence Integrated Investment Program, pulling $3.6 billion out of existing Defence projects over the forward estimates. Which projects are put on the backburner will become apparent in the next program update after the election.

Treasury identified two significant risks in Defence spending in the immediate future, including unknown costs associated with Australia's planned purchases of nuclear-powered submarines. It also noted the unknown costs of the ADF's major operations in the Middle East region and protecting Australia's borders and offshore martime interests.

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