Federal budget 2023: Defence given $4.2b boost to support AUKUS subs program

The portfolio's spending is set to soar following the latest federal budget with funding as a proportion of GDP expected to increase a further 0.2 percentage points higher over the decade.

A total of $19 billion in Defence spending will be reprioritised over the next four years, while $4.2 billion has been set aside over the decade to deliver a new submarine agency from July.

Defence Minister Richard Marles announced the money will go to a broad range of areas, including new weaponry and armaments, bonuses for defence personnel and investment in defence innovation and technology, as Treasurer Jim Chalmers handed down the 2023-24 federal budget.

Staffing levels will also be lifted by more than 2500 across the portfolio with military numbers gaining an extra 1200 places.

To pay for the additional capability and equipment, the federal government announced "hard decisions" that no longer made sense in the strategic environment.

In the lead up to the release of the Defence Strategic Review in April, Mr Marles revealed the army's order for more Land 400 combat vehicles would be slashed in half to pay for more immediate priorities.

"The Albanese government has made no secret that we are willing to make the hard decisions in order to get the best outcome for our ADF," Mr Marles said on Tuesday evening.

"Ultimately, Defence spending will grow over the medium term, which is in line with the strategic circumstances."

In the longer term, the federal government will commit $4.5 billion over the decade from 2023-24 with $4.2 billion allocated to the new Australian Submarine Agency, which will be tasked with the management, oversight and delivery of the AUKUS and US Virginia class nuclear-powered submarines.

A new regulator, the Australian Nuclear-Powered Submarine Safety Regulator, will be established with $7.6 million in funding following the introduction of a bill to Parliament later this year.

Over the forward estimates, an additional 4000 Commonwealth supported places will be created at universities and tertiary education providers for STEM and management courses to develop the skills that will help deliver the submarine program. This will cost the government's coffers $127.3 million.

Beyond Defence, the Department of Foreign Affairs and Trade will get $52.7 million over the next two years to deliver international policy advice and diplomatic support for the program.

The Workplace Relations and Education departments will gain $3.9 million and $1.1 million respectively over the next two years to identify education, skills and training areas, which will support the program's delivery.

Defence will then receive $482.7 million a year following the 2033-34 federal budget - an average yearly increase on the previous decade.

While the focus was heavily on Defence's response to the strategic review and the submarine program, there were announcements for veterans and the ongoing investigations into war crime allegations.

An extra $64.1 million will be spent on addressing the claims backlog for veterans over the 2023-24 financial year.

It will be coupled with a priority $254.1 million investment over four years to improve and modernise the ageing ICT system within Department of Veterans' Affairs, which is partially to blame for the delays.

Mental health literacy and suicide prevention training will get $2 million over the next two years.

A small amount - $500,000 over four years - has also been set aside to support grandparent careers of children or grandchildren of veterans.

The Office of the Special Investigator, which is tasked with investigating war allegations as revealed in the 2020 Brereton inquiry, has been given an extra $115.1 million over the two years from 2023-24 to continue its investigations.

Ukraine will also be given $189.6 million by the Defence Department over the next two years in its fight against the Russian invasion.

The figure will include additional Bushmaster vehicles, unmanned aerial vehicles, additional infantry training for Ukraine troops and 155-milimetre artillery munition, and is part of a joint initiative between Australia and France.