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Defence eyes off prime military sites in Sydney, Melbourne, Brisbane for revenue ‘sugar hit’

By Matthew Knott | February 17, 2024 — 5.00am | SMH


Defence’s sprawling three million hectare real-estate portfolio – including historic properties in prime locations in Sydney and Melbourne – is being scoured for possible sales in a federal government bid to raise money for new military equipment and upgrades to crucial bases.

Defence is the largest Commonwealth landowner, with an estate consisting of around 700 owned and leased properties, including military bases, barracks, wharves, ports, airbases and training ranges, as well as storage facilities for fuel and explosives.
As well as freeing up money for the strained defence budget, selling off Defence properties and converting them into residential property could help ease the dire housing shortages in the nation’s capital cities.
Defence has $34 billion in estate holdings, according to the Australian National Audit Office, but the resale value could be as high as $68 billion if sold to property developers for residential or commercial use.
The Australian Defence Force’s estate holdings include historic properties in prime locations such as the Victoria Barracks in each of Sydney, Melbourne and Brisbane, as well as the Garden Island Naval Precinct in Sydney Harbour.
The government received a sweeping audit of the entire Defence estate at the end of December and is preparing to respond by the middle of the year, with significant announcements expected.

Defence Minister Richard Marles, who will next week release plans to overhaul the navy’s fleet of surface ships, is searching for savings because Defence’s 10-year acquisition program is running significantly over budget.
“In the current strategic circumstances, it is more important than ever to ensure the Defence estate remains aligned with our operational and capability priorities, now and in the future,” Marles said after receiving the review.
The auditors, former Defence Housing Australia managing director Jan Mason and Infrastructure Victoria Board chair Jim Millar, were asked to focus on whether Defence’s real estate holdings in high-density urban areas were in line with current military needs.
Mason and Miller made recommendations to the government about assets they believe are ripe for consolidation, divestment and disposal, because they no longer contribute to the ADF’s modern war-fighting capability.

Defence properties for possible sale

1- Campbell Barracks (Perth)
2- Leeuwin Barracks (Fremantle)
3- Keswick Barracks (Adelaide)
4- RAAF Base Williams (Melbourne)
5- Victoria Barracks (Melbourne)
6- Victoria Barracks (Sydney)
7 -HMAS Penguin (Sydney)
8 -RAAF Base Richmond (Sydney)
9 -Victoria Barracks (Brisbane)

During the four-month audit, the reviewers visited 70 sites across the country including airfields, maintenance facilities, research laboratories, warehouses, training establishments, reserve and cadet depots, and working accommodation.
The Defence Strategic Review, released last year, said that upgrading Australia’s northern bases needed to be a major priority for the government because of the rising possibility of a major conflict in the Indo-Pacific.

Raelene Lockhorst of the Australian Strategic Policy Institute said that selling Defence properties was an appealing proposition for government because of the high cost of maintaining so many of them and the need to pay for expensive programs, such as the AUKUS nuclear-powered submarines.

Lockhurst, who has written widely about the Defence estate and infrastructure, said there were some “easy targets” for sale, nominating HMAS Penguin at Balmoral, a 14-hectare naval training facility which sits on a spectacular site on Middle Head in Sydney Harbour.
“Do they really need that there?” she asked of the site, which houses the ADF diving school and navy medical school.
HMAS Penguin previously housed the navy’s main hospital facility in Sydney, but this was shifted to St Vincent’s Hospital in Darlinghurst in 2008.
Lockhurst cautioned against selling off property such as the regency-style Victoria Barracks in Paddington, in Sydney’s eastern suburbs, and the Victoria Barracks on St Kilda Road, Melbourne, even though they could fetch hundreds of millions of dollars each.
Thousands of people work at these sites and would need to be relocated, she said.

Some Defence insiders have privately joked that Sydney’s heritage-listed Victoria Barracks, which houses the ADF Headquarters of Forces Command, is used more often as a training ground for the Wallabies national rugby union team than military purposes.

Lockhurst cautioned that “the short-term gains of divestment can cause long-term problems” if new properties need to be acquired down the track when strategic priorities change.
“Right now it would be tempting to divest Defence properties in the south because the focus is on bases in the north, but what happens in, say, 20 years, circumstances are different and you want to pivot again?” she asked.
Lockhurst cautioned that Defence divestments are often beset by contention and delays, pointing to repeated and failed efforts to sell the 14-hectare Leeuwin Barracks in Fremantle since 2015.
Marcus Hellyer, a former senior Defence official, agreed that estate sales could provide a “quick sugar hit” for the Defence budget but involved difficult trade-offs.
He said selling off sites in Sydney and Melbourne could worsen the ADF’s existing recruitment and retention crisis, given many military families prefer to live there than in northern Australia.
“The cruise ship industry would love to get its hands on Garden Island in Sydney, but it would be massively expensive to relocate the navy from there,” he said.

Among the sites scrutinised by the audit was RAAF Base Williams, a 148-hectare site in Laverton, 23 kilometres to the west of Melbourne’s CBD, whose runway was decommissioned in 2006.

The air force recommended in 2016 that the Laverton site and the RAAF air base in Richmond, 50 kilometres north-west of Sydney, be closed and sold off, with personnel redistributed to other bases.
The Turnbull government did not act on the recommendation.
Queensland Premier Steven Miles has expressed interest in redeveloping Brisbane’s largely dormant Victoria Barracks and integrating it into the city’s sporting and entertainment precinct.

While Defence maintains pristine and rarely used facilities in capital cities, several key bases, military facilities and storage sites are dilapidated and highly vulnerable to attack.
Federal politicians last year warned that one of the nation’s most secretive and important military stations, Naval Communication Station Harold E. Holt, was in a disturbing state and needed urgent upgrades.
After visiting the site in Western Australia, the MPS said they were “seriously disturbed to observe that Defence had allowed the pier supporting diesel refuelling of the Harold E. Holt Naval Communication Station to get into such a state of disrepair”.
Among the sites currently listed for divestment by Defence are the Haberfield Army Reserve Depot, a 1.9 hectare site in Sydney, and the Patterson Barracks in Tasmania, which it says are surplus to requirements.