The federal government has initiated a program to divest 67 defence properties across Australia, a move projected to generate up to $3 billion in revenue and save $100 million annually in maintenance costs. This initiative follows an independent audit identifying numerous sites as underutilized, costly to maintain, and no longer critical to modern defence needs. Funds from the sales are intended to support strategic defence investments, including northern bases and the AUKUS program, with discussions also addressing the potential for public access, housing development, and heritage preservation on divested sites.
Government Divestment Program Overview
The Australian federal government is proceeding with the divestment of 67 Department of Defence properties nationwide, following an independent audit that assessed the department's 3-million-hectare estate. This program aims to reduce Defence's real estate footprint and reallocate resources.
The audit, conducted by Jan Mason and Jim Miller, concluded that significant portions of the estate were no longer necessary, with many facilities having deteriorated beyond economical repair.
"Defence does not need and cannot afford all of the current estate" and that maintaining the status quo was "not an option."
The government has agreed to fully or partially dispose of 67 out of 68 identified sites, retaining only a navy diving school in Clareville, Sydney's Northern Beaches.
Financial and Strategic Rationale
The divestment program is projected to generate approximately $3 billion in sales revenue and save up to $100 million annually in maintenance costs for vacated sites. The majority of these funds are expected from the sale of 26 large metropolitan sites, estimated to have an adjusted market value between $2.2 billion and $2.4 billion.
However, the process is also projected to incur up to $1.2 billion in costs related to site sales, staff relocation, and contamination remediation. If these metropolitan properties were retained, an estimated $3 billion investment would be required over the next decade to address deferred capital works and non-compliant infrastructure.
The initiative is intended to address critical capability gaps within the Australian Defence Force (ADF) and redirect investment towards strategic priorities. These include enhancing northern bases and infrastructure supporting the AUKUS program, as outlined in the 2023 Defence Strategic Review.
Specific investments include:
- An $8 billion redevelopment of HMAS Stirling in Rockingham to support the submarine rotation force.
- Upgrades to a network of bases from Cocos Island to Tindal in Katherine.
The audit highlighted these northern bases as "critical to enhancing the preparedness and capacity of the ADF and co-operation with international partners," particularly the United States and Singapore.
It also emphasized the importance of identifying an east coast nuclear-powered submarine facility and upgrading infrastructure at HMAS Stirling to support US and UK submarine rotational forces as part of the $368 billion AUKUS nuclear submarine pact.
Assistant Defence Minister Peter Khalil noted the government's focus on ensuring Defence reflects modern needs and provides better value for taxpayers.
Key Properties Slated for Divestment
High-profile properties included in the divestment program are the Victoria Barracks in Sydney, Melbourne, and Brisbane, Spectacle Island in Sydney Harbour, and HMAS Penguin in Balmoral, NSW. Other identified sites include 16 properties in Victoria, some located near Melbourne's central business district.
Victoria Barracks Sydney
- Located in Paddington, it operates at approximately one-third capacity.
- The nearby Defence Plaza office complex in the CBD is 60 percent empty.
- Combined, these sites employ about 700 staff.
- Maintenance costs for Victoria Barracks Sydney, built between 1841 and 1849, are projected at nearly $195 million over the next decade.
- The 15-hectare site hosts the Army Museum of NSW, which offers limited public access (four hours one day a week and the third Sunday of each month).
- The City of Sydney has expressed interest in transforming the site into public green space, cultural facilities, and apartments.
Victoria Barracks Melbourne
- Located in Southbank, it has a 56 percent utilization rate.
- Defence Plaza Melbourne in the CBD has a 46 percent usage rate, despite $130 million spent on leasing, fitting out, and upkeep over the past five years.
- Completed in 1872, it previously served as Defence's main headquarters and housed the special war cabinet during World War II, with the war cabinet room currently inaccessible to the public.
Victoria Barracks Brisbane
- Located in Petrie Terrace, it is nearly half empty.
- Ample capacity exists at Gallipoli Barracks, 12 minutes away.
- Maintenance in its current state is estimated to cost $105 million over the next decade.
- The estimated resale value for the three Victoria Barracks sites combined is $1.3 billion, although heritage listings would restrict redevelopment options.
Other Notable Divestments
- Spectacle Island (Sydney Harbour): This vacant, heritage-listed island stored munitions during World War I and II. Maintenance has cost over $4 million since 2023.
- HMAS Penguin (Balmoral, NSW): Houses the defence force’s diving and navy medical schools, identified as a potential candidate for sale.
- Victorian Sites: These include:
- Training facilities and depots in Carlton, Sandringham, St Kilda, Geelong (including Newland Barracks, an air force cadet unit, and a navy training ship), and Latchford Barracks at Bonegilla.
- Historical bases such as Fort Queenscliff and the RAAF Williams base at Point Cook.
- Adjoining golf courses at HMAS Cerberus on the Mornington Peninsula and Swan Island on the Bellarine Peninsula, and a portion of the Laverton site.
- Vacated sites like the Repatriation Clinic in Melbourne's Southbank (vacant since 1998), a 127-hectare former explosives manufacturing site in Maribyrnong (vacant since 2006 and requiring significant remediation), and the Kyneton Drill Hall (vacant since 2020 due to structural issues).
- Training facilities at Cerberus and Swan Island will be retained, and personnel from other divested Victorian sites will be relocated to consolidated or nearby facilities such as Laverton.
Timeline, Heritage, and Future Use Considerations
The divestment process is expected to be ongoing for several years, with some sites, such as the former explosives manufacturing site in Maribyrnong, requiring extensive and costly remediation due to contamination before sale.
The government has committed to managing heritage obligations as a condition of sale for sites with heritage listings, including Victoria Barracks, RAAF Williams-Point Cook, and Fort Queenscliff. Arrangements to retain existing museums will also be explored.
Assistant Defence Minister Peter Khalil stated that the government aims to ensure more Australians can access and appreciate military history, as many heritage-listed buildings are not currently open to the community.
Defence Minister Richard Marles reiterated that the heritage value of these properties belongs to the Australian people.
While the government's primary focus is maximizing financial return, there is consideration for public needs. The Community Housing Industry Association Victoria has advocated for dedicating 20% of suitable sites to social housing. Former Maribyrnong mayor Sarah Carter previously highlighted the potential for significant housing, including social and affordable options.
Wyndham Mayor Josh Gilligan and the Point Cook Action Group advocated for employment precincts alongside housing. However, Defence Minister Marles and Finance Minister Katy Gallagher have indicated that the land is unlikely to be used exclusively for housing. Greens defence spokesman David Shoebridge has raised concerns that sites could be developed for luxury private housing rather than addressing social needs.
Concerns have also been raised by RSL national president Peter Tinley regarding the commercial viability of some heritage sites, the potential displacement of approximately 2,600 cadets, and veterans' emotional attachment to historical locations. Coogee MP Marjorie O’Neill referred to Sydney’s Victoria Barracks as the "spiritual home of the Australian Army," emphasizing its heritage importance.
Defence Minister Marles and Assistant Defence Minister Khalil noted that idle heritage sites behind high walls may not align with contemporary defence needs. Developer David Hodge suggested an urban renewal authority involving federal, state, and local governments with an independent chair and board to manage remediation and planning. Former Maribyrnong mayor Michael Clarke highlighted the scarcity of large, centrally located sites, suggesting that demand will eventually necessitate federal action to prepare these lands for availability.
The government's response to the audit has faced delays, which Defence Minister Marles attributed partly to the sensitive nature of proposals involving historic sites. Past efforts to sell Defence bases, including proposals during the Rudd government and a 2016 RAAF recommendation, were not pursued.