The Future Defence Estate Audit, released in February, should be considered the beginning of the decision-making process on divestment, not its endpoint. Proposed divestment sites should be assessed through a transparent framework that weighs strategic, economic, environmental, heritage and social considerations, supported by site-specific due diligence and clear pathways for reinvestment. Without this, decisions may appear efficient in isolation while generating cumulative strategic risk across the enterprise.
The audit was intended to provide a roadmap for modernising and rationalising Defence’s property portfolio. Instead, it sparked public debate about the strategic accountability and trustworthiness of the federal government’s largest proposed property divestments in decades.
The Defence estate underpins force generation, workforce distribution, training, sustainment and operational readiness. Its role is expanding in an increasingly contested Indo-Pacific environment, as enabling infrastructure for deterrence, resilience and mobilisation.
Much of the estate is certainly ageing, fragmented or no longer aligned with capability requirements. But the real question is whether the proposed divestments and the underpinning assumptions have been sufficiently tested before decisions were finalised.
The audit identified underutilised assets, rising sustainment costs and structural challenges associated with maintaining an estate designed for different strategic circumstances, leading to 67 sites proposed for divestment and a further 16 under consideration. It did not undertake the level of consultation or site-specific due diligence associated with major property disposals. As a result, public response has been significant and ongoing, concerning military legacy, impacts on reserve and cadet units, heritage considerations and local housing pressures. The audit provided limited consideration of the estate’s role within the allied and joint operating system and assessed it more as a property portfolio than as a strategic system.
In March, the Senate referred the Management of Defence Estate Assets to the Joint Standing Committee on Foreign Affairs, Defence and Trade to examine proposed disposals and the broader governance framework underpinning estate reform. The Senate inquiry received 179 submissions, held three public hearings and issued 27 sets of questions on notice. The responses demonstrate that whilst sites may appear surplus under a narrow property lens, their value is quite different when assessed within a broader defence and economic security context.
The Senate inquiry, to be finalised in September, has therefore evolved beyond a review of disposals into a wider test of whether Australia’s estate is being managed as a strategic system or treated primarily as a property portfolio driven by financial rationalisation.
Maintaining underutilised or ageing assets creates a persistent budget burden. But treating divestment as a source of general savings risks repeating the cycle that produced the current estate condition – underinvestment in enabling infrastructure followed by rising sustainment costs and declining utility.
While divestment proceeds will be returned to Defence for capability-enabling infrastructure, there is no mechanism to test whether the reinvestment will be aligned with workforce priorities, sequencing needs or the National Defence Strategy (NDS). In my testimony to the committee, I suggested that the capital proceeds from the divestments and annual sustainment savings be reinvested back into the estate, reshaping and modernising it in line with the NDS. Without this, rationalisation becomes asset shedding rather than structural reform.
I also questioned the projected net proceeds from divestments, noting that Defence sites are rarely straightforward assets to dispose of. Environmental remediation, contamination risks, heritage obligations, planning constraints and associated remediation costs frequently alter outcomes. Experience from previous divestment programs suggests assumptions around timing, remediation costs and net returns are often optimistic. Previous Defence disposals demonstrate that remediation and planning constraints can materially reduce net returns and extend timelines.
Therefore, estate divestment should be treated as a capability-linked reform process, not a standalone financial exercise. That requires conservative costing, full lifecycle accounting of disposal, and explicit reinvestment pathways that demonstrate how outcomes strengthen capability and resilience.
Public scrutiny of the audit has highlighted concerns that historically significant sites risk being treated as standard development opportunities. Heritage sites require earlier and more deliberate evaluation alongside strategic, economic, environmental and social factors. This would shift heritage from a compliance step to an early decision input, enabling clearer differentiation between sites suitable for disposal, adaptive reuse, partial retention and continued Commonwealth control.
The audit has provided value in identifying underutilised assets and highlighting the growing costs of maintaining an estate designed for different strategic circumstances. However, the evidence presented to the Senate inquiry suggests it should not be treated as a sufficient basis for final decisions without a more structured and transparent decision-making framework.
Estate decisions made today will shape Defence capability for decades. Costs will change, community expectations will evolve, and Australia’s strategic circumstances will deteriorate and shift in unpredictable ways. The central test is whether today’s decisions preserve the flexibility, workforce access, mobilisation capacity and infrastructure depth required in a far more contested strategic environment.
Estate reform is necessary, but the question is not simply how many sites can be divested. It is whether Defence will have the infrastructure, resilience and strategic flexibility it needs in the decades ahead.