‘Long overdue’: Government prepares to unveil dramatic Defence property sell-off

A dramatic overhaul of the nation’s defence property portfolio is set to raise billions of dollars as the Albanese government prepares to override resistance from the military establishment to sell valuable real estate in Sydney, Melbourne and other capital cities.

After sitting on an audit of the sprawling defence estate for almost two years, the government is poised to unveil contentious plans for a major consolidation of the 3 million-hectare property portfolio.

The lead author of the government’s defence strategic review called for Defence Minister Richard Marles to take bold decisions on asset sales, even if it upset military leaders and politicians.

Historic properties such as Victoria Barracks in inner-city Sydney, Melbourne and Brisbane are among the sites closely scrutinised for potential sale and redevelopment.

The long-awaited overhaul is yet to go to cabinet but is expected to be announced before Christmas.

Marles said the government’s response to the audit would be released “in the very near future” as he flagged major changes would be made to the composition of the defence portfolio on Thursday.

He told parliament that “there are a number of properties within the defence estate that really have their history … as being part of something in the past and not necessarily focused on the future”.

“Making sure the defence estate is fit for purpose in terms of Defence’s needs in 2025 is absolutely paramount,” he said in a response to a question from independent MP Rebekha Sharkie.

Sharkie said her constituents were concerned that South Australia’s Woodside Barracks would be sold and converted into housing as a result of the audit, underlining how controversial the overhaul could prove across the country and why it was put on ice until after the federal election.

The City of Sydney has embraced the idea of Victoria Barracks in Paddington being converted into public green space and housing units to ease the shortage of inner-city dwellings.

Defence is the biggest Commonwealth landowner, and the resale value of the estate has been estimated to be as much as $68 billion. The portfolio includes more than 1000 owned and leased properties such as military bases, barracks, golf courses, training ranges and storage facilities.

Marles told a defence conference in June that “there is the opportunity here to save billions of dollars on the one hand, and reprioritise them back into much-needed areas of defence, whilst on the other ensuring that we have a defence estate which properly supports the contemporary Australian Defence Force”.

Defence officials told Senate estimates hearings on Thursday that the department had conducted a “detailed and serious body of work” in response to the audit, which was delivered to the government in December 2023.

“The government is considering both the review, and Defence’s analysis and recommendations on its implementation,” Defence’s deputy secretary of security and estate Celia Perkins said.

Officials pushed back on Greens senator David Shoebridge’s requests for a copy of the review, which was based on visits to 70 sites across the country by independent auditors.

The reviewers, former Defence Housing Australia managing director Jan Mason and Infrastructure Victoria chair Jim Miller, were asked to focus on whether Defence’s holdings in high-density urban areas were in line with current military needs.

“This secret audit has been sitting on the defence minister’s desk for almost two years, and the community is fearful it proposes a fire sale of land across the country.”

Assistant Defence Minister Peter Khalil, who has responsibility for defence estate, said the government was committed to progressing the audit but would carefully consider its impacts on defence force personnel and capabilities.

“Now more than ever, it is vital to ensure the estate aligns with Defence’s capability needs,” he said.

Peter Dean, principal author of the 2023 defence strategic review, said: “A consolidation of the defence estate is very much overdue and in keeping with recommendations of the review.

“Some of these decisions will be difficult because of historic and cultural attachment to these places, but the Defence estate needs to be fit for purpose for the challenges we face.”

City of Sydney councillor Zann Maxwell, who has led the push for Victoria Barracks to be repurposed, said: “This isn’t about knocking things down or building over history. It’s about preserving and enhancing one of Australia’s most important heritage precincts through sensitive adaptive re-use.”

Sydney’s Victoria Barracks, in use since 1848, houses the headquarters of the Forces Command, which oversees 85 per cent of army personnel, the Australian Army Museum of NSW, and the Australian Army Band Sydney.

The council in August called for public submissions on how the 15-hectare site near Moore Park could be used if it is divested following the audit.

Retired army major general Fergus McLachlan said he supported a consolidation of the defence estate but argued two properties should be off limits for sale: Victoria Barracks in Sydney and Anglesea Barracks in Hobart.

“There is definitely inefficiency in the defence estate, but I would be very disappointed to see those barracks sold off when they form such an important part of our nation’s army history.”

Anglesea Barracks – which serves as Defence’s Tasmanian administrative headquarters and is home to an army museum – has been in use since 1814.

Melbourne’s Victoria Barracks in Southbank, completed in 1872, once served as Defence’s main headquarters and housed the special war cabinet during World War II. It still serves as a defence administrative centre, as does Brisbane’s Victoria Barracks, established in 1864.

The audit remains confidential, but an excerpt released by Marles this year foreshadowed sweeping changes.

“Today’s estate footprint comprises numerous legacy sites without a clear ongoing link to current or future capabilities,” the audit found.

“Urgent interventions are needed to correct the unsustainable trajectory that has resulted from decades of deferred decisions on contentious estate issues.”

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