Australia - Budget won't affect defence ops - PM

Prime Minister Julia Gillard has moved to stem speculation about defence cuts in the lead up to the May 8 federal budget.

Australia's men and women on the front line would still get 'all the kit' they needed in Afghanistan, East Timor and the Solomon Islands.

Any budget cuts would not impact on other members of the Australian Defence Force either, Ms Gillard said in Canberra on Thursday.

Defence Minister Stephen Smith said delaying or scrapping some projects would save the budget bottom line almost $2 billion.

Australia is contractually obliged to purchase two Joint Strike Fighters which have been already delivered in the United States for testing and training.

The government will also purchase a further 12 of the aircraft after 2016 - two years later than originally envisaged.

'The budget effect of that is that it takes out of the forward estimates for this year's budget between $1.5 billion and $2 billion,' Mr Smith said, adding the 'net benefit' to the budget was $1.6 billion.

'That's an example of where a move, a delay, a deferral of a capability has a significant budget impact.'

Mr Smith said the government also had decided not to pursue a self-propelled artillery project 'in the budget context'.

It had experienced 'some difficulties' and scrapping it would save the budget $225 million.

'The government is not proposing to proceed with the self-propelled aspect of our artillery project,' the defence minister said.

'(But) we will of course continue with towed artillery which is also able to be carried by our Chinook helicopters.'

Mr Smith confirmed his department would make a contribution to the budget bottom line as the government delivered its promised surplus in 2012/13.

But as 'a general rule of thumb' if there were savings to be made, invariably 50-60 per cent would come from capability.

There would be range of programs in the defence capability plan which have been delayed or deferred, not as a result of any financial or fiscal imperative, but because of 'industrial or technological difficulties'.

The government was not reducing military numbers, Mr Smith said.

'After Vietnam, we made the mistake of reducing numbers and didn't think strategically,' he said.

Mr Smith won't reveal any other planned spending cuts, saying all will be revealed on Tuesday when Treasurer Wayne Swan hands down the budget.

'There are savings in other areas, I'm not proposing to detail those today,' he said.