Cash bonuses for serving personnel will do little to improve retention rates, a veterans' welfare organisation warns.
The Albanese government on Tuesday announced a $600 million package to keep people in the military, while releasing the 2024 Defence Workforce Plan.
An existing cash bonus scheme will be reduced to $40,000 from July 2025 and will be expanded to permanent ADF members around the seven to nine-year service mark, to encourage career progression to middle ranks.
Initial $50,000 bonuses were offered as part of a trial launched in 2023 for permanent personnel near the end of their initial mandatory period of service, if they committed to the military for another three years.
The workforce plan found the scheme had been a success, with an uptake rate of almost 80 per cent since its introduction, resulting in more than 3100 junior rank personnel choosing to stay.
The Defence Force Welfare Association, an independent voice for defence personnel and veterans, said the payment was only part of the solution to reducing turnover.
"We welcome this initiative, we also note there are other service issues that impact retention," a spokesman told AAP.
"It does not address condition issues that impact on family life including posting cycles."
Jennifer Parker from Australian National University said it was positive to see mid-career members become eligible for the bonus.
"It concerns me that the focus on the workforce conversation is predominantly orientated to workforce growth," she said.
"The broader issue is actually the capacity of the ADF - workforce growth is one lever to address capacity, but there are others including structure, processes, culture."
The expanded scheme should be warmly received and keep people in service for a long period of time, Defence Personnel Minister Matt Keogh said.
Defence will aim to achieve "realistic growth" of a permanent ADF workforce of 69,000 by the early 2030s, with an overall workforce - including public servants - of about 100,000 by 2040.
The plan says the goal is achievable and will be updated every two years as part of the national defence strategy cycle.
To "stabilise, remediate and grow" the ADF, the number of people signing up must increase from 5500 each year to 9000 over the coming decade.
The median length of service for permanent personnel must also jump from about seven years to 12.
Under the plan, Australia's operational reserves would grow by an extra 1000 people by the end of the decade, which would play "an essential role in supporting the ADF's readiness".
"Defence will direct many of these additional operational reservists towards improving the readiness of the navy, air force, and Joint Capabilities Group," it says.
The federal budget handed down in May showed the forecast workforce at 58,600 personnel by June 30, 2025, against a requirement of more than 63,000.
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