Defence Minister David Johnston has raised the prospect of selling off some of defence's vast and expensive real estate holdings.
The defence estate covers three million hectares with 25,000 buildings and includes major and minor bases, ports and airfields and even stately heritage-listed homes and world heritage areas.
Senator Johnston told the Australian Defence Magazine conference in Canberra that maintenance of its 400 properties would cost $511 million in 2013-14.
"The estate is vast, it is costing an absolute fortune to maintain and it needs to be rationalised," he said.
"This is a very sensitive and political area that we must attack right now."
Some properties, such as on the Sydney Harbour foreshore, are extremely valuable.
Past moves to sell defence properties have sparked strong opposition from local communities and their MPs.
Some state governments have taken the view that they should gain surplus defence property at nil or nominal cost.
Senator Johnston said these were challenging times but reaffirmed coalition promises of no further cuts to defence spending and increasing defence spending to two per cent of GDP in a decade.
He said the government's plan for defence would be outlined in the new White Paper to be released in early 2015.
"The government is committed to gaining the best value for taxpayers' dollars that are spent on defence," he said.
