When the budget is delivered on Tuesday, the defence budget will be up again as the Government moves towards its commitment to spend two per cent of GDP on defence and begins to plan for the huge submarine and frigate projects.
In the aid sector a funding cut of five per cent is expected.
Defence spending for the coming decades has been outlined in this year's defence white paper and the budget will being to spell out the spending program. This year the department of defence will receive around $32 billion.
Mark Thomson, from the Australian Strategic Policy Institute is the country's foremost expert on defence funding.
He said the defence department was getting ready for the new submarine and frigate projects.
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"This budget will be the first one on the path to grow defence spending toward $50 billion in a decade's time," he told SBS News.
'The white paper has a plan for a future defence force and it is not just a decade long plan that goes out into the middle of this century."
The new commitments being paid for include 12 new submarines, nine frigates, and army and air force modernisation.
It is a long-term program but financial planning for the years ahead starts now.
Australia's record in delivering large-scale defence equipment and naval building in the past has been patchy.
The Collins class submarines suffered cost blowouts and delays as well as operational problems. The Australian Submarine Corporation was criticised by government for poor performance.
The defence department has been subjected to an extensive review of its purchasing programs, and is promising improved performance.
Dr Thomson said the defence department was doing better but there were potential risks ahead.
"In recent years we have bought a lot of equipment off the shelf," he said.
"That is pretty much low risk. The next tranche the submarines the frigates are going to be Australian unique platforms built in Australia.
"When you do that the risks go up exponentially."
The 2016 budget will also confirm the foreign aid budget is decreasing.
Australian aid grew from 2001, first under the Coalition then under Labor governments. The slowdown began at the end of the Labor years but has intensified under the Coalition government.
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Since 2014, aid funding has fallen from $5 billion to $3.7 billion.
This year more programs are expected to go in line with government policy statements, Australian National University's Development Policy Centre economist Professor Stephen Howes said.
'The aid budget has been through a massive period of change," Professor Howes told SBS News.
"With the very large cuts of 20 per cent last year, and one third after inflation since the Coalition came to power, and with more cuts to come foreshadowed in the current budget I would say the aid program has been through a massive period of change and it isn't over yet.."
Since 2014, aid to Africa has virtually halted and aid to Asia has been slashed, with health programs the most affected.
World Vision in the Middle East regional leader Connie Lenneberg said the organisation has had to close down successful and effective programs.
"The cuts the Australian government has made has had a huge impact on this region," she said.
"I was just in Iraq looking at the humanitarian emergency there.
"We are seeing a reduction in our ability to provide food, clean water, shelter, access to health care for people who have been forced to flee from their homes.”
World Vision's Afghanistan program was aimed at helping marginalised families.
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Ms Lenneberg said locals in Afghanistan were getting less support from Australian aid groups like World Vision.
"We have had to close down street children's centres, we are seeing our women's economic development programs not able to continue the kind of work that was really focused on providing long term changes for communities so they could be able to look after their own needs," she said.
Papua New Guinea and the Pacific have so far been protected from the aid cuts and there are questions over whether that continues in this year's budget.
The cuts have seen Australia's global ranking as an aid donor drop from 13 to 16 in four years.
Foreign Minister Julie Bishop has said in the past Australian foreign aid should focus on the near neighbourhood in Papua New Guinea and the Pacific.
