Around $400 million was set aside to fund the cash bonus in May’s federal budget to arrest an exodus of personnel, who were leaving the armed forces in their thousands after an initial period of service.

Defence Minister Matt Keogh says about 85 per cent of early to middle ADF ranks who qualify have taken up the continuation payment, which will flow over the next two months from Thursday.

“It’s no secret that we need to recruit more people to join our Defence Force,” he said in a statement.

“But critically we need to keep those people that we have invested so much in training, who have gained such great skills in our Defence Force to continue to contribute to our capability.”

“We have listened to the needs of ADF personnel and are implementing a range of initiatives to encourage the continued service of our highly skilled, trained and capable people.”

The up-front bonus, which is not tax deductible, was established in response to a defence strategic review and initially expected to benefit up to 3400 personnel within three years.

Keogh previously said the lump sum payment was designed to create an incentive that could not be achieved by adjusting pay scales and would provide personnel an opportunity to put money towards a housing deposit, new car or whatever their families might need.

– AAP