The head of the defence department has admitted it is struggling to meet personnel growth targets as keeping staff is proving to be a problem.
The department recognised the scale of the challenges it faced with high employment in the country, Greg Moriarty told a Senate hearing.
The current "separation rate" sits at more than 10 per cent of staff.
"Cohorts that might traditionally look to the (Australian Defence Force) for a career are finding employment elsewhere," Mr Moriarty said on Wednesday.
"A number of people are separating (leaving the department) because they're finding excellent opportunities in the private sector."
The government has put a retention bonus in place in the hopes of keeping staff.
The target for 2023/24 was 800 people behind where the department wanted to be at this stage of the financial year, defence officials said.
About 1300 people have left since July but separation rates were coming down after the retention measures were put in place, they said.
"Hopeful and optimistic is fabulous to be in all walks of life but what we're wanting here is realism," opposition foreign affairs spokesman Simon Birmingham told officials at the Senate hearing.
Asked whether the budget targets remained achievable, Labor senator Jenny McAllister said: "We will update them in the ordinary way."
"We've been very clear that this is a challenging set of circumstances, she said.
"The labour market is very tight, defence is not the only organisation in Australia that is finding aspects of their recruitment challenging."
Greens senator David Shoebridge retorted that defence was on a "shrink path", rather than a growth one.
"Rather than going well, this actually going really badly," he put to Chief of Personnel Natasha Fox.
"Senator, we're not achieving our recruitment targets," Lieutenant General Fox replied.
Independent senator and former soldier Jacqui Lambie questioned what Mr Moriarty had been doing in the role with staffing levels going backwards and targets continually missed.
