glojo,
I don't think either the 1SL or the CinC have said "No, that cannot be done". Probably for the very simple reason that we ARE doing it! Both have effectively said that should ELLAMY continue, then reprioritisation will be necessary.
From the politicians' perspective, we are carrying out their direction successfully on our current level of funding. The senior officers may be telling them we are carrying lots of risk, particularly against the possibility of future requirements, but their view may well be that such risk is acceptable as further defence expenditure is not in the nation's best interests.
Until the military actually fail on ops, such a view is unlikely to radically alter. The trouble is, we've being saying for years that we are about to fail - and we never do.