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Defence confirms major cost blowouts, government touts reforms

Defence confirms major cost blowouts, government touts reforms

The Albanese government has proposed reforms to address “significant and systemic issues” relating to major Defence capability projects.

The Albanese government has proposed reforms to address “significant and systemic issues” relating to major Defence capability projects.

According to new data from the Australian National Audit Office (ANAO) and advice from Defence, major issues have been identified in a number of key Defence capability projects. The projects are valued at a combined $69 billion.

At least 28 projects are behind schedule by a cumulative 97 years and at least 18 projects are over budget, with variations totalling at least $6.5 billion.

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Notable projects of concern include:

  • $44 billion Hunter Class Frigate program — construction delayed by four years and expected cost is $15 billion higher than initially anticipated.
  • $1.4 billion C-27J Spartan Battlefield Airlifters — delivered four-and-a-half years behind schedule and unable to be deployed into battlefields.
  • $3.7 billion Offshore Patrol Vessel project — running one year behind schedule.
  • $356 million Evolved Cape Class patrol boats — running nearly a year behind schedule.
  • $970 million Battlefield Command System — three years behind schedule.
  • Defence SATCOM projects worth $906 million — running between two and four years behind schedule.

According to the Albanese government, these “significant and systemic issues” are the result of mismanagement from the former Morrison government.

“Money was being flushed down the toilet while the former government regaled in how much they were spending on defence,” Deputy Prime Minister and Minister for Defence Richard Marles said.

“We face the most challenging strategic circumstances since the Second World War — this, along with the serious pressures facing the economy mean we need to be more responsible about how we manage critical projects, particularly as we reach record spending within Defence as a per cent of GDP.

“It's not as though we can go onto the battlefield and overwhelm our adversary by waving a copy of the budget papers in their face.”

To address these issues, the government has pledged to:

  • establish an independent projects and portfolio management office within Defence;
  • require monthly reports on projects of concern and projects of interest to the Minister for Defence and Minister for Defence Industry;
  • establish formal processes and “early warning” criteria for placing projects on the projects of concern and projects of interest lists;
  • foster a culture in Defence of raising attention to emerging problems and encouraging and enabling early response;
  • provide troubled projects with extra resources and skills; and
  • convene regular ministerial summits to discuss remediation plans.

Deputy Prime Minister Marles has also committed to “prudent management of the defence budget” to ensure timely delivery of key next-generation capability, including the nuclear-powered submarine fleet promised under AUKUS.

“In doing so, we are building a potent and capable Defence Force which will keep our country safe in the future,” he said.

[Related: Defence releases RFP for base services contracts]

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