Labor puts SA’s Hunter-class frigates and Arafura patrol vessels projects on notice

Two major shipbuilding projects in South Australia are set to come under increased scrutiny as Labor blames the Coalition’s “hoopla and vaudeville” for major delays.

Two major South Australian shipbuilding projects have been put on notice as the federal government moves to ramp up scrutiny on delayed defence programs.

Defence Minister Richard Marles and Defence Industry Minister Pat Conroy have both raised serious concerns about the progress of the $45bn Hunter-class frigate and $3.6bn Arafura-class offshore patrol vessel programs.

It comes as senior Defence officials reportedly become increasingly concerned about the Arafura-class’ ability to compete against the surging strength of the Chinese navy.

Both ministers blamed the previous federal government for being “asleep at the wheel” and allowing defence procurement projects to blow out in cost and fall behind schedule by being “totally focused” on “hoopla and vaudeville”.

“Two examples of that (are) the Hunter-class frigate, where the last government lied to the Australian people they were getting an off-the-shelf design that was proved and working for other navies,” Mr Conroy said on Monday.

“It was a developmental project – they are literally designing this ship right now, and the result is a four-year delay in cutting steel for the vital project.”

Mr Conroy also said the offshore patrol vessels, the first two of 12 built in Adelaide, were delayed by a year due to tendering decisions made by the Coalition.

He suggested Defence would expand its Projects of Concern list, which would trigger escalated attention on “troubled” programs, possibly the Hunter-class and offshore patrol vessels.

“The last Liberal government … across the entire nine years listed four projects (of concern),” Mr Conroy said.

“They only listed four not because the projects were getting simpler, they listed four because they did not care about doing their daily job.”

Mr Marles said the list would not be made public.

He would also not be drawn on reports that Defence is considering acquiring a fleet of corvette warships armed with missiles and canons, as concerns mount that the Arafura-class patrol vessels won’t be suitable for the dire strategic environment.

“Given the strategic threat that the country face, we will have a rising defence budget going forward,” the Deputy Prime Minister said.

Mr Marles stopped short of blaming Hunter-class delays on builders BAE Systems, which has regained significant ground on the project.

“Our focus is working with BAE as we are very closely to get that project back on track,” he said.

In August, BAE revealed construction on the first ship would begin in Adelaide 13 months earlier than expected as the design of the Hunter-class was accelerated.

Opposition leader Peter Dutton is expected to front the media in Queensland at 2.30pm.

Defence projects worth billions of dollars will be closely monitored and required to submit progress reports under the federal government crack down to stop critical builds falling behind schedule and going over budget.

Australia currently has 28 major Defence projects running an accumulative 97 years late, including the Hunter Class frigates, battlefield airlifters, offshore patrol vessels, P-8A Poseidon aircraft and the battlefield command system.

There are 18 projects running a collective $6.5 billion over budget so far, in large part due to exchange rates and price indexation.

The federal government will on Monday announce a suite of new measures to reign in the build timelines and budgets for major Defence projects, particularly those identified as “projects of concern” and “projects of interest”.

This will include a requirement for monthly progress reports, establishing an independent office to manage projects, creating “early warning” criteria for listing builds as being on the “concern” or “interest” lists and providing troubled projects with extra resources and skills to keep them on track.

Defence Minister Richard Marles will receive a monthly report on major projects to ensure they are running on schedule and to budget. Picture: NCA NewsWire / Gary Ramage

Defence spending as a proportion of Australia’s gross domestic product (GDP) is expected to rise from 2.0 per cent in 2021-22 to 2.2 per cent – or $80bn – over the decade to 2032.

This does not include future requirements not funded by the previous government, including AUKUS nuclear-powered submarines and an increase in the size of the Australian Defence Force.

There are 28 major Defence projects currently running late in Australia. Picture: Supplied

The Albanese Government has blamed current delays in large part on the “revolving door” of defence ministers under the Coalition, which had six different people leading the department over nine years.

Mr Marles said the former Coalition government’s investment in defence resulted in key defence projects “blow out in both cost and time”.

“Money being flushed down the toilet and all the while they regaled in how much they were spending on defence,” he said.

“We face the most challenging circumstances since the Second World War, compounded by the fact that the economy is facing serious pressures- and reaching record spending within Defence as a per cent of GDP means we need to be more responsible about the way in which we manage.

Australia’s Hunter Class Frigates project is running late. Picture: Artists impression of frigate supplied by BAE

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

Treasurer Jim Chalmers said budget pressures in critical areas like national security and defence had been “compounded by the bungled projects and cost-blow outs” not accounted for in previous Coalition budgets.

“We live in uncertain and unpredictable times, making it even more critical that defence projects deliver value for money,” he said.

“Our investments in defence and our steps to improve project management are a down payment on the stability of our region, and the security and safety of Australians.”

Originally published as Labor puts SA’s Hunter-class frigates and Arafura patrol vessels projects on notice