Defence review fears of shifting goalposts in Adelaide’s navy-linked firm

South Australian firms fear the goalposts may be shifted on their long-term plans after the government announced a major review in the nation’s defences.

Adelaide’s $45bn Hunter-class frigate program is facing a cut as the federal government embarks on yet another defence review, forcing frustrated local businesses to endure another anxious wait for certainty on their future.

Defence Minister Richard Marles announced a new surprise analysis of the country’s surface fleet after the historic Defence Strategic Review (DSR) document was released on Monday.

US Navy Vice Admiral William H. Hilarides will lead the study, which Mr Marles promised to be “short and sharp” and completed in Q3 this year.

The total number of Hunter-class frigates to be constructed at Osborne is facing a cut.

The Deputy Prime Minister hinted at significant changes to the nine Hunter-class frigates built by BAE Systems at Adelaide’s Osborne shipyard, potentially cutting the number of ships as construction stretches into the 2030s and 2040s.

He said the primary role of a Hunter-class frigate – hunting submarines – could be done by Australia’s future nuclear-powered submarine fleet, placing a question mark over the total number of planned frigates.

“Now that we are going to be operating a nuclear powered submarine, that is a dramatically different capability, and it obviously has some implication in terms of the overall structure of the Navy, not only as we think about the next decade, but as we think about the next three decades,” Mr Marles said.

Defence Minister Richard Marles has announced a new analysis of the navy’s surface combatant fleet. Picture: NCA NewsWire / Martin Ollman

He also raised the possibility of reducing the number of offshore patrol vessels down from 12, while hinting at acquiring more smaller warships, such as Corvettes.

“Navies around the world are moving in the direction, to put it kind of crudely, of having a larger number of smaller vessels,” Mr Marles said.

“But we are completely committed to having a domestic build right now. The current work in terms of the construction of Hunter will continue, and this review will report in the third quarter and it will do so in a way which does not see any disruption.”

Premier Peter Malinauskas gave conditional support to the surface shipbuilding review.

“To the extent a short and sharp review into surface shipbuilding improves the capability for the Navy and ensures an ongoing program of works at Osborne, the South Australian Government will contribute accordingly,” he said.

But Mr Malinauskas, who has repeatedly emphasised the importance of growing Osborne’s workforce for nuclear-powered submarine construction, welcomed the strategic review declaring “substantial investment” was required there.

Premier Peter Malinauskas welcomed the DSR’s commitment to shipbuilding in Adelaide.

“I welcome the release of the Commonwealth’s Defence Strategic Review, which reinforces South Australia’s central role in our nation’s defence for decades to come,” the Premier said.

“The review highlights the importance of naval shipbuilding as a sovereign industrial capability and the vital importance of a continuous pipeline of work.”

A BAE Systems spokeswoman said the company remained “committed to supporting the Australian government” in a range of “critical sovereign capabilities”.

“The Hunter program continues to make strong progress with the build of the first schedule protection block – which will be used in the first ship – beginning in two weeks,” she said.

“We remain committed to building nine anti-submarine warfare Frigates for the Royal Australian Navy.”

Australian Industry Defence Network boss Brent Clark said small suppliers that had made investments preparing for specific work on various vessels were suffering from “review fatigue” and could quit the industry out of frustration.

“Every time we change the goalposts, it makes it more difficult – this is real money that comes out of people’s bottom lines and this is where it stings … particularly for small and medium enterprises,” Mr Clark said.

Opposition foreign affairs spokesman Simon Birmingham said the decision to conduct another review was “staggering” and would create “more uncertainty and delays”.

“Labor’s additional review will risk the timely delivery of defence capability while threatening defence investment and South Australian jobs,” Senator Birmingham said.

“If it’s Labor’s plan to cut frigate construction in SA so they can build more smaller ships in WA, they should be upfront about those intentions with the South Australian people.”

Mr Marles said the surface fleet was “the biggest capability question” other than submarines.

“We thought it needs to have the attention of its own, albeit it needs to be done quickly,” he said.