Defence has retired a third of its warships since the Albanese government came to power three years ago, exposing the navy’s diminished capability to keep in check Chinese forays such as its flotilla in the Tasman Sea.

The Chinese cruiser, frigate and refuelling ship are in international waters about 500km east of Tasmania and Australian navy chiefs remain unclear on the intention of the group that conducted live-fire exercises on Friday and Saturday, forcing commercial flights to be diverted.