Local defence companies are bracing for major cuts to orders of Australian-made naval vessels and infantry fighting vehicles as the federal government rapidly boosts the nation’s missile supplies in response to China’s military build-up.
Defence Minister Richard Marles will on Monday end months of intense speculation about the future of the Australian Defence Force by releasing a declassified version of its defence strategic review, a landmark examination of the nation’s military assets and force posture.
The government wants to spur the creation of a local missile manufacturing industry. Credit: South Korean Defence Ministry
As the government faces backlash from the army about sweeping cuts to combat vehicles, sources said significant spending announcements to spur the creation of a local missile manufacturing industry would form a centrepiece of the review.
The defence industry and senior army figures were deeply disappointed by the revelation the government would slash a planned order of tank-like infantry fighting vehicles from 450 to just one battalion of 129.
Brent Clark, head of the Australian Industry and Defence Network, said there was a widespread expectation the navy’s fleet of Hunter-class frigates would also be cut from nine to six and offshore patrol vessels slashed from 14 to six to free up spending for “bucket loads of missiles”.
The frigates are being built at the Osborne Naval Shipyard in Adelaide while the offshore patrol vessels will mostly be built at the Henderson shipyards in Perth.
The government will release a 110-page version of the report, titled National Defence, which will feature a chapter on climate change and the Defence Force’s role in responding to natural disasters.
Clark said he was worried local defence industry jobs would be sacrificed as the government seeks to save time and money by buying defence equipment directly from overseas.
“My nervousness is that Australian industry is at serious risk of being eroded or forgotten,” Clark said, adding that the war in Ukraine had shown the importance of having a sovereign defence industry.
“There are lots of questions that need to be answered and there will definitely be winners and losers from this review.”
He said the cuts to the Land Force 400 Phase Three infantry vehicle program – which will be based in Queensland or Victoria – would be felt throughout the Australian supply chain.
“For that work to simply evaporate, there will be hardship,” he said.
Retired army major general Mick Ryan said the decision to slash the order of infantry fighting vehicles, revealed on Friday, was “a kick in the guts to the army and the Australian defence industry”.
“There will be a sense of despondency in the army about this,” he said.
“Our soldiers will be less protected and lethal than any other army in our region.”
Ryan said there was a misplaced view in the defence establishment that future wars would be won in the air and at sea, but not on land.
Marles has described the review, conducted by former defence minister Stephen Smith and former Defence Force chief Angus Houston, as the most important examination of the nation’s military capabilities since an influential 1986 report by Paul Dibb.
Defence Industry Minister Pat Conroy said last year the government was working on a plan with defence companies Lockheed Martin and Raytheon for missiles to be manufactured at Australian factories.
Australia currently imports its missiles, mostly from the United States.
This plan is expected to feature prominently in the government’s response to the strategic review, alongside purchases of Tomahawk cruise missiles and HIMARS rocket launchers from the US.
Alongside expected major investments in drones and jet fighters, the government will announce an array of costly projects will be delayed, reduced or scrapped.
The government’s announcements are expected to be essentially cost-neutral, with savings from the defence portfolio largely offset by new spending measures.
Cut through the noise of federal politics with news, views and expert analysis from Jacqueline Maley. Subscribers can sign up to our weekly Inside Politics newsletter here.