Projects axed, increased funding for missiles, drones, ships and subs in defence spending overhaul

Funding for defence projects will undergo a major shake-up after a landmark report found the Defence Force was not “fit for purpose”.

The government will plough an extra $50bn into Defence spending over the next decade but projects cumulatively worth billions more are set to face the chopping block to free up funds for armed drones, missiles, ships and submarines.

In an address to the National Press Club on Wednesday, Defence Minister Richard Marles released two highly anticipated documents: the National Defence Strategy and accompanying spending plan, otherwise known as the Integrated Investment Program.

Under the strategy, total spending is expected to reach $330bn over the next decade, $50bn higher than previous projections, with the increase primarily due to the purchase of nuclear-powered submarines under the AUKUS program.

Defence Minister Richard Marles unveiled the military spending overhaul in an address to the National Press Club on Wednesday. Picture: NCA NewsWire / Martin Ollman

The strategy, which warns Australia faces the “most challenging strategic environment since the Second World War” comes a year after Labor’s Defence Strategic Review uncovered significant underfunding of key projects and found the ADF was not “fit for purpose for our current strategic circumstances”.

Within the revised spending plan, $63bn will be allocated for submarines and underwater drones, $51bn for new ships, $14bn for missiles and $16bn for lethal drones, according to lowest-cost scenario under the government’s projections.

To help pay for the new projects, previous investments in military hardware will be axed, delayed or repurposed, freeing up $22.5bn over the four-year forward estimates period, and $72.8b over the next decade.

Projects headed for the chopping block include $1.4bn for upgrades to defence facilities across Canberra, $4.1bn for two Navy support vessels, and an extra squadron of strike-force jets.

“These are all examples of difficult decisions to delay projects, reduce the scope of projects, to cancel projects,” Mr Marles told the National Press Club.

The changes to pare back existing projects are also an attempt rein in “over-programming” of the Defence budget, whereby a raft of additional projects are committed to without a corresponding allocation in taxpayer funds.

Labor still expects some over-programming to occur, accounting for delays and cost blowouts.

Projects will be axed, delayed or rescoped, freeing up $72.8bn of funding over the next decade. Picture: William West / AFP

Citing heightened tensions in the Indo-Pacific and ‘coercive tactics’ employed by China, Mr Marles said transforming the ADF to become a “focussed force” would ensure Australia could “resist coercion ... in a much less certain region and world.”

“The call for focus means that we simply have to make the difficult decision to keep the vast bulk of our effort in our region,” he said.

“This is what the world would expect of us. It is what our ally the United States does expects of us, but far more significantly and importantly it is where our national interest unambiguously lies.”

Mr Marles also stressed the need for the Defence Force to project its military power further from its shores.

“To contribute to regional security we must be able to project,” he said.

“To resist the coercion that would come from the disruption of our sea lines of communication we must be able to project.”

Amid longstanding challenges with recruitment and retention in the armed forces, the Defence Minister alluded to enlisting non-Australian citizens into the ADF, including New Zealanders and Pacific Islanders.

“It is not just a matter of maintaining the current numbers in the force. We need to grow the force … and to do that we need to be thinking about these avenues and this wider pool of people we can draw from,” Mr Marles said.

Defence's acquisition of six Hunter-class frigates are among the multitude of projects facing delays and cost blowouts. Picture: supplied.

Reacting to the spending overhaul, shadow defence spokesman Andrew Hastie said a future Coalition government would exceed Labor’s fresh funding commitment.

“If it is true that we are living in the most dangerous times since the end of the Second World War, then we need to be investing more in defence, not less,” he told reporters in Canberra.

“Weakness is provocative ... If you want to defend Australia, you’ve got to be strong. You’ve got to make people think twice about having a crack at Australia.”

Defence projects are notorious for running over budget and often suffer from lengthy delays.

A report from the Commonwealth auditor-general released earlier this year found delays for Australia’s 20 largest defence acquisitions had cumulatively blown out by more than 37 years.

Projects running over budget include the Hunter-class frigates, which were reduced from nine to six vessels following $20bn worth of cost blowouts, and 72 F-35 fighter jets at a cost of $16.5bn, up from initial price tag of $14.2bn.

Originally published as Projects axed, increased funding for missiles, drones, ships and subs in defence spending overhaul