A dramatic navy overhaul will double the nation’s number of warships and boost the firepower of the surface fleet, but risks angering Germany if the federal government guts a troubled offshore patrol vessel program to free up money for missile-laden ships.
Defence Minister Richard Marles will on Tuesday release its response to a review of the navy’s surface fleet led by retired US vice-admiral William Hilarides, which made 18 recommendations aimed at speeding up the delivery of new ships and avoiding a $20 billion cost blow-out in the maligned Hunter-class frigate program.
The offshore patrol vessel designed by Luerssen and already being produced in Australia could be scrapped in favour of more heavily armed corvettes.Credit: Defence Department
Marles will announce that the navy will be equipped “with a major surface combatant fleet twice as large as when we came to government — and with more of these new surface combatants in the water and operational sooner”, according to an excerpt of his foreword to the review published on Wednesday.
This would mean a fleet of at least 22 warships given the navy currently has 11 such vessels in service: eight Anzac-class frigates and three Hobart-class air warfare destroyers.
The government is expected to cut the number of Hunter-class frigates – the planned replacement for the ageing Anzac-class ships – from nine to six after the review found it would cost a staggering $65 billion to build nine ships in Adelaide.
This price tag, amounting to over $7 billion per frigate, is up from the most recent estimate of $45 billion and double the original estimate of $30 billion when the Turnbull government announced the program in 2018.
The Hunter-class frigates, which specialise in anti-submarine warfare, weigh 10,000-tonnes but have only 32 missile cells, leading many experts to say they would leave Australia badly outgunned in any maritime conflict.
One of the most closely watched aspects of the review will be the future of the $3.6 billion Arafura-class offshore patrol vessel program, which was listed by the Defence Department as a “project of concern” in October.
Many defence experts are scathing about the patrol boats’ lack of weaponry, with one calling for them to be sold at a discount to the Philippines to help deter Chinese aggression in the South China Sea.
The 80-metre-long patrol vessels – designed for tasks such as border protection and fisheries patrol – are being built by German shipbuilder Luerssen in South Australia and Western Australia.
Some defence industry sources said they expected the Arafura program to be reduced from 12 boats to six, but this aspect of the review has been tightly held.
A defence source said scrapping the patrol boat program would be regarded as “a massive slap in the face to Germany”.
Two of the vessels have already been launched, making it difficult to abandon the program entirely.
Reducing the number of offshore patrol vessels would free up money for more heavily armed frigates, destroyers or corvette-style warships capable of playing an active role in a military conflict.
Marles writes in his foreword that Hilarides’ review team found the navy’s “current and planned surface combatant fleet is not appropriate for the levels of risk we now face and that cost pressures already existed in the program”.
“They also noted that the current surface fleet is the oldest [that] navy has operated in its history,” he writes.
The government is expected to announce it will acquire fleet of corvette-style “tier two” warships to provide a greater mix of smaller and larger surface combatants.
These ships could carry a similar number of missiles but be crewed with around half the sailors required for a Hunter-class frigate, a major advantage given the navy is suffering a well-chronicled staff shortage.
British shipbuilding firm Babcock International’s Arrowhead 140 frigate is seen as a leading contender to be the “tier two” vessel of choice, as is a corvette made by Spanish shipbuilder Navantia, Australian defence giant Austal and Australian-Singaporean construction firm Civmec.
The government’s decision on the Arafura program will be keenly monitored by the German embassy in Canberra and senior officials in Berlin given recent efforts to deepen defence ties between the two nations.
The German government was upset when the government awarded a lucrative contract to build 129 infantry fighting vehicles to South Korean firm Hanwha instead of German contractor Rheinmetall last year.
That decision threw into doubt an in-principle $1 billion agreement for Rheinmetall to export more than 100 Queensland-built Boxer armoured vehicles to the German army, announced during a visit by Prime Minister Anthony Albanese to Berlin last year.
The offshore patrol vessels have been criticised for lacking firepower after a planned 40mm cannon was removed from the build and replaced with an interim 25mm gun until a permanent solution is found.
Jennifer Parker, a maritime security specialist at UNSW, said: “We should up-arm them if we can or get rid of them.
“I’d be looking to sell them at a reduced price to the Philippines or another South-East Asian nation to help them stand up to China.”
“The problem is they are too long to just do constabulary operations, but they are not capable enough to be used in littoral warfare.
“They can’t defend themselves and have no effective weaponry.”
Parker said that while Germany was an important strategic partner for Australia, avoiding causing offence to Berlin should not influence crucial decisions on the nation’s surface fleet.
The patrol boats have also been criticised for not having hangars capable of stowing helicopters for maritime operations.
“The project has experienced delays in delivery of both the vessels and the associated support system with schedule delays first emerging in 2021,” Defence said when announcing its listing as a project of concern last year.
After meetings with company officials in December, Defence Industry Minister Pat Conroy said the program was facing “significant schedule delays” but that the government “looks forward to working collaboratively with Luerssen Australia to get the project back on track”.
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