$45bn frigate project all at sea

Three years ago, defence experts raised the alarm in The Australian that the Hunter-class program to build nine new naval frigates (small warships) – the second-largest defence procurement project in the nation’s history behind the AUKUS nuclear-powered subs – had been hit by rising costs and substantial delays. The cost of the frigates, chosen by the Turnbull government in 2018 to be designed in Britain and built in Adelaide, was revised up from $35bn to $45bn. The vessels are supposed to replace the Anzac-class frigates from early next decade, lifting naval capacity for anti-submarine warfare – a key capability as China expands its submarine fleet.

Work has just started on cutting steel for the first frigate at the Osborne shipyard in South Australia. The build was delayed by 18 months because of an immature design and excessive weight. The first ship is due for completion by mid-2032, with the final frigate due to be finished in the mid-2040s.

But the project is now in doubt, Cameron Stewart reveals on Tuesday. Australians concerned about our northern defences and aggression in the South China Sea will be alarmed to learn that the unreleased version of the government’s Defence Strategic Review heavily criticised the project. The classified report, 100 pages longer than the DSR released in April, says the nation is at risk of being saddled with poorly armed, overpriced warships, ill-suited to defending our continent against China’s navy.

An early draft of the DSR called for the entire project to be axed. Former defence force chief Angus Houston and former defence minister Stephen Smith, who led the DSR, became deeply sceptical, we understand, about information provided by Defence officials, who wanted the Hunter project to continue. In their final report in April, Sir Angus and Mr Smith recommended an independent external review to decide the matter. Defence Minister Richard Marles agreed. The issue will be determined by a review into the navy’s future surface fleet, headed by former US vice-admiral William Hilarides. He will report by late September.

Mr Marles said the short, sharp review was needed because acquisition of nuclear-powered submarines changed requirements of the surface fleet. The Hunter program’s future must come down to national security and defence concerns, not politics and regional job creation. If it does not survive, hard decisions will be needed on a replacement. A final decision is needed as soon as practical after wasted years as China embarked on record rearmament and Defence officials mismanaged key details of the frigate program. The first problem, identified three years ago by Australian Strategic Policy Institute senior defence analyst Marcus Hellyer, was the Turnbull government selecting what he described as a high-risk option – a British Type 26 Global Combat Ship with major modifications. Unlike two other competitors in the tender – an Italian Fincantieri FREMM and a Spanish Navantia F-5000 – the British option was not based on a ship in service. Despite the government wanting a mature design, it selected on the basis of the Defence Department’s recommendation a design that was years away from being in the water. It then agreed to major modifications of the radar, combat system and all weapons. This five-year litany of wasted time on a critical project could still have far to go.

The controversy erupts as the nation’s $10bn-a-year defence industry is growing frustrated over the DSR, warning the blueprint is vague, underfunded and being mired in bureaucracy. Industry participants at an army working group last week complained that, despite government warnings over the need for urgent action, key elements of the review agenda would take 12 to 18 months to get started.