Defence Review secretly slammed $45 Billion Hunter Frigates as poorly armed and overpriced

The unreleased version of the Defence review said the project risked saddling the country with poorly armed warships ill-suited against China.

A rendering of a Hunter Class Frigate.

The unreleased version of the Defence Strategic Review heavily criticised the $45bn Hunter frigate project, saying it risked saddling the country with poorly armed and overpriced warships ill-suited to defending the nation against China’s navy.

One early draft of the DSR report called for the entire project – the largest shipbuilding enterprise in Australia’s history – to be axed, before the DSR team eventually chose in its final report in April to recommend an independent external review to determine the project’s future.

In behind-the-scenes drama over the future of the massive program, the DSR authors, former defence chief Angus Houston and former defence minister Stephen Smith queried defence officials over the accuracy of information provided to them by the department about the plan to build nine Hunter-class frigates in Adelaide.

The Australian understands Sir Angus and Mr Smith were so sceptical about the information provided by defence officials, who wanted the Hunter project to continue, they chose to call for an independent external review to examine the entire project and its place in the navy’s future fleet.

Defence Minister Richard Marles accepted their recommendation, with the future of the Hunter project now set to be decided by an independent review into the Navy’s future surface fleet headed by former US vice admiral William Hilarides which will report by the end of September.

Mr Marles declined to comment on whether the unreleased version of the DSR had criticised the Hunter project, but said the independent review was necessary because the acquisition of nuclear-powered submarines had changed the requirements of the navy’s surface fleet.

“In light of the government’s announced pathway to acquire nuclear-powered submarines, it is appropriate to conduct a short, sharp review of the surface combatant fleet,” said a spokesperson for Mr Marles.

The unreleased version of the DSR was about 100 pages longer than the public version released in April.

The future of the troubled Hunter project, which is running at least 18 months behind ­schedule, has since been dealt another blow. A damning report by the Australian National Audit Office (ANAO) last month ­exposed a litany of mismanagement and misinformation that led to the warship’s high-risk ­design being chosen ahead of other more suitable frigates.

The Hunter-class frigate which is based on Britain’s Type 26 Global Combat Ship, was ­chosen by the Turnbull government in 2018 despite Defence’s initial assessment that the other two contenders, an Italian FREMM and Spanish F-100, were better options.

The Hunter-class frigates, built by BAE Systems, are optimised for anti-submarine warfare but are considered too lightly armed, with just 32 missile cells, far fewer than most large warships, at a time when the government says it wants to boost naval firepower.

The DSR says Australia is entering the “missile age” and that the ADF needs to be able to strike long-range targets in a worsening strategic environment that has seen China pursue the biggest military build-up since World War II. Such is the concern within government over the Hunter project that the British High Commission as well as the Hunter shipbuilder, BAE Systems, have been invited to provide written submissions on the project to the joint committee of public accounts and audit by Thursday.

The JCPAA has moved to include the Hunter project in its existing inquiry into defence major projects. JCPAA chair Julian Hill said: “This is a deeply concerning report by the Auditor-General into a critically important Defence project.”

Failure on Defence Strategic Review will be catastrophic for our security, self-image and world standing

Experts believe the only hope for the survival of the Hunter-Class project in its current form will be if the project receives backing from the three-person independent review, which includes former finance secretary Rosemary Huxtable and former Australian fleet commander, retired Vice-Admiral Stuart Myer.

So far no-one has been held accountable for the failures of the project, which the ANAO says is likely to have further cost blowouts, making the project’s finals cost “significantly higher” that the current $45bn estimate.

The audit report found that Defence chose the Hunter-class frigate without assessing whether it provided value for money, compared with the two other warships in contention.

“The hallmark of Defence’s management of this procurement and related advisory processes is that they lacked a value for money focus, and in that sense the procurement did not comply with the core rule of the (commonwealth procurement rules),” the audit stated

It also found defence documents that might explain why the Type 26 warship was chosen over competitors were not retained and could not be provided to the audit office.

Work has just begun on cutting steel for the first of the nine Hunter-class frigates at the Osborne shipyard in South Australia. The start was delayed by 18 months due to an immature design and excessive weight and the ANAO report revealed a separate 18-month delay in the project. The first warship is not due for completion until mid-2032 with the final frigate not due to be finished until the mid-2040s.

The DSR says the independent review of the navy’s warship fleet aims to “ensure its size, structure and composition complement the capabilities provided by the forthcoming conventionally armed, nuclear-powered submarines”.