Deputy Prime Minister/Minister for Defence Richard Marles and Minister for Defence Industry Pat Conroy have together slammed the Morrison government’s active management of defence procurement as among the worst in the nation’s history.
In a joint media release and in a later press conference at Parliament House on 10 October, both ministers blamed massive underperformance in defence projects as being “due in no small part to the chaotic administration of the Defence portfolio by the former Coalition Government” under which, they pointed out, Defence Ministers had lasted an average of 18 months, resulting in a lack of oversight.
Citing data from the Australian National Audit Office and advice from Defence, the ministers said major defence projects with approved budgets totalling more than $69 billion were facing significant schedule delays and budget variants.
“Of these projects at least 28 are a combined 97 years behind schedule and at least 18 projects are running over budget and at least $6.5 billion of variations from the approved budgets identified,” they stated.
These projects included, they said:
- $44 billion Hunter Class Frigate program – start of construction delayed by four years and a $15 billion increase in expected costs, hidden from the public by the Coalition government.
- $1.4 billion C-27J Spartan Battlefield airlifters – which were delivered four and a half years behind schedule and are unable to fly into battlefields
- $3.7 billion Offshore Patrol Vessels project – running one year behind schedule
- $356 million Evolved Cape Class patrol boats – three years behind schedule
- $970 million Battlefield Command System – three years behind schedule
- Several Defence satellite communications projects worth $906 million – running between two and four years behind schedule
Steps to strengthen and revitalise Defence’s projects of concern process would include establishing an independent projects and portfolio management office within Defence; requiring monthly reports on Projects of Concern and Projects of Interest to the Minister for Defence and Minister for Defence Industry; and establishing formal processes and “early warning” criteria for placing projects on the Projects of Concern and Projects of Interest lists.
Other measures would include fostering a culture in Defence of raising attention to emerging problems and encouraging and enabling early response; providing troubled projects with extra resources and skills; and convening regular ministerial summits to discuss remediation plans.
No details were given of when and how these measures would be implemented, although the Minister for Defence Industry pointed out that six ministerial summits took place in the last three years of the last Labor government, while six summits in nine years had taken place in the first nine years of the coalition government, including Peter Dutton’s time as Defence Minister.
Shortcomings were not the fault of the Department of Defence nor of the Australian defence industry, rather a complete failure of leadership by the former government, the Deputy Prime Minster stated.
He did not respond directly to a question on whether anyone in the Department was going to be held accountable for budget blowouts or delays but stressed that culture started from the top with the focus on the outcome of projects and the delivery of capability.
Questions on force structure, project deferrals and submarine capability awaited the outcomes in March of the Defence Strategic Review and the Mead report and could not be pre-empted, but the Commonwealth was working with BAE Systems very, very closely, to get the Future Frigate program back on track, the Deputy Prime Minister said.
“It is a fundamentally Important project for the country. The frigate capability is clearly central to our surface fleet,” he commented.
Part of closing capability gaps inevitably involved spending money on extending the life of existing platforms.
“We will be doing that in relation to our submarines and in all likelihood will be doing that in relation to the Anzac class of frigates,” the Deputy Prime Minister said.
Determining the optimal path for the Future Submarine capability would be clearer when questions involving cost would be answered “in the first part of next year” – presumably by the Mead submarine taskforce.
“We need to know what the platform is that we’re running with, how quickly we can get it, how we can deal with capability gaps, making sure that we are compliant with our non-proliferation obligations, but cost is an important element of that.
“It is from there that we will be able to place those figures into the budget,” he said.