Over Budget and Late in Australia's Biggest Defence Projects

06 Januari 2020

Three AWD are $1.9bn over budget and more than three years late (photo : Clyde Dickens)

$10bn blowout to fighter jets, ships

Australia’s biggest defence projects are running $10.2 billion over-budget and an average of 27 months late, setting back the deployment of new capabilities amid growing strategic risks.

While China rolls out new military hardware, the navy’s three Air Warfare Destroyers are $1.9bn over budget and more than three years late, while the RAAF’s P-8A Poseidon maritime patrol aircraft are nearly two years behind schedule and almost $1.8bn over budget.

The report reveals the cost of the nation’s Joint Strike Fighters have blown out by $3.2 billion since they received “second pass” approval by cabinet, and the RAAF’s EA-18G Growler electronic attack aircraft are $868m over budget.

The RAAF’s EA-18G Growler electronic attack aircraft are $868m over budget (photo : PaulC7001)

The troubled multi-role helicopter project is running $250m over budget and more than seven years’ late for final operational capability, while the acquisition of 2,707 medium and heavy trucks are 11 months behind schedule and $115m over-budget.

“Delivering major projects on schedule continues to present challenges for Defence, affecting when the capability is made available for operational release and deployment by the Australian Defence Force, as well as the cost of delivery,” the Auditor-General said.

The 2018-19 report reveals that since the projects were first approved, their combined budgets had increased by more than $24 billion, however that included an additional 58 JSF’s and 34 MRH90 helicopters.

RAAF’s P-8A Poseidon maritime patrol aircraft are nearly two years behind schedule and almost $1.8bn over budget (photo : Aus DoD)

Since the scope of the projects was finalised, their total cost increased by $10.2bn, including $2.8bn for inflation and $4.4bn as a result of foreign exchange movements.

Opposition defence industry spokesman Pat Conroy claimed Coalition “mismanagement” of the defence portfolio was behind the blowouts and delays.

“This is the direct responsibility of Defence Minister Linda Reynolds and Defence Industry Minister Melissa Price,” Mr Conroy said.

The cost of the nation’s Joint Strike Fighters have blown out by $3.2 billion (photo : Michael Clarke)

He said the Ministers needed to “do their jobs and bring in these important Defence projects on time, on budget and on spec”.

Centre Alliance Senator Rex Patrick blasted Defence over the delays, claiming the department was “incompetent in its original assessments” of projects, requiring ministerial interventions.

“It’s not just the schedule and cost blowouts in the original project that needs to be considered,” he said.

The MRH-90 multi-role helicopter project is running $250m over budget and more than seven years’ late for final operational capability (photo : Contact)

“There’s the cost to the men and women in the Defence Force who are forced to carry out their tasks with obsolete equipment. There’s also the financial cost of Defence of keeping old and tired equipment running.”

Australian Strategic Policy Institute analyst Marcus Hellyer said there was “certainly room for improvement on schedule”.

However, in many cases, he said hardware was already in use by defence before the final capability was delivered.

2.707 units of medium and heavy trucks are 11 months behind schedule and $115m over-budget (photo : Rheinmetall)

“Major projects are complex. They do tend to run late,” Mr Hellyer said.

“On the other hand, when you see projects running seven or eight years late, it’s generally not the case that defence hasn’t gotten anything.

“Often it’s the case that it is still trying to deliver the last five or ten per cent of capability.”

(The Australian)