The Federal Government will today release details of key Defence projects that are running a cumulative 97 years late and more than $6.5 billion over budget, and will announce measures it hopes will address these delays.
The report lists at least 28 major Defence projects that are behind schedule – 18 of them are over their approved budget – but says much of these budget variations can be attributed to factors such as exchange rates and price indexation.
These include the Royal Australian Navy’s SEA 5000 Hunter Class Frigate project, SEA 1180 Offshore Patrol Vessel, and the SEA 1445 Phase 1 Evolved Cape Class Patrol Boat; the Royal Australian Air Force’s AIR 8000 Phase 2 C-27J Spartan Battlefield Airlifter and AIR 7000 Phase 2 P-8A Poseidon maritime surveillance aircraft; the Australian Army’s LAND 200 Battlefield Command System and AIR 9000 Phases 2 & 4 MRH 90 Taipan helicopters; and a number of satellite communications projects.
A statement from Defence Minister and Deputy Prime Minister Richard Marles says the government recognises that Defence projects are complex undertakings at the cutting edge of technological, engineering and industrial capability and inevitably involve risk. But he attributes much of the underperformance of these projects “in no small part to the chaotic administration of the Defence portfolio by the previous Coalition Government”, which he says had a “revolving door” of six Defence Ministers in its nine years in government.
“The former Coalition Government’s investment in defence saw key defence projects blow out in both cost and time, money being flushed down the toilet and all the while they regaled in how much they were spending on defence,” Mr Marles said.
“We face the most challenging circumstances since the Second World War, compounded by the fact that the economy is facing serious pressures- and reaching record spending within Defence as a per cent of GDP means we need to be more responsible about the way in which we manage.”
Treasurer Jim Chalmers added: “You only need to look around the world to appreciate that, on both fronts – economically and geopolitically – we live in uncertain and unpredictable times, making it even more critical that defence projects deliver value for money. Our investments in defence and our steps to improve project management are a down payment on the stability of our region, and the security and safety of Australians.”
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The measures the government will take include the establishment of an independent projects of concern and portfolio management office; the requirement for monthly reporting to Mr Marles and Defence Industry Minister Pat Conroy on Projects of Concern and Projects of Interest; the establishment of formal processes and ‘early warning’ criteria for placing projects on the Projects of Concern and Projects of Interest lists; 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.
The Projects of Concern list was implemented in 2008 by Rudd Government Defence Industry Minister, Greg Combet, and was widely considered in Defence and defence industry to be a useful means of identifying, reporting on, and remediating Defence projects that were struggling with delays and cost overruns.