“Mind-boggling” waste revealed in the record rise in weapons spending

by | Nov 30, 2020 | Featured, Government

Australian governments and their defence leaders, with help from lobbyists, choose immensely complex, overpriced and overmanned weaponry. Wasteful spending has to end, writes Brian Toohey.

With the blow-out in the budget expected to hit nearly $1 trillion by 2023-24 as a result of the pandemic, one would think the Federal Government would crack down on wasteful spending. But when it comes to defence spending, too much is never enough.

Budget papers show defence funding will grow by a staggering 9.1% in real terms to $42.7 billion this current financial year. But much of the extra money will be wasted – yet again.

There’s the official cost to build nine Hunter class frigates, which has gone from $30 billion in 2016 to $45.6 billion in 2020.

Then there’s the army’s new Infantry Fighting Vehicles, estimated to cost a “mind-boggling” $18–27 billion. The mid-point estimate for the cost of each vehicle is $50 million.

Then there’s the sustainment (running) costs for the Super Hornet and the Growler jets – a scandalous $100,000 per hour. This compares to $15,000 an hour for the older Hornets which still perform well.

But taking the cake is the planned build of 12 ludicrously expensive Attack class submarines – a program that is a financial and capability disaster. The cost has already gone from $50 billion in 2016 to $90 billion.

Hunter class frigates

The official cost to build nine Hunter class frigates has risen 50% in four years, from $30 billion in 2016 to $45.6 billion in 2020. Moreover, that is three times the amount the US is spending to build its choice of a new frigate.

Australia’s Future Frigate project, called SEA5000, specified that the ship would be 8000 tonnes. However, for some unknown reason, the government chose BAE Systems’ 8800 tonne British Type 26 frigate. It was still in the design phase.

Department of Defence captured by foreign weapons makers Thales, BAE

Now called the Hunter class, the planned frigate has grown to more than 10,000 tonnes. Compare this to the highly successful frigates the navy currently operates, the 4000-tonne, German-designed ANZAC class, which was built in Melbourne on time and within budget. Australia does not need anything bigger, so long as we don’t go looking for a fight on the shores of a superpower.

Following the sharply increased risk that big surface ships can be easily destroyed by supersonic and hypersonic cruise missiles, rail guns and torpedoes, a frigate the size of the Hunter class could quickly be sunk in a high intensity battle.

The belated discovery that two crucial radar systems, the AEGIS and the CEAFAR, could not be integrated into the existing Type 26 design apparently prompted the increase in the Hunter class.

This could also explain the extraordinary $6.27 billion that a senior defence official Cheryl Lutz told a Senate Estimates hearing on October 26 was needed for the design and “productionisation” phase.

This ugly jargon refers to finalising a design to ensure all components, including radars, fit together and suit a particular ship yard before construction begins. The magnitude of the extra spending is hard to justify. After all, the government supposedly choose the Type 26 because it was a proven design.

Compare this to the US’ plans. It is building a modified Italian-designed frigate, at 7400 tonnes, with the first 10 frigates costing just A$14 billion, according to a Congressional Research Service report on October 28. The US is spending more than $30 billion less than we are on the nine Hunter class.

Similarly, the Hunter class costs between two and three times as much as Korean and Japanese frigates of a similar size.

Infantry Fighting Vehicles

As for the army’s new Infantry Fighting Vehicles, the Australian Strategic Policy Institute’s budget specialist Marcus Hellyer says the expected $18–27 billion cost is mindboggling. And given how precision guided weapons can destroy armoured vehicles: “There’s an area of unreality to the entire enterprise,” says Hellyer.

Sustainment costs for new equipment are often two or three times as much as for their predecessors. Sustainment costs for the Army’s MRH-90 helicopters average more than $31,000 an hour, which, Hellyer says, is “ridiculously expensive for something that’s essentially an unarmed flying truck”.

Hellyer puts the sustainment costs for the Super Hornet and the Growler jets at a staggering $100,000 per hour. That compares to $15,000 an hour for the older Hornets which still perform well. The VIP jet flying the former finance minister Mathias Cormann around Europe in his bid to become head of the OECD costs $4300 an hour.

F-35 fighters

Because of continuing equipment problems, the US has still not moved to full production of its F-35 fighters more than 20 years after the plane was selected. Defence Minister Linda Reynolds wasn’t aware of some core problems facing Australia F-35s whose delivery, bugs and all, is almost finalised. She even praised a crucial computerised system as “cost-effective”. Yet the US Secretary for Air had already publicly condemned the multi-billion dollar system and the Pentagon junked it a few months later.

King of Lemons: Australia swindled by Lockheed Martin and its Joint Strike Fighter

But the worst financial and capability disaster is the building of 12 ludicrously expensive Attack class submarines. Changes to the unique French design are not finished; the first boat is unlikely to be operational until the late 2030s and the last until well after 2050; and they will be obsolete before delivery. The costs do not stop there. Because the existing Collins class is due to start retiring in 2026, these delays will create a capability gap that will have to be closed by spending $15 billion to $30 billion to keep subs going.

The current plan is to integrate Australia’s new submarines with US submarines in the South China Sea where an accidental, or deliberate, incident could spark a full-scale war, unless all sides make a strenuous effort to ease tensions.

In for a penny, in for a pound: $90 billion for an obsolete submarine fleet

Australia would be better off scrapping the $90 plus billion Attack class and getting a version of the advanced medium-sized submarines the Singapore Navy is buying from Germany, the world’s biggest maker of quality conventional submarines. These low- cost, but formidable, boats can launch missiles from underwater to destroy submarine hunting helicopters and low flying surveillance planes. The first could arrive before the Collins start retiring, removing any capability gap.

Proven ships and planes can be supplemented by cheap drones. But Australian governments and their defence leaders, with help from lobbyists, choose immensely complex, overpriced and overmanned weaponry.

ABOUT THE AUTHOR

Brian Toohey

Brian Toohey

Brian Toohey began his career in journalism as a political correspondent at the Australian Financial Review in 1973. He edited the National Times in the 1980s and has contributed to numerous publications. He is author of Secret: The Making of Australia’s Security State.

33 Comments

  1. Avatar

    First flown in 1952 (that’s nineteen hundred and fifty-two!) Jindivik is an innovative pilotless drone designed and built by the Government Aircraft Factory (where the F/A -18 too was built) and sold to the Swedish Air Force; Royal Air Force;
    United States Navy.

    Drones. Drones will replace piloted aircraft and undersea craft also yet ‘we’, send billions upon billion overseas when we, have the skills and expertise to design and manufacture here.

    • Avatar

      It’s not rational.
      Once you realise that it’s not so overwhelming and you can get out and take action.

      • Avatar

        that’s not how it works here

        first – money in decision makers pocket – then secret deal is done – then public servants have to try to explain it after the event – if they want to keep their jobs …

    • Avatar

      We cannot design and manufacture modern jet fighters here. Very few countries can here. We did not ‘make’ F/A-18’s here either. McDonnell Douglas did, then shipped them here and we assembled the already made aircraft…

      The ‘Loyal Wingman’ is a ‘drone’ that we may also assemble here. But make no mistake, it is being designed and built by Boeing. Not by us.

      • Avatar

        Actually Jason there was a large ‘oven’ in Fisherman’s Bend to bake the composites the electronics were manufactured in the Philips factory Moorebank. There is a large Australian manufacturing component to the original F/A-18.
        You are correct regarding the super, it has no Australian content.

      • Avatar

        I was referring to the legacy Hornets. We didn’t build, let alone design the airframes, under-carriages, engines or on-board systems, including radar, on-board processsors, EW systems, habilitability systems, cabling, internal fuel tanks, fire supression systems, actuators, flaps, and so on, so what did we ‘manufacture’? We’re talking semantics here but what we did really did, all we really did was local assembly…

  2. Avatar

    Compare defence spending with spending directed at the disadvantaged, needy, sick, aged or disabled.
    Homelessness
    Aged care waiting list.
    Hospital waiting list.
    Underfunding NDIS.
    Abandonment of Gonski needs based funding.
    Robodebt.
    New Start.

    • Avatar

      Indeed Alan.

      As a good friend of mine suggests, maybe the better questions would be something along these lines “what kind of world do we want to live in? What kind of society? What kind of culture, and what kind of community? More than any other factor, how would it feel, to be in the place you want to be?”

  3. Avatar

    “But Australian governments and their defence leaders, with help from lobbyists, choose immensely complex, overpriced and overmanned weaponry.”

    For once, I’m just glad that people like Brian Toohey, Michelle Fahy, Marcus Rubenstien et al have their collective heads around matters such as this and its despicable waste. Which also highlights the waste that we currently know about, not what remains collectively hidden behind a pile of secrecy and its links to Defence i.e. Alexander Downer’s role in Timor, the subsequent secret
    trials of Bernard Collaery, Witness K, and last but not least, that shameful abandonment of Julian Assange and WikiLeaks. Yes, secrecy, with ideology and politics thrown in for good measure is it seems very hand to hide your contempt and malfeasance, especially showing a depth of treachery of the likes that we have not known before.

    Highlights yet another article published by TND’s Paul Bongiorno of the sheer deception that has been played out in this country by Governments since Vietnam https://thenewdaily.com.au/news/2020/12/01/paul-bongiorno-atrocious-decisions-pm/?
    which by the way, of all the appalling decisions that are impacting this country now, lead back to one person who happens to be the current PM.

    Given his outstanding performance to date, certainly gives new meaning to the term ‘whirling dervishes’ don’t you think.

    It might be helpful if Morrison keeps his mouth shut form this point on.

  4. Avatar

    I thought the submarine deal for Adelaide was pure pork-barreling to keep voters happy with jobs in S.A.

    when I read U.S. defence analysis articles – comprehensive, in-depth, well-argued in public – by comparison Australian Defense spending seems to be mostly ‘nothing to see here’ shibby right mite Bob’s Your Uncle ‘Where Do I Sign’ mates rates – money in someone’s pocket – the secret deal is done – and the taxpayer is left wondering WTF just happened …

  5. Avatar

    The decision to choose the much more expensive French design State-controlled defence contractor DCNS won out over Germany’s ThysennKrupp Marine Systems and Japan’s Mitsubishi Heavy Industries.This was in 2016 – the same time that South Australia was contemplating becoming a global nuclear industry hub. The French design is a conventional version of its nuclear-powered Barracuda submarine. So – it probably would be a not too difficult exercise to later adapt these to nuclear-powered submarines. That could well have been the underlying plan.

  6. Avatar

    The French cannot believe their incroyable luck at finding a country so monumentally fou. They call this deal the contract of century – «contrat du siècle»
    Australia will be sending billions of Euros to France each year for the next several decades. By the time submarines are delivered they will almost certainly be obsolete.

  7. Avatar

    Dear Michael, you may very well be an ‘independent’ journalist, I have no idea what your subject matter expertise maybe, but I am absolutely certain it is neither defence, nor economics that you have any expertise in whatsoever.

    It’s good for a few clicks raising the hoary old chestnut of ‘excessive defence spending’ but I really fail to see the point. You clearly don’t understand what the terms ‘then years’ or ‘inflation’ mean nor the impact they have on a program that will run for 30-50 years, nor do you bother referring to defence budget papers to see how much things ACTUALLY cost, rather than taking Marcus (ahem) Hellyer’s word for it…

    So if you don’t care to understand the economics behind the decisions and you clearly have no idea of the defence applicability of these decisions, is a few measly clicks by those who don’t know any better, worth the effort?

    Don’t want to take my word for it? Fine. Here’s just one concrete example of you not having the faintest idea of what you are talking about.

    AEGIS is not a radar. It’s a combat system… Now I expect in reality you haven’t the faintest idea what the difference between a radar system and a combat system is, but if you have the chance, give it a go…

    • Avatar

      Jason, you are clearly informed on these topics. Why would Australia have any defence capability beyond, say 100kms of the coastline? Which country will attack Australia with ships and landing craft as demonstrated in the 20th century? Is any truly military defence spending worthwhile and why?

      • Avatar

        Australia is not self-sufficient in most things a modern economy requires to function. Think we are an advanced nation? That advanced status won’t last very long if our sea lines of communication are cut… So we need a navy to ensure we have some ability to keep them open.

        Navies since oh I don’t know, around 1920 or so have proven to be vulnerable to air attack. There are some things you can do with your navy to mitigate this, however the best way to prevent or mitigate air attacks, is and always has been to maintain a strong air attack capability yourself. So we need an air force.

        Thirdly, it is historical fact that wars on won on the ground. Not in the air or sea domains, from which capabilities can inflict significant harm on ground forces, but neither can seize or hold ground thus leading to ultimate victory in any war on ground. So we need an army.

        As to your specific question about ‘100k beyond the coastline’ I am puzzled. Why that distance? Surely you accept having a C-130J Hercules capable of performing an air sea rescue or a humanitarian relief flight of cargo, delivery of medical specialists and support, or whatever you need within it’s 17t lift capacity, many thousands of kilometres beyond our coastline, is a worthwhile capability to have? Defence have these capabilities for military reasons obviously, but they are equally applicable to ‘civilian’ or humanitarian support roles? This would be of little use if it could do nothing more than go no more than ‘100k’ beyond our coastline.

        Similarly with our navy. If you accept the premise above that Australia needs the capability to maintain it’s sea lines of communication with the rest of the world, with force if necessary, than how could they possibly do this, if they were somehow restricted to operating within 100k of the Australian coastline?

        You would restrict our air force to operating well within the weapons envelope of many long range weapon systems, rather than allow them the advantages that their long range and relative high speed bring? Why? For what possible tactical purpose? Would you propose a boxing match where on fighter had to have both arms tied behind his back? Hardly seems fair or reasonable…

        Similarly with our Army. Given we are not Europe and not connected to any other landmass a 100k limit would mean our Army would stay at home. That might be a good idea for any number of reasons, but it would be a terrible idea in reality. Sending our Army and the rest of our defence to fight our aggressors overseas in WW2 was what saved us from being invaded. It also saved our allies and close neighbours too, when we pushed them back out of those countries.

        Staying at home there, while noble in some sense, makes very little sense militarily.

      • Avatar

        Declare who you work for Jason.

      • Avatar

        The Queensland government and I’m a former soldier. You?

    • Avatar

      Always good to hear various angles of informed input, thanks for your contributions!

      I think the main point of the article is more to suggest that for the money we are spending, proven alternatives exist that would’ve been better bang for our buck.

      Considering the ever increasing rate of technological progression, waiting decades for something a potential enemy outclasses in the present (or a few years from now) just seems disastrous strategically as well as economically – especially if the upkeep limits the real number of operational units we can actually send into a conflict.

      In that sense, can it really be justified that the choices being made are the best for our nation?

      • Avatar

        Thanks for the response. As with any acquisition, there are for and against arguments at almost every level. The difficulty with defence in particular among Government agencies, is that many of the capabilities that are acquired, are classified. You know we are purchasing the JSF for instance and you know defence has said publicly that it has assessed JSF as the best possible fighter option, for example.

        What defence can’t say, is specifically WHY they have assessed JSF as the best option. Because that why is classified and needs to remain so.

        It’s all well and good to have opinions about various options, but rarely do we have a detailed level of understanding of the WHY Defence procures certain things. My points above are an attempt to point some of these issues out, to those who just bleat ill-informed nonsense.

        Then add on top of that issue, Government political priorities as we see with their planned ‘continuous ship-building plan’ which to me is the main issue with the submarine project for example. The idea that these submarines are ‘out classed’ I don’t accept at all. We well understand the capability of the Collins Class today, we know where they stand compared to regional capabilities and as we are designing the Attack Class (in co-operation with the French) we know what it’s capabilities will be when they finally arrive. Suggesting they are already out-classed, is just flat out wrong. They should indeed be sped up and delivered quicker due to the regional threat issue, but capability-wise they will be absolutely world class.

        I take issue with the idea that submarines are made obsolete by sensor systems. You see a lot of so-called ‘experts’ all the time predicting this, yet you see a lot of nations hurriedly building as many submarines as they can get. Australia is expanding it’s fleet for just that reason. A naval board of some of the most knowledgeable and capable national and international naval experts that can be found, assessed the capability of the Attack Class before the decision was made to proceed with it and found it very suitable to meeting Australia’s requirements. Other options were considered and all contain varying problems of their own.

        Sensors improve yes, but so do counter-measures. It’s a ‘game’ as old as swords v armour. Sword gets better, armour improves to protect against it and so on, add to which warfare in it’s entirety is a systems event. Even such a comparatively simple thing as a rifle is a ‘system’ of different capabilities. You have the weapon itself, but you also have the ammunition, the sighting capability, the training of the user, the reliability and ‘maintainability’ of the weapon to consider and so on. Focusing on any one binary aspect misses the whole picture. Anyone who takes an especially strong position one way or the other on such a binary issue, is ignoring history, ignoring current technological development and is displaying an overall bias, that impedes the strength of their argument, in my opinion.

        Submarine detectability or otherwise is such a complicated point, anyone who points at new sensors and ignores everything else, doesn’t even deserve a seat at the discussion table… Again, in my humble opinion…

      • Avatar

        Does it make more sense then, given the delivery delays on projects like the JSFs and Attack class subs, that multiple short-term contracts are a wiser option?

        Considering the rapid progression of the sword vs shield arms race, the first few units might be world-class for their time but then be bested by the next generation (whatever it may be, whenever that may arrive). While that classified info might be the key to locking in a contract, why do the contracts have to be so long? For the first decade sure they might be the best thing out but unless the built units and those still in development can be modified to fit the latest offence/defence, would we just be wasting money on a redundant deathtrap? I imagine subs that size would have a massive crew…

        Surely it makes more sense to build a handful here then commission a handful of an updated model later (etc) to maintain relevance? Ingenuity and clever tactics with what you’ve got is one thing, but clever tactics supported by the best equipment is undeniably better.

  8. Avatar

    Given what appears to be an appalling track record of choosing the ‘wrong’ model, design, or category of weaponry for the ADF, the obvious question arises: Who is/are responsible for these cockups (and why)

    • Avatar

      Well that ‘track record’ is often criticised by those who in reality know very little, yet somehow that ‘track record’ has served us extremely well in actual combat operations…

      And interesting dichotomy, no?

  9. Avatar

    DoD corruption and idiocy! The Collins Class subs NEVER made the grade with crew fearing to serve on them such was there reputation…more lemons reported here…who runs defence? A bunch of friggin’ morons! Toohey is a brilliant journalist, but such a very short article considering it was written by Brian?

    • Avatar

      Actually, that is almost complete claptrap.

      The Collins is a fantastic little sub, the Attack class will be even better. Some of the smartest people you will ever meet actually run defence, which is more than can be said for the types who write these sorts of articles…

      • Avatar

        Your insults are unnecessary. I know people in the RAN and know what I said is true, I have no agenda except to speak the truth as I know it. Mr Toohey is one of the most brilliant journalists in this country. How dare you challenge his integrity. BrianToohey has always worked for the public good! Who do you work for? Declare it!

      • Avatar

        The Collins are maintaining their required 4 submarines online at any one time at present, so clearly there are at least 4 submarine crews who aren’t “afraid” to serve on them…

        I too know a number of former RAN members, including submariners. I know some ex-US Navy types as well, and I can assure you the capability of the Collins Class is held in a very high esteem internationally both in military and political circles. There were a great many problems early in their service, there often are in leading edge projects. But they have long been ironed out and provide great service to our country.

  10. Avatar

    The opposition to government seems just as complacent as the government itself what do we do to reduce the corrupt actions of the public service the military and the political classes?

  11. Avatar

    Special thanks to you Brian Toohey. I too have observed over the past 15 years or so, the transition of the US Military marauders into Australia.
    It began when the US not-so-good-guys were wanting a far more expansive foothold in this side of the Pacific… but much larger than the Isle of Guam.
    Th objective being to create a strategic Military base for their Military plunders and patrols in this part of the South-East Asian Pacific.

    Currently the supposed super-secret US Military Intelligence coming into Australia’s Intelligence agencies would likely be for Australia to re-arm itself with “US Military recommended war-goods and Weaponry.” Always at great expense as you are already well aware of.
    The major problem that you have touched upon is, being the many Billions of Oz taxpayer dollars being pissed up the wall by Scomo and his mobsters.
    At the end of the day its only taxpayers money, yet it was money that previously funded the welfare package of services available to those among Australia’s needy people.
    A referendum drafted up in a specific manner and in its purpose; would see the end of the Liberal party element in Australia (the revocation of and the dissolvement of) the present repressive bunch of greedsters buy lining their own pockets, whilst also cultivating their funds-donating corporate predatory blighters upon Australia’s consumers.

    • Avatar

      What?

  12. Avatar

    Best report ever heard about Military Spending is that Cost Rica scrapped it completely in 1948. In the Stephen Fry journey through so many countries in Central America, his surprise was convincing that, in contrast with ever present danger in many neighbouring military government countries, Costa Rica is particularly friendly and safe. Let’s follow their lead.

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