The Defence Department hid from the public the real cost of the now-abandoned submarine program, and a frigate-building program, and can’t — or won’t — explain why, a damning report by the auditor-general shows.
The Australian National Audit Office (ANAO) examined the department’s massive internal Integrated Investment Program (IIP), which tracks the costs of all major defence projects, and the public versions of the document, which were released in 2016 and 2020. The public version was initially going to be made available annually but now will only be released every four years. One of its purposes is to assist industry with planning, as well as provide public accountability.
The 2016 public version, the ANAO found, used cost bands — or cost maxima, or exact costs — for every one of the 150-odd programs listed, except two. One was the Future Submarines project, which was listed as “>$50bn”, and the Future Frigate program, which was listed as “>$30bn”.
In fact, according to the underlying internal “broadsheet” IIP document, the cost of the Future Submarines project was already assessed at $79.8 billion, and the Future Frigates program was assessed at $36.4 billion.
The result was that the public and industry were misled to believe the cost of the two programs would be $36 billion less than defence knew they would cost.
Why were those two projects singled out for different reporting that misled everyone outside defence?
Astonishingly, defence claims not to know. “Defence records do not document the decision or rationale to adopt a public reporting approach, for these particular programs, with a substantially lower possible cost than the provision in the broadsheet or for the top of the band to be unbounded,” the ANAO reports. “Defence advised the ANAO in August 2022 that ‘the banding was set in place by the 2016 White Paper leads and defence has been unable to identify any official record of the decision’.”
Initially defence told the ANAO that “a more conservative banding was published to mitigate commercial and foreign affairs sensitivities for those active tenderers engaging with the Commonwealth”. But apart from the fact there was no banding at all, that explanation holds no water (sorry). As the ANAO says, that still doesn’t explain why defence didn’t “place the cost within a bounded range, to more accurately and transparently reflect the cost known to government … or hold the figure as confidential until a later time”.
The $80 billion cost was only officially confirmed in 2020, when defence officials admitted they’d known of the higher cost around the time of the start of the program.
Was there political interference, perhaps by the office of then defence minister Marise Payne, out of concerns that the subs program was already blowing out its massive cost? The ANAO report also details changes made to the 2016 public report between the draft version sent to Payne’s office and the final public version. But all of those changes were to increase the reported cost of projects. The submarine weapons system cost went from $4-5 billion to $5-6 billion; the frigate weapons system went from $2-3 billion to $3-4 billion. The changes in total added $5 billion to the cost bands and, given the long history of cost blowouts in defence, were probably justified. But who made the changes?
The ANAO has not identified any documentary source or authority for these changes among defence’s records. Defence has not been able to explain these differences.
In any other department, being unable to explain a $5 billion shift in costs would be a major scandal. In defence, it’s business as usual. The defence bureaucracy appears totally indifferent to the basic idea of accountability for the hundreds of billions of taxpayer dollars it spends, thinking nothing of misleading the public, failing to keep even the most basic of records about 10-digit cost shifts, insisting it has no idea what has happened within its own systems.
And yet, politicians continue to throw money at the department, rewarding its supreme indifference to accountability.
The primary objective of our defence program is to ensure we keep up our
protection moneyinsurance payments to our imperial master via the military industrial complex. They are kind enough to leave our local capos a modest pork-barrel margin for local bribery.The second objective of our defence program is to provide colonial auxiliary forces in support of imperial campaigns of conquest or punishment. Particularly favoured warriors are allowed into the big tent, provided of course they conduct themselves in a seemly manner, inoffensive to the sensibilities (or strategic objectives) of the imperial rule makers.
I’m not entirely clear why anyone would be surprised by the insouciant departmental approach to estimates. We long ago surrendered the remnants of our strategic heavy industrial capacity. We are price takers, and apparently, for our unaccountable defence and security establishments, that’s just fine.
Correct. And we slavishly kow-tow to the US war machine, with orchestrated wars to keep the cash flowing, and with the historically ignorant neo-cons in the administration pushing Russia to the point of no return, and likely annihilation of our species. The China beatup is next. Why are our politicians so ignorant, docile, and just plain stupid.
so, wouldn’t it be easier (and cheaper) to shut down our military entirely? – get rid of the troops, the procurement people, the top brass, the marching bands etc and so on, and just make regular payments directly to various foreign governments who could then distribute it down to their “defence industries”, if they’re so inclined, or just pocket it themselves – it would get rid of a lot of wasteful churn – and then the money and resources we save can be used to decarbonise the economy and help us prepare for the inevitable climate catastrophes
What a brilliant Neocon idea. Contract out our defense to foreign tender. We would save heaps and could sack them if they did not perform.
At the moment we are paying for equipment so that a foreign power can embed it into their system – ie we have no control over it or the cost.
More. Agree wholeheartedly. Indonesia would be a good candidate but if concerned NZ has the culture and whereabouts to do a good job for the right price.
we only have to swallow our pride.
Why are our Coaltion politicians so ignorant.Fixed it for ya
It’s not just the Coalition, ask ‘bomber’ Beazeley.
It’s probably safe to confess now, that many years ago as a very junior employee of the Defence department, I personally participated in the destruction of early records pertaining to the purchase of “Landing Ships Medium,” held in a storeroom for archived procurement files. The LSM documents were kept there due to it’s long, voluminous and troubled history, and I watched as maybe 3 years of correspondence burned to ash. So I can well understand why there may be no record…
The current to-ing and fro-ing (naval gazing?) about marine defence materiel is fairly typical in a time of rapid technological change and innovation as it has occurred in the past many times. When The West can pass on miss(i)le systems to a relatively ill-equipped country which is being attacked by a far larger and (possibly?) better equipped neighbour… and the large neighbour’s cruiser-type vessel is knocked off minutes later with a guided “miss(i)le” fired by someone with limited instructions… why, it must surely give pause for thought to those blimps interested in blowing some taxpayers’ cash on vessels of one sort or another. SO much money spent on a big ship and all its crew and it’s eliminated by a bloke with a launcher! How long before submarines can be attacked with underwater drones? (As an aside, isn’t it a delicious irony that Russian hardware (a cruiser) finally CAN finally be knocked off when it’s NOT in Ukraine but they’re NOT “allowed” to do that when the hardware is in Russia! It’s in the sea see?)
How many times in the past have armed forces been found wanting when the proverbial hits the fan and war breaks out? How many armoured contrivances would YOU be confident of inhabiting when the latest miss(i)les are sent by some ingenue soldier in your direction… after watching those tanks (and a cruiser) being despatched, usually with lots of fine young men plastered around the interiors of the said contrivances?
Would you perhaps wait and see a bit before blowing a pile of cash on your hardware of choice…. especially just after putting through the stage three tax cuts AS WELL?
But I don’t think any of the above scenarios would have troubled any of our current politicians…
Unrestricted Drone reciprocity? Certainly, role of both surface and sub-surface interface opens door to question future of ‘manned’ vessels? Or, is this where warfare links directly with Inter-continental missiles and Space launch? Hopefully, climate and what’s left of our natural world will eliminate our species before we complete our insane destruction of all life forms?
A few points of fact:
Moskva was sunk by Ukrainian produced Neptune missiles. They are upgrades of Soviet Kh-35s. It is far too big for a bloke with a tube – it is a broad equivalent in performance the American AGM-84 Harpoon and a dedicated anti-ship missile.
A point of informed conjecture:
Moskva was also very likely deployed in a massive state of disrepair and poor crew competency. Modern missile defence systems are proven but never guaranteed – but there is a good chance on Moskva that they weren’t even working. You would be extremely unlikely to see a ship in this state deployed by any Western navy, or the Chinese. This is based on a leaked maintenance report which may or may not be accurate. If fully operational, the Moskva’s defences are absolutely formidable.
Historical point of reference:
Crew issues also caused a US ship to be damaged by a similar anti-ship, the USS Stark. Because in this case Iraq was seen as an ally, the threat was not responded to appropriately and the defence systems were never armed. However, the review found that there should have been enough information to recognise the attack, if memory serves. There may have been similar crew issues at play with the Moskva outside of the state of the ship itself because the USS Stark was fully operational when this occurred.
Also the missiles used were Exocet missiles, again more or less of similar performance to the Harpoon or Neptune missiles.
This sort of money is the equivalent of losing a couple of capital ships or even a whole fleet. In days of yore this would result in a court martial with serious consequences for the offenders.
BK – Q for me is why subs & esp nuke subs, at all? Malcolm Turnbull talked at UQ last week & made reference to China/Taiwan & specifically mentioned that if China was going to ‘reunify’ Taiwan it would happen soon (<5yrs) because given technology advancement the rise of autonomous underwater vehicles (his words) would make subs obsolete as if to say they would be critical right now to Chinese naval supremacy. He also discussed, as he has written about before, the use of Highly Enriched Uranium in UK/USA subs which Australia will get Vs Lightly EU/retro diesel electric of the French sub.
So BK why subs at all? What use will they be in 5 years let alone in 2040? You’ve mentioned the US/Australia tracking of Chinese subs currently with intention of being able to take them out in case of an outbreak of hostilities. How does this all tie together? Have a swing BK, if anyone can sort mystery out, you can.