Existing programs for new and upgraded warships are increasing in costs, as the government grapples with a fresh wishlist for the navy.
Senior ministers are scrambling to plug a funding hole that could be as high as $20 billion for new and upgraded warships, with inflation, the falling value of the dollar, cost blowouts and an inherited budget shortfall forcing them to confront hard decisions over the navy.
. These warships would be able to carry missiles and have a longer range than the navy’s offshore patrol vessels currently under construction.However, this is unlikely to save much from the $45 billion program, which the auditor-general warned earlier this year was facing a significant cost increase because of design issues.The frigate’s builder, BAE Systems, may instead be asked to build missile-heavy destroyers using the Hunter class as the basis for the design.
The government will release its response to the review early next year but, as it looks to fund new warships, it faces a financial squeeze as multiple sources confirmed the existing shipbuilding program – which excludes AUKUS submarines – had gone billions of dollars over planned project budgets. The collective blowout could be as high as $15 to $20 billion.
“In 2022-23 the defence budget was meant to grow 8 per cent in nominal terms but only grew by 1 per cent in real terms. Most of the real growth has been eaten away by inflation,” he said.
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