The Australian Navy's combat fleet is facing a problem. The eight Anzac frigates are worn out after three decades of adventures in the Middle East and difficult to crew. Anzac's replacements, the much-criticized Hunter Class frigates, have been delayed, and the former will not enter service until 2032 or so.
The cost of the project has also risen staggeringly from A$35 billion in 2018 to $45 billion two years ago to $65 billion now, even before shipbuilding actually begins.
Adding to the problems is that the Navy now does not like the 12 new offshore patrol ships currently being built; This seemingly simple project was also late, expensive ($3.7 billion in total) and a “problematic project.”
Meanwhile, the Navy's three new Hobart-class destroyers surprisingly need significant and expensive upgrades that will each take two to three years. With luck, all three will be back in service by 2032.
These numbers are important because the Navy needs three ships in service to reliably keep one ship deployed on remote operations for an extended period. For most of the next decade, our current surface warship fleet will be able to deploy only two, and perhaps three, warships at a time for extended periods. This is the cost of high input for low use output.
Consultant-driven solution
that's the problem. Now a review by highly paid outside consultants, led by a retired US Navy admiral, has provided the solution.
The review released today recommends retaining Hobart's three destroyers and six legacy ANZAC frigates, building just six Hunter Class frigates and immediately halting the OPV program at six ships.
David Muir / August
The biggest surprise was the recommendation that the Navy acquire at least seven new general-purpose frigates — and “optimally” 11 — and six large crew-optional surface vessels (LOSVs). The government agreed to both recommendations.
The new frigates will be a similar size to the Anzacs and the Hunter is half the size. Dubbed Tier 2 anti-submarine warfare, these ships will be designed and used to secure maritime trade routes and northern sea approaches to Australia and to escort the Navy's amphibious ships.
They will have air and missile defense capabilities and carry numerous anti-ship and land attack missiles. It is worth noting that the first three frigates will be built abroad – and this is likely to attract criticism.
The LOSVs will increase the Navy's long-range strike capability and appear similar to the U.S. Navy's planned large unmanned surface ships, which will enter service late this decade.
These ships will mostly operate unmanned, although they may have a small crew sailing for short periods, such as when entering and leaving port or refueling at sea. The LOSVs are expected to be low-cost, long-endurance and capable of carrying anti-ship and ground-attack missiles.
The review ignores the serious crew shortage of the Navy's current surface warships of 11 ships, let alone one of 26 ships. The Navy is already short about 900 personnel, the equivalent of more than three Anzac ship crews, as it struggles to meet recruitment targets.
However, the Department of Defense considers the problem to be one of retention rather than recruitment, and is taking steps to slow the rate of loss of personnel, but it has a lot of ground to catch up on before it can grow into a much larger force.
The review merely acknowledged the challenge and simply hoped for the best.
Read more: The long-awaited defense review is here. So what does it say and what does it mean for Australia?
Implications for the review
First, the good news. Much of the money allocated for new ships in Australia will be spent not only on building the metal hulls, but also on electronics.
For example, the future of the world's leading radar technology company, recently acquired by the federal government, appears secure.
There are definite benefits in creating a more skilled Australian workforce and maintaining a sovereign Australian offshore shipbuilding industry. Critics will correctly argue that it is more expensive than buying from abroad, but given the tax deductions, perhaps not by much.
However, a cost-benefit analysis will be difficult to calculate – the decision as to whether it is good value for money needs judgement, not a maths-based analysis.
Matt Turner/AP
Second, the Albanian government came to power calling for much better “effective projection” – or the ability to apply strategically meaningful military force far from Australia's shores using missiles.
However, the new frigates will only carry a few extra missiles – not many. As such, the government appears to have changed its previous intentions and will instead focus more on the submarine threat to Australian trade routes.
The only reference to “impressive expectations” in today’s review is the construction of six new LOSVs, each of which will be able to carry 32 missiles to sea. (However, one LOSV operating with a Hobart-class frigate would have about 88 missiles.)
Critics will point to the fact that this is one fewer than the US Navy's Arleigh Burke-class destroyer, which carries 96 missiles, and its larger Chinese counterpart, which carries 128 missiles.
Read more: Australia can no longer ignore Russia's expanding naval power in the Pacific
Third, the review does not call for the Navy's aging Anzac fleet to be refurbished quickly enough. The shortage of warships will continue into the next decade. This is bad news in the short term.
Finally, the Navy will now have three major ship and submarine projects underway. The new plan to acquire an additional fleet of frigates would take a long time, absorb the country's scarce shipbuilding manpower, and would be very expensive.
This would negatively impact the Navy operationally and the rest of the Department of Defense, Army, and Air Force. As a result, we can likely expect cuts to the military's budget in the next budget.
Overall, the review is good for jobs in Adelaide and Perth and will make the Navy much larger in the long term. It will also partly placate some of the government's critics who want to buy the ships abroad, arguing that this would mean faster delivery, and those who believe the government needs “new money” added to currently planned defense budgets.
But the real cost impacts of the reform plan will have to wait for the budget. The plan would also take a long time to implement, and it ignored the Navy's chronic shortage of skilled personnel, which was certainly unwise.
