Australian defence projects billions over budget, decades late

SYDNEY (Reuters) – Major Australian defence projects with approved budgets totalling more than A$70 billion ($45 billion) are overbudget and cumulatively decades late, the government said on Monday, amid China’s plans to increase its influence in the Pacific.

At least 28 defense projects are collectively 97 years late, including the A$44 billion anti-submarine frigates programme and purchases of 12 offshore patrol vessel and a digital battlefield command system, Defence Minister Richard Marles said.

“All of this has occurred at a time when our strategic circumstances are very complex and extremely challenging,” Marles said during a media briefing.

China’s plans to set up presence in the Pacific, including entering a security pact with Solomon Islands, has raised concerns in the United States and Australia, who have for decades seen the region as largely their sphere of influence.

The government will set up an independent projects management office within defence to keep a close eye on projects to avoid delays and keep them within budget, Marles said.

He flagged Australia’s defence spend will grow from current levels of about 2.11% of GDP over the medium term, two weeks ahead of the recently-elected Labor government’s first budget.

“This is a real challenge now for the incoming government to get this back on track,” Marles said, as he blamed the previous conservative government for leaving him “a complete mess”.

Separately, at least 18 projects are facing cost overruns of roughly A$6.5 billion, the government said. Cost estimates do not include the upcoming purchase of eight nuclear submarines, under an agreement with the United States and Britain.

At a summit last month marking the one-year anniversary of the security pact, leaders from the three countries said they have made “significant progress” on the plan. Marles said a cost estimate is expected next year.

($1 = 1.5723 Australian dollars)

(Reporting by Lewis Jackson and Renju Jose; Editing by Michael Perry)