A major overhaul of the Defence Department is looming as government frustration grows over delays and cost blowouts associated with Australia’s multi-billion-dollar naval shipbuilding projects.
- $183 billion worth of shipbuilding programs will be overhauled
- In an email to staff, Defence’s deputy secretary told staff to be prepared for a departmental shake-up
- It follows a multi-million-dollar review recommending significant changes
The ABC has learnt a $3 million review by international firm Boston Consulting Group urging sweeping changes to how programs are managed has been handed to the federal government.
Every major Australian naval shipbuilding project is now considered to be running late, including the $90 billion future submarines project and the $45 billion development of a fleet of Hunter-class frigates.
Even the relatively simpler and smaller project to construct a $4 billion fleet of offshore patrol vessels is behind schedule.
Earlier this year, the government instructed the heads of Defence and Prime Minister and Cabinet to undertake a review of how to fix Australia’s National Naval Shipbuilding Enterprise, which oversees up to $183 billion worth of programs.
Defence sources say the study by the Boston Consulting Group has recommended a restructure of the department’s Capability and Sustainment Group (CASG) to create a new separate group dedicated to naval shipbuilding.
Dozens of additional staff, including numerous senior executive service (SES) personnel, are expected to be recruited for the new organisation, which will remain inside Defence.
A national naval shipbuilding task force headed by Defence bureaucrat Jane Heseltine has already been set up to “implement the high-level changes stemming from the review”.
In an email obtained by the ABC, the Defence Department’s deputy secretary, Tony Dalton, warns colleagues they “need to be on the front foot so we can mobilise quickly when decisions are made”.
Mr Dalton, who is responsible for national naval shipbuilding within CASG, also confirmed the review meant “various formal approvals (both Government and internal) are pending”.
“Over the last four months work has been done to input into the Secretaries’ review which will be taken forward for Government consideration in early September,” he wrote.
“The Secretaries acknowledge the crucial importance of our role in delivering the enterprise’s key strategic objectives — delivering and sustaining naval capability and setting the framework for continuous naval shipbuilding in Australia.
“They recognise the challenges for our workforce (both within Defence and across industry), the need to work in partnership with industry, the states and territories, and multiple government agencies, and the need to approach the enterprise as a cohesive, connected portfolio.”
During a June meeting with French President Emmanuel Macron in Paris, Prime Minister Scott Morrison raised his dissatisfaction with progress on the Attack Class submarines.
Last week, CASG’s first assistant secretary, Sheryl Lutz, told a Senate committee that delivery of the first British-designed Hunter-class frigate had been delayed from the end of 2029 until 2031.
In March, the ABC revealed a powerful new Cabinet committee had been formed to tackle problems with Australia’s multi-billion-dollar naval shipbuilding projects, and that the National Shipbuilding Advisory Board (NSAB) had been abolished.
Doubts are also growing over the department’s ability to manage the planned local construction of a new vessel to support Australia’s “Pacific Step-up”, with Defence sources suggesting the government may instead choose to buy from overseas.