The government has unveiled its Navy of the future. Will it solve our current problems – or just create new ones?

Australia’s naval surface combatant fleet is in trouble. The eight Anzac frigates are worn out after three decades of Middle Eastern adventures and hard to crew. The Anzac’s replacements, the much-criticised Hunter Class frigates, are late – the first will not enter service until 2032 or so.

The project’s cost has also stunningly risen from A$35 billion in 2018 to $45 billion a couple of years ago to now $65 billion, even before actual ship construction starts.

Adding to the problems, the Navy now dislikes its 12 new offshore patrol vessels (OPVs) currently being built; this seemingly simple project is also late, costly ($3.7 billion overall) and a “project of concern”.

Meanwhile, the Navy’s three brand new Hobart Class destroyers surprisingly need major, costly upgrades that will take two to three years each. With luck, all three will be back in service by 2032.

These numbers are important as the Navy needs three ships in service to reliably maintain one ship deployed on distant operations for an extended period. Across most of the next decade, our current naval surface warship fleet will be able to dependably deploy only two, maybe three, warships simultaneously for extended periods. This is high-input cost for low-output usage.

A consultant-driven solution

That’s the problem. A review undertaken by highly paid, external consultants, led by a retired US Navy admiral, has now provided the solution.

The review released today recommends keeping the three Hobart Class destroyers and six of the aged ANZAC frigates, building only six Hunter Class frigates and stopping the OPV program immediately at six ships.

The big surprise was the recommendation the Navy acquire at least seven – and “optimally” 11 – new general purpose frigates and six large optionally crewed surface vessels (LOSVs). The government agreed with both recommendations.

The new frigates will be a similar size to the Anzacs and effectively a half-size Hunter. Called “Tier 2” ships, they will be designed for anti-submarine warfare and used to secure seaborne trade routes, Australia’s northern maritime approaches and to escort the Navy’s amphibious ships.

They will have an air and missile defence capability and carry several anti-ship and land-attack missiles. Notably, the first three frigates will be built overseas – this will likely draw criticism.

The LOSVs will increase the Navy’s long-range strike capacity and appear to be similar to the US Navy’s planned large uncrewed surface vessels, which will enter service late this decade.

These vessels will mostly operate without a crew, though they may have a small crew embarked for short periods, such as when entering and leaving port or refuelling at sea. The LOSVs are expected to be lower-cost, long-endurance vessels able to carry anti-ship and land-attack missiles.

The review glosses over the serious inability of crewing the current 11-ship surface warship Navy, let alone a 26-vessel one. The Navy is already about 900 people short, equivalent to more than three Anzac ship crews, as it struggles to meet its recruitment goals.

The Department of Defence, however, considers the problem more one of retention than recruitment and is taking steps to slow the personnel loss rate, but it has much ground to make up before it can grow into a much larger force.

The review merely recognised the challenge and simply hoped for the best.

Read more: The much-anticipated defence review is here. So what does it say, and what does it mean for Australia?

Implications of the review

First, the good news. Much of the money for the new ships will be spent in Australia – not just on sheet metal hull construction, but also on electronics.

For example, the future of the world-leading radar technology company recently purchased by the federal government, appears secure.

There are definite benefits in both creating a more skilled Australian workforce and sustaining a sovereign, Australian naval shipbuilding industry. Critics will correctly argue it’s more expensive than buying from overseas, but given tax claw-backs, maybe not that much.

Even so, the cost-benefit analysis will be hard to calculate – the decision over whether it’s good value for money needs to be a judgement call, not an analysis based on mathematics.

Second, the Albanese government came to office calling for much better “impactful projection” – that is, the ability to apply strategically meaningful military power at great distance from Australia’s shores using missiles.

The new frigates, however, will only carry some additional missiles – not many. As such, the government seems to have changed its earlier intentions and will instead focus more on the submarine threat to Australia’s trade routes.

The only nod to “impactful projection” in the review today is the building of six new LOSVs, each of which will be able to carry 32 missiles to sea. (One LOSV working with a Hobart Class frigate, however, will have around 88 missiles.)

Critics will point to the fact this is fewer than a single US Navy Arleigh Burke destroyer, which carries 96 missiles, and its larger Chinese counterpart, which carries 128.

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Third, the review does not call for renewing the Navy’s ageing Anzac flotilla quickly enough. Warship shortages will persist well into the next decade. This is bad news for the short term.

And lastly, the Navy will now have three major ship and submarine projects underway. The new plan to acquire an additional flotilla of frigates will take considerable time, soak up the country’s scarce ship-building workforce and be remarkably costly.

This will adversely impact the Navy operationally and the rest of the Department of Defence, Army and Air Force. As a result, we can likely expect cuts to the Army in the forthcoming budget.

Overall, the review is good for jobs in Adelaide and Perth and will make the Navy significantly larger over the long term. It will also partly placate some government critics who want to buy ships overseas, arguing this will mean faster delivery, and those who believe the government needs “new money” added to currently planned defence budgets.

But the true cost impacts of the reform plan must await the budget. The plan will also take a long time to implement and has ignored the Navy’s chronic shortage of skilled personnel, which is surely most unwise.