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Tuesday, 10 December 2002
Page: 7541

Senator CHRIS EVANS (2:41 PM) — My question is directed to Senator Hill, the fourth Minister for Defence in six years. Can the minister confirm that the $1.5 billion project to upgrade the Navy's six guided missile frigates is, even on the most optimistic projections, over two years behind schedule, with the first ship not due to complete its upgrade until at least 2005? Can the minister also confirm that the oldest guided missile frigate, HMAS Adelaide, will not finish its upgrade until at least 2006 and yet will be taken out of service in 2013? Will this not mean $250 million of taxpayers' money will be spent upgrading HMAS Adelaide just seven years before the end of its 35-year service life? Minister, in view of the continually increasing delays, aren't Australian taxpayers entitled to ask serious questions about the viability of this $1.5 billion project?

Senator HILL (Minister for Defence) —The project is about two years behind time, but it is believed that that can be pulled back to about 18 months. As the honourable senator would know, in relation to that part of the project that involved enhancement of the combat system there were significant difficulties with the subcontractor. In the end, ADI, the principal contractor, took back the task and, so far, work is progressing satisfactorily. There will be a major assessment in relation to the combat upgrades in about February of next year. So it is another of these projects where there have been historical difficulties but, largely, they have now been arrested and significant progress is being made. The ships are designed to increase their capability, particularly in relation to air defence, and to operate up until the introduction of a new air defence destroyer. So that is the timetable in relation to their life and the time at which they will be taken out of commission to be followed by a new and even more capable ship.

With regard to the FFGs, the oldest of them will not be upgraded to the same level, particularly in relation to the replacement standard missile. So it is an important project because they do have a unique capability within the Navy. They do need to be upgraded, as the task has changed. That is taking place. It is a highly complex project and I am pleased that it is being conducted within Australia and that a company such as ADI has got the contract. They have had difficulties—in this instance, principally with a United States subcontractor—but we now believe they are making reasonable progress.

Senator CHRIS EVANS —Mr Deputy President, I ask a supplementary question. I thank the minister for his answer. I would like some further information on his answer, in which he said that the older ones will not be upgraded to the same level. Is that a more recent decision, and what does that mean for their capability and the cost of the project? Given that most of the FFGs will gain less than 10 years additional service as a result of the upgrade, has the minister at least begun to examine alternative options in case the project becomes unviable because of further delays? It is my understanding that it is at least two years and eight months behind now. I heard your expression of confidence, but have you examined alternative options in case the project begins to look unviable, given the limited life of the ships?

Senator HILL (Minister for Defence) —I reviewed the project only about a week ago with the Navy and the Defence Materiel Organisation. Their advice to me was two years but, as I said, they believe that it can now be pulled back to 18 months. I thought that I would explain that the reason for not necessarily upgrading all ships to the same level is that they will be phased out as the new, more capable ships are introduced. We obviously do not wish, and cannot afford, to spend more money than we need to achieve the capability that is required.