Marine Link
Monday, September 26, 2016

Australia to Spend $11B on Navy Ships

June 21, 2007

In a speech published on the website of Australian Prime Minister John Howard, it was announced that Australia will make a multi-billion investment to bolster the Australian Navy. The two contracts, one for $3 billion and one for $8 billion, both specify Navantia (Spain) designed warships. The following is direct quotations from the presentation.

"Now it's no secret that the two projects involve first of all two large amphibious ships which will be delivered by Tenix and they will cost approximately $3 billion. They are a Navantia design. They will greatly enhance Australia's ability to send forces in strength when required, particularly in our own region, but not, of course, restricted to our own region and will, of course, include a capacity to send forces and men and women and materials in relation to disaster relief efforts. They will be able to land over 1,000 personnel, along with their vehicles, the new M1 Abrams tanks, artilleries and supplies and using integrated helicopters and watercraft.

Approximately one quarter of the construction will take place in Australia and that will provide about 600 jobs. The superstructure will be constructed and the majority of the fit out will be completed in Melbourne with an estimated value of about $500 million. The majority of the combat system design and integration work will take place in Adelaide and the value of that work will be up to about $100 million. So this particular acquisition will, in my view, particularly enhance our capacity to provide a flexible response to incidents in our region. The second and even more significant investment, of course, in terms of money, is in Air Warfare Destroyers and the Government has decided to purchase the Navantia designed F100 and that's been selected as the next generation Air Warfare Destroyer for the Royal Australian Navy. There will be three ships delivered under this project.

They will be delivered in 2014, 2016 and 2017; the aggregate cost will be in the order of $8 billion. This does represent a massive lift in the Royal Australian Navy's air warfare capability. These vessels will be able to perform the full spectrum of joint maritime operations including area air defence and escort duties, including, importantly, for the amphibious ships.

They will be equipped with the Aegis Combat System, which is the most capable air combat system in the world and fully interoperable with forces of the United States. Should the Government so decide at a later date, they can be equipped with the SM3 Missile to conduct ballistic missile defence. The existing design is already in service with the Spanish Navy and that has the effect of reducing costs and some of the scheduled risks. They will be assembled in Adelaide by an alliance between ASC, the Defence Materiel Organisation and Raytheon (RTN1.SG) and Australian industry will provide around 55 per cent of content; and employing around 3,000 Australians across the country.

Now these two projects together involve an investment over a number of years of $11 billion. They are very significant decisions for the future combat capability of the Royal Australian Navy. They represent a very long term investment in the future defence capability of this country and the Government, after a very exhaustive examination both within defence and at a ministerial level, is satisfied that the right decisions have been taken. And I think it's fair to say that there's a sense of great optimism and a very positive view about the future capability of the Royal Australian Navy as a result of these two decisions."



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