By Michael Shoebridge*
Australia is spending more and more taxpayers’ dollars equipping our Defence Force, but it is buying less and less. We’re in a spiralling affordability crisis leading to a shrinking Australian military and a bankrupt Defence organisation. (Strategic Analysis Australia)
The problem comes from the increasing costs of the extraordinarily complicated ships, submarines, planes, tanks and missiles that our Defence organisation likes to buy. This is now reaching the point where equipping our military at any scale that makes sense is unaffordable, unless we start learning and applying the lessons from the wars in Ukraine and the Middle East.
The biggest problem is that no one in the senior leadership of the Australian Defence Force or the civilian bureaucracy that supports it even seems to have noticed. And so far, the election campaign we’re in the middle of shows no evidence that either Labor or the Coalition have any plans to fix things. The Coalition’s policy does talk about bringing some external – even industry !!!! – expertise in to inform directions, but both major parties seem to trust the bureaucracy’s abilities too much.
The bizarre self-bankrupting behaviour we’re seeing is not new and it’s not limited to Australia’s military. 43 years ago, a former Secretary of the US Navy and head of US defence giant Lockheed Martin published a satirical but serious look at military weapons programs and the approach to decision making by the militaries and political systems of countries like Australia and America. He called it ‘Augustine’s Laws’ and listed 42 of them (42 is also the answer to the ultimate question about life, the Universe and everything in Douglas Adams’ Hitchhiker’s Guide to the Galaxy series, so maybe God does have a sense of humour).
One of Augustine’s laws gets right to the heart of the problem of unaffordable military equipment.
Based on historical data about the costs of advanced aircraft, he observed that “In the year 2054, the entire (US) defense budget will purchase just one tactical aircraft. This aircraft will have to be shared by the Air Force and the Navy 3.5 days each per week, except for leap years, when it will be made available to the Marines for the extra day.”
He’d plotted the rising costs per aircraft since before World War 1 into the 1980s, all the way from the Wright Brothers’ Model A aircraft to the F/A-16 and F/A-18 jet fighters. The graph showed aircraft costs going up about 400 per cent every ten years.
Unfortunately, this trend of rising cost per platform is still true in 2025 and is also true for Army and Navy equipment like tanks, warships and submarines. F-16 fighters cost about $34 million each in now dollars; the F-35 Joint Strike Fighter that our Air Force has bought costs around $US110 million a copy and America’s ‘next generation air dominance’ F-47 fighter, named after Donald Trump (as the 47th president), is estimated to cost about $300m a plane. Big air force fleets are now unaffordable even for a superpower like America.
In Australia, we can see this cost spiral into the unaffordable in our Navy’s investment plans. Back in the 2000s, Defence started building three very capable Hobart-class air warfare destroyers. All 3 ships were delivered for a total cost of around $8.5 billion. Rounded up, that’s about $3 billion per ship.
Fast forward to the Hunter Class frigate program. This was originally meant to deliver 9 ‘future frigates’ at a cost of more than $30 billion back in 2016. But by the time UK company BAE was selected with its modified Type 26 ship design, the budget had risen to $45 billion, still for nine ships.
And now, 7 years on from the announcement, the Australian Navy is getting 3 of these exorbitantly expensive warships for $27.1 billion, with the first one turning up sometime in the 2030s. That works out at just over $9 billion per ship, making the air warfare destroyer price tag of $3 billion a vessel look like a bargain. And for that money, we’re getting a warship several thousand tonnes smaller than the air warfare destroyers, equipped with a third less missile cells.
So, our Navy, enabled by our civilian Defence bureaucrats, is bankrupting itself. It’s now buying warships that are so expensive we can’t afford a decent sized fleet, and which are so complex to build that they take decades to deliver from start to finish. There is no way to replace these ships if they are lost during wartime, unless we can get the enemy to pause for a decade or so while we rebuild.
And there’s another very practical problem baked into the increasing cost and complexity of the things our military plans to buy for itself. It turns out that as the cost of these ‘next generation’ tanks, warships and fighter jets rises they get less reliable, instead of getting more reliable and easier to maintain – something that is incredibly valuable during an actual war. They are available for use less, break down more often and take a long time to repair and return to service.
Practical lessons from the war in Ukraine reinforce this point. More advanced, newer armoured vehicles like the American Abrams tank and the German Leopard 2 tank have proven to be extremely difficult to keep operational in field conditions and have underperformed.
Meanwhile, older items like the Marder and Gepard armoured vehicles have turned out to be robust and highly valued. Cheap, reliable drones that can be bought in large numbers, are robust in the field and able to be rapidly replaced are also highly valued, while eye-wateringly expensive drones like the US Triton Australia is buying for over $750 million each are just not viable.
The Ukrainians are teaching us a lesson we could have learned many times before: back in 1982, Norman Augustine quoted US Lieutenant General Orwin Talbott as saying “The longer a man is in a command position on the battlefield, the less enamoured he is of the technological edge – and the more obsessed he becomes with trying to make what he has work”.
So, we have a military that is pricing itself out of having enough of anything to matter and making sure it can’t re-equip itself when it suffers the combat losses it knows it will if there is a war. And it’s also buying weapons and systems that it knows are next to impossible to repair and maintain in the conditions we’ll face in a time of conflict. A company insisting on equipping itself this way would be driven out of business by its competitors or by disgruntled shareholders. They at least get a vote. The Australian government doesn’t seem to be exercising its vote on behalf of disgruntled taxpayers.
You’d think this was an urgent problem to acknowledge and resolve and that the big obvious answer would involve buying lots of cheap, replaceable armed and unarmed drones and missiles, having seen how effective these are in Ukraine on the land, in the air and even destroying warships like the Russian Black Sea fleet’s flagship, the Moskva.
But no. Instead, our Defence organisation seems more focused on growing the one thing that is in its absolute control: the number of very senior officers. So, as our Navy shrinks, we’re in the fortunate position of having more admirals than we do warships. Captains used to command ships, with admirals in charge of fleets. And that hyperinflation of rank and senior officer numbers is the same across the Army, the Air Force and the civilian bureaucracy.
It’s well past time to inject some outside rationality into how Australia’s defence organisation works. Unless we want to watch the continued slow decline of Australia’s military as its cost grows, there’s a desperate need to bring some of the ways that industry outside the protected defence sector bubble works to our military. Taxpayers will keep pouring more and more money into Defence and getting less and less for it.
Without fresh new approaches directed by strong politicians and new leadership, we’ll be living Norman Augustine’s prophecy – with a military owning, and jealously guarding who gets time to play with, a shrinking number of ships, subs and fighters. And desperately hoping they’re not called up to fight in any real war, because they will not be ready or able.
*Michael Shoebridge is a director of Strategic Analysis Australia.
