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A "typo" is being blamed for an apparent dramatic cost increase on Australia's most expensive defence project in history, the $50 billion Future Submarine program.
Key points:
- The government approved a $4.9 billion injection for the 2018-19 financial year
- About $3.7 billion was attributed to "real increases needed to fund underestimates or budget overruns"
- A senior Defence figure said the figure was "described inaccurately", because the money had already been provisioned
According to the Defence Department's annual report released last week, the government approved a $4.9 billion injection for the project during the 2018-19 financial year, taking the total budget to date to almost $6 billion.
Further examination of the figures reveals $1.3 billion of extra funding was due to a change in the project's "scope", while a further $3.7 billion was attributed to "real increases needed to fund underestimates or budget overruns".
A senior Defence figure told the ABC the latter figure was "described inaccurately", because the money had already been provisioned to cover not only future submarine design work, but Adelaide shipyard equipment and workforce over the next few years.
In a statement, the Defence Department also conceded a mistake in the annual report and promised to publish a more accurate update.
"Defence has identified unclear labels on the presentation of the supplementary online material … as being expenditure in a single financial year," the statement read.
"The Department will release an updated table once finalised.
"To be clear, there have been no under-estimates or budget overruns for the Future Submarine Program.
"These programs will be funded through a series of progressive Government approvals — all which are provisioned within the Defence Integrated Investment Program."
Former Defence Department official Marcus Hellyer, now with the Australian Strategic Policy Institute, says despite the clarification it appears the submarine program could soon prove to be more expensive than originally anticipated.
"These figures confirm that the government has now approved nearly $6 billion in funding for the future submarine program, and that only gets it to the start of construction," Doctor Hellyer told the ABC.
"Defence will spend around $750 million on the program this year and that's likely to go well beyond $1 billion a year even before construction starts in 2022-23.
"That has to be putting a lot of pressure on Defence's ability to fund other priorities."
The Defence Department said that as at 30 June 2019, expenditure on Future Submarine Design and Construction was $834.6 million, which "included the cost of design work, the science and technology program, and operational costs".
Opposition assistant defence spokesman Pat Conroy has questioned the government's handling of the program.
"The fact that Defence can't even manage to accurately report on a $3.7 billion increase in the project's budget is of real concern, especially given the fact that the Future Submarine project is already running 10 years late," he said.
"The unjustified secrecy surrounding this project is amply demonstrated by a quadrupling of the project budget first being disclosed through an appendix in an annual report.
"It is no wonder that there is little public confidence in the Government's handling of what is the largest and most complex project ever run in Australia."
Topics: government-and-politics, federal-government, defence-and-national-security, defence-industry, industry, defence-and-aerospace-industries, business-economics-and-finance, states-and-territories, australia, sa, adelaide-5000
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