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waste Department of Defence (Royal Australian Navy)
$2.7B

$2.7 billion gap: Australia's navy ships suffering 'catastrophic failures'

HMAS Canberra and HMAS Adelaide — Australia's two largest and most expensive warships — suffered complete power failures on humanitarian missions. ANAO found sustainment underfunding of $2.7 billion over 2023-28. HMAS Canberra was delivered in 2014 with 6,640 defects. Parts are being cannibalised from one ship to keep the other running.

On Their Watch
RM
Richard Marles
This happened on Marles's watch as Defence Minister, June 2022–present. Minister responsible for Royal Australian Navy sustainment funding and ANAO Major Projects oversight
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What This Means

$2.7B of Australian taxpayer money was wasted at Department of Defence (Royal Australian Navy). HMAS Canberra and HMAS Adelaide — Australia's two largest and most expensive warships — suffered complete power failures on humanitarian missions. ANAO found sustainment underfunding of $2.7 billion over 2023-28. HMAS Canberra was delivered in 2014 with 6,640 defects. Parts are being cannibalised from one ship to keep the other running.

Spread across Australia's 10.8 million households, that's roughly $250 per family — enough in total for funding roughly 23 public hospitals for a full year.

  • This language is extraordinary — Navy chiefs rarely use it.
  • Defence's own acknowledgment: These failures damage Australia's credibility with AUKUS partners (US, UK) who are relying on Australia's naval capability for the nuclear submarine program.
  • A submarine partner that can't keep its surface ships running is not an encouraging signal.
Amount Spent
$2,700,000,000
Original Estimate
$5,400,000,000
Waste / Overrun
$2,700,000,000
Cost Overrun
-50%

Analysis

HMAS Canberra and HMAS Adelaide are Australia's two Canberra-class Landing Helicopter Dock (LHD) ships — the Royal Australian Navy's largest vessels by displacement, costing approximately $3 billion combined to acquire.

ANAO Auditor-General Report No. 50 of 2024-25 (June 27, 2025) found:

- Sustainment underfunding of $2.7 billion over the period 2023-28

- "Catastrophic failures" documented in writing by the Chief of Navy to Defence leadership (June 2024)

- HMAS Canberra was delivered in 2014 with 6,640 known defects — many remain unresolved

- HMAS Adelaide suffered a complete main propulsion failure during a humanitarian mission to the Pacific

- HMAS Canberra suffered a major power system failure on a similar mission

- Parts are being cannibalised from one ship to keep the other operational ("asset stripping")

The Navy chief's June 2024 letter to Defence leadership confirming the $2.7B funding gap and using the words "catastrophic failures" is on the public record. This language is extraordinary — Navy chiefs rarely use it.

Defence's own acknowledgment: These failures damage Australia's credibility with AUKUS partners (US, UK) who are relying on Australia's naval capability for the nuclear submarine program. A submarine partner that can't keep its surface ships running is not an encouraging signal.

Per household: $2.7B across 10.8M households = $250 per household in naval capability that is literally parked or cannibalised.

Sources:

- ANAO Report No. 50 2024-25: https://www.anao.gov.au/sites/default/files/2025-06/Auditor-General_Report_2024-25_50.pdf

- ASPI analysis: https://www.aspistrategist.org.au/catastrophic-failures-defence-budget-squeeze-hits-navy-maintenance/

Sources

https://www.anao.gov.au/sites/default/files/2025-06/Auditor-General_Report_2024-25_50.pdfhttps://www.aspistrategist.org.au/catastrophic-failures-defence-budget-squeeze-hits-navy-maintenance/
Category: waste
Severity: critical
Agency: Department of Defence (Royal Australian Navy)
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