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

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/