Defence shakeup announced by Federal Government after $29 billion cost blowouts over past 10 years

Sweeping changes to the way complicated Australian military projects are managed will be unveiled by the Albanese government this week as a recent Defence review found at least $29 billion worth of avoidable cost blowouts over the past decade.

The Nightly has learnt that Defence Industry Minister Pat Conroy will on Thursday outline in detail the Defence reform process first flagged in December, including the findings of the Reform Task Force.

He will also release the 2026 Defence Industrial Development Strategy and announce an overhaul of the $US 3b Defence Export Facility, which Labor believes is not living up to its full potential since being introduced in 2018.

From July 1, the ofteny criticised Capability and Sustainment Group, responsible for massive military projects, will become the Defence Delivery Group, before transitioning to the new Defence Delivery Agency in July next year.

In an appearance at the National Press Club, Mr Conroy will argue the key driver of cost blowouts and failure to deliver military capabilities on time is a lack of discipline when considering changes to massive defence projects.

Mr Conroy is expected to say: “the way Defence was operating had become outdated and compromised for at least the last decade”, while providing examples that illustrate how the need for reform is far greater than first anticipated.

“Through these reforms, we are making sure that when Defence is developing capability projects, they are setting them up for success,” an excerpt of his speech provided to the West says.

He will reveal that a recent assessment from the Reform Task Force of a small sample of projects found that average total costs for the programs increased by 38 percent before signing, equating to blowouts of $29b over a decade.

“That represents an opportunity cost . . . funding that could have been invested better, if costings had been done better in the first place,” Mr Conroy will say, according to a draft of his speech.

“The Task Force found that Defence’s costing capability has atrophied over time — it’s become fragmented, under resourced, and over-reliant on contractors and consultants”.

On Thursday, the Albanese government will also announce it is scrapping the Defence Investment committee, a key decision-making body that was established as an oversight function for new military capabilities.

According to the government, the Committee met 13 times last year for around 60 hours, with an additional 14 out-of-session meetings, tying up time for dozens of senior executives and star ranked military officers.

Labor believes Defence public servants are currently spending too much time preparing briefs for senior officers, instead of delivering projects.

“We are talking about multi-billion-dollar capability projects — integral to the defence of our nation and to peace and stability in our region,” Mr Conroy will say in his speech.

“Held up by committee meetings where decision making wasn’t a central feature, chewing up the time of our most senior and experienced public servants and costing taxpayers’ money.”