Defence delay adds to cost of armoured vehicles

SOME of the armoured vehicles being built in Geelong will cost taxpayers more than expected due to late payments by the Department of Defence, according to a new report from the Australian National Audit Office (ANAO).

The 129 Redback infantry fighting vehicles might also not all be finished in time, with the report on the Land 400 Phase 3 program finding it would be a “significant, if not impossible, challenge” to meet the December 2028 deadline.

Hanwha won the $7.3 billion contract in 2023 and built the $140 million Hanwha Armoured Vehicle Centre of Excellence (H-ACE) next to Avalon Airport to fulfil it.

The first Redback is scheduled to be delivered in 2027.

ANAO’s report stated Defence had paid Hanwha $148,129 in interest penalties as of October 2025, with $335,889 in payments remaining.

Defence moved away from its original intent to address a capability gap by pursuing an acquisition that “increased exposure to integration and schedule risk”.

“These risks were not clearly communicated to government, nor consistently reflected in tender evaluation and contracting decisions,” the March 30 report stated.

There were two “very high risks” to vehicle mobility and lethality unresolved as of February.

Defence agreed to the two recommendations made by the auditor-general, which include strengthening advice to government and improving the timeliness of payments.

“The acquisition strategy articulated an open approach to market. Military-off-the-shelf options were not the agreed acquisition strategy, nor Defence policy at the time,” the response stated.

“The preferred tenderer offered the best capability to meet Defence’s requirements and the best value for money.”

The Albanese government announced the biggest shake up to Defence in 50 years in 2025, to ensure billions of dollars were being spent well and major projects were delivered on time.

An independent Defence delivery agency will be established, with a director to be appointed in 2026.

Labor also cancelled an annual audit of Defence major projects, with a previous report finding acquisitions were running a cumulative decades behind schedule.

Greens defence spokesman David Shoebridge questioned if anyone would be held to account for “such monumental incompetence”.

“This is a shocking waste of public funds, half a million dollars wasted because of Defence’s incompetence and late invoicing,” he said.

“Billions of public funds have been poured into defence, with next to no oversight.”

Senator Shoebridge is trying to reinstate the major projects report, saying it provided a degree of transparency.

Hanwha is also using H-ACE to build Huntsman self-propelled howitzers under the separate $1 billion Land 8116 contract, with the first two vehicles rolling off the production line in late February.

– WITH AAP