Australia to re-assess costly defence projects

CANBERRA Tue Feb 26, 2008 7:41pm EST

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CANBERRA Feb 27 (Reuters) - Australia has up to A$23 billion ($21.5 billion) worth of risky defence projects underway and will re-think several costly purchases, including U.S. fighter planes, Defence Minister Joel Fitzgibbon said on Wednesday.

"This is a list of projects that are under real risk, real risk in terms of capability and real risk for the Australian taxpayer," Fitzgibbon told reporters, brandishing a confidential list of troubled military buys.

Fitzgibbon's centre-left Labor government, which won power in November, may dump several projects including the A$6.5 billion purchase by the former conservative government of 24 Super Hornet fighter planes from Boeing (BA.N).

"The Super Hornet project is of great concern to us," Fitzgibbon said.

The Super Hornets were intended to fill a six-year gap between the retirement of Vietnam-era strike bombers and the 2016 arrival of F-35 Joint Strike Fighters (JSF), but Labor believes they may not be needed despite JSF delays.

Also under review are a A$1.5 billion fleet of naval Seasprite helicopters, manufactured by Kaman Corp. (KAMN.O>, and the problem-plagued A$1.4 billion upgrade of guided missile frigates by the local division of French defence electronics group Thales (TCFP.PA).

Fitzgibbon has ordered a review of Australia's military needs, as well as a fresh comparison of fighter aircraft plans amid delays in the A$16 billion purchase of 100 F-35 Joint Strike Fighters, built by Lockheed Martin Corp. (LMT.N).

"Obviously these projects are commercially very sensitive," Fitzgibbon said, refusing to reveal the contents of the risk assessment file. Fitzgibbon at the weekend asked the United States to sell Australia Lockheed's advanced F-22 Raptor fighter.

Australia, a close U.S. ally, has embarked on a A$61 billion military upgrade, with contracts signed or being negotiated for fighter aircraft, tanks, missile destroyers, aircraft carriers, cruise missiles and both attack and transport helicopters.

Fitzgibbon said reports two aircraft carriers and three advanced air warfare missile destroyers, worth A$11 billion and already ordered from Spanish state-owned shipbuilder Navantia SA and U.S. firm Raytheon (RTN.N), may be dumped were wrong.

"We made a firm commitment to those projects pre-election and we are absolutely committed to them," he said.

The fleet will transform Australia's navy into one of the most capable in the Asia region, with the two amphibious carriers able to land more than 2,000 troops, attack helicopters or fighter aircraft and up to 23 Abrams tanks in one go. ($1=A$1.07) (Reporting by Rob Taylor, editing by Sanjeev Miglani)

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