Navy surface fleet review finds $20 billion blowout to Hunter-class build

It is part of "Enhanced Lethality Surface Combatant Fleet" review which will be revealed on Tuesday as well as the government's response. The warship review, led by former US admiral William H. Hilarides, began last year as a response to the landmark Defence Strategic Review (DSR), particularly to complement the AUKUS conventionally-armed, nuclear-powered submarines.

Amid the threat posed by a rapidly militarising China, Defence Minister Richard Marles is set to announce that the overall size of the Navy's surface combatant fleet will increase, have greater capability and be delivered sooner with an emphasis on "continuous naval shipbuilding".

"The independent analysis team concurred with the DSR's findings that the current and planned surface combatant fleet is not appropriate for the levels of risk we now face and that cost pressures already existed in the program," Mr Marles will say in the review's forward.

"They also noted that the current surface fleet is the oldest Navy has operated in its history.

"This will see Navy equipped with a major surface combatant fleet twice as large as planned when we came to government - and with more of these new surface combatants in the water and operational sooner."

ACM, publisher of this masthead, understands the review backs in the BAE System's contract for the over-budget and behind-schedule Hunter program based in South Australia to replace Australia's ageing Anzac-class frigates with significant changes.

But it will reveal a $20 billion cost blowout.

There has been uncertainty over the future of the program which is based on the UK's Type 26 warship including for the more than 1000 local jobs associated with it.

It is understood the full cost for nine Hunter-class frigates now stands at cost close to $65 billion, a significant increase over previous estimates of $45 billion. The Defence Strategic Review also found $42 billion of unfunded announcements.

Britain's BAE Systems, which won the contract in 2018, has more than 1800 people working on the program, with more than 1500 in Australia. According to BAE Systems, more than 1800 Australian businesses, representing every Australian state and territory, have registered their interest in working on the Hunter program.

It is understood the review, among 18 recommendations, backs a commitment to continuous naval shipbuilding as "essential for Australia's sovereign capability", backing in the Defence Strategic Review and government assessments.

The Navy has 11 destroyers and frigates, but the plan has been to build nine Hunter-class frigates to replace eight of the Anzac-class ships. This would bring the destroyer-frigate total back to 12.

It is understood the 18-page public release on Tuesday looks at fleet design, continuous Australian naval shipbuilding, cost, schedule and workforce and other matters.

The Defence Strategic Review, conducted by former chief of the Defence Force Angus Houston and former Labor defence minister Stephen Smith and released last April, declared China's military build-up was now the largest and most ambitious of any country since the end of the Second World War.

The review stated the build up was happening "without transparency or reassurance" to the Indo-Pacific region.

"China's assertion of sovereignty over the South China Sea threatens the global rules-based order in the Indo-Pacific in a way that adversely impacts Australia's national interests," the review stated.