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May 22, 2026
The ill-fated $700m strategy to keep Collins-class vessels afloat
A scathing report on planned upgrades for Australia's Collins-class submarines reveals Defence has spent nearly $700 million on a now largely abandoned strategy to keep them operational, without conducting proper planning or risk assessments.
The Australian National Audit Office has found the Collins "life-of-type-extension" (LOTE) program, which aims to keep the ageing boats in service for another decade before AUKUS submarines arrive, has "not been effective".
In its 116-page report, the ANAO reveals that the Albanese Government's National Security Committee met to consider the proposed LOTE on four occasions since coming to office in 2022, finally giving approval to the complex work this month.
Earlier this week the Defence Minister confirmed a dramatic de-scoping of the LOTE upgrades but revealed the cost of the complex work over the next decade had been revised upwards from $6 billion to $11 billion.
"Defence was slow to establish project and contract management arrangements commensurate with the scale, complexity and risks of the project," the ANAO concluded in its report tabled on Friday.
"As a result, substantial further expenditure has been incurred, delays have accumulated and capability risks have remained," the report states.
"This means that Defence is not well-placed, as at May 2026, to demonstrate that the project will achieve its intended capability outcomes or represent value for money."
The original Collins-class LOTE was to include equipment that would also go into a new French designed Attack-class fleet, a prototyping exercise that involved new diesel generators, main motor, optronics masts, and possibly a new battery.
"By February 2026, Defence had spent $693 million on project definition and design activities and related equipment procurements to replace key systems and extend the service life of the Collins-class submarines," the ANAO report reveals.
But the ANAO says after the French program was scrapped in 2021 in favour of the AUKUS nuclear submarine plan, Defence failed to properly reassess the LOTE strategy.
"Following the cancellation of the Attack-class program, Defence did not clearly advise government of the implications of continuing the original LOTE delivery approach," it said.
"Nor was government presented at that time with alternative delivery options or a reassessment of the Life of Type Extension strategy.
"In contrast, senior Defence leadership was progressively informed of the significance, challenges and risks that had been transferred to the LOTE project."
In its formal response the Defence Department acknowledged the ANAO's damning findings, agreeing to all five recommendations made by the Auditor-General, including that all risks and delivery approaches are reassessed following significant changes.
"The strategic necessity of sustaining Collins-class availability remained constant, while the delivery environment evolved significantly following changes to Australia's future submarine program."
"In the event of strategic shifts impacting programs, Defence's primary focus has been to maintain continuity of capability and avoid a capability gap, which has, in practice, constrained the extent to which comprehensive reassessment of underlying assumptions, risks and alternative options could be undertaken.
"Defence is strengthening its processes to ensure that future strategic shifts trigger more structured and timely reassessment alongside continued delivery," the department added.
Shadow defence minister James Paterson claimed the ANAO report revealed the navy's Collins-class submarines would be less capable and less available as a result of the Albanese Government's indecision.
"At times we may only have two submarines in the water nowhere near enough for a maritime trading nation with supply chain vulnerabilities," Senator Paterson said in a statement.
"This situation will get worse if there are any further delays in Collins sustainment or any slippage in delivery of Virginia-class submarines."
"Over the last four years Labor has failed to make the timely decisions needed to save Collins LOTE. Their failure to effectively manage this program has fundamentally undermined our ability to deter potential adversaries."
The Albanese Government has this week insisted the sustainment changes on LOTE won't affect plans to give each Collins-class submarine an additional 10 years of service, before US nuclear replacements arrive next decade.
Australia is scheduled to acquire three Virginia-class nuclear submarines in the early 2030s, before developing a new SSN-AUKUS fleet with the United Kingdom that is hoped to enter service in the 2040s.