A rift has emerged within Australia’s Defense leadership over the timeline for a crucial AUD 10 billion (US$6.22 billion) decision on the country’s next fleet of warships, as concerns grow over the Royal Australian Navy’s capability in the face of increased Chinese naval activity off the Australian coast.

Defense Minister Richard Marles and Defense Department Deputy Secretary Jim McDowell publicly contradicted each other this week over when the government will choose between German company TKMS and Japan’s Mitsubishi Heavy Industries to build 11 general-purpose frigates to replace the aging Anzac-class vessels.

During a Senate estimates hearing this week, McDowell, who oversees naval shipbuilding and sustainment, said the government was working towards a decision in the first quarter of 2026. 

He described this as an “aggressive” schedule and noted that such major defense procurements typically take between seven and 10 years. The first of the new warships is expected to be delivered in 2029. 

Marles, however, dismissed McDowell’s comments. He insisted that the decision must be made this year. “We want to see a decision made this year, so let me be clear about that,” he said at a press conference. “Our number one objective here is speed into service.”

Government sources suggest Marles is pressing defense officials to accelerate the process, in line with his broader calls for improved efficiency within the department.

The oldest Anzac-class frigate was retired last year, and another, HMAS Arunta, is slated for decommissioning in 2025, though a final decision is yet to be made.

Meanwhile, the uncertainty surrounding the decision has drawn criticism from the opposition, with defense spokesman Andrew Hastie accusing the government of causing confusion among shipbuilders and industry stakeholders who have been waiting for months.

Japan is aggressively lobbying to secure the contract, even offering to prioritize deliveries to Australia ahead of its own navy if its Mogami-class warship is selected. 

However, concerns have been raised about the cost of Japan’s proposal. Some Australian defense and industry experts suggest Japan’s bid is the most expensive of the five original contenders.

Japan’s defense officials, however, argue that their ships offer greater durability and long-term value. They claim the Mogami-class frigates have a lifespan of at least 40 years, compared to the German vessels, which are projected to last only 30 years.

Australia’s Navy Struggles To Keep Pace With China 

The need to modernize Australia’s navy has been brought into sharp focus by the recent deployment of a Chinese naval flotilla off the country’s east coast. 

The People’s Liberation Army Navy conducted unexpected live-fire exercises in the Tasman Sea, a region with heavy air traffic, raising concerns about Australia’s ability to monitor and respond to such activity.

While Beijing has accused Australia of exaggerating the significance of the exercises, the facts suggest otherwise. The Australian government initially downplayed the seriousness of the situation, offering a version of events that omitted key details and minimized the potential threat.

Meanwhile, concerns regarding the decision over new warships are justified, given the vast size of China’s naval fleet compared to the Australian Navy. 

The Royal Australian Navy operates around 10 surface combatants, most of which are aging Anzac-class frigates. The arrival of the Chinese task group has also drawn attention to recent defense decisions, including cuts to the Arafura-class offshore patrol vessel program. 

While these reductions were made for strategic reasons, the vessels could have provided additional capacity to shadow foreign warships in Australian waters.

The increasing need to track and escort Chinese vessels is also straining Australia’s naval resources. Both of the country’s replenishment ships are currently out of service, and recent defense budget cuts have further reduced support capacity.

Peter Dean, co-author of the government’s Defense Strategic Review, has warned that Australia’s surface fleet is smaller and older than it has been in decades. 

He pointed out the importance of keeping to the government’s timeline for selecting a new fleet of warships. Dean stressed that a decision must be made by the end of the year to prevent further delays in construction and delivery.

Operational readiness remains a major challenge. Generally, only one-third of a navy’s vessels are available for operations at any given time, with the rest undergoing maintenance or refits. 

Given the age of Australia’s fleet, extended periods out of service will be necessary for upgrades to combat and weapons systems.

Despite these constraints, Navy Chief Mark Hammond told a Senate estimates hearing that six of the seven Anzac-class frigates are currently fully crewed, describing fleet availability as relatively high.

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