Australia Dismisses Speculations About Broken $1 Billion Army Deal With Germany

Australian Army sappers from the 2nd Combat Engineer Regiment guide an Boxer Combat Reconnaissance Vehicle through the decontamination bay during a chemical, biological, radiological and nuclear defence training serial at Gallipoli Barracks, Brisbane, May 11, 2023. (CPL Nicole Dorrett, Australian Defence Forces).

The Australian government has denied that negotiations with Germany over the supply of Australian-made armed vehicles have broken down.

In July, Australian Prime Minister Anthony Albanese announced during his trip to Berlin that Germany would purchase over 100 new Boxer Heavy Weapon Carriers, an eight-by-eight-wheeled, all-terrain Combat Reconnaissance Vehicle, from Australia.

The federal government said the deal was worth over $1 billion (US$665 million) and would support over 1,000 jobs.

The armed vehicles were expected to be made by German contractor Rheinmetall at one of its facilities in Queensland, with delivery starting from 2025.

At the time, the prime minister touted the deal to boost Australia’s defence capacity and economy.

However, reports have recently emerged that Germany has suspended the negotiations just weeks after Australia awarded a multi-billion dollar contract to a South Korean defence contractor.

In late July, Korean conglomerate Hanwha won a bid to supply the Australian army with 129 Redback Infantry Fighting Vehicles (IFV) over Rheinmetall, which proposed to assemble its Lynx IFV in Queensland.

In making the decision, Defence Industry Minister Pat Conroy said Hanwha’s Redback IFV provided the Australian army with “capability” and “value for money.”

Australian Government Rejects Speculations About Broken Deal

In an interview with Sky News, Deputy Prime Minister and Defence Minister Richard Marles said Australia would continue to work with Germany to deliver the armoured vehicles.

“I’m aware of the speculation, but obviously, we’re not going to react to the speculation,” he said.

“The facility in Brisbane is an excellent facility, and the Boxer vehicles which we have purchased for our own army, I’ve had the opportunity of looking at, and they are an excellent vehicle, and we'll continue down that road.”

The defence minister also noted that the two contracts were not relevant to each other as the Boxer and Redback IFV were different types of vehicles.

Hanwha Defence Australia’s Redback fighting vehicle on display in Canberra, Australia, on March 12, 2021. AAP Image/Mick Tsikas

In addition, Mr. Marles said Hanwha won the contract via a fair process.

“What we do with major defence tenders is to have competition between competing tenderers so we get the best value for money for the Australian public,” he said.

“That necessarily means that for every tender who wins, there is a tenderer who loses. Defence industry companies know this better than anyone; it’s part of the process.”

However, the minister distanced himself from the Hanwha’s contract, saying he was not involved in the deal while praising both companies as excellent contractors.

No Confirmation about A Cut to the Hunter Frigate Program

Mr. Marles also refused to comment on whether the government would reduce the number of frigates to be built under a defence program.

In 2018, the then-Turnbull government announced a plan to boost Australia’s defence capacity with nine high-tech, anti-submarine frigates.

British aerospace company BAE Systems won the bid to build nine 10,000-tonne Hunter-class frigates, with production expected to start in 2020.

The program was initially estimated to cost $35 billion; however, it has been subject to delays and cost blowouts, with the latest price tag reaching $45 billion.

There have been speculations that the government would slash the number of frigates to six to cut costs.

However, the defence minister said the government would not react to speculations on the program.

He also noted that a review of the country’s surface fleet was underway, and further information would be available when the report was released by the end of September.

“We‘ll take our time to digest that report. It won’t be a huge amount of time, but obviously, we’ll take our time to work through that and make the announcements in relation to that in due course,” Mr. Marles said.

Victoria Kelly-Clark contributed to this article.