The Morrison government has cancelled Australia's only armed drones project as it diverted Defence's long-term programs to pay for its cyber capability upgrade, known as project REDSPICE.
Officials revealed during budget estimates hearings on Friday the SkyGuardian lethal remotely-piloted aircraft, also known as Reapers, had been cancelled as part of the government's $9.9 billion REDSPICE decision.
Officials also revealed Australia's cancelled French submarine program could cost taxpayers $5.5 billion after reparations were made to contractor Naval Group.
The drone cancellation was not mentioned in the budget papers on Tuesday and Defence Minister Peter Dutton on Wednesday dodged providing detail on changes to his department's Integrated Investment Program when questioned by the Canberra Times.
"There's new money going into this [REDSPICE] program and it's paid for within the IIP. We'll make more announcements about more projects that are coming up that I think we must fund to defend our country - we're in a very uncertain time," Mr Dutton said.
Labor's defence spokesperson Brendan O'Connor criticised the government for not having "the good grace to tell Australian defence industry the program was scrapped". The decision demonstrated the government did not care about Australian manufacturing, he said in a statement.
"Cancelling a $1.3 billion project without notice will reverberate around Australian defence industry, already reeling from the Attack Class cancellation and the secret-offshoring of the Pacific Support Vessel," he said.
"Defence industry firms will rightly ask what is next on this government's secret chopping block?"
Australia had sought to purchase the drones for about $2 billion since 2018, but only received permission last April when the US government gave the green light to "assist our ally in developing and maintain a strong and ready self-defence capability".
Air Force intended to use the long-range drones for combat and surveillance capability. They were to be based in South Australia where contractors had invested more $30 million.
While Air Force is losing its combat drones, the Australian Army will acquire 24 new surveillance drones to be manufactured in Brisbane.
The UK SkyGuardian design of the drones was based on the effective US-designed Predator UAVs used to hunt and kill insurgents in the Middle East during the wars in Iraq and Afghanistan. Their use has been questioned by military ethicists as the government explored development of artificial intelligence in automated targeting of weapons systems.
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