Fears of $1bn bailout as destroyer project leaks $10m a month

Australia's biggest defence project is now in crisis, with the $8 billion construction of three Air Warfare Destroyers rocked by budget blowouts of almost $10 million a month amid fears it could eventually require a $1bn federal government bailout.

In a new blow to the nation's beleaguered manufacturing sector, an Australian National Audit Office report will today reveal that the AWD project was $106m over its $618m budget for 2012-13 - a wastage of more than $2m a week due to poor productivity in inefficient shipyards and excess costs for labour and materials.

It will show that $4.5bn - more than half - of the AWD project's $8bn budget has been spent even before the first of the three warships has been completed, and that budget overruns are eating deeply into the emergency reserve funds for the project.

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