Navy frigates blowout: $100 million over budget

Despite the blowout, the Government remains committed to the upgrade, Defence Minister Gerry Brownlee said today.

An upgrade of the Royal New Zealand Navy's frigates which will give them 10 more years of life is running $100 million over budget and a year behind schedule.

But the Government remains committed to the upgrade, Defence Minister Gerry Brownlee said today.

"It's capability we want. It's capability we've decided we are going to have," he told the Foreign Affairs and Defence Committee.

The navy frigates HMNZS Te Mana and HMNZS Te Kaha are getting their surveillance, combat and self-defence capabilities upgraded.

Labour MP Phil Goff challenged the minister today on the cost overruns and delays in the project.

The original budget of between $354 million-$374 million has risen to $473 million, he said, and a deadline of February 2018 had been pushed back to March 2019.

As a result, the Treasury had rated the upgrade as a "high risk".

Mr Goff asked the minister whether it was worth spending nearly half a billion dollars on ships which would be "on the scrap heap" by 2029.

Mr Brownlee's response was equivocal.

"Yes," he said.

"It's a capability the Government wants. It's a capability the Government's paying for. It's a capability we're going to get. And therefore we're going to get it."

He also took a shot at the Treasury, saying the upgrade would go ahead no matter how many times the department got upset about the expenditure.

"They don't put their name on a ballot paper, they don't stand on street corners talking to constituents, they don't have a responsibility for the security of New Zealand," he said.

Mr Brownlee conceded that significant delays could mean the new technology on the ship was "less than optimal", but he said it would still be a significant improvement.

The two Anzac class frigates are nearly 20 years old. The cost of the upgrade was equivalent to the original purchase price of one frigate.