From Chris Joye:
With another bloated budget looming next week that could further undermine Australia’s AAA credit rating, it is opportune to reflect on the integrity of the Turnbull government’s bold decision to punt $50 billion on building 12 French submarine “concepts” that have yet to be designed, produced or proven in the water.
Here the Australian Strategic Policy Institute’s Mark Thomson highlights that the assumed “$50 billion spend comes from the Defence White Paper and only accounts for the design and construction costs – not many other very expensive variables including ongoing maintenance, armament, crewing and the costly combat system”.
A conservative reckoning is that the subs’ total lifetime costs could be 50 per cent to 100 per cent of the upfront investment, making this the biggest public works program in Australian history. A veritable underwater NBN.
…ASPI’s Thomson says that “a key problem with European kit is that it does not give us the logistical interoperability we need with the US military, which is our primary coalition partner”. “When you take European assets into theatre you cannot leverage off America’s maintenance and support, which we can do with US platforms like the F18 fighters, the Chinook and Blackhawk choppers and the Abrams tanks,” he adds.
…In security land, it is analogous to selecting a Russian telco to service the National Broadband Network because it has the best kit while ignoring that it can be legally compelled to collect intelligence on behalf of Russia in the same way Telstra and Cisco do for Australia and the US.
…This begs the question as to why the government subordinated the manifold strategic benefits of the in-service Japanese boats to the speculated advantages of the French concept. While choosing the latter has clearly frustrated Australia’s two most significant defence partners, the stand-out winner is China, which repeatedly threatened that there would be adverse consequences if we went with the Japanese.
A superior risk-adjusted choice would have been to spend the $50 billion on building a fleet of autonomous and future-proofed unmanned underwater platforms while also paying America to have her world-beating Virginia Class boats patrol our waters and carry out surveillance on our behalf years in advance of the French subs entering service in the 2030s in the same way the “five eyes” nations share strategic electronic espionage assets (eg, Pine Gap).
You can rest assured that if ASPI is going public with these concerns then the military intelligentsia is in outrage over the Turnbull decision. Or. it it? At The Australian, ASPI head, Peter Jennings, hosed criticism of the decision:
There’s a desperate need to refute this baloney, but so far from the government we have a 13 paragraph news release and a handful of media appearances. Just days after announcing the biggest defence acquisition in Australia’s history, the circus has moved on.
…If the US had said it wouldn’t supply the submarine’s combat management system, the French deal wouldn’t have gone ahead. So the US will supply the system, and all three countries will protect their intellectual property. This is routine defence business.
…It’s not preordained that we’ll pay an unacceptable premium to build in Australia. Done right, a domestic sub build should involve little or no added cost. For example, the Anzac frigate program started with expectations of a 20 per cent premium for local build but ended with none. It’s the responsibility of the designer, builder, the navy and the commonwealth to run the program in a way that constrains costs. No one said this was easy.
…The Australia-Japan relationship isn’t in ruins. The relationship is crucial and we shouldn’t have allowed a competition for a defence contract to have loomed so large. But the hurt is reparable because the underlying strategic reason Australia and Japan are getting closer stays in place. It’s Canberra’s job to apply some care to the relationship because we prodded Tokyo to front up for the submarine deal, then turned it into a competition that, rightly, had to be judged on the technical merits of the bids.
…Recruiting the numbers needed to operate 12 boats is simply a function of management, money and priority. Crewing for the Collins subs suffered in the early 2000s because they lacked all three. The new subs will be one of the most advanced military capabilities in the ADF. That cachet — and cash — will get recruits through the door.
Perhaps, but the fact that we’ve bought these subs before they are even designed reeks of policy on the run and tremendous scope for cost blowouts.
Either way, the one winner here is Christopher Pyne, Member for Sturt, with the retainer for his services mushrooming from $25 billion (the balance of what would have been saved buying Japanese subs) to as much as $75 billion, as the potential extra service costs are added.
It would have been a bit cheaper to pay $500 million to keep Holden operational but Minister Pyne is worth the extra $74.5 billion (or 4.7% of GDP) because he can fix anything!
