Future Submarines ‘megaproject’ cost still in motion

Will Australia’s Future Submarines be a $50 billion megaproject or an $80 billion megaproject? Years after the big announcement, the true costs remains a sticking point.

• Defence retains a contractual ‘escape route’
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Australia’s $50 billion Future Submarines are really Australia’s $80 billion Future Submarines. Or are they?

The so-called “megaproject” to build 12 new Attack class submarines in Adelaide has had several hefty price tags attached.

Back in 2012, initial estimates by the Australian Strategic Policy Institute put the cost at $36 billion, based on international projects.

Three years later, then-Prime Minister Tony Abbott was at Adelaide’s ASC shipyard to announce the $89 billion shipbuilding spend that included $50 billion for submarines.

Then-Prime Minister Tony Abbott in Adelaide in 2015. Picture: Calum Robertson

That sparked a spat over whether it was $50 billion in “constant” dollars (ie, the current cost) or in “out-turned” dollars (ie, how much it would be once decades of inflation are added).

Not long after, the Germans said they could do it for $20 billion, but this offer was not taken very seriously.

Defence documents officially say “greater than” $50 billion, a phrase that has been labelled “cheeky”.

The Royal Australian Navy has previously said the boats would cost $50 billion in 2016 dollars – and later conceded the actual price would be about $79 billion by the time the bulk of the building is done.

The Australian National Audit Office this week said the cost would be $80 billion in 2032.

But Defence Minister Linda Reynolds said the estimated acquisition cost figure was still $50 billion in 2016 dollars and that that was “consistent with advice from Defence”.

ASPI’s senior defence analyst Marcus Hellyer said that at least “we are all now calling an $80 billion spade an $80 billion spade”.

“Defence says that this isn’t a cost increase but just a way of expressing the same number,” he said, but added that it was all eventually “real money”

And that’s before we even look at sustaining the submarines, which will be about twice that price again.