Australian history is studded with “con tricks” and “con artists” but no one has ever attempted - and for six years apparently succeeded in - a $270 billion confidence trick.
Back in 2016 the French “conned” Australia to go with the massive submarine project. As I explain below, by stopping the contract we now have a magnificent opportunity to transform not just our defence, but our nation.
The 2016 error by Australia’s defence people and the Coalition government was so huge that I feared we would not gain a defence minister with sufficient courage to face the facts. Then Australia got lucky.
The Brittany Higgins affair meant that Australia would need a new defence minister to replace Linda Reynolds. I pleaded that there were only two ministers in the cabinet with the potential strength to face the truth about our defence equipment mess. One was Josh Frydenberg but there was no way he would be transferred from treasury.
The second was Peter Dutton.
To Scott Morrison’s great credit he appointed Dutton to the job. It’s not easy to admit a $270bn mistake but that’s what Dutton, along with his assistant Andrew Hastie, did on Thursday, September 16, 2021 - a historic day in our nation’s history.
And better still they replaced the French “con trick” with what we should have done in the first place - a link with America and the British in a nuclear submarine.
My first warning that Australia might have been “conned” came three days after the announcement on April 29, 2016. Countless commentaries have followed and I want to thank all the people who have helped me with information and gave me the courage to keep writing when I seemed alone.
My readers were wonderful, including those who suggested I should confine myself to business commentary. I also want to thank News Corporation. They were being told a different story by defence people but they never wavered in publishing my submarine commentaries. For those who want to know the detail of how the “con trick” was organised I direct you to our web site and my February 17, 2020 commentary titled “French negotiators misled Australia on submarines contract”.
I also point out that from day one the Americans were horrified that Australia had made such a terrible mistake and they tried to warn us via their representatives on the naval board of advice, but we ignored them.
The Americans did not trust the French security (there had been too many leaks) yet we were asking the Americans to put their advanced combat submarine systems on a submarine the French were designing. They agreed to do it but everyone knew that we would get a second-rate combat system.
The written 2016 estimated tender price for the French submarines was in the vicinity of $23bn, in 2016 dollars. Defence officials desperately tried to keep a secret that the base costs had ballooned and construction was headed to be around $150bn, inflation-adjusted. But the operating costs would take the total bill to around $270bn. And the submarine fleet that relied on outmoded lead acid batteries would not be available until 2040 and beyond. Crazy. Defence officials desperately tried to keep the original cost estimate secret even though it had been announced in April 2016.
To be fair to the Navy, it always believed a nuclear submarine was best for Australia but back in 2016 that was not politically possible.
It’s somewhat ironic that my last commentary was this week under the heading: “Has lesson been learned from defence debacles”. The commentary made the point that defence officials were totally consistent in their ability to get major decisions wrong.
We still have the Joint Strike Fighter/ F-35 disaster and the frigate mess to sort out. But the submarine was the biggest of the mistakes.
I urge Peter Dutton and Andrew Hastie to get the backing of really top defence equipment people in this new nuclear project, as well as in trying to sort out the Joint Strike Fighter and frigate mistakes. We must make sure that our industry is involved in the solutions to all three projects.
The temptation will be to go down the conventional nuclear submarine route but the Chinese are now well advanced in molten salt nuclear-cooled nuclear submarines and this technology has the potential to generate carbon-free energy without the current nuclear dangers. It can transform vast parts of our industry, including steelmaking.
I know the government will be in deep shock over the submarine debacle but we will need to lead the Americans in this new era. Your job is not done, Peter.
There also some lessons. Ministers need to make sure they have the very best public service advice and not just rely on their hand-picked personal staff. Defence did not have the right people. The federal parliament needs to realise they have been fed a series of lies and half truths, not just over the submarine but the Joint Strike Fighter and the frigate contracts.
The Labor opposition should have made defence a pivot point in attacking the government but they did not do the work. I must congratulate Senator Rex Patrick for his wonderful work in this area. He may have got the tax confidentiality issue wrong but in defence he was a lone politician seeking the truth from defence officials who constantly blocked revealing that truth.
I am getting the distinct impression that while the Morrison government expects to win the next election they know that it will be very difficult. They have between now and May 2022 to do the things that need to be done. The biggest was clearly the submarine contract. But we also desperately need a proper and fair tax collection system.
Just as Peter Dutton had the courage to do the right thing by the nation irrespective of the political consequences, so must Josh Frydenberg, Michael Sukkar, Stuart Robert and Michaelia Cash do the right thing by the nation in tax. I think they will.
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