Buried deep in the Auditor General’s report on Australia’s $220bn submarine agreement with the French Government’s Naval Group is a clear warning to the Australian nation from one of the most highly qualified independent boards of advice ever assembled in Australia.
The so called “Naval Shipbuilding Advisory Board” consists of seven of the most experienced and talented American defence and defence equipment experts and five very talented Australians.
In announcing appointments to the board in 2016 the then minister for defence, Christopher Pyne said: “The establishment of the Advisory Board is an important milestone in the Government’s naval shipbuilding strategy, ensuring expert, independent advice on all aspects of this historical national endeavour.
”The Advisory Board is representative of Australian and international expertise and will be a valuable asset in supporting the government’s plans for a secure, sustainable, long-term future for the Australian naval shipbuilding industry.”
I set out the members of the board below but this was a board that was not a rubber stamping body but one that had ability and took its mandate very seriously.
The Auditor General reveals that defence records indicate that the Naval Shipbuilding Advisory Board met 11 times from June 2017 to February 2019 to consider Defence’s naval construction programs. During the negotiation period, the board considered eight submissions from the Future Submarine Program on the progress of negotiations.
Defence reporting to the board included both Defence’s assessment of significant risks to the Future Submarine Program and risks involved in entering into the Strategic Partnering Agreement with Naval Group.
I add my comment that this incredible group of US and Australian talent by emphasising again that the board considered eight submissions and met 11 times. I would suggest that the talents on that board were at least equal to and – given their breadth of experience – possibly better than the Australian navy.
The Auditor General reveals:
”In September 2018, the Board recommended to government that Defence examine alternatives should negotiations not succeed in the achievement of its requirements for the Strategic Partnering Agreement.
“The Board also commented that Defence should assess whether program risks outweighed the benefits of proceeding even if negotiations succeeded on the Strategic Partnering Agreement”
The navy and the government ignored those risks and proceeded.
Unfortunately the Auditor General does not spell out the risks the board isolated that may outweigh “the benefits of proceeding”
But given the fact that there were seven Americans on the board who are very well connected to the US defence establishment this was a very clear warning to the Australian nation of reaching an agreement with the French.
As I revealed on December 10, US defence and security people have never trusted the French since US defence secrets were leaked to Russia during the reign of President de Gaulle. That distrust has grown in the decades that followed and intensified when the base design of the proposed Australian submarine was leaked prior to the deal.
Scared of their secrets leaking, the Americans would only supply a combat system to the project if the US had a separate deal with Australia.
And so, the $220bn submarine development is two deals — one for the basic design between Australia and France and one for the combat system between Australia and the US. Accordingly the French will have restricted indirect access to the combat system proposed for the submarine they are designing.
The Auditor General’s report has a diagram showing how the deal is supposed to operate. Remember this is the he most complex construction the Australian navy has ever undertaken. The base submarine has highly controversial technology and the first vessel will not be delivered until well into the 2030s, when many believe it will be obsolete.
But to have a combat system that the Americans do not want to share with the French designers takes risk to a crazy level. Despite what the agreements may say, my guess is that the US will find a way to give us a combat system that is old technology. And to defy the Americans in this way may even ultimately put the alliance at risk.
The original base costs have already blown out from $50bn to $90bn and the total outlay estimate of $220bn is likely to be low. This is a vital matter for all members of the Australian parliament, government opposition and cross benchers.
For the record here are the members of the Naval Board:
The US contingent comprises Professor Donald Winter (chairman), Rear Admiral Thomas Eccles (Ret); Vice Admiral William Hilarides (Ret);. Irwin Edenzon; Vice Admiral Paul Sullivan (Ret) Ms Becky Stewart; and Emily DeRocco. I will not list all their experience and qualifications but they cover the operation and construction of submarines plus and incredible depth of defence supply knowledge. This was a hand-picked group of Americans with unique skills.
But the Australians on the board also have a wide array of talent which again I will not detail. They include Martin Bean; Mike Burgess; Ronald Finlay Lisa Paul and Dr Lesley Seebeck.
They have done their job and warned the nation of the risks. We chose to ignore those risks.
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