Submarines project desperately needs external inquiry

Australia’s new submarines will replace the Collins Class vessels, seen here in Cockburn Sound, Western Australia. Picture: RAN

Members of Scott Morrison’s federal cabinet not surprisingly look down at Victoria’s breakdown of cabinet accountability and responsibly, which led to hundreds of people dying, and say: “It could never happen to us”.

But sadly for the nation, that’s exactly what is happening in a key section of Morrison cabinet deliberations. And the consequences of that federal accountability and responsibility breakdown could be just as serious as what happened in Victoria. Indeed long term, they might be a lot worse. The break down goes to the heart of our national security.

The federal breakdown in cabinet and accountability responsibility potentially covers both the Turnbull and Morrison administrations. My readers will not be surprised that this breakdown in cabinet concerns the submarine disaster.

Back in 2016 the Prime Minister of the day Malcolm Turnbull announced that the French bid for the submarine in 2016 dollars was in the vicinity of $20bn to $25bn. He briefed cabinet with a more exact amount but in public statements that amount remained confidential. The Turnbull statement to the cabinet was in line with statements by the then Defence Minister Marise Payne and the former Defence Secretary Dennis Richardson. In their public statements Turnbull Payne and Richardson used inflation adjusted sums but it was revealed at the time the actual French bid before cabinet was in 2016 dollars.

In addition Marise Payne explained that while the bulk of the cost comprised the French developed submarine structure and contents, there was an additional US combat system cost.

The current defence Minister Senator Linda Reynolds earlier this year told cabinet and the parliament that the 2016 dollar cost was actually $50bn: twice the level stated by Turnbull, Payne and Richardson.

More than a price difference

The breakdown in cabinet communication might have been lost in the mists of history but for the fact that this month the department of finance came out on the side of Reynolds and this caught the attention of ALP deputy leader and defence shadow minister Richard Marles.

In addition, it becoming clear that this difference masks a much bigger set accountability and responsibly cabinet issues than a tender price difference.

At it now stands Malcolm Turnbull, Marise Payne and Dennis Richardson appear to have grossly misled the cabinet and the nation on the French submarine tender. However I believe that Turnbull, Payne and Richardson were telling the truth. Accordingly, the Reynolds statement, backed by Department of Finance, is wrong.

Check the documents

I am sure Reynolds genuinely believes the $50bn in 2016 dollars was the correct French tender/US combat system cost estimate, because that was what her briefing said. I do not believe she deliberately misled the parliament or the cabinet but was in fact misled herself.

There is a simple way that cabinet can determine whether Turnbull, Payne and Richardson were telling the truth and whether I am right: ask for the original French tender documents. There they will find the correct figure.

If I am right in backing Turnbull, Payne and Richardson then, if cabinet does its job, it must ask whether the concealment is simply a surface indication of much deeper and national challenging problems?

We saw in Victoria what happens when cabinet accountability and responsibly breaks down. It must not happen at the national level.

The nation no longer has a balanced budget and has huge debts. As I understand it there is no way this project will come in at Reynolds $50bn figure in 2016 dollars, let alone the original tender of below $25bn.

The French have us over a barrel. There is no competition. Almost every feature of the project is coming in at a higher than expected cost. The original dream was that Australia would become a regional submarine research development hub. Instead the French do the designing and if we want something different we pay.

A different dream

The original dream was that it would spark a high technology manufacturing revival. What happens is that the European-made product is nearly always shown to be lower cost than developing Australian capacity.

The originally hoped-for level of Australian content outside the Ikea-style assembly process in Adelaide is being reduced.

The nation desperately needs an outside body to look at what the real cost of this project is going to be and how to maximise Australian content outside the assembly process. The estimate of the total submarine lifetime cost including infrastructure and operational costs is in the vicinity of $270bn. It’s now headed much higher.

The Chinese are developing submarines and weapons that make our submarines using 1918 battery technology look a little akin to the Buffalo aircraft we planned to use to defend Singapore. Our submarines will not be available until the 2030s and 2040s. The Americans believe we have made a mistake and are not happy at working closely with the French installing the modern American combat systems. This is too important an issue to be swept under the cabinet table.

Footnote: Marise Payne is now foreign Minister.