Navy chief’s submarine cost bombshell

Five words to a parliamentary committee have raised the alarm over the huge cost of Australia’s new submarine fleet.

A computer-generated image of the new submarine. Pic: AFP

Five dramatic words from Rear Admiral Gregory Sammut have put in jeopardy Australia’s long term ability to fund the spending in the 2019 election splurge on education, aged care and other areas.

Rear Admiral Sammut is the head of the future submarine program and his five words --- “on a constant price basis”--- sound innocuous.

But when the Australian government announced in 2016 that it was accepting a $50 billion contract from the French to build 12 submarines instead of the $20 billion firm price offered by the Germans, some of our best defence commentators said they believed the difference was narrowed because the $50 billion covered maintenance and had been adjusted for inflation. They were wrong.

The Rear Admiral was recently asked by a parliamentary committee to clarify the $50 billion calculation. With crystal clarity he dropped a bombshell which shocked the defence community.

The Australian Strategic Policy Institute’s Marcus Hellyer says the five words translate the original $50 billion into an outlay of $79 billion. But, as I understand it, the base $50 billion actually excluded the combat system (always a handy addition to a sub) so the inflated cost will be about $90 billion.

But in the parliamentary committee it got much worse----the $90 billion is just the construction cost. Then there is the maintenance figure – another $50 billion. And again, according to the Rear Admiral, it is “in constant dollars” which, according to the Australian Strategic Policy Institute (ASPI) translates into another $124 billion.

Rear Admiral Sammut emphasises that these estimates are preliminary because the submarines have not yet been designed.

I think we can say that the nation of Australia faces a $225 billion plus bill for 12 submarines.

And the first submarines will not be available for at least 14 years, but the Rear Admiral believes they will still be useful up until around 2080. Of course, the way technology is moving in the defence space, conceivably they could be outmoded before construction is finished in the late 2030s.

According to ASPI we were looking to spend about 30 per cent of our estimated defence capital on these 12 submarines.

Rear Admiral Gregory Sammut face a parliamentary committee. Pic: Sean Davey.

But there is more. We have contracted to spend $35 billion on nine frigates which I guess will be in constant dollars, so call it $70 billion. And then there is goodness knows what for the Joint Strike Fighter.

According to the Americans the JSF does not deliver air superiority in the region, which is what we wanted. On that basis it’s a lemon.

The frigates should be worth having but everyone else buys their frigates for a fraction of what we are paying. We claim our frigates will be better than our rivals so they are worth the outlay. They had better be.

And of course because the government wants to win South Australian seats the submarines, frigates and also the first two patrol boats will be built in Adelaide.

The cost of trying to establish a huge industrial complex where skills must be brought in will be very high. And so is the defence risk of having so much defence manufacturing capacity in one place.

I fear Australia will look back at the Abbott-Turnbull-Morrison government as one that took huge gambles on our long term defence future and on our ability to fund our defence given other priorities.

But to be fair we do need to understand what we are trying to do in submarines.

At the risk of oversimplifying we plan to take a nuclear-shaped submarine and drive it with non-nuclear engines using the pump-jet propulsion systems that have not previously been used outside nuclear power. There are some physicists in Australia who say what we are attempting is scientifically impossible. I can’t argue that but let me share with you the way the Rear Admiral justifies what the navy has done (I quote extracts from an edition of Strategist magazine)

“After years of research, we couldn’t find a military-off-the-shelf submarine to meet Australia’s requirements. We need a submarine with the range and endurance of Collins (existing submarines) to operate where we believe submarines need to operate. We have to improve stealth and sensor performance in a submarine that will operate into the 2070s.

“A key driver of the choice of Naval Group (the French) was capability and the assessment that it offered us the best opportunity to design and deliver a regionally superior submarine and, importantly, one over which we have the sovereign capacity to operate and sustain over its life. This could not be simply a commercial relationship. It always had to be backed by a treaty-level government arrangement between our country and the home nation of our partner. We’re developing plans for technology transfer…..

“We are using pump-jet propulsion that was offered by France. Some claims about the pump jet are misleading. It’s not purely for use in nuclear submarines. It can be efficient across the entire speed range, taking account of the submarine’s size, the speed required and stealth. It needs to be tuned to the hull of the submarine. The hull needs to be tuned to the pump jet. We did not specify that the boat should have or not have air-independent propulsion or lithium-ion batteries, rather that it met our requirements. We’ll continue to look at all applicable technologies as we go through the design process.”