AUKUS subs deal risks creating crippling capability gap

Defence Minister Richard Marles will attempt to nail down a deal in critical Washington meetings next week.

A US Navy Virginia Class submarine USS Mississippi arrives at Fleet Base West, Rockingham, Western Australia for a routine port visit.

The shape of the plan by which Australia will acquire nuclear-powered submarines under the AUKUS agreement is now in place though not yet formally agreed, and it could still change substantially.

Defence Minister Richard Marles will attempt to finalise the key planks of the deal in a series of meetings overseas in the next week. He and Foreign Minister Penny Wong are travelling to the US for this year’s AUSMIN meeting with their counterparts, US Secretary of State Antony Blinken and Defence Secretary Lloyd Austin.

In America, Marles will also participate in the first AUKUS defence ministers’ meeting, which Britain’s Defence Secretary Ben Wallace will travel to the US to attend. Marles and Wong will then travel to Japan for a 2 + 2 meeting with their Japanese counterparts.

AUSMIN will have its customary big agenda, focused on the region, especially Southeast Asia. But Marles’ key mission will be the submarine plan.

In a parallel process, in March the Albanese government will announce its plans in response to the Defence Strategic Review being undertaken by former defence minister Stephen Smith and former chief of the defence force Angus Houston.

This will determine the extra defence capabilities we will acquire across the next five or 10 years, the most dangerous period we face.

Simultaneously, the government next March will also announce its AUKUS submarine road map. This is about the defence force we’ll have in 15, 20 or 30 years.

A focus on the distant shiny object in the far future has often contributed to poor Defence performance in the here and now. Nonetheless, the AUKUS subs project is immense and involves fundamental strategic rethinking in Canberra, Washington and London.

Our preferred AUKUS option has long been the US Virginia-class attack sub, the SSN-774. It is a beast, rightly described as the apex predator of the oceans. Its range is limitless and its combat weapons – torpedoes, Tomahawk missiles and much else – devastating. If we had eight Virginias we’d be vastly more formidable than we are today.

But – and there are a series of buts – the government is committed to building the subs in Australia. (Of course the nuclear reactor and the weapons system will always be built in the US.)

But it will be many years before we’re capable of such a build, which means there will be a capability gap. Our six Collins-class subs get another decade each from their life-of-type extensions which start in the middle of this decade

. They’ll start to retire definitively, one every two years, towards the end of next decade.

Here’s the biggest but. The US has announced the end of the Virginias, which it has been making since 1998, and is now designing their replacement.

If we wait for the successor to be designed and built before we get a single new sub, that’s decades away. What to do? Step one is to get the US Navy to home-port two Virginia boats in Perth. That can’t happen overnight. We still need to build extensive, high-class facilities for such boats. They would remain US boats but increasing numbers of Australians would serve on them.

We already have Australians on Virginias, but this would be with a view to our ultimately building and running our own nuclear-powered subs, so some of our sailors would get to work at the back end of the boat, where the nuclear reactor is.

The beauty of this is that it doesn’t take anything away from existing US capabilities. It would fit US plans to disperse its regional forces so they are less vulnerable to pre-emptive Chinese missile strikes.

Although not Australian boats, they would contribute to our security and enhance the extended deterrence we participate in with the US. We might get these boats late this decade.

But the proposal’s strength is also its weakness. It doesn’t add anything at all to US-led allied military force in our region.

Step two offers more radical change. The Albanese government convinces the Americans to sell or lease us two of the last Virginias in their production run. The Americans have to provide us two boats they would otherwise have used themselves or we have to fund a new US production line. As our order would be for only two Virginias, this wouldn’t justify an entirely new production line. But such a production line could be used for other things.

There’s a lot of unease, if not outright opposition, to this in the US Navy. But the US Navy, initially sceptical of Australia’s ability to absorb nuclear-powered submarines, has come round to AUKUS generally. AUKUS was always led at the political level by Scott Morrison, Joe Biden and Boris Johnson.

Then PM Scott Morrison with the President of the United States Joe Biden and then prime minister of Britian Boris Johnson announce AUKUS in September 2021.

Anthony Albanese has rightly maintained national commitment to AUKUS. Within the US, the decision to provide us two Virginias otherwise destined for US service would come directly from Biden and the White House. We might get those Virginias some time in the 2030s. If we still had two US boats home porting in Australia, that could be four nuclear-powered boats by the end of next decade.

There are a few wrinkles in this, of course. The Americans might take back their home-ported boats as we get our own Virginias. We would be very hard-pressed to crew four giant Virginias, as well as our six Collins conventional submarines, by any time next decade, though the Americans might help us out with crew.

The government has promised to build AUKUS subs in Australia. But if we lease the Virginias, and if they are regarded as the super-sized solution to a capability gap, that would be consistent, more or less, with the plan to build the later AUKUS subs in Australia.

What of the ultimate AUKUS subs? Wallace has publicly hinted at all three nations operating the same nuclear-powered submarine. That means the successor to the Virginia-class, the new SSNX, would replace not only the Virginias but also the British nuclear Astutes, and would become our submarine, too. There is a certain elegance to this. It binds the US, Britain and Australia into the most intimate defence technology sharing arrangement in history.

However, it also presents really big problems. For a start, the US is accustomed to designing and building nuclear submarines entirely for itself, and never sharing the absolute crown jewel of the whole boat even with its closest ally. To have two other allies with full knowledge and control over its key, hi-tech, globally superior weapon is revolutionary.

Same but different for the Brits. Compared with the US, the British nuclear submarine program is a cottage industry. The Americans had to rescue the Brits over technical problems with the reactor in the Astutes.

But – and this is a big but – would the Brits really be happy to effectively abandon their own design capabilities and indeed their own distinctive subs? The only way the three navies can have the same sub is if the Brits, and we, accept the American boat. The Conservatives might accept this to participate in a pooled program, but what guarantee is there a future British Labour government would take the same view?

There could possibly be a kind of modular element to the sub, so that the British and Australian version could be a bit smaller.

Which brings us to another problem. The Virginia is already much bigger than the Astute. But the successor to the Virginia, the SSNX, is, according to public guidance from the US Navy, going to be much bigger again. It might go from a submerged weight of 7800 tons for the Virginia to 9150 tons for the SSNX.

There are two types of nuclear subs. There are attack subs, such as the Virginia and the Astute. And there are nuclear ballistic missile subs, which carry nuclear weapons.

These are behemoths that can stay deep, deep under the ocean for long periods so that no adversary knows where they are. They furnish assured nuclear second strike capability. They can’t be knocked out in a pre-emptive strike. They are key to nuclear deterrence. The new SSNX is likely to be so big, it will use the same nuclear reactor as America’s new ballistic missile subs, the Columbia-class. It will be big enough to carry unmanned underwater vehicles, submarine drones, which it can deploy at will. There is some prospect it might be powered by low enriched uranium, which cannot be used for nuclear weapons, as opposed to highly enriched uranium that powers Virginias. Substituting LEU for HEU would remove whatever counter-proliferation argument might remain against our AUKUS subs.

But the size and complexity of the SSNX pose two enormous problems for Australia.

Can we possibly construct, crew and run such giant beasts? And what about the time line?

It will take the Americans the better part of a decade to design the SSNX and the better part of another decade to build one. They will want to build the first several for themselves before they licence us to build any. And we would want Washington to take the first in class anyway, to iron out bugs inevitable in any new class of boat.

The US Congressional Budget Office thinks these new boats might cost $US7bn each – that’s at least $10bn in Australian dollars. And if we’re building them in Adelaide you can rest assured they’ll cost more than that.

But wait! There’s more. We wouldn’t be able to build the first of these until some time in the 2040s. By then, even with their LOTE extensions, three or four of the antique Collins will be retired. Also, the whole program requires sustained political and financial commitment across five or six electoral cycles in the US, Britain and Australia.

The risk of delay, or of our participation in the program becoming impossible, is huge. This option, in other words, offers strategic reward but carries enormous strategic risk. Not only that, we won’t have built any kind of submarine for 40 years, then we will magically be able to build the most complex nuclear submarine ever known to the human race. It’s not impossible, but it involves pretty heroic assumptions.

Here’s where the Meade review examining the way for Australia to get nuclear-powered subs has made its worst mistake, in my view. It has, I believe, ruled out an interim conventional submarine.

The navy has convinced the review that neither it nor Australian industry could handle the huge project of the LOTE extensions on Collins, plus working out how to run the Virginias, then building the new AUKUS subs, while building new conventional boats.

But as there will be no actual work building an AUKUS sub for decades, this seems too convenient. The navy has also convinced the government that a new conventional sub would be dramatically vulnerable. This is speculation, not fact, and it flatly contradicts the other navy assertion that the Collins, even after their LOTE extensions, will still be “regionally superior”.

Most nations operate mostly conventional subs. Most of China’s subs are conventional.

Similarly, some claim that building a new, conventional sub would reproduce all the troubles we had with the French. But these came about because we redesigned everything. Instead of buying six sturdy pick-up trucks, we redesigned a Citroen and put the steering wheel in the boot.

Australian industry could build new Collins boats, incorporating all the updates we’ve had over 30 years, and all the LOTE improvements. It could cut the LOTE program, which is a huge, costly and risky business, down to say two, while it simply built four or six new so-called Collins Block 2 boats.

We know how to build these and we know how to operate them. It may be in the future that the Chinese have bases in Solomon Islands or elsewhere in the South Pacific. Then range is not such an issue and conventional subs, which can operate very quietly in shallower waters, come into their own.

In any event, a new conventional sub guarantees we have some formidable sub capability for the next 30 years. Whereas the strategic risk involved in investing solely in the AUKUS sub, with all the danger of delay and political or financial reversal, means there’s a serious chance we’ll end up with no sub. Australian industry and the manufacturing unions both passionately believe this and repeatedly put the case to government.

I am 1000 per cent behind the AUKUS nuclear-powered sub. But the danger is that the process is so complex, so vast, takes so long, involves so many moving parts and such political uncertainty, that it also creates great strategic risk. We could mitigate that risk in a heartbeat with a new conventional submarine program as the bridge to the nuclear future. But apparently that’s not in the plan.