Richard Marles rules out tax rises to pay for subs

Defence Minister rules out tax ­increases to pay for the government’s promised fleet of nuclear-­powered submarines.

Defence Minister Richard Marles has ruled out tax ­increases to pay for the government’s promised fleet of nuclear-­powered submarines, which are expected to cost in excess of $100bn, more than double the annual defence budget.

In Washington on Wednesday (Thursday AEDT) after two days of meetings with US and British defence and foreign ministers, Mr Marles said the government would provide a “sense of scale” of the cost of the submarines in its defence review and AUKUS updates slated for ­release early next year.

“No, the cost of this is something we have said will be ­addressed in the announcement in the first part of next year,” Mr Marles said when asked whether the submarine program could lead to tax increases.

“We’re talking about a very long program that goes over decades, and as we go through the various budget processes, and we’re dealing with the next four years, you’ll see costs associated with this program start to ­appear.”

The AUKUS security pact announced in September last year undertook to provide ­Australia with eight nuclear-powered but conventionally armed sub­marines, the first slated to ­arrive in the late 2030s ­although details of construction specifics remain to be worked out.

A November report by the US Congress Research Service estimated the incremental per-unit cost to the US government for its own program of next-generation attack submarines, which Australia could potentially seek, at between $US5.6bn and $US7.2bn.

“The optimal pathway is now crystallising but there’s still a process to go through … This is a huge endeavour we are embarking on but it’s doable,” Mr Marles, who has promised that Australian shipyards would build significant components of the submarines, said.

In December 2021, the Australian Strategic Policy Institute estimated the total cost of the program, which is expected to include construction of the boats in South Australia, could exceed $171bn.

The Defence Minister was speaking after the first trilateral meeting of AUKUS defence ministers, where US Secretary of Defence Lloyd Austin reiterated US hopes that Australia would obtain the submarines “at the earliest possible date”.

UK Defence Secretary Ben Wallace said he was delighted Australia would join that club of nations with access to “some of the most complex machines on Earth, to give a strategic reach to Australia”.

“[This] will allow us to make sure we’re ready and match-fit for the end of this decade,” he said.

Mr Marles flew to Tokyo late on Thursday with Foreign Minister Penny Wong to discuss with their Japanese counterparts how Japan might join Australia-US troop exercises and rotations in Australia, one of the outcomes of bilateral AUSMIN meetings with the US on Tuesday (Wednesday AEDT).

“Expanding force posture co-operation was a key outcome of the AUSMIN meeting and we hope it will be a key outcome of our meeting in Japan, which in essence is an invitation from the US and Australia to Japan to do more force posture co-operation with us,” Mr Marles said.