We now know the “optimal pathway” for Australia to achieve a nuclear-powered submarine (SSN) capability by 2033. This timeline delivers a capability within a decade – completely defying earlier critiques of this program. The plan generates speed to capability, an essential move given the high risk in our strategic environment. Speed to delivery does, however, mean the pathway is rather complex and the cost potentially very high. At potentially $368bn out to the mid-2050s the scale of this investment should not be underestimated.
The optimal pathway will see Australia buy three to five US Virginia-class submarines starting in 2033 and delivering one boat every three years. Concurrently all three countries will design, and Australia and the UK will build, a new class of boats – SSN-AUKUS. These boats will incorporate the most advanced US technology and will see each country operating the same combat systems and weapons. Long term, this will see cooperative development, cost sharing and interchangeability of capability.
This approach shows exceptionally high confidence in Australia and among all three AUKUS partners. The decision to sell Australia Virginia-class submarines is massive. Virginia-class submarines are the crown jewels of US Navy advance undersea military technology. They are some of the most sensitive and secret military technology on the planet. This shows exceptionally high confidence by the US in Australia and our ability to maintain secrecy, develop nuclear stewardship and operation expertise.
This is especially significant given the fact the US Navy is short of these platforms and is struggling to maintain its own build tempo, even without adding Australia’s requirements. This is the US strategy of “integrated deterrence” in action and it demonstrates one of the firmest US commitments to this strategic concept, Australian security and regional stability in decades.
The move to a trilateral-designed SSN-AUKUS is also very smart move. The US has the most cutting-edge technology, and the decision for the UK to build the first boat in the AUKUS class is wise given its depth of experience over Australia in building SSNs. Furthermore, this will help to de-risk the Australian build as the delivery of the first in a class of any maritime platform is the most complex.
The “drum beat” of SSN capability to Australia from 2033 is also very wise. Australia will get its first Virginia-class submarine in 2033 and the two follow-on vessels in 2036 and 2039. SSN-AUKUS #1 for the RAN will arrive in 2042. The option for Australia to purchase two additional Virginia-class boats also gives flexibility in case of delays to AUKUS boats or changed strategic circumstances.
This pathway also means generated flexibility for our current Collins-class submarines. To avoid a submarine capability gap, all six Collins-class boats were planned to go through a life-of-type extension (LOTE). Now with the speed of the delivery of the SSNs it is possible only four out of six Collin-class boats will need LOTE. This provides flexibility for a future government. It also factors in flexibility and potential cost and workforce savings.
The optimal pathway sees Australia acquire an SSN capability in the shortest possible time. In addition, the announcement of a “Submarine Rotational Force-West (SRF-W)” of US and UK boats to HMAS Stirling in Western Australia from 2027 will significantly enhance deterrence and support Australia’s development of a sovereign capability. This will be critical, along with the UK and US support for training Australian personnel and workers to ensure that by 2033 Australian can support a sovereign capability.
While this pathway shows exceptionally high confidence in Australia, it comes with high risk. Congress will have to approve the sale of the Virginia-class around 2030 and there is no way to predict, at this stage, if the current bipartisanship on AUKUS in the US will continue. The infrastructure investment requirements in all three countries are also massive.
In the US, despite the announcement of an immediate $US4bn in 2023-27 to uplift its submarine industrial base another $US2.2bn to its submarine budget in 2024-28 to improve Virginia maintenance it still needs to scope out how the support for the uplift in Virginia boats will be achieved. The UK will need to invest in its own industrial base and solve its construction problems, which have seen its submarine capability running years late. All three countries are suffering from workforce shortages, and this represents the clear, and present, danger to this project.
The optimal pathway is long-term and there are many, many decision points to come. The complexity of the program to meet the needs of speed and the avoidance of an Australian submarine capability gap ensures the risk will remain high, but the rewards are just as high. Despite the complexity and risk, this is a pathway to capability at maximum speed to help manage the very high strategic risk outlined in the 2020 Defence Strategic Update.
But the ultimate question is – is it worth it? The cost is not insignificant. The headline – $368bn – is massive and we should not underestimate the size of this number. This does, however, include supply chain investments, sustainment of the platform, and weapons and workforce costs – something most defence costing does not fully factor in. This means this is not only the largest defence procurement in history but the largest in the country – as Defence Industry Minister Pat Conroy noted, it is larger than the Snowy Mountains Scheme.
Over the forward estimates the government has indicated this project is revenue neutral, but thereafter the costs rise. The headline number is also mainly guesswork. No one knows inflation and cost of living in 2054. Significantly, Treasury can’t get most estimates right year on year for the federal budget, let alone the forward estimates. It should also be noted no other country costs its SSN programs this way. This program is also setting up Australia for the continuous build of SSNs from 2042. As such, the costs are relative to ongoing capability development for many decades after the 2050s. This spreads the cost even further. That said, everything is an opportunity cost, both for Defence and the rest of the economy.
The basic fact remains that if the world and our region were benign, we would not be undertaking this massive uplift in capability. As a trade-dependent maritime nation with one of the world’s largest exclusive economic zones, and with 99 per cent of our trade coming and going by sea, maritime security is critical to Australia’s peace and prosperity.
Submarines are the capital ships of the modern age. SSNs are the “Rolls-Royce” of submarines. US SSNs are decades in advance of any potential adversary. Australia acquiring this capability will give us a regional military capability edge in the maritime domain. To put it in perspective, China now has the world’s largest navy. It has built 12 nuclear-powered (and armed) submarines in the past 15 years. By the time our first SSN-AUKUS hits the water the PLA navy will have 70-plus submarines in service. AUKUS is a prudent response to the largest military build-up since WWII.
We are now at the end of the beginning, but still decades away from the beginning of the end. Lots could go right and lots could go wrong over the next 30 years. This is a worthwhile investment in a critical and essential defence capability. But we should also ask ourselves this question, every year, for the next 30 years.