Future submarines: Australia's $40 billion risk

The selection process to build 6 to 12 future submarines in Australia involves many hurdles and risks. It would be hugely wasteful for politicians, admirals and officials to again make hasty choices that again steer this country into a Collins disaster. When the future planning Defence White Paper is published next year it will be too early to decide on "local or foreign built?" issues because Japanese submarine opportunities are only starting to emerge. Australia should not be locked into another ASC construction in South Australia fiasco - whatever Labor promised the maritime unions and State Government in 2009.

Australia's business model of locally built submarines may well be over-ambitious and un-affordable. At current estimates the cost of 12 locally built submarines may amount to $40 Billion. With the global financial crisis and the end of the mining boom Australia doesn't have that kind of money to spare.

The current Air War Destroyer (AWD) project should cause hesitation in deciding to launch into a locally built submarine project. The AWD project is increasingly seen as an exercise in building 3 destroyers in Australia for the price of 4. The usual suspects in this over-budget, deadlines missed, exercise are "…the unwieldy set-up of the AWD Alliance, made up of the government military purchaser the Defence Materiel Organisation, the government-owned shipbuilder ASC…".

The extravagant plans for future submarines to be locally built will actually compete for funding and manpower with yet another project - that is for 8 future frigates. The Navy wishes to build these frigates far larger and more expensively than the current ANZAC frigates. Each new frigate may well weigh as much as an AWD destroyer - 7,000 tonnes.

Japanese Risks

An additional layer of submarine risk has been added over the last two weeks with reports that the Australian Government may see merit in selecting a Japanese submarine propulsion system and perhaps a complete Japanese submarine. It is Japan's current Soryu class submarine that has caught Australian attention. The Soryu has a propulsion system (including the diesel-electric engine and Air Independent Propulsion (AIP)) that may be suitable for the very large conventional submarine that Australia is seeking. However Japan plans to begin phasing out its Soryu's around 2030 – the year that Australia wants to phase in the future submarine. It is undesirable that an Australian Soryu would be a one of a kind "orphan" submarine like the Collins was.

Japanese Prime Minister Abe's willingness to consider exporting submarine technology to Australia has only come about via a recent and radical departure from Japan's traditionally pacifist political and constitutional approach. These new ideas may not be deeply or broadly held in Japanese politics. Hence there is a risk that a new Japanese government after Abe (perhaps a centrist-pacifist Democratic Party government) might effectively renege, mid-project, on any Japanese understandings, promises and contracts with Australia concerning submarines.

Chinese pressure must also be considered in any Australian-Japan submarine deal. China, fearing a remilitarising Japan, may exert political and economic pressure on Australia and on Japan (including the Soryu's principal builders Kawasaki and Mitsubishi) to break up a submarine based security relationship. It must be remembered that the Quadrilateral Security Dialogue, proposed by Prime Minister Abe in 2007, collapsed in 2008 when Australia pulled out of it due to Chinese pressure.

Australian Selection and Construction Options

It is also vital for Australia to avoid the major integration risks caused by the purchase of essential systems (including hull, propulsion system and combat system) from too many equipment companies from too many countries. Too many suppliers and interests hamstrung the Collins. The possible outcome for Australia's future submarine project may be ASC working with a German, French, Japanese, Spanish or Swedish prime contractor to integrate a third-country hull with a Japanese propulsion system and an American combat system.

A far cheaper, easier and less problematic approach might be to choose just one foreign company to build the future submarine with that company's existing overseas facilities and labour force. The most experienced companies, with the most reputable sales record, are Germany's ThyssenKrupp and France's DCNS . ThyssenKrupp has a Type 216 very large submarine design that is planned for customers like Australia. DCNS builds the reputable Scorpene that can be enlarged levering DCNS long experience in building very large nuclear submarine hulls. Spain's Navantia falls down in having never designed or exported a submarine without heavy French involvement. There have also been major program management problems with Navantia's S-80 (Isaac Peral) project. Sweden falls down on having not fully designed or built a new submarine since HMAS Rankin (of the Collins class) in Australia in 2003. The association of Sweden with the Collins project is not a positive selling point in Australia.

Just because submarines are a defence item doesn't mean Australia's future submarine project has to be excessively risky and overly expensive. Australia has choices to make the process less risky and less expensive. Having the future submarines built at a foreign shipyard should free up $Billions that would have been wasted in re-inventing an Australian submarine building industry. Those $Billions saved could be spent on other industry development projects in Australia.

Australia is having its F-35 jet fighters built in the US – therefore why not have Australia's submarines built overseas? Could it be that aviation industries are flexible while shipbuilding industries are locked in the past?