Prime Minister Turnbull and Defence Minister Payne (on left of fin) at sea. The Turnbull Government is suffering much political and financial inertia - so launching the 2016 Defence White Paper provides a much needed "achievement" (Cartoon by David Rowe via AFR Feb 25, 2016).
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The Turnbull Government's 2016 Defence White Paper (DWP) (PDF 10MB) includes breathtaking dollar figures calculated to win votes for the imminent Election. But unfortunately the submarines will not be “regionally superior” (claimed on DWP pages 19, 21, 90, 91 and 115). The will, however, be the most expensive conventional submarine in world history.
It is unfortunate that the upfront cost of Australia’s 12 Future Submarines will be unusually high for mere conventional diesel-electric submarines, at A$55 Billion or more (see Table below). As they will be conventional they will not be “regionally superior.” The "superior" accolade goes to the nuclear propelled attack submarines (SSNs) belonging to China, Russia, (in future India), France, UK and the US that frequent or at least transit the Asia-Pacific (frequently called "Indo-Pacific") Region.
In terms of China - perhaps the most likely future enemy - China’s Type 093 SSNs will remain superior in the critical areas of range, speed and fully submerged (not loud diesel) operation. China's future Type 095 SSNs (likely to be launched before 2030 (long PDF 10MB, December 2015, CRS Report RL33153 to Congress, page 87)) will be even more regionally superior than Australia’s shorter range, slower, noisier (when on diesel) and more vulnerable (when snorting) Future Submarines. Friendly India is also planning to build SSNs before 2030. So Australia's "regionally superior" claim will turn out even more wide of the mark.
This less than "superior" submarines will not come cheap. Australia will be paying the highest cost ever envisaged for merely conventional submarines. Australia’s News.com points out, February 25, 2016: “The ongoing cost over the lifetime of the 12 submarines could be as much $100 billion, putting the total cost at $150 billion. Defence officials and industry experts consistently say acquisition is only one third of the cost.”
The A$55 Billion upfront cost of the 12 Submarines is from the “Future Submarine Program” items on "Table 6: Summary of key investment decisions from FY 2016–17 to FY 2025‑26." below. This is on page 89, 2016 Integrated Investment Program
Program title | Program Timeframe | *Approximate investment value |
Future Submarine Program – Evaluation | Scheduled for approval† | Less than $100m |
Future Submarine Program – Design and Construction | 2018–2057 | >$50bn |
Future Submarine Program – Weapons and Systems | 2018–2045 | $5bn–$6bn |
* “The figures in the table cover the acquisition element of the programs. There will be additional investment in whole-of-life sustainment and operating costs for each program. All figures are calculated on an out-turned price basis ^.”
^ On "out-turned dollars" see [(Page 2 (long PDF 2.5 MB) of this Australian defence budget terms document“Out-turned dollars methodology recognises that the dollar is worth less over time. Out-turning a project budget takes into account the planned increases in overall Defence spending due to inflationary pressures.” It is very difficult to estimate out-turned price as this involves:
- estimating inflation in Australia and in the US and in Japan or France or Germany and
- estimating estimating exchange rates of the A$ with US$ and Yen or Euro.
- all over a period out to 2057.
The Federal Government has been careful to make only vague statements that the submarines will be built in South Australia. This keeps open the option of an overseas build if (as seems apparent) the Australian costs are too high. If built in Australia:
- Australia will need to go to the expense of building a Future Submarine shipyard. This is when Japan, Germany and France have perfectly good submarine building yards in their own countries (which enjoy economies of scale)
- an Australian build may involve another 200% over world price burden, as is occurring with the AWDs
- many other Australian companies will need to be created and integrated into the 12 submarine build. Many will then close down at the end of the project - as happened with the Collins Project.
I wonder how cheaply the submarines could be built in Japan, Germany or France?
This would involve adding:
the A$50 Billion Acquisition cost
+ A$6 Billion for Weapons and [Combat] System
Maybe also consider the A$100 Billion whole-of-lfe sustainment estimate.
Perhaps the submarines will all be assembled in Australia or all overseas.
This would involve adding:
the A$50 Billion Acquisition cost
+ A$6 Billion for Weapons and [Combat] System
Maybe also consider the A$100 Billion whole-of-lfe sustainment estimate.
Perhaps the submarines will all be assembled in Australia or all overseas.
Pete