Does Australia have the capacity to become the eighth nation to own nuclear-powered submarines?
For all the hullabaloo that followed Prime Minister Scott Morrison’s joint announcement of the AUKUS partnership with the US and UK on September 16, few seem to know what military commitments Australia has made.
Much of that ambiguity is a product of the announcement itself, which lasted 12 minutes, resulted in a document that is one-and-a-half pages long and features little in the way of policy commitments.
Instead, the presentation effectively served two functions.
The first was an announcement that Australia would cancel its $90 billion contract with France’s Naval Group to construct 12 diesel-powered submarines to replace its six Collins-class submarines, built between 1990 and 2003.
The other was to announce the formation of a taskforce that will spend 18 months identifying Australia’s path to owning and operating nuclear-powered submarines.
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No new alliance was announced, with Australia already maintaining a security alliance with the US through ANZUS.
It is not party to a comparable agreement with the UK but maintains strong diplomatic relations with the country as a member of the Commonwealth and through other alliances, such as Five Eyes.
No new shipbuilding contract was announced, either, meaning Australia is, for the time being, effectively without a future submarine program.
“There are so many interpretations of [AUKUS] floating around,” Peter Dean, director of The University of Western Australia’s Defence and Security Institute, told Business News.
“Of course, there’s so much space the government has left for people to speculate and fill.”
Assessing the announcement in its entirety, Professor Dean sees the partnership as a largely positive attempt to form a balancing coalition in the Indo-Pacific region in response to increased assertiveness and competitiveness from China.
This is through an array of defence projects, including the acquisition of long-range strike missiles such as hypersonic missiles, co-developed alongside the US, and precision-strike, guided missiles with a range of more than 400 kilometres.
Still, as he admits, nuclear-powered submarines are the headline-grabbing item.
Just six countries own and operate this technology, being the US, Russia, China, France, the UK, and India, with Brazil in the process of becoming the seventh with assistance from France.
“The Americans have not shared nuclear submarine reactor technology with anyone except Britain in 1958 and 1959,” Professor Dean said.
“This is absolutely significant.”
He believes the AUKUS partnership has the potential to rebalance Australia’s relationship with China.
That’s supported by many regional allies, including Japan, which itself was burned when Australia bypassed its Sōryū-class submarines in favour of France’s Attack-class model.
In some cases, the partnership appears to have brought erstwhile allies back into the fold, with the Philippines, which has at times dabbled in appeasing China under its current populist president, Rodrigo Duterte, now one of the region’s most vocal proponents of the partnership’s aims.
Not every player in Australia’s immediate regional orbit supports its right to own nuclear-powered submarines, though, including New Zealand, which will not allow Australia-owned and -operated nuclear-powered submarines into its waters.
New Zealand’s reasons for disapproving are well understood.
While the submarines do not constitute nuclear weapons, they do fall foul of the country’s long-standing policy against nuclear armament of any sort.
Still, that one of Australia’s closest cultural and geographic allies won’t allow them into its waters carries significant strategic implications, given the country participates in wargaming through an interoperability arrangement reached in 2006.
Any material impact on the nature of Australia’s relationship with New Zealand has not changed because of AUKUS, with security pacts such as the Five Eyes alliance, which also comprises Canada, unaffected by the deal.
Still, allies to Australia’s north have made their thoughts known, particularly Indonesia, which has been vocal in its concern for what it believes was emblematic of a continued arms race in the region.
“I think most experts would agree that Indonesia, like most countries in Asia, would welcome an increased US presence in the region because it does offer that balance against China,” Ross Taylor, former state government commissioner to Indonesia and president of the Indonesia Institute, said.
“But what they don’t want is a presence that’s matched by a belligerent and aggressive attack back on China, because that then does force them into a position where they’ve got to make a decision.
“Do they back the US, or do they back China? And their response, of course, is neither.”
Those concerns are not isolated.
In Malaysia, where the South China Sea dispute remains a live issue, officials responded to the news by arranging a working meeting with China to discuss its views on the agreement.
France has loudly rejected the deal given it has led to the termination of the federal government’s deal with Naval Group to build 12 diesel-powered submarines from 2035 through to the 2050s.
Critics of that deal had long since noted the cost had blown out to about $90 billion amid project delays and diminishing local content quotas in favour of French manufacturing.
That’s done little to temper France’s reaction.
The country has since made clear its intention to scupper a free-trade agreement between Australia and the EU under negotiation since 2018 and have its ambassador “redefine” its relationship with Australia and seek a hefty exit fee from the terminated contract.
Evidently, Messrs Morrison, Biden and Johnson believed the political upsides outweighed any diplomatic blowback.
Mr Biden, whose once well-regarded foreign policy credentials have taken a significant hit amid the chaotic withdrawal of US armed forces from Afghanistan, stood to gain significant reputational strength by being seen as tough on China.
Across the pond, Mr Johnson is leading the UK out of the EU, which has required him to forge agreements for the country outside of the European framework and solidify the UK’s credibility as a great power nation.
Mr Morrison, meanwhile, has been left to confront China not only as an economic and political competitor in the region but as a military threat, distinct from how his recent predecessors have dealt with the matter.
China’s strategic shift has been well documented in the past three years, both through its apparent embrace of economic coercion through punitive trade practices and accusations of subversion through cyber-attacks.
Militarily, though, the country’s armament in the past year alone has proved staggering.
Reporting from the Department of Defence, published about 13 months ago, found China’s 350 ships dwarfed the 293 held by the US Navy, in part thanks to the country’s shipbuilding capacity being the greatest in the world by tonnage.
USS Nautilus, now decommissioned, was the world’s first nuclear-powered submarine, built in 1954. Photo: US Submarine Force Museum and Library
Thomas Shugart, adjunct senior fellow at the US-based think tank Center for a New American Security, echoed those concerns in analysis for the Lowy Institute published in August.
He argued that, while Australia’s territorial integrity at present was largely unthreatened because of current alliances, China possessed the military and industrial potential to project power in the region and strike Australia from existing bases either by aircraft or long-range missiles.
That’s in contrast to criticisms from regional allies, like Indonesia, that Australia is engaging in an arms race by acquiring these submarines.
“The great irony there is that the largest military expansion in modern history has been undertaken by the PRC in the last 20 years,” Professor Dean said.
“The PLAN [People’s Liberation Army Navy] built the equivalent of the entire Royal Australian Navy in the past 12 months.
“There’s been only one country arms racing in Asia, and it’s not any of the western powers or US allies. It’s the Chinese.”
If responding to China’s increasing armament is considered sound, then paying for it will no doubt prove a financial headache for decades to come.
Simply put, submarines are expensive pieces of equipment to build and maintain, and scrutiny of costs is a recurrent theme of media coverage.
Reporting of the Naval Group deal often focused on how and why a $50 billion deal had ballooned out to $90 billion over a five-year span.
The decision to award the contract to the French in the first place was itself wrapped in a political dimension that in retrospect appears quaint.
Tony Abbott, who romped to the prime ministership in 2013, had stated his preference for Japan to build Australia’s next class of submarines as late as 2014 through an agreement signed between the two countries.
The political overlay was hard to ignore, given Mr Abbott faced the prospect of losing the seats in Adelaide’s suburbs without a local content quota in the form of South Australian jobs.
Much of this was solved after Malcolm Turnbull displaced Mr Abbott in the top in 2015, with France’s Naval Group winning the contract against competing bids from German and Japanese manufacturers.
Over time, the local content requirement was whittled down from about 90 per cent of all works to 60 per cent; as part of the new deal, it’s expected to be as low as 40 per cent.
Whether Western Australia will see any of it is up in the air; Mr Morrison has already said the build will take place in South Australia.
That’s in addition to full-cycle docking of Australia’s six Collins-class submarines, which are now likely to remain in the water until the 2060s due to the protracted build time required of nuclear-powered submarines.
Again, the political overlays are evident, with Stephen Marshall, SA’s first-term Liberal premier, facing re-election in six months’ time, and at least two of the state’s nine lower house seats in Canberra considered marginal ahead of an upcoming federal election.
Keeping full-cycle docking in SA should, in turn, ensure a large and diverse portion of the workforce stays in a job absent the contract with Naval Group.
WA, meanwhile, would accrue little political benefit from the move.
Mr Morrison and Melissa Price, federal Defence Industry Minister and representative for WA’s vast federal electorate of Durack, have been keen to play down this narrative, having publicly insisted the state will receive more than its fair share of works over the coming years.
Estimates from the Department of Defence indicate the total value of shipbuilding works for WA is indeed generous, with the state’s shipyards to undertake 11 projects valued at between $30.2 billion and $39.4 billion between now and 2040.
SA’s share of the pie is considerably bigger, though, with its shipyards undertaking four projects of between $52.6 billion and $56.4 billion in value in that same timeframe.
That’s not including a prospective nuclear-powered submarine program, which does not carry a value but has already been promised to Adelaide.
In WA, the state government, which founded Defence West to explicitly chase full-cycle docking, is hardly impressed with how recent weeks have transpired.
Paul Papalia, who has been the inaugural holder of the created Defence Industry and Veterans Issues portfolio since 2017, was sharply critical of decision, saying the federal government had not been genuine with WA after it had engaged in a two-and-a-half-year process to try and secure the works.
Matt Keogh, opposition defence industry spokesperson and member for the federal seat of Burt, also criticised the federal government’s handling of the matter, characterising it as a short-term political fix.
“As a consequence of deciding to go down the nuclear path and tear up the contract with Naval, there’s now prospects of even less work happening in South Australia, where the government’s already dealing with a two-year delay on its frigate program,” he said.
The strategic implication of the decision is also interesting, given it appears to rest on the assumption that Australia can rely on its six Collins-class submarines while it waits for nuclear-powered submarines to begin arriving in the 2040s.
Whether that’s practical is questionable.
Australia’s most recent strategic update, conducted while Linda Reynolds was still defence minister, did away with the conventional 10-year warning for armed conflict.
That means the possibility of war is, strategically speaking, thought to be far closer than in years’ past, meaning that should Australia become involved in a military conflict it would need to lease nuclear-powered submarines from either the US or the UK in the absence of owning and operating its own.
“We can’t just start cutting steel and cranking [submarines] out in South Australia overnight,” Professor Dean said.
“A, we don’t have a deal, B, we don’t have a design, C, we don’t have the industrial capacity and skills yet, and D, this is a whole new level of technology in nuclear reactor systems, and we don’t have a domestic, nuclear reactor industry to lean on.
“That’s really problematic.
“We’re staring down the barrel of a considerable capability gap.”
Professor Dean sees value in mirroring the procurement process used in the Adelaide-class frigate program, in which the first four of six vessels were built in the US to expedite delivery.
Beyond short-term concerns, though, defence manufacturers will also face the prospect of being shut out of significant parts of any new submarine.
None of this is to say Australia needs a civil nuclear industry to sustain such a program, nor does it mean Australia is in pursuit of nuclear weapons.
Indeed, many key aspects of building a nuclear-powered submarine, including enriching uranium, are not direct contraventions of Australia’s international obligations on non-proliferation.
That’s not to say a path towards ownership of nuclear-powered submarines is straightforward, as was outlined by Mr Turnbull in his address to the National Press Club in late September.
He argued these submarines, which have unlimited range, move faster than diesel-powered vessels and need less maintenance and upkeep given their reactors are self-sustaining, were so appealing he charged the Department of Defence with assessing Australia’s capacity to use nuclear power while he was prime minister in 2016.
Impediments, such as giving cover to hostile states in pursuit of weapons-grade uranium, were raised, but Australia’s lack of a civil nuclear industry proved particularly difficult to negotiate.
All other countries that maintain nuclear-powered submarines also operate civil nuclear industries, which opened Australia to significant sovereign risk if it was to operate or maintain such vessels.
That would likely mean maintenance will have to be performed in another country, an option he found unpalatable given it would dilute Australia’s sovereign defence capabilities.
“If you can’t maintain your own ships, you are not in full control of them,” Mr Turnbull said.
Therein lies the greatest concern for any potential nuclear submarine program.
Mr Keogh, who believes owning nuclear-powered submarines is the right strategic move for Australia, was particularly alarmed about how Mr Johnson had played up how AUKUS would create hundreds of jobs in Scotland and northern England.
That, he believes, points to a dilution of Australia’s defence industry in the process.
“[It’s] not to say that the ultimate strategic decision is wrong, but there hadn’t yet been a sufficient working through of consequential decisions or, at least, how to communicate about those issues, by the government,” he said.
“That’s left a huge question mark for industry going forward in Australia.”
Professor Dean, who is broadly supportive of the aims outlined by the AUKUS partnership, is similarly cautious about the technical details of the agreement.
While he notes strong bipartisan and public support for Australia owning nuclear-powered submarines, he argued the next 18 months would prove critical as the Department of Defence builds requisite infrastructure and the federal government navigates leasing options and capability development with the US and the UK.
“I’d still be surprised if we see something in the next 10 years,” he said.
“If we could lease a boat or get [the UK or the US] to build something, we may be lucky enough to see a submarine in five years.
“That would be a gold standard outcome, but I’m not holding my breath.”
