A Critical Analysis of Australia’s Submarine Choice: A Lesson in Mismanagement and Waste

The Former Australian Government’s decision to replace the aging Collins-class submarines with nuclear-powered submarines under the AUKUS agreement has been marred by mismanagement, excessive costs, and a lack of due diligence. This document provides a detailed critique of the decisions that led to an appalling waste of taxpayer money, and contrasts Australia’s approach with the more economical choices made by its Southeast Asian neighbours.

1. Overview of the French Submarine Contract and Its Failures

Initially, Australia awarded a contract to the French company Naval Group for 12 new Attack-class submarines to replace the Collins-class. The decision to opt for a diesel-electric boat converted from a nuclear design with a pumpjet propulsor was risky, resulting in numerous delays and cost overruns. The initial estimate was AUD 50 billion, but by the time the project was canceled in 2021, costs had ballooned to estimates of up to AUD 90 billion.

2. Alternative Offers and the Contrast with Southeast Asian Neighbors

Despite the high costs associated with the French contract, alternative offers were available. For instance, ThyssenKrupp Marine Systems (TKMS) of Germany offered a fixed price of AUD 20 billion for 12 submarines to be built in Australia. Southeast Asian neighbors like Japan, Korea, and Singapore have managed to acquire submarines at a fraction of the cost. Japan’s Taigei-class, equipped with advanced lithium-ion batteries, costs approximately AUD 958 million per unit, while Korea’s Son Won-Il-class boats cost about AUD 505 million each.

3. Comparative Analysis of Submarine Costs

A comparative analysis reveals stark differences in spending. For instance, the Korean Navy’s 12 @Son Won-Il-class submarines cost approximately AUD 6.1 billion, Japan’s 12 Taigei-class submarines cost AUD 11.5 billion, and Singapore’s Type 218SG submarines cost around AUD 9.7 billion. In contrast, Australia’s expenditure on the canceled Attack-class project alone could have funded multiple fleets of advanced conventional submarines.

4. The Lack of Due Diligence and Oversight

The decision-making process behind Australia’s submarine selection has been plagued by poor oversight and a lack of due diligence. The Defence Department failed to provide clear and consistent cost estimates to the Parliament, and the local content requirement of the Strategic Partnership Agreement was never scrutinized. The lack of transparency and accountability raises serious concerns about the governance of such critical defense projects.

5. Conclusion

The choice of submarines has exposed significant flaws in Australia’s defense procurement processes. With Southeast Asian nations achieving far better results at a fraction of the cost, the Australian approach stands as a cautionary tale of mismanagement. Moving forward, Australia must adopt more stringent oversight and due diligence practices to ensure that taxpayer money is spent effectively, and that strategic decisions are based on sound, evidence-based evaluations.

6. Second Interim Report – February 2022

On 16 September 2021, Prime Minister Scott Morrison announced the Australia-United Kingdom-United States (AUKUS) agreement, which would see Australia acquire nuclear-powered submarines. This decision significantly altered Australia's strategic defense footing, but raised numerous questions regarding costs, schedules, capability sustainment, and logistics. The announcement was criticized for its lack of detail and transparency, contributing to fears of a capability gap between the retirement of the Collins-class submarines and the delivery of the new nuclear fleet.

7. Defence Accountability

The committee's interim reports expressed frustration at the Department of Defence’s poor performance and lack of transparency. There were repeated calls for the Department to explain inconsistencies in reported costs and to provide a more robust process for parliamentary scrutiny. The committee recommended the establishment of a bipartisan oversight process to ensure accountability in delivering the AUKUS objectives and military capabilities.

8. The $5.5 Billion Failure

One of the most staggering revelations was the expected final cost of the cancelled @Attack-class program, which could be as high as $5.5 billion. This sum represents a gross mismanagement of public funds, given that it could have been used to acquire multiple state-of-the-art conventional submarines from Japan, Korea, or Germany. The waste of taxpayer money on submarines that do not exist exemplifies the broader issues of inefficiency and poor governance in Australia's defense procurement processes.

9. Recommendations and Lessons Learned

The committee made several key recommendations to address the ongoing issues with submarine procurement in Australia. These include the need for enhanced oversight, transparent communication with Parliament, and a thorough reassessment of the Defence Department's corporate culture regarding accountability. Moving forward, it is critical that Australia adopts a more disciplined approach to defense spending, ensuring that strategic decisions are grounded in rigorous analysis and best practices.