Commentary | 03 May 2016

Myths surface over new submarines deal

Originally published in the Sydney Morning Herald.

  • Euan Graham

Originally published in the Sydney Morning Herald.

  • Euan Graham

Executive Summary

Two myths are fast growing up around the government's decision on Australia's future submarine to fill in the void of public information about the competitive evaluation process.

The first is that the choice of France's DCNS over Japan's Mitsubishi-led bid represents a strategic "cave" to China. The second is that the government's commitment to building 12 submarines in Adelaide's shipyards is a purely political sop to South Australia, devoid of strategic logic.

Both myths can claim perhaps a morsel of truth to sustain them. Details are already dribbling out and more will enter the public domain in coming weeks. But their power to distort Australia's strategic and defence debate is damaging and needs rebuttal.

The China kowtow myth received a high-profile boost in a recent Wall Street Journal editorial claiming that the "most significant influence" on the government's choice "may have been China". Note the use of "may". The editorial further asserted that "it isn't lost on Tokyo that Mr Turnbull announced his decision a week after he visited China".

Greg Sheridan's column in The Australian at the weekend reinforced the assumption that the Turnbull administration opted against Japan out of deference to Beijing.

Such innuendo only sweetens the temptation for bruised egos in Japan to leap to the same, facile conclusion. For however poorly Australia has treated Japan in this process, blaming the "China factor" only avoids harder questions about shortcomings in the Japanese bid. Japan's Nikkei newspaper also noted that "some in the Japanese government suspect that Canberra is reluctant to rile Beijing". Yet it concluded that it was Japan's initial hesitancy over local production and inexperience in overseas defence sales that ultimately left it in third place behind slicker European campaigns, better primed for the export pitch.

In the end, the overriding factors were that Japan's bid was not a technical stand-out from the competition; nor did it react quickly enough to Tony Abbott's replacement by a leader less personally invested in elevating the bilateral relationship with Australia's best friend in Asia.

China will be relieved that Australia and Japan are not collaborating on submarines - and is likely to see this as a strategic gain. But, as my colleague Sam Roggeveen has observed, China still faces an eventual doubling of Australia's submarine fleet. This is a strategic signal that makes sense only in the context of rising concern about China, as reflected in the recent defence white paper. Moreover, it appears increasingly clear that DCNS was preferred partly because the French sub design includes a transition path to nuclear propulsion unique among the bidders. "Option F" is therefore a hedge towards "Option N".

The government was at pains in the submarine announcement to emphasise the participation of prominent US experts in the evaluation process, a heavy hint that the "regionally superior" capability claims of the French design have already received a technical US seal of approval, irrespective of Washington's strategic enthusiasm for Japan-Australia high-level defence co-operation.

The myth gaining traction domestically is that the submarine build in Adelaide is nothing more than a $50 billion election subsidy to South Australia, hiding behind a strategic smokescreen.

This reflects a combination of cynicism and parochialism in the Australian defence debate. With a general election looming, and the ruling Coalition's vulnerability in South Australia well known, the tub-thumping tenor of the PM's announcement ("Australian built, Australian jobs, Australian steel") unfortunately does everything to encourage this.

In a tangible sense, the submarine build is a kowtow to Adelaide (not Beijing): a $50 billion jewel in the crown of the federal government's wider commitment to a continuous surface naval build in the state. For sure there's never been a more exciting time to be a South Australian shipbuilder.

Other states must console themselves with much smaller contracts and the chance to be a part of submarine supply chain. Since Australia's share of China's iron ore imports jumped from 58 to 64 per cent last year, they will at least have a majority input for the basic raw material of China's naval shipbuilding program. If not Australian submarines, then Australian targets perhaps?

Beyond marginal employment gains from this massive investment, the wider economic benefits to the nation are open to question, and it arguably sends a worrying signal of corporate welfarism to industry. The premium of an indigenous build is not only financial but temporal. The government could have shaved a few years off the future submarines' initial operating capability by importing the first pair, while onshore production is ramped up. But the so-called "hybrid" option has apparently been jettisoned in the cause of maximising local inputs. That means the Collins will have to hobble on as the mainstay of Australia's conventional deterrent into the early 2030s, by when Australia's much-vaunted "capability edge" may have receded altogether.

But Canberra's willingness to pay more for an onshore submarine build is not simply top-down electoral expediency, it is also explicitly supported by 70 per cent of the Australian public, according to this year's Lowy Institute poll.

Yet this has done nothing to allay growing cynicism around the government's intentions, which has only intensified since the PM's announcement. The ABC ran an online commentary boldly asserting that the submarine build-up lacks any credible strategic justification, hence its "actual purpose is bailing out South Australia as a tight election nears". Parochialism, always present, is being magnified in an election year.

Any large-scale defence procurement attracts its share of politics and special interests. This one more than most. But we need to be collectively on guard against facile myths. The primary fact is that Australia has committed to a step-change in its conventional deterrent capability for strategic reasons and is investing heavily in a national maritime capability, which can never be entirely purchased off-the-shelf. Don't let electioneering or the "made in Adelaide, designed in France" labels distract you from that.

 

Euan Graham is director, International Security Program at the Lowy Institute.