In his post of 21 September on Australia's future submarines, Stephen Grenville cautioned against the arguments of regional and industrial lobbyists and challenged those who believe Australia's future submarines should be built at home rather than abroad to make the economic case.
I suggest that readers consider the large volume of studies, commentary and reports already produced. They will conclude that the case for building the submarine in Australia has been subjected to more than sufficient study already.
Any consideration of this subject should start with this piece from February 2013 on why Australia needs submarines, and the unique capability they offer governments to deal with our increasingly challenging maritime environment. The arguments for 12 long-range submarines were accepted in the 2009 and 2013 Defence White Papers, although media speculation about the 2015 White Paper envisages building eight with an option for four. Our geography requires a large submarine with long range, high endurance and a large payload.
Given these requirements, successive Australian governments have spent years and millions of dollars to study the options, and all have concluded that there is no off-the-shelf solution to our requirements. Australia, in partnership with an experienced overseas submarine designer, will have to design and build a suitable replacement for the Collins class. In 2014 and 2015, the Senate Economic Reference Committee heard evidence from the Department of Defence, industry and submarine experts, and reached bipartisan agreement on this point. To quote one of the Committee's recommendations: [fold]
Given the weight of the evidence about the strategic, military, national security and economic benefits, the committee recommends that the government require tenderers for the future submarine project to build, maintain, and sustain Australia's future submarines in Australia.
There is no production line; we must pay to set this up, either in France, Germany, Japan or Australia. French and German designers have indicated that they can build 12 suitable submarines in Australia for $18-24 billion.
Grenville questions the level of self-sufficiency we can achieve. He has a point, but the situation for submarine support is far better than he implies. The majority of Collins sustainment is undertaken using Australian-supplied components, and if push comes to shove, it's easier to air freight components rather than a whole submarine. This happy situation has arisen because the Australian build of the Collins class has resulted in an extensive industry capability spread across Australia (not just South Australia). As the Senate Economics Reference Committee found after industry visits:
Based on the evidence presented to the committee and independent studies, there can be no doubt that Australia has a substantial and solid foundation on which to build a competent and highly skilled workforce for the construction of the future submarines.
Collins sustainment, much improved since ASC began managing the entire supply chain, demonstrates the breadth of Australian industries' capability – over 90% of every dollar ASC spends on Collins sustainment is spent in Australia.
Professor Goran Roos has argued eloquently for the overwhelming economic justification for building the submarine in Australia: 'Sending $20 billion overseas for an off-shore build would remove $20 billion from the economy. In contrast, investing the same amount on-shore would deliver a multi-billion dollar return in terms of innovation, exports and employment.' When the multiplier and spillover effects Professor Roos cites are taken into account, it will cost Australia more to build overseas.
There are a number of studies to support this conclusion and there is a strong case for building the future frigates and submarines in Australia. The time for a decision is rapidly approaching; indeed we may be too late to avoid incurring the additional expense and a consequent capability gap of extending the life of Collins.
Enough studies – it is time for a decision!
Photo of a US Virginia class submarine under construction courtesy of Flickr user Marlon Doss.