CANCEL THE $220 BILLION SUBS CONTRACT

It is currently estimated that the Future Attack Submarines the government wants to buy will cost $220 billion including construction and ongoing service. We aren’t expecting to see the first one in the water until 2032 and the final one sometime in the 2040s.

They are outrageously expensive, will be obsolete by the time they hit the water and aren’t even nuclear powered. Don’t just take my word for it, almost every expert adviser and person outside the government has said they must be cancelled.

Transcript

[Chair]

As the call.

[Malcolm Roberts]

Thank you Chair, thank you all for being here today. My first, the questions are about the Attack Submarines Contract. Given that some estimates of the final cost to Australia for this Attack Submarine fleet of 12 subs may run to more than $200 billion over the life of the subs. For example, the Managing SEA 1000 document is Australia’s Attack Class Submarines, February, 2020. Why is this considered good value for money in the face of wide criticism from reputable experts on the government appointed Naval Shipbuilding Advisory Board, which included admirals and others. The board advised the government to consider terminating the contract with Builders Naval Group.

[Greg Sammut]

Greg Sammut, General Manager Submarines. Senator, the board didn’t recommend terminating the contract with Naval Group. They recommended that we make sure that we are managing our risks properly as we continue our work to get into contract with Naval Group and talked about the best alternative to a negotiated outcome when they made their recommendations. What actually occurred was, we reached a negotiated outcome with Naval Group. We entered into contract with them and as the auditor general concluded, we have established within the strategic partnering agreement. A fit for purpose strategic framework for meeting the government’s objectives for the future submarine programme.

[Malcolm Roberts]

Thank you. You raise the word risks and that report raised risks, that committee meeting. If the last sub will be delivered in the 2040s and the first delivery estimated to be in 2032, ’33, won’t these subs be obsolete by the time they’re ready for the water.

[Greg Sammut]

No Senator, they won’t be obsolete by the time they enter the water we’re designing these boats now to meet Navy’s capability requirements. Those requirements contemplate a submarine that has to operate within the timeframes of delivery. We’re also designing this submarine to have appropriate margins, such that through life new technologies as they sufficiently mature can be incorporated into the submarines to keep them regionally superior throughout their service life.

[Malcolm Roberts]

When the contract was first being considered, is it true that only eight submarines were to be built?

[Greg Sammut]

Not when the contract was being first considered I’ve said previously in Senate estimates that the competitive evaluation process that was initiated in February of 2015, which was established to pick an international partner used an assumption of eight submarines. But as we’ve also said previously to this committee, after the decision was made to commence the committee evaluation process there was a defence White Paper in which the government announced its policy to acquire 12 submarines.

[Malcolm Roberts]

What was the reason for the change? From eight to 12

[Greg Sammut]

There was a policy decision in the White Paper of 2016 to acquire 12 submarines that followed a process that was underway at that time, called a full structural review that accompanied the defence White Paper of 2016. And through that process, when options were considered for the structure of the defence force, 12 was the number that was decided by government.

[Malcolm Roberts]

The original cost quoted of around 25 billion was that for eight or 12?

[Greg Sammut]

I’m not sure what original cost you’re referring to, Senator.

[Malcolm Roberts]

I’m told that the original cost of the programme was expected to be around 25 billion.

[Greg Sammut]

I’m not sure where that information ever came from, Senator.

[Malcolm Roberts]

It was widely known that in the early stage of this project that the cost was estimated to be around 55 from memory for 12

[Greg Sammut]

I’m not aware of what you’re referring to, Senator.

[Malcolm Roberts]

What was the original cost of the programme? The very first cost when the contract was set.

[Greg Sammut]

When the contract was set, $50 billion constant, which today in outturn dollars is $88.5 billion that has not changed.

[Malcolm Roberts]

So the $200 billion that some people are estimating, reliable people.

[Greg Sammut]

I think people are endeavouring to estimate not only the acquisition costs but the through life sustainment costs, which will run out to an excessive 2080. And cost that also include I might add, not just material sustainment of the boats but expected costs of crewing, operations and fuel.

And infrastructure.

Infrastructures included in acquisition costs as well, Senator, yes.

[Malcolm Roberts]

How will these subs be cutting edge when they use technology from the 20th century?

[Greg Sammut]

What technology are you referring to, Senator?

[Malcolm Roberts]

This technology of the subs comes from the 20th century.

[Greg Sammut]

Well, Senator, I’ll assume you’re referring to the battery technology that we’re using.

[Malcolm Roberts]

I am, ’cause the next question is will these subs be using lead acid or lithium composite battery bank? That’s one of the things, but the technology generally comes from the last century.

[Greg Sammut]

We are using proven technology in these submarines to meet the capability requirements of Navy. And I think that’s what we must understand in the first instance. We’re not making compromises to meeting capability requirements, by simply choosing technologies. We are also being very mindful of the risks that attend the use of new technologies in something as complex as a submarine. So if we were to take the battery as an example, yes, the first batch of submarines will be delivered or at least the first future submarine will be delivered with a lead acid battery. We need make that decision now because if we don’t make that now the boat’s design will not be completed. And if the boat’s design isn’t completed in sufficient time we won’t be able to commence building and deliver the boat by the early 2030s. What’s important to understand is that in choosing the battery technology that we’ve chosen we are still meeting Navy’s capability of requirements when it comes to parameters such as dive endurance, range and so forth. We will continue as we are currently doing now to look at new battery technologies. Indeed we have an established and funded science and technology programme that is looking into a number of battery chemistries, including lithium ion but there are other promising technologies out there such as nickel zinc. When these are sufficiently mature, And we agree that they can be safely incorporated into the submarine to meet the Seaworthiness requirements of Navy which go to the safety of our crews at sea as well as meeting those capability requirements or indeed expanding the capability of the boat because of what advantages that new technology might bring. We will have the option to incorporate that. Because as I said earlier, we are building a submarine with margins to be able to incorporate new technology into the future.

[Malcolm Roberts]

Thank you, how easily, these questions reflect concerns of our constituents. And they’re very concerned when we look at the government debt right now and what has happened last year, they’re very concerned at the amount of money that’s going towards these subs. And they’re very concerned about the value in particular. How easy will the submarines be located by potential enemies when they’re so large and powered by obsolete diesel engines that apparently are easily heard? I’m not a submariner, but that’s what I understand.

[Greg Sammut]

One of my first response would be that diesel engines aren’t obsolete. Diesel electric submarines throughout the world use diesel engines to generate electricity, to charge batteries, to run the submarine. Again back to the capability requirements of Navy to which we are designing this submarine, it contemplates the threats and the scenarios in which the submarines will be operating. And those requirements have been established to enable the submarine to operate in the environments in which it operates remaining undetected to achieve its mission.

[Malcolm Roberts]

Given the exponential rate of increase or improvement in technology throughout life. Is there any regular or systemic review of the original assumptions?

[Greg Sammut]

We always continue to look at new technologies and what they might bring, not only to the future submarine but the existing submarine capability we have today. And that’s a good example perhaps to use that for your constituents, to understand how we continuously look at the ability to upgrade existing platforms that were produced some time ago. And if you look at any Naval vessel, it generally has a long life. And you’re right Senator, of course technology does evolve over the life of ships or submarines which are typically in service for at least 30 years in many cases. Over that timeframe we have to have the ability in Australia to be able to not only maintain the systems as they’re delivered, but to update them to deal with obsolescence that might emerge as well as upgrade them to take advantage of those new technologies so that we can maintain a capability edge or regional superiority. We do that today with the Collins class, we’re upgrading the Sonar suite in the Collins class, we’re upgrading the communication systems in the Collins class. We continue to manage any obsolescence that may arise in the Collins class because it was designed back in the 1980s. And we have to make sure that it continues to perform well. Life of type extension for the Collins class looks at these very issues where we will look at updating the diesel engines in the boat as well as the main motor and power control and distribution systems in the first instance. So what I’m saying to you is that we don’t design a vessel, deliver it and expect that that’s the way it will remain throughout its service life. It will be updated. It will be upgraded to ensure that it remains a potent and viable capability for the defence of our nation.

[Malcolm Roberts]

Thank you. And you mentioned the Collins class. So let’s go to that. Given the difficulties that have been reported about like for locating enough submariners to man the current Collins class submarines, what’s planned to identify and train enough submariners to man the Attack Class submarines, should they actually be built

[Greg Sammut]

I’ll hand that question to Chief of Navy whose his area of responsibility that falls under

[Vice Admiral Michael Noonan]

Good afternoon Senator, Vice Admiral Michael Noonan, Chief of Navy, with respect to the workforce for our submarine force, we have a growth plan which will allow us to achieve the required manpower to man 12 submarines as the Attack Class come to service.

[Malcolm Roberts]

Can you tell us any particulars about that that would give us confidence without divulging anything secret?

[Vice Admiral Michael Noonan]

The submarine force has been enduring record growth over the last five years. I currently have over 800 submariners in the trained force which is an increase of almost 50% of where we were 10 years ago. And we have a separation rate from our submarine force at the moment, which is the lowest of any other trade within the Navy. I need to achieve a growth of approximately 50 submariners a year to achieve our target for the introduction of the cones. And we are well on track.

[Malcolm Roberts]

So could you just tell me the expansion, how much it expanded? Was it 50% since when?

[Vice Admiral Michael Noonan]

50% in the last 10 years.

[Malcolm Roberts]

10 years. Could we man all of the Collins class submarines 10 years ago?

[Vice Admiral Michael Noonan]

No, we could not.

[Malcolm Roberts]

My final three questions Chair. They’re brief ones, they’re to the minister because they’re matters of policy or opinion. Given minister that the prime minister has just said that the submarine contract will go ahead is this to win votes because of Australian-built content?

[Minister]

Absolutely not, Senator Roberts, as you know and as I think Mr. Sammut has indicated and has been discussed in this committee for some time both during my previous tenure and since. The Australian government and the Australian Defence Organisation, both the ADF and the Defence Organisation itself regard submarines as a vital element of our defence strategy essential to protecting those interests. And we will continue to stand behind the commitment that we have made the partnership that we are invested in and engaging in. We have, as you have noted in passing a very strong policy approach about maximising the Australian industry content, about building submarines here in Australia with Australian steel, with Australian workers. But that aside, Senator, we regard this as a vital element of our strategic approach.

[Malcolm Roberts]

Has the government given… I’ll leave that question. Can Australia afford this in the light of the COVID 19 restrictions from state and federal governments, that recovery will now take enormous effort from our country? Can we still afford it?

[Chair]

How many last questions do you have, Senator Roberts?

[Malcolm Roberts]

One.

[Minister]

Senator, my response to you would be how can we not afford to do it? We must do it in the interests of the factors I put forward to you in response to your previous question and in the context of a COVID-19 recovery, the the impact of the work that we are doing in defence industry and particularly in Naval ship building is absolutely vital in the Australian economy. So I would absolutely respond to you in the affirmative to say we can afford it and we will afford it.

[Malcolm Roberts]

So given the risks with technology increasing and improving so much outside the area, as well as inside the area, given that and the cost, and the changing circumstances in Australia isn’t it time to face reality and cancel these particular submarines?

[Minister]

Senator, I don’t agree. And I think Mr. Sammut has done an excellent job of setting out the reasons why including at a highly technical level.

[Malcolm Roberts]

Thank you. Thank you, Chair.