This post firs appeared in the newsletter of the Australian Sensible Centre.
The contract signed by the Australian government to purchase 12 Attack-class submarines from the French Naval Group should never have been signed. It was brought to us by the same people who gave us 20 years of wasted effort in Afghanistan and a shiny new trillion dollar debt.
The Morrison government has tried to hide the cancellation of the contract behind the latest twist in the longstanding habit of our political class of grovelling to military powers in the northern hemisphere. Facing declining popularity at home, President Biden and Prime Ministers Johnson and Morrison hope an announcement of a new military pact against China – AUKUS – will erase the memory of American and NATO humiliation in Kabul.
The pact guarantees one thing – should the United States find itself in military conflict with China, it will drag Australia down with it in a re-run of Vietnam, Iraq and Afghanistan.
The submarine contract was initially valued at $55bn and is now reported to have blown out to more than $100bn. The cost even at $55bn was twice the amount per vessel than we should have committed to.
The break-in-contract fees are reported to be $14m if a basic design has been completed, $404m if a detailed design has been completed, and $355m per vessel after delivery of the first submarine. The federal government has now decided to cut its losses and get out. It should sack the people responsible for this latest in a long line of disastrously wasteful and strategically inept defence procurements, but of course, it won’t.
The failure of successive Australian governments to develop a clear strategic objective and purpose for our defence acquisitions has led to a deeply irresponsible culture of ‘vote-buying’ using defence procurements. This gave us the exorbitant cost of the 12 Attack-class submarines, since their primary purpose was to allow South Australian politicians, principally Christopher Pyne, to promise jobs in South Australia.
International evidence tells us that the benefits of defence procurements for domestic job-creation and economic development are vastly over-stated. Australia is better served by ‘off-the-shelf’ purchases from other countries to contain acquisition costs.
The enormous wastage in defence spending under successive Australian governments has been hidden from public scrutiny by the Byzantine complexity of internal defence decision-making processes and the phenomenon of ‘provider capture’ in defence spending, where decisions made about billion dollar purchases are driven by internal departmental dynamics, force prestige and industry vested interests, rather than by rigorous and open public debate. Full financial details of the 12 Attack-class submarines contracts are still withheld from public disclosure.
A number of procurement programs in addition to the ‘Asset-class’ submarines should also be cancelled because they do not fit our strategic objective of maritime denial, such as the $35 billion SEA 5000 Hunter Class vessels. Others which are no longer fit for purpose, including the Canberra Class vessels, should be sold off.
Our policy for the self-reliant defence of Australia will require an overall increase in defence spending from the current 2 to 3.5 per cent of GDP, an increase from $40bn to $70bn annually. Read our policy in full: www.sensiblecentre.org.au/defence-policies
