IT IS not often that a government has the chance to save around $40 billion by buying the best available product rather than trying to design and build what will almost certainly be an inferior version. Yet Julia Gillard’s government seems determined to press ahead with the immensely complex task of designing and building twelve huge submarines at a likely cost of over $40 billion to replace six trouble-plagued, Australian-designed Collins class subs. Never mind that a high-quality submarine fleet can be bought from overseas for under $3 billion – less than it will cost to try to keep two decrepit Collins class boats operationally available until the future subs are due to arrive in 2025. Despite the political and fiscal damage it is inviting down the track, Cabinet seems unwilling to pull the plug on the project initiated by Gillard’s predecessor, Kevin Rudd.
Rather than wait forever for Defence to offer to scrap the project, Cabinet should ask the Productivity Commission’s Gary Banks for an independent report. In a wide-ranging speech at a conference in Melbourne last week, Banks queried the case for locally designed and built submarines “when imported alternatives could be purchased for a fraction of the cost and risk.” He went on: “The justifications sometimes offered for ‘build rather than buy’ policies – skilled job creation or technological spillovers – even if they had some merit in the past, have little credibility today, given the pressing need for such skills in mining and associated industrial activities.” A lot has changed since the 1980s when Bob Hawke’s defence minister, Kim Beazley, chose to build the Collins at Port Adelaide in the electorate of his close Labor colleague Mick Young. Owing to the resources boom, there are now severe skills shortages in areas crucial to submarine construction, including welding, integrating electronic systems and project management.
On the same day that Banks spoke, the chair of the Defence SA Advisory Board, retired general Peter Cosgrove, told the Australian that buying “cheaper” off-the-shelf naval vessels from overseas would compromise Australia’s ability to maintain and upgrade its ships. But Australia already maintains advanced weapons systems without having to design and build them. No Australian government would dream of trying to design and build its own jet fighters – an easier task than designing and building a submarine. Yet the air force is happy to rely on Australian industry to maintain the high performance fighters and other planes it buys from overseas.
Cosgrove really pushed his luck as a lobbyist when he claimed that Australia had a good record of building naval vessels and could “build ships as cost-effectively as other shipbuilding nations.” In February, an understandably frustrated defence minister, Stephen Smith, scrapped six locally designed and built landing craft that were never cleared for service, despite being delivered in 2005. According to Smith, they were too big to fit into their designated space on board larger transport ships and too heavy for the ships’ cranes to lift.
Perhaps Cosgrove should have a look at the record of one of his defence advisory board’s favourite shipbuilders, the Australian Submarine Corporation. The Howard government nationalised the ASC following the difficulties it experienced in building and maintaining the Collins at Port Adelaide. Nevertheless, it is now the lead contractor to build the navy’s three large air warfare destroyers using a Spanish design. Welding and other bungles by one of the sub-contractors have delayed the project by two years and blown out its $8 billion budget.
ASC is by no means to blame for all the problems with the Collins. Although the United States doesn’t operate conventionally powered submarines, Beazley chose an unproven US combat control system instead of an established European version. The US system was a complete dud and $1 billion was spent to replace it – unfortunately with another difficult US design. Design problems have also added greatly to maintenance costs. The failure of Australian-built generators (but not those built in France) is an unhappy example. The hatch on a Collins is one metre across but the generators are 1.093 metres, which means they have to be taken apart so they can be removed for major repairs. A senior defence official, Kim Gillis, told a Senate committee that it would take two to three weeks to remove a generator from a normal ship, fix it and put it back, but it takes twenty-three to twenty-five weeks for the Collins.
Submarines are never cheap to maintain, but the six Collins class boats are exceptionally expensive. They can be out of the water for four or more years at a time. Usually, no more than two are operationally available at any one time – and sometimes none. The annual maintenance bill is now close to $400 million and rising, and the subs will have to be cut in half to replace the faulty diesel engines. Yet Defence not only plans to keep some of the boats going until 2025, it wants to undertake costly upgrades. There are good defence preparedness and cost grounds for replacing the Collins now and abandoning the folly of trying to design and build an even bigger version.
FORTUNATELY, options exist that would give our submariners much better, more reliable submarines at a lower cost. All are smaller than the Collins, let alone its proposed replacement in 2025, but big is not always better with submarines.
The Collins displaces 3050 tonnes. According to Defence sources, the preferred new sub – dubbed the Son of Collins on Steroids – is expected to displace 4500 to 5000 tonnes. The main alternatives are three medium-sized boats – the Swedish A-26, the German Type 214, and the Spanish S-80 – which range from 1600 tonnes to just over 2400 tonnes. Unlike the Collins, all three make use of air independent propulsion systems, such as the fuel cells, to achieve a much lower noise signature in an operational zone than if diesel engines are used to recharge the batteries. Because the Swedish and Spanish boats are new designs that won’t be proven for several years, the 1700-tonne Type 214 offers the best chance in the near future to improve Australia's submarine capability (and save money) by replacing the Collins.
The Australian Strategic Policy Institute’s Andrew Davies and a former submariner, Sean Costello, estimated in 2009 that the cost in 2020 for twelve new Australian-designed submarines of 4000 tonnes (less than Defence’s preferred size) would be $36.5 billion, compared to $8.8 billion to build twelve upgraded Type 214 submarines in Australia. These figures were in 2009 dollars and used an exchange rate of 70 US cents per Australian dollar, compared to 107 cents today. The calculations also made the optimistic assumption that local construction only adds 30 per cent to costs. A more up-to-date estimate for designing and building a 4500–5000 tonne submarine locally would probably be over $40 billion, compared to well under $5 billion to import twelve Type 214s.
Australia does not need twelve subs unless there is a severe decline in its favourable strategic outlook. Six is enough, particularly as the navy has had trouble crewing more than two. In a recent paper, Dangerous Luxuries, US army officer Colonel John Angevine concludes that Australia’s 2009 defence white paper (which recommended the twelve big subs) wrongly focused on procuring “high end” weapons systems to deal with an implausible threat from China. Angevine says the more likely requirements are for humanitarian and other operations at the lower levels of the military continuum. The assessment of Australia’s intelligence agencies is that the country would have many years’ notice of a serious military threat emerging, thus allowing time for more subs to be acquired.
Six new 214s could be imported for well under $2.5 billion. Buying near-new 214s from Greece and Portugal would be even cheaper. Either way would cost less than struggling to keep a couple of Collins barely operational. The 214 would also give Australian submariners a chance to work with the most advanced conventional subs available and let our anti-submarine forces train against a much tougher target than the Collins.
The Collins has a crew of forty-five compared to twenty-seven for the Type 214, which was designed by HDW, a German company that employs 850 design engineers. HDW has sold 156 submarines since 1960. Six navies have purchased a version of the 214 that has a reputation as a reliable, highly capable submarine. The 214 matches the Collins’s endurance of around forty days and its range of 19,000 kilometres, but is quieter and dives deeper.
Rex Patrick, a former submariner with experience on the Oberon, Collins, Type 214 and other conventional subs, as well as the Los Angeles nuclear class, has written extensively online about the merits of medium sized submarines. Now an undersea warfare trainer in Australia and overseas, Patrick says the enormous cost differential between a modern off-the shelf submarine and the proposal for a unique Australian designed one cannot be justified on the basis of capability difference. “If any of a number of the multitude of risks inherent in a grand plan of this scale were to materialise during project implementation,” he says, “the impact on Australia’s submarine capability, already in a perilous state, would be catastrophic and the impact on national security would be unprecedented”. He describes the sustainment costs for the Collins as “obscene” compared to its lack of availability.
THE GOVERNMENT is yet to make a final decision on a replacement for the Collins, other than saying that it must be built in Adelaide. If Rudd’s proposal proceeds, Australia will have the world’s largest modern conventional submarine. But smaller subs are harder to detect, more manoeuvrable and able to operate in shallower waters. This helps make them devastatingly effective at their primary role of “sea denial” – deterring hostile ships from approaching Australia and, if deterrence fails, sinking them with torpedoes and missiles. The greater stealth of small to medium sized subs usually means that they are also better at gathering intelligence, and at least as capable overall of laying mines and putting special forces ashore.
Relatively small subs also have an impressive record of “sinking” powerful surface ships during exercises. South Korea is building the Type 214 to replace its earlier version, the Type 209. Although smaller than the more capable 214, the 209 has been an outstanding participant in the biannual US-led naval exercises off Hawaii, RIMPAC. In the 2004 exercise a single 209 sank all the “enemy” surface ships, including the US navy’s most advanced nuclear aircraft carrier, the John C. Stennis, which was surrounded by a destroyer screen. The 209 survived the two-week exercise undetected and without mechanical troubles. Unfortunately for those who want to keep the Collins in service until 2025, for the first time in over thirty years Australia did not send a submarine to last year’s exercise. None were operational.
The US navy has responded to the threat from smaller subs by leasing two of the Swedish Gotland class to help train its carrier battle groups based at San Diego. The US training also recognises that two relatively small, low-cost subs can greatly complicate the defensive task of big surface ships by lurking in two different locations within the target zone.
A large replacement for the Collins might have slightly greater endurance, but at a much higher cost. Patrick says a larger-hulled submarine can have greater fuel storage capacity but also requires more energy to propel it through the water. This in turn creates a need for larger diesels, larger batteries, larger main motors, more auxiliary equipment, more personnel and greater stowage capacity. He says the laws of diminishing returns soon kick in. Because the Type 214 matches the lengthy endurance requirements the navy set for the Collins, its smaller size should not be a serious issue, particularly as Australian submarines are regularly replenished in ports to our north. If desired, a long-range submarine tender could provide additional support.
Submarines are useful. But so are other military capabilities that don’t cost $40 billion. Subs have a limited intelligence-gathering ability whereas sensors on cheaper planes and satellites can cover a wider range of requirements. Subs have no role in Afghanistan; closer to home, they are no use for peacekeeping or disaster relief in the South Pacific.
Unlike the Collins, the large replacement submarines that Rudd’s 2009 white paper recommended would carry 2500 kilometre–range US Tomahawk cruise missiles for attacking land targets. Smaller hulled submarines can also carry land strike missiles, although none at present have the Tomahawk’s range. But it makes no sense to spend $40 billion to fire a relatively small warhead onto a target that could be hit by planes operating with much greater speed, flexibility, frequency and firepower. Slow-moving submarines costing over $3 billion each don’t offer more value in this role than a $200 million advanced fighter capable of destroying targets that are thousands of kilometres apart within a twenty-four hour period. Often, pilotless planes would be even more cost-effective.
The 2009 white paper envisaged that the huge size and cost of its proposed submarines could mainly be justified by their ability to mount a unilateral cruise missile attack on mainland China during a conflict in which Australia had no help from its allies. Once the submarine had fired its missiles, however, it would have to make the long journey back to Australia to reload and return for another go the following month. Although far more Western air power has been pounding Libya’s skimpy defences for four months, that government has not surrendered. China is not Libya. It could retaliate savagely on the military and trade fronts.
While the thinking behind the white paper contemplated Australian submarines “tearing a limb off an Asian giant,” ultimately China could only be persuaded to surrender by an invasion in which land forces marched against millions of patriotic Chinese defenders until Beijing was occupied. Australian invaders would be chewed up in a horrific human mincing machine long before they reached Beijing. The Son of Collins on Steroids is part of a dangerous Rudd fantasy. His successor should escape without further delay. •