Here comes that sinkin’ feeling again

In all the fuss over the nuclear submarine deal announced in mid-March, observers seem to have overlooked a basic point – that the deal involves building nuclear submarines from scratch in Adelaide.

Never mind the city’s long history of cost overruns, budget blowouts and required rework in naval contracts, or that the region lacks anything like the skills base required for such an endeavour, it is decided that Adelaide will build these complex vessels as part of the $368 billion program.

Instead of a grandiose vision of a thriving naval industry, anyone who remembers the long history of problems getting the Collins-class submarines into their current state of reasonable combat effectiveness, not to mention problems with almost every other naval construction project that through this country, the latest announcement conjures up visions of financial and possibly military disaster, albeit a few years in the future.

As announced, the federal government intends to fill a military readiness gap by purchasing between three and five used (or new) Virginia-class submarines, starting in 2032 or 2033 to be delivered three years apart. In the 2040s, or so it is hoped, the first of these nuclear submarines SSN-AUKUS, designed by the British as the successor to the Smart class submarines and equipped with adaptations of American combat systems and weapons, will begin to slip down Adelaide.

The first part of the transaction in the purchase proves, if used submarines ready to operate from day one shows some sense. The vessels will continue to be powerful weapons platforms and help train a new generation of Australian nuclear submarines. Even the Aukus part of the deal at least avoids the worst pitfalls of the Collins-class saga, and that of the $90 billion deal between Australia and French shipbuilder Naval Group that sank with all hands in early 2021.

The Collins-class submarines, the last of which was built in 2003, are an enlarged version of a design by the Swedish shipbuilder Kockums to which a combat data system from the American company Rockwell would be added. The modifications, different combat systems, insistence on large local content quotas and construction in Adelaide caused endless problems. After repeated refits, the Collins class can now hold its own against other navies, but the saga was an expensive ordeal that few governments would be willing to repeat.

Except the Malcolm Turnbull government just wanted to do it and add some new bugs. As noted by this publication (‘Collins class again’, 6 March 2021), the French deal announced in 2016 was to build a conventional version of the nuclear-powered Suffren-class submarines operated by the French Navy.

Scott Morrison torpedoed the French deal in 2021 and greatly simplified the choice of vessels for the navy by declaring that the next generation of submarines would be nuclear. Despite the often hysterical local opposition to nuclear power in all its forms, this declaration caused surprisingly few problems, with the Labor opposition led by Anthony Albanese declaring its support.

Now Prime Minister Albanese has taken the next step to identify the submarine to be built, but the politically motivated choice to require much of the work in Adelaide shows that some lessons are too hard to learn.

That decision means the project managers must find and train more than 5,000 workers and build a massive facility, at an initial cost of $5 billion, all within the next decade to begin building these vessels. At least the project avoids a host of major problems in that the vessels will be mature designs with the US combat systems and weapons already integrated (unlike the Collins class). The first vessels in the class will also have already been built by UK yards by the time the Australian facility comes into gear.

In other words, the site and facility to be built at Osborne in South Australia will follow assembly instructions, while hopefully sourcing more of the components locally, and potentially be able to call on British expertise when needed.

However, building a nuclear submarine, even from an established blueprint, will not be easy, especially as there is a very thin local skill base to build on.

The Australian Submarine Corporation, which built the Collins-class submarines, retains some expertise to service and maintain the six submarines, and to significantly refit the vessels, starting in 2026, so that they are in good service into the 2040s will deliver.

Preliminary work done by the French Naval Group has also led to several hundred workers who can be used in the new project (they are now working on other naval contracts). South Australia, and Australia in general, has some innovative niche manufacturing and software companies, but it still doesn’t add up to much.

As was widely reported in 2020, the French group was surprised by the lack of expertise and manufacturing capacity available in Australia.

Given these problems, a reasonable compromise for the British shipyards might have been to build the vessels to the point where they could be sailed to Adelaide under their own power. Once in Adelaide, the vessels can be fitted with the weapons and combat systems, which can be difficult enough to get right.

However, no one wants a reasonable compromise, with Prime Minister Albanese alarmingly comparing the subs deal to the creation of the car industry in Australia after WWII. That industry survived for many years by making the Australian consumer pay more than 50 per cent more for cars than they would have otherwise through a system of tariffs, part of a comprehensive system of industrial protection.

When that system was finally dismantled by a succession of governments from the mid-1980s, the car manufacturing industry, much of which was based in Adelaide, went out of business. Cars have gotten much cheaper, and the economy doesn’t seem to have been affected.

This time a Labor government is about to repeat the mistake of having an industrial ‘vision’ in an area where Australia has a proven record of waste and inefficiency. A prime example of this is the endless problems with British shipbuilder BAE Systems’ $45 billion contract to build nine Hunter-class frigates in Adelaide near the planned submarine shipyard. Construction was due to start in 2022 but may not now start in 2024, with problems including arguments over the details of the layout of the taxpayer-funded shipyard.

As things stand, the main use of the nuclear submarine project may be to torpedo tax dollars.