Finding the money for submarines is squeezing the Australian Defence Force
Deputy Prime Minister and Minister for Defence, the Hon. Richard Marles MP and the National Defence Strategy Announcement. Defence images

Deputy Prime Minister and Minister for Defence, the Hon. Richard Marles MP and the National Defence Strategy Announcement. Defence images

Written by

Marcus Hellyer

Deputy Prime Minister Richard Marles unleashed a blizzard of numbers yesterday when he launched the Albanese government’s first National Defence Strategy and the first public version of the Department of Defence’s acquisition plan in four years. Those numbers included some big statements in the speech about increased spending. Since we are talking about tens and hundreds of billions of public funds, it’s worth unpacking the claims to see what it all means.

It’s worth noting that that the Government continues to have trouble calling out what is driving this spending. Marles’ speech adhered to the line set out in last year’s Defence Strategic Review that Australia is facing its most challenging strategic environment since the Second World War. In fact, Marles’ noted that the NDS says that our strategic environment has deteriorated even further since then.
However, Marles and the NDS both continue to use the strangely bloodless tone that has characterised this government’s depiction of China’s behaviour. Apparently we are witnessing strategic competition between the United States and China, suggesting we are merely somewhat interested observers in a robust sporting match between the regional heavyweights. Other than that, China was virtually absent from Marles’ speech.

But that absence is belied by the government’s commitment to AUKUS and its multi-hundred-billion dollar nuclear submarine program, which aims at nothing else that deterring China from reshaping the regional order by force to become its hegemon. If the Government isn’t going to call a spade a spade, it’s hard for the public to understand why this money is needed.

Related to this, there is still the marked discrepancy between the pace of deterioration in our strategic environment in Marles words and the shape of the funding set out in these new strategic documents. There is an additional $50.3 billion going to Defence over the coming decade—that’s on top of the growth trajectory that was already built into Defence’s funding model. But the next four years gets barely one-tenth of that: $5.7 billion or a 2.4% increase on what was previously. Granted that’s $5.7 billion more than previously planned, but if we are in an age of uncertainty, where we will have no warning of major conflict involving us (as both the previous and current government has stated), it would be preferable to see the funding front loaded to deliver enhancements to capability in the short term. Moreover, that 2.4% likely won’t even cover the loss to Defence’s buying power caused by inflation in the post-Covid era.

Overall the Government has largely stuck to the previous plan. Along with nuclear-powered submarines, the big-ticket items in the program are things announced by the previous government like long-range strike missiles and local production of guided weapons. The one big new thing are the 11 general purpose frigates that were an outcome of the surface fleet review released earlier this year by the Government. The $11 billion required over the decade for those frigates is part of the additional $50.3 billion.

Importantly, the Government has set out a way to pay for the nuclear-powered submarines, at least in the next decade. The program they inherited from the previous government included the submarines, but not the funding needed to pay for them. But covering the additional cost of the nuclear-powered submarines is going to consume the bulk of the new $50.3 billion announced by Marles—that single program alone is going to cost $53-63 billion over the coming decade.

For those who have been urging Defence to get serious about autonomous systems, it appears that it is learning from the war in Ukraine. There’s now billions programmed in the coming decade for autonomous air systems and uncrewed maritime systems.
Bu the main narrative here is that submarines are starting to distort the overall program. Even with the additional funding, other capabilities have needed to be cut in order to deliver an affordable program that includes the submarines. That can deliver some strange outcomes. The Defence Strategic Review already cut the army’s armoured vehicles and a fourth squadron of F-35A Joint Strike Fighters.

Now it looks like medium-range ground-based air defence and ballistic missile defence are gone—that’s an interesting call as we watch Ukraine and Israel defend themselves against barrages of missiles. While the Government is increasing the size of the surface fleet, it’s cancelling two planned replenishment ships, so it’s hard to see how the new frigates will remain at sea for long. And since the public documents only give a high-level view of the investment program, there are no doubt many more projects below the surface that have been delayed, reduced or cancelled.

The Government has justified these cuts by saying it is transforming the Defence Force from a ‘balanced force’ to a ‘focused force’. But observers of the cost of the Royal Navy’s nuclear submarine program have quipped that you can have nuclear submarines or you can have a navy. We are starting to see how those hard choices play out in our own defence force.

This article appeared in the Australian newspaper on 19 April 2024