On Wednesday, the Commonwealth unveiled the AUKUS Submarine Industry Strategy, an extensive initiative with the aim of bolstering the nation’s defence capabilities whilst revolutionising its industrial landscape.
The strategy details an ambitious plan to develop a conventionally-armed, nuclear-powered submarine fleet.
The strategy is a blueprint for how Australia intends to not only acquire but also to build, sustain, and operate a fleet of nuclear-powered submarines, a class of submarine unfamiliar to Australian waters.
As announced in March 2023, Australia is set to receive at minimum three Virginia-class nuclear-powered submarines from the United States with delivery expected in under a decade, with an option to acquire two more. An important stopgap, this purchasing agreement allows for Australia to acquire nuclear submarines, as soon as possible, bridging the gap between the aging Collins-class submarines and the domestically built SSN-AUKUS, theoretically circumventing any gaps in capabilities as Beijing continues to assert itself in the Pacific.
The report notes that AUKUS will create approximately 20,000 jobs and inject $30 billion into the Australian economy over the next 30 years. The strategy also looks to establish a sovereign submarine industrial base that will allow Australia to maintain its naval fleet whilst integrating into supply chains within the United States and the United Kingdom.
The development of nuclear-powered submarines is not merely an ambitious naval endeavour; it is a colossal task. Australia’s defence industry must expand quite dramatically and swiftly in order to accommodate the logistical and technological hurdles of nuclear propulsion, a capability that no other Australian industry has previously handled.
The strategy identifies five lines of effort to drive industrial uplift:
- Creating demand clarity: providing Australian companies clear signals and communication about the needs and requirements of the submarine program.
- Increasing investment attractiveness: offering financial incentives and regulatory support to encourage participation and foster engagement with the private sector.
- Simplifying industrial regulation: cutting bureaucratic red tape in order to facilitate a smooth, simplified entry into the national defence supply chains.
- Growing the workforce: the launching of a wide range of new training programs and apprenticeships in order to equip and develop a labour force that is skilled enough to handle submarine maintenance and construction.
- Embedding nuclear stewardship, safety, and security: emphasising Australia’s commitment to nuclear safety and security whilst reassuring stakeholders and the general public that Australia will uphold the highest standards of environmental responsibility while managing nuclear materials and waste safely.
Further reinforcing these efforts is the goal of integrating stakeholders in Australia’s defence industry into AUKUS supply chains. The Commonwealth says it will support Australian companies competing for contracts in the UK and the US defence markets.
One of the largest elements of the strategy includes the transformation of Australia’s two principal shipyards: Osborne in South Australia and Henderson in Western Australia. The goal is to transform these shipyards into state-of-the-art facilities capable of handling the construction and sustainment of nuclear-powered submarines.
Despite optimism and ambition from the federal government and defence sector, industry insiders have warned that the construction of sovereign submarine capabilities from scratch presents a formidable challenge. Reinforcing these concerns is the fact that Australia’s most recent attempt at domestic shipbuilding, in the Collins-class submarine program, came across difficulties in maintenance delays and was plagued by budget overruns. The federal government is insistent however that it has learnt from the pitfalls in the Collins-class program, allowing for course correction in the future.
Further, concerns have been voiced around Pillar 1 of the AUKUS agreement which involves the acquisition of Virginia-class submarines from the United States. The are fears that these nuclear-powered subs that the Commonwealth have already began payments for, may never arrive due to growing strain on US submarine production. The United States is already currently lagging in their submarine production schedule, with some forecasts projecting that it will only have half of the required working submarines, with shipbuilding speeds also currently lacklustre, running at half the rate it needs to. This raises doubts about whether the United States can realistically supply Australia with the agreed nuclear powered vessels without falling even further behind its own strategic timeline.
In a report penned by the US Congressional Research Service, an alternative was proposed, “up to eight additional Virginia-class SSNs would be built, and instead of three to five of them being sold to Australia, these additional boats would instead be retained in U.S. Navy service and operated out of Australia along with the five U.S. and UK SSNs that are already planned to be operated out of Australia under Pillar 1.” With the United States Navy looking to prioritise its own fleet readiness amidst rising geopolitical tensions, the Commonwealth risks facing the same prolonged delays as the Collins-class program, casting some uncertainty over the long-term viability of AUKUS.