I thank the committee and secretariat for their ongoing work in this inquiry.
I also thank all contributors to this inquiry with the exception of senior leadership, who have both frustrated this committee (see Chapter 3 of the report) and misled the Senate in relation to the Naval Shipbuilding program. Responsibility for this rests squarely with the Secretary of the Defence Department, Mr Greg Moriarty, who has shown poor leadership and dishonour in the conduct of his role. He should have been moved on by the Prime Minister when Senator Reynolds was given the flick as Defence Minister.
This second interim report focusses on the future submarine project. It’s a mess: an expensive financial mess and a national security mess. The Government purports to be strong on defence on the basis of its planning and the scale of its expenditure, but shows great weakness in implementation and delivery. The Australian people should recognise that the Government has left Australia vulnerable. This is a story of national security failure.
Whilst the report focusses on submarines, I will go briefly to Future Frigates, particularly noting the Future Frigate Engineering Team Assessment that was recently leaked to the media.
Submarines
Back in July 2021 the ABC reported that two Chinese warships were off the Queensland coast observing the Australian-US military exercise Talisman Sabre.
“We fully expected a ship of this class to arrive in our region during the exercise and have planned for its presence, as we do for every iteration," said Defence Minister Dutton. "The presence of similar vessels did not detract from Talisman Sabre 2017 or Talisman Sabre 2019, and we are confident that it will not impede this year".
The fact that a potential naval adversary was monitoring these exercises is of no great surprise. This is what navies do in peace time. It’s what the US Navy does on a daily basis all around the world and what the Royal Australian Navy does on occasion too.
The significant point is not that the Peoples Liberation Army-Navy (PLAN) is collecting intelligence, it’s that fact that they are able to deploy a vessel, and now multiple vessels, at long range for an extended periods of time. The significant point is that the PLAN-Navy has matured and grown in capability such that they are now able to regularly deploy to Australian waters.
They did so again last month, only this time ‘illuminated’ a Royal Australian Air Force P-8 surveillance aircraft with a laser.
Contrast their progress with our progress, particularly in relation to the future submarine.
Australia’s future submarine project was announced in the 2009 Defence White Paper. It advised that future strategic circumstance would require our submarine force being expanded from 6 to 12 submarines. Those future strategic circumstances, which included a rising China, meant that our submarines needed to have greater range and longer endurance on patrol compared to the Collins Class submarines. Construction of the first submarine was to begin in 2016.
Since 2009 we have spent almost $3 billion dollars on our future submarines. After the cancellation of the Attack Class submarines we have now commenced consideration of the possible procurement of nuclear powered submarines. An initial study is to be completed in 2023. It is estimated that a first nuclear powered submarine would not be delivered until 2040. Entry into service would follow two or three years after that. That has left Defence with no choice but to commit to a multi-billion Life of Type extension of our 30 year old Collins Class submarines, something that does not come without its own risks either.
On 28 October 2020 the following exchange took place between myself and the then Secretary of Foreign Affairs and Trade, at Foreign Affairs, Defence and Trade Senate Estimates:
Senator PATRICK: Following from that, Secretary, is there a risk of another Taiwan Strait crisis in the near or medium future?
Ms Adamson: We would always hope, including through the words that we use and the relationships that we have, obviously both in Beijing and unofficially, as Ms Lawson said, in Taipei, to ensure through our own diplomacy and that of a wide range of partners that we don't get to that point. It is certainly something I would be more concerned about this year than a year ago or possibly in fact at any time over the last 3 [and] 1⁄2 decades that I've worked on this subject, if you like. [my emphasis]
The Department’s concerns about China were reinforced in the February 2022 Additional Estimates hearing when I asked an official what the situation was like between China and Taiwan since Ms Adamson’s October 2020 Estimates appearance. The answer went:
Mr Hayhurts: … It was serious then, it remains serious and were watching it with concern.
We are in a tinderbox situation with Chinese and Taiwan. Meanwhile, the PLAN are already operating in the Indian Ocean, the Arafura Sea and the Pacific Ocean. Prime Minister Morrison’s national security response is to propose a nuclear submarine option for delivery well after it is realistically needed.
Prime Minister Morrison’s proposed nuclear submarine may only have relevance to the regional unrest we’re seeing if it is fitted with a time machine. The government has left Australia vulnerable. The Navy cannot deter, nor fight, a future conflict with a marketing announcement from the Prime Minister.
Recommendation
The government should immediately move to procure at least six military-off-the-shelf conventional submarines, to be built in Adelaide with workers left idle from the schedule failures on the submarine and future frigate programs. Australian industry should be engaged, post build, to enhance the proven design in a controlled and managed manner.
Rapid construction of an established design should be prioritised.
This recommendation should be implemented to deal with an immediate Defence vulnerability, as a fallback for the AUKUS program and Collins Life of Type Extension and as a negator for the need to conduct a Life of Type Extension on all Collins Class submarines.
Any future procurement of nuclear-powered submarines should be secondary to the timely acquisition of new conventionally powered submarines.
To adapt an old saying, a conventional bird in the hand is worth more than a nuclear one in the bush.
Future Frigates
The Hunter Class Frigate project is unquestionably in deep trouble. It has many of the same hallmark problems the Attack Class submarine program was experiencing. Now it has lost it’s one big advantage, to hide in the shadows of the Attack class program debacle.
Paragraph 3.1.1 of the Future Frigate tender laid out the Future Frigate project objective. It started as follows:
The Commonwealth is seeing the delivery of nine Ships that are based on a Military-Off-The-Shelf design with Minimal Change to reflect the Commonwealth’s requirements and that is capable of evolving over time to respond to the Commonwealth’s changing capability requirements and to manage materiel obsolescence.
Against that criterial, the Type 26 should never had been a candidate for selection.
Many in Australia accepted the selection of the Type 26 as the basis for the Hunter Class because it was the least mature, and in the context of establishing a Naval Shipbuilding Enterprise gave Australian industry the best chance of being incorporated into the design and subsequently supplying into a program that would supply eight ships to the UK, nine ships to Australia and possibly eight to ships Canada. For a nation building an enterprise, the additional risk could be warranted. This acceptance has since proven to be ill founded. Australian industry has been left waiting, whilst BAE Systems used the project “to develop its own supply chain” for the Type 26/Hunter Class.
The recent leaking of the Future Frigate Engineering Team Assessment has revealed, in the face of a cover-up by Defence, a program that is not just in trouble in relation to Australia Industry participation, but also in terms of warfighting capability.
Weight problems, range and endurance issues, noise problems, power margin problems—just to name a few. This must raise alarm. This is a program with very serious problems that will take much time and additional expenditure to fix, if indeed they can be fixed.
Recommendation
The Joint Select Committee proposed in the Committee’s recommendation should be expanded in remit to cover Naval Shipbuilding more generally and be tasked to take a deep dive into the Hunter Class Program.
Naval Shipbuilding Enterprise
Finally, I wish to comment on the current state of the Naval Shipbuilding Enterprise.
A serious concern is that the submarine project was a major component, in fact the largest, of what was supposed to be an overarching program to establish an ongoing Naval Shipbuilding Enterprise.
For some time, I’ve held concern that the overarching program to establish the enterprise was taking a backseat to the three sub-ordinate projects. The cancellation of the Attack Class submarine project, with no strategy to address the impact on or mitigation strategy for building Naval Shipbuilding Enterprise provides confirmation of my concerns.
Unfortunately, there are many other supporting elements for my concerns:
The delays we are already seeing in commencing construction of the Hunter Class frigate, associated with what are clearly significant design issues.
The decision to procure the Humanitarian Aid and Disaster Relief (HADR) ship from overseas rather than look to accelerate an onshore build.
Defence not pursuing a new build submarine program, to provide some additional interim capability, but specifically to help get construction of the enterprise underway and develop the skill and experience in the workforce.
Navy framing an argument that operating two classes of submarine whilst transitioning to a nuclear submarine was not viable, seems extremely short sighted and should have been a task for the nuclear submarine task force to consider.
The bottom line is that the Naval Shipbuilding Enterprise is in deep trouble and as it stands, the current team seems incapable or unwilling to acknowledge this and do something to fix it.
When Industry was recognised as a Fundamental Input to Capability (FIC) many considered it to be a major step forward, one that would reshape defences approach to Australian industry. Sadly, this has not been the step forward that many expected or hoped for.
In contrast, the United Kingdom has learnt what it means to identify a capability as a sovereign capability and understands the obligations that come with it and the dangers if you let those obligations slip. The issues they experienced in relation to the Astute Class submarine, which they sought assistance from the United States to resolve, were a consequence of having lost skills and experience due to program delays. This decision to build a complete additional submarine to preserve the skills and experience going into the Dreadnought Program are an example of understanding what a sovereign capability, and the commitment to it, requires.
Many in government – Ministers, Departmental Secretaries, Defence Chiefs and senior personnel in the departments they preside over, seem to have a view that Australian Industry should be happy with the crumbs they are thrown and they will be there ready and waiting for the times when they’re required. This is normally when our usual supply chains are disrupted or fail, such as in responding to COVID, a natural disaster, or could happen in a conflict situation. What this fails to recognise is the proverb, ‘use it or lose it’, it’s highly likely industry most won’t be there when we need them, and the skills and experience they could have had will be likely diminished, increasing risk, the very basis for so often excluding them.
The Naval Shipbuilding Enterprise program needs an overhaul, as does Defence’s approach to Australian industry. It's becoming extremely clear that ‘Maximising Australian Industry’ participation or involvement is in reality a shallow marketing statement that lacks real commitment, but this is not limited to Defence its evident across virtually all elements of Australian Government procurement.
We need an overarching plan for Australian industry, one that supports the vision for future Australia and can guide government commitment, including grants, procurement and budget planning.
Future government policy in this vital area must be the subject of close Parliamentary scrutiny to ensure that our nation gets the highly capable warships and equipment our Navy needs and that Australian industry can play a full part in delivering that. Our Defence leadership needs to be held fully accountable for their performance. That is vital for Australia’s national security interests to be protected in advanced in what is an increasingly dangerous world.
Senator Rex Patrick
Member
Independent Senator for South Australia