Submarines and Ships: Australia’s Future Defence

Australian Polity

Volume 5, Issue 2

By

The Hon. Kevin Andrews MP 

Federal Member for Menzies

Minister for Defence

Australia’s Strategic Environment and Future Defence Priorities

The first priority of a national Government is the safety and security of its citizens. In recent times we have faced complex national security challenges which remind us that Australia is not immune from emerging global threats.

Australia’s national security and our $1.6 trillion dollar economy rely on the unencumbered use of the sea.

70 per cent of Australia’s exported goods and services, by value, travel by sea, an export trade worth more than $220 billion in 2012-13.

We are a maritime nation and we need maritime security. And maritime security requires a robust surface force capability.

It comes as no surprise that the Government is making significant investment in naval programmes and the Australian shipbuilding industry.

The development of appropriately capable maritime forces is central to the Government’s strategic objectives that will be laid out in the Defence White Paper, to be released later this year.

The 2015 Defence White Paper will provide a costed, affordable and enduring plan to achieve Australia’s defence and national security objectives.

The White Paper will guide Australia’s defence capability for the coming decades and include a comprehensive review of Australia’s strategic environment, including the changes underway in our region and across the globe, and the implications of these changes for Australia.
It will give substance to the principle that the primary purpose of the ADF and Defence is to secure Australia and to shape Australia’s strategic environment in support of our national interests.

Most importantly, it will propose options for the force structure that ensure the capabilities that enable modern joint operations, such as surveillance, communications and logistics infrastructure, are robust and resilient.

The future force we are seeking to develop will be built on the solid foundation that was provided by the Howard Government.

Our air capabilities are being transformed through already agreed plans, the result of which can be seen in the skies over Iraq today.

The last decade has seen substantial investment in our land force with future emphasis on new armoured vehicles, digitisation and enablers.

What we now require is a major programme of modernisation for our naval forces, with key decisions to be taken on submarines, frigates and patrol vessels.

We are in the early stages of an ambitious programme to procure up to 40 naval surface ships and submarines over the next two decades. Programmes for Australia’s future submarine and future frigates will consume a significant amount of the available capital funding, and it is important to engage in open discussion of their need and the Government’s investment plan.

Future Submarines

Investment in an effective submarine capability plays a critical role in Australia’s defence, in conjunction with all ADF elements.

By 2030, half of the world’s submarines will be in Australia’s broader strategic region. The Indo-Pacific region has some of the fastest growing economies in the world and the demand for defence technology to safeguard the region’s prosperity and security is ever increasing.

The complexity of Australia’s strategic environment means our defence planning has to cater for a range of possible contingencies, but particularly focussed on maintaining stability in our region and ensuring that conflict doesn’t have the chance to start. So submarines remain a logical and necessary investment in Australia’s wider defence capability.

For this reason, Australia’s future submarine must give us a significant capability edge in our region as well as meet our needs in respect to geography and strategic outlook.

We need submarines capable of operations at long range over extended periods because they defend our interests far from our shores. The range and endurance must be similar to that of the Collins class submarine. They are an essential part of our national security capability.

Submarines are the most complicated, sensitive and expensive Defence capability acquisition a Government can make in meeting that responsibility. As a Government and as a nation, we have one chance to get this decision right.

The previous government’s refusal for six years to make a decision on the replacement for the Collins class submarines, created a looming security and capability gap arriving in about ten years.

While Labor’s valley of death can not be prevented now, its impact can be lessened.

The process recently announced by Government is the best way forward to reduce the impact of Labor’s poor management, which oversaw $16 billion of defence funding cut or deferred, 119 defence projects being delayed, 43 projects being reduced and eight projects cancelled, risking critical capability gaps.

The future submarine programme represents a $50 billion investment in Australia’s safety and security – the largest Defence procurement in Australia’s history – with up to two thirds of this investment being spent in Australia during the lifetime of the future submarine.

To the average Australian taxpayer this may seem to be a huge price to pay for a capability that may never be used in anger, but that cost also needs to be measured against the major investment that would need to be made by any adversary to counter the effect of our submarines.

It must be delivered in time to avoid a capability gap in the mid-2020s when the Collins class submarine is scheduled to be retired from service. The decisions we make on the Future Submarine Programme will determine what kind of capability we have to defend Australia and Australian interests into the 2040s and beyond.

The process outlined by the Government provides a pathway for Australian industry to maximise its involvement in the programme, whilst not compromising capability, cost, programme schedule or risk.

Future Frigates

A second major naval project identified by Government is Australia’s future frigate capability requirement. The former Government’s mismanagement of Defence has again, overseen critical gaps in Australia’s naval capability.

Our current fleet of ANZAC class frigates are planned to be withdrawn from the mid-2020s and at least some of the ANZAC ships are likely to require a modest life extension. There is a strategic imperative to avoid a capability gap during the transition from the ANZAC class frigate to the Future Frigate.

The gap between completion of the AWD project and the start of the Future Frigate project, Labor’s Valley of Death, cannot be avoided and no decision this Government could make now could stop it.

For six years, Labor failed to make the decisions needed in our shipbuilding industry – including decisions on the replacement frigates for the ANZAC fleet but also on the replacement for the Collins class submarines.

The Navy’s Air Warfare Destroyers will underpin the surface force’s war fighting capability. But with three destroyers in the fleet, the Future Frigate must also be capable of conducting operations independently or in a task group.

Our current ANZAC class frigates were originally designed as a low intensity patrol frigate but their role has expanded over time. They have become the workhorse for the Navy, operating across a range of peacetime and military roles, both independently and in task groups.

This required successive investments in new capabilities for the ANZAC fleet to keep pace with their expanding roles. At a maximum displacement of 3,900 tonnes, the ships are approaching their weight and stability limits which will constrain further upgrades.

Drawing in part from this experience, the Future Frigates are expected to face more demanding operational requirements and will need to be more capable. They will be required to conduct a range of missions, from low-level constabulary roles through to regional conflict, but with a particular focus on anti-submarine warfare and theatre-level anti-submarine operations.

These requirements reflect the modernisation and expansion of regional submarine fleets that is underway, to the extent that by 2030 approximately 300 submarines are expected to be operating in the region.

Operating along Australia’s coastline, northern approaches and throughout the Indo-Pacific, will require the Future Frigate to have the range, endurance, sea-keeping qualities, survivability and weapons load-out to support prolonged operations throughout our substantial region and, when called to do so, globally.

The nature of the threat environment will require the vessels to be equipped with a range of offensive, defensive and self-protection systems. They need to be of adequate displacement to facilitate a growth path for future weapons systems and sensors.

This is one of the reasons why there is something of a global trend towards larger-sized frigates.

Defence and Industry are currently conducting risk reduction design studies to investigate a number of options for the Future Frigates including the viability of an evolved Hobart Class as a possible solution. Consideration is also being given to a range of alternative foreign designs such as the Type 26 and FREMM frigates, amongst others.

In addition to the Future Frigates the Government is also progressing other projects that will create additional opportunities to move into a design, build, and sustainment phase for Australian ship building, including a fleet of Offshore Patrol Vessels to replace the Armidale class patrol boats and the Australian manufacture of up to 21 Pacific Patrol Boats under the Pacific Maritime Security Program.

Both projects will represent a significant investment in Australian defence industry.

A Sustainable Naval Shipbuilding Industry

In recent times there has been some anxiety about the future submarine programme.

This is why the Government announced the acquisition strategy in February to provide a pathway for Australian industry to maximise its involvement in the programme, whilst not compromising capability, cost, programme schedule or risk.

An enterprise-level naval shipbuilding plan is currently being developed to provide for the long-term future of the Australian naval shipbuilding industry.

We are looking to sustain a shipbuilding industrial base, and avoiding the peaks and troughs we are experiencing – and have experienced in the past – is the feasibility of a continuous build strategy, with a regular pace of delivering new warships.

This would require Defence to carefully manage its acquisition processes and keep the future frigates operational for relatively less time than has been the norm to date. By adopting such an approach the industry would no longer be characterised by a stop-start approach to naval shipbuilding.

To guide industry’s efforts to become more productive, the Government’s naval shipbuilding plan will provide a clear and sustainable path for the industry to support the strategic and capability needs of Defence; deliver value for money; build commercial confidence; and promote the use of global best practice.

In doing so, the naval shipbuilding plan will ensure that opportunities remain available for competitive Australian businesses to participate in future naval shipbuilding, sustainment and upgrade projects.

Defence must be fit for purpose and able to promptly respond to future challenges.
This is why the Government directed the First Principles Review – because we want to ensure that the Defence organisation can and will deliver on the strategy and capabilities that will be outlined in the White Paper and Force Structure Review.

This is a busy time for Defence, especially as the ADF is embarking on a period of significant modernisation and acquisition projects. Investment by the Government will provide Defence with a stable and sustainable funding growth path, which was left unachievable by the previous government.

We remain committed to lifting our Nation’s Defence budget to two percent of GDP by 2023-24 to maintain a strong and capable Australian Defence Force.

Building a strong and prosperous economy and a safe and secure Australia is the Government’s number one responsibility and priority.

Australian Industry Involvement

In 2014-15 financial year, Defence expects to spend $6.2 billion on equipment acquisition and support in Australia.

This equates to around 53 per cent of the military equipment acquisition and support expenditure this year, and is consistent with long-term averages of between 50 and 55 per cent being spent in Australia.

The Government does support local Defence industry.

When it comes to making decisions on Defence capability, the needs of the Australian Defence Force will – must – always come first.

The Government will acquire Defence capability that supports ADF requirements first and Australian industry can play a very significant role in this process.

Our sailors, soldiers or airmen and women need the right equipment and industry needs to demonstrate that they are world leaders, producing the best product at the best price.

For its part, industry also needs to step up to meet the challenge of building a sustainable naval sector. The only way Australia can continue to have a naval shipbuilding industry is if the industry is properly structured to drive efficiencies and improve productivity.

This will require hard decisions, and a commitment to a productivity-based culture from all parties – including unions.
Our experience with the AWDs has underlined the need for strong shipbuilding capability and complex project management skills in senior management and across the shipbuilding workforce.

Without shipbuilding experience in management, it is difficult to manage a block build across multiple subcontractors. Moreover, a lack of management experience in shipbuilding leads to inadequate supervision, development and training of the workforce.

Ultimately, a workforce without shipbuilding experience adds a large Australian-build premium. The Australian naval ship building industry that will build our next generation of frigates will need to be a different industry.

The industry currently isn’t internationally competitive in terms of its productivity, and if this does not change it will not be sustainable.

Australian taxpayers currently pay a price premium of at least 30-40 per cent greater than US benchmarks to build naval ships in Australia, and even greater against some other naval ship building nations.

That price premium is simply too high to make good economic sense.

As it currently stands, it is too high to enable a continuous build strategy to be adopted.

The opportunity cost associated with the defence capabilities which could be foregone, as a result of paying that premium, are too great for any responsible government to consider.

This Government recognises the significant value to our nation of having a skilled naval ship building industry.
We cannot afford to see this industry disappear.

The Government will make further announcements in the forthcoming Defence White Paper and accompanying Naval Shipbuilding Plan.

This will include more detail on the commencement of ship construction, the rate the warships will be constructed, and the structure of the naval ship building industry that will be required to support this programme.

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