Address to the National Press Club

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The Hon Pat Conroy MP

Minister for Defence Industry

Minister for International Development and the Pacific

Media contact

media@defence.gov.au

(02) 6277 7840

General enquiries

minister.conroy@dfat.gov.au

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28 November 2023

Acknowledgements

I acknowledge the Ngunnawal people as traditional custodians of the land we

meet on and recognise any other people or families with connection to the lands of the ACT and region.

As Minister for Defence Industry, I also pay my respects to Aboriginal and Torres Strait Islander men and women who have served our nation in the past and continue to do so today.

Deputy Prime Minister and Minister for Defence, the Honourable Richard Marles MP.

Minister for Foreign Affairs, Senator the Honourable Penny Wong.

Senior leaders of the Australian Defence Force and the Department of Defence.

Members and directors of the National Press Club.

Members of the Diplomatic Corps.

Colleagues and friends.

Introduction

I begin my remarks by acknowledging the members of the Royal Australian Navy’s Submarine Service.

Submariners keep watch over our maritime approaches, sacrificing time with family and friends to deter action against Australian interests.

Their work is essential to our national security, and I open my speech today by acknowledging and recognising their service.

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As Minister for Defence Industry my number one priority is to make sure members of the Australian Defence Force have the capability they need to protect and defend our country.

I know this is front of mind for the Deputy Prime Minister as well.

And no capability acquisition is bigger, more important or more complex than acquiring and constructing nuclear-powered submarines for the Royal Australian Navy.

How the Government is getting this job done, on time and at pace, is the subject of my address today.

Strategic environment

The Government is clear, and the Defence Strategic Review is clear, on the changes in our strategic environment.

When we look out to the region, we see intensifying great power competition, accelerating military build-up, rising tensions and reduced warning time for conflict.

This is Australia's most challenging strategic environment since the Second World War.

And looking back to the lead-up to the Second World War provides important lessons about the need to invest in defence.

In the decade before the outbreak of war in Europe in 1939, Australian defence spending averaged 0.8 per cent of GDP a year – less than half its level today.

It’s an extraordinary fact that on the brink of World War Two, Australia’s Army comprised a permanent force of just 1,600 soldiers supplemented by a voluntary citizen militia.

A month before Hitler invaded Poland, with imperial Japan entering the third year of war with China, the Menzies Government rejected a proposal to increase this tiny force to 7,500 permanent soldiers – because it would cost too much.

Such were the mistakes of appeasement in foreign policy and the fiscal orthodoxies of the day.

Why do I reach back to the 1930s?

It’s not to make simplistic historic parallels.

It’s because today, as in the 1930s, there are some who are turning a blind eye to our security challenges.

Conflict is far from inevitable.

But Australia’s 10-year warning time has evaporated, just as it had in the mid-1930s.

The lesson from that era is that we cannot afford to be under-invested in defence.

To shape a peaceful and stable region, Australia must play its part in deterring aggression and coercion.

We must be able to deter conflict before it begins, and certainly before it reaches our shores.

That means investing in military capabilities that will discourage anyone from taking actions against our interests.

As the Foreign Minister has said, by having strong defence capabilities of our own, and by working with partners investing in their own capabilities, we change the calculus for potential aggressors.

For Australia, this is best achieved by arming the ADF to hold any potential opponent’s assets at risk at greater distance from Australia’s shores.

This requires a mix of intelligence collection, defensive and strike assets that generate deterrence and, if that fails, an ability to impose unacceptably high costs on any attacker.

Acquiring the most capable nuclear-powered, conventionally-armed submarines in the world is key to this strategy.

Why Australia needs submarines – and the right submarines

Three mighty oceans – the Pacific, the Indian and the Southern – connect Australians to each other, our nation to the region, and our economy to the world.

Those charged with protecting the nation have long recognised the fearsome strength of submarines to protect our connection to the world and deter action against Australian interests.

In times of tension, submarines conduct surveillance and collect intelligence.

Against an enemy at war, they can strike without warning, delivering a highly sophisticated and destructive payload.

As the former submariner Commodore Peter Scott put it, submarines see without being seen, hear without being heard, and know without being known, until the day comes when we need them to strike.  

Our highly capable conventionally-powered submarines have provided potent undersea deterrence for decades.

But technology is changing.

Increases in wide-area surveillance and detection capabilities mean the effectiveness of conventionally-powered submarines will be more challenged in the decades ahead.

At some stage in coming decades the requirement to snort air to run diesel engines to recharge their batteries will compromise the stealth and effectiveness of conventional submarines, potentially affecting their survivability in a high threat environment.

Submarines are at their most vulnerable when near the surface.

But nuclear-powered submarines can stay submerged from the minute they leave their base to the minute they return.

That’s one of the things that makes them such a remarkable capability.

There is no technology in existence or planning that can supplant the role of the nuclear-powered submarine as a highly potent and enduring maritime capability.

Its speed, range, endurance, stealth, mobility and firepower are unsurpassed.

They offer virtually unlimited range and increased stealth.

Nuclear-powered submarines enable us to hold an enemy’s assets at risk at the greatest distance possible from Australia’s shores, and to put a substantial question mark in their minds.

Due to their stealth and destructive capability, submarines – especially the most capable nuclear-powered ones – provide an asymmetric advantage.

They allow a middle power like Australia to place doubt in nations with much larger militaries.

Their mere existence imposes uncertainty in a potential opponent’s plan.

We have the third largest exclusive economic zone on the planet.

We need to be able to deny adversaries in our northern approaches.

We need to patrol and protect sea trade routes far from home.

And we have made a commitment to work with our partners to promote security and stability in the region.

Nuclear-powered submarines are a vital capability that makes all of this possible.

Ultimately their speed and endurance mean that a fewer number of nuclear-powered submarines can do the work of a larger number of diesel-electric submarines.

This is one of the key reasons why people arguing that diesel-electric submarines are the right capability for Australia are misguided.

Australia is the only nation in the world that requires diesel-electric submarines to transit thousands of kilometres before they reach their patrol area.

Our diesel-electric submarines need to use the greater part of their fuel capacity for these transits, limiting their time on station.

By contrast, nuclear-powered submarines are not limited by fuel – they can get to where they need to go faster, meaning they can spend more time on station. 

Furthermore, they can reposition to different areas without the need to return to port to refuel, providing operational commanders much greater flexibility in the types of missions they can conduct with nuclear-powered submarines.

The key takeaway is that nuclear-powered submarines get to where they need to go faster; stay there longer; and can reposition to conduct other tasking more flexibly than conventional submarines.

Even in comparison to the Collins – which is at the highest end of the scale for range, endurance and stealth for a conventional submarine – nuclear-powered submarines such as the Virginia Class can transit into an area more than twice as quickly and remain in an area of operations for much longer.

To illustrate the point, using a hypothetical example, a diesel-powered submarine might spend about half of its time on an operation in transit.

By contrast, for the same operation a nuclear-powered submarine would spend 15 to 20 per cent of its time in transit.

In this example, let’s say a theoretical 70-day operation, a diesel-electric submarine would spend 35 days in transit and 35 days on station.

Meanwhile, a nuclear-powered submarine would spend just 15 days in transit and 55 days on station.

For Australia’s circumstances, where transit distances are necessarily long, this type of advantage is particularly significant.

This advantage is compounded by the fact that nuclear-powered submarines can generally patrol longer.

This means that a nuclear-powered submarine can be seen as the equivalent of two diesel-electric submarines in terms of patrol coverage.

In addition to the other significant capability advantages of nuclear-powered submarines, the bottom line is that nuclear propulsion is a significant force multiplier by itself.

Our acquisition strategy 

A critical aspect of this national endeavour is developing and implementing the acquisition strategy to build the new submarines.

This will be the greatest industrial undertaking Australia has ever attempted, both in scale and technical complexity.

An undertaking that that will generate around 20,000 highly-skilled, secure jobs. 

An undertaking that will drive the modernisation of Australian manufacturing.

An undertaking that will train thousands of scientists and engineers.

So, designing and implementing a realistic and viable acquisition strategy is critical.

Our strategy is informed by lessons from previous procurements, especially the experience constructing, operating and sustaining the Collins Class submarines.

This project delivered the best diesel-electric submarines in the world – submarines that continue to provide a critical capability to Australia.

But it was not without challenges.

As someone who has spent much time across two Governments working on submarine acquisition and sustainment strategy, the lessons from the Collins build are tattooed on my brain.

They will be vital touchstones as we seek to reduce risk in the new project.

For me, the critical lessons from the Collins build experience include:

  • The challenges of a unique design and being a “parent” Navy.
  • Combining a new hull design with new combat and weapons systems.
  • And insufficient consideration of through-life support requirements.

Australia’s future nuclear-powered submarine – the SSN-AUKUS – will be a state-of-the-art platform designed to leverage the best submarine technology from all three nations. 

It will be operated by both Australia and the UK.

Unlike our experience with Collins, where Australia was left operating a unique design with no existing “parent” industrial base to draw from, SSN-AUKUS will provide shared experience in operating the platform and a shared industrial base for maintenance and sustainment.

Sharing a design with the United Kingdom clearly avoids the first challenge that Collins faced.

SSN-AUKUS will be a common platform operated by both the UK and Australia, with two production lines – one based at Barrow-in-Furness in the UK, and one based at Osborne in South Australia.

In addition, we have reduced risk further by staging Australian production behind that of the UK.

The UK will bear the first of class risks common in defence procurement, especially in naval construction.

The first submarine will roll off the UK production line in the late 2030s for the Royal Navy.

Indeed, some of the long-lead items for those submarines are already beginning construction.

The first Australian submarine will be delivered in the early 2040s from Osborne at a three-yearly drumbeat.

On current timing, at least one if not two Royal Navy submarines will be in the water before our first.

This arrangement will also spread the risk over two production lines and create efficiencies.

Economies of scale will be generated by producing parts for a fleet of submarines much greater than the production run of six Collins submarines.

Regarding the second Collins lesson, while the SSN-AUKUS design will be new, it is envisaged that the combat system will be an evolved version of the current AN/BYG1 Combat System, which is already in service on the Collins and Virginia Class submarines.

This evolved version will be co-developed by the US and Australia.

It will incorporate evolutions of other existing systems that are tested, proven and successful, such as the vertical launch systems and torpedo tubes.

It is also envisaged to carry weapons currently deployed on US and Australian submarines such as the Mark 48 heavyweight torpedo. 

And sustainment needs are being considered from day one of the process, including what parts we will need, when we will need them, and where they will need to be.

The Collins Class illustrates the difficulties that can emerge when insufficient attention is given to future maintenance and sustainment needs during the design and build process.

For example, we are now having to cut the Collins boats in half to replace major equipment as part of the Full Cycle Docking process.

The SSN-AUKUS will not repeat mistakes like this.

Building submarines is hard – but sustaining them is just as tough, especially when it comes to parts that are only manufactured with submarines in mind.

And unless the whole project is carefully mapped from beginning to end, there is the risk of a loss of the critical workforce with design and construction skills – as we saw with the Collins.

The trump card of the SSN-AUKUS is that by operating a common class of submarines, we not only increase demand – we also create stable and continuous demand in both the acquisition and sustainment phases of the project.

This will provide businesses with confidence to invest in capabilities needed to support this international endeavour.

By working closely with our partners, we can identify the best way to share work to create a capable, efficient and integrated industrial base across the three nations.

This is a critical point that is missed by those opposed to the acquisition.

Mr Keating, whom I respect greatly, has suggested that these submarines will be built in the United Kingdom.

This is incorrect.

Peter Dutton and Alexander Downer have suggested that we should buy them from some mythical show room in the United States.

This is completely wrong.

The entire point of AUKUS Pillar 1 is to expand and grow the industrial base of all three nations, so that Australia joins the US and UK in building nuclear-powered submarines.

This will mean the AUKUS partners move from having three shipyards capable of building nuclear-powered submarines to four of these shipyards.

It will be a transformative uplift in Australia’s defence and industrial capabilities – and a net increase to AUKUS partners’ industrial capabilities at a time when it is needed most.

Yet it is an uplift which Mr Dutton seeks to deny, in a stance that would have adverse consequences for Australia’s national security.

Cost comparison between Attack Class and SSN-AUKUS

One of the most egregiously unfair and unrealistic criticisms of AUKUS Pillar 1 is around cost.

Unless you are arguing for unilateral disarmament, the most accurate approach is to compare the cost of nuclear-powered submarines to the cost of the conventionally-powered Attack Class submarines.

The Morrison Government hid the cost of the Attack Class from the public, claiming for years it was $50 billion.

It was eventually revealed that the Attack Class had an acquisition cost of almost $90 billion and sustainment costs of $145 billion out to 2080, a total of $235 billion.

And that figure did not include all the costs.

The former Coalition Government’s costing of the Attack Class did not include the costs of the workforce, all the required facilities and infrastructure, weapons, and contingency across the whole program.

It is reasonable to assume that over the next 30 years the cost of these aspects alone would have exceeded $30 billion for the Attack Class.

For example, applying a minimal 30 per cent contingency on elements such as the sustainment would add over $40 billion by itself.

To be clear, unlike the Coalition, the Albanese Government is being transparent with the public about the costs of this important national undertaking.

What we are embarking on under AUKUS is unlike any other defence capability.

We are building a new industry.

And as such, we are accounting for additional investments across infrastructure, jobs and skills.

We are making a moderately larger investment, for a significantly greater capability, and we are doing so with a more careful, prudent budget approach.

This is the choice for a responsible government.

Spend over $235 billion for a diesel-electric submarine that will be increasingly at risk in our region – or make a moderately larger investment to acquire a regionally superior submarine.

A submarine that can stay on station at least twice as long.

A submarine that can carry significant numbers of cruise missiles, torpedos, and other ordnance.    

To acquire a truly strategic capability.

A capability that offers true deterrence.

More AUKUS myths

AUKUS attracts myths like a hull attracts barnacles, so I’d like to scrape off a few more today. 

The first myth – the stickiest barnacle of them all – is that Australia loses sovereignty by acquiring this capability.

The reverse is true.

The capability decisions we make in the context of AUKUS will strengthen our sovereignty.

Australia’s nuclear-powered submarines will be owned, operated, maintained and regulated by Australia and under Australian command.

They will be a sovereign Australian capability, commanded by Royal Australian Navy officers under the Australian Defence Force’s chain of command.

Decisions on their deployment, missions and operations will be matters for the Australian Government, as with all of Australia’s sovereign defence capabilities.

The reactor unit will be delivered in a sealed module and will not have to be opened over the entire life of the submarine.

This gives Australia greater sovereignty compared to other options.

Mr Turnbull has advocated building the Barracuda submarine that uses low-enriched uranium.

This would require refuelling the nuclear reactor on each submarine every 10 years in another country.

This would raise difficult issues around access to another nation’s facilities in times of conflict or possibly in competition with their domestic priorities. 

The reality is that almost all of Australia’s high-end capability is developed in cooperation with our partners.

Submarines are no exception.

Our current submarines already include components sourced from overseas industrial bases.

The generators, main motors and diesels in the Collins Class came from Europe – and during the Life of Type Extension we will rely on many overseas manufacturers to either replace or extend the service of many components.

The truth is that unless you make 100 per cent of your defence materiel, including all the inputs, you are reliant on other nations’ industrial bases to some extent.

The question is how you manage this.

The second myth is that the cost of acquiring nuclear-powered submarines is exorbitant.

Hundreds of billions is a large number – but this is a cost over more than three decades.

Frankly, many other Federal Government programs will cost far more over that period.

Based on the projections in Treasury’s latest Intergenerational Report:

  • Federal Government health spending will be more than $8 trillion to 2055 – more than 20 times the projected cost of the nuclear-powered submarine program over that same time period.
  • The age pension is projected to cost more than $4 trillion to 2055 – more than 10 times the submarines.
  • And the Federal Government is projected to spend many times more on aged care, education, and the NDIS than on the AUKUS submarines over the next three decades.

Just as spending trillions on social programs over the next three decades will be important for the welfare of Australians, spending billions on nuclear-powered submarines will be important for the security of Australians.

The third myth is that cost contingencies are bad things.

Learning from the challenges of the past, we have built a very significant contingency into the program’s cost estimates to allow planning for real-world economic uncertainty, including inflation, the cost of labour and raw materials.

It is entirely prudent to include an estimate of risk and uncertainty.

Some thought they had a “gotcha” moment when they realised that the AUKUS submarine program’s cost estimates included a 50 per cent contingency.

The reality is it would have been highly irresponsible not to include a contingency.

Fourth myth – that technology will erode the stealth capability of nuclear-powered submarines.

It is true that undersea surveillance technology is advancing.

In fact, Australia’s defence science and technology enterprise is a global leader in undersea and maritime capabilities.

I’ve asked our best scientific minds whether technology is capable of tilting the balance between stealth and surveillance.

Their answer is “not yet, and probably not ever.”

Even the most optimistic scientists find overwhelming barriers to monitoring even a modest marine space.

And surveillance technology evolves in a race with counter-surveillance technology.

Finally, I’d like to set a few things straight about the hull.

We are not building the hull of the SSN-AUKUS in the UK.

The UK’s SSN-AUKUS submarine will be built in the UK.

Australia’s SSN-AUKUS submarine will be built in Osborne, South Australia.

US support

A critical step in the optimal pathway is the transfer of three Virginia Class submarines to Australia.

This is necessary due to the dangerous gap the former Liberal-National Government allowed to occur between the retirement dates of our Collins Class submarines, even after extension, and the new SSN-AUKUS.

The staggering incompetence which created this capability gap …

The mismanagement which saw 28 defence capability projects running 97 years late …

And the diplomatic and foreign policy blunders in the Pacific …

This all adds up to an Opposition which can’t be trusted on defence and national security.

The Albanese Government is moving to close Peter Dutton’s submarine capability gap.

Our plan to deal with the submarine capability gap we inherited is the transfer of three Virginia Class submarines to Australia from the early 2030s.

This will require an uplift in the US submarine industrial base.

This is occurring and is underpinned by very strong US Congressional support for the optimal pathway.

Whether it’s Prime Minister Albanese’s recent visit to the United States, or Deputy Prime Minister Marles’ visits or mine, we have been met with a very strong commitment by Congressional leaders, Democrats and Republicans, Senators and Representatives, to get this done.

The US Government is investing billions in expanding its submarine industrial base.

For example, in 2022 the American submarine builder Electric Boat hired a total of 3,800 employees.

By the end of August 2023, the shipyard had hired an additional 4,000 new workers and it is aiming to exceed its hiring goal of 5,750 employees.

The Electric Boat workforce at its two submarine shipyards has doubled over the last decade.

There has also been a very significant increase in the number of suppliers, with overall supply chain capacity increasing by 10 per cent.

I witnessed this when I visited the Electric Boat submarine construction facility at Groton, Connecticut in June.

During the COVID-19 pandemic, the number of Virginia Class Submarines being delivered reportedly dropped to 1.2 per year and availability declined to 60 per cent because of maintenance challenges.

However, availability is now back to 67 per cent and SSN production has climbed much closer to two per year and continues to improve.

A transformational endeavour

Delivering the industrial base and shipyard capable of building nuclear-powered submarines will be a transformational endeavour for Australia.

We’ve started by getting the international agreements in place.

AUKUS partners signed the ground-breaking Exchange of Naval Nuclear Propulsion Information Agreement in November 2021.

And we are working openly and transparently with the International Atomic Energy Agency, and in consultation with our AUKUS partners, to develop a safeguards and verification approach that will ensure Australia continues to meet our nuclear non-proliferation obligations and commitments.

Workforce is a complex challenge that’s got to be tackled from the perspective of the Navy, industry and all levels of government.

We’ve got to build the right workforce with our AUKUS partners, and with State and Territory Governments, industry, unions, education and training institutions, and the scientific and technical sectors.

It’s pretty obvious, but more than anything else, submarines need submariners.

Members of the Royal Australian Navy are already training at the US Naval Nuclear Power School.

The Commanding Officer and leadership team of the first Australian-flagged Virginia Class submarine will come from those officers and from those who follow in coming years.

The first three officers graduated from the US Naval Nuclear Power School in July after completing a six-month program of study.

Another three graduated in October.

Those officers will undertake additional training before serving aboard a US Virginia Class submarine.

In another milestone, the first cohort of sailors commenced studying at the Nuclear Power School in October.

Uplifting the skills of defence industry is also essential to the success of this endeavour.

The best way to do that is to get people into the workplaces now.

That’s why work is underway on embedding Australian industry in the UK and US nuclear-powered submarine construction and sustainment programs.

To kick-start the supply chains, we’re exploring opportunities for Australian industry to supply Australian-made materials and components to the UK and US programs.

We are creating pathways for Australian industry to carry out maintenance activities on US Virginia Class and UK Astute Class submarines during their rotational presence in Australia.

We’re also actively training the workforce needed to deliver this critical national endeavour.

Earlier this month, the Deputy Prime Minister and the South Australian Premier released the South Australian Defence Industry Workforce and Skills Report.

This report outlines the actions we are taking to grow the workforce for the submarine program.

A foundational piece will be the dedicated Skills and Training Academy in South Australia, which will be built by 2027-28.

The academy has commenced delivering pilot programs this year.

Other initiatives to grow the workforce have also already commenced.

A UK Masters Program pilot initiative currently has nine industry personnel undertaking 12-month nuclear training programs in the UK, focussed on high-priority job functions such as nuclear engineering and science.

And the Accelerated Training in Defense Manufacturing Program, in the US, currently has 12 Australian industry trade and training personnel participating in a fast-tracked training program in critical manufacturing areas.

We’ve also begun the vital work of skilling up Australians through the Early Careers Program in South Australia and Western Australia.

Under this program ASC will employ more apprentices, graduates and undergraduates.

And we are providing an additional 4,000 Commonwealth Supported Places to build the Australian STEM workforce needed to deliver the nuclear-powered submarine program.

The allocation of these places will be announced very soon.

From as early as 2027, UK and US nuclear-powered submarines will begin a rotational presence at HMAS Stirling in Western Australia.

Submarine Rotational Force-West (SRF-West) will develop Australia’s ability to operate, maintain and safely steward our future SSNs by deploying our Navy personnel on visiting UK and US submarines – this will enable them to gain at-sea experience with naval nuclear propulsion.

Then from the early 2030s, HMAS Stirling will house Australia’s first sovereign SSN capability, the Virginia Class submarines.

The Albanese Government recognises the significance, importance and complexity associated with building SSN-AUKUS.

We need to get our Navy ready through training our sailors.

We need the associated regulations in place for nuclear propulsion.

We need to construct the necessary infrastructure at Henderson and Osborne.

One of the most critical elements will be the build strategy for the SSN-AUKUS.

This build strategy, and the build partner, will play a crucial role not only in delivering our nuclear-powered submarines, but also in uplifting and upskilling the Australian industrial base.

In line with our announcement around the optimal pathway in March this year, you can expect an announcement on the build strategy and build partner for SSN-AUKUS early next year.

Conclusion

I have used this address to explain the importance of the nuclear-powered submarine acquisition and to provide an update on the Government’s work to deliver this capability.

Let me conclude by returning to some fundamentals.

The first responsibility of any national government is protecting Australia’s security and sovereignty.

It’s why Labor Governments:

  • Established the Royal Australian Navy.
  • Led Australia during World War One.
  • Led Australia during World War Two.
  • Forged the alliance with the United States.
  • Created the modern Department of Defence.
  • Built the Collins Class submarines and Anzac Class frigates.
  • And extended the alliance with the US through a range of force posture initiatives.

It’s why this Albanese Labor Government has a strong approach to defence.

Acquisition of nuclear-powered submarines is a critical element of our defence and national security policy – squarely in the tradition of responsible, reforming Labor Governments who take defence seriously.

This is a transformational endeavour for Australia’s defence and industry.

Its scale, complexity and economic significance cannot be underestimated.

I hope my remarks today have demonstrated that the Albanese Government is seized of the challenge and getting on with the job – working methodically and at pace to deliver this nation-building and nation-defending project.

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