Home Navy shipbuilding budget What is the real cost of Australia’s submarine capacity?

What is the real cost of Australia’s submarine capacity?


You can have an inexpensive underwater capacity, or you can have a safe and efficient capacity. There is no third option. Australia chose the second option; therefore, its submarine capability is expensive. But how much exactly? We’re all now very familiar with the $ 89 billion price tag for the future submarine, but that’s a number that stretches a long way and doesn’t cover all aspects of capacity.

Perhaps a more useful way to answer the question is to focus on the annual expenditure on Australia’s submarine capability. Parts of the answer are easy to find, but as with all areas of capability in the Australian Defense Force, it is difficult to develop a full number. It’s especially difficult if we’re trying to include all the elements of capability – or the nine core inputs of capability, to use the Defense Department’s term – like facilities. It is unclear how much of the $ 3,188 million spent annually on estate maintenance and garrison support should go to submarines, for example. Or how to identify indirect costs such as training future submarine officers at the Australian Defense Force Academy. We will therefore limit our analysis to the direct costs that can be attributed to the submarines with reasonable confidence.

The cost of sustaining the Navy’s six Collins-class submarines is the easy part. This is clearly stated in the budget statements and the annual Defense report. It has averaged $ 574 million per year over the past 10 years, but it is increasing. It is expected that $ 671 million this year.

However, this number does not include some key elements. One is fuel. A full tank of diesel will cost several hundred thousand dollars. Another cost that is not included is even more significant, namely uniformed personnel for the operation and maintenance of submarines. While each submarine has a crew of around 55, much more than six batches of 55 are needed to have a strong and sustainable workforce. The Navy has been very successful in increasing the number of its submariners in recent years and Defense informed the Senate earlier this year that that total had reached 881, although there are still gaps. The ASPI analysis (page 70) concluded that the average cost of each permanent ADF member was $ 160,000 per year five years ago, but submariners receive special allowances and retention bonuses in order to that we can look at $ 250,000. Overall, the cost of uniformed submarine labor is likely over $ 225 million.

Collins’ sustainment cost includes full and medium cycle moorings in which the submarines are taken out of the water for overhaul, but it does not include the cost of major upgrades that are installed during these. moorings. These are listed separately as acquisition projects in the SEA 1439 project portfolio. Here is where the numbers can get tricky. Since the Defense Budget statements only include the Ministry’s top 30 projects by planned spending for the year, we don’t know what the projects spend if they don’t meet the threshold, which was $ 97 million. of dollars this year (although it has been less than around $ 50 to $ 60 million in recent years). If a project never makes it to the top 30, it’s hard to know it even exists, let alone what it’s spending.

Ongoing projects include SEA 1439 Phase 6, which upgrades Collins sonar. He spent $ 133 million in 2020-2021 but is not in the top 30 this year. There’s also SEA 1439 Phase 5B2, which is an upgrade to Collins’ communications and electronic warfare suites. It spent $ 64 million in 2018-19 and $ 70 million in 2019-2020. There are other phases of SEA 1439, but we can’t see what they’re spending. This year’s budget statements also include Joint Project 9013, which modernizes Collins’ satellite communications system with planned spending for the year of $ 101 million. We have compiled the data available in our cost of defense database. Let’s put all of Collins’ upgrade projects together and call it $ 300 million a year.

With approximately $ 670 million for sustainment, $ 225 million for manpower, and $ 300 million for modernization projects, the direct costs of the Collins class are in the range of 1.2 billion dollars a year.

But since we are looking at the cost of Australia’s submarine capability, not the Collins per se, we also need to include the cost of the future submarine. The annual expense for SEA 1000, the design and construction project for the Attack-class submarine, has been steadily increasing. Although we are still several years away from the start of construction, spending reached $ 719 million last year and is expected to exceed $ 1 billion this year.

The direct cost of our submarine capacity is therefore approximately $ 2.2 billion this year. This represents about 5% of the $ 44.6 billion Defense budget. This is the cost. The fundamental question is whether this has any value. It’s difficult to deal with one message. As part of Collins’ use and maintenance cycle, this expense translates into two deployable boats. But in light of the long transit distances to where our submarines operate, this model cannot guarantee that a single boat remains docked. On the other hand, even the prospect of encountering a capable submarine can generate significant uncertainty for any opponent.

Annual expenses will increase dramatically and rapidly. In the short term, as the future submarine project accelerates from design to construction, it’s reasonable to assume that its annual cash flow will exceed $ 2 billion by the middle of this decade. . It is important to realize that now that we are in the age of continuous shipbuilding, these costs will never go down; we’re still going to design and build submarines, so we’ll pay something like $ 2 billion a year (in current dollars) until submarines are out of fashion.

Collins’ current round of upgrade projects will come to an end, but they will be replaced by the Collins-type life extension program in the second half of this decade. While the LOTE is based on a full-cycle docking station, its reach will be much wider, including new main engines, diesel generators, and power distribution systems, so its costs will be much higher. The higher amount is not clear, although the Force Structure Plan 2020 has a funding line for LOTE of $ 3.5 billion to $ 6.0 billion (page 45). It’s hard to see its cost lower than the current program of upgrades, so it’s likely we’ll still spend at least $ 300 million per year once the first LOTE installation begins in 2026. The number of submariners will need to be continue to increase in anticipation. of the arrival of the Attack class.

By the second half of the decade, we’ll probably be looking at around $ 3.5 billion a year for our submarine capacity – which will be the same as it is today. There are still a few years left before the first Attack Class is deployable in 2034 according to the current schedule.

In the longer term, costs will continue to increase as the Attack class enters service. Its increased cost of sustaining power will be a major driver. The new submarines will be 40-50% larger than the Collins and the fleet will be twice the size, so the sustainment cost will be at least three times that of the Collins, or around $ 2 billion. (in today’s dollars) by the time the 12 ships were in service in the mid-2050s. Defense’s own figures confirm this. He informed the Senate that the cost of sustaining the Attack Class will be $ 50 billion in current dollars; for a 25-year lifespan, this equates to $ 2 billion per year.

Of course, the 2050s are far away. But there will likely be a 10-year period, from the mid-1930s to the mid-2040s, in which we operate the Collins and Attack submarines simultaneously, resulting in significant overhead costs.

The future fleet will likely need more than twice as many submariners as the crew of each Attack-class boat will be larger. In addition, overhead costs will increase, for example through the establishment of a second submarine base on the east coast (see page 120 of the force structure plan 2020).

So between the cost of operating the future fleet and the ongoing cost of continued shipbuilding, we could easily envision $ 5 billion per year in current dollars once we hit the mature Attack class fleet. That’s more than double what we are paying now, but it should translate to at least twice as many boats with more capacity available for operations, which means more boats will be stationed for longer.


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