With the acquisition of nuclear-powered submarines through AUKUS, Prime Minister Anthony Albanese said Australia is on the cusp of “the single biggest leap in our defence capability in our history.”
Now, 18 months since the original surprise announcement, the highly-anticipated AUKUS report shares the “optimal pathway” to acquire the nuclear-powered submarines. But the pathway is fraught with challenges and aligned intentions do not guarantee delivery. Where is the greatest daylight between the three countries in terms of the nuclear submarine production? What role will the advanced capabilities pillar play during the long lead-up to acquisition of the submarines? How should, or shouldn’t, we read the AUKUS report?
To discuss these issues, USSC hosted a webinar discussion with United States Studies Centre CEO Dr Michael Green, Director of Foreign Policy and Defence, and lead author of the 2023 Defence Strategic Review, Professor Peter Dean and Director of Economic Security Hayley Channer.
Event transcript
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Dr Michael Green: Good morning. Or good evening if you're in the United States, and thank you for joining us for this discussion on AUKUS.
I'm Michael Green. I'm the CEO of the United States Study Centre. I am joining you today from Canberra. My colleague, Peter Dean, is joining us from Sydney and my colleague, Hayley Channer, is also in Canberra. So let me begin by acknowledging the traditional owners of Australia, for those in Sydney, The University of Sydney stands on the land of the Gadigal people of the Eora Nation, and in Canberra the Ngunnawal people, and we pay our respects to their elders, past, present, future, and further acknowledge the traditional owners of the country which we are on and pay our respects to those present and emerging.
We are going to discuss the new announcement by the Prime Ministers of Australia and the United Kingdom, and President Biden of the United States about the optimal pathway forward for AUKUS: the US, Australia and UK trilateral capabilities building agreement.
This announcement focused on Pillar 1 of that agreement, which is the delivery of nuclear power submarines to the Royal Australian Navy. We will dive deep into that: the regional reaction, the technological complications, the strategic and operational logic of this pathway. We might say a little bit about Pillar 2 of AUKUS, which focuses on developing other advanced capabilities to enhance deterrence among the US, the UK and Australia, but potentially, including other allies such as Japan, South Korea, Canada and NATO countries.
I am the CEO of the United States Study Centre. I've been here and thoroughly enjoyed it since August. I came from the Centre for Strategic and International Studies and Georgetown University. I served on the NSC staff before that as the Senior Special Assistant to President Bush for the Indo-Pacific.
Joining me also is Professor Peter Dean. Peter is the director of the Foreign Policy and Defence Program at the United States Study Centre. He was a professor at the University of Western Australia (UWA) before that, and the chair of their first defence studies, and Director of the UWA Defence Security Institute. Peter is a prolific author. His tenth book is coming out soon. He also, among his various writings, had the pen for a good part of the Defense Strategic Review, which will be made public in a matter of weeks, I believe, and we'll also do a webinar on that.
Hayley Channer is the director of the United States Study Centre’s Economic Security Program. She is experienced in the world of policy and think tanks. She advised Foreign and Defence Ministers, worked at think tanks in Sydney, Canberra and Perth, and in her current role is examining the intersection of economic issues and national security. And I think Hayley, AUKUS is certainly in that category.
We'll have a bit of a discussion amongst ourselves, and then we'll look forward to your questions. I'm going to see the questions in the Q&A part of my screen, so you can submit them as you're listening, and we'll get to as many as possible.
I want to first start by getting everyone's reactions to the announcement early Tuesday morning Australia time, from the US submarine base in San Diego. I might go first on this one. We've been following it, we’ve seen press reports, we've been talking to people, and we have some idea of what might come out. First reactions for me, the thing that struck me was there was no major surprises from what we've been seeing in the press and hearing. But when I saw, for my part, the details of the optimal pathway forward, I did think that this really is a complicated procurement decision, the biggest, as the Prime Minister said, in Australia's history.
This really is the optimal path, because, like you, I've puzzled what's the best way to do this.
The criticism is either put something in the water quickly that does not have the capability that you want in the long run, or you wait for that nuclear propulsion advanced capability, and you don't have anything in the water for decades. It seems to me this was the Goldilocks solution: a staged series of deployments of deterrence capability beginning fairly soon.
In the next few years, you'll see autonomous undersea vehicles like Ghost Shark that provide some AI-driven early deterrence capability undersea. Then you'll see US Virginia-class and Royal Navy ships beginning to berth at HMAS Stirling, and that puts deterrence capability in the waters around Australia from two close allies. Then, the three US Virginia class submarines coming online by 2030s, as many as 5. Then, we have the new build: the most advanced state-of-the-art nuclear propelled attack submarines, designed in a way where Australia can shape a British program for the optimal crew size on the optimal configurations. The Virginia class is very big, probably twice as big as Australian really needs for the long run.
Some of our friends have said it’s a Frankenstein, it's unusual, it's not the way the US Navy would do it, where we would have had a simple or linear path. But given the complexities, my first reaction was “well done”. This was really a hard puzzle, and they probably got the mix and the timing to get deterrence early while building the longer-term capability they need right. Now there are problems - we'll get to those; however, my first reaction was that this was a pretty impressive effort by Vice Admiral Mead in Defence.
Hayley, what was your first reaction?
Hayley Channer: Thank you so much, Mike and I really enjoy talking about this because it is the biggest thing to have ever happened in the defence and security field, probably since the end of World War II. I’m not going to lie; my first reaction was complete shock at the price tag. Obviously, I am the Director of Economic Security, and I wondered what does this mean for Australia's economy, and also the workforce?
Just the headline figures of $268 billion to $368 billion - I had been expecting the price tag to be around $200 billion, because we knew that the previous Attack-class submarines were going to cost around $150 billion, but I expected much more with the nuclear-powered variant. I thought maybe $200 billion, but I wasn't expecting the figures that we saw, and the other reaction I had was, why would we do it, $100 billion in leeway really surprised me, because it is so imprecise.
To me that says that the Government is being honest in the sense that it really doesn't know how much it will cost in 30 years’ time. So, there is a big amount there for us to question as to exactly how much this will cost. One of the other thoughts I had was Biden had this unusual comment about subs to the moon, and he was making an analogy about the Moon race, and how these are national mega projects where we all have to spend a lot of money. In John F, Kennedy’s speech where he said, we choose to go to the moon, not because it is easy, but because it is hard, and he didn't then follow up that statement in that speech by saying it will cost $244 billion, which is the amount in today’s money that the space phrase cost the United States. He had this hugely inspirational speech about going to the moon, and then didn't say the price tag.
I think you're seeing a new approach by the Australian Government to actually explain a lot more detail about what it is planning to do, and I think it would be interesting to discuss that a little bit later on about the pros and cons of being so upfront about the costs with the Australian public and the world.
Dr Green: So, some sticker shock, but points for honesty. Peter, what was your reaction?
Professor Dean: This was big, it was bold, it was historic, and it was very trusting. The level of trust that the three countries are demonstrating between each other, and particularly from the United States sharing this technology in the way that it's announced, is very high reward. That also makes it very complex and very high risk. There is a potential for a really, really big payoff here for a whole range of things, but it’s also very high risk. However, it is over a long period of time.
Then I got to the speed to capability question - there had to be a way to get speed to capability, and to get a nuclear-powered submarine quickly. That was what delivered with the sale of the Virginia class boats. That's the thing that in the end really blew me away.
The US Government has struggling to build enough Virginia-class submarines and would like to operate more of them. The US is looking at upscaling their own production and then sell a couple to Australia to avoid that capability gap and get that speed to capability. That’s really big in that US commitment to do that. Yes, it has to get past Congress, but I believe we're going to get it through.
Also, as Haley said, it's the sticker price - no one's talking about $268 billion, everyone went to the $368 billion. You know. You walk into the car. You look around for the new car, and they got the lovely stickers on the windscreen, and we tend to go for the stick across as well. And that's a big sticker. Price like is a really big synchronous, and of course.
Treasury can’t always get it right. They haven’t got it right for the forward estimates for the last 5 years. In 2054 who knows what inflation will be, what the exchange rate would be, or what the cost of living will be. Therefore, we get that big $100 billion bandwidth because it's really hard to predict what things will cost in that time.
Dr Green: The number was eye popping, and, as Haley said, they get points for being candid with the Australian people. Roughly over 3 decades, we’re talking roughly 20% to 25% of the current Australian Defence budget. If that is correct, by comparison that's about what the British pay as a percentage of their Defence budget to maintain their nuclear-powered submarines. Therefore, it is sort of what you'd expect if you want this capability.
It also raises the question whether the Defence budget is going to be the same size. Australia spends about 2% of its GDP, the US spends about 3.5% of GDP, and Japan's is going from 1.2% to 2% of GDP. Therefore, there is a question about whether the denominator stays the same, and whether there might be public support for more defence spending. It's not way out of perspective or out of proportion when you think of what the British are doing to have this capability. So that raises the question, how important is this capability? Why submarines - is this really worth investing such a big part of the Defence budget?
I have my views, but I want to start with both of you. Peter I’ll go to you, and Hayley after that.
Prof Dean: I think the numbers are interesting. Pat Conroy and Richard Marles have pivoted quickly from the $368 billion number to 0.15% of GDP. Also cost comparatively, Kim Beazley, our former Defense Minister, pointed out that in a recent article that in the 1980s when we were worried about the load level threats, they were spending about 9% of the budget outlay on Defence. Now, in a modern era, where we're worried about great power conflict and major war, we're only spending 6%.
Specifically for submarines, they are critically important. If you look at the 2020 Defence Strategic Update there is a statement that says submarines are significant to every element and stage of Australia's maritime security. We can't overlook the fact that while we're a continent, we're also an island and we live in the Indo-Pacific, which is a region dominated by maritime geography, unlike Europe, which is dominated by continental geography. There's are a few simple statistics that really bring this home and why, this is really important - 99% of Australian trade comes in and out of this country by cargos ship, including almost all of the fuel, oil and diesel; we have the third largest exclusive economic maritime zone covering 8.2 square million kilometres, which includes our fisheries, shipping lines, and our oil and gas fields. Therefore, the economic and conservation value of this is absolutely enormous, and these sea lines of communication are the lifeblood of our nation.
The protector of that maritime security is our Defence Force, specifically the Navy. The capital ships used to be battleships once upon time, such as aircraft carriers. Now the modern era capital ship is the submarine, and the nuclear power submarine is the Rolls Royce of Submarines, and an American submarine, with the American technology, is the very pinnacle of that.
US technology in this field is the best and a generation ahead of everybody else, by somewhere between 10 and 20 years. That means ahead of any other potential adversary or competitors. This will give us the ability to maintain a regional maritime security capability edge.
It will be important in securing the sea lines of communication, and important to deterrence, and of course, what we're doing is also contributing towards the military balance in our region, ensuring that there's a balance of power for the maintenance of peace and prosperity.
You can get into what role submarines play, and what things that submarines do, but ultimately, they are the cutting edge in terms of maritime security, and for a maritime country, in a maritime region depending upon maritime security, it is a critically important part of our defence.
Dr Green: The nuclear propulsion piece from Rolls Royce is critical because diesel submarines have to use snorkels to refuel.
Prof Dean: Yes, what we're getting here is a massive leap forward in military technology. Diesel electric submarines are much slower, they have to come to the surface often to recharge their batteries, and in a world where there's increasing intelligence and reconnaissance from satellites, it is becoming more and more difficult for conventionally powered submarines to be survivable and to maintain stealth. If you're a submarine, that is your primary capability edge over everyone else is – your ability to disappear and be invisible. The nuclear-powered submarine can stay underwater for very long periods of time, and it has longer range. Every submariner that I've ever spoken to in Australia will say their choice would be having nuclear power submarine from a tactical, strategic, and operational point of view.
The limiting factor for Australia not going down this path beforehand was that we couldn't - as a non-nuclear-powered site without domestic production, we would have to rely on the UK and the US to share this technology. The US has only done it once before in the 1950s, so this is a very big move for them to support this capability for Australia.
Dr Green: The reality is that this emphasis on undersea capabilities tells you a lot about the historical chapter we're entering. When the battleship was champion, that was sort of the pre-war era, and in the post-Cold War area the aircraft carrier and the Carrier Task Force was champion. Why? Because the US had air and maritime dominance in the Western Pacific.
The fact that submarines and undersea warfare, generationally and technologically, are now the capital ships, for the US Navy, and going forward, probably the Australian and British Navy. That tells us we've gone from air and sea dominance to a contested strategic environment where survivability and stealthy nuclear-power submarines are the literal King and Queen of the Chess board.
As you pointed out, Hayley, to quote JFK: we don't do these things because they're easy. We do them because they're hard. This is going to be hard. We already talked about the budget, but there are going to be technological and other challenges. What are you focused on in the coming years as the obstacles you think the 3 governments, particularly the Australian Government, have really got to tackle?
Ms Channer: Great question. Yes, Australian needs new submarines. Yes, I agree they should be nuclear. Yes, I agree we should be spending more on Defence. However, I think the percentage of national resources being spent on this, not only just one service, but one capability, is probably out of proportion for me, with where I think we could be spending the resources.
I did my calculations a little bit differently when the Government said Defence spending would go to around 2.2% of GDP, and that AUKUS would cost about 0.15% of that - that's 7% of the Defence budget. I don’t think that we should be spending 7% of Defence budget on this one capability. I would actually like to see the funds distributed more equally between the services, and actually a little bit more to Air Force, than just to this one capability.
Another of my other concerns is around operating two different types of submarines. As we won't just have the Virginia class, we will also have a hybrid that we develop with the UK – the AUKUS class- which sounds incredible and is a really good selling point. However, I do worry about having these 2 different classes of submarines in terms of if they are staffed differently, or with missing parts or the logistics around having two different types. Debates aside about how quickly we can actually bring these into service, I would like to see in the context of other national spending, where does this sit? My view is that I would like to see it more evenly split to the Air Force, and also a bit of context around some of the other things we're spending on.
The nation is at a point now where we are spending a lot of money on a lot of different things. We've got the national disability insurance scheme that's costing 1.5% of GDP, health that’s costing 4% of GDP, and also aged care is around 1% of GDP. These are huge costs, and things like aged care are going to cost more in the future as well. This is a 30-year endeavour, and we don't see some of these other national requirements expressed over a 30-year period, so it is hard to judge in that sense. However, it has started a national conversation, about where Australia should be spending its treasure. I agree we do need to spend more on Defence, and that's one of the hardest portfolios to champion, because it's not a domestic expense, and the Australian public can't see the benefit of it, and they can't see submarines because they're under water.
I think it's great that we're having this conversation, and it's very interesting, having the Government being so upfront and frank about it. No other government says these things about their capabilities, and how much these capabilities will cost. I think that raises another really interesting point: that the Government is being so transparent and open when juxtaposed with China’s opacity. The fact that China is not telling other countries in the region why they are building their military, why China has the world's largest navy - 340 warships – and their own nuclear submarines. I think it's interesting and clever how the Government is doing this.
I think it will play well within the region - southeast Asia and the Pacific - they've also reached out to France, and to China to give a briefing. I wonder how it will play out domestically, because a lot of Australians don't know why we need this capability, and they hear the price tag, and they wonder why they should potentially sacrifice things like health or NDIS or aged care to be able to support this capability.
Dr Green: When we surveyed this question at the Centre last year a narrow majority of Australian supported AUKUS, and they hadn't yet seen the price tag. There are also polls that show for the first time Australians actually support an increase in Defence spending, which is interesting.
Peter, just quickly on the Air Force question - do you think there's going to be some trade-offs in terms of the services and an inter-service balance of budget?
If it were me, I'd rather have the submarines. They're close to existential in terms of national offense. But the Air Force Mission is also important - Do you think there's going to be a big trade off?
Prof Dean: I think it depends on the unknown future about where the costs go on this, and you know one of the risks I think we do have with such a large single procurement, like Hayley said, it does have the potential to eat the Defence budget. We've seen in the past governments who then say to Defence that they need to then find the savings within Defence to offset things. I think the difference for the last couple of decades is the government, and both sides of politics have recognised the much greater threat that we're carrying.
And there’s been an overall indication from the Defence Minister, and the Prime Minister, that this is going to start, and that defence spending will rise overall. One of the really interesting parts of the short-term budget piece is that the DPM made it very clear that there’s going to be no new money in the forward estimates for this program. The Attack class money that was set aside for the French submarine that has been discontinued has been allocated for this. They’ve got to find an extra 3 billion dollars, and Defence will have to find that from within the Defence budget. And then it's after the forward estimates, the following 5 years that the number starts to really ramp up, and that the Government will have to prepare it to fund that into the budget a bit more.
The other thing he said is that the Defence Strategic Review, which I worked on, is going to be made public next month, and the government has made real indications that that will cost more. They’ve also said that there will be initial savings in that to offset some of these things, and then that will be announced in the budget. So, we know they’ve committed to releasing the Defence Strategic Review public version and the government’s response to that in April. The Budget is the second Tuesday in May. When we get to that gap, I think we’ll have a much more holistic view of how they’re going to allocate the money between the services and what the balance is. There’s lots of wild speculation about what’s in the DSR and what the Government will respond to that. I think that balance between the services, the strategy, the approach, and where the nuclear-powered submarines fit into that will become clearer next month when we see that. And then the budget stuff, which is the really hard part. You can come up with a great strategy, a great capability plan, but for Governments, the big task is finding the money. As Haley said, the cost of living is rising – so are fuel and energy prices, we’ve got the NDIS. I’ve heard a lot of commentary around this, where people have said that, “if we didn’t do this, we could solve the housing price in New South Wales.”
My response to that is, it’s like building a house. You can build a house, and have the best backyard, if you don’t have any plumbing. You can give away having windows to have the best living room of all time. You can build a wonderful house to the best of your ability, but not have doors or any locks on it. You could say, “we’ll take the risk that everyone will be nice in the neighbourhood and leave us alone,” but I don’t know anyone who’s willing to build a house without a front door or window locks. It’s not about choosing one thing or another – I worry about that analogy. As Haley said, it’s about the balance. The Government has to assess the risk and cost of these choices. We want the NDIS, we want infrastructure and education. But we need defence and security for that as well.
Ms Channer: I completely agree with you. It shouldn’t be an either or choice. These figures are so far in the future, we really have no idea which phase of AUKUS we’ll get to. Who knows whether or not phase 3, where Australia and the UK codesign an AUKUS class, will happen with the government of the day and its financing pressures.
My dad is a civil engineer, my father-in-law is a builder. Decades ago, they built houses. If I need a new house, it would make sense for me to get my father and father-in-law to build me a house. But the difficulty for me in finding a plot of land, upskilling them, and the heartache in spending money at home between them is so great that we would be better off buying an existing house. In this analogy, with nuclear submarines, I appreciate that there is no existing off the shelf submarine to buy from the US or the UK. We’re going to have to help them upgrade their production lines so they can build more faster for themselves and for us.
But if you were going to look at this purely from the perspective of getting things faster and cheaper, we would be better off buying just Virginia-class submarines or just the Astute-class - not actually creating a new AUKUS design. However, that would probably be politically impossible, because, even prior to 2013, the Australian government had promised that submarines would be built here in Australia just like the Collins-class. I get that it’s politically difficult for the Government to say “we’re just going to buy from the US or the UK”, but, I honestly think that you could save 100 billion dollars by purchasing directly from US ro UK shipbuilders. Obviously, I would feel very sorry for the 20,000 people who would no longer have shipbuilding jobs in Australia, but I wonder, couldn’t you invest that 100 billion dollars in defence tech innovation or other defence industry in Australia? Things like Pillar II, where we’re going to be designing capabilities related to cyber, undersea warfare, autonomous vehicles, AI, quantum?
I wonder how much you could use 100 billion dollars in Pillar II and increase the Australian workforce. If you look at the Australian workforce now, we don’t have the major tech companies like Apple or Google, but we do have incredible home-grown companies like Atlassian or Advanced Navigation. I’d personally love to see the savings put into that side of defence innovation, rather than Australian shipbuilders. Sorry, shipbuilders in Adelaide!
Dr Green: I‘m sure the 20,00 jobs, primarily in South Australia, are a big political driver. You don’t do these big defence productions without domestic politics in mind. My favourite example is the F-35 in the US. Parts of the F-35 are built in every state of the union. Why? Because they need Congressional support. South Dakota, which has a population well less than one million, makes the models of the F-35 that they pass out to visiting VIPs.
You’re right, the politics are tough. The other complication, of course, is you can see from public correspondence by members of the US Congress that there’s not a lot of enthusiasm in the Congress for adding nine boats for Australia to a line where the US desperately needs those boats for the US Navy – and so three to five seems about right politically. I think it also has an advantage for Australia, frankly, because if you’re buying nine boats out of dozens, as much as the US is transferring technology and supporting AUKUS, you don’t have the same leverage as you have with the Brits, where you’re coequal partners providing half the build. So, Haley, you’re right, but man, the politics are complicated.
Let’s talk a little bit more about complications, because we don’t do things because they’re easy. Haley mentioned workforce. ITAR, US tech transfer rules, have to be broken. What in the near term are you looking for, Pete, to see that we’re actually dealing with some of these engineering and legal and bureaucratic complications?
Prof Dean: Yeah, I think you've hit on the 2 really big ones, and I, I would lead with workforce, workforce, workforce. And I say that three times, because its important in the short, medium, and long terms, and it’s important for the UK, the US, and Australia.
We’re short of workers – as we know. We know the navy is short of submariners, and we know the Navy is short of sailors, full stop. The Defence Force is short of personnel. So, we have to solve those issues. And we can’t go out and beg, borrow and steal those workers from the UK or the US, because they have exactly the same problems as we have.
One of the things about this pact that I know officials have been talking about is an agreement they’re not going to steal workers from each other, because there just aren’t enough to go around.
Dr Green: It would be nice if difference services and departments and think tank and consulting groups in Australia had the same agreement, wouldn’t it?
Prof Dean: We know we’ve suffered a bit because of COVID and the related restrictions on migration in all three of our countries during that tough period. But we can’t just reach out to and import workers from around the world and out them straight into these jobs. The technology we’re talking about here is one of the most secret bits of military technology on the face of the planet. That’s why it is such a big deal for the US to share it with us, but also continually to upgrade the level of sharing they do with the United Kingdom.
What we’re going to have to look to is to backfill workers into the country to fill other jobs, and encourage Australians or those to get through security clearances to go into the submarine workforce area. Navy is going to have to go to a massive recruitment campaign over this. These boats have a bigger crew than the Collins class. One of the reasons I’m happy that we didn’t go down the Virginia-build path, despite the wonderful advantages on some levels that they’d provide, is the size of their crew complement. The AUKUS SSN is looking at having a 30-35% smaller crewing requirement. We’re going to really struggle to provide the naval crews to do this; it’s going to be a lot of investment. Behind all of this is going to have to come a system for universities and the TAFE and trades and skills sectors.
And of course to convince people about this, we’re going to have to start talking to young people in Australia in high school about jobs, not only in the military, but also in the defence industry. The government’s done a bit of work on this and has found that when most people hear ‘defence industry job’, they think that you’re going to put them in a uniform. They’re not really that aware of it. One of the positives of this big AUKUS announcement is that people are more conscious of it the public front of mind.
There’s going to have to be a huge amount of work from government, from industry, from the State governments, the Commonwealth governments, from the military, and everybody to promote the idea that there are lots of jobs. Pat Conroy, I think, hit the nail on the head: if you’re a young person today looking at a high skill, high-paying job, you could get into the AUKUS submarine program and retire and the program will still be going. You can spend your whole career in there in a very well-paid, very high-tech, very cutting-edge career that would be really fascinating. But we’re going to have to convince people to do it, and it’s going to be really hard.
Dr Green: As you know Pete, I toured the lines where they make the Virginia and Columbia class subs in Groton, Connecticut and in […] before I moved to Australia and I talked to a lot of the workers on the line. The companies, the Defense Department and the state governments in Connecticut and Rhode Island have a program where they do training, internships, for high school kids. By the time they graduate, they’re building nuclear powered submarines together and then they are moving on to more advanced skills. They’re doing this with what you’ve just described exactly in mind; this is a career for their whole life, with their friends from school and in their neighbourhood.
Before we go to questions, let’s talk about two of the criticisms that we’ve been hearing/ There’s been some temper tantrums. There’s a little bit of hyperventilation, but there are some legitimate criticisms. We’ll touch on two of them in particular that are repeated. One is the regional reaction, an the other is the question of Australia losing sovereignty. So Haley, to you first, on the regional reaction.
I’ll preface this by saying that the idea that Australia is now targeting Australia because of AUKUS is laughable. Anyone who knows PLA military strategy know that they’ve been targeting Australia for some time. But we do have to worry a little bit about Southeast Asia. I think the big maritime powers, Japan, India, as well as Vietnam and others, see huge advantages in this deterrent capability for themselves. But there are other smaller states in Southeast Asia don’t want to get caught up in geopolitics. They’re nervous a little bit. Haley, you’ve served in government. What do you think the Australia, US and UK governments have to do to deal with that particular problem, particularly when our Chinese friends are pretty actively spreading narratives about AUKUS in the region?
Ms Channer: Yes – the PR around this announcement is extremely important, and this Government has recognised this. They saw the mistakes made by the previous government 18 months ago when AUKUS was first announced. When AUKUS was first announced, it had to be done secretly, because there are many factors that could have prevented the deal from actually happening – one of them being an upset France speaking to America about it. But the repercussions of announcing it the way they did 18 months ago is that the region was shocked, and there was confusion about the nuclear aspect, which is why President Biden was at paints to explain earlier this week that it was nuclear propulsion, not nuclear armament.
Everyone hears the word “nuclear” and is like “wow.” So, I think this Government has learned lessons from last time and did extensive outreach before the announcement. Deputy Prime Minister Marles said that he, the Prime Minister, the Foreign Minister Penny Wong and others placed around 60 calls to countries throughout Southeast Asia, the Pacific, France. They offered a briefing to China. They actually explained all the details, so that countries understood what was going to happen, and that is really showing respect to the region and helping bring them along in understanding why Australia is doing this.
I think that one of the relationships we’ll have to manage extremely carefully is the one with Indonesia. Indonesia has always been a challenging relationship for us, and there’s been a lot of missteps on Australia’s part in the past, so Penny Wong was doing her best to engage the region. All the trips she has done to the Pacific and Southeast Asia have been mending some wounds from the past.
I think the next challenge for us will be speaking with Pacific Island nations to reassure them about nuclear waste questions and the fact that Australia will be making sure we keep the nuclear waste on defence land, whether that’s on new land we purchase in the future or on existing land now, because obviously the Pacific’s relationship with nuclear issues and nuclear testing is fraught, and brings back terrible memories for them, as well as current issues.
Expressing complicated issues in a way that the region understands – how Australia, in particular, fits into this picture – I think will be challenging for Australia, the United States and the UK going forward. That this arrangement reinforces security rather than undermines security.
I think China’s rhetoric around Australia creating an arms race is interesting. I wonder which countries buy into that. Pete, what do you think about this?
Prof Dean: This is the most unbelievable element, you know: their audacity of trying to make statements on this, as you said, throwing anything at the wall and seeing what will stick, when they’ve undertaken probably the largest military modernisation or expansion program since World War II in dollar terms. China currently operates 59 submarines. They’ve built 12 nuclear powered submarines, many of them nuclear armed, in the last 15 years. By the time the first SSN AUKUS is due to be delivered in Australia in 2042, there will be in excess of 70 to 75 Chinese submarines operating in the region.
If there’s an arms race going on, one side is racing. Everyone else by comparison seems to be making modest investment. We’re looking at building 8 submarines, where the Chinese are looking at having 76. Now, of course, the reason we’re doing it is not just for our own security, but for regional security as well, because you’d balance out our much more advanced submarines with the US submarines, the Japanese submarines.
To be honest, everybody in the region is building, buying or modernising submarines. You can’t name a country that’s got maritime interests in Southeast Asia who isn’t mobilising their fleet, expanding their fleet, or actually looking at buying submarines that they didn’t have before.
One of the things the government’s been Is incredibly open about this. The number on this, 368 billion, is the training costs, the supply chain costs, the infrastructure costs, the basing cost, the people costs, the platform, the weapons. This is as close to a holistic notion you could find. But the Chinese are completely opaque.
Xi Jinping in the same week came out and said he’s going to increase their spending by a considerable amount of money, more than the entire annual Australian defence budget. He’s going to increase it again to build his great wall of steel so he can, in his own words, protect China and ensure that China’s interests are guaranteed against those who disagree with China.
On AUKUS, it's wonderful overblown rhetoric. What worries me is that some people actually repeat these lines as if they’re true, in the region and in Australia at times.
Dr Green: So Pete, before we go to questions, can you unpack the sovereignty question? You hear charged that, because Australia would depend on US and UK nuclear propulsion technology, there’s a loss of sovereignty. Because these Virginia class will be jointly crewed, there’s a loss of sovereignty, and so on and so forth. What should people think about the sovereignty question?
Prof Dean: You can peel back the layers at the top level. The way the government is talking about this is that investing in capability for a maritime country is about protecting our own sovereignty. This is about helping the safety and security, peace and prosperity, and the sovereignty of our country. What they’re also talking about, in the regional context, is having states in the region able to make choices free of coercion about their own sovereignty. Penny Wong has discussed this extensively since she’s become Foreign Minister while travelling the region. They’re packaging AUKUS about creating a regional balance that will help those states be free to make sovereign decisions for themselves. So, they’re playing it at that very broad geopolitical level. But most people are worried about the sovereignty question in terms of sovereign capability and control.
The PM has been very clear that this is an optimal pathway not only for capability but for sovereign capability. I agree with Haley that it would be cheaper to buy these off the shelf from overseas than build it in Australia. The politics of this are pretty much impossible unless we built them in Australia. One of the other arguments for building ships in Australia is that it gives us sovereign control over our capability, as, by building them you also learn how to maintain and sustain them. Then you have the capacity to field them yourselves.
We won’t build it all. The reactors will come from either rolls Royce in the UK or from the United States. We’ve heard Malcolm Turnbull and others say this is the end of sovereignty as we know it. But their definitions of sovereign military capability are no different to what we’ve operated with for decades and decades. If you look at our air force, it has F-35s and it has Super Hornets. It has P-8 Maritime Patrol aircraft. These are American aircraft that we buy from the United States. We do the maintenance and sustainment, the same way that most countries in the world do. The F-35 Joint Strike Fighter not only has a part from every state in the United States of America; it has 7 other countries involved in its production, including Australia at that. Even a state the size of the United States can’t necessarily always get complete sovereignty over their military capability. Very few countries can do this. A big country like India is very reliant on Russian military technology. But once you import that, you own it, you control it, you maintain it and you can deliver it. It’s about the capability being under sovereign control.
The key thing people are worried about is, if we have a Virginia class submarine, who is in control of where that submarine goes and what it does? The Australian government is being very clear that it will be majority crewed by Australians. The captain will be an Australian and will be taking its orders from the Australian Government and not from anybody else.
Dr Green: So let’s get to some questions. There are a lot of very good questions across a broad range of subjects, and some are directed to individuals on the panel. But first, a question for both of you from Pat Buchan: what does the Government here have to do to engage the Australian public on this going forward? We’ve raised a lot of questions; of things we like and things we aren’t sure about. What does the government have to do to continue building its case?
Ms Channer: This is the 368 billion dollar question. It’s really hard because, like I said before, there are so many other competing national priorities, and defence is one of the things where you can’t physically show people the benefits. One of the good things that the Ukraine war did was to show European countries the value of their defences. We don’ t have the same situation. We have this fantastic geographical location – countries in our region have territorial disputes, which we simply do not have. So, Australia doesn’t want to be drawn into conflict. But the honest truth of it is that we are reliant on a secure and stable region for everything. A nation’s wellbeing is not just security, it’s prosperity, it’s quality of life, it’s a social resilience.
And so, the message that the government needs to send is an extremely complicated one, because people are going to need to engage at a deeper level than what the communication mechanisms that we have today provide. On Twitter, on social media generally, it is very difficult to communicate about these complex issues, because you have counter-narratives that have a lot more cut through. It’s the reason why we had President Trump is because he got media cut, even though a lot of what he said wasn’t true. So, in this new era, how do you communicate something like AUKUS to the Australian public?
Part of it is honesty and transparency. But I’m also a big believer that there shouldn’t be complete honesty or transparency, including in your private life. You don’t tell your friends everything you think all the time. So, I think it’s going to be an extremely difficult balance. Shamelessly, to give a big plug to think tanks, think tanks are at the nexus of explaining government policy with people from academia and explaining it to a public forum. You need more of us.
It's true, though, that you really need people to communicate well to the public in a way that there’s cut through, so that they will understand what the government is doing and be brought along over a 30 year journey.
Dr Green: Thank you. Peter, what is the expectation of and the opportunity for the university sector in AUKUS, from technology to workforce and skill building?
Prof Dean: It’s absolutely enormous. I saw some announcement from the Group of 8 research universities that they’re going to go over to have visits with their UK and US colleagues to discuss this. I know Sydney University has extensive relations with universities in the UK and the US, and the University of New South Wales have their own AUKUS partnership with a university each in the UK and the US. This is going to occur on multiple levels. The university sector has an enormous role to play, also in terms of engagement, in talking to the public.
But I really hope in the Government will be more forthcoming, more direct in their engagement with universities and make this more of a partnership. There’s a training component, as we have to train more people to do marine architecture, to operate submarines. I saw one report saying we’re looking up to meeting nearly 100 PhDs a year across a whole range of areas for the next generation to get enough skilled people to not only be able to deliver on this project, but then to train the generation that comes behind them. This is an enormous opportunity for research and development, and the education piece as well, because you don’t just need the marine architects, engineers and nuclear architects – you also need accountants, and project management. This is an enormous series of very large projects, that will then be broken up further into smaller projects.
Also, I don’t think we should underestimate the TAFE area. As you said Mike, in the United States, they have a sophisticated way to engage people to be welders. The number of welders you need to do this type of work is immense. I was lucky enough to be down at the Collins class yard recently, where they’re doing full-cycle docking and then locking at doing the life of type extension for Collins. They have to cut the hull of the submarine and then weld it back together and they weld it continuously in multiple sheets over a two week period. That’s some of the most highly skilled welding on the face of the planet – we have to do that work and develop not only the current workforce but the future workforce for this.
The education piece for this, then, is enormous. Way back in the beginning of my career, I was a high school teacher. I spent some time as the Pro Vice Chancellor Education at UWA. What really worries me is the level of high school education and awareness. We have states in Australia who are pushing away students from doing TAFE courses over ATARs in Years 11 and 12. Any discussion or predictions on the work of the future says that low-skilled or unschooled jobs are going to be automated out the door. We have to up skill our people. This is a great opportunity for that, and that’s a really good question, because we shouldn’t underestimate the challenge in the training, education, research and development piece.
Of course, universities are the largest contributors to R&D in our economy – much greater as a portion, for instance, than the UK. The US as well.
Dr Green: Let me direct this next one to Hayley, its from Jay-bun Kim from the Korea America Association, but there are a couple of questions in the queue about this topic. Korea, Japan and others docking into AUKUS – what are the possibilities?
Ms Channer: On Pillar 2 I feel like the possibilities are much stronger than Pillar I, because there’s not going to be a nuclear-powered submarine for everyone. Not everyone gets a prize – it’s just us. So, I think on Pillar 2, on some of those advanced defence capabilities where we’re already working very closely, not only with the Five Eyes, but also with Japan, South Korea, and maybe down the track also India/ We do need to work closely with these countries, because in supply chains we’re going to need a lot more things that have duel use applications. The classic example is semiconductors, but in other things that are world leading technologies, we’re going to have to work with them because they have some of the best and brightest.
We are already seeing movements to do that, but AUKUS is going to create more of a mindset shift in the US, UK and Australia about the imperative to cooperate more closely. What we would need to help that along with other countries like Japan, South Korea and India is something else that would actually be a signal to governments in those countries and our officials to break down invisible barriers, cultural barriers, that exist to doing thing more closely. I would like to see something else develop to actually move that along, because I think we could achieve things faster in some cases by including those countries. We should really be benefiting from countries that are fantastic at automation and AI.
Dr Green: And they have significant defense budgets. They have significant technological advances, as you said, and the reality is the US bilaterally with Japan especially, but also Korea is doing a lot of this Pillar 2 stuff already, including hypersonics and so forth. So, it seems natural, I think, in the Japan case security of information will be the biggest sort of thing to overcome.
Prof Dean: That was what I was going to say. The real big thing that those countries need to develop, to bridge that gap, to get closer to working with us on all this, is their own internal security mechanisms: their cyber security, their physical security and their counter-espionage work. The US, UK and Australia are able to do that a little more easily because we’re part of the Five Eyes network, and that's smoothed the way for this technology transfer, which means we have the higher standards in the world of that levels of secrecy. And so, if those other countries can build up their capacities in those areas, it will make it much easier to bring them into these pretty cool areas. We can share in the cutting edge, as Haley said, of quantum computing, undersea capabilities, artificial intelligence.
Dr Green: There are a couple of questions that I think I’ll take on for a minute about US reliability. Will the Virginia class subs be approved by Congress? Will a future American administration honour Joe Biden's commitment? The reality is, over the life of this endeavour, there are a lot of scenarios for politics in the UK and Australia as well. The US isn't the only country that has unpredictable political outcomes from elections.
As Pete said, this deal shows a remarkable level of trust, and for good reason, despite the uncertainties that elections and politics in a democratic society can bring. For one thing in the United States, the support for AUKUS and the support for Australia is very bipartisan in the Congress, but also in the public. You know, we've surveyed this at the US Studies Centre and Americans have always been pro-Alliance by pretty wide margin. The big shift in the last 2 years is that Americans, now from 45% to 60%, say Australia's capabilities make America safer. The US needs this deal for its own interests.
We have Five Eyes, and other deep, deep historical roots for trust. I’m sure people are wondering well ‘what if Donald Trump becomes president again?’ Or Ron DeSantis, the Governor of Florida, recently got headlines because he was critical fo the US commitment to Ukraine. But if you read what DeSantis said, or if you look at how the Trump administration behaved, the right wing is sceptical about Europe - not Asia. These are not isolationists; these are Asia Firsters. It may not be a very subtle Asia First policy – it may be pretty rambunctious and spicy on anti-China rhetoric – but I think the support for deterrence is pretty strong.
The complications in US politics are just going to be the general dysfunctional aspects of Congress because of a narrow Republican majority and year-to-year continuing resolutions on our budget. There are a lot of procedural complications, but, in terms of will, it’s pretty robust if you look at polls, Congressional opinion, and the opinions of potential candidates. But look, this is one of the uncertainties about politics.
A quick final question for each of you: when we are all on our front porch in our old age, well, me and Pete anyway, in 25 or 30 years, what will the Australian submarine force look like? Any predictions?
Ms Channer: I’m not going to end on a negative note, so that was a hard question for you to give me. It will look better than it does today. We will have nuclear submarine, I think. How many? I don’t know. I definitely think the US deal will come through, so we will definitely realise aspects of this pathway.
Prof Dean: I’ve got the high level confidence Haley does. If you look at the details, it’s a good deal for the United States. We’re investing in uplifting US capabilities, US shipyards. This is then going to have a long-term boost for their ability to build their own things. There’s going to be plenty of US jobs out of this as well, so I think you can sell this – not just to Congress, not just on the security side, but from a whole range of vantage points. As you said Mike, the public feel that the security of Australia is good for the United States – that’s a key tipping point.
I agree with Haley that we will have nuclear powered submarines. The big thing will be the interesting mix of what that fleet looks like. I like the deal on a number of levels. It’s three to five Virginia class submarines. Why? Because when we do the LOTE of the Collins-class submarine, if all those timelines are met, we won’t need the extra two Virginia class, because we’ll have the AUKUS boats and be able to drop off the Collins class. We’ll actually be able to do the LOTE extension earlier, and only have to do a full LOTE extension to four of the six boats. But if that doesn’t work out, or AUKUS submarines don’t turn up on time (because everyone knows the risk of Defence blowing out budgets and timescales), the option is there to buy additional Virginia-class submarines. Another reason for the $100 billion flexibility in the price tag is that there’s multiple decision points coming along.
This is why I’m hesitant to make too much of a guess. I made the note in the Australian the other day that this is the end of the beginning, but we’re a very, very long way off from the beginning of the end. Think about the number of decision points, the number of governments in Australia alone between now and elections to 2054. I think you’re right Mike – people are worried about the United States and Trump, but who could imagine what Australian electoral politics will look like in 2054? Who predicted the teal wave? What will happen on the left of Australian politics, or the far right? We will also have to see what happens in the UK.
But I think, if you look back over the arc of our long term democratic history, we have these movements here and there but the sensible centre prevails. So, in the past, we’ve been able to share technologies; all military capability at this level takes 20 or 30 years to develop, and we’ve done that since the second World War, and I think that will hold true.
Optimistically, we will have nuclear powered submarines. How many? What type? What brand? And, most interestingly, what’re they going to call them? We don’t want SSN-Boaty McBoat Face. Pick some really good names for some submarines. The Brits have thought of some really cool names. Let’s see what our Navy is going to come up with. This is one of the interesting PR elements to keep it in the public interest.
Dr Green: Very likely there’ll be the Virginia class. Probably, you’ll have this AUKUS class,
But when we meet in 30 years to reminisce, I think the element that people will be surprised about is the very, very large fleet of autonomous undersea vehicles that comes out of Pillar 2 that constitutes the cutting edge of deterrence undersea and keeps this region safe. It’s not just the 9 or so subs; it’s the constellation of autonomous AI-driven vehicles that just make it too hard to consider using force by an adversary against Australia, the US or our friends. That, I think, is the future we’re looking at. But, like Haley said, we don’t do these things because they’re easy.
Prof Dean: If I can add a one-finger on that, one of the things I didn’t mention is the beauty of a nuclear powered submarine is its power plant. It can run autonomous systems, run sensors. Diesel electric boats have very limited battery life, and husband their battery power very carefully. You don’t have to worry about that with a nuclear powered submarine. You can add sensor after sensor, autonomous system after autonomous system, because you’ve got that big nuclear power plant driving your boat.
Dr Green: People interested don’t have to wait thirty years for us to rejoin on this issue. We will be putting out more reports and doing more webinars, including when the Defence Strategic Review comes out, but that’s it for now. Thank you Haley and Pete, and thank you everyone for joining us.
