{"id":66651,"date":"2021-08-24T06:00:05","date_gmt":"2021-08-23T20:00:05","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=66651"},"modified":"2021-08-23T16:55:55","modified_gmt":"2021-08-23T06:55:55","slug":"whats-the-real-cost-of-australias-submarine-capability","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/whats-the-real-cost-of-australias-submarine-capability\/","title":{"rendered":"What\u2019s the real cost of Australia\u2019s submarine capability?"},"content":{"rendered":"
<\/figure>\n

You can have a cheap submarine capability, or you can have a safe and effective one. There\u2019s no third option. Australia has chosen the second option; consequently, its submarine capability costs a lot. But how much exactly? We\u2019re all now very familiar with the $89 billion price tag on the future submarine, but that\u2019s a number that stretches far off into the distance, and it doesn\u2019t cover all aspects of the capability.<\/p>\n

Perhaps a more useful way to answer the question is to focus on the annual spending on Australia\u2019s submarine capability. Parts of the answer are easy to find, but as with all areas of Australian Defence Force capability, it\u2019s difficult to develop a comprehensive number. It\u2019s particularly hard if we\u2019re trying to include all elements of capability\u2014or the nine fundamental inputs to capability, to use the Defence Department\u2019s term\u2014such as facilities. It\u2019s hard to know how much of the $3,188 million<\/a> spent annually on estate maintenance and garrison support should be attributed to submarines, for example. Or how to identify indirect costs such as educating future submarine officers at the Australian Defence Force Academy. So we\u2019ll limit our analysis to direct costs that can be attributed to submarines with reasonable confidence.<\/p>\n

The sustainment cost of the navy\u2019s six Collins-class submarines is the easy bit. That\u2019s spelled out clearly in Defence\u2019s budget statements<\/a> and annual report<\/a>. It\u2019s averaged<\/a> $574 million per year over the past 10 years but has been increasing. It\u2019s predicted to be $671 million this year.<\/p>\n

However, that number doesn\u2019t include some key elements. One is fuel. A full tank of diesel will cost several hundred thousand dollars. Another cost that isn\u2019t included is even bigger, namely the uniformed personnel operating and maintaining the submarines. While each submarine has a crew of around 55, a much larger number than six lots of 55 is needed to have a robust, sustainable workforce. The navy has done well in increasing the number of its submariners over recent years and Defence informed the Senate earlier this year that that total had reached 881, although there were still some shortfalls. ASPI analysis<\/a> (page 70) concluded that the average cost of each permanent ADF member was $160,000 a year five years ago, but submariners receive special allowances and retention bonuses so we could be looking at $250,000. Overall, the cost of the uniformed submarine workforce is probably more than $225 million.<\/p>\n

The Collins sustainment cost includes full- and mid-cycle dockings in which the submarines are taken out of the water for overhaul, but it doesn\u2019t include the cost of major upgrades that are installed during those dockings. Those are listed separately as acquisition projects in the SEA 1439 portfolio of projects. Here\u2019s where numbers can get tricky. Since the Defence budget statements include only the department\u2019s top 30 projects by planned spending for the year, we don\u2019t know projects\u2019 spending if they don\u2019t make the cut-off, which was $97 million this year (although it\u2019s been lower at around $50\u201360 million in recent years). If a project doesn\u2019t ever make the top 30 it\u2019s hard to know that it even exists, let alone what it\u2019s spending.<\/p>\n

Projects currently running include SEA 1439 Phase 6, which is upgrading the Collins\u2019 sonars. It spent $133 million in 2020\u201321 but doesn\u2019t make the top 30 this year. There\u2019s also SEA 1439 Phase 5B2, which is an upgrade of the Collins\u2019 communications and electronic warfare suites. It spent $64 million in 2018\u201319 and $70 million in 2019\u201320. There are other phases of SEA 1439, but we can\u2019t see what they are spending. This year the budget statements also include Joint Project 9013, which is upgrading the Collins\u2019 satellite communications system with predicted spending for the year of $101 million. We\u2019ve collated the available data in our Cost of Defence database<\/a>. Let\u2019s lump all of the Collins upgrade projects together and call it $300 million a year.<\/p>\n

With around $670 million for sustainment, $225 million for workforce and $300 million for upgrade projects, the Collins class\u2019s direct costs are in the order of $1.2 billion per year.<\/p>\n

But since we\u2019re looking at the cost of Australia\u2019s submarine capability, not the Collins per se, we also need to include the cost of the future submarine. Annual spending on SEA 1000, the project designing and building the Attack-class submarine, has been steadily growing<\/a>. Even though we\u2019re still several years away from starting construction, spending hit $719 million last year and is planned to pass $1 billion this year.<\/p>\n

So the direct cost of our submarine capability is around $2.2 billion this year. That\u2019s about 5% of Defence\u2019s $44.6 billion budget. That\u2019s the cost. The fundamental question is whether that presents value. That\u2019s hard to address in one post. Under the Collins\u2019 usage and upkeep cycle, that spend results in two deployable boats. But in light of the long transit distances to where our submarines operate, that model can\u2019t ensure one boat on station. On the other hand, even the prospect of encountering one capable submarine can generate significant uncertainty for any adversary.<\/p>\n

The annual spend is going to increase considerably\u2014and quickly. In the near term, as the future submarine project ramps up and transitions from design to construction, it\u2019s reasonable to assume that its annual cash flow will pass $2 billion by the middle of this decade. It\u2019s important to realise that now that we\u2019re in the era of continuous naval shipbuilding, those costs will never ramp down; we will always be designing and building submarines, so we will be paying something like $2 billion per year (in current dollars) until submarines go out of fashion.<\/p>\n

The current round of Collins upgrade projects will wind down, but they will be replaced by the Collins life-of-type-extension program in the second half of this decade. While the LOTE is based on a full-cycle docking, its scope is going to be much larger, including new main motors, diesel generators and electrical distribution systems, so its costs will be much higher. How much higher isn\u2019t clear, although the 2020 force structure plan<\/a> has a funding line for the LOTE of $3.5\u20136.0 billion (page 45<\/a>). It\u2019s hard to see its cost being less than the current program of upgrades, so it\u2019s likely we\u2019ll still be spending at least $300 million per year once the first LOTE installation starts in 2026. The number of submariners will need to keep growing in anticipation of the arrival of the Attack class.<\/p>\n

By the second half of the decade, we\u2019re likely to be looking at around $3.5 billion per year for our submarine capability\u2014which will be the same as it is now. That\u2019s still some years before the first Attack class is deployable in 2034 on the current schedule.<\/p>\n

In the longer term, costs will continue to grow as the Attack class enters service. Its increased sustainment cost will a major driver. The new submarines will be 40\u201350% bigger than the Collins and the fleet will be twice as big, so the sustainment cost will be at the very least three times that of the Collins\u2014or around $2 billion (in today\u2019s dollars) by the time all 12 boats are in service in the mid-2050s. Defence\u2019s own numbers support this. It has informed the Senate that the sustainment cost of the Attack class will be $50 billion in current dollars; for a 25-year life of type, that works out at $2 billion per year.<\/p>\n

Of course, the 2050s are a long way away. But there\u2019s likely to be a 10-year period from the mid-2030s to the mid-2040s when we\u2019ll be operating both the Collins and Attack submarines simultaneously, and that will bring significant overheads.<\/p>\n

The future fleet will likely need more than twice as many submariners since the crew of each Attack-class boat will be bigger. Plus, overheads will increase\u2014for example, through the establishment of a second submarine base on the east coast (see page 120<\/a> of the 2020 force structure plan).<\/p>\n

So, between the operating cost of the future fleet and the ongoing cost of continuous shipbuilding, we could easily be looking at $5 billion per year in current dollars once we reach the mature Attack-class fleet. That\u2019s more than twice as much as we\u2019re paying now, but it should result in at least twice as many boats with greater capability available for operations, meaning more boats will be on station for longer.<\/p>\n","protected":false},"excerpt":{"rendered":"

You can have a cheap submarine capability, or you can have a safe and effective one. There\u2019s no third option. Australia has chosen the second option; consequently, its submarine capability costs a lot. But how …<\/p>\n","protected":false},"author":767,"featured_media":66660,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[2436,253,114,223],"class_list":["post-66651","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-attack-class","tag-collins-class","tag-ran","tag-submarines"],"acf":[],"yoast_head":"\nWhat\u2019s the real cost of Australia\u2019s submarine capability? | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/whats-the-real-cost-of-australias-submarine-capability\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What\u2019s the real cost of Australia\u2019s submarine capability? | The Strategist\" \/>\n<meta property=\"og:description\" content=\"You can have a cheap submarine capability, or you can have a safe and effective one. 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