Pearls and Irritations

If the main aim of building ships in Australia for the Royal Australian Navy were to keep locals in work, then the South Australian-based Australian Submarine Corporation (ASC) would be a pretty good model. It spent around $400 million on salaries last year, about half its budget. If the aim, however, is to build on time, on budget, and to obtain value for money for Australian taxpayers, ASC would be a terrible model.

South Australian spruiker Senator Nick Xenophon and others are on the warpath against competition from Japan, ahead of the long-delayed decision on supplying the next generation of submarines for the RAN. Xenophon thinks the government-owned ASC (formerly Australian Submarine Corporation) is the ticket. He claims the ASC-built Collins-class subs are now “very good” at what they do­­––proof that local know-how is perfectly able to meet the Navy’s future requirements.

Defence Minister David Johnston intemperately (though not unreasonably) claimed last year that ASC couldn’t be trusted to “build a canoe”––and lost his job for saying so.

Who is right?

ASC exists to fulfill two major defence contracts: for the 6 Collins-class submarines currently (or at least sometimes) in service and the 3 Air Warfare Destroyers (AWD) now under construction.

The company’s performance delivering and maintaining the Collins submarines was, until recently, woeful. The final report of the Coles Inquiry into the debacle, issued last year, said there had been “remarkable progress” in several areas, with reduced breakdowns and speedier maintenance. The Navy was pleased to say now that 2, and often 3, of its 6 subs were available to put to sea at any time. If that sounds less than spectacular, consider this: there were times after the Collins-class subs came into service when none was available to defend the country.

The first subs ASC built were too noisy to avoid detection and so prone to engine failure due, among other things, to “poor design and manufacture”, it was felt in 1999 they would never meet the standard for military operations. Retrofits and redesigns have brought the subs up to scratch, but this laborious process (“ASC is a learning organisation” says the company’s annual report) has taken 27 years of a 35-year life of project, i.e. from contract-signing to when the subs will have to be replaced. The Navy began its search for a replacement submarine several years before the Collins class started delivering on its original promises.

Now, if ASC is, at it says, a “learning organisation”, given the experience with the Collins project, one might expect it to do a lot better with the more recent AWD project. Unfortunately it has not. The first of the destroyers was due for delivery last December. The deadline came and went unfulfilled. The project is running 3 years late (for the 3^rd ship) and hundreds of millions of dollars over budget. In 2013-14 the project crawled from 70% complete to 73% complete. ASC admitted to “significant challenges” in the program. Once again, the government has had to devise a rescue plan for ASC in a bid to prevent another gap opening in the country’s defence capability. This is not the “old story” of the Collins debacle, that defenders of ASC would have us discount; it is the current state of affairs in the biggest naval project Australia has ever undertaken. Who would not wish that things were different, and we were able to sing the praises of an Australian success, but nothing is gained by hoodwinking public opinion with cheap, unsubstantiated claims of a “secret” Abbott-Abe deal to give the next submarine project to Japan.

I am, of course, not privy to the discussions taking place, though I have written here before about the close interest shown by both Tony Abbott and the now former Defence Minister Johnston in Japan’s submarine capability and, therefore, I have no doubt that Canberra would be well disposed to such a result, if it happened. But this is a far cry from the uninformed, jingoistic claptrap that is overtaking the debate on radio talkback, etc.

Here are some facts to consider.

The Defence Department and the RAN began scouting for Australia’s next generation submarine in 2007 and continued the process under the Rudd-Gillard-Rudd governments.

One of the major lessons the Navy learnt from the selection process used for the Collins contract was that an open tender proved more open to political influence and fudged specifications than to public, or even departmental, scrutiny. The term “open tender” was a misnomer. European consortiums either joined the bidding with designs for “export only” submarines they had never ordered for their own navies or with designs that required significant modifications to meet Australian requirements. This flawed process greatly contributed to the project’s chronic problems.

Navy and Defence decided that a better approach would be to survey what capabilities existed here and overseas to actually deliver to performance specifications that, on this occasion, would be defined more precisely than they were for the Collins project. They did not want to invest in another unpredictable and costly “learning curve”. Time went by, governments came and went, and by 2014, seven years into the study program, it became apparent that, at this rate, there was a risk the Collins-class subs would be obsolete and unserviceable before a replacement could be delivered––especially if a design were chosen that required major modifications and the fitting out of a completely new manufacturing operation.

From the beginning, the Japanese were in the periscope sights of the RAN, because of the widely held opinion in international defence circles that their non-nuclear powered submarines are second to none. They are reliable and run almost noiselessly: two key requirements. Back when the Collins project was being tendered, Japan was not in the business of exporting military technology. Once that changed the Japanese automatically became front-runners. It did not take any “secret deal” to bring this about. The Sōryū-class diesel/electric submarine is the model being assessed. A sale to Australia––which could easily involve a major component of local manufacture and maintenance––would undoubtedly be a feather in the cap for Prime Minister Shinzo Abe, a proponent of a greater Japanese defence capability, but news reports this week that Japan’s Defence Ministry was thrown into confusion by the Abbott leadership challenge were sheer hyperbole, presumably intended to bolster conspiracy theorists like Xenophon and his ilk.

It reminds me of the way the Japanese proposal for a Multifunction Polis in the 1980s was exploited by an ignorant commentariat––until the controversy, among other things, derailed the 1990 election campaign of Andrew Peacock (who fell for the “Japanese invasion” rhetoric). If the submarine project is swept up into the maelstrom of Liberal Party politics once more, with the enthusiastic encouragement of Labor and the Greens, etc., a rational decision-making process may prove to be impossible. Better to scrap the whole project if it means building subs that arrive late and incapable to a future conflict.

Walter Hamilton is the author of “Children of the Occupation: Japan’s Untold Story” and “Serendipity City: Australia, Japan and the Multifunction Polis”.

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