The federal government’s surprise decision to scrap a $90 billion submarine project for a new one based on closer ties with the US and nuclear technology has “profound” industrial and geopolitical consequences for Australia and has received a mixed reception.
Manufacturers, tech companies and employers have welcomed the potential for more advanced domestic capabilities through the arrangement, which has also been criticised for raising tensions with China and eroding sovereign capability.
On Thursday, Prime Minister Scott Morrison announced Australia had joined a “next generation” trilateral security partnership with the US and UK, dubbed AUKUS.
The first major initiative of AUKUS is a nuclear-powered submarine fleet for Australia, which will replace the current submarine building project in Adelaide. The $90 billion, five year running project had been led by the French Naval Group, which has expressed disappointment in the decision along with the French Government.
Mr Morrison said the new nuclear-powered fleet will also be built in South Australia’s capital in “close cooperation” with the US and UK. The submarines will not carry nuclear weapons and Australia will not establish a civil nuclear capability, according to the Prime Minister. But the new propulsion technology opens new options which the federal government said Australia now needs.
Nuclear submarines have fewer limitations for weapons storage and speed compared to conventional submarines and can stay submerged for months. The US closely guards its nuclear submarine technology and sharing it with Australia is significant.
The Department of Defence will lead an 18-month consultation period on Australia’s “nuclear stewardship” to inform the delivery of at least eight nuclear submarines, including vessel type.
While the opposition has given in-principle support to the submarine move, former Labor Prime Minister Paul Keating lashed it, warning it would “lock-in” Australia with US military forces and potential conflict with China.
In a statement, the former prime minister said the arrangement would lead to a “further dramatic loss of Australian sovereignty” and had been made with the underlying objective of collective action against China. Mr Keating questioned the prospects of any US-led conflict with the rising superpower and doubted if Australia had sufficient domestic capability to build the advanced warfighting vessels.
“Australia has had great difficulty in running a bunch of Australian built conventional submarines – imagine the difficulty in moving to sophisticated nuclear submarines, their maintenance and operational complexity,” Mr Keating said.
“And all this at a time when United States reliability and resolution around its strategic commitments and military engagements are under question.”
Australia’s Advanced Manufacturing Growth Centre managing director Dr Jens Goennemann said the arrangement represented a difficult but “honest decision” for Australia which would have felt the limitations of non-nuclear vessels sharply.
He said there was no realistic way for Australia to develop nuclear submarines on its own and locking in with Australia’s most powerful ally to develop capable weapons systems was the right call. The decision could create a “moonshot” opportunity for local manufacturers, he said.
“I think there is nothing wrong with locking ourselves in, from an industrial point of view, to advance our manufacturing capability and to be part of this journey to build one of the most advanced things mankind can build and to involve our local industry,” Dr Goennemann told InnovationAus.
“That is really good news.”
The project presented a major opportunity for many of Australia’s 47,000 manufacturers – 85 per cent of which employ fewer than 20 people – to develop new capabilities and to scale, Dr Goennemann said.
“Many of our manufacturers are extremely capable. The problem is scale but not ingenuity. And if we now have moonshot opportunities such as building a nuclear propulsion submarine, that is uplifting.”
Dr Goennemann also welcomed the technological aspects of the agreement, which includes cyber capabilities, artificial intelligence, quantum technologies, and additional undersea technologies.
“These are hot topics in ability to make complex things. And if that goes along with an agreement that is fantastic,” he said.
The Australian Industry Group chief executive Innes Willox said the move had “profound industrial and geo-political implications for Australia”.
Scrapping the Naval Group project is “devastating” for the French company and its Australian staff, Mr Wilcox said, adding it would be important to transfer local capabilities to the nuclear project.
“Utilising the skills and capabilities already developed will be important to the project’s success. We should not be quick to write-off the work already done on further developing Australia’s skills base,” he said.
“Industrially, the announcement that the submarine will continue to be built in South Australia with supply chains across the country is welcome. A key issue will be when that production will start, as well as how sustainment, which takes up to 70 per cent of work done on a submarine, will be undertaken.
“Any decision to simply import submarines from either the US or UK without Australian industrial input would be a setback for developing our domestic capacity and capability.”
Meanwhile, the Electrical Trades Union (ETU) has condemned the move, saying it represents a betrayal of two generations of secure local shipbuilding jobs.
ETU national assistant secretary Michael Wright said the decision had not been subject to appropriate scrutiny and could actually cost jobs. He warned that the new submarines would require significant offshore maintenance, “undermining Australia’s sovereign capability”.
“It is dangerous and delusional to rely on nuclear submarines for our defence. We are fearful this will also cost Australia much needed engineering, manufacturing, and construction jobs. We need answers as to where and how these nuclear submarines will be built. We need these answers quickly,” Mr Wright said.
University of Technology Sydney Australia-China Relations Institute director Professor James Laurenceson said the strategic move closer to major allies in the other hemisphere was at odds with regional neighbours.
“No other country in our region is behaving in the same extreme manner as Australia,” he told InnovationAus.
“We are either strategic geniuses or strategic fools. Judging by the behaviour of the rest of the region, I’d wager the later. There is much talk in Canberra about wanting to maintain our ‘sovereignty’. But how is our freedom of action enhanced by making ourselves so utterly aligned and dependent on the US?”
Professor Laurenceson said Beijing would recognise the AUKUS partnership as Australia aligning itself with the US in strategic competition against China rather than the ostensible commitment to a rules-based order. China is unlikely to react directly to the strategic move with something similar of its own, he said, but the partnership could still leave Australia vulnerable in trade with its biggest partner.
“I think the main impact will be to further cement in Beijing’s mind that Australia has chosen to align itself with the US in a long-run effort to counter China. And so we can expect the freezing out of Canberra to just get colder and more prolonged. Meanwhile, we know that the US and China will continue to deal with each other directly. This puts Australia in a vulnerable position.”
The agreement for the US, UK and Australia to partner on quantum technologies was also welcomed by Q-CTRL, a venture backed Sydney quantum startup.
“As Australia’s first venture-capital-backed quantum technology startup, boasting both Australian and US investors, Q-CTRL has been an early industrial beneficiary of this extraordinary international technical partnership,” Q-CTRL founder Michael Biercuk said.
“Nonetheless, our growth has come against a backdrop of emerging nationalism in advanced technologies that has threatened to isolate us from key partners, investors, and customers.
“Today’s announcement recognises that international collaboration among closely allied nations is as essential to the development of advanced technology as it is to developing weapons systems.”
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