The story of Australian public policy over the past four decades, under governments of both political persuasions, has been one of getting the big calls right. Hawke’s internationalisation of the economy in the 1980s, Medicare, and Howard’s GST reforms come to mind. Most people would also include Keating’s superannuation system and the Abbott government’s successful border protection policy on that list.
On Tuesday, with the announcement of the arrangements for the delivery of submarines under the AUKUS pact, the Albanese government has got the biggest call on national security policy of our lifetimes right. Spectacularly right.
The government had to balance a number of competing priorities and reconcile potentially inconsistent objectives. The measures announced by US President Joe Biden, UK Prime Minister Rishi Sunak and Anthony Albanese are as successful in doing so as the circumstances allow.
The dilemma for AUKUS was one of capacity and delivery times. It was essential that Australia acquire this capability at the earliest opportunity. Yet the project faced supply-side difficulties from both our partners. If the subs were to be sourced from the US, we faced capacity constraints within their shipyards, at a time when America is increasing its demand for the vessels.
The UK, which operates a much smaller fleet, is not subject to the same capacity constraints. However, the different economies of scale mean its production facility at Barrow is much slower than the US, and it would not be in a position to supply us until the 2040s.
That problem was unlocked by the adoption of a hybrid solution, whereby a small number (currently three) Virginia-class submarines would be supplied in the 2030s, while Australia and the UK would jointly produce the remaining vessels through to the 2050s, incorporating American propulsion and weapons systems.
In the meantime, beginning in 2027, American Virginia and UK Astute class submarines would rotate through Stirling Naval Base in WA, while the existing Collins class submarines would continue to operate into the late 2030s.
The hybrid model also addressed (or at least mitigated) the issue of long-term political risk. As I argued in this column previously, while there is no doubt about the long-term willingness of future British governments, Conservative or Labour, to partner with us in building the subs, the American political system presents immensely more complexities and uncertainties, not least with the growing strength of isolationism on the American right.
As well, if Australia were solely reliant upon American design and construction, we would have much less weight in the relationship through the delivery phase, at the very time when the US is likely to have difficulties meeting its own demands. Having the majority of the fleet supplied by the UK should give us greater confidence that, in the long term, the AUKUS pact will meet our needs.
The hybrid solution also means that, long term, the construction of our submarines will be a more truly collaborative endeavour. The British manufacturer, BAE Systems, already has a significant operation in Australia, with the new Osborn shipyard in Adelaide used for the construction of most of the F26 frigates that Australia is acquiring.
BAE is eager to expand its operations in Adelaide, with the construction of another dedicated shipyard to build the AUKUS-class submarines. Putting political rhetoric to one side, few people close to AUKUS doubted that, were the America-only option to have been chosen, most of the work would have occurred in the United States.
This also means, as Albanese was at pains to emphasise in his speech in San Diego, a massive expansion of the Australian industrial and skills base, which will have flow-on effects across the country, not just in industry but in universities and other research institutions.
While I have long been critical of allowing defence procurement to be driven by industry policy, in this case the benefits of collaborating with a UK prime contractor which is already heavily invested in Australia, and the greater degree of control which it will give us, means a convergence of the twin, and sometimes conflicting, imperatives of security in acquisition and growing our industrial base.
There are two political figures who above all made this all possible. Defence Minister Richard Marles deserves credit for navigating these dilemmas and delivering the best outcome to meet Australia’s complex needs.
But AUKUS itself was the brainchild of Scott Morrison. Bold in its conception and historic in its implications, it was the direct product of close collaboration between Morrison himself, a very small number of his senior advisers, and the leaders of Defence. From the start, the former prime minister took the hardball but necessary decision to keep the inner-circle tight, in particular by marginalising the notoriously leaky Department of Foreign Affairs. (Until shortly before the announcement, the only senior DFAT officials in the loop were Arthur Sinodinos in Washington and me in London.)
The short-term damage to our relationship with France was a cost which Morrison was willing to pay to secure the much better protection for Australia’s national security which AUKUS offered.
Scott Morrison has had a rough time over the past year. In the longer perspective of history, AUKUS will be judged to be his most important legacy. It is a legacy greater than many other prime ministers have left behind them.
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