A small group of Australian journalists gathered around a mobile phone in San Diego on Monday, local time, for a call that will influence national debate for years.
The journalists were on speakerphone with government advisers to check key facts about the AUKUS alliance shortly before new details were to be unveiled at the Point Loma naval base nearby. With Prime Minister Anthony Albanese about to join United States President Joe Biden and British Prime Minister Rishi Sunak for the announcement, the journalists were being briefed before they reported the news.
The documents handed out to about a dozen reporters, who were gathered in a hotel meeting room, included the $9 billion cost of the updated pact over the next four years and the $58 billion cost over the next decade. This was the first media briefing of the day and was limited to journalists who were travelling with the prime minister in the US to cover AUKUS in depth. It began at 9.15am in San Diego on Monday (4.15am in Canberra on Tuesday).
What the documents did not reveal was the lifetime expense of the entire project from the purchase of interim submarines from the US to the construction of the future fleet of nuclear-powered vessels in Adelaide.
That price tag – up to $368 billion – has become the single, jarring, clarifying fact for the entire argument about defence policy and how it affects the federal budget. It forces all sides to consider what the nation can afford. And that is just what Albanese wants. More on that below.
It took several questions for the answer to emerge, almost as if the government thought it would not have to reveal the figures. The cost was expressed in the documents as a percentage of economic output: 0.15 per cent of GDP. But the questions were about what this meant in dollars. Finally, the answer came. Between $268 billion and $368 billion.
This figure covered every aspect of the commitment, from the construction of a shipyard in Adelaide to a new port facility in Perth and the cost of every vessel, whether made overseas or in Australia. It also included the cost of personnel to run and maintain the fleet. Over what time period? From now until 2055.
The figure is at least twice the cost forecast by the Australian Strategic Policy Institute before the heavy revisions to the AUKUS plan this week.
Political leaders often try to play down costs like these because they can make their ideas look unaffordable. Asked about the $368 billion after the announcement, Deputy Prime Minister and Defence Minister Richard Marles avoided saying the number. “I’ll let you all do the maths,” Marles said on Tuesday in Canberra, a few hours after the briefing in the hotel room in San Diego. He repeated the figure of 0.15 per cent of GDP.
There is already a real problem with the $368 billion. It puts a hard number on a very sketchy forecast over a timeframe full of factors that will change. It not only offers a false sense of certainty but also draws attention away from the most important changes in the AUKUS update.
This week’s biggest advance was the move to acquire Virginia-class nuclear-powered submarines from the US in the early 2030s. This brings forward the nuclear-powered capability by almost a decade compared to the original AUKUS plan. This is an historic decision – the first time the US has transferred these submarines to an ally. Canada, a NATO member, does not have them. Australia will gain a military power it has never had before.
Yet the focus is on the $368 billion figure. At first glance, it looks like Albanese and Marles would be better off if the number had never been disclosed.
In fact, there are three good reasons for putting the cost on the public record. The first is the simplest: transparency. One senior figure in the government says the release of the long-term number was always going to happen. Labor is being up-front about the financial impact of momentous decisions.
The second reason is political. The number forces a debate on hard choices about what Australia can afford. It shapes decisions on the federal budget for this term of parliament and others to come. Opposition Leader Peter Dutton says he supports AUKUS, but does he back the decisions needed to pay for AUKUS? The Coalition has to decide its response. Albanese is not only seeking to position Labor as the strong party on national defence but as the responsible party in funding that defence.
The immediate political tension is about the stage three tax cuts. These cost $254 billion over the coming decade; AUKUS costs $58 billion over the same period. The implication is obvious: Labor could fund AUKUS by amending the tax cuts, most likely by halting the benefits for the wealthiest workers. Labor does not need to scrap the cuts to pay for AUKUS in full.
The third reason is geopolitical. The objective of this pact is to deter China from aggression – a move some regard as a provocation but which Albanese and Marles see as essential for Australian security. They emphasise a financial commitment that lasts across the generations. The full cost estimate is a way of telling China they mean it.
Nobody can be sure of the final shape or cost of AUKUS. Defence projects routinely exceed their budgets. No financial forecast over three decades can be really accurate. Yet the $368 billion estimate is a way of forcing the nation to decide its priorities. Now the number is out there, it is up to Albanese to persuade Australians to accept Labor’s decision.
( Information from politico.com was used in this report. Also if you have any problem of this article or if you need to remove this articles, please email here and we will delete this immediately. [email protected] )