Part 1: Technology risk
The most important acquisition included in the government’s Defence White Paper, released in February 2016, is the decision to procure twelve new submarines for the Royal Australian Navy (RAN). With an acquisition cost of at least $50 billion (and with a much higher through life sustainment cost), this is by far the largest defence programme in Australia’s history.
Australia has made some extremely costly errors in defence procurement in the last few decades, particularly naval acquisitions. The Hawke government’s decision to specify a unique requirement for the Collins class submarines and to build them locally has caused very considerable problems related to cost and availability. It is over ten years since the Howard government awarded the air warfare destroyer (AWD) project to ASC and still not one ship has been delivered, with the cost per vessel in excess of $3 billion and still climbing. As Hugh White has pointed out, if Australia had ordered three Arleigh Burke destroyers from the US at that time, they would have cost around $1 billion each for more capable ships and been delivered long ago.
In this context, the proposed acquisition of the future submarine (FSM) raises a number of complex issues and involves substantial risks. Because of the extremely high cost of the project, these issues should be thoroughly evaluated before any binding commitment is made. The fundamental issue concerns the high risks involved both in the decision to develop a unique Australian submarine and in the possible government disposition to build it locally. We also need to remember that these issues involve not just financial risks but also the risk of sending service personnel into harm’s way using inadequate equipment.
This article is in three parts. This first part contains a brief discussion of the main technical risks involved in the acquisition of the FSM. Major economic and financial risks around the proposed investment are evaluated in Part Two. Finally, the implications of the analysis, including a proposal for an alternative, less costly and risk-minimising approach to delivering advanced submarine capability, are addressed in Part Three.
Technological superiority in the Asia-Pacific
In order to compensate for its numerical inferiority, a traditional objective for the Australian Defence Force (ADF) has been to maintain a level of technological superiority in its equipment relative to potential adversaries. The White Paper states that: “maintaining Australia’s technological edge and capability superiority over potential adversaries is an essential element of our strategic planning.”  In relation to the FSM, “the Government has determined that regionally superior submarines … are required to provide Australia with an effective deterrent… The key capabilities of the future submarine will include: anti-submarine warfare; anti-surface warfare; intelligence, surveillance and reconnaissance; and support to special operations.”.
In the light of previous statements and given the requirement for a very long range, it seems clear that operations in the South China Sea would lie at the heart of the FSM’s mission. Activities in those congested waters would include reconnaissance, intelligence gathering and, perhaps, special operations, moving to anti-shipping and anti-submarine interdiction should hostilities break out. The question then is, will the FSM embody the advanced technologies required to discharge this mission?
Will the FSM embody ‘regionally superior’ technologies?
The statement in the White Paper that the FSM will be regionally superior in terms of its technology is highly contestable. In general terms, a conventional submarine (SSK), however advanced its design, will be inferior to a nuclear submarine (SSN), particularly in prosecuting a force projection role in distant, contested waters.
First of all, a nuclear boat is a true submarine; it will not need to refuel during its service life and its underwater range is limited only by the endurance of its crew. A SSK needs to come to periscope depth from time to time to run its diesels (‘snorting’) and recharge its batteries; this ‘indiscretion’ makes it much more vulnerable to detection. For a conventional submarine like the Collins without air-independent propulsion (AIP), the indiscretion rate ranges typically from around seven to ten per cent on patrol at four knots, and 20 to 30 per cent in transit at about eight knots.
Secondly, a SSN has a high underwater speed (over 35 knots) and can withdraw from any threat very quickly. A SSK can only generate a burst speed of about 20 knots submerged for a short period of time, less than one hour, and then, using AIP if fitted, its speed underwater is limited to around three to five knots.
Thirdly, the size and power of a SSN means it can carry much more kit (such as torpedoes, anti-ship missiles, cruise missiles and mines) than a SSK.
A very important attribute of a SSN is the ability to generate sufficient electrical power so as to run today’s advanced electronic sensors and systems for as long as is required. Already the power hungry sensors in the Collins class, including the vital combat system (of US origin and originally designed for nuclear boats), make a heavy demand on the available power, requiring the submarine to undertake more frequent snorting to recharge the batteries, thereby raising the indiscretion rate. This will become increasingly important as submarines are required to carry more and more sophisticated electronic equipment.
On the other hand, although contemporary SSNs are extremely quiet compared with legacy designs, the one advantage still possessed by a SSK is its ability to run very quietly underwater. Once detected, however, every submarine skipper would exchange this advantage for the very high speed capability of a SSN. As a US expert notes, “AIP does not give … the sort of high-speed power which saves a submarine once it is being pursued. Only nuclear power can give that…”.
In terms of the White Paper’s goal of regional technological superiority, it is true that potential adversaries in the Asia Pacific (with the important exception of Russia) do not currently deploy many nuclear submarines and the ones that are operational are not particularly effective. It may well be that the new submarine, if it were in commission now, for a few years could boast technological superiority in the South China Sea, where it is clearly designed to spend most of its time. While China already has nuclear submarines, they are crude by contemporary western standards, noisy and not considered a significant operational threat. On the other hand, if it realised its potential, Australia’s new submarine would be very quiet and its AIP system (or alternatively substantial banks of lithium-ion batteries) would allow it to patrol submerged, albeit at a slow speed, for around a month.
But the problem is that the FSM is not in the water now. The first boat will not be available for at least fifteen years. This makes it highly unlikely that it would be technologically superior even when it is introduced and much less so in the out years to 2050 when the final FSM will be commissioned.
Even by 2020, the FSM would find it difficult to counter the submarine fleet deployed by China. The White Paper states that: “By 2020 China’s submarine force is likely to grow to more than 70 submarines”. Yet the White Paper is coy about the fact that this total will include up to nine modern SSNs and up to five nuclear powered ballistic missile-armed submarines (see Tables 1 and 2 below). By 2020, therefore, it would be difficult to argue that the FSMs, even ten years before the first one will be available, would be ‘regionally superior submarines’.
Beyond 2020, the technological development of China’s navy is likely to continue apace. Both India and China now have nuclear submarines with the ability to launch long-range nuclear missiles, at the least in second strike attacks. While intensively developing its indigenous nuclear submarine capability, India is actively seeking Russian assistance in developing an advanced SSN capability. It already has commissioned one capable Russian SSN of the Akula class. It is inevitable that China, perhaps with technological support from Russia, will step up its SSN development. Other countries in the region (Indonesia?) may seek to acquire SSNs by the 2030s. At the very least, Australia needs to consider these possibilities in determining the FSM acquisition. The absence of any discussion of this in the White Paper constitutes an important omission.
Improvements in detection technologies
In recent times, the rapid growth in computer processing power has enabled the use of technologies such as undersea laser detection of foreign objects and sound monitoring to enhance substantially the ability to detect submarines underwater. Add to this the improvements in low frequency sonar to detect submarines at very long range, and the playbook has changed very considerably. Also, constant improvements to radar (such as the US equipment that Australia deploys in its fleet of P3 Orions), and SSKs are in much greater danger of being detected when they come to periscope depth in order to snort. Larger submarines, of the kind that Australia is seeking to acquire, are more vulnerable to detection because of their larger footprint and acoustic signature.
Andrew Davies, a naval specialist at the Australian Strategic Policy Institute (ASPI), has analysed future trends in anti-submarine warfare in terms of the FSN acquisition:
“The net summary is that future submarines will need to:
- operate away from chokepoints and contested spaces but be able to project influence into them
- have a low indiscretion rate
- be a hub for a suite of long-range sensor and weapon systems
- be networked with other units, including electronic warfare platforms and systems
- be able to manoeuvre quickly in response to a rapidly changing threat environment.” 
Davies goes on to say: “of course, that list pretty much says ‘SSN’, but that’s not going to happen”.
Davies’s conclusions are of critical importance for the FSM. He states that “the design of the future submarine has to be cognisant of these trends, which will make penetration of adversary space or operations in contested chokepoints by the submarine itself very much harder. Basing our investment around traditional ideas of submarine operations isn’t likely to be a winning strategy a couple of decades from now.” Australia needs “to decide whether our subs are going to play in the highest end operations. If we decide we need to, we’re necessarily going up the risk reward curve for a conventional boat.” One approach, in the absence of the nuclear option, would be to “temper our ambitions and settle for a fleet that can still operate effectively in less than the most challenging situations.” 
Other roles for the FSM
These less challenging situations suggested by Davies would include sea denial in the approaches to Australia and the littoral, where the RAAF may control the airspace and could operate in support. They would also include the other roles assigned to the FSM in the White Paper, namely reconnaissance, intelligence gathering and special operations. To the extent that these can be conducted closer to base and away from contested chokepoints, these are standard roles for a conventional submarine (SSK). They have been at the centre of successful operations of the Collins class and, before that, the Oberon boats. Over the last half century, Australian submarine crews have spent substantial time lurking underwater and reporting shipping movements around Vladivostok or monitoring mobile phone calls on Java.
A conventional FSM with the ability to spend a long time underwater without snorting would be well capable of undertaking all these roles, although there is likely to be an advantage for the submarines in being smaller than the size required by Defence for the FSM. As a former commanding officer of Collins class submarines puts it, “I do not believe an SSK significantly larger than Collins is possible, much less a good idea. There will always be some missions that can’t be achieved; let’s focus our solution on the ones which can.”
Jon Stanford is a Director of Insight Economics. He had a significant career as an economist in the Australian Public Service, ultimately in the Department of Prime Minister and Cabinet. He has worked extensively on economic and policy issues around defence procurement and naval shipbuilding.
 Hugh White (2015), “Naval shipbuilding in Australia: a strategic necessity?”, The Strategist, Australian Strategic Policy Institute, August, http://www.aspistrategist.org.au/naval-shipbuilding-in-australia-a-strategic-necessity/
 Australian Government (2016), Defence White Paper, Canberra, page 16.
 Ibid, page 90.
 Asia Pacific Defence Reporter (2010), “Submarines – The Future”, 21 December, http://www.asiapacificdefencereporter.com/articles/102/SUBMARINES-THE-FUTURE
 Defence White Paper (2016), op. cit., page 42.
 US-China Economic and Security Review Commission (2014), “Chinese Navy extends its combat reach to the Indian Ocean”, Staff Report, March, page 12.
 Andrew Davies (2014), Trends in submarine and anti-submarine warfare, Australian Strategic Policy Institute, Canberra, http://www.aspistrategist.org.au/wp-content/uploads/2014/04/ASPI-submarine-conference-2014-Davies.pdf
 Andrew Davies (2014), op. cit.
 James Harrap (2012), “Reflections of a Collins submarine captain”, Asia Pacific Defence Reporter, 3 May, http://www.asiapacificdefencereporter.com/articles/226/Reflections-of-a-Collins-Submarine-Captain