The federal government is facing calls to buy modified off-the-shelf submarines as soon as possible or risk a major capability gap in years to come.
The warning comes in a new Insight Economics report, commissioned by Gary Johnston, an electronics retailer who has a blog about submarines.
Defence Minister Marise Payne has dismissed the report “as beat up”.
In December last year, Australia and France formally sealed a $50 billion agreement for French naval contractor Naval Group to design a new fleet of 12 diesel-electric submarines based on its nuclear Barracuda.
Australian National University professor Hugh White and former Australian Public Service head Michael Keating both contributed to the report and have sounded alarm bells over the project ahead of construction work beginning in Adelaide in 2022.
“We will pay far too much for a boat that will do far too little,” Prof White told the National Press Club in Canberra on Wednesday.
“Our calculation in the report is that in 2016 dollars, these 12 boats will cost us $40 billion, plus $6 billion for the combat system – well over $3 billion a boat. In every major project like this, the costs escalate.”
He said the calculations in the report were up to three times the cost of other conventionally-powered subs.
Navy’s existing six Collins Class submarines will be withdrawn from service by 2036.
Prof White warned there was a serious danger of a capability gap if the new boats weren’t delivered in time before the present subs leave service.
The pair made the case that Australia needed to urgently make some trade offs and obtain some less-than-optimal vessels in order to make sure we have some submarines at all.
Dr Keating said Australia should acquire a fleet of six off-the-shelf modified submarines along with a mothership to re-service them that could be based at Christmas Island and Cocos Keeling.
He estimated the cost would be $10 billion and suggested the Germans and French should be approached, but not the Japanese who were the third bidder in the competitive evaluation process.
“We need insurance against the possibility that the (French) design proves to be inadequate or unsatisfactory or unable to provide value for money,” Dr Keating said.
However, Senator Payne dismissed the report.
“The consistent advice from Defence and actual experts in the field is that there are no military-off-the-shelf submarine options that meet Australia’s unique capability requirements,” she said.
“A ‘modified off-the-shelf’ submarine is an oxymoron.”
She said modifying an existing submarine to substantially extend its range would involve a complex and risky redesign process.