More than a year after Australia committed to buying nuclear-powered submarines, industry is no closer to knowing how it will be involved in the project.
Australia’s only nuclear reactor is found 45 minutes’ drive from the Sydney CBD in the outer south-western Sydney suburb of Lucas Heights, which has a reported residential population of four.
The plant isn’t connected to a power grid. Instead, it produces radioisotopes, commonly used for medical imaging and diagnostic scans, and is operated by the Australian Nuclear Science and Technology Organisation, a government body that in FY21 reported a net loss before government grants of $157.5 million.
Waste produced at the facility is processed overseas.
Work on the country’s own radioactive waste management facility has only just begun in regional South Australia.
Traditional owners are fighting that decision in the Supreme Court of Australia, arguing they were not part of consultation that showed most residents supported the decision.
Resources minister in the Morrison government at the time, Keith Pitt, disputed their claims. Suffice to say, Australia’s nuclear industry is lacking.
That’s partly because nuclear power has been legislatively banned in Australia since 1998, meaning the country is one of few leading member nations in the Organisation for Economic Co-operation and Development (and the only country in the G20) without any significant nuclear industry.
Interest in changing course has been limited at best since John Howard lost government and his seat in parliament following his dalliance with nuclear power ahead of the 2007 poll.
Public sentiment has been remarkably consistent on the subject, too.
As recently as 2011, Lowy Institute polling found 62 per cent of voters were either strongly or somewhat against nuclear power.
Speaking to the same pollster this year, a narrow majority now favoured removing Australia’s ban on nuclear power to combat climate change, an improved position that was still a smaller percentage than those who favoured increased use of gas, a ban on coal mining and the introduction of a carbon tax as solutions.
All of this has left Australia greatly dependent on carbon-intensive energy sources for baseload power.
It’s also meant the country is firmly behind the eight ball when it comes to developing the skills needed to build, sustain and operate the eight nuclear-powered submarines it has committed to buy as part of the AUKUS security pact.
Paddy Gregg, who’s led Henderson-based shipbuilder Austal for two years, is well aware of this issue.
Addressing a Business News Destination State event in February, Mr Gregg noted myriad difficulties in owning such vessels, including the 35-year lifespan of modular nuclear reactors, the requirement for a comprehensive safety and regulatory framework, and the need for a workforce competent in managing those risks.
Mr Gregg relayed his personal experience with the subject when speaking to Business News earlier this month.
He worked with BAE Systems in the 2000s when it began building Ambush, the UK-based shipbuilder’s second boat delivered as part of the Royal Navy’s Astute-class submarine project.
Those subs are built in Barrow-in-Furness, a northern English port town in county Cumbria, near Scotland.
“It’s industrial and it’s in the middle of nowhere for a whole lot of reasons,” Mr Gregg said.
Shipbuilding was once the town’s bread and butter. It’s receded in recent decades, leaving BAE Systems, the UK’s only nuclear submarine builder, as the area’s economic lifeblood.
“At the time we employed about 5,000 people,” Mr Gregg said.
“They’d been doing it [building nuclear-powered submarines] for decades. It’s not an easy process.
“There’s quality control, there’s safety measures, there’s security measures.
“It’s not a technology you ever want to take a chance with, so there’s a lot of focus on ensuring that it’s right.”
Andrew Hastie, assistant defence minister in the Morrison government and now opposition spokesperson on defence matters, framed Australia’s procurement of nuclear submarines in similarly stark terms.
“It’s a nation-building undertaking,” Mr Hastie told Business News.
“We need people identified in primary, secondary and tertiary levels of education who will help build this industry to support our nuclear submarines into the future.”
While submarines aren’t the only element of the AUKUS security pact – which broadly seeks to deepen hardware exchanges and interoperability between defence manufacturers in Australia, the UK and the US – they are arguably the most consequential provision included in the deal.
They’ve also become a public policy enigma in the year since the pact was revealed.
When AUKUS was announced, the Morrison government had committed to an 18-month consultation period to iron out the project’s finer details.
Some important steps have been made in that time, most notably in August when the UK announced Australian submariners would be stationed with crews on HMS Anson, the country’s newly commissioned Astute-class submarine.
Many, including Labor while in opposition, have nonetheless questioned how the future fleet will be built, given industry has warned over the past decade that Australia is lacking the capacity to build and sustain a fleet of nuclear-powered submarines.
None other than the Submarine Institute of Australia wrote to the Department of Defence when it sought consultation for the department’s 2009 white paper.
The institute’s submission rather bluntly asked: Why not nuclear power?
A litany of reasons was listed. Chief among them was Australia had no engineering, academic, commercial nuclear infrastructure, or regulatory regimes necessary to support such a capability.
The department’s own defence science and technology group raised similar issues in 2016.
Reporting on Australia’s submarine requirements, the group noted a nuclear-powered fleet, though it would be technically superior to the country’s Collins-class vessels, had been ruled out given the lack of appropriate infrastructure, regulation and procedures to build and operate them.
Time worked against any pursuit of them in the near term, the report’s authors wrote, given construction would likely outpace the period it would take to replace Australia’s existing fleet of conventional submarines.
Richard Marles became defence minister after this year’s federal election and has pledged to address these issues, and more, in the New Year.
Still, his party’s frustrations with the vagueness of AUKUS are well documented.
In a Senate economics reference committee report into Australia’s sovereign naval shipbuilding capability tabled in May, committee chair (now junior minister) Anthony Chisolm labelled last year’s announcement of the pact “nebulous” with “little information on costs, schedules, capability, sustainment and logistics”.
That’s not unfair given the only aspect of the submarine decision to be publicly litigated since has been the question of whether it will meet Australia’s non-proliferation obligations.
An answer to that came in mid-September with the International Atomic Energy Agency reporting it was satisfied with Australia’s efforts on this front, noting it expected further communications that would ensure “the highest non-proliferation and safeguards standards are met”.
Included in that report was a letter, attributed to Australian officials, detailing how modular reactors would be built overseas and later installed in the submarines.
Gia Parish, professor at the University of Western Australia’s school of engineering and recently appointed director of the university’s Defence & Security Institute, believes this implied some degree of separation between what submariners do and what happens within the boat’s engine.
“The assurance is why the IAEA has signed off on supporting the deal,” Professor Parish said.
“If there was any sense that we were going to start playing around inside [the reactors] that support would no longer exist.
“While we do have to reassure … providers of the technology that we are safe hands for nuclear stewardship, that’s an OHS [matter] of training, the same as any of the other specialised training that our maintenance and sustainment people need to do on highly complex and sophisticated modern day maritime and defence [technology].”
Parliament’s joint standing committee on treaties came to a similar conclusion in December.
It established there would be “no weakening” of Australia’s non-proliferation commitments as they pertained to the exchange of nuclear propulsion expertise.
And while that inquiry strictly considered the exchange of naval nuclear propulsion information, several submissions canvassed a wide array of views on AUKUS.
Curtin University defence and space director Gary Hale, writing on behalf of the university, specifically made the case for preparing WA industry, universities and TAFEs for the sustainment of a future fleet, should the subs be located in this state.
He noted it took 10 years for postdoctoral students to graduate in subjects such as physics, engineering and chemistry that would be key to these activities.
Rather than focusing on building boats, Professor Hale argued these skills were needed to establish sovereign capabilities that would allow Australian workers to maintain and upgrade these submarines as late as the 2070s.
Mr Gregg similarly pressed the case for greater attention to be paid to the regulatory and strategic framework necessary to sustain these vessels, rather than their construction.
“We’re talking here about a 100-year evolution,” he said.
“It’s a much bigger topic than what we generally read about in the press.”
Local industry is unlikely to play much of a role in the construction phase as it stands.
South Australians are particularly attuned to the topic, with Senator Rex Patrick having bluntly called for an interim capability in the form of locally built, conventional submarines, while his state is primed to manufacture nuclear-powered submarines in the long run.
Peter Dutton, who served as defence minister in the Morrison government before becoming opposition leader, has also made waves for suggesting two submarines be purchased from the US before 2030, while a The Wall Street Journal report said the US had considered providing Australia with submarines in the interim.
That report indicates Australia would need to step up and assist the US in expanding its own shipbuilding capacity while the country lays the groundwork to build its own boats.
Estimates of how much it would cost to build nuclear submarines in Australia vary, with the Australian Strategic Policy Institute pegging it as low as $77 billion (should 7,000- tonne Astute-class boats be built one after another in Adelaide), or as much as $129 billion if 10,000t Block V Virginia-class vessels are built in an expedited process.
Both figures assume all eight vessels will be built locally, which appears unlikely and is a nonfactor for WA industry given SA has all but been promised the construction work.
At least one local industry source who spoke on background seemed sanguine on the subject, broadly accepting that, absent any detail from government, national security concerns would likely necessitate an off-the-shelf purchase.
They instead expressed anxiety at being frozen out of operation and sustainment of the boats, should the US or UK governments choose to enforce domestic industry protections.
This was a particular worry as it related to the US’s international traffic in arms regulations (ITAR).
That may prove specifically difficult to swallow if the project’s local content component is diluted during the construction phase.
Brendan Nelson, another former defence minister, has publicly griped about ITAR, telling a Perth audience in August these controls had hampered works at Boeing Australia, the organisation of which he is now chair.
Mr Hastie said ITAR was something that needed to be worked through.
“Political leaders have a responsibility to harmonise these frictions, they have a responsibility to make sure they’re driving their departments and make sure these things aren’t happening,” he said.
While further details on cost and acquisition of nuclear-powered submarines are expected by early 2023, Mr Marles has made clear his intention to sift through defence’s spending, demonstrated most spectacularly earlier this month when he appeared alongside Treasurer Jim Chalmers to pillory the previous government for what he identified as at least $6.5 billion of cost overruns on major projects.
Monthly reports will now be delivered to the defence minister on projects of interest because of unbudgeted spending. However, these reports will not be made public.
Speaking on 6PR earlier this month, Defence Industries Minister Pat Conroy repeatedly insisted the government was not seeking to cancel existing commitments, while naming the $4 billion offshore patrol vessel project as cause for concern.
Luerssen Australia is building 12 of those boats, with construction split between Henderson and Osborne (in Adelaide).
“We need that capability for the navy as soon as possible and we are working with defence and the defence industry to fix that project,” Mr Conroy said.
“This is not about a pre-budget softening up.
“[T]his is about being honest with the Australian people and saying, ‘This is what we’re going to do to fix the projects’.”
Stephen Smith – who held the defence and foreign affairs ministries under Kevin Rudd and Julia Gillard and has been named as Australia’s next high commissioner to the UK – is leading a separate defence strategic review after spending time with The University of Western Australia’s associated defence and Asia research think tanks.
Investment decisions have come under the microscope in that review, with an initial analysis to be provided to government in time for the AUKUS taskforce meeting in March.
Mr Hastie said he was “fine” with that review, accepting a newly elected government was entitled to review defence strategy and spending commitments.
He was, however, insistent spending as a whole should not be cut, arguing Australia should increase its commitment from about 2 per cent of GDP per annum to 3 per cent in line with a similar commitment made by new UK Prime Minister Liz Truss.
NATO member states have been obliged to spend at least 2 per cent of GDP annually on defence matters since 2006. US spending on defence has regularly exceeded 3 per cent of GDP per annum in that time.
“I think that’s the sort of thing we need to be looking at,” Mr Hastie said.
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