Key points

• Australia will build a new fleet of eight nuclear-powered submarines in Adelaide to begin service in the 2040s, costing up to $368 billion.
• The Greens said the deal would fuel an arms race and would not support cuts to make savings, the Coalition supports the deal.
• The government has launched a diplomatic blitz to calm concerns in the Indo-Pacific: China accused the AUKUS partners of nuclear proliferation, Indonesia is yet to decide if the submarines would be permitted in its maritime territory.

San Diego: Australians are being urged to accept hard decisions to fund a decades-long plan to build nuclear-powered submarines after the potential $368 billion cost sparked a political furore over whether the nation could afford the mammoth outlay on a stronger defence force.

The federal government said the investment was essential to shield the country from security threats by purchasing an interim fleet of nuclear-powered submarines from the United States in the 2030s before building a future fleet in Adelaide that would enter service in the 2040s.

Prime Minister Anthony Albanese.Credit:Alex Ellinghausen

But the Greens said the increase in defence spending would require future cuts to health and education and warned they would not help in parliament to make any savings, while the Coalition warned against “cannibalising” other defence programs to pay for the submarines.

China, which possesses its own fleet of nuclear-powered submarines, railed against the plan, accusing the AUKUS partners of undermining international non-proliferation and fuelling an arms race in the region.

“The latest joint statement from the US, UK and Australia demonstrates that the three countries, for the sake of their own geopolitical interests, completely disregard the concerns of the international communities and are walking further and further down the path of error and danger,” foreign ministry spokesman Wang Wenbin said.

Wang said the AUKUS deal was “a typical case of Cold War mentality” and accused the three countries of fueling a severe nuclear proliferation risk and violating the objectives of the nuclear Non-Proliferation Treaty.

The dispute over the cost sets up a long political fight over the impact on the federal coffers when Labor is committed to the stage three tax cuts worth $254 billion over a decade and expects the nation’s finances to remain in deficit when the budget is handed down on May 9.

Prime Minister Anthony Albanese announced the new steps alongside US President Joe Biden and UK Prime Minister Rishi Sunak at the US Navy’s Point Loma base in San Diego on Tuesday morning (AEDT), which revealed the most significant decisions made since the three nations struck the AUKUS agreement in September 2021.

The government has launched a diplomatic blitz to calm concerns in the Indo-Pacific, including from nations such as Indonesia and Malaysia, and counter what it regards as a campaign of misinformation by China.

Senior ministers including Foreign Minister Penny Wong have made more than 60 calls to regional leaders to assure them Australia will fulfil its non-proliferation obligations.

Indonesia is yet to decide if AUKUS submarines would be permitted to travel in its maritime territory, but Tubagus Hasanuddin, a senior member of the ruling party, warned the future fleet would not be welcome if it provoked China.

“It definitely is related head-to-head [rivalry] with the Chinese maritime powers. It means it is not a peaceful means so that Indonesia will reject [them sailing through its waters].”

The government has launched a search for an appropriate waste dump on Defence property in remote Australia to dispose of used nuclear material from decommissioned future submarines.

In a strong sign of concern at China’s military build-up, the federal government will bring forward the delivery of the first nuclear-powered submarines to the Royal Australian Navy by almost a decade by purchasing at least three vessels from the US from the early 2030s.

Albanese said the new AUKUS plan would ensure sovereign nations would remain “free from coercion” and Biden cited stability in the South China Sea and the Indian Ocean as key objectives of the pact, while Sunak said the “growing assertiveness” of China was a key danger.

The government expects the full cost of the program, from construction to maintenance and service of the interim and final fleets, will range from $268 billion to $368 billion up to 2055.

With debate flaring over the cost, Deputy Prime Minister and Defence Minister Richard Marles said Australia had to deal with the intense pressure on the international rules-based order in the Indo-Pacific.

“We are witnessing the biggest conventional military build-up that we have seen since the end of the Second World War and it’s happening within our region and it is not Australia which is doing that,” he said, without naming China.

“We need to respond to this. A failure to do so would see us be condemned by history.”

Opposition Leader Peter Dutton backed the AUKUS plan but warned against taking money from other Defence programs to pay for the submarines. Instead, he flagged the National Disability Insurance Scheme as a program that needed to become more sustainable.

“We can’t allow Labor to go back to a circumstance where they’re going to cannibalise army or navy or air force to pay for this,” he said.

“There’s no magic pudding. There’s no way in which you can sugar-coat it. There is extra money that needs to be spent in defence.”

Former prime minister Scott Morrison said pushing back against Chinese aggression and aiming to prevent war with the superpower were the key reasons he pursued the AUKUS deal.

“To prevent such an outcome you needed this capability. You needed the counter-balancing influence within the Indo-Pacific that this would produce,” he said on ABC’s 7.30.

“Since 2016, even in that short period of time [there was] a very significant shift in the strategic situation in the Indo-Pacific.”

Navy Vice Admiral Jonathan Mead said China’s expanding military presence justified the AUKUS pact, saying the government “made a clear decision that the region had … changed for the worse”.

Albanese did not reference China when he announced the pact, but Mead, who spent 18 months helping develop the AUKUS roadmap, said the Indo-Pacific had become less stable.

“We recognise that there has been reclamation of land in the South China Sea and the military modernisation of islands there,” Mead said on ABC’s 7.30.

Peter Dean, the director of foreign policy and defence at the University of Sydney’s United States Studies Centre, said the government had outlined a “really good pathway and solution” to acquiring nuclear-powered submarines but warned the plan was “high-risk and high-reward”.

“There are lots of moving parts, there’s still a lot of unknowns,” said Dean, the lead author of the government’s soon-to-be-released defence strategic review.

Dean said the biggest surprise was the vow to acquire at least three Virginia-class submarines from the US beginning in 2023. “Virtually no-one predicted this, people were saying it couldn’t happen,” he said.

The Virginia-class vessels will be under Australian command with Australian crews and will mark the first time the US has sold these submarines to another country.

Richard Dunley, a naval expert at UNSW, said the plan “looks about as good as you can imagine and better than a lot of us expected”.

He added: “The idea of this being delivered on-time and on-budget seems highly improbable.”

Longstanding AUKUS critic Hugh White, emeritus professor of strategic studies at the Australian National University, said he was even more dubious about the merits of acquiring nuclear-powered submarines.

“The more moving parts in any defence program, the more likely it is to fall over,” he said.

White said the submarine program made it virtually inevitable Australia would become involved in a potential war between the US and China over the self-governing island of Taiwan, a conflict he said Australia should avoid.

Greens senator David Shoebridge opposed the spending and blamed the government for fuelling an arms race in the region.

“With this one decision, Labor is mortgaging our future in order to stoke regional tensions with a dangerous escalation in regional defence spending,” he said.

Over the decade to 2033, the cost estimate ranges from $50 billion to $58 billion, at least twice that of the $24 billion claimed for the contract cancelled with Naval Group in September 2021 to fierce criticism from French President Emmanuel Macron.

The program is estimated to cost $9 billion over the next four years, including $2 billion for infrastructure in Adelaide and $1 billion for an expanded naval base in Perth.

Australia will contribute about $3 billion to the efforts in the US and UK to develop the submarine technology, including the design and development of the SSN-AUKUS.

With Chris Barrett and Paul Sakkal

Cut through the noise of federal politics with news, views and expert analysis from Jacqueline Maley. Subscribers can sign up to our weekly Inside Politics newsletter here.

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