Cost of Australian submarine project blows out by $10bn

The estimated cost of Royal Australian Navy’s future submarine programme hit nearly $90 billion– a rise of nearly $10 billion in just five months.

Defence Minister Linda Reynolds declared the submarine program remained ‘on track’ on Friday after a teleconference with her French counterpart. Picture: AAP

With the construction of the future submarine fleet lasting into the 2050s, the difference between constant and outturned estimates will be substantial, even if they are different ways of looking at the same thing.

The requirement for 12 large conventional submarines first appeared in the 2009 defence white paper. They were intended to have ‘greater range, longer endurance on patrol, and expanded capabilities compared to the current Collins class submarine’. In addition to the Collins’ anti-submarine, anti-surface and intelligence, surveillance and reconnaissance roles, the new submarines were to have a strategic strike capability.

All of that implied greater size and complexity. Increasing size and complexity are the two main reasons why military equipment suffers significantly greater rates of inflation than the broader economy. Therefore, the new submarines were necessarily going to be much more expensive than the Collins, which cost about $5.1 billion for six 3,300-tonne boats.

These programs will be funded through a series of progressive Government approvals — all which are provisioned within the Defence Integrated Investment Program.

Aerial view of HMAS Sheean ploughing throw the waves.
Collins Class submarine HMAS Sheean at sea.(ABPH Joanne Edwards)

Former Defence Department official Marcus Hellyer, now with the Australian Strategic Policy Institute, says despite the clarification it appears the submarine program could soon prove to be more expensive than originally anticipated.

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