Anthony Albanese has declared the arrival of a “new dawn for Australia’s defence policy”.
The prime minister, standing side-by-side with US President Joe Biden and UK Prime Minister Rishi Sunak, on Tuesday unveiled the first stage of the AUKUS pact, signed in 2021.
The agreement is a major shake-up to Australia’s submarine capabilities, and will see more American and British forces descend on the country.
It’s also the largest defence-spending commitment in recent Australian history.
So what’s been announced, how much will it cost, and what else could the money have been spent on?
What’s been announced?
Long-term submarine capacity, short-term protection.
Up to eight AUKUS-class submarines, based on a British design, will be built in Adelaide and will roll off the production line from the early 2040s. It’s envisaged one vessel, to be equipped with a US vertical launch system, will be produced every three years.
That’s a long time away, so the three countries have announced some interim measures.
The UK and US will begin rotational deployments of up to five nuclear-powered submarines operating from Australia from 2027.
Australia will also purchase three American-made Virginia-class submarines, provided that’s approved by the US Congress. If so, they won’t arrive in Australia until 2032.
This year, Australian forces will start training on US nuclear-powered ships to build their capacity to operate such vessels independently down the line.
How much will it cost?
It’s an eye-watering figure.
The program is set to cost Australian taxpayers between $268 billion and $368 billion by the mid-2050s. That estimate includes the construction and sustainment of the boats and all associated costs, including investing in capability in the US and UK.
Over the forward estimates (2023-24 to 2026-27), the program will cost $9 billion. That’s set to reach $50-58 billion within a decade.
Then there’s the cost of the aborted French submarine contract, now replaced by the AUKUS arrangement. Australian taxpayers will still pay up to $5.5 billion for that deal, including $835 million in compensation for ripping it up.
And Defence says extending the life of Australia’s Collins-class submarines, made necessary by the AUKUS pact, could cost more than $6 billion over a decade.
But Treasurer Jim Chalmers insists Australia “can’t afford not to do this”, while also stressing the deal will create 20,000 direct manufacturing jobs in Australia.
What does this mean for Australia’s nuclear capability?
Waste, not weapons.
Mr Biden was at pains to stress the submarines will be nuclear powered, but not nuclear armed.
“Australia is a proud non-nuclear weapons state and has committed to stay that way,” he said on Tuesday.
But Australia will be forced to deal with its new fleet’s nuclear waste on home soil. That hadn’t previously been clear. At present, Australia doesn’t have any high-grade nuclear waste disposal sites.
The waste will be stored on a Defence-run site, to be decided this year.
What could that money fund elsewhere?
A lot.
Most policy proposals aren’t costed into the mid-2050s, so we’ll take the $58 billion figure the government says this proposal could cost over ten years.
That’s excluding the additional costs of cancelling the French submarine deal and maintaining the Collins-class submarines for the decade, and the potential economic flow-on effects of the policies.
It’s also worth noting that the spending is backloaded; $58 billion in the first decade means that more than $300 billion is likely to be required over the following two.
Modelling from the Grattan Institute shows $58 billion could cover the cost of boosting both the JobSeeker and Parenting Payment by $75 per week, with around $13 billion in change.
If you add $15 billion towards increasing Commonwealth Rent Assistance, aimed at reducing housing stress and poverty for low-income Australians, Grattan’s modelling says you end up with just a $2 billion tab over a decade – or $200 million per year.
Taking a different route, Grattan says the AUKUS money would be able to fund a Medicare-style universal dental system and leave $2 billion in change.
The Australia Institute says $58 billion over a decade would roughly equate to increasing unemployment benefits by 30 per cent, increasing federal funding to government schools by 40 per cent, or increasing federal funding for state hospitals by 15 per cent in that time frame.
Those estimates are based on the most recent budget papers, assuming the average growth of expenditure over the next three years is maintained for a decade.
