Australia's next submarine fleet is a hot topic, with the Federal Government creating widespread confusion with its decision to embark on a "competitive evaluation process".

What it seems to be is a process in which offerings from submarine manufacturers in Europe will be compared with what’s on offer from Japan.

They won’t be directly evaluated against each other, as would happen in a tender process, and that’s mostly because the two options offer different benefits (and risks).

A Japanese submarine brings strategic benefits with it that the Europeans can’t match, while Australian industry would likely benefit most if the Europeans get up.

Whichever approach the Government takes in replacing the current Collins class submarines, the Australian taxpayer is likely going to face a bill for $20 billion or more, and for that sort of money it’s worth understanding what we’d get in return.

I’ll explain later why I don’t think subs have to be built in Australia (though they certainly could be). But long before we get to industrial questions such as build location, we should talk strategic fundamentals: why we need submarines and how we’ll use them.

In fact, the rationale for a capable future submarine is a strong one.

Australia has long been the beneficiary of a global economic and security system underpinned in no small way by the dominance of western sea power — mostly provided by the United States US Navy.

Up until the turn of this century, our part of the world was an Asia in which the only significant local powers were US allies: Japan, South Korea and Australia. American sea power could be deployed at will across the western Pacific, as it was during the Taiwan Strait crisis of 1996.

Since then, China has put a lot of effort into building up its ability to deny the seas near its coastline to external forces. A formidable array of cruise and ballistic missiles, sea mines and an increasingly sizeable submarine fleet raise the stakes for any would-be adversary. We mightn’t yet be at the point where an American carrier group can’t safely approach China, but that will be the case sooner rather than later.

And those same technologies are slowly proliferating across the Asian region, including into South-East Asia.

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If we think it’s necessary to be able to project western sea power anywhere in the Pacific region at times of crisis or conflict, we’re going to need to be able to do it in a much less vulnerable way than sailing large surface vessels into harm’s way.

Australia has a stake in an enduring western naval presence in our region, so a capable submarine presence is important. But, regardless of what we do, the lion’s share of allied submarines in north-east Asia will be American and Japanese.

We’re a long way away from the more contested parts of the western Pacific, and even with 12 subs we couldn’t hope to continuously deploy more than one or two into north Asian waters.

But Australian submarines could be part of a wider Allied strategy, perhaps in a burden sharing arrangement that frees up American submarines.

And an important part of the argument is that America is more likely to remain deeply engaged in Asia if it has allies willing to shoulder part of the cost and difficulty of contesting naval superiority in the region. Australia and Japan working together would play into that picture as well. Of course, having our own submarines would also give us a sovereign capability, and allow us to operate them independently of American forces as well as with them.

We also have to work out how to get subs. No one builds the large, high-endurance conventionally-powered boat we want, so we’re necessarily going to be looking for a partner to help us modify an existing design, or produce a new one to suit. The consensus now seems to be that the latter course is too risky (and might take too long). So we’re in the market for a submarine designer — and perhaps builder — to help.

In practice, that means we need to work with either Europeans (France or Germany, since Sweden was dropped) or Japan; nobody else really fits the bill.

The Japanese alternative seems to have the inside running, not least because it fits into the Pacific alliance framework described above. As well as being a well-established builder of submarines, involving another US ally would help further cement alliance relationships, especially if we put American weapons and other systems into Japanese hulls.

This brings us to the vexed question — especially for South Australians — of where the boats will be built. One of the last things David Johnston did as Defence Minister was to announce the government’s intention to develop an Australian “sovereign submarine capability”. That was interpreted by some as implying a local build, but that isn’t necessarily the case.

A sovereign capability simply means having the ability to safely and effectively operate submarines. The RAN successfully did that with British-built Oberon submarines during the Cold War, as well as performing a substantial upgrade in Australia. Conversely, for much of its first decade the Adelaide-built Collins class didn’t offer the navy much in the way of capability at all.

It’s over a decade since ASC launched the final new-build Collins, but it’s only now becoming a reliable maintainer of that fleet. It seems that the build location isn’t as critical as the support and management arrangements put in place.

Finally, there are arguments for building here based on local industry and economic benefits.

Those are complex issues — much more so than some public discussion suggests — and I’m sure the government is looking hard at them. In a nutshell, the European countries will probably pitch a build almost entirely here in Australia, and the Japanese probably won’t, though they’re said to be willing to share work with ASC.

But it’s a balance between the total cost, the project risk and the strategic benefits that would follow from the Japanese option, so an offshore build remains a definite possibility. But ultimately support will always be done locally — it simply wouldn’t work any other way — and that’s what we have to get right.

We now look at that pedigree, what’s on offer, and the pros and cons of each choice.

Compete the Solution

There are pros and cons for the French, German and Japanese designs. Defence are hopefully now in the process of teasing out each candidate’s submarine, the package that comes with it (including Australian industry involvement), any associated restrictions and the price.

Of particular interest to South Australia – along with the choice of design partner and submarine design – will be the need to choose a build partner.

At this stage no-one should be mandating a particular build solution.

While an Australian build is clearly preferred, this cannot be done at any price. Defence and others need to analyse the broader benefits to the economy and ongoing submarines sustainment advantages of a local build and factor that into any premium it may incurs. Political decisions and informed decisions can be very different beasts.

Finally, consistent with this competitive approach, ASC should not be the mandated builder within any Australia build regime. The market should be left to provide us with the best Australian-build configuration: e.g. Germany’s TKMS setting up a new facility at Techport, the same being done under joint venture between France’s DCNS and its related Australian company Thales or perhaps BAE buying and transforming ASC and then partnering with any of the candidate submarine designers.

A fair and proper assessment should yield the best decision for both the Navy and the taxpayer.

Interactive Model - click or touch and drag the submarine to rotate, use mouse wheel or pinch to zoom in or out.

By Ian McPhedran, National Defence Writer

SWEDISH submarine expert Gunnar Ohlund can’t understand why the Collins Class submarine has such a poor reputation.

Like many in the know he regards the program to build the largest and most advanced conventional submarine in the world from scratch on a green field site in Port Adelaide in under 10 years as a minor miracle.

Mr Ohlund spent a decade working on Collins, including three years at ASC in Adelaide integrating British torpedo tubes with American torpedoes.

Up to 30 Swedes worked at Osborne during the project with some even taking out dual citizenship and others marrying Australians and making it their new home.

Like many submarine builders and submariners, Mr Ohlund says Collins has been wrongly maligned (mostly by issues outside ASC control) and he would relish the opportunity to use it as the basis for a new generation Australian submarine.

“Australia should be proud of what has been achieved and I don’t understand why you don’t believe that it can be done again,” he said.

Sweden has a century of submarine building history to draw on and local firm Saab has reclaimed the Kockums submarine builder from German giant TKMS and the country is a serious player in the conventional submarine business.

Despite this the Abbott Government has excluded the Swedes from the “competitive evaluation” process for the navy’s future submarine opting instead for Japan, Germany and France.

During a recent visit to Sweden, Australian journalists were provided with rare access to the Saab-Kockums submarine business from the navy’s Gotland Class boats to the company’s 3D computer aided design technology and Stirling Air Independent propulsion system.

The overwhelming impression was of a country and a company that is serious about submarines.

At the nuclear blast proof former top-secret Cold War base at Musko near Stockholm Saab is using the dry docks and support facilities, built deep within a mountain, to sustain vessels for the Swedish Navy.

The vast underground fortress would not be out of place in a James Bond movie and perched in a cradle within one of the cavernous dry docks sits a Saab-built stealth Visby Class corvette.

The futuristic ships have such a low radar signature that they have to activate a transponder as they transit the congested English Channel so ship controllers can “see” them on radar.

The facility might be a Cold War relic but it still attracts the attention of Russian submarines including one that infiltrated the nearby waters in 2013.

For the Swedes the capacity to build and sustain a submarine fleet is a national security imperative.

By Rex Patrick

Japan has been building submarines for a century. With the exception of four Matchanu class submarines built for Thailand in the late 1930s, all of their submarines have been built for the Japanese Navy. Submarine construction is shared between Kawasaki and Mitsubishi, both located in Kobe. Each shipyard delivers a submarine every alternate year. Whilst the shipyards are not state-owned, the entire program is state backed.

Advanced technologies have been included in the Japanese designs through a “collaborate with proven suppliers” approach. For example, their diesels and main motors have German origin, their air independent propulsion system is of Swedish origin, periscopes are of British origin and combat system and torpedoes have had US input.

Interactive Model - click or touch and drag the submarine to rotate, use mouse wheel or pinch to zoom in or out.

The Japanese submarines are understood to be capable and reliable, however they are not necessarily leading edge.

Whilst the current Japanese Soryu class submarine approximates the size that the RAN has said it needs and they carry the Harpoon missile used in the Collins Class, there has been criticism with regard to the Soryu’s lack of suitability with respect to range and endurance. However, it must be understood that Australian interests do not lie with the Soryu, rather an enhanced next generation Japanese submarine designed with Australian input.

Nonetheless, like the French and German offerings, the next generation Japanese submarine is currently only a 3D CAD drawing and will therefore attracts program risk. The Japanese have also indicated that they want to remove the current Soryu AIP system, a system that uses Swedish intellectual property, and replace it with Li-ion batteries. This will provide stealth advantage for a submarine transiting to and from a distant operational area, but degrade stealth potential once the submarine is “in-area’’. The French and Germans are both offering combined AIP/Li-Ion solutions to Australia.

Another risk associated with a Japanese solution, and possibly the most significant, centres on its nascent export experience, both in build and in through-life support, a problem that won’t be assisted by the techno-cultural difference between Australian and Japanese industry.

FRANCE builds reliable and capable submarines. Its primary customer is the French navy, for which it builds large nuclear attack submarines and even larger nuclear ballistic missile submarines.

To help sustain its submarine industrial skills base, the French design and export conventional submarines. Their most recent Scorpene diesel-electric submarine design has been exported to Brazil, Chile, India and Malaysia.

The Chilean and Malaysian submarine build was spread between French and Spanish yards, while the Brazilian and Indian boats are being constructed in customer yards.

France is offering Australia a conventional variation of its 4800-tonne Barracuda nuclear-reactor powered boat, which requires significant design work to convert it to diesel-electric and air-independent propulsion.

However, there is no question the French can successfully build large submarines.

And noting that Foreign Affairs Minister Julie Bishop recently opened the door on nuclear power as a future energy source for Australia, and with regard to the current royal commission on the subject here in South Australia, a French buy could offer the Royal Australian Navy a relatively simple transition path from conventional to nuclear submarines when the time is right.

The French designer, DCNS, has French Government shareholding which will give comfort to those in Defence conducting analysis on the potential suppliers’ books and balance sheets.

Downsides for the French option includes a lack of fielded AIP submarines (only one submarine in Pakistan) and an absence of instances of its designs carrying US Combat Systems and weapons (Harpoon missiles and Mk 48 torpedoes), nominated as “preferred’’ equipment in Defence Minister Kevin Andrews’ announcement of France being short-listed.

DCNS is the French leader in naval defence and an innovative player in energy. With a history dating back to its creation by Richelieu in 1631, the group is approaching five centuries of activity.

Significant milestones include the launching in 1863 of the first submarine propelled by mechanical power, Le Plongeur, and in 1967 of SSBN Le Redoutable.

DCNS designs and builds submarines and surface combatants, develops associated systems and infrastructure, and provides services for long-term support of ships and naval bases.

With more than 13000 employees and a turnover of €3.1 billion ($4.3 billion) in 2014, the group is growing internationally with subsidiaries in 10 countries, including Australia.

With major domestic programs such as FREMM frigates, Barracuda SSN and the development of the next SSBN generation, DCNS has a five-year portfolio and visibility until 2080.

It is the only group with design and production capabilities and experience from 400 T SSKs to 12000 T SSBNs, OPVs to aircraft carriers.

Anticipating a competition for SEA1000, DCNS has been working on a project leveraging its experience in submarine design and production, as well as transfer of know-how to the Australian industry to ensure its involvement and long-term supportability in-country.

Recent DCNS experience of such schemes include India and Brazil, with the creation of a Submarine Design School in Lorient, on-the-job training in Cherbourg and development of production facilities in Mumbai and Rio.

To illustrate that how to address stringent and peculiar unique requirements such as those of Australia, DCNS showcased during Euronaval 2014 a concept named SMX Ocean, a non-nuclear sibling of Barracuda.

GERMANY has built more than 160 submarines since the end of World War II. They design high-end conventional submarines for both their own use and export. Germany seems to be NATO’s conventional submarine supplier of choice – Germany, Greece, Italy, Norway, Portugal and Turkey all use their submarines.

They have had recent export success in Egypt, Israel, South Korea and Singapore.

They build submarines in Kiel or in the shipyards of their customers. They have over more than 18 instances of submarines at sea with hydrogen fuel cell AIP and some of their submarine designs are, or will be, fitted with US weapons.

Germany is offering the RAN a 4000-tonne Type 216 submarine, an upsized evolved version of its very successful Type 212 and 214 submarines.

The Germans have never built a submarine that large and, as such, the Type 216 is a concept design. That presents a risk, perhaps mitigated by the fact that the design team in Kiel is highly experienced and the majority of the components in the Type 216 are common to its other submarine designs.

The German designer, TKMS, is a 100 per cent privately-owned company, which introduces greater balance-sheet risk than the French and Japanese entities.

ONE of the main issues regularly missed by public servants and government funded entities when talking about defence acquisition, is the public mood.

Australia is about to embark upon its largest defence acquisition in a generation at a time when the public is doing it tough due to low employment opportunities; when the elderly are indirectly blamed for the chaos in healthcare; when pensions of people who worked hard all their lives are nonchalantly played with to bolster public servants’ pay.

So, do we need new submarines? Do we have to spend so much money on multi-year projects that often run over time and over budget? Where is the threat? These are legitimate questions that need clear and uncomplicated answers from those whom we elected to look after this nation-state, yet all we sense is a ‘fait accompli’ and that is not good enough.

It is the peoples’ money and the people have a right to the courtesy of an explanation.

South Australia has lost most of its manufacturing. Its mining sector is contracting due to the crash in the commodity market and unless we retain the building of the submarines, we will lose our unique national capacity for advanced, complex manufacture and that will have unwelcomed flow-on effects.

Both Navy and politicians want boats that fit into our strategic relationships in the Asia-Pacific — especially with the Americans.

Where Navy and politicians differ is that Navy is not as fixated on where the boats are to be constructed. They just want an operational submarine that arrives in service on time and at cost because they have been burned on past Defence projects that specifically supported local jobs but were sub-optimal or failed through a combination of poor project governance and bad industrial relations.

Savvy politicians on the other hand, will try to preserve some, if not all the boat construction in-country, because giving this project in its entirety to a foreign country gives the recipient of this project the economic lion’s share.

We need to also consider that although the Navy may get great boats built on time and cost offshore, their ability to perform deep maintenance on the vessels throughout their operational life may be severely curtailed if we are dependant on others to do all the work. It also raises the question of our sovereignty in these very unstable times.

Then there is the central question to justify a multi-billion defence acquisition — where is the threat?

Australia is a trading nation. It is a maritime nation. However, the maritime domain internationally is extremely fragile, existing as it does on ‘just-in-time’ delivery of goods to locations all over the world. Submarines are a national/international asset. They secure what are known as sea-lanes of communication (SLOCs).

Disruption of trade routes leading to and from Asia would have grave economic consequences for Australia. The fact that we have one of the best submarine fleets in the world in the Collins class has made us a great regional asset in the Asia-Pacific and has given us a key role within the American alliance network to actively protect SLOCs connecting Asia, the contemporary hub of global economic activity to the world.

People glibly speak of China as a contemporary threat and ‘yes’, China certainly is a rising power and as such her strategic interests will diverge from those of the US and other powers, including Australia. But its blue water (ocean going) navy is a work in progress. It is true that the Chinese fleet, including its submarine fleet, is expanding and in the cut and thrust of international relations where friends can become enemies and enemies become friends, we in Australia can never be sure that the relationship we currently enjoy with the People’s Republic of China will not ‘turn on a dime’. We can only hope that it doesn’t, but hope is not something we can base our defence policy on and that is why we need submarines.

We need to keep our regional maritime advantage via a type of platform that provides us stealthy intelligence gathering and stealthy deterrence to moves and counter moves by surface and sub-surface units of other navies. What isn’t widely known or often discussed publicly is that we have defence forces and expensive equipment because even in times of relative peace, nations spy on each other. They do so for political and/or commercial advantage. There is always sparring at various levels of intensity in the international arena. This subterranean friction exists not in some far-flung future with an imaginary belligerent China or Russia, but now, among the existing countries of the world.

Knowing this, let a free and fair competition give the Navy the best design for its requirement. Let’s win the work for Adelaide. Let the public know that buying platforms like submarines is not a waste of money and let’s stop beating ourselves up on past experiences. Past experiences, especially if they were negative, are meant to be instructive so that we may learn and not repeat mistakes.

Our experience with Collins had its teething issues, but we now have a fine boat. They are not ‘dud subs’.

Generation two, whatever design we choose, can be built here, can be built on time and at cost.

Let’s not waste our initial multi-billion dollar investment in Collins, and let’s not lose our unique national capacity for advanced, complex manufacture that submarine construction represents.

If we lose it, it will be lost to us forever.

THE submarine’s most fundamental, key feature is its stealth. A well-handled, capable submarine is able to operate without causing fuss in areas where we do not control the sea or air and is able to gain access to areas denied to other ships and aircraft. Large submarines, such as Collins, are able to operate at long range for weeks carrying a flexible payload of sensors, weapons and specialist personnel.

A capable submarine force creates great uncertainty for an adversary – countering them would be difficult, expensive and can’t be guaranteed.

Commentators largely agree that Australia’s strategic setting ahead will be dominated by China’s rapidly developing maritime capability and a determination to control her maritime approaches. This will constrain Australia’s strategic choices.

We would also all agree with successive Chiefs of Navy on the criticality of the maritime environment for Australia’s prosperity. We depend on it to bring in critical oil/fuel supplies and manufactured goods, for example, and to export the raw materials on which our prosperity hinges.

It is not just China; our access to the region’s oceans will also be impacted by the significant growth in regional navies, making it more difficult for our navy to operate freely. We need to look for capabilities that will give future Australian governments options to cope in this emerging situation – and submarines fit the bill. A capable submarine will be able to operate in these difficult strategic circumstances and provide a “strategic impact’’ that would make a potential aggressor avoid a military confrontationwith Australia.

In a surveillance role, submarines are able to simultaneously observe activities under water, on the surface, in the air and over the electromagnetic spectrum, often in areas denied to other eyes and ears.

Satellites and unmanned aircraft can complement a submarine’s capability but cannot replace it. Not only do they not cover the underwater spectrum but their presence can be observed/predicted and sensitive activities curtailed while they are present. In the event of conflict, sub-marines, backed by a capable intelligence and command systems, offer Australia’s most potent maritime strike capability against ships and, particularly, other submarines.

In a land-strike role, a submarine’s stealth enables it to covertly position-precision with land-attack missiles, without causing a diplomatic incident, retire if not requir-ed, or launch and withdraw. A large con-ventional submarine configured for a strike mission can carry more than 12 missiles. In some cases, such as targeting a non-state actor, 12-20 missiles might be enough.

But strike is a long way up the spectrum of conflict. In situations short of conflict, Australia’s submarines are able to provide unique indications of another player’s long-term intentions, facilitating counter measures via diplomacy and force prep-aration that will, hopefully, avoid an esca-lation to conflict. There’s also a payoff in terms of alliance management – the US has made it clear that it would value an Australian sub-marine force offering these capabilities.

To be able to exploit the initiative gained from their stealth, Australia’s submarines must be able to covertly reach sensitive areas throughoutin our region with sufficient mobility, endurance and payload for the long-duration missions involved, fre-quently in or through hot tropical waters.

It’s worth understanding these terms, because they’re often misused or confused: Mobility is the capacity to complete the long transits required expeditiously and discreetly, i.e. with low chance of counter-detection; endurance is a combination of fuel and energy, habitability (food and crew support systems) and availability of sensor/platform systems (equipment, power, cooling, redundancy and onboard-repair capability), and payload is the capacity/flexibility to carry/deploy sufficient crew and specialist personnel teams, a range of weapons and remotely-operated unmanned vehicles/ remote sensors – the latter are the next capability frontier/force multiplier for submarines.

Taken in combination, Australia’s requirements are unique and very demanding. The maximum range frequently quoted in specifications or cited by advocates for smaller European boats does not tell the whole story. Such figures tend to be based on a non-operational scenario, with transits completed at an optimum low speed with prolonged and predictable periods for recharging batteries. By the time the submarine arrives, it has exhausted its food and crew.

Habitability and crew size over the long missions are also important, not only for crew effectiveness but also to ensure an acceptable quality of life for crews – a key factor in attracting and retaining personnel.

The importance of stealth can’t be underoverstated and it underpins the strategic impact of Australia’s submarine capability. This enables access that confers significant initiative in the complex strategic environment ahead – and submarines are best employed proactively to exploit this. Where appropriate, They can be employed offensively to maximise the benefits gained from this advantage. Submarines are the only weapons system in Australia’s “order of battle’’ with this characteristic. They offer a unique range of options for future Australian governments.

FUTURE Australian governments need to have the capabilities to protect the maritime environment and safeguard the nation’s prosperity in an era of growing regional maritime power. This creates the requirement for long-range, long-endurance, survivable submarines.

This is the starting point for a discussion of how many submarines Australia needs, to provide sufficient “strategic impact” to make a potential aggressor avoid a military confrontation with Australia, given the interesting strategic circumstances ahead of us.

It’s worth reiterating that the submarine’s most fundamental, key feature is its stealth.

Given the unfolding strategic landscape, my starting assumption is that our submarine force must be capable of operating and surviving north of the archipelago, throughout the South China Sea, able to observe, report and if necessary strike; this is the high pay-off area, where their impact is greatest.

Their ability to operate in this environment is unique among Australian Defence Force assets.

Against this setting how many submarines does Australia require?

Let’s start with two points based on practical observation that are unlikely to change for the next generation submarine.

The first is the “rule of three’’. Like aircraft and helicopters, submarines operate under a strict maintenance regime and are designed to provide a high level of serviceability at sea and avoid catastrophic failure of a key system (and, in the worst case, loss of the submarine). Given sufficient personnel, this regime determines availability as follows: from three submarines, typically one will be in maintenance/refit, one will be in training or preparing for deployment and one will be available or deployed. Submarines come in threes.

The second observation is that a force of six submarines, i.e. typically with three or four available or at sea (under the rule of three) will struggle to achieve sufficient sea days to generate enough of the highly skilled/long training time personnel such as commanding officers, engineers and senior technicians to man the four to five crews and provide essential shore supervisory staff.

In support of this contention I’d cite the perennial shortages in these categories across the Oberon and now the Collins submarine force for the 40+ years I’ve been working in or observing it.

My modelling of these training pipelines demonstrates that a force of at least nine submarines, i.e. typically six at sea, is the minimum to achieve a sustainable critical mass of specialist and experienced personnel.

The RAN has survived hitherto by lateral recruiting qualified personnel from other navies — not a reliable basis for manning a core capability.

Turning to the maths, the calculation starts with a requirement related to geography as a major factor. It is about 3000 nautical miles from HMAS Stirling in WA to the southern end of the South China Sea via three to five choke points on a typical transit route for a submarine.

Without being specific about the scenario, it’s therefore likely that Australia will want a deterrent submarine presence at very long ranges, say 3500 nm.

Concurrently, Australia would also want some submarines closer to home in support of task force operations, for special force missions or training our own anti-submarine warfare units.

The issue of concurrent roles and an allowance for attrition of own submarines employed on offensive operations are additional factors to the calculation.

So how many submarines does Australia require for a strategic impact given this geography? Geography helps determine the number but that’s not the end of the story.

The characteristics of the submarines themselves are also important. For example, the speed of advance is the critical factor in determining how long it will take a submarine to complete the transit to and from a patrol area. This speed is determined not only by the submarine’s own design, but also by external factors such as weather, ocean currents, the need to remain covert to achieve the mission and level of anti-submarine warfare surveillance/threat.

Design features of the submarine, such as hull shape and the rate at which it can recharge its batteries (and their capacity) will determine how it performs in those environments. Not all designs are equal; these features are all critical attributes that need to be balanced and optimised in the design of the future submarine. My brief summary understates the challenge and complexities involved in achieving this.

External factors vary during the course of a transit and the mission profile adapted “on the fly’’ to accommodate variations.

Typically the submarine will “snort” (run its diesels to recharge the batteries) at a slow speed and for a limited time, exploiting local acoustic and environmental conditions where possible, to reduce counter-detection risks, before going deep to run at higher speed using battery power to cover the ground.

To avoid snorting in high threat or surveillance zones of choke points significant battery capacity will be important and it’s possible an air independent propulsion system may have to be used — though that’s generally a limited resource.

To assess the impact of these factors, I’ve developed a simple model including the time necessary for training crews, maintenance and using assumptions based on typical performance figures made possible by exploiting modern propulsion and battery technologies.

Modelling transit timing with an allowance for practical and navigational obstacles indicates a force of eight high capability submarines would be needed to maintain one continuously on task at 3500 nautical miles.

Each mission would typically involve 35 days transit to and from the patrol area and 35 days on patrol — a total mission time of 70 days. Two such missions a year are probably the limit for crew effectiveness and retention.

It’d be prudent to be able to provide at least one additional, operational submarine for other, concurrent tasks such as task group support or for own anti-submarine warfare force training.

With the rule of three, this would require a total of at least 12 submarines.

This calculation illustrates the process of determining the number of submarines.

It’s at the minimalist end of the spectrum, with little allowance for attrition or the unexpected. The strategic situation may also require additional deployed submarines.

The cumulative requirement could sustain an argument for a total of 15 or 18 to provide for attrition and the flexibility.

Summing up: 12 submarines is the minimum force size to enable Australia to sustain one deployed at long range, provide one operational submarine for other tasking and have some capacity for anti-submarine warfare training.

The deployment mix is one for the strategic judgement of the Government of the day and will depend on the circumstances they face. As a minimum, for a sustainable manpower base we should have at least nine submarines.

The design and construction of a fleet of new advanced submarines for the Australian Defence Force (ADF) will be one of the most expensive, complex and sophisticated industrial projects ever undertaken by this nation.

The recent decision by the Federal Government to call for bids from France, Germany and Japan under a unique “Competitive Evaluation Process” provides a basis for developing an evolved hybrid submarine design to meet the RAN’s operational requirements. Saab Sweden, a highly experienced submarine designer, should also have been included and it’s disappointing that the Government has yet to explain why its absence.

It’s a bit concerning that the Government has only allowed 10 months till bids must be submitted, although the experienced exporters of submarines – such as the French and Germans – are well placed to meet the deadline. Japan has never exported a submarine, although its fleet of Soryu submarines offer impressive performance features, making it a competitive option.

The new submarines will be a strategic asset unsurpassed in our national security armoury. This is the chief factor which leads the Australian Industry Group to support building the submarines in Australia. Other benefits will flow from doing so. Based on previous in-country naval vessel construction, it is estimated that more than 1000 Australian companies could participate in the new submarine program. Many of these (perhaps 90 per cent) are likely to be SMEs (small and medium-sized enterprises).

These companies can expect to add some 70 per cent of the contract’s value. The program may generate more than 5000 jobs and contribute GDP growth of perhaps $5 billion. The companies will offer advanced manufacturing technologies and skills. These will benefit all Australians, proving the competitive, innovative and sustainable nature of Australia’s defence industry.

South Australia is a principal hub of naval ship and submarine construction and support in this nation. All the major, world-class defence industry players are located in this state. These include ASC, BAE Systems Australia, Lockheed Martin Australia and Saab Systems. Each have impressive supply chain member companies, such as the Nova Group and Barton Vale Group of companies.

ASC, a pre-eminent South Australian naval shipbuilding company, has a highly skilled workforce currently sustaining the Collins-class submarine fleet and capable of shifting its skills to construction and support of the new submarines. The research heft of the locally located Defence Science and Technology (DSTO) laboratories and world-class university and TAFE sectors offers South Australia unique advantages for substantial involvement in a project of this complexity.

As to the decision-making itself around the submarine acquisition, it is critical that the Federal Government has available to it the necessary data and high-level military, industry and scientific advice to ensure proper account is taken of the risk associated with such a challenging activity.

Of critical importance for the success of the new submarine program is the requirement to develop and transfer technology for the design, construction, combat system integration and sustainment phases of the program.

Australian industry, often in conjunction with the DSTO, has been at the forefront of developing and applying first-class technology, offering a substantial edge for deployed ADF forces, including submarines. Advanced anechoic tiles designed in-country for the Collins-class, offering major stealth benefits, is but one example of this technology. Another is towed arrays, designed specifically to operate effectively in Australia’s unique ocean environment. The new submarine program will build on these experiences.

The Australian Industry Group believes that it is essential that Defence undertake a funded Project Definition Study (PDS) of proven submarine design options – conventional and nuclear – to meet the demanding operational requirements of the Royal Australian Navy (RAN). European and Japanese submarine designs should be included in the PDS, with options for Australian and overseas build, including on a fixed-price basis.

Australia’s submarine fleet must be able to deter an adversary and, if necessary, defend our maritime, including trade, approaches (at considerable distance from Australia), protect and support other ADF assets, and undertake certain covert missions where the stealth and other operating characteristics of highly-capable advanced submarines are crucial.

How many submarines should be acquired is a matter for careful consideration by government, with an analysis of Australia’s longer-term strategic circumstances a principal driver.

A submarine force larger than the existing 6 Collins-class fleet would increase the military planning challenges faced by any potential adversaries. It would increase the size and capabilities of the force they would have to be prepared to commit and risk to attack Australia directly, or coerce, intimidate or otherwise employ military power against our national interests.

Unlike the Europeans or the Japanese, who operate their conventional submarines closer to home base than the RAN, Australia’s strategic requirements require longer range, including deployments north of the equator. Consequently, a larger submarine able to carry more crew, weapons and logistic support is needed. Australian industry’s experience in adapting off-the-shelf naval designs to meet these requirements is proven.

Critical to Defence’s early consideration of the procurement strategy for the new submarines is access to the intellectual property (IP) of the design authority and builder. Although the Collins-class is recognised as being one of the most capable and formidable conventional submarine types in naval service anywhere in the world, limitations on Australian access to IP owned by other nations has hindered sustainment and, therefore, operational availability of the current fleet, including midlife upgrades. It is not in Australia’s national interests to have use of strategic IP restricted by other nations.

Overcoming this challenge will require careful attention and firm negotiating skill. Again, the expertise embedded within Australian industry, which includes experienced, world-class submarine builders and maintainers,sa will be of critical importance to Defence as it addresses IP and other issues.

Australians expect that the Federal Government will provide for their security in an increasingly uncertain world. A commitment to acquire new submarines, preferably built in Australia, based on sound advice from our military, industry and scientific experts, will provide considerable assurance that this goal will be met.

As an isolated island continent that transits in excess of 95% of its imports and exports by sea, Australia’s demand for maritime vessels to trade and protect the nation is enduring and growing. It is in this strategic context that the our defence industry believes that future submarine construction and sustainment must be considered within the framework of an holistic, whole-of-government, long-term plan for shipbuilding in Australia.

By way of example, in 2010 the Government of Canada recognised that its marine industry is a key economic driver and the lifeblood of many communities across the country. Acknowledging the strategic importance of this industry it committed to making its federal fleet renewal a key contributor to the industry’s long-term wellbeing.

To achieve this, it assessed its shipbuilding and maintenance demands for the next 30 years and developed a National Shipbuilding Procurement Strategy. Factoring-in the ‘multiplier’ and ‘spillover’ benefits of investing taxpayers’ dollars back into the Canadian economy, the Strategy identified the need to maintain indigenous shipyards to supply the $36.6 billion worth of large ship construction and sustainment expected over the coming three decades.

The Canadian Association of Defence and Security Industry estimates that the decision to build and maintain the ships in Canada, under a continuous build philosophy, will generate approximately 15,000 jobs and $2.4 billion in annual economic benefits over the life of the strategy. This long-term commitment has prompted the shipyards to invest $500 million to upgrade their capabilities.

If Australia had a shipbuilding strategy 30 years ago, we would not have gone through the very expensive peaks and troughs that surrounded the Collins Submarine, Anzac Frigate, Air Warfare Destroyer and Landing Helicopter Dock programs and threaten future shipbuilding projects.

If we had a long-term strategy in Australia 30 years ago we would not have been compelled to acquire mothballed US and UK vessels that subsequently incurred inordinate costs to operate and maintain. We would not have had to lease commercial vessels to fill capability gaps and we would not have spent billions of Australian taxpayers’ dollars sustaining vessels beyond their projected life due to the absence of timely strategic decisions.

When industry is presented with a long-term plan and commitment by government and is challenged with performance-based contracting, it will invest early to achieve efficiencies and deliver savings. A rolling build program is vital for ongoing success.

Skills learned and maintained through constant work mean that the peaks and troughs or ‘Valleys of Death’ between programs are avoided.

The development of a National Shipbuilding Plan for Australia would not be an onerous or lengthy task.

Much of the data required is readily available through the plethora of studies and reviews conducted recently and the Canadian National Shipbuilding Procurement Strategy provides a sound model to base it on. It is important that the development of a shipbuilding strategy must consider the whole-of-government requirements from submarines to icebreakers. It must be developed in an apolitical manner with the final product endorsed by all parties of parliament. It must also be developed in close consultation with industry, the states and academia.

It is time to end the practices of the past three decades where our shipbuilding strategy has been based on 30 month ‘thought bubbles’ sandwiched between each federal election. What industry, indeed the nation, needs is a 30-year strategic vision and plan for shipbuilding in Australia that realises the security, sovereignty and economic benefits to the nation of sustaining an indigenous shipbuilding industry.

THERE is an upside to Prime Minister Tony Abbott’s decision to look to Japan to supply Australia’s next fleet of submarines.

It poses a brutal and arresting question: As a nation, do we sustain our sovereign submarine-building capabilities, or do we abdicate responsibility for this hard-won industry and export these strategic capabilities to another country through this $100 billion-plus program?

The Japanese option sent shockwaves through the Australian Defence Force, state governments, defence experts, policy think tanks, industry and the workforce who were forced to explore whether such a radical idea was economically feasible, logistically desirable and in our nation’s best interests.

For the most part, it was met with incredulity by industry insiders.

However, the question did create a welcome opportunity to finally focus national attention on our shipbuilding sector and brought into stark relief the case for and against building Australia’s future frigates and submarines here, as part of a continuous build program.

Without question, Australia has – through a long period of trial, error and innovation – developed the capability and experience to build excellent long-range conventional submarines and ships.

Disappointingly though, we have lagged in correcting major structural problems within the sector, notably the historical and so costly project-by-project approach to building complex naval platforms.

This, however, doesn’t form a credible reason to trash a hi-tech, advanced manufacturing industry born from one of Australia’s greatest achievements of the modern era.

Yet in the face of drifting unresolved issues, offshore purchase of submarines from a country that currently has them on the production line seems compelling.

Japan, Germany and France have unique, capable, conventional submarines that have comparatively low price tags – reported to be about $20 billion for 12 units – with public indications from at least two experienced submarine enterprises that the price to build in Australia will be comparable.

When compared with the wide-ranging estimates for an Australian-built fleet, offshore purchase could be an easy sell.

That is provided, of course, that no mention is made of the fact that compared with Collins, none of the options being considered meet Australia’s unique requirements.

The Soryu, for example, lacks long-range capability, has reduced stealth, a shorter shelf-life, is much slower and requires a larger crew.

In many critical respects, therefore, it is a potentially backward step from Collins.

Submarines are our most significant national strategic deterrent and, as such, are the most complex, sensitive and expensive Defence capability acquisition a government can make.

Australia’s national security and $1.6 trillion economy depend on secure sea lanes.

The competitive evaluation process announced recently by the Common-wealth is a welcome step. Sole-sourcing submarines from a foreign builder with no export experience and with vastly different cultural and language barriers would have been fraught with risk.

The potential impact of these issues on program-implementation risks should be, quite rightly, assessed and measured in an objective competitive process.

It would also see the gradual atrophying and ultimate loss of Australia’s extensive submarine expertise, intellectual property, investment and infrastructure built up over decades.

So if nothing else, the debate triggered by “J option’’ has pulled us up by the bootstraps and delivered us to the doorstep of a critical juncture in Australia’s naval shipbuilding future.

Do we keep evolving this multi-billion dollar industry on-shore, or not?

The answer is, of course, unequivocally we can’t afford not to.

The next step then must be to build upon the bare outline of the three-point naval shipbuilding plan released by the Commonwealth late last year.

While ambiguous, the plan appears to throw a lifeline to an in-country naval shipbuilding industry, committing the Federal Government to:

1. Work with industry to fix the Air Warfare Destroyer program
2. Create a sovereign submarine industry and avoid a submarine capability gap
3. Create a naval shipbuilding industry around a fleet of future frigates – provided industry productivity continues to improve.

In the same way that Australia successfully delivered Anzac frigates and Huon Minehunters in the 1990s and 2000s, we must find the best team, structure, budget and time-frame for the AWD contract to get back on track.

At present, the AWD’s builder, ASC, is being assisted through its teething problems by way of a series of experts from three defence companies.

Which, of course, brings to mind US Navy Admiral Hyman G. Rickover’s quote: “If you can’t point your finger at the one person in charge, then there’s no one in charge”.

When ex-US Under Secretary for the Navy, Professor Don Winters, and Dr John White conducted an investigation into the AWD project performance last year, they called for a sole manager for the project rather than the mixture of “lead’’ companies that have, to varying degrees, contributed to the problems to date.

It is serious issues such as this one that must be put right if we are to be clear on how we intend to manage the next big defence construction contract (i.e. submarines) and the next after that.

Australian industry is more than capable of building both the next generation of submarines and frigates, concurrently, as long as it is done within a well-managed plan that must surely start with the establishment of a Submarine Construction Authority.

The authority should form the centrepiece of the Federal Government’s implementation program that accompanies its three-point plan.

The time to stop “naval gazing’’ is now.

The consensus is clear.

We choose to remain a naval shipbuilding nation, so let’s get on with it.

THE first priority of a national Government is the safety and security of its citizens. In recent times, we have faced complex national security challenges that remind us that Australia is not immune from emerging global threats.

This Government is making significant investment in the safety and security of all Australians and central to this investment is the defence industry in South Australia.

Recently, the Federal Government announced an investment in the order of $50 billion for Australia’s Future Submarine Program. This represents the largest Defence procurement investment in Australia’s history.

SA is set to benefit significantly from this investment. There will be more jobs, more opportunities and long-term certainty for the state.

There will be more than 500 new high-skill jobs for the life of the program – for decades into the future – with the majority based in SA.

In the state, it is likely that significant work will be undertaken during the build phase of the future submarines, including combat-system integration, design assurance and land-based testing.

There will also be opportunities arising from the support and maintenance of the submarine through its life. In dollar terms, this often accounts for two-thirds of the total investment.

For the SA defence industry, these decisions provide a clear pathway so that local involvement in this program can be maximised. A sustainable naval shipbuilding industry that supports shipbuilding jobs is also a priority for the Government.

The recent request for tender for an Australian-made replacement for the Pacific Patrol Boats is a further significant investment in Australian defence industry, worth $594 million, in addition to the life sustainment and personnel costs estimated at $1.35 billion over the next 30 years.

The Government wants to maximise Australian industry opportunities where that is possible.

Local defence industry contributes significantly to Australia’s sovereignty and national security, and is a major contributor to the economy.

The way forward must balance the need to get the best equipment for our defence force personnel, at the right price for the taxpayer, while also giving necessary consideration to the need of Australia’s defence industry.

In the recent past, the Labor government oversaw $16 billion of defence funding cut or deferred. Poor management led to 119 defence projects being delayed, 43 projects being reduced and eight projects cancelled, risking critical capability gaps.

Through Labor’s inaction and indecision, shipbuilding jobs have been put in jeopardy

The Australian defence industry shed more than 10 per cent of its workforce because of budget cuts and deferrals, procrastination and lack of opportunity for Australian suppliers.

South Australians should rightly be angered at Labor’s “valley of death’’.

Through Labor’s inaction and indecision, shipbuilding jobs have been put in jeopardy, and in all likelihood, this could be felt for many years to come. Once again, it is up to a Coalition Government to fix Labor’s disaster.

A strong relationship between Defence and industry groups, which encourage entrepreneurship and innovation, is vital to breaking down any barrier to domestic or international competitiveness.

A sustainable defence industry is possible and this Government is determined to do what it can to bring that about.

Politics muddies water for fleet- STEVEN CONROY

THE chaos, dysfunction and politicking that now lies at the heart of the Abbott Government has infected the process that will determine our new submarine fleet.

This fleet will be one of our most important national security assets.

It will help secure our country until at least the middle of the century and will cost taxpayers many billions of dollars.

It is absolutely critical that we get this decision right.

That Prime Minister Tony Abbott is using it as his personal plaything and a bargaining chip to prop up his leadership is nothing short of a disgrace.

It is clear that the Government will break its promise to build the future submarines in Adelaide.

Before the federal election in September 2013, the then CoalitionShadow Defence Ministerspokesman David Johnston famously stood outside Australian Submarine Corporation (ASC) in Osborne and stated:

“We will deliver those submarines from right here at ASC in South Australia.

“The Coalition today is committed to building 12 new submarines here in Adelaide.”

Before the election, building our new submarines in Adelaide was bipartisan policy.

That bipartisanship has been shredded by the Prime Minister, who is desperate to deliver his “captain’s pick’’ to build our next fleet in Japan.

It is now an open secret that Tony Abbott did a “handshake deal’’ with the Japanese Prime Minister of Japanto have the future submarines built in that country.

The process established by the previous Labor government that was well under way has been derailed, causing unnecessary and damaging delay.

Defence has been thrown into chaos by the desperate attempt to reverse-engineer an outcome to suit the whims of the Prime Minister.

And the competitive evaluation process the Coalition has now hurriedly announced is nothing more than a sham designed to secure the Prime Minister’s leadership, while still delivering him what he wants - less work in Adelaide and more jobs sent overseas.

As Tony Abbott has abandoned the car industry in South Australia and its thousands of jobs, he is set to abandon the state’s defence industry as well.

There is no good reason for this.

Expert after expert has told the Parliament that our shipyards have the capability to build these submarines in Australia while providing value for money for taxpayers.

It would be a signature failure if the Government abandoned our ability to build and maintain our own warships, including submarines.

Tossing this strategic capability on the scrapheap would not only result in thousands of job losses, it has long-term consequences for the country.

As an island nation, the last thing we should be doing is killing our shipbuilding and submarine building industries.

It makes no strategic sense.

It makes no economic sense.

It is time the Government admitted they’ve got it wrong on submarines and get back to the bipartisan position they held before the election.

We decided to build submarines in Australia after the lesson we learned during the Falklands War more than 30 years ago.

Back then, Australia had Oberon submarines built in Britain. But when war broke out between Britain and Argentina, Australia couldn’t get parts from Britain so most of the Australian fleet quickly became non-operational.

We learnt that the only way to ensure we had control over the supply chain and operational readiness was to build them ourselves.

A decision now to buy our submarines from Japan would mean that we can’t ensure the supply of parts and technology, which would be harmful to Australia’s defence capabilities.

But that’s not the only argument against the Federal Government breaking its promise to deliver 12 submarines at the ASC in Adelaide.

If it does renege on its promise to build submarines here it will have a devastating impact on Australia’s high-tech manufacturing industry. If the submarines are built in Australia, there will be a $20 billion benefit to the national economy, compared to a $29 billion hit if they are built overseas.

Billions of dollars in investment from international firms would not happen.

It would cost thousands of jobs and remove high-level engineering jobs from our economy for good.

In South Australia, we need defence industry jobs to provide crucial opportunities for manufacturing workers to transition from the automotive industry as it winds down.

So the current questions about the next fleet of Australian submarines raise more than the fundamental breach of trust with SA, the shipbuilding industry and its 3000 workers who were told one thing before the election and another thing afterwards.

Every consideration about where is best to build – including cost, economic impact and defence requirements – show that we should be building locally.

Unite to create jobs for the state - STEVEN MARSHALL

THE future of the state’s defence industry is vitally important to South Australia. This is an industry that drives our economy, builds our workforce’s capacity, and provides our nation with the ability to protect itself.

The State Liberals are 100 per cent committed to doing everything within our power to ensure the Federal Government keeps its pre-election promise to build the next fleet of submarines in Adelaide.

The ongoing discussion about where our submarines will be built is front and centre at present, but it is also important to remember our defence industry is much more than just submarines.

Of the 25,000 people employed in the defence industry in this state, nearly 3000 of these are directly involved in shipbuilding. As you read this, there are tenders out for new patrol boats and the Land 400 vehicle contract.

The State Liberals have always believed that the ongoing viability of this industry is so significant that it should be approached in a bipartisan manner.

SA needs leadership when it comes to securing the future of our defence industry — not partisan grandstanding.

While we all understand that the federal Defence Department is in reality the only customer and the security and budgetary needs of our nation must be satisfied, there are also other factors I believe should be key considerations in awarding defence contracts.

After key specifications of the DMO have been met, I believe it is vital that the defence tenders also take into account the need to support local industries and jobs. I also believe it is important that all defence tenders take into account the need to maintain a long-term sovereign capacity in this ever-changing globalised world.

The State Liberals will continue to fight for all the potential defence contracts that could be fulfilled by our talented and dedicated work force.

The truth is that South Australia is best equipped to support the needs of our nation’s defence industry, and we should never lose sight of this fact.

Imagine, for a moment, that Australia is a household. It’s a household running short of cash, and wants to improve its income.

As the householder you have various options. You can sell unwanted items; you can make cuts to your weekly budget. You can borrow to invest or you can look for a better paid job. There are financial risks and unknowns; there is a short and a long-term view.

In the short term you need cash, but in the long term you need a solution. As every household knows, there’s a significant difference between quick money and building long-term wealth.

For centuries, the world’s most-respected economic philosophers and theorists have argued that the role of governments is to build wealth – ensuring financial security for future generations.

The problem, when we apply that thinking to Australia, is that our government is on the wrong track.

In the eighteenth century, the moral philosopher and economic theorist Adam Smith saw wealth creation as a balancing act, where self-interest is balanced with empathy – the consideration of others’ needs.

His view echoed that of other philosophers, from Confucius to Voltaire. The unifying idea was balance – individual needs must be considered alongside others’ and the needs of the present must be balanced with the future.

In more recent years, thinking has turned to economic complexity as a way to create and sustain a balanced economy. Economic complexity enables the creation of new industries, products and services to meet a need, that leverage off each other to boost a nation’s wealth and opportunities.

In Australia, the best way to create economic complexity is through the transformation of our manufacturing sector. Advanced high value added manufacturing means more than the introduction of technology and innovation – it means future-proofing Australian industry economically and competitively.

Advanced high value added manufacturing sets its sights deliberately high. It sets out to build complex systems that require new skills, technologies and supply chains to deliver a product.

In the process, employees in both the firm and its suppliers acquire new expertise and in addition new entrepreneurial firms enter the market.

Networks of specialist services are also required, spanning financial, legal, design and engineering fields, providing further opportunities for jobs and growth.

This, in turn, has a ‘spill-over’ effect into other sectors –suddenly there are new skills and supply chains available to create other new products and services. Those outputs tend to also be advanced and globally competitive.

Economically, income streams are increased. The ‘spill-over’ effect of increased business between suppliers, service providers and manufacturing employers also affects local communities.

From the corner deli to the local greengrocer, money generated by innovation in the manufacturing sector is invested back into the economy through increased purchasing power and household spending.

The United States (US) Bureau of Labour Statistics calculated that every dollar of manufactured goods creates another $US1.43 of economic contribution towards other sectors, the highest multiplier of any sector. This is double the multiplier effect of services at $US0.71.

Some research from last year in the UK by the West Midlands Economic Forum suggests that the comparative contribution of manufacturing, taking into account the direct and indirect contribution through the distributed supply chain, rather than amounting to the reported 14-16% for the Midlands is in the range of 38-53% – this means between 3 and 4 times as high as statistically reported when the dependent non-manufacturing supply chain is not taken into account.

The above provides an interesting demonstration of the importance of the manufacturing sector to the economy in terms of job creation, investments and sales in other sectors

For some reason, however, the Australian Government is one of the few governments in the OECD to fail to recognise the nature and value of manufacturing, and specifically advanced high value manufacturing, to the economy.

The building of Australia’s next fleet of submarines is a case in point.

When the costs of building in Australia and abroad were compared by the National Institute of Economic and Industry Research last year using very conservative assumptions, the Australian economy stood to lose out by $21 billion if the contract went overseas.

While South Australia and Western Australia would be hardest hit, the analysis showed a negative impact on council areas throughout the country.

For example, in the federal electorate of Reid in western Sydney, more than $100 million would be lost from the local economy if the submarines were built overseas.

As a highly complex system, requiring technology, expertise and input from a number of sectors, the submarine is a strong example of advanced high value-added manufacturing in the 21st century.

International research shows that the return to the economy of the design phase and the building of first in class is at least 2.6 times the invested cost.

If the prospect of a $21 billion unnecessary loss were not enough, there is further evidence that Australia’s failure to invest adequately in advanced, high value-added manufacturing will have a long-term negative effect on the national economy.

Studies have compared the standard of living of different countries with the complexity of their economies. The link between the two has been well established by economists: in order to maintain a high standard of living, with a high per capita income, a nation requires an equally high level of economic complexity.

According to this research, Japan, Germany, Austria, Finland, Switzerland and Sweden are at the high end of the scale. Australia stands out for very different reasons. Whilst its income level is high, its economic complexity is low.

In fact, its economic complexity is on a par with Jamaica – a country that is regarded as having strong economic prospects but is in need of modernisation.

Given this situation, Australia faces two possibilities. Either living standards will fall, and fall dramatically, or its economic complexity must increase.

Achieving the latter would raise it to a higher league in economic terms, alongside Denmark and Hong Kong.

Boosting our economic complexity requires a new approach, however. It requires investment in complex, high value-added manufacturing.

It requires an increase in Australia’s share of global supply chain activities. It also requires adding value to our natural resources instead of exporting them in non-value added form.

Is the current government prepared to invest in the future of Australia in this way?

Unfortunately, current policy prefers ‘buying in’ complex systems from overseas – submarines, cars and supply ships are obvious examples.

Buying these ‘big ticket’ items from elsewhere means increasing the budget deficit while not replenishing our finances with new sources of income generated by investment in our own manufacturing sector.

In the short term, this will deliver a decreasing taxation base, higher budget deficits and lower living standards due to imposed budgetary savings that follow. In the long term, we’ll see higher unemployment combined with continuously reduced living standards.

Our workforce will also be denied the opportunity to improve its skills and to remain globally competitive. As a nation, our population will have less purchasing power and be less productive.

The evidence is unquestionable – empirical studies have shown when low complexity economies, like Australia and New Zealand, are left to themselves, industries decline and any new jobs created are overwhelmingly in lower productivity sectors. Sadly, that is the legacy of what neoclassical economics call being “left to the market”.

For any government, building wealth for a nation requires knowledge and commitment. It also requires creativity and courage.

If Australia does not change its industrial policy and increase its economic complexity it could become the first OECD country to register a long-term reduction in its per capita income.

That would mean a fall in living standards for every household in the country and that today’s children will be worse off during their lives than their parents.

MARK, Danny and Michael Benfield are keeping ASC well within the family.

The three brothers, who grew up in North Haven, all have solid jobs at Osborne, with eldest brother Mark the most senior in an electrical superintendent role jointly overseeing 307 electricians and 16 supervisors.

He was placed at ASC under an apprentice scheme in 1998, taking time out to flex his skills in Western Australia after completing the four years training, but eventually returning to where it all started to begin climbing the management ladder.

“It was a good foundation for my career,” Mark, 34, said.

“It gave me a career path after leaving school and since I’ve returned it’s paved the path to where I am now.”

Danny, 32, had been working for two years as a trades assistant for mechanical fitters after originally training as a carpenter elsewhere.

Now he’s just started a mechanical fitter apprenticeship.

Youngest brother, Michael, a second year electrical apprentice, said once they’d both finished their training time it would mean they both would have a dual trade.

“Not everyone can go around and say they have worked on projects like this, it’s totally different and unique,” Danny said.

“It’s set me up with a whole new career path that I’m really looking forward to.”

ASC’s current workforce is approximately 2600 staff and about 1200 of those staff members are working on the Collins program.

APPRENTICES

• ASC started its own apprentice development program in January, 2011, partnering with TAFE, with 136 apprentices across the company to date.
• The first intake graduated in January this year with most of the 23 apprentices offered jobs in the organisation.
• In February this year, 27 new apprentices started, 23 in South Australia and four in Western Australia.
• Among them is one female apprentice and six adult apprentices, 12 are working on Collins Class submarine maintenance and 11 on the Air Warfare Destroyer construction.
• The trade breakdown is: electrical, 12, mechanical, seven, fabrication, four.
• Previously, ASC hosted apprentices through a training scheme.

AUSTRALIA’S entry into the submarine building business in the 1980s was a transformational project of national significance.

The world over is littered with failed and abandoned attempts to build these highly complex naval vessels, complete with their high-end power generation and combat systems, proving that very few nations have the capacity or tenacity to achieve such an undertaking.

So the decision made by Australia to build its own fleet of conventional long-range submarines was audacious and ambitious.

And what it created, after unavoidable errors and imported design flaws were fixed, is a conventional submarine unrivalled around the world for its stealth, range, speed and endurance.

It’s maddening that this success has been overshadowed by the earlier negative media commentary.

I despair that most Australians still to this day don’t fully understand the magnitude of the achievement and the ripple effect of modernising industry across the nation.

To now abandon the capability and skills base would be disastrous.

Building submarines is a task of herculean scientific and engineering effort.

It takes a national effort.

The expense to the nation can be returned many times over by amassing a high-end skills base and a world-class competency, technological advancements, job and industry growth and many other spin-offs.

In Sweden, for instance, an economic analysis of the manufacture of its Gripen fighter jets revealed the project returned 2.6 times the value of its cost to the Swedish economy.

Sweden managed to diversify its economy, grow employment, skills, investment and infrastructure and, during the design phase, develop technology spin-offs that could be applied to other Swedish products (including those made by Volvo and Ericsson) that in turn allowed their industries to grow and export.

This resulted in government revenues and the economy growing significantly so that in effect, the fighter jets paid for themselves and then some.

The Swedish Gripen fighter jets were a nation-building project.

In the US, whole new industries and inventions have sprung from its defence program, worth billions of dollars to the US economy.

Technological developments in defence industries have spawned the fuel cell, GPS, the internet, heat-protective clothing for racing car drivers, lightweight prosthetic limbs ... the list goes on.

Closer to home, building submarines and warships in Australia introduced the nation to advanced welding techniques (Collins submarines), modular construction (ANZAC frigates) and advanced fibreglass construction (Huon minehunters).

Wollongong-based Bisalloy Steels for example, developed innovative high-hardened steel plates which were used on the Collins submarines (8000 tonnes), retrofitted to Australia’s US built FFG 7 frigates (1000 tonnes) and later adapted for use on Bushmaster military vehicles (more than 3500 tonnes).

Bisalloy now exports its world-leading armour plate products across the globe.

The next generation of Australian submarines can be a nation-building project for Australia – or for Japan, France or Germany at Australia’s expense.

If the subs were manufactured in Australia, they would build on the legacy and lessons learnt from the Collins Class project and also the FFG and ANZAC Frigate, Minehunter and Air Warfare Destroyer projects.

Around 70 per cent of the Collins class submarine content (more than 500,000 parts) was produced by Australian small to medium-sized companies.

In pre-submarine Australia, many of those small businesses were in a protected taxation regime, supplying local goods and services using old technology.

When the Collins project began, there were only 35 Australian businesses with the international standard ISO 9000 quality accreditation.

Some 1500 businesses from across the country applied for government industry support to upgrade their equipment, processes and quality so they could be endorsed for defence-standard contracts.

This allowed many to become globally competitive, export oriented and gain contract work associated with the Collins project – because while the actual build took place in South Australia, components and services were supplied from a broad range of businesses across Australia.

In the recently released Future Submarine procurement process the Commonwealth hedged their bets, requesting options for build in Australia, build overseas and hybrid solutions.

Their failure to specify build in Australia from the outset will distract bidders’ focus, potentially leading to an inferior set of proposals.

In the final decision, it is critical that single line cost is not the overriding factor. We must look at the big picture, considering taxation and spend flows throughout the economy to define a net cost for the project.

We must examine what a project of this size and scale can do for our country.

If we keep building subs for Australia, we will grow our capability. And one of the things we must do better is find ways to adapt new technologies that will be developed through design modifications and ongoing improvements over their more than 30-year life span.

An Australian-based submarine project will not only attract world expertise to Australia, it will lead to jobs growth, skills development and improve our capability as a high-end advanced manufacturing nation.

But importantly, if we learn how to capture, adapt and apply the experience, we will gain much more in value for our workforce, our industry and the economy as a whole than just the cost of a submarine.

WHEN Stephen Bitmead joined the Australian Submarine Corporation in January, 1988, its current Osborne home was just a swamp with a small ship lift and crane.

He missed seeing it developed to open in 1989 at a cost of $100 million.

Instead, Mr Bitmead was immediately sent to Sweden for two years among a group of 24 elite engineers recruited to work alongside design house Kockums as they created the first of six new Collins Class submarines.

“At that point in Australia there was no capability at all to design and build a submarine,” Mr Bitmead, who is now chief engineer for the Collins Class Submarine fleet, said.

But the Federal Government was determined to build an Australian shipbuilding capability around its plan to replace the navy’s ageing Oberon submarine fleet.

When Mr Bitmead moved to Malmoe in Sweden for two years he was immersed in observing, working on and understanding the highly complex design for a virtually undetectable underwater vessel.

Two others among that first “seeded core group” are still on the engineering team, John Moloney and Chris Allen.

Together they have stuck by the Collins subs, where two modules of the first submarine Collins was built at the Kockums in Sweden.

The remaining blocks of Collins, along with the other five Collins Class submarines were assembled at ASC – a remarkable feat given the industry started from scratch.

“A lot of the design was done in Sweden but the final design was done here (in Australia) and we looked after the build and the testing and the commission of the submarines and looked out for any issues that might crop up in any new boats,” Mr Bitmead said.

Mr Bitmead said there were highly publicised issues but “none of that relates to the Australian build quality of the ASC workforce”.

“There are no aspects directly related to how they were assembled in Australia,” he said.

“And the good stories are never told because from the navy’s point of view, we don’t ever want to get out any information about a good capability, it’s such a strategic asset.”

When the submarine project began there were only 35 Australian companies certified to the quality levels required for defence work. By 1998 there were 1500.

The first submarine was the Collins, commissioned in 1996.

“When people say they (the Future Submarines) are too complex to build here I would say: ‘how much more complex than what we have already done’.

“If we had the core of people available now that we had in 1988, the job would have been significantly simpler and yet people were prepared to take up the challenge.”

He said Australia had the intellectual property to support Collins but not the intellectual property to build a new vessel.

“If you don’t have the design and build experience here then when a number of issues that are well publicised over the years came up, it wouldn’t have been resolved as readily.

“Without the expertise that engineering people have here I would have to go back to the design house to get that support.People have to interpret the intellectual property, there’s no use having a pile of intellectual property unless you know what it means.”