Australia's AUKUS dream is a costly political nightmare

Much the same thing could be said about the program to replace the six Collins-class submarines with nuclear-propelled ones. And, indeed, the same thing could be said about Australia's defence posture generally.

We got a bit of an insight into how the submarine quest is going with the publication last week of a report by the Congressional Research Service into the nuclear propelled Virginia-class submarine program and the AUKUS submarine project under which Australia will get three to five Virginia-class submarines.

It is not reassuring reading.

The Congressional Research Service, like Australia's Parliamentary Library, provides research in response to requests from members of Congress and of its own volition. It has a staff of 600 and a budget of nearly $A200 million.

The Virginia project began in 1998 with a target of two boats a year, but since 2022 that has fallen to just 1.1 boats a year. It needs to get to 2.33 if Australia is to get its submarines under the AUKUS agreement.

In June last year the US Department of Defense ordered a review of AUKUS after widespread concern that the US should not be selling boats when it could not meet its own needs.

Then, inexplicably, President Donald Trump made enthusiastic noises about AUKUS. In December, the review announced support for AUKUS with no other details.

The research paper said, "A December 5, 2025, press report stated: 'The Pentagon's initial review of the AUKUS pact had to be rewritten to conform with US President Donald Trump's enthusiasm for the agreement'."

It shows that the program is at the mercy of US presidential whim.

The report also exposes some flaws in the US shipbuilding effort. The Virginias are made at two commercial shipyards, in Connecticut (General Dynamics, GD/EB) and Virginia (HII/NNS).

"The submarine construction industrial base includes about 16,000 suppliers in all 50 states, as well as laboratories and research facilities in numerous states," the report states. A lot of these suppliers rely on expensive commercial finance.

There was not the slightest hint that this seems to be a fairly inefficient way to build boats. Why two yards? Why so many distant suppliers?

The report says, "Under the arrangement, GD/EB builds certain parts of each boat, HII/NNS builds certain other parts ... The arrangement has resulted in a roughly 50-50 division of Virginia-class profits between the two yards."

The report, of course, does not specify the level of profit. It comes down to the stranglehold the military-industrial complex has over the US government: a supplier in every state lobbying each state's members of Congress.

The CRS report says the Navy and industry are working to increase the production rate to 2.33 to meet US needs and to replace the three to five boats that are to be sold to Australia.

"Congress has appropriated billions of dollars of submarine industrial-base (SIB) funding to support this effort," the report said.

But in April last year the navy reported: "We have not observed the needed and expected ramp-up in ... Virginia-class submarine production rates necessary to keep pace with the ... strategy."

This should have members of Congress asking, "Precisely how many billions of dollars?" You would think the CRS's 600 staff could find that out.

And is there anything later than April 2025? Also, why is the Pentagon's rewritten report, or at least part of it, not public? And is there any date or target for when the production rate meets the strategy?

Or do we all just sit on our hands and wait for the appointed delivery date of 2032 and just shrug if nothing turns up, presumably forfeiting the money we have handed over to US shipbuilders to help the strategy?

On that score, the CRS report says, "A January 2, 2026, press report stated that 'Australia quietly sent another $A1.5 billion to the United States in a non-refundable down payment for AUKUS in December'."

Why quietly? Surely, if the AUKUS deal was so good we would have had a ceremony with the appropriate minister, in this case Richard Marles, and the government taking full credit for this excellent use of taxpayer money. Perhaps they could have had a ceremony at the US shipyard with the handing over one of those publicity-attracting over-sized cheques.

No. Political reality says that the probably non-refundable $A4.5 billion Australian payment to the US (not for the submarines themselves, mind you, just for US shipbuilding effort in general) is deeply unpopular and is seen as a sign of gullibility not astute bargaining.

Rather, the US should be paying Australia rent for the use of HMAS Stirling and other Australian bases.

The UK element of AUKUS is in even worse shape. And we are paying them, too. Another $A4.6 billion.

Retired UK Rear Admiral Philip Mathais warned last December that the UK's nuclear submarine fleet was in a "parlous state" with "shockingly low availability" and that the UK's part in the AUKUS deal would probably fail. The UK and Australia are to join in the production of the AUKUS class of nuclear submarines for delivery in the late 2030s or early 2040s.

Ironically, the only operational UK nuclear-propelled attack submarine, HMS Anson, is on its way to Australia to meet the rotational requirements of AUKUS. The barrel was scraped.

The two reasons for continuing the journey (even from here) are that we have come so far that it would be worse to change course; and that the Virginia-class is the best of its kind by far.

Yes, Australia has vulnerable supply chains through the South China Sea and the Strait of Hurmuz, but so do scores of other nations which are not opting for nuclear submarines.

As for China, most of the vessels going through the South China Sea are either carrying goods that China wants to sell or carrying goods it wants to buy.

As for a Chinese attack or blockade on Australia, China is having trouble doing that against Taiwan, just 130km from the mainland. Australia is several thousand kilometres away.

Yes, national security matters demand a degree of secrecy. But in Australia's case it is coming at a cost. The cost is fewer people making all the policy and procurement decisions without the benefit of a diversity of views. It is a recurrent theme in military history.

AUKUS was a narrow argument about whether we have a diesel or nuclear or French or US submarines. And then Prime Minister Scott Morrison pulled AUKUS like a rabbit out of a hat. And Labor was wedged to go along with it.

A wider argument about whether we needed submarines at all was not considered. Neither was the more pertinent questions of meeting more fundamental national security matters like our total dependence on foreign oil; meeting the ravages of climate change; and making our industrial base more resilient, self-sufficient, and versatile.

Alas, it is going to be very costly starting from here.