AUKUS Submarine Agreement: Historic but Not Yet Smooth Sailing

The joint announcement this week by President Joe Biden and Prime Ministers Anthony Albanese and Rishi Sunak in San Diego, of the multi-decade collaboration of Virginia- and SSN-AUKUS-class submarines, is a seminal moment in the relationship between the United States, the United Kingdom, and Australia. The United States has only once shared one of its technological crown jewels—submarine nuclear propulsion—with another nation. That was back in the early days of the United Kingdom beginning its nuclear-powered submarine development under the auspices of the 1958 U.S.-UK mutual defense agreement.

Now, the United States has decided to share this technology with another ally—Australia. Initially, Australia will be the homebase for U.S. and British nuclear submarines from the late 2020s. Then, Australia will procure up to five of the SSN-774 Virginia-class submarines in the 2030s. Concurrently, Australia will invest in Australian and U.S. shipyards to expand submarine construction capacity. The final phase is Australia participating in the design and construction of a new class of submarine, SNN-AUKUS, in the late 2030s and into the 2050s.

The cost of the project is massive. At 368 billion AUD (around 240 billion USD) until 2055, there has been no other Australian project—military or civilian—of such a magnitude. It represents a figure that is over 700 percent of Australia’s FY 2022–23 defense budget. This is compared to the U.S. Columbia-class ballistic missile submarine project, which the Congressional Research Service estimates will cost 112 billion USD to procure, or about 14 percent of the 2023 U.S. defense budget. Thus, the Australian submarine program is a significant economic commitment by the Australian government and will demand decades-long political consensus about funding, basing, and procurement from all sides of Australian politics.

The San Diego joint statement, following the original AUKUS announcement in 2021, serves as a statement of alliance commitment and unity in an era when the threats faced by democracies around the world are only increasing. The brutal assault on Ukraine by Russia is a potential harbinger of a future Indo-Pacific if the deterrent posture of the United States, Japan, Australia, and their security partners is underdone. As such, the highly symbolic San Diego announcement, with the USS Missouri in the background, is meant as clear signal of commitment to U.S. allies and to telegraph resolve in defending democratic systems against authoritarian encroachment by China, North Korea, and others.

The Virginia-class submarines, and the future Anglo-Australian SSN-AUKUS class, will be a significant capability enhancement for the Australian Defence Force (ADF). Range, lethality, and stealth are critical capabilities in the maritime domain. Nuclear-powered submarines will deliver this capacity for Australia, and they will increase alliance underwater capability in contesting the subsea aspirations of the People’s Liberation Army Navy (PLAN).

However, many questions remain to be answered about the implementation of what is described as the optimal pathway for Australia to possess and operate nuclear-powered submarines. Perhaps the most important question is the opportunity cost of this long-term program.

The Chinese Communist Party, and the different arms of the Peoples Liberation Army (PLA), pose threats in every domain that military and national security affairs are conducted. Their threat is not restricted to the subsea domain. Herein lies the challenge. Given the huge expense of the nuclear-powered submarine program to Australia, it is quite likely that the rest of the ADF will need to be restructured, and its capabilities reprioritized, to afford these submarines.

The degree to which this might be the case has yet to be explained by the Australian government. But with many other government spending pressures, there are almost certainly going to be cuts in other areas of defense spending. The ADF may have to stop doing some things in the coming years that are central to future warfighting capacity and national defense.

Ukraine has shown that the possession of a modern, digitally linked air, missile, and drone defense complex is essential to national resilience and the preservation of military capability. Australia currently has no such system, and very few capabilities that might be components of such a capability. It will need one in the years ahead.

Additionally, military operations in Australia’s immediate region, such as defending its sea and air approaches and responding to potential future Chinese military expeditions in the south Pacific, are very likely to require sophisticated air, ground, and cyber combat capabilities. These are expensive to procure, crew, and sustain. Finally, autonomous systems are beginning to disrupt military operations. While this is now occurring with crewed combat systems in places like Ukraine, several developing technologies herald unprecedented levels of awareness and lethality in the underwater domain which might make crewed nuclear-powered submarines become limited in utility from the 2040s.

A narrow focus on an exquisite underwater capability may ironically result in Australia having a less capable, less autonomous, and less ready army and air force in the coming decades. This unintended outcome will need to be explored and addressed in the government’s Defence Strategic Review, which is expected to be released sometime in April this year.

The optimal pathway is founded on the Australian government’s belief that the undersea domain is going to be so decisive in Australia’s future national security that it is investing around 20 percent of its defense budget in this capability for the next three to four decades. Unfortunately, democracies have poor records at predicting future conflicts. Even though there is a compelling need to increase the size, lethality, and reach of the ADF, spending such a massive proportion of the defense budget on such a narrow capability may hinder the ability of the organization to respond and adapt to a range of different strategic surprises.

Magnifying this risk is two issues.

First, there is a significant time lag before Australia takes possession of any nuclear-powered submarine. There is approximately a decade before that occurs. However, as some analysts like Admiral Phil Davidson and international relations scholar Hal Brands have described, the riskiest period in the U.S.-China strategic competition is likely to be from now until the end of this decade. If that is indeed the case, what other strategic capabilities might the ADF need to procure urgently to deter Chinese aggression and respond to any future military contingencies in Taiwan or the wider region? The forthcoming Defence Strategic Review should address this challenge.

Second, building a sufficiently sized workforce will be an issue. Historically Australia has been challenged by its inability to crew its smaller conventional submarines. Multiple reports, including the 2012 Australia's submarine sustainment review by John Coles and the 2011 RAND report into the Collins Program, have described workforce shortage as one of the most compelling issues for an Australian submarine fleet. The Collins-class submarine requires a complement of 58 personnel, but the Virginia class needs 135. Even with a small number of Virginia-class submarines, the Australian Navy should double its submarine crew size while building a nuclear propulsion workforce and safety regime. It will take perseverance in Australia and patient assistance from its U.S. and British partners.

The March 13, 2023, announcement in San Diego is an extraordinary moment in the long and close relationship between Australia, the United States, and Britain. The AUKUS partnership, incorporating nuclear-powered submarines as well as other new technologies, is critical to security and deterrence in the Indo-Pacific. But there is much hard work, creative thinking, and clear communication between country partners and their citizens required ahead.

Mick Ryan is an adjunct fellow (non-resident) with the Australia Chair at the Center for Strategic and International Studies in Washington, D.C.

Mick Ryan
Adjunct Fellow (Non-resident), Australia Chair