This independent report by Insight Economics, sponsored by Mr Gary Johnston (Submarines for Australia), presents an analysis of the government’s decision on the acquisition of twelve future submarines (FSM) for the Royal Australian Navy under the SEA 1000 programme. In preparing this report, we have benefited from extensive discussions with a large number of experts in the areas of strategic analysis, submarine capability and operations, engineering and defence industry.
In April 2016, the government announced that the French company DCNS (now ‘Naval Group’) had been selected as Australia’s partner to design Australia’s FSM, the Shortfin Barracuda. Including a life extension for the Collins class submarines, the cost of SEA 1000, at around $60 billion in 2016 prices, is extremely high, while the risks around the programme are very substantial.
After evaluating the government’s decision and while not seeking to disrupt current contractual arrangements, we propose a way forward that involves significantly lower costs and risks.