Minister for Defence - Speech - Address for the ASPI conference

It is a pleasure to be here today and those of you who know me will appreciate the strong interest I have in submarines. Submarines are a highly potent asymmetric capability of strategic importance to this country.  Their importance is unlikely to abate, rather they will grow in significance. They are a critical element in our maritime security planning.  I would like to thank the Australian Strategic Policy Institute for providing this opportunity to discuss the importance of the Future Submarine.

ASPI is a significant and valuable contributor to the national discussion on submarines in Australia and more broadly Defence issues and I would like to congratulate ASPI for the very balanced way you work and the success you have enjoyed in getting the word out about submarines and Defence issues in general.

The Australian Government is acutely aware of the importance of having a highly capable submarine force, especially given the rapidly changing strategic circumstances of our region.

And importantly – this year as we celebrate the “Centenary of Australian Submarines” – it is a reminder that we have had a need for a strong and enduring submarine capability in the Royal Australian Navy since its inception 100 years ago.

Since their introduction into Australian service, the value of a capable submarine force to our Nation has been clear with no better example than that of AE1 and AE2.

These submarines were among the very first “Defence Capability” plans for our Navy. They were a 750 tonne submarine ordered “off-the-shelf” from Britain in late 1910 and built in Barrow-in-Furness. I was recently fortunate to have visited and seen the UK’s latest Astute class submarines being built. In the BAE shed was the almost ready to be launched HMS Artful and boats 4 and 5 under construction. The UK Defence Minister was kind enough to allow me to have a detailed inspection of this very capable 7400 tonne attack submarine. The Astute is at the forefront of technology and capability in submarines.

Returning to AE1 and AE2, the range and endurance of these submarines, the largest and most modern in the world in their day, allowed Australia to deploy them both very quickly to areas of operation that were far afield from Australia in support of our Allies during World War 1.

Our first submarines were unfortunately lost, AE1 off Rabaul in PNG, around 14th September 1914 and AE2 in the Dardanelles on 30th April 1915, but not before she had made a major contribution to the Allies operations in harassing and damaging the capabilities of the Turkish fleet. On the morning of 25 April 1915, the AE2 set out on an historic journey just before the ANZACs landed at Gallipoli. Its mission was to force a passage up the DardanellesStrait and then, as ordered, 'generally run amok’.

This was a treacherous task – the Strait was thirty-five miles long, was heavily mined, and completely controlled by the Turkish Navy. And such an extraordinary order required extraordinary daring.  AE2 became the first allied submarine to penetrate the Dardenelles.

The AE2 under the command of Lieutenant Commander Henry Hugh Gordon “Dacre” Stoker, was pursued and attacked by a number of destroyers as Stoker did indeed run amok and in the end successfully completed his mission before the AE2 sustained irreparable damage and was scuttled by her crew.

Importantly the news of AE2’s achievement at the time spread to the Diggers clinging to the Gallipoli cliffs and lifted their morale when a notice was stuck on a shell shattered stump on the hillside that read “Australian sub AE2 just through the Dardanelles. Advance Australia”.

AE2 at one point spent about 16 hours at 90 feet below the surface. It was here that our sub surface skills and heritage was forged.

From then until the 1930’s Australia continued to operate large British ocean going submarines periodically, with varying degrees of difficulty and success but unfortunately during the Second World War, we were without submarines and relied on the many allied submarines operating out of Australia to make the decisive impact on the Pacific War. And many of our submariners joined these allies.

The Government made the strategic decision in 1963 to purchase and enter into service six Military Off The Shelf Oberon Class submarines to re-establish our submarine force.  The first of the six, HMAS Oxley was commissioned in 1968, the last, HMAS Otama was commissioned in 1978.

These very capable boats are the foundation of the submarine capability we have today. The O-boats with their long range and high endurance, confirmed the role that our submarines could fulfil as strategic defence assets, with the capacity to deter as well as respond to aggression. Through them, and in the forty years or so since their introduction into service, we have learned many lessons – some hard, some expensive but all very valuable:

• Australia’s Navy became a competent submarine operator and maintainer;
• We learnt enough to give us the confidence to undertake the Collins class submarine build program;
• We have grown the ability to maintain and operate a complex and demanding platform like a submarine.

The build and sustainment of the Collins has been an enormous challenge for Australia and, despite its well documented problems, the achievements of this program and class often get forgotten:

• We built and delivered 6 submarines over a construction period from 1990 to 2003.
• Our build quality was equal to and also exceeded the quality of sections of the first submarine that were built overseas.
• The build of the Collins class also overlapped the construction of the Anzac Class frigates in Australia. This program was marked by world-class performance in terms of build quality, cost, and schedule and demonstrated that we could manage two major maritime construction programs in Australia concurrently and deliver quality vessels.

Enough for history, what about the future?

Our election commitment was to make a decision on our Future Submarines within eighteen months of being elected.

No-one should underestimate the priority I am giving this project. In Opposition I spent a significant amount of effort ‘shining the light’ on our then deeply troubled submarine force – the political pressure applied undoubtedly served as a catalyst for the Gillard government to give the submarine force its due regard. After four years of inactivity which saw our submarine availability fall away to alarming levels the Collins review, led by John Coles, was commissioned by the previous Government and the outcome of that review has seen a significant improvement in submarine availability.

In the lead-up to the last election I threw my support behind Defence’s charted course for the future submarine program – the suspension of investigations into option one (an existing off-the-shelf submarine design modified to meet Australia’s regulatory requirements) and option two (an existing off the shelf submarine modified to incorporate Australia’s specific requirements, including in relation to combat systems and weapons) and more detailed investigation of option three (an evolved design that enhances the capabilities of existing off-the-shelf designs, including the Collins Class) and option four (a new design).

It is always difficult for a Shadow Defence Minister to gain a full appreciation on defence planning on account of the necessity for secrecy, and as such I placed a caveat on my support; I said at the Defence Debate in Adelaide that “if anything the Minister has said is based on fantasy, we’ll tell you and we’ll revisit this”. I have now had extensive discussions with defence and access to a range of information previously denied me. Notwithstanding, I am still coming to terms with the complexities of intellectual property and our imperative to have sovereign control and proprietorship.

As a government we want both low risk and high levels of capability for the ADF.  Whilst such desires are not mutually exclusive the resolution and attainment of a viable balance between these competing imperatives is a highly complex and perpetual battle.

 Typically we would seek to achieve that through a military off the shelf acquisition – but this is not a typical acquisition.  The balance between risk, capability and costs is a tough one, and not surprisingly, different areas of Defence, Government and Industry have very different perspectives on how to achieve that balance.  It is fair to say I am still working the problem.

A submarine design and build is one of the most complicated engineering projects a nation can undertake. And some of the more experienced countries have struggled to achieve excellence on every design occasion.  My experience at Barrow on Furness highlighted to me the enormity of such a task. The considerable number of design and build engineers, and the complexity of modern submarine design and the cutting edge construction processes as a national asset was indeed impressive. Nevertheless, Australia did achieve something similar in the Collins submarine build programme.

Can we repeat such success, avoiding some of technical and commercial issues that plagued the Collins? In truth for our requirements it is probably much more complex than this.

It should be evident that our approach to our future submarine acquisition needs to be more comprehensive than just the introduction of a submarine.  In fact I would say that there are four primary objectives for the future submarine enterprise.  These are:

• To deliver an enduring regionally dominant conventional submarine capability;
• Ensure our new submarine capability is affordable;
• To ensure Australia is able to sustain a superior conventional submarine capability into the foreseeable future; and,
• To avoid a submarine capability gap.

Let me tackle each of these in turn, drawing out where I believe we have some certainty and where we are still examining questions.

Delivering a regionally superior conventional future submarine capability

I have deliberately used the term “submarine capability” rather than just “submarine”.  Our future submarine will be part of a larger ADF and Defence structure, and often allied suite of capabilities and enablers.  Satellite communications and surveillance, off board sensors, logistics and even our ability to support our submarines on operations and sustain them through life must all be factored into our thinking about the future submarine capability. 

To be regionally superior our submarine capability must meet two key tests.  It must be capable of operating independently over the large distances of our maritime region and stay on station sufficiently long to safely fulfil its mission.  It must also be capable of undertaking its missions clandestinely and be capable of destroying other submarines and surface vessels.

To a large extent the United States and United Kingdom are world leaders in a number of these areas and continuing these close relationships on high end submarine capability is critical to our success with the future submarine.  Our ability to access such technologies is not a simple undertaking and relies on our ability to sustain a trusted relationship with these critical partners at the levels of Government to Government, Navy to Navy and across Industry.

Ensure our submarine capability is affordable

We need a highly effective future submarine capability, but not at any cost. 

It is critical that we maintain the affordability of the future submarine capability both in construction and sustainment.  To do this we need to carefully manage our aspirations and we will need to make many compromises along the way.  A key element of this is to minimise the degree of risk.

I have fully endorsed a list of key principles that the Future Submarine project is following, including:

• Defence must maximise the use of proven technology;
• Defence must maintain strict control of requirements;
• Defence must engage  an appropriately experienced design house;
• Defence must utilise appropriately qualified and experienced personnel; and
• Lessons learned from the initial Collins and similar programs should not be forgotten.

I know that Navy wants to go this way and that the DMO has stood up the SEA 1000 Program Office and its IPT with these tenets as foundation stones.

As I have said on other occasions, and as is clear from our election commitment, the Coalition government intends that the ADF be equipped and sustained by Australian services and equipment wherever possible.  We have also committed to ensure that work in Australia on the replacement of the current submarine fleet will be centred around the South Australian shipyards. 

As a Government we want to give Australian Industry every chance of success. 

As the Prime Minister said very clearly prior to the September election, “We have also committed to ensure that work in Australia on the replacement of the current submarine fleet will be centred around the South Australian shipyards”. 

The Prime Minister has also recently noted: “we make decisions on the basis of defence imperatives, not on the basis of industry assistance imperatives or regional assistance imperatives”.

As a government we want to give Australian industry every chance of success, but let me be clear our primary and dominant purpose is to ensure that we provide Navy with a submarine which meets its requirements.

A submarine is not industrial or regional policy by other means or another name. Industry must demonstrate an ongoing capacity to meet international benchmarks with respect to productivity, cost and schedule.

Furthermore, we see military shipbuilding as a strategically important industry and certainly it is desirable that the new submarine would be built in Australia but it is not a blank cheque. 

I have agreed that Defence actively and formally engaging key industry sectors to ensure we have the best information available on these and related issues. 

This engagement will have the purpose of ensuring that Defence is able to act as an intelligent and informed customer and to explore an appropriate industry structure to support the delivery of the future submarine.

In addition, we also need a highly skilled workforce built on the experience we have gained in sustaining and upgrading the Collins Class submarines and building the Air Warfare Destroyers and the LHDs. Our work here must also bring together the related education and training programs that we need to grow and sustain a workforce for the next few decades.

My recent visit to the UK shipyards clearly demonstrated to me the issues associated with a ‘green’ labour force being stood up to construct their Astute program. It is now world class but it took time to get it to the high level it is today.

Ensure Australia is able to sustain a superior conventional submarine capability into the foreseeable future

At this point we believe that Submarines will remain relevant for the foreseeable future – although we cannot rule out the possibility of some disruptive technologies.  Consequently, the enterprise not only needs to be capable of introducing the new submarine, it must sustain the future submarine capability edge.

From a design perspective, I believe at the very least we need to be capable of two key things.  Firstly, we need to have sufficient access and knowledge to exercise sovereign design control over capabilities necessary to maintain a regionally superior conventional submarine capability into the foreseeable future and taking account of our desire for ongoing access to US and/or UK technologies. In other words we must as I have said have proprietorship of intellectual property.  Secondly, we need to have sufficient knowledge and expertise to exercise our responsibilities under Workplace Health and Safety Law. 

Furthermore, we need to be capable of materially maintaining our submarines into the foreseeable future, including undertaking full cycle dockings. 

In parallel with this we need to ensure that we maintain appropriate investment in science and technology as we continue to push the boundaries of our own knowledge of submarine operations.

Avoiding a Submarine Capability Gap

To avoid a gap we really need two things to happen. Firstly, we need to maintain the Collins as regionally capable submarine – that is operationally effective – probably beyond its original design life and secondly we need to introduce our future submarine into our order of battle by early to mid 2030s at the latest.  At this stage we are not aware of any specific issue that might prevent the life of the Collins being extended but I think we would also be wise to retain some healthy degree of caution until this is confirmed by more detailed work.  

The Collins class was originally designed for a life of about 28 years, although we have now moved to a 30 year life.  So this means that HMAS Farncomb, which was commissioned in 1998, might be expected to remain in service till about 2027.  However, we are planning to extend the Collins Class submarine for a further 5 or 6 years through another full cycle docking. This would take Farncomb out to about 2033.  This will mean Farncomb, and the rest of the Collins class submarine will be 10 years older than the Oberon class when they retired and is the equivalent of operating the AE1 out to the end of World War Two.

I am led to understand that if we were to get our own design developed by one of the major international design houses it would take at least 8 years from selection of the design concept to the cutting of steel.  Noting it is now 2014, this means we are already pretty much against the wall – on the critical path.  The Government needs to understand how long we should expect such the Design to Build process to take?  What alternatives are there to accelerate such a process?  Are there other ways to introduce the future submarine that allow the evolution of our aspiration without a gap, and without undue risk?

The previous government did develop the Integrated Project Team with the intention that it be able to advise Government as an ‘informed customer’ of the way forward for the Future Submarine Project.

I still do not know what the potential costs of a new design submarine or an evolved Collins submarine might be.  Furthermore, I am advised that the former Government removed millions from the front of the Submarine program and it is unclear how they proposed to deliver this program.

There has been a lot of speculation about whether we need 12 boats.   Let me make clear that my primary focus is not on numbers but on the capability and availability of boats required to meet the tasks set by Government.    As part of the White Paper process we will re-examine the strategic objectives of the future submarine program including the number of submarines required at sea and therefore the total number of submarines.

So where does that lead us?

I propose to take to Government this year, in support of the White Paper, a plan that balances up cost, capability and risk.  I am closely engaged in this project and the resolutions I take to my colleagues will of necessity provide assurance that there will be no capability gap, and that we will deliver a regionally superior and affordable conventional submarine capability sustainable in Australia over the foreseeable future.  The full details of this will be outlined in concert with the White Paper.

Today I will also release the findings of the Coles Review – Stage Four where John and his team took a deep look at what progress has been made in implementing his recommendations. I am very pleased with the way the Navy, DMO and ASC have pulled together to create the kind of change we have seen in the Collins availability. When I was briefed by John Coles I personally spoke with a range of personnel he had identified and thanked them for their efforts. 

I am hopeful that the change we have seen in performance around the Collins can be translated across to the Air Warfare Destroyer program.  The most encouraging piece from his report, which was also the most troubling, was that, between October 2009 and February 2010, we were effectively without any submarine capability – against a three boat availability indices we had 0% availability. On the two boat availability indices it was about 7% availability. We were in a very dire and dark place! Against this in 2007 the two boat availability was 90%.

Something was going seriously wrong and the previous Government did very little in its first three years but wring its hands in despair.

It wasn’t until July 2011 and after four years of questioning and badgering from the Opposition that the previous government did something constructive to critically examine this issue and appointed John Coles and his team to look at what was now a very troubled Collins program.

We are heavily indebted to John Coles and his team for their outstanding work and to the men and women of the submarine enterprise for their truly remarkable efforts.  

Through the Collins Transformation Program guided by the recommendations of Mr Coles and his team, our two submarine availability in December 2012 grew back to 60% - today it is back at the 2007 level of 90%.

John Coles also found that progress towards achieving benchmark performance is equally impressive. From mid-2014 none of the Collins Class submarines will be in the old 8+3 operating cycle and are progressively moving into the new 10+2 operating cycle of 10 years in-service followed by a two-year Full Cycle Docking (FCD). This change to the operating cycle is a pre-requisite to reach and maintain benchmark availability. Once in the 10+2 Usage and Upkeep Cycle steady state, time in maintenance will significantly reduce. To achieve this, planned maintenance is being comprehensively restructured, whilst ensuring that the design intent of the submarines is assured. The two-year Full Cycle Docking requires compressing the previous overhaul time by a factor of nearly two.  This is the word of caution and provides a benchmark of achievement or not.

The first two-year Full Cycle Docking commences in July 2014 and he has ascertained that preparations are well advanced. New facilities projects funded by the ASC, improved working practices and maintenance and material supply routines are collectively designed to deliver the required efficiency improvements. The capital projects are nearing completion and some process improvements have been trialled and verified on extant programs.

He is optimistically cautious that the two-year Full Cycle Docking should be able to be achieved, and notes that the right initiatives to achieve it are being undertaken, but many are untried. There remains more than routine risk to be managed to achieve HMAS Farncomb’s scheduled end date.  

If this Full Cycle Docking can be achieved within the 24 month period then I think we can say we are ‘getting there’.

In summary, I agree with John Coles when he says that he has seen a lot to be admired in what is a remarkable transformation. Much has been achieved in a very short time, leading to improved availability which is on track to reach the International Benchmark in FY17. Ensuring personnel with the required skill sets in the breadth and depth necessary for Defence to discharge its more limited but essential roles and responsibilities will be extremely important to ongoing progress of the Transformation Program.

The signs are encouraging but there are still risks ahead with more work needing to be done.  We need to always remember that the Collins Class is a sophisticated platform which operates in a demanding environment and continued improvements in availability will lack resilience until the Coles recommendations are fully implemented.

But what has been achieved to date is remarkable, delivering a level of performance that would not have been viewed as possible two years ago. It has been most gratifying to see the astonishing turnaround of a seriously failing project to one that should, within just two years, achieve or better International Benchmark Performance.

In concluding, I would say that I am more optimistic today about our submarine fleet than I was seven months ago.

I must mention how impressed I am with the dedicated and professional men and women in our submarines. They are doing amazing things in what are becoming once again, reliable and technologically advanced boats and commend them for having gone some distance in restoring a vital capability.

The future submarine is clearly one of our most important and vital strategic capabilities. Our quest to provide a boat which fulfils our future needs is a very arduous and challenging one but one which I and the Government will approach with the same level of commitment determination and focus we see every day in our submariners.