Alliances drive Australian Defence Spending

A digital impression of Naval Group Australia's Shortfin Barracuda attach-class submarine.

Australian defence modernisation is moving ahead across a broad front with a ‘build in Australia’ impetus behind many major projects.

Modernisation Programme

Australia’s defence modernisation programme is following the route set out for it under the government’s last Defence White Paper published in 2016. It committed to spending two percent of Gross Domestic Product (GDP) on defence by 2020-21 and a total of $129 billion (AD$195 billion) over 10 years.

Its analysis of the global strategic environment for the next 20 years out to 2035 has informed its equipment procurement programmes and while it anticipates increased prosperity across the Indo-Pacific region through to 2050 it acknowledges that the relationship between China and the US will be key to maintaining peace.

The White Paper stated that: “A strong and deep alliance is at the core of Australia’s security and defence planning” and that the US “will continue to be Australia’s most important strategic partner.” Therefore it committed to “broaden and deepen” the relationship and support its role in underpinning security in the region.

Australia’s procurement decisions have largely been taken with this alliance structure in mind and it has forged ahead with a wholesale modernisation of the Royal Australian Air Force (RAAF), Australian Army and Royal Australian Navy (RAN). Australian Defence has embarked on some large and expensive programmes that, when brought to fruition, will give the Australian Defence Force (ADF) the most modern and capable platforms available.

Project SEA 1000 Future Submarine

The White Paper also committed Australia to the “most ambitious plan to regenerate the RAN since the Second World War.” But here, the Department of Defence has been more than ambitious as it wants most of its new platforms to be built in Australia rather than imported from overseas. This means it has devoted huge sums towards developing its domestic naval shipbuilding industry to undertake this task. Its largest ever acquisition project SEA 1000 Future Submarine is projected to cost an estimated  $53 billion (A$80 billion) and it will replace the RAN’s existing six Collins-class submarines with 12 new Attack-class boats.

The new SSKs will be built at a new manufacturing facility at ASC in Osborne North near Adelaide, South Australia. The prime contractor is French shipbuilder Naval Group, which is providing a new design called Shortfin Barracuda that is an adaptation of its Barracuda design used to build the French Navy’s new Suffren-class SSNs. But it could be that Defence has been over-ambitious.

In a report by the Australian National Audit Office on Future Submarine published in January 2020, it highlighted an overall programme delay of nine months in achieving the original pre-set milestones and a further five-week delay since the project was re-baselined with revised milestone dates. This has been down to a failure of communication between Naval Group and Defence and what seems to be a lack of understanding about what the company is expected to provide at each project stage.

After some extensive bartering a Strategic Partnership Agreement (SPA) was belatedly signed in February 2019 setting out the long-term relationship between them. Marcus Hellyer, senior analyst at the Australian Strategic Policy Institute (ASPI) told AMR: “It may be that now they are working together under the SPA things will improve.” However, he added: “The construction schedule and IOC [Initial Operational Capabiltiy] schedule is still rather opaque (i.e. start of construction in 2022-23 really means 2024). IOC seems to have slid over the past few years to 2034.”

The project has other areas of risk. The extent to which Australian industry is able to provide what is required in the supply chain is also in doubt and the project does not have much scope for error. If there are significant overall delays in excess of three years then it could affect the RAN’s submarine capability.

SEA 5000 Hunter-class frigate programme

The RAN is also set to receive nine new frigates under the $23 billion (A$35 billion) SEA 5000 Hunter-class frigate programme that will replace the existing ANZAC-class. Construction will take place at a new facility in ASC South, adjacent to the new submarine shipyard in Osborne. Prime contractor BAE Systems is expected to deliver the frigates from 2029 built to its Type 26 design and it has been granted temporary ownership of the ASC South shipyard for the duration of the contract. Prototyping will commence this year including the procurement of long-lead items and steel cutting for the first ship is expected in late-2022.

Avoiding Boom and Bust

The reason the programme is drawn out over a long time period is that Defence wants to establish a continuous shipbuilding programme that will see a steady stream of naval vessels built at ASC once the Hunter-class are completed in the 2040s. The intention is to avoid a boom-and-bust cycle where orders and work dries up causing the loss of personnel with skills and experience to other sectors whilst facilities and equipment lays dormant.

However, this has raised criticism as Hellyer believes that new ships and submarines are needed sooner than this. He told AMR that a long procurement programme will mean the RAN will not get its first new frigate for another 10 years and its first new submarine not for 15 years. Final ship and boat deliveries will not take place until the 2040s and 2050s respectively, and by then technology and the strategic environment is likely to have changed. Hellyer’s concerns is that Defence has overcommitted itself with SEA1000 and SEA5000 taking up so much of the budget and leaves little room to change.

The RAN is also getting 12 new Arafura-class Offshore Patrol Vessels (OPVs). The first two are being built at ASC before production shifts to Civmec’s facility in Henderson, Western Australia. Luerssen is prime contractor and the ships are being built under a Joint Venture with Civmec to its OPV80 design for nearly $2 billion (A$3 billion). ASC has already started construction of the first two OPVs and Civmec is due to start cutting steel for the third this year at a new facility in WA.

Lürssen Australia will deliver 12 OPVs meeting the RAN’s requirement for its SEA 1180 Offshore Patrol Vessel (OPV) project.

Outside of the big three programmes the RAN is expecting to receive two new auxiliary oiler replenishment (AOR) vessels under Project SEA 1654 phase 3 Maritime Operational Support Capablity (MOSC). Built by Spanish shipyard Navantia for $424 million (A$642 million), the vessels Supply and Stalwart are due to arrive in June this year and May 2021 for handover to the RAN. The programme is running about a year late due to logistical support issues.

Lightning Arrives

Meanwhile the RAAF is in the process of receiving 72 new F-35A Lightning II Joint Strike Fighters under Project AIR 6000 phase 2A/B. Lockheed Martin is delivering the planes under a Foreign Military Sales (FMS) agreement. So far the RAAF has just 20 fighters. Pilots and maintainers are undertaking training at Luke Air Force Base in the US and Defence has announced that 34 pilots and 16 instructors have been certified. It means that training can begin in Australia. The final aircraft is due to be handed over in 2023 when the programme will achieve Full Operational Capability (FOC) and they will be split into three squadrons of 24 aircraft.

Defence told AMR: “After their arrival at RAAF Base Williamtown, the aircraft will be used in a Verification and Validation (V&V) program during 2019-2020. The V&V programme is an important milestone in the lead-up to the declaration of Initial Operating Capability (IOC) in December 2020.” Lockheed Martin has stated there should be 33 aircraft in Australia by then to reach IOC and the first fighter squadron of operational F-35 will be created within the next three years.

An F-35A Joint Strike Fighter aircraft from No. 3 Squadron about to conduct night flying at RAAF Base Williamtown as part of pilot familiarisation training.

“The first operational squadron – No. 3 Squadron – will be proficient in air combat, strike and offensive air support, and ready to deploy in support of Australia’s national interests,” Defence said.

The question for the RAAF is whether it should proceed with Phase 2C, the acquisition of more aircraft to develop a fourth squadron of F-35As. However, there is debate within the service if it would not be better served to instead opt for upgrading their existing F/A-18F Block II Super Hornet aircraft to the Block III standard. Malcolm Davis, a senior analyst at ASPI, told AMR that “the issue is still under consideration” and he believes the Super Hornet upgrade option has its merits.

“The F/A-18Fs still have a lot of life in their airframes, and there is no reason for them to be replaced. Certainly upgrading them to Block III would make a great deal of sense, and save a great deal of money in comparison to buying an extra batch of F-35As,” he said. An upgrade of 24 Super Hornets and 11 EA-18G Growler aircraft to an advanced model is estimated to cost a total of $568 million rather than $2.8 billion for 28 additional F-35As. But it is not just about money, the F-35A’s stealth characteristics are thought to be less than effective and the F/A-18s have a larger weapons payload capacity. However, there is nothing official from Defence and there is still some time before a decision has to be made therefore the debate within the RAAF is set to continue.

A decision needs to be made whether the RAAF should buy more F-35As or upgrade their existing F/A-18F Block II Super Hornet aircraft to the Block III standard.

Project AIR 5349 Phase 3

An original 12 Growler aircraft were delivered in July 2017 under Project AIR 5349 Phase 3 but in January 2018 the engine of one plane failed on the runway at Nellis AFB in the US and the damage was beyond repair. The RAAF originally wanted to replace the aircraft but compensation from neither the suppliers (General Electric and Boeing) or the US Navy has been forthcoming and so the Growler fleet will remain at 11 aircraft. The initial operating capability (IOC) for the Growler was mid-2018 and this was pushed back to April 2019.

Defence told AMR that IOC was delayed “to ensure sufficient maturity for training and support systems” and that “The US Navy continues to pursue remediation from the Engine Manufacturer General Electric. Defences continue to engage with the US Navy over the engine claim.”

It added that one less aircraft “has an effect on aircraft availability but does not affect the Growler capability to achieve its Airborne Electronic Attack mission. Final Material Release is still planned for 2022.”

AIR7000 Phase 2

Another major capability upgrade is the acquisition of 12 P-8A Poseidon maritime patrol aircraft under AIR7000 Phase 2 that will replace the RAAF’s existing AP-3C Orion aircraft. The final aircraft was delivered to RAAF Base Edinburgh in December 2019 and some P-8s already in-service have completed a deployment with Operation Manitou, which is Australia’s contribution to international security efforts in the Middle East. Meanwhile the P-8As are being supplemented by a new Unmanned Aerial Systems (UAS) capability under Phase 1 of AIR 7000 with the acquisition of six Northrop Grumman MQ-4C Triton systems. Valued at Anearly $1 billion, the aircraft will enter service from 2023-25.

A Boeing P-8A aircraft from No. 11 Squadron undertaking a search and rescue exercise in the Spencer Gulf, South Australia.

Land 400 programme

The Army is progressing with its flagship procurement programme Land 400. Under the Phase 2 Combat Reconnaissance Vehicle (CRV) element worth about $3.4 billion (A$5.2 billion) it is replacing its existing ASLAV vehicles with the Boxer 8×8. Defence made the choice of Boxer to meet its CRV requirements in March 2018 and prime contractor Rheinmetall will deliver 211 vehicles. The first 25 are being built in Germany with construction of the rest taking place at a new facility near Brisbane, Queensland. Defence wanted the initial batch from Germany because the facility in Australia would not have been up and running until 2022 and it will deliver the remaining platforms through to 2026. Rheinmetall handed over the first German-built unit in September 2019 and of these initial vehicles, 12 are reconnaissance vehicles and 13 are multipurpose variants. It means that the Army can begin training earlier.

Australia’s first Boxer vehicle received by the Army on 24 September 2019 at Enoggera Barracks, Brisbane that will replace the ageing ASLAV. The vehicles will also come with 223 Mission Modules.

Under Phase 3 worth about $6.6-10 billion (A$10-15 billion), the Army will get 450 new Infantry Fighting Vehicles (IFVs) that will replace its ageing M113 Armoured Personnel Carriers. Known as the Mounted Close Combat (MCC) capability, the competition to provide the new vehicle has been narrowed with two companies remaining: Rheinmetall offering the KF41 Lynx and South Korea’s Hanwha Defense Systems offering the AS21 Redback. These beat rival offerings from BAE Systems with the CV90 and General Dynamics with a variant of the Ajax. Rheinmetall and Hanwha have been awarded Risk Mitigation Activity (RMA) contracts that will allow them to ensure their vehicles meet the MCC requirements. This RMA is expected to last about two years with a Gate 2 approval due in 2022 and an IOC slated for 2024-25.

Derisk Required

With large acquisition programmes underway for the land, sea and air domains, there are significant challenges ahead for Australia. Davis said that the priorities for Defence are to de-risk the major projects “particularly Future Submarine, and address the slow delivery of capability”. He is concerned that the first boat won’t enter service until 2034 at the earliest.

Davis also said that Australia needs to “think seriously” about options to meet an air strike capability gap in the ADF and whether this should be met with manned aircraft, long-range missiles or Unmanned Combat Air Vehicles “and how we might better utilise forward basing”.

The role of unmanned systems along with Artificial Intelligence (AI) and autonomy could be key capabilities for the military in the future and these are only just starting to play a larger role. Defence needs a strategy to exploit these technologies better and analyse how they could change the whole structure of military forces.

Overall with the increasing amount of commitments on the horizon, changing technologies and rapid rise of China, Davis believes Defence needs to think about whether the size of the ADF “is right for the worsening strategic outlook we face” – and by extension – “to what extent do we need to increase defence spending to levels above that suggested in the Defence 2016 White Paper.”

by Tim Fish