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toward the aussie nuke upgrade……..

Which Australian Defence Minister convinced the Hawke Cabinet to create a submarine production industry at Port Adelaide with no commercial prospects, its product being of only marginal benefit to our defence, with zero local construction expertise, at extraordinary cost to taxpayers yet available economically elsewhere – while obscuring the finding by his Department that submarines suffer critical limitations in defending Australia?

 

BY MIKE GILLIGAN

 

It’s about time Australians knew that the submarine fixation which grips our media is a fraud. Rather than being a war-winner, submarines have intractable strategic problems in defending Australia, of which our governments and people have been kept ignorant for over four decades. The upshot is that outsize spending on submarines for many years has seriously detracted from Australia’s security and national productivity. The origin of this aberration is a Cabinet submission placed before Hawke Ministers by then Defence Minister Kim Beazley, in May 1987. A warning: readers will need some patience with Defence official practices and some semi-military terms.

For submarines to be effective they need a lot of luck. Hitler, like most of our recent prime ministers, believed them to be war- winners. But Hitler at least knew that to be effective in vast waterways large numbers of submarines are required, because submarines are slow. In the war Germany built 3000 submarines mainly to interdict convoy supply to Britain across the Atlantic. By 1941 Britain’s economy was on its knees from Germany’s submarines. But Hitler’s luck ran out. The same laws of physics and risk which induced Hitler’s huge investment were exploited by British operational analysts. Simply by cutting the frequency of convoys and increasing their size by twenty-fold, Britain’s resupply was transformed almost overnight from perilous to satisfactory. Germany had grievously misallocated its military spending to submarines.

Of course, Australia has different geographic and strategic factors. And passing time has meant that submarines are more capable, although not much in speed. But so have their alternatives changed ie aircraft and surface vessels. Because such strategic and operational influences play out differently for Australia and Germany, and understanding them is critical to gauging value for Australian taxpayers, their evaluation was the starting point whenever Defence faced a major acquisition decision.

Defence Department Machinations

The strategic case for submarines was addressed by the Department of Defence in 1985 in response to the Australian Navy’s proposal to replace its ageing British Oberon submarines. The reviewing body was the Force Structure Committee (FSC) whose members were the military Vice-Chief of the Defence Force, Services’ Chiefs of Operations, Chiefs of Materiel, Deputy Chief Defence Scientist and senior officials with strategic, analytical and financial responsibilities.

The FSC gave serious consideration to scrapping submarines entirely because the evidence showed they offered little incremental
effectiveness in major roles of strike, interdiction and ant-submarine warfare above that already obtained from existing aircraft and surface vessels. There was no dissent. The decision finally was to acquire 4 to 6 small boats off- the-shelf to retain a core of skills in submarine operations, some secondary intelligence and as a tool for training our primary anti-submarine forces. Local production was specifically ruled out as unwarranted for such a marginal capability.

Major factors for Australia were long transit times to and from southern basing to northern waters which present difficult submarine operating conditions. Sonar effectiveness is degraded in the warm waters and variable depth of the archipelago. That also presents physical risks – covert submarine operations are hazardous and boats are “canalised”, increasing vulnerability.

The Defence Department’s procurement process required this decision to be referred to the Defence Source Definition Committee (DSDC) for procurement. The DSDC would then identify a supplier for new submarines constructed offshore. As it turned out the FSC recommendation was ignored. The procurement focus of the DSDC went straight to construction in Australia. Kim Beazley had become Minister in December 1984.

The Submission

In May 1987 a submission was put to the Hawke Cabinet by Minister Beazley entitled “ New Submarine Project” ( No 9580, obtainable through the National Archives of Australia – running to 90 pages). The Minister’s submission concentrates on the merits of two tender responses to construct new submarines at Port Adelaide. The project is said to lead to benefits to Australian industry – 65% of cost to be expended in Australia, creating some 800 jobs.

As justification, Ministers were informed that the new submarine would replace the Oberons which “are difficult to maintain and suffer operational degradation”. The submission touched on operational utility by listing submarine roles: “maritime strike, anti-submarine, covert surveillance, mining, clandestine operations, training for other ADF assets”. These roles were said to require “sufficient speed, range, reliability and endurance to make fast covert passage through oceanic and archipelago areas and patrol for extended periods at long distances from Australian base support etc”. There the Minister’s advice stopped. Yet, whether these requirements could be delivered was exactly what the Force Structure Committee had assessed and found wanting. That finding was omitted from the Minister’s submission.

The submission’s Attachment D is entitled “Evaluation Processes”, referring to evaluations done in the Department of Defence. It lists the findings of the DSDC tender evaluation, but leaves out the overarching evaluation by the FSC.

On local construction, the Cabinet was given no estimate of the cost premium for local construction nor why Port Adelaide was the chosen site, apart from observing that both contenders were agreeable to working there. The project cost was estimated at $3.89 billion. The Minister advised colleagues that the design involved some risk but that this risk would fall predominantly on the chosen contractor. Cabinet decided that Defence must return if the cost exceeded the estimate by $10m.

Cabinet agreed to the Minister’s recommendations and decided that public scrutiny of the Port Adelaide choice would be blocked: “ The Minister for Housing and Construction seek a resolution from the House of Representatives that the construction of the submarines and the associated Australian Construction Facility to be located at Port Adelaide be exempted from the Parliamentary Standing Committee on Public Works ( PWC ) on urgency grounds”.

Thereafter, the Collins submarine project has been riven with difficulty, bestowing anguish on every subsequent government. Anthony Galloway writing in the Sydney Morning Herald in 2021 observed that the project cost was $40 billion more than expected, citing former Howard Finance Minister Nick Minchin on his experience 15 to 20 years later:

“We had enormous issues with the Collins. Almost every National Security Committee meeting, Cabinet meeting, Expenditure Review Committee meeting that I was involved in – the issue of submarines came in.”

Marcus Hellyer of ASPI estimates the annual cost of operating the Collins today: “ With around $670 million for sustainment, $225 million for workforce and $300 million for upgrade projects, the Collins class’s direct costs are in the order of $1.2 billion per year”.

And John Menadue has cited : “The Effective Rate of Assistances for the submarine industry is in excess of 300%. This is the excess cost we are paying for construction in Australia rather than buying from overseas suppliers. Compare that rate of assistance to the 5% that our car industry received before the Coalition shoved it out the door.”

Obviously, the objective of Minister Beazley was to create a subsidised, uneconomic industry at Port Adelaide. Professional concern for Australia’s security did not rate. Nor did frankness with Cabinet colleagues. Largely because of this duplicity no government since has  questioned the submarine –its relative immobility, absurdity of small numbers in our geography, chanciness of sensors, limited payloads and long replenish periods. The Collins major roles are currently being performed by combat platforms having orders-of-magnitude greater capability – by squadrons of fighter/attack and long-range maritime patrol aircraft operating from strategically-sited airfields plus surface combat ships, all armed with stand-off anti-shipping missiles. And the multi-dimensional anti-submarine combat capacity dwarfs that of the Collins submarines.

The upshot is that successive governments have muddled through with no strategic foundation to weigh the chronic submarine failures and cost blowouts – unaware that cancellation was the prudent course which would be beneficial to national security. Our governments operate under inherited, empty hubris on submarine utility. If Australia’s Defence Budget is as stressed as claimed, requiring high levels of growth, the responsible course is to decommission the six Collins Class now, recognising that they offer little in defending Australia. And obviously no strong case exists for replacing them.

The current nuclear submarine proposal for Australia under AUKUS is also devoid of strategic justification, unsurprisingly. Being championed by a fast-disappearing international trio of political leaders who also are untroubled by verity, what could go wrong? The proposal is peculiar in not being initiated by the Australian Navy. Australia must have a transparent strategic premise for this off-the-wall proposal. The origin of its advocacy is basic to that transparency. Release of papers showing where the proposal originated and its reasoning would be a welcome display of honesty by our Defence Minister Richard Marles.

 

 

READ MORE:

https://johnmenadue.com/deceiving-cabinet-colleagues-on-submarines-surely-not/

 

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bomber joins the board.....

 

BY Michelle Fahy

 

There is a never-ending conga line of politicians, intelligence, military and defence officials quick-stepping through revolving doorways onto the boards of lucrative military weapons companies.

Kim Beazley, former WA governor, ex Labor defence minister, two-time federal opposition leader, and former ambassador to the USA, was known, because of his enthusiasm for all things military, as ‘Bomber Beazley’ during his Defence ministership.

Just two months after his vice-regal role ended on 30 June this year, he joined the board of defence contractor Luerssen Australia. The move is another example in the long list of Australia’s revolving door appointments in the military-industrial sector.

In 2018 the federal government awarded Luerssen Australia, the WA-based subsidiary of the German naval shipbuilder Lürssen, a contract to supply twelve Offshore Patrol Vessels to the navy. The $3.7 billion contract was one of 28 projects listed as a concern in October by new defence minister Richard Marles, and was said to be running a year behind schedule.

Quality issues with the hull of the third vessel, being built by Luerssen’s WA project partner, the engineering firm Civmec, were revealed last month by unnamed defence sources to the Australian Financial Review. The first two vessels were built by Luerssen’s South Australian partner, ASC, at Osborne near Adelaide.

In February this year, Beazley, then WA state governor, made an official visit to Luerssen at Civmec’s facility in the Australian Marine Complex at Henderson, 35 kilometres south of Perth, where the remaining ten vessels are planned to be built.

The Morrison Government invested around $1.5 billion in infrastructure at both the marine complex at Henderson and at Fleet Base West at HMAS Stirling. Just across the waters of Cockburn Sound from Henderson, Stirling, Australia’s largest naval base, has long been coveted by the US military as an Indian Ocean base for its nuclear submarines and other naval ships.

Photos and a story of Beazley’s visit to Henderson were posted on the WA Government House website, including his description of the Luerssen vessel as ‘the ship of the future’.

Then, in early May this year, Governor Beazley met with a delegation of Luerssen executives at WA’s Government House. Present at this meeting were two Australian executives, Jens Nielsen, Luerssen Australia’s chief executive, and Matt Moran, its strategy and government relations executive. More significantly, however, there was also Tim Wagner, the chief executive of Naval Vessels Lürssen (NVL) Group, the German multinational conglomerate that owns Luerssen Australia. Government House downplayed Wagner’s presence, describing him only as the chairman of Luerssen Australia.

The Government House webpage says the Luerssen executives updated the Governor on the offshore patrol vessel program and that discussion then turned to ‘the possibilities of relocating further defence industry works to Western Australia to bolster our sovereign shipbuilding capabilities’. No further details are provided.

There is a wider context that raises questions about what was discussed at this meeting, which took place less than three weeks before the federal election and just four months before Beazley joined Luerssen’s board. In response to a request from Declassified Australia for more details, Beazley said only that, “Discussions centred on the subject on the website”, the subject being the sentence quoted above.

What is Lürssen seeking?

The possibility of a multinational naval shipbuilder relocating potentially billions of dollars of additional works to Henderson is significant. It could become more so if reports in international media of potential consolidation in the German naval shipbuilding industry, including speculation about a possible merger between ThyssenKrupp Marine Systems (TKMS) and Lürssen, prove accurate. TKMS is the large naval shipbuilding subsidiary of German industrial giant ThyssenKrupp. It was one of the three firms shortlisted for Australia’s ill-fated submarine contract, losing out to France’s Naval Group.

Lürssen launched its new NVL Group entity, which Wagner leads, in October 2021 to house its naval shipbuilding businesses, separating them from its super yacht division, a move that indicates it may be positioning itself for future industry consolidation.

In November, executives from TKMS were in Canberra seeking meetings with Australian Navy officials to discuss a potential new shipbuilding project, which the Financial Review said could lead to the Navy scrapping the offshore patrol vessels and replacing them with more heavily armed corvettes.

This may be significant because Lürssen and TKMS are already working in partnership (also see here) supplying the German navy with corvettes. No formal Australian corvette project yet exists, but it’s reported that it is being considered as an option by the Albanese government’s Defence Strategic Review.

Beazley’s term as WA Governor ended on 30 June 2022. Luerssen Australia announced his appointment to its board on 30 August 2022.

Beazley has joined the former chief of navy, Christopher Ritchie, and former Howard government cabinet minister John Sharp on the Luerssen Australia board. Both Ritchie and Sharp have also accepted other board positions with foreign arms manufacturers.

Sharp was with European group Airbus, a significant federal defence contractor, from 2002–2015, prior to joining Luerssen in 2017. Ritchie was a director of Lockheed Martin Australia, local subsidiary of the world’s largest arms manufacturer, from 2013–2020, adding the Luerssen board in 2017.

Ritchie is also chair of the AMDA Foundation, curiously a registered charity, that organises arms industry expos around Australia for local and international defence officials, military representatives, and arms corporations to network and do business.

The Luerssen board appointment is not Beazley’s first move through the revolving door. After returning from Washington DC, where he had been ambassador from 2010 to 2016, he joined Chris Ritchie on the board of Lockheed Martin Australia.

Around this time, Beazley was appointed as co-chairman of the Australian American Leadership Dialogue, a Director and Distinguished Fellow at the Perth USAsia Centre, and president of the Australian Institute for International Affairs

Beazley was also appointed a Distinguished Fellow at the Australian Strategic Policy Institute (ASPI), for whom he wrote and spoke regularly. ASPI is designed to be the federal government’s ‘independent’ primary source of external advice on defence and national security matters, though there are serious questions over its independence, as shown previously by Declassified Australia.

Beazley left Lockheed’s board in April 2018 ahead of taking up the WA governorship. Since resigning as governor, he has taken up the role of chairperson of the Australian War Memorial, which has been sponsored by weapons manufacturers Lockheed Martin, Thales, BAE, and Boeing.

Defending the state

Two months after the Turnbull government signed the offshore patrol vessel contract with Luerssen Australia in late January 2018, WA Labor Premier Mark McGowan visited Lürssen’s Bremen headquarters in Germany. There he discussed the program and Western Australia’s potential as a base for defence exports into the Asia-Pacific region.

McGowan said his government had “identified defence as a key pillar for diversifying Western Australia’s economy, creating more jobs for Western Australians”.

Within days of returning to Australia, McGowan announced Kim Beazley’s appointment as governor. “[He is] a great West Australian, a great advocate for our state, someone respected across the political divide, someone that can represent our state overseas… someone that can represent us interstate and be an advocate for WA in a unique way.” Beazley commenced in the vice-regal role on May 1.

The following year, Governor Beazley undertook his first official visit, to the United Kingdom and Germany, from 25 March–2 April 2019. While in Germany, his official engagements included a site visit to the Lürssen corporation. Beazley and WA Government House both declined to respond to Declassified Australia about the purpose of this visit.

While in London, in addition to meeting with Queen Elizabeth II, some of Governor Beazley’s engagements were specifically defence industry related. He met with Sir Roger Carr, the chair of BAE Systems, the UK’s and Europe’s largest arms manufacturer, and sixth largest globally. He made a site visit to Airbus, a global top 15 arms multinational, which has established a drone launch site in WA. He also gave a keynote address to a gathering at the King’s College London’s Menzies Australia Institute event, Contemporary thinking in Australian defence policy.

Expanding the role of governor into ‘strategic’ advocacy

In May 2019, WA Today reported that Governor Beazley had won an additional $1.4 million in the McGowan government’s 2019 Budget. The budget on page 85 revealed that the extra funding covered the new Governor’s ‘expanded role of advocacy and representation’.

WA Treasurer Ben Wyatt told Perth radio the budget increase was because the Governor would help attract a bigger share of Australia’s defence industry to WA in addition to performing his job under the constitution, the report said. It quoted Wyatt:

The deal is that the Governor is uniquely placed to advocate for WA in respect of doing what we’ve been trying to be doing… in attracting more defence investment into Western Australia…

As a result of that, that’s why three extra staff have been allocated to the Governor.

This is unique, there’s no question about that in respect of roles the Governor has traditionally played. But, because we’re very fortunate to have a Governor that has quite a global background… we want to attract more jobs.

Wyatt said while advocacy was not the Governor’s formal role, the Governor’s expanded responsibilities were ‘not political’: “Under the constitution, this is a broader remit that has been asked of him and it’s one that I think is not in conflict with the constitution.”

The WA Government House website entry for ‘Role of the Governor’ was updated to read: ‘The Governor advocates for the State’s strategic interests and capabilities’, and ‘The Governor has a key role in… promoting the strategic interests and capabilities of the State’.

Premier McGowan said the inclusion of advocacy by Beazley had ‘modernised’ the role of governor.

Revolving doors and undue influence

The ‘revolving door’ is a term used to describe the movement of individuals from public roles into related private industry roles and vice versa. Such moves are not illegal and not necessarily problematic. Declassified Australia is not alleging any illegal activity by Kim Beazley. However, given the potential for undue influence and conflicts of interest, global integrity bodies recommend clear guidelines and a transparent process of scrutiny and approval before such appointments take place.

Unfortunately, Australia’s guidelines for managing revolving door appointments are weak and largely unenforced. It is also unclear whether they exist for certain positions, such as state governors.

The WA Public Sector Commission has developed an integrity strategy for public authorities. It has however advised Declassified Australia it doesn’t issue a code of conduct for the WA Governor. WA Government House declined to respond to questions from Declassified Australia about whether any such guidelines exist for the role of governor.

In 2018, the Grattan Institute produced a report – Who’s in the room? – which notes that Australia is vulnerable to policy capture by vested interests and that a key risk factor is Australia’s “lax revolving door rules [which] permit ‘cosiness’ between politicians and influence-seekers”.

Transparency International advises as follows for revolving door appointments:

Reasonable minimum cooling-off periods (12-18 months) should be adopted by governments to mitigate the risk of conflicts of interest. They should accompany a comprehensive, transparent and formal assessment procedure which assesses whether post-public office employment is compatible with former duties.

In response to Declassified Australia’s questions, Kim Beazley said: “Whilst Governor I visited many industries involved in Defence in Western Australia and industries in other sectors. All were aimed at encouraging investment in WA. With none of them at any stage did I discuss a role with them after my time as Governor.”

Luerssen Australia declined to respond to questions, instead pointing to its August media release announcing Beazley’s appointment to its board.

 

READ MORE:

https://johnmenadue.com/bombers-revolving-doorway/

 

 

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