Aukus price tag: report warns of $80bn cost for Australia's nuclear submarine plan

Australia's $80 billion project to develop a fleet of nuclear-powered submarines will be the most challenging undertaking the government has embarked on, a defence analysis report said on Monday.

The Australian Strategic Policy Institute said that even with US and British input in the plan — which could see the three countries collaborating to construct the vessels in Australia as part of the controversial Aukus pact — getting the submarines seaworthy would be a challenge.

The report did say the project would give Australia a regional strategic advantage, as geopolitical tensions rise in the Pacific, but the first submarines are not expected to be operational until 2040.

The Aukus pact caused controversy in September when Australia announced that it would work with the US and Britain on a new nuclear submarine project, ending a plan to procure $90 billion worth of French diesel-electric submarines.

“Within Nato, the United States and the United Kingdom are our allies. Of course, Australia is not a part of it,” French Foreign Minister Jean-Yves Le Drian said at a conference in Jakarta last month.

“Nonetheless, they are historically our allies and they acted behind our back on strategic and military issues. This is a trust crisis. My first comment was [that it was] some sort of betrayal. The second element is a crisis of trust between historical partners, which is even more of a concern,” he said.

The Australian Strategic Policy Institute said it would be an extremely difficult task to establish a nuclear-powered submarine fleet, requiring a step-change in Australia's military and industrial capabilities.

It is “probably the largest and most complex endeavour Australia has embarked upon. The challenges, costs and risks will be enormous,” the think tank warned.

“It's likely to be at least two decades and tens of billions of dollars in sunk costs before Australia has a useful nuclear-powered military capability.”

The project, announced last month, will make Australia the only non-nuclear weapons power to own nuclear-run submarines, which are capable of travelling quickly over long distances carrying long-range missiles and state-of-the-art underwater drones.

Canberra plans to equip them with conventional rather than nuclear weapons. It has yet to decide whether it will buy US or British technology, what class, size and capabilities the subs will have, where they will be built, or how radioactive material will be handled.

Even under an optimistic schedule, the first submarines are unlikely to be operational before 2040, according to the report's authors, who include former Australian defence department officials and an expert on nuclear physics.

The price tag will be eye-watering, with an eight-boat programme costing US$83 billion “at an absolute minimum”, almost a tenth of the country's annual gross domestic product.

Among a litany of tasks ahead, the navy will have to triple the number of submariners it recruits, refurbish docks, and develop extensive nuclear safeguards.

On the diplomatic front, Australia will need to reassure neighbours and the International Atomic Energy Agency that the subs do not present a nuclear proliferation risk.

“Regardless of the Australian government's declared intentions,” the report said, “once Australia possesses [weapons-grade enriched uranium], the breakout time to develop and construct nuclear weapons would be less than a year if a simple nuclear-weapon design were pursued.”

The submarine plan has already caused diplomatic headaches for Canberra in Asia, with nearest neighbour Indonesia expressing concern.