The Albanese Government is already pouring $9.1B of taxpayers’ money into the US and UK submarine industrial base. Yet a new FOI release from Washington reveals a secret deal that means there’s even more money to be dispatched. Rex Patrick reports.
Make Australia pay again?
The future of Whyalla’s steelworks is of vital national importance and should matter to all of us. It is critical to Australia’s manufacturing, construction and national security and resilience.
Being frank, the steelworks are in dire straits. They are 60 years old and have been on a rocky road for well over a decade. Its blast furnace has been out of action for over six months now, and whilst there is some optimism that they will get it back up and running it will not change the fact that the steelworks have been in operation for some six decades.
In 2016, when the previous owner, Arrium, went into administration with $4 billion in debts, UK billionaire Sanjeev Gupta’s GFG Alliance bought the steelworks, making lots of big promises for a bright future, but it was not to be. At the turn of the decade, Greensill Capital, GFG’s financier, collapsed and there’s been trouble ever since.
As it stands, the future of the steelworks and Whyalla is in the hands of a court-entangled foreign billionaire with a gaping chasm between his promises and delivery. Those promises of a 21st century industrial transformation look very much like ever receding mirages.
The Federal Government needs to have the SA Government bring matters to a head by putting GFG’s South Australian operations into administration (by calling for unpaid and overdue mining royalties), taking an equity stake in the steelworks alongside someone like BlueScope Steel, and investing the necessary billions to build a new green steel industry for Australia.
It would be a part of Make Australia pay again.
But that’s not happening. Instead, it’s
Make America great again!
Prime Minister Albanese’s focus is on investment in US industry, not Australian industry.
In September 2023, the Federal Government announced it was pouring $4.7 billion ($US3B) into the US submarine industrial base to assist the largest economy in the world in getting their submarine production rate up to 2.3 subs per annum (from the current rate of 1.4 subs).
Some $1.5 billion will be paid to the US this financial year and $1.8 billion next financial year. The remaining $1.4B will follow thereafter.
The geniuses in the Department of Defence have set up a regime where, if for any reason the US can’t deliver (it is highly unlikely they will ever make the 2.3 subs required) or won’t deliver (more on that possibility below), we get exactly none of the money back.
The Government is shy about spending money on steelworks, which they would have complete control over, in terms of success, but are happy to recklessly throw money at US shipyards.
Go figure!
Make Great Britain great again, too!
That’s not the end of the story, though.
The British are in on this deal of a lifetime too. They’ve managed to pull $4.4B (£2.4 billion) over the next decade from Australian consolidated revenue.
There is no clawback on payment to the United Kingdom either.
Everyone must be feeling pretty chuffed in Groton, Connecticut, and Barrow-in-Furness, England.
But wait, there’s more!
Whilst the Federal Government has been open about the totals, albeit with a little ‘encouragement’ from Green’s Senator David Shoebridge at Senate Estimates, there’s a dark secret being withheld from the Parliament and the public.
There’s more ‘shared’ cost to come.
FOI returns from the US Department of the Navy reveal that behind the scenes the three AUKUS government participants have been negotiating trilateral cost sharing principles to guide future cost sharing negotiations.
March 8, 2024 Letter from Under Secretary of the Navy to Secretary of the Navy (Source: US FOI)
The principles were worked up by the AUKUS Submarine Executive Group and presented to Defence Minister Richard Marles earlier this year. It’s been all strictly hush-hush. Noting how naïve Australia’s approach has been to date to date, these cost-sharing principles really ought to be subject to scrutiny.
Senator David Shoebridge backed this in telling MWM, “Why on earth do cost-sharing principles need to be secret? Of course, they should be made public.”
He went on to comment, “Once again, we get more transparency on AUKUS out of the US than Australia.“
The one-sided secrecy is because the US has a whole lot less to be embarrassed about than Australia. They are the ones getting all our money after all.
Transactional Trump
The approved appropriations in the US for enhancing their submarine industrial base through upgrades as well as recruitment and training of thousands of additional workers amount to $US14.7B. Australia adds another $US3B to that. But the total the US administration is seeking for this work is in the order of $US28.4B.
Of course, there is some quid quo pro in all of this, with the Australian government having committed to spending $8 billion upgrading HMAS Stirling near Rockingham to support the operations of UK and US nuclear-powered submarines from 2027 and possibly Australian nuclear submarines from 2035.
There is a danger under the incoming Trump administration that the President will seek a greater contribution from Australia – just as he has demanded that members of NATO pull their weight. And it will be a case of having no choice but to pay, no matter the cost-sharing principles negotiated, because our Defence Department simply has no Plan B.
They have literally bet our national security future on one single, vastly expensive project to acquire just eight conventionally armed submarines.
Senator Shoebridge commented,
The AUKUS submarine deal is a non-refundable $368 billion gamble on the goodwill of some future US President, and the US just elected Donald Trump.
“You only need to put these two facts side by side to realise what a disaster the whole thing is.”
Ships and steel
Meanwhile, as Australian money is being tossed around the US and UK like it’s free, Albanese is sitting on his hand on the issue of green steel manufacturing in Whyalla.
As steelworkers in Whyalla worry over their future, and for very good reason, shipbuilders in the United States are like pigs in gravy, wallowing in cash and looking forward to a lot more of that coming their way from Australian taxpayers.
Anthony Albanese says he wants to revitalise manufacturing and ‘Make Australia Pay Again’. But in this topsy-turvey world, he’s instead working to deliver on Donald Trump’s slogan to Make America Great Again.
Studious Ambassador Rudd and his “big careful” AUKUS shipyard cost study
Rex Patrick is a former Senator for South Australia and earlier a submariner in the armed forces. Best known as an anti-corruption and transparency crusader, Rex is running for the Senate on the Lambie Network ticket next year - www.transparencywarrior.com.au.