Australia May Reconsider AU$368B AUKUS Submarine Deal Due To Budget Pressure: US Report

A report prepared for the United States Congress stated that Australia might reconsider its AU$368 billion AUKUS submarine project, while proposing alternatives like using U.S. submarines instead, in addition to raising concerns about cost overruns and the adequacy of the original cost-benefit analysis.

The observation was made in the updated report published by the Congressional Research Service (CRS), which examined plans for the U.S. to sell Australia three Virginia-class submarines in the 2030s, before Australian-built nuclear-powered fleet submarines, SSN-AUKUS, were expected to enter service in the 2040s, under the AUKUS Pillar 1 plan.

The 105-page report outlines several policy options, including the possibility of Australia dropping the purchase of U.S. submarines in favor of American vessels carrying out missions on its behalf, while continuing to build the SSN-AUKUS fleet, ABC reported.

"An alternative to Pillar 1 as currently structured would be a US-Australia military division of labour under which US SSNs would perform both US and Australian SSN missions while Australia invested in military capabilities for performing non-SSN missions for both Australia and the United States," the report stated.

The report also questioned whether the initial cost-benefit analysis conducted prior to the project's announcement was adequate.

In strong terms, the report cautions that the costs associated with AUKUS Pillar 1 could significantly reduce funding for other essential Australian military capabilities, especially if the project's budget overruns, potentially weakening Australia's overall defense capabilities against Chinese aggression.

"If this were to occur, there could be a net negative impact on Australia's overall military capabilities for deterring potential Chinese aggression," the report stated.

The report cited comments by Australian Defense Minister Richard Marles in an interview with Guardian Australia last year about Australia, the US, and the UK being committed to "each other's success in this project" and that it "puts all three countries in a position where it was too big to fail" for any of them. The report warned that this mindset could lead to a budget strain.

The report also mentioned a 2012 parliamentary submission from retired Royal Australian Air Force Air Commodore E.J. Bushell, who criticized the management of Australia's program to acquire F-35 Joint Strike Fighter aircraft.

"Despite a series of increasingly critical reports coming from various US governance authorities ... both US and Australian defense and military bureaucrats have retreated to the defense of 'The project is too big to fail', and 'There is no alternative', neither of which is true," Bushell wrote in the submission.

Greens Senator David Shoebridge, who was opposed to AUKUS, called the recommendations made in the CRS report "a strategic surrender than a partnership."

"From an Australian perspective that looks far more like a strategic surrender than a partnership. For the US, the whole AUKUS deal always had at its heart US access to Australian real estate for their submarines, bombers and marines, with any marginal additional Australian capacity being very much secondary," Shoebridge said.

Elizabeth Buchanan, a senior fellow at the Australian Strategic Policy Institute, pointed out the report highlighted the potential options to achieve the objectives of AUKUS.

"The alternative pathway outlined by the CRS indeed offers some logical options, and after all, this multi-decadal project will need all the optionality and flexibility it can get," she stated.

The CRS is an independent body providing policy briefings to the U.S. congress.