The choice of Australia’s nuclear submarine is being complicated in part by US and UK production schedules. Britain has confirmed it will only build seven of its Astute class attack submarines, with the last boat to be commissioned in 2026.
The Virginia class will continue to be built into the 2030s, but American shipyards are at full capacity as the US builds up its submarine fleet, making it unlikely the US would divert a boat off the production line for the Australian navy.
Both the US and UK have started separate design processes for successors to these submarines, but there is growing momentum for the three navies to work together on a common design.
While such a move would allow Australia to be incorporated into the program, sources said it would also suit the Americans because it reduces the risk of technical problems with British submarines that US experts often have to provide assistance on.
It is likely the US, as the parent navy for nuclear propulsion, would have the whip hand in designing the new submarine, pushing costs to the upper end of the spectrum.
On the politically sensitive issue of shipbuilding jobs in South Australia, one option being canvassed is having the Osborne shipyard build sections of the hull that could be used by all three navies.
But the complex task of marrying the back part of the boat which contains the nuclear reactor with the front hull section could be done at US shipyards, instead of transporting the sealed reactor containing highly enriched uranium to Adelaide for integration.
UK Defence Secretary Ben Wallace hinted at a common design when he hosted Defence Minister Richard Marles in September, saying it “might well be fully shared with all three nations as a collaborative design” in the mid 2030s.
The government is expected to acquire at least eight nuclear-powered submarines but is yet to commit funding in the budget to the project.
But in a report last week, the independent US Congressional Budget Office estimated that the Virginia replacement could cost between $US6.2 billion ($9.2 billion), and $US7.2 billion per boat, higher than the US Navy’s $US5.6 billion estimate.
“Estimating the costs of the SSN(X) is difficult because the Navy has not yet determined its capabilities or size,” the report said.
“In the past, the Navy has indicated that … the next-generation attack submarine should be faster, stealthier, and able to carry more torpedoes than Virginia class ships.”
Australian Strategic Policy Institute senior analyst Marcus Hellyer said public discussion had emphasised the extra capability nuclear-powered submarines offer, but consideration of the cost had been non-existent.
“No one wants to show signs of disloyalty to AUKUS but at what point does it become too expensive?” Dr Hellyer said.
“The history of naval shipbuilding is you have increasing size and increasing complexity which results in increasing costs.”
Mr Marles played a dead bat to questions about the two-step submarine solution and potential cost, repeating that the government continued to work with the US and UK and announce the optimal pathway in the first half of next year.