ASA officials clueless about how $4.4 billion submarine gift to UK will be spent

In a previous article we explained that there is no refund clause for the $9.4 billion Australia is giving to the submarine industries of the US and UK during the next few years. Just as bad, there is a stunning lack of detail and accountability about what the money will be used for and whether or not Australia will have any visibility of the outcomes. Led by VADM Jonathon Mead, during Senate Estimates on June 6, he and several other Australian Submarine Agency (ASA) officials showed that they had no idea of the detail of agreements with London and Washington under the AUKUS Pillar 1 umbrella.  One of the major items in the UK part of the deal is funding Rolls Royce for work on the nuclear reactor that will supposedly power the AUKUS SUB to be built in the late 2030s, initially in Scotland and then at Osborne in South Australia. In a previous article we focussed on the US and the failure of Australian officials to negotiate a refund clause – and note the continuing silence of the relevant Ministers, Richard Marles and Pat Conroy.  The situation regarding the forthcoming transfer of cash to UK industry is no clearer.  Greens Senator David Shoebridge tried his luck with VADM Mead, to no avail. Sen Shoebridge: How much have we committed to give Rolls Royce? VADM Mead: £2.4 billion, which I think equates to $4.4 billion. Sen Shoebridge: Is any of the payment being made in FY 2024-25? ASA official: Yes Sen Shoebridge: How much? ASA officials confer, then one says: I’ll clarify, that’s to Rolls Royce and for design. Sen Shoebridge: Of the $4.4 billion, how much is going to Rolls Royce and how much is going to other entities? ASA official: We agreed to a fixed contribution with the UK government, which covers our contribution to the design of SSN AUKUS across each of the UK government’s design partners, as well as to the uplift of Rolls Royce. Sen Shoebridge: Is it for the UK to determine where the money goes? ASA official: We agreed to a fixed contribution to the scope that I just described. Sen Shoebridge: Yes, but within the $4.4 billion, is the UK government going to choose where to allocate it, or is it set out in the agreement? VADM Mead: We had discussions with the UK government about what was required – what we required – and they provided detail about where the money was going to go. We provided that advice to government and we agreed on that contribution. Sen Shoebridge: Is it legally binding? Has the UK government said “yes, it’s going to those poor struggling people at Rolls Royce”?  Is that what the agreement provides? VADM Mead: The UK government has given a commitment where the money is going to go and they will have traceability and visibility of where the money is going to go. Sen Shoebridge: So how much is going to Rolls Royce? No answer from ASA officials as they look at each other. Sen Shoebridge: You say you have traceability and visibility, so how much is going to Rolls Royce? This was followed by what appeared to be an ASA finance expert and VADM Mead disagreeing about whether the amount being handed over is a fixed lump or whether it is in discrete amounts.  When this was pointed out to them, they said they were in fact talking about the same thing. Sen Shoebridge: So how much is it to Rolls Royce? VADM Mead: The total is £2.4 billion. Senator Shoebridge pointed out that – being a Budget Estimates hearing – he was expecting to receive specific answers to his questions. VADM Mead:  I’ll have to take that question on notice if you want the specifics of the breakdown. Sen Shoebridge: Of course I do. Never in the history of Defence acquisition have so few people signed off on so much money with so little accountability.  The money being given to the UK is also not refundable. Is this the single most inept performance of Defence officials in front of Senate Estimates, ever?  If people want to subject themselves to the torture of watching VADM Mead and his colleagues duck, weave and obfuscate, the relevant part of the day-long hearing starts at 18:02 for the US questions and non-answers and at 18:15 for the UK segment: https://www.aph.gov.au/News_and_Events/Watch_Read_Listen/ParlView/video/2510108 But let’s not forget that VADM Mead and the others supposedly answer to politicians.  AUKUS was dreamt up by Scott Morrison but since the change of government in 2022 it has been the responsibility of Anthony Albanese and the Labor Cabinet.  They are the ones ultimately responsible for a process as poor as this one. Since the announcement of AUKUS in September 2021, Australian officials – mainly from Defence, the RAN and more recently the ASA – have spent around $500 million on salaries, travel and expenses.  Next Financial Year, the wage bill alone for the Australian Submarine Agency is forecast to hit $330 million – and to that can be added $20 million worth of Business class airfares and hotels in Washington and London. With the ASA unable to negotiate a refund clause for Australia’s massive payments and unable to explain even the slightest detail of where billions of dollars of taxpayer money is going, we are entitled to ask if anyone actually knows what is going on.  Unfortunately, apart from APDR and a Greens Senator, no one else seems to care. Hopefully the Australian National Audit Office (ANAO) will examine this mess at some point.  Given the growing number of ex-politicians seeking financial gain from AUKUS, there might also be a forthcoming referral to the National Anti-Corruption Commission (NACC). For Editorial Inquiries Contact: Editor Kym Bergmann at [email protected] For Advertising Inquiries Contact: Director of Sales Graham Joss at [email protected]