Government deceit on AUKUS buy-in cost

The amount being voluntarily given to the US as an AUKUS down payment is not the widely reported $3 billion figure – it is $4.7 billion.  This is because to date the government – meaning Ministers, the Department, and the RAN – have hidden the fact that all their references to $3 billion have omitted a critical detail – that is in US currency, not Australian. Speaking to an unnamed journalist in Washington on November 1, the following exchange with Defence Minister Richard Marles occurred: “JOURNALIST: In terms of Australia’s contribution do you ever see a point in which Australia may need to lift its $3 billion input? “MARLES: We’ve, as part of this process, made clear what Australia’s contribution is. It’s very significant. Of course, the passage of the legislation obviously enables that contribution to be made. It’s a fair contribution in the context of the overall uplift on the industrial base here in the United States and what will of course happen with the development of the industrial base in Australia.” Similarly, on September 15 the head of the nuclear-powered submarine task force, VADM Jonathan Mead, leaving an ASPI conference in Canberra was also asked about the $3 billion figure by journalist Colin Clark, quoted as saying: “It’s partly long-lead items but it’s also partly working on those yards where our submarines will come out of for us.” The story appeared under the headline: “Aussies to pour $3B into US nuke boat yards, long lead-time items for AUKUS subs.” After the San Diego announcement of the “optimal pathway” on March 14 this year, the media first widely reported the duplicitous $3 billion figure based on background information supplied by Australian officials.  Outlets carrying this included the ABC, The Australian, The Guardian, The Sydney Morning Herald and the Australian Financial Review. Government people have been very careful – in a way that looks coordinated – to omit the currency being referred to, leaving the impression that $3 billion is in Australian rather than US currency.  This has never been corrected or clarified until a few days ago, and then only late at night during a previously unreported Senate Estimates hearing. Standard practice is that all government purchases are announced in Australian dollars, irrespective of the country of origin of the contract.  This is particularly so for Defence equipment with everything from submarines to satellite contracts being in AUD for public statements and media releases. The apparent purpose of nominating $3 billion as Australia’s contribution to the extremely profitable US submarine building sector is to disguise and minimise the true amount being transferred.  Using today’s exchange rate of US $1 = AU $1.56 the AUKUS commitment will be $4.68 billion, a more than 50% increase over what the public have been led to believe. The cat has been let out of the bag by two inquiries – one in Washington and another in Canberra. On October 25, the ‘US House Armed Service Subcommittee on Seapower and Projection Forces Holds Hearing On AUKUS Submarine Industrial Base’ heard repeated references to the Australian commitment, clearly in the context that the $3 billion was in US, not Australian currency. Meanwhile, late at night in Canberra – also on October 25 – Senate Estimates heard the following from the deputy head of the Australian Submarine Agency: “Rear Adm. Buckley: In terms of the uplift to the US system, we have provision for US$3 billion—that’s the provision that we’ve allocated within our model. On the UK side, we’re still working through what that provision might be.” And shortly afterwards: “Senator Simon BIRMINGHAM: To be clear, it’s US $3 billion? “Rear Adm. Buckley: It’s US $3 billion. “Senator BIRMINGHAM: Is that funding subject to the normal currency adjustment that defence gets for major acquisitions and those factors? As the dollar has gone down, is defence having to find more to meet that US $3 billion. “Rear Adm. Matthew Buckley: My short answer is yes, it would be subject to those arrangements. Our agreement with our partners was for US $3 billion, so yes, it would be.” In summary, for at least the past eight months the government has implied a far lower figure will be given to the US rather than the actual amount – an unprecedented occurrence for large Defence contracts.  The motivation is presumably to minimise embarrassment and live in hope that the correct $4.7 billion is never reported. For Editorial Inquiries Contact: Editor Kym Bergmann at [email protected] For Advertising Inquiries Contact: Director of Sales Graham Joss at [email protected]