The Future Submarine Project – replacement of Australia’s 6 ailing Collins Class submarines with 12 Future Submarines – has a potential cost of $40 billion.

The Future Submarine is likely to involve a substantially redesign of an existing diesel powered submarine to meet Australia’s needs. This is a mistake; only nuclear submarines have the capabilities Australia needs.

Risks inherent to evolutionary redesigned submarines like the Collins Class and systemic issues within the Royal Australian Navy will translate into serious issues for the Future Submarine. Like the Collins Class, the Future Submarine is likely to be very expensive to maintain and have poor reliability.

A better option is to lease the US Navy’s Virginia Class nuclear powered submarine. It can cover greater distances, at greater speeds, and be deployed for longer than diesel powered submarines. It has better sensors and systems. It is a better submarine.

Leasing Virginia Class submarines would save Australia more than $10 billion in acquisition costs and potentially up to three-quarters of a billion a year in operations costs.

Arguments against nuclear powered submarines on the basis of skill shortages and defence self-reliance are flawed. Nuclear powered submarines are safe and the best option for Australia’s Future Submarine.

Simon is a Research Fellow in the Economics Program at The Centre for Independent Studies and specialises in government industry policy and regulation. Before joining the CIS, he practised corporate law for several years at a top tier law firms in Sydney and London, after which he joined the NSW government’s industry division. He has degrees in commerce and law from the University of New South Wales.