Australia will hand almost $5 billion to British industry over the next decade for design work and to expand production of nuclear reactors that will eventually be installed on AUKUS submarines constructed in Adelaide.

The massive funding commitment will be unveiled at the Osborne shipyard today ahead of annual talks involving Foreign Minister Penny Wong and Defence Minister Richard Marles, alongside their UK counterparts.

A new joint commercial venture will be established between Adelaide-based submarine-builder ASC and British defence giant BAE Systems to build the future nuclear-powered submarine fleet to be known as SSN-AUKUS.

“This is another major step in the delivery of AUKUS, the announcement of the commercial build arrangements for SSN-AUKUS at the Osborne naval shipyard in Adelaide demonstrates that this is moving apace,” Mr Marles said.

Richard Marles (right) welcomed UK Defence Secretary Grant Shapps to Canberra this week.(Department of Defence)

The Australian contribution of $4.6 billion to UK industry will go towards design work on the new SSN-AUKUS fleet and to expand a Rolls-Royce plant that builds the nuclear reactors that will eventually be installed into the submarines.

Under the AUKUS agreement, Australia will first buy up to five Virginia-class submarines from the United States in the early 2030s, before jointly building and operating the new SSN-AUKUS subs with Britain, roughly a decade later.

Government-owned ASC will also be given responsibility for maintaining Australia’s second-hand Virginia-class submarines, as well as the locally built SSN-AUKUS submarines that begin arriving in the 2040s.

China threat a factor in funding

Visiting British Defence Secretary Grant Shapps said the threat posed by China and other potential adversaries across the globe justified the massive spending on nuclear-powered submarines by AUKUS partners.

“Nuclear-powered submarines are not cheap, but we live in a much more dangerous world where we are seeing a much more assertive region with China, a much more dangerous world all around with what’s happening in the Middle East and Europe,” Mr Shapps said.

“Countries need to invest in making sure that adversaries see we are serious about our security, defending freedom of navigation for example.”

After signing a new Defence and Security Cooperation Agreement with Defence Minister Richard Marles, Mr Shapps acknowledged his country’s submarine sector was facing cost blowouts and delays, but played down concerns over their impact on AUKUS.

Greens critical of cash injection 

Greens senator and AUKUS critic David Shoebridge said it was clear Australia was helping to prop up a failing UK submarine industry. 

“There’s no way the UK could afford to build their next generation of nuclear subs without finding some sucker like Australia on the other side of the planet who will chip in billions and billions and billions of dollars,” Senator Shoebridge said.

Australia’s huge injection of financial support into the UK’s submarine sector matches a similar taxpayer-funded payment to the United States to help expand its struggling industrial base.

“There’s been bipartisan support for this, there’s significant investment in the United States,” US ambassador Caroline Kennedy said ahead of visiting the Osborne shipyard on Friday.

The Australian Defence Industry Network said it was “fully supportive” of the new joint venture, but said Australia needed to ensure its own industry was “fully designed and integrated into the design”, including receiving the “technical know-how and know-why”.

“If this is not a requirement then the ability for Australia’s industries’ inclusion is at risk,” the network said.

Posted , updated