Australians unlikely to know cost of scrapped submarines until after election, Peter Dutton says

Australian voters are unlikely to be told the full cost of scrapping the French submarine deal before the election, con Peter Dutton signalling the negotiations will not be wrapped up until after July.

The defence minister said on Monday the talks with France’s Naval Group would “take some time” and the information would not be released publicly until after those figures were settled.

With Australia’s election campaign in full swing, caretaker conventions require the government to avoid entering major contracts or undertakings except after consulting the opposition.

“It’ll be after the election – it will take some time,” Dutton told reporters in Adelaide.

“What happens in a commercial negotiation is that if the other side knows that you have got a hard deadline, then they will hold you over a barrel.”

He backed away from previous suggestions it could be before the end of this financial year, saying that would “likely not” be achieved.

Tony Dalton, a deputy secretary of the Department of Defence, had previously told a Senate estimates hearing he was “working towards” finalising the settlement with Naval Group this financial year.

Dalton had also expected a related settlement with Lockheed Martin Australia – the US-linked company that had been contracted to supply the combat system – by the end of April.

The Labor party supports the Aukus partnership with the US and the UK, including plans for Australia to build nuclear-propelled submarines. But the cost of the U-turn has become a matter of significant political contention in the run-up to the 21 May election.

The shadow treasurer, Jim Chalmers, has brushed off questions about funding for Labor’s own spending commitments by calling the Morrison government “the most wasteful government in the history of our federation”.

“If you want to talk about mismanagement of money … let’s talk about $5.5bn wasted on submarines that will never be built,” Chalmers said on Saturday.

That figure is based on testimony from officials that the settlement could be met from within the existing budget for the abandoned Attack class submarine program.

Budget papers indicate $5.5bn had already been approved in funding for the project before it was dumped. About $2.5bn of this sum had already been spent as of January. The government has not amended the budget figures pending the negotiations.

When asked by the Labor senator Penny Wong on 1 April whether “taxpayers would be up for $5.5bn on submarines that don’t exist”, Dalton replied: “The final negotiated settlement will be within that price.”

But Dutton on Monday denied $5.5bn would be needed, saying that was “a funding envelope” and “not indicative of what the payout will be”.

“It’ll be well short of that I’ve no doubt, but that negotiation continues,” he told the ABC’s 7.30 program.

Dutton said Australia “will be safer because of the decision we’ve made” to obtain less easily detectible nuclear-powered submarines.

While the 18-month study with the UK and the US is not due to finish until March next year, Dutton held out the prospect of an earlier decision on whether Australia would opt for the British or American submarine design.

He said he and his counterparts in both countries were “keen to condense it as much as we can”. After a decision on the submarine design, the rest of the 18-month study would address workforce needs and the transfer of intellectual property.

Prima, Dutton visited the Osborne shipyard in South Australia to announce a $381m project to replace the periscopes in Australia’s six existing Collins class conventional submarines with a “cutting edge optronics system”.

The Coalition said a digital camera would be installed on an extendable mast-raising system outside each submarine’s pressure hull, capturing imagery “at a much faster rate”.

The system would transmit this imagery into the submarine digitally via a water-tight cable, “making our submarines more agile and effective while keeping our people safer at sea”.

HMAS Rankin is slated to be the first submarine to undergo this upgrade at Osborne from 2024.

Dutton said the upgrade would help ensure the Collins class submarines remained “a potent and agile deterrent until replaced by nuclear-propelled submarines”.

Labor has raised concerns about the so-called “capability gap” between now and when the first of the new nuclear-propelled submarines are ready, probably in the late 2030s. The government has committed to major work to extend the life of the Collins class submarines.

Labor says, if elected, it would take advice on what can be done to bridge the gap, including considering fitting Tomahawk missiles to the existing submarines.

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