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Defence chief warned to keep it simple -

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As Australia prepares to commit to its most expensive defence project yet, military chiefs are
being warned not to get out of their depth when buying new submarines.


KERRY O'BRIEN, PRESENTER: Today's headlines detailing many millions of dollars spent on Defence
travel including private jets and luxury resorts couldn't have come at a more sensitive time for
Australia's military hierarchy. Later this year the Defence chiefs will hand the Rudd Government
their wish list for what's likely to become the nation's biggest and most ambitious defence
spending program; the next generation of submarines, destined to replace the troubled and costly
Collins class submarine. It's a wish list that will have a multibillion dollar price tag attached,
and given the chequered performance of the Collins boats, described as shambolic by some in Defence
circles, many are questioning whether Australia is simply going to make the same mistakes all over
again. The Defence force is already facing a series of programs like Australia's wedge tail early
warning aircraft and even the conventional army truck running over budget or behind schedule. Nick
Grimm reports.

NICK GRIMM, REPORTER: Modern warfare: it's high-tech, sophisticated and it's expensive.

KYM BERGMANN, DEFENCE JOURNALIST: Australia, time and time again, just seems to repeat the mistakes
of the past.

JOHN FAULKNER, DEFENCE MINISTER: I've been frank about the fact that there are frustrations and
there have been now frustrations for some time.

ANDREW DAVIES, AUST. STRATEGIC POLICY INSTITUTE: No-one who's been in this business for any length
of time would confidently predict that the future will be any different to the past.

NICK GRIMM: That's a gloomy assessment given the recent past has included debacles like the
Seasprite project. The Navy spent close to $1.5 billion trying to install state-of-the-art
submarine detection equipment into 40-year-old helicopters without success before the Government
cancelled the project two years ago.

Now, as Australia prepares to commit itself to its biggest military spending splurge in the
nation's history, there's little confidence that Australia's strategic planners have learned from
the past blunders or even figured out how to get the best bang from the Defence buck.

HUGH WHITE, ANU & LOWY INSTITUTE: Without doing that, all of these projects are gonna risk wasting
huge sums of money.

NICK GRIMM: And when it comes to huge sums of money, the two projects expected to soar the highest
will be new joint strike fighters for the Air Force and new submarines for the Navy.

ANDREW DAVIES: There's certainly a lot of things to worry about when planning a future submarine
project because you'd have to say at the moment the Collins fleet is in a shambolic state.

NICK GRIMM: And as video of this naval training exercise helps demonstrate, Australia's Collins
class submarines can be formidable killing machines.

PETER HOROBIN, SUBMARINE INSTITUTE OF AUSTRALIA: It's absolutely wrong to describe them as dud
subs. I've observed 'em at sea in a number of operations. They're very, very capable submarines.

NICK GRIMM: But the fleet of six subs has been plagued with mechanical and design problems for
years and it recently emerged that only two of Australia's submarines are actually seaworthy. Two
of the remaining boats are expected to be out of service for a total of four to five years.

ANDREW DAVIES: The Collins submarine on its day is one of the finest conventional submarines in the
world. But, yes, we're now getting towards the end of 10 years of fairly consistent problems with
the fleet.

NICK GRIMM: Frustrated naval chiefs have called it disappointing, while the Federal Government is
now seeking $5 million in compensation from the Australian Submarine Corporation.

JOHN FAULKNER: It is critically important that we do learn the many lessons of - from the Collins

KYM BERGMANN: From a marketing point of view, it's everyone's worst nightmare that right while
you're in the middle a promotional campaign, a major problem occurs.

NICK GRIMM: The ongoing problems with the Collins couldn't have come at a worse time for ASC. The
news broke as the world's leading manufacturers of non-nuclear conventional submarines had gathered
in Sydney, all knowing Australia will soon be in the market for a new submarine to replace the
Collins in 15 years time.

KYM BERGMANN: They're way more complex than a 747, if you take into account the machinery, the
electrics, whatever. It's a huge amount of work for Australian companies. So the stakes are pretty

NICK GRIMM: Editor of the Asia Pacific Defence Reporter and Defence Review Asia magazines Kym
Bergmann says Australia can buy a sub off the shelf, just like a new car, or, like the Collins, we
could build our own.

KYM BERGMANN: You actually select one company to produce the body of the car and another company
the engine and a third one the transmission, so on and so forth, and then you give all of those
parts to a company that's never actually built a car before, and then you ask them to put it all
together. It just seems we have an uncanny knack of choosing a difficult and complex way of trying
to achieve an outcome.

NICK GRIMM: Guided missile frigates, Wedgetail early warning aircraft, even the job of choosing new
trucks for the Army - they're all causing headaches too. Last year, the Australian National Audit
Office found that eight major defence projects are together a total of more than 31 years behind

JOHN FAULKNER: I think it's fair to say the Collins program, where we need to learn our lessons, I
think there are other major Defence procurements, in fact, that will be a key part of informing the
future submarine program.

NICK GRIMM: Perhaps one of the Defence Minister's key lessons will be the controversial joint
strike fighter, a plane still under development in the United States, running behind schedule and
unlikely to do what was initially promised.

HUGH WHITE: It's not a perfect plane. It's got a lot of faults. It will be more expensive than we
hoped, it will be less capable that we'd hoped, it will arrive later than we hoped.

NICK GRIMM: The US Government has recently sacked the head of the program and promised to speed
things up. Though, when the US Defence Secretary Bill Lynn visited Adelaide's naval shipyards
recently, he acknowledged that it will only come at higher cost.

BILL LYNN, US DEPUTY DEFENCE SECRETARY: Development is definitely gonna cost more, and the unit
costs have gone up. The important thing is to get it right and to budget it right, and that's what
we think we've done.

KYM BERGMANN: Every time that we try something that is both expensive and complex, we collectively
seem to underestimate the difficulties and underestimate the risks involved.

NICK GRIMM: This year the Defence Department plans to give the Federal Government its wish list for
the submarines that will one day replace the Collins feet.

HUGH WHITE: You can be absolutely sure that what they're cooking up on Russell Hill is very big,
very complex, very sophisticated, very expensive and very risky submarine.

NICK GRIMM: Hugh White is a former deputy secretary of the Australian Defence Department and he
authored the 2000 Defence white paper. He argues that Australia needs lots of subs, but to do that,
they'd need to be simple and cheap.

HUGH WHITE: My concern is that as the Navy and the rest of the Defence organisation do put together
the submarine of their dreams, they won't focus on what's really important. They'll go for the
Rolls Royce solution. We'll end up with a very risky boat which we can only afford to buy a
relatively small number.

NICK GRIMM: Some estimates have put the cost of an all-Australian sub as high as $40 billion. And
while the Federal Government has already promised the new subs will be assembled in South
Australia, experts say the cost could still be kept to a fraction of that sum if they're built to a
foreign manufacturer's specifications without costly modifications.

ANDREW DAVIES: If you get an 80 per cent solution off the shelf, often that's better than aiming
for 100 per cent solution that you have to wait years and expend a lot of dollars to get and end up
being disappointed with.

PETER HOROBIN: No, I don't accept that line of argument. Bottom line, we need to be masters of our
own destiny. If we are purchasing an off-the-shelf submarine, we're forever gonna be going back to
whoever that person was that made the submarine to find out whether we can fix it, change it and
we'd be dependent on an external party. Submarines are so fundamental to our Defence strategy that
we have to do it ourselves. It's part of growing up.

NICK GRIMM: And according to Hugh White, the question is: has the Defence Department learned
anything from its hard lessons?

HUGH WHITE: But I'm very uncertain that the people in Defence, the people in government have really
sat down and studied and understood what went wrong with the Seasprite and what went wrong with the
Collins. And I think until they do that, talk of learning from our past mistakes is just rhetoric.

KERRY O'BRIEN: Nick Grimm with that report.