According to the ABC, the cancelled French submarine program could cost taxpayers up to $5.5 billion as a potential *maximum* estimate [1], but this was not the final cost incurred.
The actual settled cost, determined through negotiations between the Morrison government (2021) and subsequently finalized by the Albanese government (2022), differs from these figures.
The ABC reported in April 2022 that Defence officials stated "the final negotiated settlement will be within that price, senator" regarding the $5.5 billion upper estimate [1].
However, by June 2022, Prime Minister Anthony Albanese announced a final settlement with Naval Group for $835 million in compensation, bringing the "total cost of the former government's failed policy to $3.4 billion" according to the Prime Minister's statement [2].
This $3.4 billion figure included various costs: the $835 million settlement to Naval Group, plus other termination expenses, asset writedowns, and re-employment costs.
Senate estimates in November 2022 revealed an additional $591 million in supplementary costs (asset writedowns on unused infrastructure and re-employment assistance), bringing disclosed costs to approximately $4.2 billion [3].
The claim suggests an "undisclosed fee for early contract termination, which is approximately $400 million" - however, the $835 million settlement with Naval Group was publicly negotiated and disclosed in June 2022 [2], not an undisclosed fee.
The claim omits critical context about why the contract was cancelled and under what circumstances.
**Strategic Rationale:** The French submarine contract was abandoned not due to Coalition incompetence or wasteful spending, but because the government shifted to nuclear-powered submarines through the AUKUS partnership (Australia-United Kingdom-United States) announced September 2021 [4].
This was a deliberate strategic decision to enhance Australia's defence capabilities in response to changed regional security assessments, not a reversal of a bad original decision.
**Contract Status:** Importantly, the contract was cancelled well before construction commenced.
No submarines were actually built, meaning Australia did not lose completed defense assets - it paid to exit an unfulfilled contract.
**Timing of Announcement:** The Coalition government under Prime Minister Scott Morrison made the AUKUS announcement in September 2021 [4], ending the French contract.
The final settlement figure of $835 million (totaling ~$3.4 billion with other costs) was negotiated and disclosed publicly by the Albanese government in June 2022 [2].
**Comparative Submarine Programs:** This needs historical context.
Australia's previous submarine program, the Collins-class, built between 1990-2003, cost approximately $20 billion with severe technical problems and cost overruns [5].
While that program produced 6 submarines, it demonstrates that submarine acquisition is inherently expensive and prone to cost escalation across governments.
The original sources provided are mainstream, credible outlets:
- **ABC News** [1]: Australia's public broadcaster, considered the most authoritative mainstream news source in Australia with strong fact-checking standards [6].
- **The Guardian Australia** [2][3]: Part of the international Guardian Media Group, mainstream news organization with editorial standards, though with documented center-left editorial perspective [7].
However, the claim itself cherry-picks the highest *possible* estimate ($5.5 billion as a maximum rather than the final settled figure) and mischaracterizes the termination fee as "undisclosed" when it was publicly disclosed in negotiations.
**Did Labor do something similar?**
Search conducted: "Labor government defence program cancellation costs Australia Collins-class submarine"
**Labor's Defence Program History:**
The Rudd/Gillard Labor governments (2007-2013) inherited and continued the Collins-class submarine program which had already accumulated massive cost overruns.
* * * *
The Collins-class program, initiated under the Hawke Labor government (1983-1991), ultimately cost approximately $20 billion to produce 6 submarines, with pervasive technical problems, schedule delays, and design flaws [5].
However, the French submarine cancellation was a deliberate strategic pivot (AUKUS) rather than a program failure - fundamentally different from the Collins-class which was a flawed program that Labor inherited and struggled with.
**Key Difference:** Labor's Collins-class problems involved cost overruns on a completed but problematic program.
**Coalition Justification:**
Finance Minister Simon Birmingham stated: "You could wish that we had more information and the availability of nuclear-powered submarines at an earlier time.
The decision reflected genuine strategic reassessment - the US and UK offered nuclear submarine technology that wasn't previously available to Australia, changing the optimal defence strategy.
The strategic shift reflects changing Indo-Pacific security dynamics and technological opportunity, not mismanagement of the original program.
**Criticisms:**
Shadow Defence Minister Brendan O'Connor criticized: "Murky numbers from the Morrison government on the Attack Class submarines is sadly unsurprising... their cost blowouts run into the billions of dollars" [1].
Cost blowouts typically refer to projects exceeding their budgets during execution.
**AUKUS Sustainability Questions:**
It's worth noting that critics have raised concerns about the AUKUS replacement program's own costs.
Strategic analysts estimate the nuclear submarine program could cost $268-368 billion over 30 years [9], raising questions about whether cancelling the "cheaper" French option was economically optimal.
The Albanese government's own review noted defence program cost overruns as a systemic problem requiring major restructuring [10].
**Key Context:** The French submarine cancellation cost (~$3.4-4.2 billion) must be weighed against the strategic benefits of nuclear submarine capability.
Whether this tradeoff was wise depends on whether AUKUS delivers the promised strategic benefits - something that cannot be finally assessed while the AUKUS submarines remain in development.
The claim is partially true but significantly overstates the actual costs incurred and mischaracterizes the settlement as "undisclosed." The $5.5 billion was the *maximum estimate* stated in April 2022 [1], but the actual final cost settled by the Albanese government was $835 million to Naval Group, with total program costs including asset writedowns and re-employment totalling approximately $3.4-4.2 billion [2][3].
While the costs are significant, they represent an exit fee from an unbuilt contract due to strategic reassessment, not cost overruns on an executed program.
The claim misleads by using the highest possible estimate and characterizing publicly-disclosed settlements as hidden, without acknowledging that the strategic rationale was the availability of superior nuclear submarine technology through AUKUS.
The claim is partially true but significantly overstates the actual costs incurred and mischaracterizes the settlement as "undisclosed." The $5.5 billion was the *maximum estimate* stated in April 2022 [1], but the actual final cost settled by the Albanese government was $835 million to Naval Group, with total program costs including asset writedowns and re-employment totalling approximately $3.4-4.2 billion [2][3].
While the costs are significant, they represent an exit fee from an unbuilt contract due to strategic reassessment, not cost overruns on an executed program.
The claim misleads by using the highest possible estimate and characterizing publicly-disclosed settlements as hidden, without acknowledging that the strategic rationale was the availability of superior nuclear submarine technology through AUKUS.