9 hours ago
9
Australia made a second $800m payment to America’s shipbuilding industry – bringing total payments so far to $1.6bn which was promised before the Trump administration placied the Aukus agreement under review.
As part of the Aukus deal – in which Australia would buy nuclear submarines from the US ahead of its own nuclear submarines being built in Adelaide – Australia has agreed to pay about $4.6bn towards boosting US shipbuilding capacity.
After decades of under-investment, the US has fewer nuclear submarines than it needs for its own defence, and is building them too slowly to replace its ageing fleet, potentially jeopardising the sale of any submarines to Australia.
The office of the defence minister, Richard Marles, has confirmed the second $800m payment was made in the second quarter of 2025 to boost US boat-building, with payments occurring “in line with Australia’s commitment to contribute US$2bn by the end of 2025”. A further payment is due later this year.
Sign up: AU Breaking News email
“When the Aukus pathway was announced in March 2023, Australia was clear that we would make a proportionate contribution to the United States industrial base,” a defence spokesperson said.
“Australia’s contribution is about accelerating US production rates and maintenance to enable the delivery of Australia’s future Virginia class submarines.”
Anthony Albanese confirmed the payment was made as part of an agreed schedule, committed to before the US announced its review of Aukus.
“There is a schedule of payments to be made, we have an agreement with the United States as well as with the United Kingdom, it is about increasing the capacity, their industrial capacity, and as part of that, we have Australians on the ground, learning the skills so that when it comes to the SSN Aukus, the submarines being built here in Australia, we have those skills.”
Australia is also paying the UK about $4.6bn to assist its shipbuilding industry.
In June, US president Donald Trump ordered a review into the Aukus deal signed by his predecessor Joe Biden. The review is being headed by the Pentagon’s undersecretary of defense for policy, Elbridge Colby, who has previously declared himself “sceptical” about the deal, fearing it could leave US sailors exposed and under-resourced.
There is speculation the review could demand further financial contributions – or political commitments such as support in a conflict over Taiwan – from Australia in exchange for the sale of nuclear submarines and transfer of nuclear technology.
The US defense secretary, Pete Hegseth, has already asked Australia to lift its overall defence spending to 3.5% of GDP, from its current level of 2%. The US has been demanding similar increases from other allies, including Nato countries.
One of the most significant concerns over Aukus in the US is the naval superpower’s capacity to spare any submarines to sell to Australia: the first sale is forecast for 2032.
The Aukus agreement mandates that before any submarine can be sold to Australia, the US commander-in-chief – the president of the day – must certify that America relinquishing a submarine will not diminish the US navy’s undersea capability.
The US’s submarine fleet numbers are a quarter below their target and the country is producing boats at half the rate it needs to service its own needs, US government figures show.
Marles told parliament in question time that Aukus would deliver Australia a “long-range submarine capability” required for a more contested region and world.
“We are living in a more volatile world with increasing challenges … we need a defence force which will give pause for thought for any potential adversary which seeks to coerce us.”
The head of the Australian Submarine Agency, V-Adm Jonathan Mead, told Senate estimates in February this year Australia’s funding to the US industrial base was a vital element of the Aukus deal.
“This contribution will help uplift the US submarine industrial base capacity and accelerate sustainment and production to enable the delivery of Virginia class submarines to Australia.
“Australia’s contribution to the US submarine industrial base is to benefit both the United States and Australia.”
