Australia quietly pays US another $800 million for AUKUS despite review

13 hours ago 4

Washington: Australia has quietly paid the United States another $800 million towards the AUKUS submarine deal, taking the total to $1.6 billion, despite the Trump administration placing the agreement under a review.

This masthead confirmed the second payment was made in the second quarter of this year, per the agreed schedule. By the end of 2025, Canberra will have paid $US2 billion, or just over $3 billion, to the American shipbuilding industry to boost submarine production.

Australia has paid another $800 million to the US to help build subs.

A Defence Department spokesperson said Australia had been clear since March 2023 that it would make a “proportionate contribution” to the American industrial base under the AUKUS agreement.

“Australia’s contribution is about accelerating US production rates and maintenance to enable the delivery of Australia’s future Virginia class submarines,” the spokesperson said.

“The payments are occurring in line with Australia’s commitment to contribute US$2 billion by the end of 2025, which underscores our commitment to the successful delivery of AUKUS Pillar I outcomes.”

The government was unfazed by the Pentagon’s review of the AUKUS agreement and said it was natural that a new US administration would want to examine the progress of key initiatives.

US Secretary of Defence Pete Hegseth (left) with Australian Deputy Prime Minister Richard Marles at the Pentagon in February.

“All three countries are continuing to progress the AUKUS pathway at pace, ensuring it meets national and trilateral objectives,” the Defence spokesperson said.

While Australia’s first $800 million payment was announced with fanfare in February, when Defence Minister Richard Marles met his US counterpart, Pete Hegseth, in Washington, the second payment was not announced.

However, in February, officials told a Senate estimates hearing the payment would proceed as per an agreed schedule – before the end of the 2024-25 financial year – and that $2 billion would be paid by the end of 2025.

The exact date of the second $800 million payment – and whether it occurred with knowledge of the US review – is unclear. The government confirmed the payment was made during the second quarter of this year – between April and June – but did not respond to further questions to clarify the date.

The Pentagon publicly confirmed the existence of the AUKUS review on June 11, and Marles has said the Australian government was informed of the review “weeks” before then. The government was in caretaker mode from March 28 until the May 3 election.

After this year, the remaining $US1 billion will be paid in regular annual instalments adjusted for inflation over 10 years. The $US3 billion ($5 billion) contribution to US submarine building represents a fraction of the $268-$368 billion price tag of AUKUS over 30 years.

Bruce Wolpe, a senior fellow at the United States Studies Centre, said the payments made so far showed AUKUS was moving forward and nothing had changed despite the doubts that had erupted following the Pentagon’s review.

“There’s been no deviation on AUKUS from this government,” he said. “What this shows is a redoubling of the commitment. It’s in an orderly fashion.

“It’s kind of significant, though, that it has not been disclosed in a timely fashion ... everyone’s touchy about AUKUS and I guess they want to be more reticent than forthcoming.”

There is speculation the Pentagon review of AUKUS could ask for further contributions from Australia beyond the $US3 billion already pledged towards the US maritime industrial base. Hegseth has asked Australia to lift overall defence spending to 3.5 per cent of gross domestic product, from about 2 per cent – about an extra $40 billion a year.

The review is also considering whether the US can build enough submarines to fulfil its AUKUS commitments, and what undertakings Australia can give about how the boats will be used in the event of a conflict with China over Taiwan, or other contingencies.

On Wednesday, this masthead reported that President Donald Trump’s new submarine chief, Jerry Hendrix, who is leading the president’s push to build more vessels in the US, harbours significant concerns about Australia’s commitment to AUKUS and ability to help the US in a Pacific conflict.

Marles’ office and the Pentagon were contacted for comment.

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