Australia’s payment for its Virginia-class submarines has two distinct parts: a US$3 billion contribution to the American submarine industrial base, separate from any purchase price, and the eventual cost of buying three secondhand Virginia-class boats from the U.S. Navy. As of mid-2026, Australia has transferred roughly A$1.6 billion of the industrial base commitment, and the first submarine is scheduled to arrive in 2032. Both figures sit inside a wider AUKUS program estimated at A$268 billion to A$368 billion over about 30 years.1Defence Minister Richard Marles has framed the program’s cost as approximately 0.15 percent of Australia’s GDP over the lifetime of the deal.
What Australia Has Paid So Far
Australia made its first payment of US$500 million in February 2025. A second payment of US$525 million, roughly A$800 million, followed in the second quarter of 2025. Together those transfers total approximately A$1.6 billion.
Australia committed to paying US$2 billion by the end of 2025. The remaining US$1 billion of the US$3 billion pledge is scheduled in annual installments, adjusted for inflation, over ten years.
The US$3 Billion Industrial Base Commitment
The US$3 billion is not the price of the submarines. It is a direct investment in U.S. shipyards intended to lift their production capacity so American builders can sell boats to Australia without shrinking the U.S. Navy’s own fleet. The money supplements ongoing U.S. government spending on submarine production infrastructure, funds facility upgrades and supplier development, and supports workforce growth across the industrial base.
The current American build rate sits at roughly 1.1 to 1.2 Virginia-class boats per year. The target is two or more per year. Australia’s contribution is meant to help close that gap. Congress authorized acceptance of the Australian funds through the FY2024 National Defense Authorization Act, enacted in December 2023.
Separately, Congress has appropriated approximately US$9.8 billion through FY2028 for submarine industrial base improvements. Australia’s payments sit alongside that larger American investment rather than replacing it.
The Cost of the Submarines Themselves
The purchase price of the three Virginia-class boats has not been broken out publicly as a single figure. The Congressional Budget Office estimates a new Virginia-class submarine at approximately US$5 billion under the FY2026 budget, with the time from funding to delivery now stretched from six years to nine. Australia is buying used boats rather than new construction, so the acquisition price per hull is not directly comparable.
What is public is the program envelope. The full AUKUS submarine effort is estimated at A$268 billion to A$368 billion through the 2050s. That covers the Virginia purchases, the domestic build of eight SSN-AUKUS submarines in Adelaide, base and shipyard upgrades, workforce training, and decades of maintenance. SSN-AUKUS construction alone accounts for A$100 billion or more. Infrastructure spending includes up to A$8 billion for HMAS Stirling in Western Australia and A$2 billion for the Osborne shipyards in South Australia.
Near-term outlays are more contained. Australia planned A$9 billion over its initial three-year budget window, with A$26 billion to A$34 billion projected across the first decade. Spending ramps up significantly in the 2040s and 2050s.
What Australia Is Now Buying
The original 2023 plan was for two secondhand Virginia-class boats plus one newly built vessel, with an option for up to two more. On May 31, 2026, at the Shangri-La Dialogue in Singapore, the three AUKUS partners announced a revision: Australia will now purchase three in-service Virginia-class submarines, all from the same production block, and drop the new-build boat.
The three submarines will be Block IV Virginias, drawn from the SSN-792 to SSN-800 cohort commissioned between 2020 and 2028. The new-build that was dropped would have been a Block VII, one of the most advanced variants in the class.
Defence Minister Richard Marles said operational simplicity drove the change. Under the earlier plan the Royal Australian Navy would have operated four different submarine classes at once: aging Collins-class diesels, two used Virginias, one newer-variant Virginia, and eventually the SSN-AUKUS. “That gets pretty complicated in terms of how you’re operating a fleet of submarines,” Marles said. Standardizing on three identical boats simplifies training, spare parts, and maintenance.
Marles described the cost savings as “significant” for the third boat’s purchase price and associated operational costs, but acknowledged the shift “doesn’t fundamentally change the equation” of a program running into hundreds of billions of dollars. A joint statement from the three nations described the change as “simplifying supply chain management, operational and maintenance requirements and maximising cost efficiencies.”
What the Change Costs in Capability
Block IV boats carry two Virginia Payload Tubes with a total capacity of 12 Tomahawk cruise missiles. Block V and later variants add the Virginia Payload Module, which carries 28 more Tomahawks across four additional tubes, more than tripling the missile capacity of a Block IV.
Service life also shortens. A new submarine would have offered a 33-year service life. The used boats will arrive with roughly 20 years of operational life remaining, according to reporting by the Sydney Morning Herald. Military analyst Michael Shoebridge said the secondhand submarines are “less capable than the new ones.” Defence academic Malcolm Davis said the third used boat will have a “shorter shelf-life than a new one.” Albert Palazzo, an adjunct professor at UNSW Canberra, called the shift a “bait and switch.”
Delivery Schedule
Under the revised plan announced in May 2026, the three Virginia-class submarines arrive on the following schedule:
- 2032: first in-service Virginia-class submarine arrives in Australia
- 2035: second submarine delivered
- 2038: third submarine delivered
Australia retains an option to purchase two additional newly built Virginia-class submarines in 2041 and 2044. That option is a hedge against delays in the SSN-AUKUS program, whose first Australian-built boat is targeted for the early 2040s. Exercising the option is not automatic. Any sale requires White House approval and depends on U.S. shipyard capacity.
The Certification Hurdle Before Any Transfer
Before any individual submarine transfer, the AUKUS Submarine Transfer Authorization Act requires the U.S. President to certify to Congress, at least 270 days in advance, that the sale will not harm U.S. undersea operational requirements, that the U.S. has sufficient industrial capacity, and that Australia has demonstrated the sovereign capability to host and operate the vessel. Congress can block a proposed transfer through a joint resolution of disapproval.
All costs associated with a transfer must be borne by Australia. Needed repair or refurbishment work must be performed at American shipyards to the maximum extent practicable. Palazzo has noted that the agreement gives the U.S. President unilateral authority to cancel submarine transfers, with no formal recourse for Australia.
The Production Risk Sitting Under the Schedule
The delivery dates depend on American shipyards building submarines fast enough to sell boats to Australia without depleting the U.S. Navy’s own fleet. That remains an open question. U.S. submarine production has run at roughly 1.1 to 1.2 boats per year since 2022, well below the goal of two per year and below the 2.33 per year that would be needed to meet both U.S. requirements and AUKUS commitments.
A Congressional Budget Office analysis found that selling three to five Virginia-class boats to Australia will cause a nearly decade-long dip in the U.S. attack submarine inventory beginning around 2037, keeping the fleet in the high 40s to low 50s. The Navy’s stated goal is 66 attack submarines. CBO noted that increasing production is “very difficult and expensive,” particularly because shipyards must also build Columbia-class ballistic missile submarines.
Labor MP Ed Husic has argued that current U.S. production rates make early-2030s deliveries unrealistic and has called for a “plan B” in case the deal fails to deliver. Treasurer Jim Chalmers has said the program remains on track. Marles has characterized the shift to secondhand submarines as a pragmatic streamlining rather than a downgrade, saying there are “no changes” to the fundamental AUKUS arrangement.
Where the Money Stands in Mid-2026
Two payments totaling about A$1.6 billion have gone from Canberra to the United States. A third payment is due before the end of 2025 to hit the US$2 billion mark, with the balance of the US$3 billion pledge scheduled across ten annual installments. The purchase price of the three submarines will be paid separately, on a schedule tied to each transfer, with the first boat arriving in 2032. Both streams sit within an overall AUKUS envelope that Australia will keep spending against into the 2050s.