Nick Xenophon: SA needs more work to dodge shipbuilding valley of death

JUST over a year ago, we were staring down the barrel of Australia’s $50 billion submarine project going overseas. Then former PM Tony Abbott had all but promised an overseas build of just eight subs to Japan.

Building vessels like the Antarctic icebreaker will help avert the shipbuilding ‘‘valley of death’’. AFP PHOTO / Sam Kingsley. AFP PHOTO / Sam Kingsley

• Victory: 12 subs to be built in Adelaide
• Reaction: What the major players say about the announcement

JUST over a year ago, we were staring down the barrel of Australia’s $50 billion submarine project going overseas. Then PM Tony Abbott had all but promised an overseas build of just eight subs to Japan.

Fifteen months and one prime minister later, the Government has finally surfaced with a very welcome announcement — even though it’s almost identical to its pre-2013 election promise to build 12 subs in SA.

The ‘‘captain’s pick’’ has given way to a sensible solution with French submarine-builder DCNS.

PM Turnbull’s mantra of an ‘‘Australian build, Australian jobs and Australian steel’’ will have flow-on effects around the nation.

South Australians have every reason to be elated. But we must also ask tough, but reasonable, questions when the euphoria wears off.

The announcement was surprisingly short on detail.

We don’t know how much of the build will involve local content. The minimum benchmark must be the 70 per cent of the Collins-class build.

And it makes economic sense to have major sections of the subs built in one place — Adelaide — rather than having a fragmented build which will result in costly inefficiencies.

For instance, where will the hulls of the subs be built? If it’s not here then expect that to cost many hundreds of jobs. But no matter how good the detailed commitments turn out to be, there’s a harsh reality check we need to face now.

The Defence White Paper says the new subs aren’t due to be in the water until the 2030s — which means the cutting of the steel (when the bulk of the jobs will commence) won’t happen for up to eight years.

In the meantime, we need to deal with the so-called ‘‘valley of death’’ – the rapidly shrinking workforce at the ASC.

From 1700 direct jobs at the peak of the Destroyer build it will plummet to 500 in two years’ time. With a multiplier effect of five jobs for each job at the ASC, those 1000 direct jobs to go affect another 5000.

If the PM and his Government are fair dinkum about an ‘‘Australian build, Australian jobs and Australian steel’’, they need to urgently follow through on two key shipbuilding projects.

It’s not too late to demand that the lion’s share of the $2 billion naval supply ships contract is done here and not Spain.

And even more imminently, it’s definitely not too late to require that the $500 million Antarctic icebreaker tender — awarded to a Dutch company — is built here in SA.

That alone will prevent the deepening valley of death.

Building vessels like the Antarctic icebreaker will help avert the shipbuilding ‘‘valley of death’’. AFP PHOTO / Sam Kingsley

You’ve heard of shovel-ready programs — these two projects worth $2.5 billion are ‘‘spanner ready’’ which will save thousands of local jobs and generate billions in economic activity.

Yesterday’s announcement was great for the state. But if the Turnbull Government doesn’t commit to maximising local content for the supply ships and the icebreaker, it will be throwing a spanner into its own works.

Finally, I make no apology for being like an annoying, yapping, jumping, even biting fox terrier at the Government’s ankles (even a bit higher sometimes). My job, and that of the Nick Xenophon Team candidates, is to make sure that this pre-election promise becomes a post-election reality.

Nick Xenophon is an independent Senator for SA.