Abbott Government to spend $20 billion on Japanese submarines in major blow to SA’s defence industry
THE Premier and Prime Minister have both responded after The Advertiser today revealed the next generation of Australian submarines is all but certain to be built in Japan, not the Adelaide shipyard.
THE next generation of Australian submarines is all but certain to be built in Japan, in a major blow to SA’s defence industry, as Prime Minister Tony Abbott confirms the decision will not be based on “regional policy”.
In one of the biggest and most contentious defence equipment decisions in decades, the Abbott Government will select the Japanese-built Soryu Class submarine to replace locally-built Collins Class boats as the navy’s key strike weapon for operational use beyond 2030.
While both German and French submarines officially remain in the running, senior sources told The Advertiser that the Japanese option would be chosen.
A formal decision to spend more than $20 billion on up to 10 of the Japanese vessels will be announced before the end of the year.
This morning, Premier Jay Weatherill said he met with Defence Minister David Johnston recently and was reassured about the future of shipbuilding in Adelaide.
Mr Weatherill said Senator Johnston had committed to a further meeting with the state’s Defence Industries Minister Martin Hamilton-Smith.
“He assured me that no decision had been taken in relation to future submarines. He assured me there would be no decisions announced later this year, as had been reported,” Mr Weatherill said.
“He went so far as to say that he would be deeply embarrassed if such a decision was announced at that time (and) he went on to say that it’s something that Navy would not contemplate.
“There is a very detailed set of processes and decision to be taken. I can only take the Defence Minister at his word.”
Senator Johnston refused to reaffirm the promise to build the subs at the Osborne shipyard late last month.
Mr Weatherill said Australian workers were producing “high-quality” products and had the capacity to deliver the $36 billion submarine build and through-life maintenance.
“The idea we would export $250 billion worth of jobs overseas when we could keep those skills and capabilities here in Australia is something which would bewilder many Australians,” he said.
Mr Abbott told a press conference this morning that Australian work on the submarines would be centred in Adelaide.
But he said the government’s decision would be based on defence requirements and value-for-money.
“The most important thing is to get the best and most capable submarines at a reasonable price to the Australian taxpayer — as I’ve stressed all along,’’ Mr Abbott said.
“We should make decisions based on defence requirements, not on the basis of industry policy, on the basis of regional policy.’’
Mr Abbott said the government had yet to make final decisions on the replacement for the ageing Collins class submarines.
“I can confirm what we’ve said all along: the Australian work on the submarines will be centred on the South Australian shipyards in Adelaide,’’ he said.
“Now the precise nature of how we are going to do our next generation of submarines is still subject to a whole range of further decisions.’’
There have been strong indications in recent weeks that the Abbott Government would break its pre-election commitment to build 12 next generation submarines in Adelaide, which would have cost about $36 billion and guaranteed thousands of jobs in the defence sector.
This followed a visit by a Japanese delegation, which was believed to include representatives from the industry giant Kawasaki Shipbuilding as well as the Japanese Government, visiting Osborne and shipbuilder ASC’s base in Western Australia.
Prime Minister Tony Abbott also foreshadowed the decision to buy subs from overseas last month.
“Defence acquisitions have to be made on the basis of defence logic, not industry policy, not regional policy but on the basis of sound defence policy,” Mr Abbott said in a speech at the SA Liberal Party annual general meeting.
“I have to stress we have not yet made a final decision on the design and build on the next generation of Australian submarines but there will be more of them.
“The bulk of the Australian work will be done in Adelaide and that means more jobs for SA.”
He said the next generation of submarines would create a “massive amount of work” in Adelaide.
The move to buy the subs offshore is likely to cost the state thousands of jobs, with the defence industry hoping the submarine build would provide work beyond the construction phase of the Air Warfare Destroyers, which is set to finish in 2017 when the third ship is scheduled to be delivered.
The decision to buy the subs from Japan is being fast-tracked due to growing concerns about the massive cost of maintaining the Collins class submarines beyond their use-by-date of 2026. Some estimates put that cost at more than $2 billion.
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“The Government cannot afford a submarine capability gap and every day past 2026-27 when Collins class is due to begin decommissioning, adds days of risk,’’ a senior defence source said.
The Collins class subs, which were built at Osborne, have been plagued with problems.
The Air Warfare Destroyer construction process has also been fraught, with revelations recently that the $8 billion program is now running $600 million over budget and will be delivered three years late.
Senator Johnston last month called the AWD build a “disgraceful mess of a program”.
One insider told The Advertiser: “It is ludicrous to think we can design a submarine — nobody believes that.”
The 4200-tonne Soryu class boat carries a crew of 65 and is powered by an air-independent propulsion system that allows it to remain submerged for much longer periods that other conventionally powered submarines.
Range has been a major factor against the design — the Soryu has a range of about 11,000km at 12km/h compared with 22,000km at 19km/h for the Collins class — but it is understood that one option under consideration is to provide submarine basing facilities in Darwin to cut the transit distances to the boats’ patrol areas by thousands of kilometres.
It is expected that ASC will continue to perform submarine maintenance locally and will play a key role in the future frigate project with work estimated at $1 billion a year flowing to South Australia by 2023.
However, the shipyard’s woeful performance on the Air Warfare Destroyer project has left the Government with little option but to look elsewhere for a new submarine.
“With a record like that, is anyone seriously thinking we should proceed and build a fleet of future submarines in the same shipyard?” a government source said.
The Advertiser can also reveal that when the Commonwealth signed up to the AWD contract, it was informed by Treasury that the project would cost $1 billion more than expected.
According to government auditors, the extra cost to build the submarines locally would be about 30 per cent or $15 billion.
That is the entire cost of the Joint Strike Fighter project.
Originally published as Abbott Government to spend $20 billion on Japanese submarines in major blow to SA’s defence industry