‘Make Port Adelaide’: $200bn boost to SA economy on the line in AUKUS submarine deal

The state’s top business group said the AUKUS deal would help inject $200bn into the state’s economy, but the Premier says the total value is “incalculable”.

A staggering $200bn will be injected into the South Australian economy as construction ramps up on the future nuclear-powered submarines, providing a “once-in-a-generation” opportunity for the state’s army of small-business owners.

That’s the conclusion of Business SA chief executive Andrew Kay, who says the AUKUS nuclear-powered submarine deal will establish SA as a “beacon” for industries beyond defence.

“It is a once-in-a-generation opportunity for SA to create an entire business ecosystem servicing the construction of submarines,” he said.

“Building submarines is the end goal, but the planning required to establish the shipyards, develop technology, train, house, clothe and feed the influx of new workers starts now.

“Not only will this industry attract workers and investors to our state, but it also makes us a beacon for unrelated industries that will want to tap into our technology and skills base.”

My Kay estimated up to $200bn would surge into the SA economy with the construction of nuclear-powered submarines and Hunter-class frigates at the Osborne shipyard.

Business SA chief executive Andrew Kay. Picture: Matt Loxton

Premier Peter Malinauskas said the total economic benefit from AUKUS would be “incalculable, given the size and breadth of the program”.

“We are talking about a project that lasts for decades and decades and decades. This is a potentially 100-year endeavour,” he said.

Prime Minister Anthony Albanese is due to unveil the full details of Australia’s plans to acquire a fleet of nuclear-powered submarines in a historic meeting with US President Joe Biden and UK Prime Minister Rishi Sunak in San Diego on Tuesday (Adelaide time).

The full cost of the program – tipped to be well over $100bn – is expected to be confirmed.

Speaking in New Delhi, India, on Friday, Mr Albanese refused to confirm how much the defence budget as a percentage of GDP would increase to accommodate AUKUS and a suite of other new projects.

“I said consistently that we will need a minimum of 2 per cent of GDP, but I expect that defence spending will increase. We’ve been saying that consistently,” he said.

“We need to make sure that we invest more in our defence. You don’t just pluck a figure out in order to get a headline in a newspaper. We’ll invest in what is needed.”

Prime Minister Anthony Albanese did not reveal how much the defence budget would grow to accommodate AUKUS and a suite of other defence procurement programs. Picture: SHARMA / AFP

Several media reports from both sides of the Atlantic indicate Australia will buy up to five US-made Virginia-class submarines by the 2030s as a stopgap measure before constructing British-designed submarines in SA.

Reports also suggest the US will forward-base several submarines in Perth by 2027.

Despite concerns about SA job losses from the state and federal oppositions, one major defence industry group said the unconfirmed plan would be a boon to SA businesses, although the initial spoils would be shared with Western Australia.

“If it was to transpire that there was going to be some sort of increased operational tempo of US submarines out of Australia, then clearly industry sees that as very beneficial,” Australian Industry Defence Network chief executive Brent Clark said.

“It’s probably more likely to be of benefit to the WA industry, but the simple reality is ASC (the federal government-owned shipbuilder) has created a very large and very capable supply chain and the vast majority of that supply chain is South Australian.”

Lefevre businesses await news from PM

A prominent property developer believes building nuclear submarines at Osborne could “make Port Adelaide” and turn the wider area into a breeding ground for engineering innovation.

Business owners, developers and residents on the Lefevre Peninsula are patiently waiting for the Prime Minister’s announcement about the role the Osborne Naval Shipyard will play in the nation’s defence future.

With the anticipated nuclear submarine deal set to bring in billions of dollars to the state over the next two decades, it is Port Adelaide and surrounds that is set to benefit most from the economic boom.

Neville Smith Group’s developer Hans Ehmann. Picture: Dean Martin

It’s an exciting prospect for Neville Smith Group’s developer Hans Ehmann who has been eager to bring the area back to life.

“Port Adelaide has invested heavily in anticipation of the national government confirming its future as a defence manufacturing capital of Australia,” he said.

“The building of subs in Port Adelaide will bring massive socio-economic benefit and could make Port Adelaide. In fact, it could make South Australia.”

He said the reintroduction of sovereign skills and capability in the engineering field was equally as important.

“When we closed the car manufacturing industry, we lost a generation of engineers and engineering capability that transcended the automotive sector,” he said.

“A positive announcement by the Prime Minister next week could reinstate South Australia as a breeding ground for engineering innovation.”

Premier Peter Malinauskas said the project would produce thousands of jobs, attracting skilled workers to the area.

Rosalie Grickage from Century 21 in Semaphore. Picture: Ben Clark

Semaphore Century 21 real estate agent Rosalie Grickage said that was an exciting prospect for the property market.

“It’s going to create a larger footprint of people along the peninsula and we might see people stay in the community because of what it has to offer being by the water for example,” she said.

“It may have a flow-on effect for those experiencing mortgage stress because of the demand for rentals and what the could do for prices.”

She said the wider Adelaide area was in a prime position to grow its population off the back of the announcement.

“Even when you look at South Australia as a whole, we can accommodate these contractors or subcontractors coming in because we have the Northern Expressway, which makes it easy to get out to the development areas further north.”

Trina Randall, who owns a small business Binding Energies, at Semaphore, said the deal would provide “assurance” for their future.

“Something like this would allow us to do what we want to do which is expand,” she said.

“It’s super exciting because for years, we’ve been hearing that, ‘it’s happening in the port’ and finally it appears like it will happen.”

However, she said not everyone in the community would be in favour of bringing a nuclear build to the area.

“I’ll be honest I don’t even really like the idea of nuclear submarines being built,” she said.

“There’ll be a lot of old locals that love Semaphore and Port Adelaide for what it is that won’t like it.”

Port Adelaide Enfield mayor Claire Boan said the area has experience significant investment and growth off the back of previous defence contracts.

“This AUKUS deal has the potential to continue the transformation and growth of our local economy in the City of Port Adelaide Enfield, and the wider state of SA, with incredible opportunities for business, education, employment and infrastructure,” she said.

The City of PAE will continue to work with all stakeholders to seek the best outcomes for our business and residential community.”