Moving costs, virus blowout to shoot down WA’s Future Submarines bid
A cost blowout and a major budget crunch have left the Federal Government with a dwindling appetite for shifting submarine jobs west, defence insiders say.
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Relocation costs of between $600 million and $1 billion could torpedo a bid by Western Australia to wrest a lucrative submarine contract worth $400m to the South Australian economy each year.
Defence industry sources have told The Advertiser a substantial moving bill –combined with fears over the costs of recovery from COVID-19 – have strengthened SA’s case to keep the Collins Class submarine maintenance contract.
It is understood Prime Minister Scott Morrison does not have an appetite to incur additional costs right now with the Budget facing unprecedented pressures due to the coronavirus.
The Advertiser can also reveal Defence SA engaged the same specialist team of military experts used to help secure the National Space Agency headquarters in Adelaide to help with SA’s bid to stop Western Australia stealing a lucrative submarine sustainment contract.
The WA State Government has promised to wear some of the costs associated with the relocation. But sources have put the cost of moving the contract from SA to WA as at least “hundreds of millions of dollars” to $1 billion.
Funding will be needed for new infrastructure, staff relocation and training costs and more land at the Henderson shipyards in WA.
Premier Steven Marshall told The Advertiser he was confident the State Government had provided all the evidence needed to keep the contract in SA.
“We want to retain and create as many jobs in naval construction and maintenance as we can and that is why we are investing very heavily in skills, that is why we have a master plan for the Le Fevre Peninsula, and that is why we’ve made a very compelling case to the Federal Government to keep the sustainment jobs and to grow the sector more broadly,” he said.
“The Federal Government has put its decision-making in regards to this matter on hold during COVID-19 but we maintain a dialogue with the Federal Government on this issue.
“I remain confident that SA is the best place in the country for this contract.”
Australian Industry & Defence Network chief executive Brent Clark said he could not speculate on the actual costs of any move to WA, but there was “undoubtedly going to be additional costs with relocating an activity such as this from one location to the next”.
“There may well be costs associated with additional infrastructure, movement of personnel, recruitment of personnel, possible retention of personnel and additional plant and machinery costs,” he said.
Mr Clark called for government to make a decision so industry could “move forward and start the complex task of planning”.
In a move that looks like it could have paid dividends, the duMonde Group – which was also used to help SA secure the National Space Agency headquarters in Adelaide – was paid about $150,000 to help stop the submarine maintenance jobs from going west.