Flinders Uni report says moving Collins class submarine jobs to WA would cost $500m
A new report has revealed a raft of concerns about moving submarine maintenance jobs to WA, including a cost of about half a billion dollars for taxpayers.
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Shifting a lucrative submarine maintenance contract from Adelaide to Western Australia could cost taxpayers close to $500 million dollars, according to a new independent report by Flinders University.
The report by the University's Australian Industrial Transformation Institute, commissioned by the State Government, has also warned the shift would not be in the best interests of the nation.
A decision on the future of full cycle docking (FCD) – and whether it should be moved to WA – is expected to be delivered by the Federal Government in the next few months.
Amid rumours FCD work could be split 60-40 in SA’s favour, the new report is expected to be used as ammunition to bolster the case for Adelaide to retain the entire contract.
The report, authored by the institute’s director John Spoehr and deputy director Ann-Louise Hordacre, has raised serious questions about the viability of taking the contract to WA.
Professor Spoehr said the project involved extensive analysis of the relative costs and risks associated with the location of FCD in Australia.
“We interviewed a range of experts and concluded that it is clearly in the national interest for FCD to remain in SA,” he said.
“Life of Type Extension functions are also best undertaken in SA where a critical mass of submarine building expertise exists and facilities are available.
“There are significant financial and risk management benefits from FCD remaining close to where subs are being built.
“There are also substantial costs/risks involved with moving the operation to WA where there is no experience of undertaking submarine FCD.
“The case for relocation of Collins Class FCD to Western Australia has not been accompanied by evidence of any benefit to the nation,” the report says.
“Relocation is likely to erode significant operational gains achieved by the FCD program at Osborne.
“The evidence available suggests that risks associated with relocation are unacceptable and that the costs would be substantially higher.
Findings include:
CONSTRUCTION on the Henderson site – WA’s shipbuilding precinct – would cost an estimated $293.3 million in capital expenses and wages.
DUPLICATE wages to pay for additional 600 workers required to build FCD capability in WA, while maintaining it in SA, would cost an estimate $251 million.
SCHOLARSHIPS to upskill the workforce of 100 staff would cost $29 million.
RELOCATION and moving expenses could cost about $10,000 per worker.
FLY in fly out worker costs could also reach $16.5 million over three years.
Professor Spoehr said a mature naval shipbuilding and sustainment ecosystem like Osborne is of enormous strategic value to the nation.
“Its importance to Australia’s sovereign capability cannot be understated,” he said.
“Collins Class sustainment at Osborne has proven itself as an exemplar project, exceeding international benchmarks in quality and performance.
“Sustainment capability like that found at Osborne cannot easily be recreated in other sites given the extensive sunk investment in workforce development and critical infrastructure.
“This is a product of years of investment … as such it is largely immobile.”
Premier Steven Marshall said the report is further proof that South Australia is unquestionably the national centre of naval shipbuilding.
“We designed and built the Collins Class submarines right here in Adelaide, and absolutely have the skills, expertise and capacity to continue to maintain them,” he said.
In exclusive interviews with The Advertiser in September, WA Premier Mark McGowan and WA Defence Issues Minister Paul Papalia questioned SA’s ability to create the necessary defence workforce.
Mr Papalia said: “When that cycle of the Collins Class submarine confronts a massive uplift in demand for construction of submarines and frigates in South Australia, we view that as being beyond the South Australian manufacturing sector’s capability”.
“The operational capability of a Collins Class submarine would be in jeopardy, which is unacceptable in the national interest,” he said at the time.
A $3.5 billion 25-year contract for the Collins Class submarines’ FCD was inked in October, 2003, by the-then defence minister Robert Hill and finance minister Nick Minchin – both SA senators.
Senior Liberals have told The Advertiser the presumption at the time was the work would be undertaken in Adelaide for the duration of the contract.
Under the terms of the agreement, the initial duration was for 15 years (until 2018), with an option to extend for a further 10 years.
Defence Minister Linda Reynolds has been contacted for comment.