Peter Dutton’s warning for Naval Group if Future Subs cost, time frames blow out
Australia’s new Defence minister has sent a warning about what will happen if the $89bn Future Subs aren’t delivered on time.
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Defence Minister Peter Dutton has sent a warning over the $89bn Future Submarines contract, saying the government will impose penalties or take “other action” if the cost or time frame blows out.
Mr Dutton has been on an information-gathering blitz about Australia’s major military contracts, including the Future Subs and $45bn Future Frigates, since taking over the role from Linda Reynolds in Scott Morrison’s ministerial reshuffle in March.
Mr Dutton met last week with Naval Group Australia chairman David Peever, who took on the role in December after heading up Cricket Australia and Rio Tinto.
Asked on ABC’s Insiders program yesterday if he could guarantee Australia would “stick with” the Naval Group contract, Mr Dutton said: “If it can be delivered and if there is performance under the contract then, yes, we will.”
“But like with any contract that the Commonwealth enters into, those people ... know that we are going to hold them to the conditions of the contract. If there are penalties to pay or there’s other action that we can take, that will happen.”
Mr Dutton was also blunt about the possibility of a battle with China over Taiwan, saying it shouldn’t be “discounted”.
Mr Dutton said people “need to be realistic” about China’s activity, the militarisation of bases across the region, and the animosity between Taiwan and China.
“We want to make sure we continue to be a good neighbour in the region, that we work with our partners and with our allies,” he said. “Nobody wants to see conflict between China and Taiwan or anywhere else.”
Fears the Federal Government could walk away from the $89bn contract for 12 Attack Class submarines, set to be built in Adelaide, were sparked in February when it emerged the Federal Government had appointed a trio of top navy officers to look at options for Australia’s subs fleet.
Defence industry sources said at the time the government, and Prime Minister Mr Morrison in particular, had been frustrated over concerns about cost and time blowouts.
Naval Group’s global boss Pierre Eric Pommellet moved to ease fears about the contract when he visited Australia in February, telling The Advertiser: “My concern is to deliver.”
It emerged the same month the company had revised down costs for the next phase of the contract after concerns about the initial estimates.
Progress on the contract was also reached in March when the Defence Department and Naval Group locked in the company promise to spend at least 60 per cent of its contract in Australia.
Mr Dutton said on Sunday he had “extensive briefings” from the Defence Department in recent weeks.
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