Prime Minister Tony Abbott declares confidence in SA’s defence shipbuilding industry
PRIME Minister Tony Abbott has declared confidence in ASC’s workers, outlining a $1.2 billion destroyer project blowout and cemented Adelaide defence shipbuilding for a generation.
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PRIME Minister Tony Abbott has declared confidence in ASC’s workers, outlining a $1.2 billion destroyer project blowout and cemented Adelaide defence shipbuilding for a generation.
Unveiling a $89 billion naval construction program revealed on Tuesday by The Advertiser, Mr Abbott said frigate construction would be accelerated by three years to start in Adelaide in 2020.
SA Liberal Senator Simon Birmingham said construction of the offshore patrol vessels would be brought forward by two years to 2018, while the frigates would start three years earlier, in 2020, in an attempt to lessen the impact of the so-called ‘Valley of Death’, in which contracts run out before new ones begin, leaving workers without jobs.
“Further, we will invest an additional $1.2 billion into the delivery of the three world-class Air Warfare Destroyers (AWD) currently under construction,” he said.
Read Mr Birmingham’s complete opinion piece here
Mr Abbott also said on Tuesday that there had been a $1.2 billion blowout in the air-warfare destroyer program being spearheaded by ASC at Osborne, taking the total project cost to just under $10 billion.
He also announced a review of ASC’s shipbuilding capacity ahead of future decisions on submarines and ships, which is understood to include options for the government-owned firm to participate in submarine construction.
This might involve one of the overseas bidders operating at a government-owned ASC shipyard or could lead to a long-sought privatisation.
Federal independent and SA Senator Nick Xenophon questioned whether Mr Abbott could be trusted to deliver the frigate program in SA but Premier Jay Weatherill said it was a win for the state.
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Mr Abbott rejected concerns that the frigates were a consolation prize for SA missing out on submarines, saying the announcement approved by an Adelaide Cabinet meeting on Tuesday did “not preclude any of the options in respect of submarines”.
He said the $89 billion costed 20-year program — $50 billion for submarines and $39 billion for ships — was a historic naval fleet rebuild centred on SA.
Frigate numbers and cost will be revealed in a Defence White Paper due within weeks.
Asked if he had confidence in the ASC workers given the air warfare destroyer program cost overruns and delays, Mr Abbott said the RAND defence think-tank report released in April had concluded it was a good workforce.
“It’s a highly talented, highly capable workforce that, at times, has been a little bit let down by, dare I say it, the nationalised industry culture ... (and) some of the practices which have grown up over the years
“We do have to get a maximumly productive operation here in Adelaide but I’m very confident that that is exactly what we will get, particularly now that we have made the decisions that ought to secure 2500 ongoing, highly skilled, highly relevant jobs.”
Mr Abbott said bringing forward the future frigate program would save more than 500 jobs. A competitive evaluation process to decide the designer and builder will start in October.
Construction of offshore patrol vessels to replace Armidale class patrol boats will be brought forward by two years to 2018, maintaining about 400 skilled jobs.
It is unclear where this work might be based, although BAE Systems shipyard in Melbourne is an option.
Mr Abbott said the precise number of surface shipbuilding jobs in Adelaide would depend on the competitive evaluation processes.
“But the yard for building major surface ships will be here in Adelaide because the infrastructure is here,” he said.
“The subordinate yard may be in South Australia. It may be somewhere else. but the major focus for surface shipbuilding will be here in Adelaide.”
Senior government sources said the frigate construction at Outer Harbor’s ASC, formerly the Australian Submarine Corporation, was expected to create jobs and begin in the early 2020s.
It is understood that government analysis shows the $89 billion program will sustain about 1000 jobs which otherwise would have been lost, by ending the boom/bust cycle which has afflicted the industry.
Adelaide is also in line for more work building offshore patrol vessels as part of a process revealed on Tuesday.
Mr Abbott is in Adelaide for close to three days for a series of jobs announcements designed to improve the state’s 8.2 per cent unemployment rate and boost the Liberals’ flagging political fortunes in South Australia.
It is understood the naval shipbuilding program was approved by Cabinet’s National Security Committee and will go to a Cabinet meeting in Adelaide.
South Australian MPs have been urging Mr Abbott to keep a pre-election promise to build the submarines in Adelaide.
Mr Abbott told The Advertiser the continuous shipbuilding program was a long-term plan for a strong and sustainable industry.
“This critical investment will generate significant economic growth and preserve South Australian jobs,” he said.
“This strategy will transform Australia’s naval shipbuilding industry and put it on to a sustainable long-term path, giving the workforce certainty into the future.
“It’s the first time any Australian government has committed to a permanent naval shipbuilding industry.”
Mr Abbott attacked the former Labor government for creating the “valley of death” by failing to commission a single naval warship from an Australian shipyard during its six years in office.
Defence Minister Kevin Andrews said the decision meant Australia’s “world-class shipbuilding workforce” would build the future frigates and offshore patrol vessels, along with other surface vessels.
“The future frigates will be built in South Australia,” he said.
This is likely to trigger a split of ASC into shipbuilding and submarine arms, along with a partial privatisation involving the successful frigate builder.
The Government analysis shows 2500 jobs will be sustained for a decade across Australia by the continuous shipbuilding program.
Mr Abbott told a $500-a-head fundraising lunch for Make-A-Wish Australia at the Adelaide Entertainment Centre earlier this week that SA had some particular issues — but he had particular faith and confidence in the state’s people.
“If we can make another wish for this state it would be to see this state restored to being an economic powerhouse of our country,” he said.
Federal Industry and Science Minister Ian Macfarlane revealed 15 SA companies had won almost $29 million funding in the first round of a $60 million program designed to accelerate private sector investment in non-automotive manufacturing.
The 15 businesses will receive grants ranging from about $500,000 to almost $5 million, which are expected to generate about 430 jobs.
Liberals spread the love around
Analysis — Paul Starick
PRIME Minister Tony Abbott has partially achieved the goal of his big-spending, three-day mission to Adelaide.
Growing alarm at the state’s 8.2 per cent unemployment rate has been slightly soothed with multi-billion dollar confirmation that frigates will be built here.
This ends some of the indecision and sloppy messaging that has plagued the Federal Government over the critical South Australian defence industry.
Coupled with the highly visible Cabinet presence and some manufacturing funding announcements, this also shows some love to federal Liberal MPs increasingly worried about losing their seats.
South Australia has become renowned as a weak spot for the Liberals, not least because Labor has held power at a state level since 2002 while the Opposition has been beset by generational infighting.
Until recently, the federal Liberals’ woes were compounded by relentless attacks from Premier Jay Weatherill — some of them taxpayer-funded.
But there has been a rapprochement in recent months, particularly since Mr Weatherill secured majority government in December last year and realised the feds have a large cheque book.
Both sides — Mr Abbott and Mr Weatherill — have been keen to talk up the new-found harmony, which they say is resulting in greater co-operation in the state and national interest.
Mr Weatherill won plaudits in Canberra by being prepared to consider New South Wales Premier Mike Baird’s proposal for a GST hike to 15 per cent if the revenue was quarantined for hospitals and schools.
But there is one $50 billion elephant in the room — future submarines. If SA does not get a substantial portion of the construction, Labor and Senator Nick Xenophon will be able to create electoral mayhem in SA and threaten to topple once-safe Liberal seats.
We mustn’t settle for the consolation prize
Analysis — Paul Starick
AUSTRALIA’S future frigate program has experienced some delays and changes since it was first revealed in the 2009 Defence White Paper.
Finally, the Federal Government has committed to building the frigates in Adelaide as part of a $89 billion program designed to cement the future of Australian naval shipbuilding. It is speculated this will involve a $20 billion project to build nine frigates.
The Coalition has a powerful argument when it blames Labor indecision on major shipbuilding projects for the so-called “valley of death”. Putting the $89 billion shipbuilding program in the forthcoming White Paper is the Government’s attempt to transform the industry.
But the major prize remains the $50 billion Future Submarine program, which was promised to SA by the Liberals when in Opposition.
This is now a three-way contest in a competitive evaluation between Germany, France and Japan, which must produce options of foreign, domestic and hybrid builds.
Senior government sources steadfastly reject any assertion the deal is already headed Japan’s way as part of a “Captain’s Pick” by Prime Minister Tony Abbott.
But there has long been suspicion by industry insiders that handing the frigate project to Adelaide was intended as a consolation prize for missing out on submarines. A decision on the latter is expected by Christmas.
Without appearing ungrateful for a frigate program, SA must convince the Federal Government that building submarines here is in the national interest, in terms of capability, cost and industry development.
Four reasons the PM and the entire Cabinet are in Adelaide
Hindmarsh — Liberal margin 1.9 per cent
Liberal Matt Williams captured the inner-western Adelaide seat from Labor Georganas at the 2013 election. In an effort to sure up his hold on the seat, Mr Williams has spoken out strongly in support of submarines being built here.
Boothby — Liberal margin 7 per cent
The last time a Labor MP was elected in Boothby was 1946. Held by Andrew Southcott since 1996. Angst about the end of car manufacturing and uncertainty about ship and submarine building contracts has made the Libs vulnerable.
Sturt — Liberal margin 10.8 per cent
Christopher Pyne’s comfortable win at the last election would usually have the Liberals relaxed. Independent Senator Nick Xenophon’s threat to run a candidate in the electorate has complicated things and My Pyne will have to work hard.
Senate
Sean Edwards, David Fawcett and Anne Ruston are all facing a fight to keep their seats at the next election. Six of SA’s 12 seats will be up for grabs. A strong vote for the Nick Xenophon ticket could mean only one or two Liberal senators will be back.
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