Professional services firm PwC estimates naval shipbuilding will reap $134.4 billion for South Australia

ADELAIDE’S multi-generational naval shipbuilding program will trigger a $134.4 billion economic bonanza for the state — the equivalent of a new mining industry, fresh economic research reveals.

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ADELAIDE’S naval shipbuilding program will trigger a $134.4 billion economic bonanza for the state, including 8000 jobs.

In an independent assessment of the $89 billion submarine, frigate and offshore patrol vessel construction projects, to be released today, professional services firm PwC estimates they will create 8000 jobs in South Australia, more than tripling the current workforce.

Of these, 3500 will be in shipbuilding and 4550 in industries directly related to shipbuilding.

The increase in gross state product of $134.4 billion during the construction program, scheduled to start next year and last until the early 2050s, is equivalent to an average $6300 per household each year.

Defence Industry Minister Christopher Pyne said the report was great news for current and future workers, while PwC economics and policy partner Jeremy Thorpe said the substantial economic benefits would have important community flow-on effects.

“South Australia will be entrenched as Australia’s key naval construction centre and the shipbuilding program alone will triple the South Australian (naval construction) workforce and boost GSP (gross state product) by upwards of $134.4 billion over 40 years,” Mr Thorpe said.

“An uplift of this size is the equivalent of adding a total new mining industry to the SA economy, year-on-year over the life of the program.

“It is rare that a state sees such a long-term commitment that can be banked on. This avoids the traditional problems of a boom and bust cycle.”

French company DCNS (now Naval Group) last year won the $50 billion contract to build 12 submarines at Osborne’s Techport naval shipbuilding precinct. Nine frigates will also be built at Osborne in a $35 billion project from 2020, as well as the first two of 12 offshore patrol vessels from next year before the project transfers to Western Australia.

Submarine construction will start in 2022-23 and the last boat is likely to enter service in the early 2050s. For much of this time, the frigates project will also be running.

The PwC report’s figures are based on the Federal Government’s expectation of SA attracting at least 60 per cent of the spending for the $89 billion shipbuilding program.

Mr Pyne highlighted the report’s finding that for every $10 million in expenditure in SA directly related to shipbuilding, there would be a total of $24 million in additional GSP.

“Not only will there be thousands of new jobs as a result of the Government’s $90 billion naval shipbuilding endeavour, but South Australia will be hallmarked as Australia’s key naval construction centre,” Mr Pyne said.

In commentary likely to trigger criticism by Labor and crossbench Senator Nick Xenophon, the PwC report says the Federal Government “rightly makes the point” that setting a minimum local work target “is a mistake as Australian industry should be incentivised to make the most of this unique opportunity”.

State Government agency Defence SA warned in April that SA was set for only a tiny slice of the $89 billion naval shipbuilding program, saying there was a “false perception that all of the economic benefits will be delivered to SA”.

Premier Jay Weatherill then said the state wanted a commitment about jobs, citing a 90 per cent figure for Australian project work.

Also in April, Senator Xenophon condemned as alarming the failure of Naval Group’s Australian Industry Capability Plan for the submarine project to set a minimum level for Australian involvement.

But the PwC report says debating the absolute level of ­expenditure in SA is not productive. The priority should be to mobilise SA industry to capitalise by providing products or investing to grow capabilities to support shipbuilding, it says.