SA set for tiny part of $89 billion Future Submarines and shipbuilding defence construction, Defence SA says
UPDATE: Jay Weatherill says SA will have to “fight for its fair share” of Future Submarine work, as it was claimed today that the state was set for only a tiny slice of the $89 billion spend.
- Head of DCNS Australia in shock resignation
- ACS Shipbuilding sheds another 22 jobs
- Future Submarines may not use Australian steel
- Australia’s $50bn Future Submarines to be built at Osborne
- Much of the submarine work may be done overseas
SOUTH Australia is set for only a tiny slice of the $89 billion submarine and shipbuilding spend despite a “false perception” all the benefits will flow here, a State Government agency says.
Defence SA chief executive Andy Keough will front a federal shipbuilding inquiry in Adelaide on Tuesday to outline concerns that the state will get as little as 10 per cent of the overall project.
An industry plan obtained by The Advertiser also fails to mention any minimum national involvement, leading to further claims that the industry has been “dudded” in the build.
The new Western Australia Government indicated on Monday it will mount an aggressive campaign to host the majority of ship and submarine maintenance, as well as some construction.
WA Defence Issues Minister Paul Papalia said his state should get the work and that SA, which has built Air Warefare Destroyers, might not even be capable of doing it.
In a submission to the federal inquiry into the Future of Australia’s Naval Shipbuilding Industry, Defence SA says there is a “false perception” that SA is set to receive a large part of the plan’s benefits, which include billions of dollars in industry investment and thousands of jobs.
The plan comprises 12 Future Submarines, nine Future Frigates, and 12 Offshore Patrol Vessels.
The Federal Government says the submarines, frigates, and the first two OPVs will be built in SA.
Prime Minister Malcolm Turnbull has said most of the sub servicing would be done here.
Defence SA warns the state will likely receive only “10 — 15 per cent” of the overall work.
“The naval shipbuilding program will be a national enterprise which involves all states and territories, however much of the current public and media commentary is creating the false perception that all of the economic benefits will be delivered to SA,” the submission says.
The submission agrees with a general assumption that most of the ‘servicing’ or sustainment of vessels will be done in WA, and some in NSW. WA has been doing an increasing amount of the sustainment of the ageing Collins Class submarines.
Sustainment is about 70 per cent of the future subs project cost. Of the remaining 30 per cent, much work will be done in foreign countries including France and the United States.
Defence SA say the “through-life support” will mostly likely be done in WA and NSW for “practical reasons”. “Further, much of the acquisition cost is expended through global supply chains spanning the nation and the world,” the submission states.
“Drawing on … published data points, with through-life support performed outside of the state, we can hypothesise that only 10-15 per cent of the total cost of ownership of a naval vessel would be expended in SA.”
This afternoon, SA Premier Jay Weatherill said Defence SA was a “source of expert advice” for the State Government in its “fight” to secure Future Submarine work in SA.
“We just want to see this commitment that’s floating around there about lots of jobs in black and white because we’ve been disappointed in the past,” Mr Weatherill said.
“We saw the 90 per cent commitment that was made by DCNS and repeated by (Federal Defence Industry Minister) Christopher Pyne in the lead-up to the election.”
Mr Weatherill said he understood the commitment to be for 90 per cent of the project work to be done in Australia.
“Work will be distributed around the nation ... we’ll have to fight for our fair share,” he said.
“We accept that it will be a competitive process... but we don’t want any backtracking on this notion of South Australia having a submarine building capability.”
The Federal Government has consistently said it will “maximise” Australian industry involvement, but has declined to give a fixed percentage. That sentiment is echoed in French shipbuilder DCNS’s Australian Industry Capability Plan for the $50 billion Future Submarines, obtained by The Advertiser.
Defence Minister Marise Payne has produced the document after a Senate Order. Sections are heavily redacted because of risks to national security, she wrote in a letter to Senate President Stephen Parry.
Senator Payne emphasises in the letter that the Commonwealth has not yet approved that plan. SA Senator Nick Xenophon — a prominent advocate for building the submarines in SA — says the plan is “alarming” and “outrageous” because it does not set a minimum level for Australian involvement. The plan says DCNS will seek to “maximise the involvement of Australian industry without unduly compromising capability, cost, schedule or risk”.
Senator Xenophon said SA had been “spun a line”.
“The Commonwealth has to explain how we’re not going to get dudded,” he said.
“This is extremely alarming. After fighting so hard to get the submarines built here, this is a nightmare. The Government must reject this plan; it is so deeply flawed.”
Mr Papalia told the inquiry in Perth on Monday he did not think SA had the capability to do much of the work, while WA did.
“We don’t accept the announcements that have been made … with respect to the location of future naval shipbuilding,” he said.
“I don’t think it reflects the national strategic interest that all the larger vessel construction be done in SA. We are also unsure that SA has the capacity; the human capital or the physical capacity to meet the demands of those tasks.”
WA is also facing a ‘Valley of Death’ due to a drop-off in skilled workers needed for future projects, Mr Papalia said. SA’s Valley of Death as work on the Air Warfare Destroyers winds down was a large part of the Government’s decision to start building the OPVs here from next year.
Workers worried about the future of their jobs will rallied this morning outside the Hotel Grand Chancellor, where the inquiry is being held. The Australian Manufacturing Workers’ Union say the “clock is ticking” on 500 jobs because no new work is coming in to shipbuilders ASC.