‘Step up’: Christopher Pyne’s message to Australian defence industry

Christopher Pyne has issued a blunt message to the Australian shipbuilding industry if it wants to win work on lucrative military contracts.

• Pyne: The Government never said 90 per cent local
• SA firms will still be in running for vast array of contracts

The Australian shipbuilding industry needs to “step up” if it wants to win work on lucrative military contracts, former defence minister Christopher Pyne says.

Mr Pyne, who inked the deal to build the future submarines at Osborne, has warned businesses cannot expect to win a contract on multi-billion dollar projects just because they are Australian-based.

But senior industry figure Brent Clark, a former Naval Group Australia boss, says Australian companies can do the work “when they’re allowed to compete on an equal and fair footing”.

The debate over Australia’s defence industry capability flared last week when Naval Group Australia’s current chief executive, John Davis, voiced concerns. The French firm is building Australia’s $50 billion Future Sub­marines in Adelaide.

Writing in T he Advertiser on Monday, Mr Pyne says: “Australian industry needs to step up.

“No one in business can expect to win contracts just because they are domiciled in Australia.”

Mr Pyne, who as defence minister awarded the contract for the Attack Class submarines to Naval Group, said companies must only win contracts “because they have the capability to deliver”. The Government would not endanger navy officers’ lives by putting them into a “substandard product”, he says.

An Australian Collins Class sub at Hamilton in Brisbane. Picture: Peter Wallis

Mr Pyne made it clear Defence’s contract with Naval did not include a mandatory minimum percentage of Australian industry content, but said a local build was considered at least 60 per cent local content and that this figure must be met.

Mr Clark, who has previously worked for major defence contractors Naval, BAE, Thales and SAAB and is now chief executive of lobby group Industry Voice, said it wasn’t fair to say Australian industry wasn’t stepping up when it had delivered the majority of content for Collins Class submarines and other major projects.

“I think the prime contractors are doing what prime contractors always do, which is minimising cost and risk and therefore ensuring that they can deliver as close to the schedule as possible,” he said.

“It makes perfect sense for them to look at their overseas supply chain because they’re used to working with them.

“What Australian industry is asking for … is the ability to compete on an equal footing and not to be unduly penalised because they haven’t been in these supply chains before.”

Defence SA chief executive Richard Price agreed local companies needed to be competitive but said existing suppliers would “almost always” present the lowest perceived risk initially.

“The challenge is that new entrants need investment and time to prove they meet these needs at an acceptable risk as well as price,” he said.

Peter Bauer, convener of the SA Shipbuilding Federation of Unions, said mandating a percentage of local content would stop overseas builders taking the “easy way out” and using established overseas suppliers. “Australian industry need to be given first opportunity for contract work and local jobs should be committed to,” he said.