Morrison recruits French President to help get $90bn submarine deal on track

Prime Minister Scott Morrison has declared the troubled $90 billion submarine project is back on track after recruiting France’s President Emmanuel Macron to help salvage the deal.

After meeting with Mr Macron in Paris, Mr Morrison confirmed French builder Naval Group has a September deadline to convince the government it can progress with the project to build Australia’s new submarine fleet and said “I leave knowing we have properly raised the challenges that we need to address”.

Prime Minister Scott Morrison with French President Emmanuel Macron in Paris.Credit: AP

“It was a very positive discussion. The contract is coming up to an important gate in the project,” Mr Morrison said.

“President Macron has been taking a very active role [in the project]. He and I have been discussing these issues for some time and he has an open invitation ... to raise these issues in relation to this contract, and we have.”

Australia commissioned the new fleet in 2016 amid rising tensions in the Indo-Pacific, including as a way to contain China in the South China Sea along with the United States.

The program has been plagued by cost blowouts, schedule slippages and disagreements over commitments to use local contractors.

The future submarines program continues to sail into stormy waters.Credit: The future submarines program continues to sail into stormy waters.

Mr Morrison raised his dissatisfaction with the project at a working dinner with Mr Macron in Paris as Australia continued to look at alternatives to the contract with Naval Group.

Both leaders agreed the project was critical to France’s new geopolitical strategy to play a more prominent role in the Indo-Pacific.

Speaking alongside Mr Morrison ahead of the dinner on Tuesday night local time, Mr Macron called the Attack-class submarines agreement a “pillar of our partnership and the relationship of confidence between our countries”.

“I want to assure you of our full and complete commitment. That of French companies, and American companies working with us ... that of the whole French government in order to meet our common ambitions, to go further and faster if possible,” Mr Macron said.

Naval Group has been given until September to revise its design work plans for the next two years of the project, after submitting the plan in February but told it was too expensive.

The government will now order all six of the nation’s ageing Collins-class submarines to be completely rebuilt – after an initial plan to extend the life of just three – to avoid a capability gap as the first of Naval Group’s 12 submarines is not due to enter service until 2035.

Department of Defence secretary Greg Moriarty this month said “prudent contingency planning” was under way in the event the government decided to walk away from the French build. Senior government sources have confirmed it is highly unlikely it will ditch the Naval Group deal, saying the decision to do a full life-of-type extension on the Collins should apply the necessary pressure on the company to get the project back on track.

Michael Shoebridge, director of the Australian Strategic Policy Institute’s defence program, said he didn’t think the government was serious about walking away from the French construction.

“The Morrison and Macron meeting is important because it sends a clear message to Naval Group that this is not a contractual matter between them and Department of Defence, it is a national strategic matter that has the attention of our national leader,” Mr Shoebridge said.

“What we really need out of the Morrison-Macron meeting is a recognition by both leaders this is not just a big contract, it’s a strategic partnership that needs to be thought of as part of France’s new strategic direction which has a greater priority on the Indo-Pacific.

“What Morrison wants is tangible progress that reduces the political damage of what is seen as a slow, troubled program with the French.”

Before the dinner Mr Macron condemned Beijing for using economic coercion to intimidate Australia, labelling the tactics a “flagrant breach” of international law.

“You are at the forefront of the tensions that exist in the region, of the threats, and sometimes of the intimidation, and I want to reiterate here how much we stand by your side,” the President said.

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