Peter Dutton says $5.5bn Attack-class costs includes ’massive contingency’

Visiting Adelaide on Monday, the Defence Minister said a $5.5bn bill for the French submarines Australia no longer wants is “miles more” than required to pay off Naval Group.

The expected $5.5bn taxpayer bill to dump the French submarine deal includes a “massive contingency” that is “miles more” than what will be required to pay off Naval Group, Defence Minister Peter Dutton says.

Visiting Adelaide’s Osborne shipyard to announce upgrades to the Collins-class fleet on Monday, Mr Dutton was grilled over the cost set to be sunk on the cancelled contract for the Attack-class submarines.

In Senate Estimates last month, it was revealed the total cost to taxpayers could reach $5.5bn – a figure that included billions to meet the compensation demands of jilted companies.

It also included $2.5bn spent on the failed project prior to last September’s AUKUS announcement.

“There is a massive contingency within that ($5.5bn) sum,” Mr Dutton told reporters on Monday.

“Some of that money is also being used elsewhere within different programs.”

Mr Dutton said “commercially sensitive” settlement negotiations with Naval Group had no deadline and were likely to spill over into next financial year.

Defence Minister Peter Dutton visited the Osborne shipyard on Monday. Picture Emma Brasier

“What happens in a commercial negotiation, if the other side knows that you’ve got a hard deadline, then they’ll hold you over a barrel,” Mr Dutton said.

He said the $5.5bn figure revealed in Senate Estimates was “miles more than what we require”.

The Defence Minister arrived in Adelaide on Monday to unveil a $381m upgrade to the periscopes on the ageing Collins-class submarines.

He also sweet-talked SA voters about the local defence industry and future opportunities under the AUKUS security pact with the US and UK.

Mr Dutton rejected speculation that much of the future nuclear-powered submarines would be built offshore, saying: “We will see more, not less, built here in Australia”.

“I’m very confident in the discussions I’ve had with the US and the UK that … there is more blue sky here than what people realise,” Mr Dutton said, touting “huge opportunities” and “thousands of jobs” for SA.

He said he “hoped” more than 60 per cent of the nuclear-powered boats would be built with local Australian content.

“We haven’t chosen which boat we’re going to use (but) I think you’ll be very pleasantly surprised,” he said.

The $90bn Attack-class contract that was dumped last September included a mandate for 60 per cent local industry content.

At least eight nuclear-powered submarines will be built at the Osborne shipyard, which will more than triple in size. A taskforce is deciding which model boat to construct. Mr Morrison travelled to Perth on Monday, announcing a $124m investment for two new patrol boats.

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Originally published as Peter Dutton says $5.5bn Attack-class costs includes ’massive contingency’