Dick Smith furious at $50 billion subs ‘fiasco’

A WAR of words has erupted between the government and a group of prominent Australian businessmen over a controversial $50 billion spending splurge.

A WAR of words has erupted between a group of prominent Australian businessmen and seemingly the entire southern state over the Federal Government’s controversial French submarines deal.

The group, which includes entrepreneur Dick Smith, Gary Johnston of Jaycar Electronics and adman John Singleton, took out a full-page advertisement in The Australian on Tuesday slamming the move to go with French producer DCNS, suggesting buying off-the-shelf nuclear subs would be a better option.

They warned the current deal, announced on April 28 this year, will “condemn our sailors to their graves”. The group says it can’t understand the Federal Government’s decision to award a multi-billion deal to French supplier DCNS, which will be required to deliver 12 diesel-powered submarines for which there are no drawings and no plans.

They said under the deal, the navy’s next fleet of conventionally-powered subs would come into service at a time when the rest of the world would be operating nuclear fleets, which would be “like putting a propeller plane up against a modern jet”.

“We will be condemning our sailors to their graves,” the advertisement said. It also questioned the economics of the decision, saying it would be cheaper to subsidise car industry jobs, if creating jobs was the desired outcome. Mr Johnston said DCNS was being asked to build a diesel-powered version of what is essentially a nuclear-powered sub.

“It’s a bit like trying to turn a cat into a dog. It’s crazy. Why would you do it?” he told Sky News. “They haven’t got a drawing, they haven’t got a plan. Their current nuclear submarine, the Barracuda, is sitting on a slipway. It won’t even be tested until next year.”

Dick Smith is fronting a campaign critical of the subs deal.

JayCar managing director Gary Johnston. Picture: Renee Nowytarger

Legendary adman John Singleton is against it too. Picture: Toby Zerna

DCNS declined to comment on the row, but the Federal Government said the decision to award the contract to the company came after a competitive evaluation process, which involved the best experts available. It said the new subs would be regionally superior and would allow Australia to pursue its national and international interests.

“They could have chosen a workable state-of-the art existing diesel submarine from either the Germans or the Japanese but chose a very complicated option,” the ad said.

“This is horrifyingly reminiscent of the ‘Seasprite’ helicopter fiasco when we tried to make an ASW (Antisubmarine Warfare) helicopter from airframes that had been in the Arizona desert since the ‘60s.

“The exercise was aborted after we spent $1.4 billion. They never entered service in Australia. This time we are looking at a $50 billion dollar experiment with frightening parallels to the Seasprite fiasco.”

The group, which has launched a website, Submarines For Australia, argue buying the submarines off-the-shelf from a reliable supplier would “undoubtedly” be at least 30 per cent cheaper. That equates to a roughly $15 billion premium.

The government estimates building the submarines in Adelaide will create 2800 jobs.

That would be the equivalent of giving every single one of those 2800 workers a cheque for $5.4 million — or handing every single man, woman and child in South Australia a cheque for nearly $9000.

Speaking on 2GB, Mr Johnston said “if we were smart” we would simply buy the French or British nuclear sub, or even the “ultimate” US Virginia class nuclear submarine, which has 33 years of fuel.

“You don’t have to have a nuclear industry in Australia — you just simply buy the thing and 33 years later you trade it in on a new one,” he said.

“It’s unbelievable how these things are just such an order of magnitude better than a diesel sub. Every one of the enemy we would hopefully not ever encounter, but if we do, would have nuclear submarines which will blow diesel submarines out of the water.”

South Australian Premier Jay Weatherill. Picture: Keryn Stevens

Minister for Defence Industry Christopher Pyne. Picture: Mick Tsikas/AAP

But the group was dismissed as “sad old men” by South Australian Premier Jay Weatherill, who rubbished their proposal to go nuclear. “[It] looked like it was scribbled on the back of a serviette after a long lunch,” Mr Weatherill tweeted on Tuesday.

Defence Industry Minister Christopher Pyne, who holds the South Australian seat of Sturt, described the criticism as “misinformed, misguided” and “entirely wrong”. “We don’t have nuclear energy in Australia and therefore we can’t have nuclear submarines,” Mr Pyne told ABC radio on Wednesday.

“The advice from defence was entirely clear and that was that the French DCNS design was the best for what we needed.

“Quite clearly we are not getting a Short Fin Barracuda submarine, we are getting a unique design for Australian conditions. We’ve chosen DCNS because we believe that they have the best record and the best designs in terms of large submarines both nuclear and non nuclear.”

News Corp’s Adelaide Advertiser, meanwhile, has rubbished the “fiasco” warnings as “mistakenly [meshing] facts with irrational fear and good old Adelaide industry bashing”.

“[Dick Smith] is right to raise important questions about haphazard defence procurement but wrong to conflate these with an astonishing lack of confidence in Adelaide’s shipbuilding capability — particularly for a renowned champion of Australian industry,” the paper wrote.

The announcement in April came as a shock to both the Japanese, who were widely tipped to win the contract, and Australia’s key defence partners the United States.

At the time, The Australian’s veteran foreign editor Greg Sheridan described the announcement, which was leaked to the media before the Japanese were officially notified, as having done “utterly needless damage” to Australia’s relationship with Japan through “cack-handed mismanagement and a lack of attention to detail”.

“The Japanese option offered profound strategic benefits to Australia, to Japan and to the US, which backed the Japanese option,” Sheridan wrote.

“[As] soon as a decision on Japan was made, [Malcolm] Turnbull should have rung his Japanese counterpart and Defence should have notified the Japanese ambassador. Anything less was deeply discourteous.

“Deep value in this important relationship has been sacrificed so the government can have an announcement in Adelaide with all the South Australian Coalition politicians lined up on the stage.”