Fantastic boost for submarine manufacturing, and Scott Morrison must sell it

Naval Group’s announcement of an initial wave of $900m worth of manufacturing on the future submarines to go to Australia is a huge boost for our manufacturing prospects and a sign that both sides of this arrangement are serious about Australia acquiring a genuine sovereign capability in submarine manufacture.

This is the first of what will be many such announcements.

This important defence acquisition has two important political components: strategic effect and domestic industry development. Despite committing a record sum of money to the project over time, the Morrison government has not been effectively selling either dimension.

The manufacturing announcement indicates an emerging solid reality to Australian industry participation in the sub. These things take time, and French and other European companies would prefer that they did the work in Europe and shipped the gear to Australia, as was the case with the Collins class subs. But both Naval Group and the federal government are serious about reaching the agreed 60 per cent Australian content.

It can’t all happen at once and Australian industry has to step up to the plate. Australian companies will have first crack at the work in at least 23 technology areas within the sub, including weapons handling and steering systems. There is also a commitment to build the majority of the subs’ main shaft line in Australia.

There will be some hundreds of Australian jobs emerge out of all this. But more importantly, there will be a big technology uplift in the Australian defence manufacturing industry. If the Morrison government is successful in building a new high-end manufacturing industry on the back of cheaper energy prices, but also driven by the need to have secure supply chains for critical equipment, defence will be a big part of this.

This contradicts the nostrums of the free market but every successful national defence industry in the world contradicts the free market. Indeed, every significant defence exporting country builds its industry on the basis of a more or less protected domestic industry.

Before Silicon Valley, the Pentagon was the biggest source of industrial innovation and technical advance in the US, and it still is an enormous engine of technological progress. Australia, as one of the richest but least industrially complex economies in the world, needs at least a proportionate effort from our considerable defence budget.

But up until now, the government has not sold this program well. One of the most advanced submarine manufacturers in the world, in partnership with the Australian government and Australian defence firms, is designing and building some of the world’s most advanced submarines.

Yet the government has allowed a fraudulent perception to take hold — that the whole project is a white elephant. It represents political failure by the government. Thursday’s announcement may be the beginning of the way back.