‘Hold their feet to the fire’: Christopher Pyne lashes French subs builder

Christopher Pyne blasts French future submarines builder for refusing to say how much work local firms will get.

Illustration: Johannes Leak.

Former defence minister Christopher Pyne has blasted France’s Naval Group for refusing to say whether Australian firms would get even half the work on the $80bn Future Submarines, calling on the Morrison government to “hold their feet to the fire”.

Mr Pyne, who as minister signed off on the strategic partnering agreement with the company, said Naval Group committed to building the boats in Australia, and “the accepted standard for an Australian local build is 60 per cent Australian industry content”.

Former defence minister Christopher Pyne. Picture: Milan Scepanovic

The intervention came as Defence Minister Linda Reynolds ­revealed she would raise comments by Naval Group Australia chief executive John Davis about shortfalls in Australian industry capability with her French counterpart, Florence Parly.

Senator Reynolds said she was “disappointed” by Mr Davis’s ­explosive interview with The Australian this week and would discuss “our very clear ­requirements to lift Australian industry capability” with Ms Parly at a security conference in Munich on Friday.

The Australian can reveal Mr Davis will be hauled before the Senate’s economics committee later in February to be questioned over the company’s views on the capabilities of Australian defence ­industry players.

Amid growing fears in the defence sector that they could miss out on lucrative submarine contracts, Defence and Naval Group issued a joint statement listing 137 “Australian companies and organisations” that had been awarded contracts on the project so far.

The list includes the Australian branches of at least 26 foreign companies, including French-owned firms Safran Defense & Electronics Australia, Thales Australia and Bollore Logistics Australia. Defence said its definition of an Australian company was one “with an Australian business number and Australian-based ­indus­trial capability”.

The statement said Defence and Naval Group would systematically work with Australian industry to maximise the involve­ment of local firms and ensure sovereign sustainment of the ­Attack-class submarine fleet.

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It followed the Naval Group chief executive’s warning in The Australian on Thursday that the capability of Australian suppliers was presenting unforeseen challenges and the company was unsure whether the value of contracts to local firms would reach 50 per cent.

“We didn’t know the Australian market before we joined the program,” Mr Davis said.

“Now we have a much deeper insight, and we recognise there is a lot more work to be done than we anticipated.”

Mr Pyne, who works as a defence adviser for consulting firm EY, said in 2016 that up to 90 per cent of work on the subs could be done in Australia, but did not insist on a specific Australian content target in the agreement with the majority French government-owned company.

He stood by that approach on Thursday, telling The Australian it would remove competition from the process “and without competition, the navy is liable to receive a substandard product”.

But he said 50 per cent local content was “not satisfactory”, and the government should insist on at least 60 per cent. “The government needs to hold their feet to the fire to ensure they fulfil their obligation,” he said.

Labor defence spokesman Richard Marles said if Mr Pyne wanted to ensure sufficient opportunities for Australian companies, he should have mandated a target.

“If Christopher has such strong feelings about Australian industry content then he would have ensured there was a commitment of a percentage of local content in the contracts he was responsible for signing,” he said. “The Collins-class (submarine) which was initiated under a former Labor government, had a target of 70 per cent, and it was exceeded.”

Defence Industry Minister Melissa Price said mandating minimum Australian industry targets “focuses on measurements rather than proper Australian industry engagement to build sovereign capability”.

The chair of the Senate economics committee’s naval shipbuilding inquiry, Labor senator Kimberley Kitching, said the committee had resolved to “urgently call” Naval Group and Defence before the committee.

Centre Alliance senator Rex Patrick said the committee needed to test the company’s approach to Australian involvement: “My biggest fear is (it) is behaving as a surrogate for the French state.”