Industry high and dry on nuclear subs

Australia’s $100bn-plus nuclear submarines are unlikely to have a mandated level of local industry content, a senior Defence official has revealed.

British nuclear submarine HMS Vanguard. Picture: AFP

Australia’s $100bn-plus nuclear submarines are unlikely to have a mandated level of local industry content, a senior Defence official has revealed.

Defence’s Capability and Sustainment Group chief counsel Fran Rush said the government was more focused on securing the right nuclear-powered submarines under the AUKUS partnership than setting a benchmark for Australian industry participation in the program.

“The concept of (Australian) content is something we do want to focus less on, and more on capability,” Ms Rush told a defence industry conference on Wednesday.

“I don’t think we can say there will be a percentage ascribed to anything. I think we are actually maturing beyond ascribing a percentage now. That is how we are talking in the department.”

The revelation comes nearly two years after France’s Naval Group was forced by the government to agree to a 60 per cent Australian industry content agreement on the now-cancelled Attack-class boats.

Scott Morrison has pledged eight nuclear submarines will be built in Adelaide under the trilateral defence pact with the US and UK. However, many defence strategists argue Australia should try and speed the submarines’ delivery by negotiating to buy them off the US production line.

The cancellation of the French-designed boats was a devastating blow for small and medium-sized defence firms, which lost billions in future work and an estimated $120m invested in new systems, equipment, security and personnel to win contracts.

Australian Industry and Defence Network chief executive Brent Clark said if the nuclear submarine program failed to develop a strong local supply chain, Australia would be unable to sustain and maintain the boats.

“The creation of a sovereign industrial capability is a vital part of the creation of the overall warfighting capability, ensuring Australia is not beholden to foreign governments no matter how close our strategic alliances may be,” he said.

“The government needs to provide a clear unequivocal statement that its intentions are to ensure that Australian industry will be an integral part of the nuclear submarine program. There must be a fully costed and scheduled transfer of technology and required access … to the necessary IP, technical information, know-how and know-why.”

Ms Rush told the Defence Connect conference there would be a high level of engagement between Defence and industry “on getting the right mix of opportunities” on the nuclear submarines.

But she warned: “We need to recognise we are one (part of) this trilateral arrangement and while it is a really wonderful opportunity, it is also the broader opportunities we are trying to harness as well.”

Ms Rush said Defence was working to understand the sovereign industry requirements of the program, and asking “what is the industry capable of supporting here?”

“(We are) recognising that particularly with the nuclear submarines, we are talking about intergenerational change and an intergenerational industry that does not exist yet,” Ms Rush said.

The Defence Department recently revealed to the Senate that the government’s nuclear submarine task force – which is conducting an 18-month review on all aspects of the nuclear submarine proposal, including whether Australia will get an American, British or hybrid design – had grown to 137 members since it was announced last September.

The Australian revealed that Defence was concerned Australian firms were also being passed over by $45bn Hunter-class frigates contractor BAE Systems.

A classified report said BAE had claimed local ­industry content requirements were “a complicating factor for system design maturity”. It was instead relying on its global supply chain to minimise risks associated with using unfamiliar suppliers that would otherwise fall to the company.

Defence Minister Peter Dutton said the federal government would stick with the British­designed frigate, despite an explosive departmental warning that it would be “substantially” slower and have a shorter range than originally ­intended, and could be vulnerable to detection by enemy vessels.