AN $89 billion program to build navy ships and submarines over 20 years, including a guarantee that future frigates will be built in Adelaide, will be announced by Prime Minister Tony Abbott today.To be highly congratulated for this.
AN $89 billion program to build navy ships and submarines over 20 years, including a guarantee that future frigates will be built in Adelaide, will be announced by Prime Minister Tony Abbott today.
The centrepiece of the Defence White Paper to be released within weeks, the historic spending on naval shipbuilding is aimed at creating a continuous program to replace the nation’s entire navy fleet.
Senior government sources said the frigate construction at Outer Harbor’s ASC, formerly the Australian Submarine Corporation, was expected to create jobs and begin in the early 2020s.
It is understood that government analysis shows the $89 billion program will sustain about 1000 jobs which otherwise would have been lost, by ending the boom/bust cycle which has afflicted the industry.
Adelaide is also in line for more work building offshore patrol vessels as part of a process to be revealed today.
Mr Abbott is in Adelaide for close to three days for a series of jobs announcements designed to improve the state’s 8.2 per cent unemployment rate and boost the Liberals’ flagging political fortunes in South Australia.
It is understood the naval shipbuilding program was approved yesterday by Cabinet’s National Security Committee and will go to a Cabinet meeting in Adelaide this morning.
The $89 billion naval shipbuilding spend is understood to comprise $39 billion for ships and $50 billion for submarines — the latter program now being contested between Germany, Japan and France ahead of a decision expected by Christmas.
South Australian MPs have been urging Mr Abbott to keep a pre-election promise to build the submarines in Adelaide.
Mr Abbott told The Advertiser the continuous shipbuilding program was a long-term plan for a strong and sustainable industry.
“This critical investment will generate significant economic growth and preserve South Australian jobs,” he said.
“This strategy will transform Australia’s naval shipbuilding industry and put it on to a sustainable long-term path, giving the workforce certainty into the future.
“It’s the first time any Australian government has committed to a permanent naval shipbuilding industry.”
Mr Abbott attacked the former Labor government for creating the “valley of death” by failing to commission a single naval warship from an Australian shipyard during its six years in office.
Defence Minister Kevin Andrews said the decision meant Australia’s “world-class shipbuilding workforce” would build the future frigates and offshore patrol vessels, along with other surface vessels.
“The future frigates will be built in South Australia,” he said.
This is likely to trigger a split of ASC into shipbuilding and submarine arms, along with a partial privatisation involving the successful frigate builder.
The Government analysis shows 2500 jobs will be sustained for a decade across Australia by the continuous shipbuilding program.
But it will not stem the “valley of death” between projects which has resulted in another 100 ASC workers on the air warfare destroyer program losing their jobs, raising fears about the remaining 2500 workers at Osborne.
However, speaking on radio this morning, Mr Abbott was optimistic for their future: “We will have up to 2500 ongoing jobs in surface naval shipbuilding so this is a very, very significant announcement,” he told FIVEaa.
While we can’t entirely avoid the valley of death, we can certainly fill some of it in with the announcement we’re making today.”
Industry insiders said the awarding of the frigate project to SA would fuel speculation it was a consolation prize for missing out on submarines to Mr Abbott’s preferred Japanese option.
Industry figures said German and French companies vying for the submarine deal had spent millions of dollars and hundreds of hours on their bids and would be enraged if this was fruitless.
But Mr Abbott told ABC 891 this morning that the submarines would be a “prize” for SA in some form.
“The frigates are coming as the first prize, and one way or another, the subs will be coming as a further prize,” he said.
“Whatever the competitive evaluation process ultimately comes up with, there will certainly be more submarine jobs in Australia. (But) we’ve got to get the right deal for Australia.”
“You shouldn’t assume that the subs won’t happen here. When we get all those figures in, that’s when we’ll make a final decision.”
Premier Jay Weatherill met Mr Abbott yesterday to discuss job-creation measures. This morning he applauded the Abbott government’s pledge to build future frigates in Adelaide.
“This is a big win for South Australia,” Mr Weatherill told ABC 891.
“We’ve been pursuing a continuous shipbuilding program. It’s a fantastic piece of news.”
Asked about the state’s push to have future submarines built in Adelaide, Mr Weatherill said: “That’s something that we continue to pursue.”
Mr Abbott told a $500-a-head fundraising lunch for Make-A-Wish Australia at the Adelaide Entertainment Centre yesterday that SA had some particular issues — but he had particular faith and confidence in the state’s people.
“If we can make another wish for this state it would be to see this state restored to being an economic powerhouse of our country,” he said.
Federal Industry and Science Minister Ian Macfarlane yesterday revealed 15 SA companies had won almost $29 million funding in the first round of a $60 million program designed to accelerate private sector investment in non-automotive manufacturing.
The 15 businesses will receive grants ranging from about $500,000 to almost $5 million, which are expected to generate about 430 jobs.
We mustn’t settle for the consolation prize
Analysis — Paul Starick
AUSTRALIA’S future frigate program has experienced some delays and changes since it was first revealed in the 2009 Defence White Paper.
Finally, the Federal Government has committed to building the frigates in Adelaide as part of a $89 billion program designed to cement the future of Australian naval shipbuilding. It is speculated this will involve a $20 billion project to build nine frigates.
The Coalition has a powerful argument when it blames Labor indecision on major shipbuilding projects for the so-called “valley of death”. Putting the $89 billion shipbuilding program in the forthcoming White Paper is the Government’s attempt to transform the industry.
But the major prize remains the $50 billion Future Submarine program, which was promised to SA by the Liberals when in Opposition.
This is now a three-way contest in a competitive evaluation between Germany, France and Japan, which must produce options of foreign, domestic and hybrid builds.
Senior government sources steadfastly reject any assertion the deal is already headed Japan’s way as part of a “Captain’s Pick” by Prime Minister Tony Abbott.
But there has long been suspicion by industry insiders that handing the frigate project to Adelaide was intended as a consolation prize for missing out on submarines. A decision on the latter is expected by Christmas.
Without appearing ungrateful for a frigate program, SA must convince the Federal Government that building submarines here is in the national interest, in terms of capability, cost and industry development.
Four reasons the PM and the entire Cabinet are in Adelaide
Hindmarsh — Liberal margin 1.9 per cent
Liberal Matt Williams captured the inner-western Adelaide seat from Labor Georganas at the 2013 election. In an effort to sure up his hold on the seat, Mr Williams has spoken out strongly in support of submarines being built here.
Boothby — Liberal margin 7 per cent
The last time a Labor MP was elected in Boothby was 1946. Held by Andrew Southcott since 1996. Angst about the end of car manufacturing and uncertainty about ship and submarine building contracts has made the Libs vulnerable.
Sturt — Liberal margin 10.8 per cent
Christopher Pyne’s comfortable win at the last election would usually have the Liberals relaxed. Independent Senator Nick Xenophon’s threat to run a candidate in the electorate has complicated things and My Pyne will have to work hard.
Sean Edwards, David Fawcett and Anne Ruston are all facing a fight to keep their seats at the next election. Six of SA’s 12 seats will be up for grabs. A strong vote for the Nick Xenophon ticket could mean only one or two Liberal senators will be back.