Australia's PM Makes Big Shipbuilding Promises
The Australian government has committed to spend over A$89 billion ($65 billion) on naval ships and submarines as part of a long-term plan for a strong and sustainable naval shipbuilding industry.
The figure includes A$50 billion ($37 billion) expected to be spent on submarines, with France, Germany and Japan all competing for the contract.
The investment will generate significant economic growth and sustain several thousand Australian jobs over decades, and is a key part of our commitment to a safe and secure Australia, says Prime Minister Tony Abbott.
It’s the first time that any Australian government has committed to a permanent naval shipbuilding industry, he said.
The government will be bringing forward the Future Frigate program (SEA 5000) to replace the ANZAC class frigates. As part of this decision, the government will confirm a continuous onshore build program to commence in 2020.
“This decision will save over 500 hundred jobs and help reduce the risks associated with a cold start,” says Abbott. The Future Frigates will be built in South Australia based on a competitive evaluation process, which will begin in October 2015.
The government will also be bringing forward construction of Offshore Patrol Vessels (SEA 1180) to replace the Armidale class patrol boats by two years, with a continuous onshore build commencing in 2018 following a Competitive Evaluation Process. This decision will maintain around 400 skilled jobs that would otherwise have been lost. It will also reduce the number of man-hours that would be wasted on the Future Frigate program if the existing workforce was disbanded and reconstituted, setting it on a stronger path for earlier completion.
In the short term these two measures will sustain around 1,000 jobs that would otherwise have been lost, says Abbott. Once both programs ramp up they will guarantee around 2,500 Australian shipbuilding jobs for decades.
The announcement has been met with some skepticism. Independent senator Nick Xenophon said the Future Frigate project was an “eternity” away. "How is this promise – to build the future frigates in South Australia – any different from the Coalition's 2013 promise to build 12 submarines in South Australia?" he asks.
The third major pillar of the government’s naval shipbuilding plan is building the submarines based on the outcomes of the competitive evaluation process. There will be more submarines and more submarine-related jobs in Australia, Abbott promised, but he would not be drawn on where the submarines would be built.
AWD Program
Abbott is also addressing the serious cost overruns, delays and productivity problems affecting the Air Warfare Destroyer (AWD) program. Following a forensic audit, and building on significant improvements made through the recent interim phase of reforms, the government is acting decisively to reform the AWD program, he said. By the end of October 2015 substantial additional shipbuilding management expertise will be inserted into the AWD program and an additional A1.2 billion ($887 million) will be invested in the program budget.
The government will also undertake further reform of shipbuilder ASC to ensure Australian shipbuilding is best structured to support a continuous build program and future naval projects are delivered on time and on budget. To this end, the government has commissioned a strategic review of ASC’s shipbuilding capacity. The review will consider how best to implement long-term arrangements.
Recognizing that the Adelaide shipyards and workforce are strategic national assets, the review will consider options to ensure they are structured to support the government's commitment to naval shipbuilding.
The outcomes of the review will be considered in conjunction with future decisions on submarines and surface shipbuilding programs.
The government’s investment in Navy capability will be a centerpiece of the fully-funded Defence White Paper that will be released later this year. It will set out the government’s plan to equip the Australian Defence Force to meet current and future challenges.