Australia’s fleet of nuclear submarines will be primarily built in the US or the United Kingdom, with the Morrison government agreeing to drop its requirement for local construction to just 40%, according to a briefing delivered by a senior government figure.
The now-binned contract for the Attack-class boats to be built by France’s Naval Group required that 60% of the submarine be built in Australia in Adelaide — a requirement that Naval Group struggled with throughout the five years of the contract and which played a crucial role in the government’s decision to cancel the deal.
By dropping the local build level to 40%, the government is de facto recognising that its local build requirement is inconsistent with a project within acceptable cost or outcome parameters. As Crikey has flagged, trying to maintain local build with the new fleet simply kicked the local content problem with Naval Group down the road.
The drop to minority local build may also strengthen Naval Group’s hand if it decides to contest the break fee the government proposes to give it for binning the contract — said by a ministerial source to be $500 million.
Naval Group could argue that as the government has changed the project requirements without offering it the opportunity to compete for it, it merits compensation in addition to the break fee. France has already ferociously criticised what it is calling a “stab in the back”, which augurs poorly for a clean settlement.
The government does not yet know whether the new vessels will be a UK or US design, but it is expected that a US firm will provide the nuclear reactors required for the boats’ propulsion systems, and that the reactors will be fitted offshore without ever entering Australia.
According to a senior government source, the government is very concerned about the crewing requirements of nuclear submarines, which are more than twice those of diesel-electric subs, given that the Royal Australian Navy already struggles to fully crew the existing Collins-class fleet, and it expects significant ongoing problems with sourcing both submariners and the onshore expertise needed to maintain nuclear-powered submarines, with foreign workers expected to fill the majority of positions given the skills and experience needed.
One figure mentioned is that the government is budgeting $1 million per migrant worker in order to be able to obtain the necessary skills.
Another concern of the government is paying for the project, which will cost at least as much as the Naval Group contract and likely a significant premium more to accommodate even a reduced local build requirement.
Thinking within the government is that a significantly expanded migration program will be needed to drive up government tax revenue sufficiently to fund the $100 billion plus bill for the submarines.
The one-third reduction in construction in Adelaide that will result from the drop in the local build requirement may be politically costly — but will also reduce the overall budget given the relative inefficiency of local construction.
Exclusive!
Scott Morrison becomes Australia’s Most Expensive Prime Minister.
He has broken John Howard the rodent’s record
Jobs to Adelaide! It would have been much cheaper to keep subsiding Holden etc.
Or even cheaper still to deport fishnet stockings and his daughter.
Well that really sounds like a winner the usual Scott Morrison double deal $1million per migrant worker bargain
That’s a million per worker budgeted. We all know how government budgets have a strong tendency to blow out.
So – the less we build in Australia, the less we pay in total. That will not be a cost factor. Morrison has demonstrated he doesn’t give a flying fig about costs. If he can spaff $9 billion in JobKeeper up against the wall, what’s a few lazy billion to free us from the perfidious French, so we can play real games with our real mates?
Once upon a time Australian defence force, and in particular the Naval side, was well taken care of. Most people didn’t need to know, because competent people oversaw the cool runnings of Navel defence. Yep, mistakes were made, but it was a proud and well organised system.
The financial wastage and bullsit incurred on Naval sectors and other defence force sectors in the last few decades is abominable.
Why would citizens go to war for Australia as it is. I’m appauled with Australian Politics. We’re sitting ducks. What an insult to all who lost their lives for Australian democracy and spending wisely for the greater good of Australia.
What a bloody mess. The penties are bringing on the end times. Self fulfilled prophecy. It’s a stance with consequences which they embrace. I lived with them in the 80s. Australia, in their mind is the land of Christians. No war – just love for fellow Christians. Porter has the right name. Our defence force ìs being deconstructed.
That Porter chooses to be known by his middle name tells you everything you need to know.
Um, that he had the same given name as is father?
… his father
And his grandfather, the Porter’s consider themselves to be some domastic elite descent hybrids with all of the males first born being called Charles, unfortunately chilla Porter, his daddy raided the charity for which he was responsible definitely a DNA defect despite the first born Charles ruling the porter family naming system
I’ve never really had a reason to defend my navel.