Major local shipbuilding report in Australia excludes submarine costs

A hint that the subs will be built by Japan?

David Wroe, The Sydney Morning Herald
16 April 2015


Australia's $40 billion future submarine project was left out of a key consultant's report on the local shipbuilding industry on the instructions of the Abbott government.
The revelation made by the report's author, RAND Corporation, on Thursday raises fresh questions about how far the government had progressed last year in its plans to have Japan build the next fleet of submarines, despite a pre-election promise they would be built here.
The $2.5 million RAND report, which Defence Minister Kevin Andrews released on Thursday, found that Australian taxpayers pay a premium of 30 to 40 per cent to build ships at home rather than overseas, but said this could be slashed by smoothing out the flow of work to shipyards rather than clumping it into boom and bust periods.
It also finds that the economic benefits of having a domestic naval shipbuilding industry are "unclear".
But the report strikingly left the future submarine project out of its calculations, concentrating instead on surface warship such as new frigates and patrol boats.
When asked why, lead researcher John Birkler told reporters submarines had been "specifically excluded" from RAND's terms of reference by the Abbott government.
"We were asked not to include submarines," he said.
Mr Birkler went on to indicate that RAND had been told by the government last year that Australia planned to build its submarines offshore.
"That was the strategy that was under consideration for the future submarine at the time we did the study - to build it offshore," he said.
"That was the strategy at the time when we did the bulk of the analysis ... I know it's changed since then but when we were doing the study, that was what was under consideration."
His remarks, backed up by a table in the report that places the future submarine project in the "build offshore" column, is clearly at odds with the government's repeated insistence that it had at no point decided to have Japan build the new fleet of up to 12 submarines.
This is despite the widespread belief that Prime Minister Tony Abbott and then Defence Minister David Johnston were leaning heavily towards a deal with Japan but subsequently tempered their views for fear of a massive electoral backlash in South Australia, where
the government-owned shipbuilder ASC is based.
More recently the government has announced a "competitive evaluation process" that allows Japanese, German, French and Australian shipbuilders to bid for the work.
A spokesman for Mr Andrews said that at "no stage were RAND Corporation informed by the government or the Department of Defence that an offshore submarine build was the only option being considered".
Until the February 20 announcement of the competitive evaluation process, "no decision about the type or location of the future submarine had been made", he said.
Labor's defence spokesman Stephen Conroy said the RAND revelation was "more evidence of Tony Abbott's blatant lies on the next generation of Australian submarines".
Andrew Davies, a senior analyst at the Australian Strategic Policy Institute, said the RAND report was still useful in showing "what you need to do to sustain a shipbuilding industry if you're not building submarines here".