Monday, May 25, 2015

No construction jobs in South Australia from submarine contract

A Japanese Soryu-class submarine, which is being considered by Australia.
A Japanese Soryu-class submarine, which is being considered by Australia. Reuters
John Kerin/Financial Review
24 May 2015
Prime Minister Tony Abbott's pledge to create 500 new jobs in South Australia no matter who wins the $50 billion submarine project looks unlikely to include any construction jobs.
Mr Abbott, who made the jobs pledge on February 27, suggested the extra jobs would be needed to maintain the submarines. But Defence Minister Kevin Andrews revealed in a written answer to South Australian senator Nick Xenophon the only jobs would be in design, testing land-based systems and software integration.
The government's refusal to opt for an open tender and instead use a "competitive evaluation process" has convinced Senator Xenophon that buying Japanese submarines is heavily favoured and the "government's 500-jobs pledge little more than window dressing".
The jobs promise was widely seen as attempting to quell the government's plummeting poll fortunes in South Australia and concerns among federal Liberal MPs that buying foreign submarines could cost the federal government seats.

'No decision' on builder

A spokesman for Mr Andrews said no decision had been made on a builder, which would await the completion of the competitive evaluation process, known as the CEP.
"The at least 500 jobs figure refers to the things that need to take place in Australia no matter the outcome of the CEP – ie, design assurance, combat system integration, and land-based testing of submarine systems," he said.
Senator Xenophon told The Australian Financial Review: "When you take these answers together it seems they presuppose a Japanese build, which is bad news for Australia in economic and strategic terms.
"The details suggest at best if the government goes with a Japanese submarine, the build will take place offshore with only negligible or token participation in Adelaide."
Mr Abbott has been under pressure from South Australian politicians of both major parties, the federal Labor opposition and shipbuilding unions over the government's failure to commit to a pre-election pledge to build the submarines in South Australia.

Foreign bidders

Germany, Japan and France are bidding for the project, which could be worth $50 billion. Germany's TKMS is offering its 4000-tonne Type 216, Japan a version of its 4200-tonne Soryu-class submarine and France a non-nuclear version of its Barracuda submarine.
Both the European bidders for the project, German-based TKMS and France-based DCNS, say they are willing to build the submarines at Adelaide-based ASC.
Tokyo has also offered a hybrid build in Adelaide but it is likely most of the construction work would be done in Japan.
A submarine consultant and former adviser to former defence minister David Johnston, Rex Patrick, said the lack of any government commitment to building the submarines in Australia raised suspicions "a decision has already been made".
"There are merits in each of the solutions but none of them stands out from the other, which makes a political pick a lot easier," he said.

Abbott pledge

Mr Abbott, on a post-budget visit to Adelaide on Thursday, pledged there would be "more submarine jobs in South Australia" whoever was awarded the final contract.
Relations between the federal Liberal government and South Australian Labor government are poor after South Australian Premier Jay Weatherill accused "powerful forces" within the Abbott government of attempting to malign the state's shipbuilding reputation after another damning audit of the project to build three Navy destroyers showed it had blown out to $9 billion – three times as much to build locally as in Spain.
The first of the 6500-tonne destroyers was launched in Adelaide on Saturday.
Finance Minister Mathias Cormann said the federal government would begin a limited tender to insert a managing contractor into ASC, which could also be expected to be the lead contractor in any plan to build the future submarine fleet in Australia.

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