SA will be home of Defence Shipbuilding for a generation!
PRIME Minister Tony Abbott has declared confidence in ASC’s workers, outlining a $1.2 billion destroyer project blowout and cemented Adelaide defence shipbuilding for a generation.
Unveiling a $89 billion naval construction program revealed on Tuesday by The Advertiser, Mr Abbott said frigate construction would be accelerated by three years to start in Adelaide in 2020.
SA Liberal Senator Simon Birmingham said construction of the offshore patrol vessels would be brought forward by two years to 2018, while the frigates would start three years earlier, in 2020, in an attempt to lessen the impact of the so-called ‘Valley of Death’, in which contracts run out before new ones begin, leaving workers without jobs.
“Further, we will invest an additional $1.2 billion into the delivery of the three world-class Air Warfare Destroyers (AWD) currently under construction,” he said.
Mr Abbott also said on Tuesday that there had been a $1.2 billion blowout in the air-warfare destroyer program being spearheaded by ASC at Osborne, taking the total project cost to just under $10 billion.
He also announced a review of ASC’s shipbuilding capacity ahead of future decisions on submarines and ships, which is understood to include options for the government-owned firm to participate in submarine construction.
This might involve one of the overseas bidders operating at a government-owned ASC shipyard or could lead to a long-sought privatisation.
Federal independent and SA Senator Nick Xenophon questioned whether Mr Abbott could be trusted to deliver the frigate program in SA but Premier Jay Weatherill said it was a win for the state.
Mr Abbott rejected concerns that the frigates were a consolation prize for SA missing out on submarines, saying the announcement approved by an Adelaide Cabinet meeting on Tuesday did “not preclude any of the options in respect of submarines”.
He said the $89 billion costed 20-year program — $50 billion for submarines and $39 billion for ships — was a historic naval fleet rebuild centred on SA.
Frigate numbers and cost will be revealed in a Defence White Paper due within weeks.
Asked if he had confidence in the ASC workers given the air warfare destroyer program cost overruns and delays, Mr Abbott said the RAND defence think-tank report released in April had concluded it was a good workforce.
“It’s a highly talented, highly capable workforce that, at times, has been a little bit let down by, dare I say it, the nationalised industry culture … (and) some of the practices which have grown up over the years
“We do have to get a maximally productive operation here in Adelaide but I’m very confident that that is exactly what we will get, particularly now that we have made the decisions that ought to secure 2500 ongoing, highly skilled, highly relevant jobs.”
Mr Abbott said bringing forward the future frigate program would save more than 500 jobs. A competitive evaluation process to decide the designer and builder will start in October.
Construction of offshore patrol vessels to replace Armidale class patrol boats will be brought forward by two years to 2018, maintaining about 400 skilled jobs.
It is unclear where this work might be based, although BAE Systems shipyard in Melbourne is an option.
Mr Abbott said the precise number of surface shipbuilding jobs in Adelaide would depend on the competitive evaluation processes.
“But the yard for building major surface ships will be here in Adelaide because the infrastructure is here,” he said.
“The subordinate yard may be in South Australia. It may be somewhere else. but the major focus for surface shipbuilding will be here in Adelaide.”
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 2020’s.
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 revealed on Tuesday.
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 by Cabinet’s National Security Committee and will go to a Cabinet meeting in Adelaide.
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.
Mr Abbott told a $500-a-head fundraising lunch for Make-A-Wish Australia at the Adelaide Entertainment Centre earlier this week 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 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.
The Advertiser, 5th August 2015
