The announcement of a continuous shipbuilding program, with Adelaide as the hub, is the best and most concrete economic news South Australia has received in decades. It will secure thousands of jobs and should boost confidence and optimism in the future of our state.
For the first time ever, a strategic, long term decision is being taken to support a sustainable shipbuilding industry in Australia, with a profile of scheduled work that will span decades. It will support around 2,500 direct shipbuilding jobs and stands in stark contrast to the boom-bust nature of government shipbuilding decisions that have long beset the industry and contributed to cost inefficiencies.
Around $40 billion of investment on Future Frigates, Offshore Patrol Vessels (OPVs) and other surface ships will provide a steady stream of work for shipbuilders in Adelaide, which will support many more jobs in associated suppliers and have multiple economic benefits throughout our economy. The scale and duration of this investment in South Australia is far greater than any other Federal Government procurement activity in any other state.
Before this new dawn, there will be some darkness. The six year failure of the Rudd-Gillard Labor Governments to commission any new naval vessels has created risks in our naval defence capabilities and a potential valley of death for our shipbuilding industry. The lead time on such enormous projects makes this somewhat unavoidable, but less than two years since our election we have undertaken the analysis and made the decision to back a continuous build program that provides light at the end of the tunnel.
Importantly, our plan for a continuous build program includes measures to reduce the impact of the so-called valley of death by starting construction as soon as possible. Construction of OPVs will commence in 2018, two years earlier than initial estimates, while Future Frigates construction will start three years earlier, in 2020.
Further, we will invest an additional $1.2 billion into the delivery of the three world class Air Warfare Destroyers (AWD) currently under construction. These additional AWD costs are, in part, caused by the boom-bust nature of previous shipbuilding decisions. It takes time to establish capability and maximise productivity – by establishing a continuous shipbuilding program we can maintain both of these features into the future.
We are also undertaking a strategic review of the ASC, to ensure it can operate at the global level of competitiveness required to support our continuous shipbuilding program. With our new policy, supported by a highly skilled workforce and outstanding facilities at Techport, there is no reason why we can't be among the best surface shipbuilders in the world.
I appreciate that many of my fellow South Australians will say, but what about the submarines? This decision doesn’t preclude the submarines from being built in Adelaide. But there are important and credible reasons why that decision will take a little longer.
The Future Frigates will be a mature design, meaning the risks associated with their construction are less. The ASC have admitted that they don’t have the internal capability to build the next generation of Australian submarines from the ground up.
Just as we required international partners for the Collins Class submarines and the current AWDs, we will require international partners for our next generation of submarines.
Our competitive evaluation process will ensure our navy gets submarines with the capabilities they need for Australia’s defence, taxpayers get good value for money and Australian industry involvement is optimised. Hopefully that will mean more good news for South Australia in the not too distant future.
For now though, we should focus on the vast opportunities that lie ahead. The new continuous shipbuilding program is exceptionally good news. Billions in investment and thousands of jobs should see us sail high on the back of shipbuilding well into the future.