SA still counting cost a year after subs deal sunk

One year ago today, hundreds of South Australians were suddenly made jobless when a $90 billion deal to buy French-designed submarines was scrapped. InDaily investigates the fallout.

Sep 16, 2022, updated Sep 16, 2022
Former Prime Minister Scott Morrison aboard Collins Class submarine HMAS Sheean in 2019. (AAP Image/Richard Wainwright)

Former Prime Minister Scott Morrison aboard Collins Class submarine HMAS Sheean in 2019. (AAP Image/Richard Wainwright)

When former Prime Minister Scott Morrison scuttled a well-advanced contract to buy 12 submarines from French-owned Naval Group and announced a new regional security pact, it took the nation – and the French – by surprise.

Some 350 staff in SA lost their jobs overnight and the thousands more jobs promised under the landmark deal to replace the nation’s ageing Collins Class submarines disappeared.

Some French workers who moved to Adelaide to build the new diesel-electric submarines under the contract returned home. Australian workers training in France came back to Adelaide. Some who were about to leave Adelaide for France suddenly had no job to go to.

Others found work elsewhere. Naval Group’s former general manager stakeholder management Alex May – previously a long-time Liberal staffer including as deputy chief of staff to former Premier Steven Marshall and in the office of former Foreign Minister Alexander Downer – is now state director of the Liberal Party.

Former Naval Group chief financial officer and deputy chief executive officer Alexis Junin, who moved to Adelaide from France, chose to stay and is now busy working at Saab Australia.

“I’m looking forward to contributing my international defence industry experience to support the future growth of such a great company with a well-regarded global reputation,” Junin, their new general manager sales and government relations, said.

“In terms of living and working in Adelaide and South Australia, my family couldn’t be happier. We really enjoy the lifestyle and everything South Australia, and Australia has to offer.”

Most of Naval Group’s Australian workers are scattered throughout the local defence industry, the majority at shipbuilder ASC.

While French hubs like the “Maison de France”, or France House, in the city of Unley opened partly “to attract business to Adelaide” are still doing fine, according to Unley Council chief executive Peter Tsokas.

“Primarily because Unley’s connection with the nation of France is not predicated on that project,” he says.

“Unley has been the home to Alliance Francaise for many years now and our council has a strong connection with that organisation, undertaking several joint projects including supporting the annual French Markets event.”

Tsokas mentions a successful film festival, but there are no comments about how high hopes of services to support French businesses operating in SA, or wanting to relocate here, are advancing.

A new Paris SA trade and investment office promised in 2021 by the former Marshall State Government has been abandoned by the new state leader.

And projected boosts for special French language programs at Highgate Primary School and Unley High School also have been distanced from the Naval Group contract in a response from the Education Department.

A spokesperson said the department established the SA model for French bilingual education between 2015 and 2017, and the “French bilingual education model was the first of its kind in South Australia”.

In 2023, Highgate will have two classes per year level up to year five and the first graduates of the program can enter the French program at Unley High School. There are 10 students in the Unley High program this year, with projections of 23 in 2023.

When Morrison announced the Naval Group deal was off, he said the nation would instead buy nuclear submarines from either the United Kingdom or United States under a newly signed AUKUS treaty.

It was a multi-billion-dollar blow to the economy and a significant blow to the local defence industry.

No decision about where the new nuclear submarines are coming from or how much work will come to Australia through the new taxpayer funded deal has been made.

It was Morrison’s predecessor former Prime Minister Malcolm Turnbull who signed the deal with Naval Group in 2016, accompanied by much fanfare about building the fleet in Australia, Adelaide at its epicentre. SA politician Christopher Pyne was Defence Minister at the time.

Christopher Pyne signing a working agreement with Naval Group Australia CEO John Davies and ASC CEO Stuart Whiley in 2019. Photo: Kelly Barnes / AAP

Thousands of new spin-off jobs were promised to breathe new life into a sovereign shipbuilding industry, a hub for economy-wide skills and innovation.

Just a few weeks after Morrison put the kibosh on the deal, the first of those new jobs were being dispersed elsewhere.

A press conference fronted by former Premier Steven Marshall, former Federal Finance Minister Simon Birmingham and government-owned shipbuilder ASC chairman Bruce Carter, was called where the three men were spruiking ASC job offers for redundant staff.

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Through their Sovereign Shipbuilding Talent Pool (SSTP), ASC has since offered employment to 296 eligible affected workers from Naval Group Australia and Lockheed Martin Australia.

On 23 August 2022, figures showed 226 affected workers had accepted offers and 196 had commenced work with ASC on the Collins class submarine sustainment and the Life of Type Extension programs, “while participating in exciting learning and development opportunities”.

ASC managing director and chief executive officer Stuart Whiley said ASC was successfully transitioning eligible affected workers under the SSTP to continue to grow Australia’s shipbuilding workforce.

“All affected shipbuilding workers who expressed an interest in the talent pool have been offered a role at ASC and those who have accepted are being placed into meaningful work, including the Collins class sustainment and Life of Type Extension Programs,” he said.

Among them is former Naval Group Australia general manager human resources Rachel Botting who is now ASC head of people and culture. Former Naval Group Australia offers manager Roy Utting, is head of forward planning and asset management ASC, and glowing in his report on making the shift to work on the Collins Class subs.

“As you’d expect the cancellation of the Attack Class program was unfortunate for everyone involved and meant a big change for the team and me personally, but the opportunity to transfer to ASC was a natural fit.

“I’ve moved across with hundreds of my former colleagues and everyone I’ve spoken to has been glowing about the process, how it’s been managed and how welcome we feel here at ASC,” he said.

But it has been an expensive change of heart for the nation, after South Australia fought long and hard for the Naval Group submarine contract to involve a strong local content.

In June this year, the new Albanese Federal Government agreed on an $830 million settlement with French shipbuilder Naval Group after last year’s decision to scrap the contract.

At the time, Prime Minister Anthony Albanese said this commitment brings the total cost of the failed project to $3.4 billion.

“This is a saving from the $5.5 billion that Senate Estimates was told would result from that program. But it still represents an extraordinary waste from a government,” he said.

Despite the loss of promised jobs and work in this state from the submarine contract, state Defence and Space Industries Minister Susan Close remains upbeat.

She said the state is leading a major expansion of Australia’s naval capabilities and the current growth will support thousands of jobs in the state’s shipbuilding industry by 2030.

“Current labour force participation rates have rebounded solidly following the COVID shock and remain at solid levels,” she said.

“This is particularly the case within advanced manufacturing and defence in South Australia with demand for skills at an all-time high.”

On a visit to Britain’s BAE Systems submarine-building facility this month, Defence Minister Richard Marles announced that the United Kingdom military would allow “a significant number” of Australian submariners to train and serve on its AUKUS ally’s Astute class submarines.

But a decision on where, when and from whom Australia would acquire its new nuclear submarine capability is not expected until the first half of next year.

In the meantime, SA again waits to see how much defence work may fall its way.

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