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New shipbuilding plan is a South Australian sell-out

No matter how the federal government tries to spin it, today’s shipbuilding announcement is a loss for South Australia based on years of Defence and political failures, writes Rex Patrick.

Feb 20, 2024, updated Feb 20, 2024
An Air Warfare Destroyer being built at Osborne in 2014.

An Air Warfare Destroyer being built at Osborne in 2014.

In 2016 when the federal government first used the term “continuous naval shipbuilding”, they announced a plan that was to see us now – in 2024 – four years into the construction of nine future frigates and six months into the build of 12 future submarines.

After today’s announcement, all we are left with is the build of six future frigates and the idea that on the distant horizon we will build five nuclear-powered submarines and some new air warfare destroyers.

The government did announce its intention to build 11 new general-purpose frigates.

That work will first be exported to overseas shipyards and then transferred to Western Australia. This is despite the fact that SA was supposed to be the place where major combatants were built and WA was supposed to be the place where minor combatants were built. Another loss for SA.

None of this is SA’s fault. We have been sabotaged by incompetent Defence leadership and the inability of successive governments to rectify the leadership. To ground that serious allegation, a little bit of history and context is required.

“Continuous” shipbuilding

It’s helpful to recall the origin of continuous naval shipbuilding concept.

In 2007, the federal government signed contracts for the construction of three Air Warfare Destroyers to be built at Osborne. By 2014 the program was running significantly over budget and over schedule.

Some of the cost and delay was caused by what the Auditor-General called “immaturity in the detailed design documentation provided by [the ship designer] Navantia”.

But most of the cost and delay was caused by understandable inexperience – the last significant naval platform built in Adelaide was the Collins Class Submarine HMAS Rankin, launched in 2003.

The remedy to this problem and the key to achieving efficient sovereign naval shipbuilding was proposed by RAND Corporation in 2015. In a taxpayer-funded study, RAND conducted they found that the cost premium for building ships in Australia was around 40 per cent but that this could be reduced significantly by adopting a continuous build program. The continuous naval shipbuilding concept was born.

A series of announcements were made on submarines, offshore patrol vessels and future frigates to create the continuous program.

The Air Warfare Destroyer work was to conclude in 2019. To fill the gap between 2019 and the start of the Future Frigate program in 2020 (building initially prototype blocks) the Navy’s first two Offshore Patrol Vessels were to be built in Adelaide. Full-blown construction of the Future Frigates would commence in 2022 and the build on the first French-designed submarine would start in quarter three of 2023.

There was to be shipbuilding work flowing from every building at the Osborne shipyards and from the workshops of its supply chains.

That was the plan, but that’s not what happened.

Risks but no rewards

Defence picked a non-existent French Attack Class submarine. A contract was signed in October 2016 but the entire program was cancelled in September 2021, leaving a lot of local partners stunned and with huge unrecoverable outlays in expenditure and empty order books.

At best, we will see submarine construction work commencing in Adelaide in the next decade.

Defence, in spite of its Future Frigate tender calling for a “Military-Off-The-Shelf design with minimal changes”, then selected an immature Type 26 ship design which it proceeded to load up with changes. Its tonnage went from 8800 tonnes to 10,000 tonnes. The cost and schedule risks materialised to the point where its construction start was delayed until June this year.

Not appreciating the risk associated with new ship design, Defence sabotaged its own plans.

Inexperience at all levels

Senior military officers, who were no doubt great war fighters in their junior years but with little project management experience, have been making high-risk purchase recommendations to Cabinet ministers with zero project management experience.

In choosing paper capabilities, Defence has exposed its programs and taxpayers to budget blowouts that ultimately mean there’s less money to spend on other much-needed Defence capability, and schedule blowouts that leave our service men and women without modern capability.

Over the past decade, we’ve seen the cancelled Multiple-Role Helicopter program ($3.5 billion wasted), the cancelled Sky Guardian medium altitude long endurance attack drone program ($1.3 billion), the cancelled Army’s Battle Management system ($760 million), the failed Spartan battlefield airlift aircraft ($900 million), the failed Tiger helicopter program ($1.8 billion wasted) and the cancelled Attack Class submarine program ($3 billion).

Defence experts are now suggesting the Future Frigate program will go from $45 billion to $64 billion.

Two weeks ago the Auditor-General reported to the Parliament that, across 20 major Defence projects, the “total schedule slippage was 453 months (23%) when compared to initial project planning”.

Today is a result of Defence failures

It’s through the track record of failure, massive cost blow outs, protracted delay and abrupt cancellations, that we must view today’s betrayal.

Defence has repeatedly failed to manage project risk; taxpayers have been picking up the tab on every occasion and our highly capable shipbuilding workforce has faced disruption and uncertainty.

Today’s announcement will see the same incompetent organisations execute the new plan.  There hasn’t been any accountability for past procurement failures or reform to ensure better performance in the future.

The real change that’s needed from today moving forward is some real constraint on our Defence bureaucrats from doing anything remotely risky.

Big announcements and press conferences don’t deliver the goods. That is done by effective project management by leaders and teams with deep expertise and experience. That’s what Defence needs to build if they are to do better in the future.

So, whilst others, particularly WA, may feel good about today’s announcement, they’re likely to ultimately suffer at the hands of the very entity that sabotaged SA.

Rex Patrick is a former Senator for South Australia and former submariner.

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