Senator Rex Patrick welcomes scrapping of French submarine deal, Naval Group slams decision as ‘major disappointment’

Former-submariner-turned-senator Rex Patrick says a decision to make nuclear-powered submarines in Australia had to happen, but will come at a short-term cost for Adelaide shipbuilders who could face another “valley of death”.

The submarine plan was revealed by Prime Minister Scott Morrison this morning, as he announced a new partnership between Australia, the United Kingdom and the United States (AUKUS).

The plan means the $90 billion deal with French company Naval Group — currently underway in South Australia — will be scrapped, but Mr Morrison said the government intended to build the new submarines in Adelaide.

“The first major initiative for AUKUS will be to deliver a nuclear-powered submarine fleet for Australia,” Mr Morrison said.

“Over the next 18 months, we will work together to seek to determine the best way forward to achieve this.

“We intend to build these submarines in Adelaide, Australia, in close cooperation with the United Kingdom and the United States.”

He was careful to emphasise that Australia was not seeking to acquire nuclear weapons.

Naval program ‘was in big trouble’

Senator Patrick, a former submariner who has spent time on nuclear vessels, working aboard a US one, said the Naval Group project had been plagued with issues and cost blow-outs.

“There’s no question that the program that we were in … was in big trouble,” he said.

“It was running late, there was questions as to its capability, big questions over things like its pump-jet propulsor, the battery technology.

As recently as June, Australia’s Defence Secretary Greg Moriarty said he was thinking about alternative submarine options, as tensions with Naval Group simmered.

At the time, he insisted that Defence was determined to proceed with the plan to build 12 conventionally powered Attack-class submarines based on a French design.

Senator Patrick said about $2 billion had already been spent on the Naval Group project.

“We’re walking away, maybe with some experience, some knowledge, lessons that we will take away from this program, and there will be an exit fee,” he said.

“But the cost of doing that is substantially less than continuing in my view — on a $90 billion program, if you have a delay, which was most likely, you can have a 10 per cent increase in budget, and that’s $10 billion.”

However, he said the lag between the two projects could prove problematic for the local workforce. 

“I don’t think people who are working in the submarine industry need to worry in the long-term because their skills will be required in whatever program pops out of this,” he said.

“The difficulty will be bridging the gap between where we’re stopping a program and then having a consultation for 18 months.

“We do not want to see these people leave and go to other industries and not be able to get them back, so that’s one big problem.”

Naval Group reacts to news

In a statement, Naval Group said the announcement was a “major disappointment”.

“The Commonwealth decided not to proceed with the next phase of the program,” the statement read.

“Naval Group was also offering Australia a sovereign submarine capability making unrivalled commitments in terms of technology transfer, jobs and local content.”

Naval Group said both its French and Australian teams had “given their best” and that the group had “delivered on all its commitments”.

“The analysis of the consequences of this sovereign Australian decision will be conducted with the Commonwealth of Australia in the coming days,” the statement read.

Workers ‘have no certainty’ on future

SA Unions Secretary Dale Beasley said state and federal leaders must provide information for Naval Group workers who are “learning that there’s no work for them anymore”.

“Workers employed by Naval Group, including close to 100 who have made the life-changing move to be seconded to France with their families, have no certainty from either [the] state or federal government.

“It’s … welcome news that the future nuclear submarines will be built in SA, but that’s small consolation to the workers and businesses close to Naval Group who are today learning that there’s no work for them anymore.”

One Naval Group worker told the ABC they had been kept in the dark.

“It’s very fresh so we don’t know,” he said.

“I’m not really sure how to react at the moment.

“We were not expecting this.”

Future of full-cycle docking confirmed

While the future for some workers is up in the air, a long-awaited decision on the full-cycle docking of the Collins Class submarines has also been made.

That maintenance work will stay in South Australia securing around 900 local jobs.

The life-of-type extension to the Collins Class submarines will also take place in South Australia from 2026, which will give the state a further 400 local jobs. 

The federal government said $6.4 billion would be invested in these works which were expected to go until 2038.

“South Australia is home to some of the most-skilled shipbuilding workers in the world, they have the know-how, ingenuity, industrial knowledge and determination that is required to provide our Defence Force with the very best capability,” Mr Morrison said today.

“This expansion of Australia’s naval capabilities will strengthen national security, boost our sovereign workforce and support thousands of jobs in the South Australian industry.”

The Government will also invest up to $5.1 billion in upgrades to the Hobart Class destroyer combat management system upgrades at Osborne from 2024, creating 300 jobs in the state.