Significant investment is required to develop Australia’s naval shipbuilding capabilities.
Foreign Minister and former defence minister Marise Payne fronted Senate Estimates at the end of October to address a series of important topics.
Among the revelations was news that a Pacific support vessel contracted to Western Australian shipbuilder Austal in 2018 had been cancelled in favour of an alternative purchased from overseas.
While not surprising to Austal, it was a shock to the defence industry and another blow to local hopes, following the decision to keep full cycle docking in South Australia and cancellation of the Naval Group submarine contract (for which several WA businesses were pre-positioned to be part of the supply chain and sustainment network).
In making the announcement under questioning, Senator Payne alluded to projected operational readiness of the Pacific support vessel being a critical factor.
“The fastest way to do that, given the rate of shipbuilding currently under way at Osborne and at Henderson, which are, after all, finite physical areas for shipbuilding capacity ... is with this purchase, to deliver it to the Pacific next year,” Senator Payne said.
With recent decisions affecting the Australian shipbuilding industry, there are concerns over job losses when continuous workflow is not achieved. It is hard to reconcile that prospect with the assertion that Australian industry does not have the capacity to deliver this Pacific support vessel.
This, in turn, raises three subsidiary concerns.
Firstly, if decisions are now being made within an enhanced threat profile, the impact of this on procurement methodology needs to be shared. Industry will adjust and adapt to its strategic environment, but it is damaging to the sector when actions are seemingly in conflict with published objectives to engage industry.
This highlights the second thread of concern. Effort across the sector is being expended on recruiting and retaining skills, and on encouraging cross-industry players to enter the defence sector.
Every occupation and business strategy brings with it degrees of risk, but these decisions have the potential to destabilise the market and undermine these other efforts. Realignment between intention and action is required and must be clearly communicated.
The third thread of concern extends from this desire for clear communication. Australia’s Continuous Shipbuilding Plan, released in 2017, is the document that can provide such clarity, and an update on it is keenly awaited by industry.
The Department of Defence, via its website, articulates that the plan: “[O]utlines the government’s vision for the Australian naval shipbuilding enterprise and the significant investment required in coming decades.
“The plan sets out how our government is delivering on the commitment to build a strong, sustainable and innovative Australian naval shipbuilding industry … it will create a long-term, sustainable naval shipbuilding and ship sustainment capability that will serve our strategic and economic interests for many decades.”
It talks of laying the foundations for a nationwide continuous naval shipbuilding enterprise, rightly identifying the boom-bust cycle as a key issue requiring attention, as consistency of workflow provides certainty to businesses and workers. It further notes this will create future employment opportunities.
The plan also identifies four key enablers to implementation:
• modern, innovative and secure naval shipbuilding infrastructure.
• workforce growth and development;
• a sustainable and cost-competitive Australian industrial base; and
• a national collaborative approach.
Reviewing those enablers through the lens of the recent decisions reveals a degree of disconnect. Cancelling local contracts in favour of overseas options does not support workforce growth, but instead limits the scale that enables a sustainable and competitive Australian industrial base. Meanwhile, the comments about Australian capacity reveal the potential for further industry collaboration.
Government and the defence sector are facing challenging times. Being held to past promises in a fast-evolving threat environment is no easy task.
An involved Australian industry will support defending our nation and our allies, and equipping our war fighters as best as possible, as primary considerations.
However, what industry seeks is connectivity between words and actions, providing clarity around which businesses and people can adjust. To avoid doing so destabilises our industry participants and other state and federal agencies, makes contributing efforts in recruitment and retention infinitely harder, and unsettles the families committing their careers to support our Australian Defence Force.
Assuming the decisions are justified, many would welcome the release of an updated shipbuilding plan, driving industry and supporting agencies to outcomes aligned to the current environment.
• Kristian Constantinides is the general manager of Airflite, and chairperson of AIDN-WA; the opinions expressed are purely his own
