Politicians push for all navy ships to be built by Australian companies

The Centre Alliance party, made up of South Australian senators Rex Patrick, Stirling Griff and Rebekha Sharkie, will introduce a bill into the Senate when parliament resumes next month.

The Defence (Sovereign Naval Shipbuilding) Bill 2018 will seek to amend the Defence Act 1903 to require all new naval vessels, including Australia's Future Submarines and Future Frigates, to be built in Australia except in times of defence emergency or in war time.

Responsibility for any vessels built in Australia would also need to be contracted to a "well-established, high performance Australian controlled shipbuilder". Currently, this would be ASC or Austal.

If the bill passes, it would not prevent foreign shipbuilders tendering to be the prime contractors in any shipbuilding program, but would make it mandatory for the foreign designer to sub-contract the entire build to an Australian shipbuilder that meets the above requirements.

Former submariner and Defence contractor Senator Rex Patrick said the bill would allow for Australia to obtain more naval sovereignty. 

"Australia's uncertain strategic future requires a much greater measure of self-sufficiency as a pacific maritime power," Senator Patrick said.

"Australia needs to be able to exercise a much greater measure of independent maritime power in our region and to do that we need a sovereign naval shipbuilding and support sector."

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The origin of the bill has come out of what he described as a potentially "treacherous approach" by those within the Department of Defence that deliberately excluded sovereign shipbuilder ASC from the Future Frigates and Future Submarines project.

"The bill is designed to counter what may in the future come to be seen as the treacherous approach taken by Russell Hill bureaucrats in the Future Frigate program whereby Australia’s two established and highly capable shipbuilders, ASC and Austal, have been excluded in the tender documents from having responsibility for the build," the senator said.

"Instead the government has invited three foreign ship designers to bid for the job, offering them a taxpayer-funded shipyard in Adelaide and a $35-billion contract to establish themselves to compete with the long-standing Australian companies. This approach to the project makes ASC’s future rather bleak."

Senator Patrick argues there has been a gradual but shift away from the use of local shipbuilders in Navy programs. The supply ships set to replace the RAN’s French designed Durance-class supply ship, built by an Australian-controlled company, are now being built in Spain by Navan while the Aurora Australis, the Antarctic Division’s Icebreaker, which was built in Newcastle by an Australian controlled company, will be replaced by RSV Nuyina which is being built by Damen in Romania.

"It is hard to avoid the conclusion that the bureaucrats advising government are determined to see the quiet death of a sovereign shipbuilding capability in Australia and its replacement with foreign entities operating on Australian waterfront real estate," he said.

"This has to stop. The new bill will contain a provision that will mean the law applies from the date it was announced - as has been done for other government bills. This will have effect on both the Future Submarine Program, for which no build contract has yet been signed, and the Future Frigate Program.

"While the bill will allow overseas procurement of naval vessels in time of a defence emergency or war, it will provide an unambiguous legislative direction that Australian naval construction must take place in Australia by Australian companies with the consequent benefits for our defence industrial base and long-term strategic self-reliance."

Senator Patrick said the use of Australian companies for the build will ensure the know-how of these programs is transferred to an Australian-controlled company, rather than a "daughter company" of a foreign entity and will ensure foreign companies will not have veto power over any export opportunities Australian shipbuilders wish to engage in.

While the Centre Alliance Party is likely to garner support from other crossbenchers and members of the Labor Party, Minister for Defence Industry Christopher Pyne shot down the bill.

"You ... need to keep competitive tension in the market otherwise the taxpayer of Australia loses in two ways — in value for money and in the quality of the productions of the products or the service," the minister said at the opening of the Australian Defence Export Office.

"If the Australian government was to mandate only two shipbuilders in Australia, the ASC which was a very troubled institution until the last few years, and Austal, then the competitive tension would be removed from the market. The loser from that would be the taxpayer, the defence force of course would be the loser potentially in terms of the quality of the product provided because if a company knows that they cannot be defeated in a tender or a contract then of course what they offer doesn't have the competitive tension that's required to make sure that the quality of the service offered is the best it could possibly be."