May 23, 2016

Turnbull's Vote-Magnet Shipbuilding Promises are Labor Proof

(Flow-chart courtesy The Daily Telegraph based on Defence Teaming Australia advice, mid August 2015). In terms of cost estimates the A$17 Billion might be for a build of just 8 submarines. 12 submarines and the lower Australian dollar, since August 2015, may boost 17 up to A$25 Billion. As most of the submarine build will likely be in 13 years time (the 2030-2040s) inflation could double the figure, hence 2 x 25 = A$50 Billion (the most frequently quoted build estimate). 

Submarine Matters will comment about once a fortnight on Australian ship (especially submarine) building issues in the runup to the July 2, 2016 Election.

After Prime Minister Turnbul's rush of shipbuilding announcements on:
-  April 18, 2016 (Offshore Patrol Vessels, Future Frigates, Pacific Patrol Boats) and
-  April 26, 2016 DCNS winning the submarine CEP, with build in Adelaide

The Australian Labor Party (ALP) Opposition and Nick Xenophon Team (NXT) have found it very difficult to criticise Turnbull's continuous shipbuilding strategy. They cannot criticise the extravagance of the shipbuilding promises because Turnbull is offering money and jobs for:
-  unionised workers (the ALP's natural constituency) and
-  workers and managers in South Australia (NXT's main constituency)

Even the ALP Government of South Australia under Premier Jay Weatherill has praised the Turnbull Government's South Australian centric shipbuilding program. 

The only opportunity for the ALP and Xenophon's NXT to criticise Turnbull was over the already 2 month old decision to have 2 naval supply ships built by Navantia in Spain. A criticism that did not "stick".

So the Turnbull Government is finding building of ships (and subs) in Australia to be a sound Vote-Magnet. But the inability of the ALP to criticise extravagant shipbuilding plans may encourage over-spending at the expense (opportunity cost) of other defence and civilian projects. 

There are two major milestones that may undue Turnbull's nicely played shipbuilding strategy:

1.  as announced April 26, 2016 the Turnbull Government is releasing a Naval Shipbuilding Plan AFTER the July 2, 2016 Election with a “review of the workforce, skills and infrastructure needs” for the “Future Submarine program…Future Frigate program and…Offshore Patrol Vessel (OPV) program…”. This may well allocate shipbuilding work to States that are less electorally unpredictable than the main shipbuilding beneficiaries (South Australia and Western Australia). That is Turnbull might give more of the ship/submarine section building work to Coalition leaning New South Wales (NSW) with NSW also receiving the submarine steel-making contract (at Port Kembla), And

2.  if the ALP wins the Election its leader, Bill Shorten, may well allocate more OPV and Frigate section building work to the ALP heartland in Williamstown, Victoria. Williamstown should also "win" on its own merits - having proved itself an efficient shipyard in the ANZAC class frigate and Canberra class LHD builds.

Aside from milestones there is a speed-bump. South Australians may underestimate how long the necessary submarine design negotiations between Australia and DCNS may stretch. It may take 3 to 5 years before the Future Submarine project begins to generate a substantial number of jobs in South Australia.

Turnbull may have done well in the shipbuilding program, so far, but the industry can expect some surprises. 

Please connect this with Submarine Matter's Turnbull's Pre-Election Shipbuilding Rush - Table of Ship/Sub Acquisitions, May 5, 2016.


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