Naval Group awards Australian taxpayer-funded bonuses despite being behind schedule

Defence correspondent Andrew Greene for Australian Government owned ABC News has written an excellent article of May 6, 2020 https://www.abc.net.au/news/2020-05-06/french-submarine-builders-get-taxpayer-bonuses-despite-delays/12217534

"Submarine builder Naval Group Australia hands out taxpayer-funded bonuses despite being behind schedule"

"The French-owned company building Australia's future submarine fleet has granted employees taxpayer-funded pay rises despite fears the project is already billions of dollars over budget and years behind schedule.

Key points:

• *   Naval Group Australia [website] has given staff early financial bonuses to "support them
•      during the unprecedented COVID-19 period"
• 
  *   In January [2020 the Australian] the auditor-general concluded Naval Group's design was running
       nine months behind schedule
• 
  
• *   A senator says paying the bonuses at a time when other Australians are losing jobs is  
•      offensive"

In 2016 Naval Group, then known as DCNS, won a lucrative international competition to design and build 12 new submarines to replace Australia's ageing Collins Class fleet.

The massive defence project, which is expected to cost at least $90 billion, has faced regular criticism including from the auditor-general who concluded in January the design was running nine months behind schedule.

In a statement, Naval Group Australia confirmed its recent cash windfall for staff was approved by the Defence Department and awarded on an "individual performance basis" while taking into account "external market remuneration conditions".

"Naval Group Australia recently completed its annual remuneration review in line with our remuneration policy," a company spokesperson told the ABC.

"Bonuses paid were linked to the 2019 performance year and were brought forward by three weeks to support our workforce during the unprecedented COVID-19 period."

"Our first priority during this period has always been the safety and wellbeing of our people, clients, suppliers and their families. Nothing is more important to us today and always," the spokesperson added.

It is not known what proportion of Naval Group's future submarine workforce received pay rises and bonuses, and the company has declined to reveal what the increases were worth.

Defence has refused to reveal who in the department approved the remuneration changes and referred all questions on Naval Group's employment conditions and pay to the company.

"The Strategic Partnering Agreement outlines that Naval Group Australia employee salaries and bonuses reimbursed by the Commonwealth in aggregate are appropriate and in line with market conditions and industry benchmarks," a Defence spokesperson said.

Senator calls for examination of 'offensive' bonuses

South Australian crossbench Senator Rex Patrick labelled the pay rises and bonuses granted during the coronavirus pandemic "offensive".

Australia's submarine requirements explained

With the winning bidder for Australia's next fleet of submarines announced, attention turns to how it will meet Australia's high-endurance requirements.

"Ultimately it is the Australian taxpayer that pays Naval Group's employees working on the Future Submarine project," the long-time critic of the French company told the ABC.

"In an environment where businesses are shutting their doors and people are signing up for unemployment benefits en masse, and even corporate executives are trimming their own salaries, some would consider this insensitive".

"Noting the auditor-general found that [Naval Goup Australia] have missed deliveries and critical milestones, I think it's offensive".

Senator Patrick stressed his criticism was directed at Naval Group management, not workers, and suggested the Defence Department should examine the recent pay increases.

"Defence have the ability to examine Naval Group's books and it might be worthwhile them taking a look to see whether or not this is appropriate," he said.

Former Defence official Andrew Davies, now a senior fellow at the Australian Strategic Policy Institute, said the payment of bonuses on a troubled project during the COVID-19 economic downturn was questionable.

"Normally when you're managing a major project, bonuses in particular would typically be tied to increased productivity or meeting project milestones, so it's a bit surprising to see bonuses being given out at the moment," he said.”