Any decision to build Australian subs overseas unlikely until late 2016

The likely mild nature of Australia's next Tuesday May 12, 2015 Federal Budget will prove an indicator that the Abbott Government wishes to avoid decisions that might alienate voters. Abbott's idea to "Build submarines overseas" will  increasingly become a decision to be delayed.

The Abbott Government originally planned to make a decision in early 2016  on who (Japan, France or Germany) would build Australia's future submarine and where (mainly in Australia or mainly overseas). Early 2016 was the earliest period after the stages of the Competitive Evaluation Process (and see) were completed and also after part publications of the 2015 Defence White Paper and associated Force Structure Review.

It is likely that the Abbott Government will only make a decision AFTER the next Federal Election (likely in late 2016) that the submarines will be built overseas. 

Considerations are:

- The May 12, 2015 Federal Budget [watch this space] is already shaping up to be mild, risk averse and sensitive not to alienate too many of Australia's 16 million voters. This is because the Coalition Government's austere May 2014 Budget made the Government rapidly unpopular with  average voters. If Abbott were to declare a submarine policy that effectively meant that $20 Billion of Australia's declining revenue would be sent to Japan to buy Soryus this would be very unpopular. 

- The next Election by law must be held on or before January 14, 2017. However Governments rarely call elections in December or January as this causes voter resentment (too close to the major holiday period in Australia). An election in the southern hemisphere Spring ie. September, October or November 2016, is more likely.

- South Australian voters will become increasingly sensitive about shipbuilding job losses (or lack of growth) prior car factory job losses fully impacting. South Australian car factories have closed in the last few years including 1,000 job losses from the Mitsubishi factory closure in 2008 and General Motors Holden in South Australia is due to close by late 2017 with 1,600 job losses. 

Abbott would be mindful that a decision to build the submarines overseas might just lose him the 2016 Federal Election. Not only the Navy, workers and unions but many business leaders in Australia’s manufacturing sector prefer “Build in Australia”. Meanwhile, the submarine issue may influence votes definitly in South Australia but also in Victoria and NSW (both are also involved in submarine builds). The Labor Party Opposition's “Build Submarines in Australia” may prove increasingly attractive.

Hence, only after a September 2016 or October 2016 Election, is a definite Federal Government decision on any overseas build likely.

Pete

Australian submarine selection, GMH closing, defence spending

Part of the Australian Submarine Corporation's complex, Adelaide, South Australia (Image from http://www.hassellstudio.com/cms_images/389_26-07-2011_5562.png )

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Most public interest generally focusses on a submarine's military technology, attributes and functions. Submarine technology, tactics and their missiles are cool. But below the surface are other pivotal matters including domestic industrial policy, jobs, international relations and government budgeting.

The December 10-11, 2013 announcement that General Motors Holden (GMH) will close its Adelaide factory in 2017 (Adelaide's Mitsubishi car factory closed in 2008) will impact on Australia's submarine selection. Adelaide is the capital of the ship-submarine building state of South Australia. South Australia relies on manufacturing more than other Australian states because South Australia has smaller mining, energy and agricultural resources than most states. Australia's federal government may well find it necessary to direct more funding, in the shape of defence spending, to South Australia, for jobs, economic growth and ultimately votes.

The Adelaide based Australian Submarine Corporation (ASC) is Australia's largest domestic defence company (as distinct from foreign owned Boeing and Lockheed Martin). From the 1980s to the 2000s ASC (working with Kockums and other foreign corporations) built the six Collins Class submarines. ASC is now involved in the expensive and extensive maintenance of the six Collins - see http://www.asc.com.au/en/Programs/Submarines/ .

ASC's main current defence construction activity is building the three Hobart Class Air Warfare Destroyers (AWDs) - also see http://www.asc.com.au/en/Programs/Ships/ .  

Timing

The closure of GMH in Adelaide in 2017 may impact not only on the Federal and South Australian states determination to that the future submarines be constructed domestically but also impact on the timing of future submarine project - SEA 1000
http://www.defence.gov.au/dmo/id/dcp/html_dec10/sea/Sea1000.html . As things stand it appears that many of the decisions for SEA 1000 might not be made until 2020, if not later. South Australian workers, businessmen and voters may well object to this timing. An earlier decision that might involve the ASC concurrently performing substantial work on a future submarine, as well as completing the AWDs, may be necessary.

Pete