At South Australia's budget estimates last week, Opposition Leader Steven Marshall and Minister for Defence Industries Martin Hamilton-Smith went head-to-head over the recent sale of the common user facility and surrounding land at Osborne in Adelaide, which the federal government purchased for $230 million.
The facility, purchased by the federal government in May, will now be fully owned and operated by the federal government and will play an important part in getting the infrastructure up and ready to cut steel on the Offshore Patrol Vessels next year.
Minister Hamilton-Smith explained at budget estimates that the estimated book value of the assets at disposal is $235.7 million. The total state investment in these assets since 2007 has actually been $303 million.
Marshall and Minister Hamilton-Smith quibbled over the book value of the site and the depreciated capital value, with the state Opposition Leader insisting Defence got a better deal than South Australia.
"Are you satisfied that we maximised the return to the people of South Australia with the $230 million price tag, considering we clearly invested much more than that? You talked about the book value, but I presume that is the depreciated capital value, not the book value. Was there any assessment done of the market value of that site?" Marshall probed.
"There was quite a bit of history on this ... I think we did extraordinarily well, and I must say that I think the Ccommonwealth was pretty decent through the negotiations," Minister Hamilton-Smith responded.
"I think they did you like a dinner ... They got a bargain," Marshall argued.
Minister Hamilton-Smith maintained that while the negotiation process required "a bit of goodwill", South Australia got the best deal possible, with access to the common user facility (CUF) still available to the state for other commercial uses in the future.
"The South Australian government wanted to ensure that the CUF was available for other commercial uses at various points in the future, should they arise," said Minister Hamilton-Smith. "That might have been for shipbuilding purposes, it could have been to do with the oil and gas industry.
"There was always a risk that some or more of the work than we hoped for could have been redirected to another state. Frankly, the Commonwealth is in a pretty powerful position here. They have the chequebook. It is their project."
In May this year, Federal Defence Industry Minister Christopher Pyne said that the federal government was pleased to work with the SA government to deliver this outcome for the state.
"The Turnbull government is solely committed to delivering its $89 billion naval shipbuilding program on time and on budget in order to deliver the jobs and economic growth to South Australia as soon as possible," Minister Pyne said.
"The purchase of the common user facility and associated parcels of land at Osborne is an important step in delivering on our commitments to naval shipbuilding.
"As part of the deal the state government has promised to provide assistance to the Commonwealth to progress the development of the shipyards at Osborne. This assistance includes items such as assisting with relevant approvals, providing utilities and services, road, rail and emergency services access, and stamp duty relief."
Finance Minister Mathias Cormann said the deal was an important part of setting the organisational foundation for the program.
"The acquisition of land and facilities at Osborne marks the successful completion of the first stage of the structural separation of the ASC," Minister Cormann said.
"This is a critical step in the Coalition government delivering on its commitment to an historic, $89 billion continuous naval shipbuilding program in Australia."
South Australia will be the build site of Australia's 12 Future Submarines, nine Future Frigates and at least two of the Offshore Patrol Vessels, totalling around $86 billion of the $89 billion shipbuilding plan.