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A focus on percentages will not alone achieve sovereign shipbuilding capability in Australia

awd hobart

Whether it be a debate around the Future Submarines or Future Frigates (did we forget about the OPVs?!), we have become fixated on attaining a particular percentage of Australian industry capability (AIC) to the detriment of any real discussion about how we genuinely develop and sustain sovereign shipbuilding capability in this country.

The debate in Federal Parliament yesterday saw senators from both SA and WA raise valid concerns about the SEA 5000 tender and the involvement of Australian industry, but once again the focus was on a percentage rather than outcomes that directly relate to achieving sovereign shipbuilding capacity.


The recently publicly released SEA 5000 tender document requires bidders to both develop and sustain shipbuilding capacity in Australia, while maximising AIC during the build and sustainment phase.

The document goes on to talk about the Air Warfare Destroyer program and the achievement of 50 per cent AIC, but this is where any discussion about percentages falls down. The 50 per cent achieved on the AWD program was over the whole of life of the program and was measured in terms of Australian contract expenditure.

It is not enough to simply insist on a particular percentage of AIC in a program without clarifying how it is measured (value or volume?), by what stage in the program it is to be achieved (first or last ship?) and will it deliver the required outcome of developing a sovereign shipbuilding capability in Australia.

Fifty per cent AIC can theoretically be achieved through the use of locally produced components, paint, carpets and door handles, but that is not going to deliver the desired industrial base needed to achieve sovereign capability, nor is it going to transform the national economy.

So how do we achieve sovereign shipbuilding capability? That is, how do we develop the ability to design, maintain, sustain, enhance and develop naval assets and capabilities in Australia? First, you use Australian shipbuilders. But equally important is that Australia has the rights and develops the know-how and know-why. Acquiring the rights will depend on the contract set in place between the Commonwealth and the successful tenderer. Developing the know-how and know-why, which reside in industry and the workforce, will depend on the mechanisms put in place to ensure the transfer of knowledge and expertise to Australians.

The ‘so what’ here is that while we are busy trying to hold the government to percentages of AIC, we’re not scrutinising and asking the right questions about the contract that is being negotiated and we are not insisting that measures are put in place to mandate the transfer of skills and knowledge to Australians.

We must focus on the outcomes that relate to achieving sovereign shipbuilding capability in this country and ensure the federal government puts in place the right frameworks, measures, incentives and contractual terms that allow local industry to achieve that. While a percentage of AIC might be one such outcome, it will not alone achieve sovereign shipbuilding capability in Australia.


A focus on percentages will not alone achieve sovereign shipbuilding capability in Australia
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