Sovereign naval shipbuilding bill to be introduced this week

Image via Commonwealth of Australia, Department of Defence.

A new bill that would ensure all Australian naval vessels be built in Australia by Australian companies will be introduced into the Senate this Wednesday.

Centre Alliance senator Rex Patrick will introduce the Defence (Sovereign Naval Shipbuilding) Bill 2018, which will seek to amend the Defence Act 1903 to require all new naval vessels exceeding 30 metres, including Australia's Future Submarines and Future Frigates, to be built in Australia except in times of defence emergency or in war time.

Under the proposal, any future naval vessels would need to be built by an Australian shipbuilder that is incorporated in Australia and is not controlled by one or more foreign persons and is not a subsidiary of a foreign entity.

The information required to maintain and upgrade the naval vessels would also need to be placed under government control.

If the bill passes, it would not prevent foreign shipbuilders tendering to be the prime contractors in any shipbuilding program, but would make it mandatory for the foreign designer to sub-contract the entire build to an Australian shipbuilder that meets the above requirements.

Former submariner and Defence contractor Senator Patrick said the bill would allow for Australia to obtain more naval sovereignty. 

"Australia's uncertain strategic future requires a much greater measure of self-sufficiency as a pacific maritime power," Senator Patrick said.

"Australia needs to be able to exercise a much greater measure of independent maritime power in our region and to do that we need a sovereign naval shipbuilding and support sector."

The origin of the bill has come out of what he described as a potentially "treacherous approach" by those within the Department of Defence that deliberately excluded sovereign shipbuilder ASC from the Future Frigates and Future Submarines projects.

"The bill is designed to counter what may in the future come to be seen as the treacherous approach taken by Russell Hill bureaucrats in the Future Frigate program whereby Australia’s two established and highly capable shipbuilders, ASC and Austal, have been excluded in the tender documents from having responsibility for the build," the senator said.

"Instead the government has invited three foreign ship designers to bid for the job, offering them a taxpayer-funded shipyard in Adelaide and a $35 billion contract to establish themselves to compete with the long-standing Australian companies. This approach to the project makes ASC’s future rather bleak."

Controversially, should the bill pass, it will come into effect from the day of tabling, 9 May, which would impact the Future Frigates and Future Submarines project as neither project has signed a build agreement.

While the Centre Alliance Party is likely to garner support from other crossbenchers and members of the Labor Party, Minister for Defence Industry Christopher Pyne last month shot down the bill.

"You ... need to keep competitive tension in the market otherwise the taxpayer of Australia loses in two ways — in value for money and in the quality of the productions of the products or the service," the minister said at the opening of the Australian Defence Export Office.

"If the Australian government was to mandate only two shipbuilders in Australia, the ASC, which was a very troubled institution until the last few years, and Austal, then the competitive tension would be removed from the market. The loser from that would be the taxpayer, the defence force of course would be the loser potentially in terms of the quality of the product provided because if a company knows that they cannot be defeated in a tender or a contract then of course what they offer doesn't have the competitive tension that's required to make sure that the quality of the service offered is the best it could possibly be."

Senator Patrick responded to this criticism by stating that the bill would allow for competition among shipbuilders (such as Austal and ASC) and accused the minister of "being duplicitous, noting all competitive tension has been removed from the future submarine project with the down selection to one submarine design house well before any solid understanding of cost and final Ts and Cs have been settled".

To view the Bill, click here.

Sovereign naval shipbuilding bill to be introduced this week
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