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WA government seeks to ‘clear the record’ over university report claims

The Office of Paul Papalia, West Australian Minister for Defence Issues, has released a document to the media that aims to “refute the incorrect claims made by the Flinders report”, which called for Collins Class sustainment to remain in South Australia.

Last week, a review by the Australian Industrial Transformation Institute of Flinders University, commissioned by the South Australian government, highlighted reasons for the role to remain in SA.

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The report noted the significant cost, estimated at nearly $650 million, that would be required to "build the appropriate infrastructure in Western Australia and ensure sufficient skilled workers are available in both states during a potential move".

The review also claimed that "strong growth in the state’s mining and construction sectors" would intensify the competition for suitably skilled personnel, suggesting that Western Australia would struggle to recruit and retain enough security cleared engineers and tradespeople for the full-cycle docking sustainment.

"ASC (2019) has indicated that shifting sustainment activities from South Australia to Western Australia would initially require the recruitment, training and certification of an additional 500 employees," the report read.

"However, this number will only increase the Western Australian maintenance sustainment workforce to 900 employees, sufficient to deliver the FCD, but insufficient to also deliver the MCD, unscheduled docking (USD) and other sustainment activities required concurrently.

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"To deliver all maintenance and sustainment requirements, Western Australia would require a total of 1,300 employees (ACIL Allen Consulting, 2019; ASC, 2019). Nine hundred of this workforce would need to be upskilled and retrained in Western Australia, be seconded, fly-in fly-out (FIFO) or move from South Australia in order to deliver the work associated with FCD, which is considerably more technically complex than the current program of work delivered in Western Australia."

The report also said that over $250 million would be required in duplicate wages if the job was moved.

However, Western Australia have now released a "clear the record" document, which is outlined below.

National interest is not served by full-cycle docking sustainment moving 

Western Australia says:

"Moving FCD to WA is in the national interest because it will reduce the pressure on a stretched SA workforce and protect the Attack, Hunter and CCSM programs from potential failure and cost blowouts.

"The Flinders document ignores that co-location of sustainment of submarines near operations is in line with international best practice. This provides an important human element, as submariners will spend less time away from home and more time with their families. This could assist in retaining the current Navy workforce and make a career in the Navy more attractive for future generations. This is critical when you consider Navy is doubling its submarine fleet."

There are plentiful supply chain issues

Western Australia says:

"CCSM supply chains already stretch across Australia.

"Australian industry is more sophisticated than Flinders proposes and capable enough to meet Defence’s supply chain needs. Given that Defence is looking at regional sustainment options for its other sustainment projects, Defence already recognises industry’s potential."

If Collins sustainment is moved to WA, a significant proportion of SA workers would need to move or conduct FIFO work

Western Australia says:

"This is not true. WA will train a workforce, as it has done before for deep sea oil and gas work. SA workers are needed to meet the workforce requirements for the Attack and Hunter programs."

There will be competition for skills from the mining sector

Western Australia says:

"The state’s overall mining investment levels over future years are expected to be very similar to the state’s pre-resource boom levels (particularly in the case of iron ore and oil/LNG projects). This has previously been outlined by WA Treasury. Future mining industry activity will not be a risk in growing the FCD workforce. By comparison, there are already concerns in the defence industry about wage blowouts in South Australia due to the limited number of workers.

"The document has numerous errors on wages and relies on outdated data. Since the 2016 Census (relied on by Flinders), the SA wage price index has outpaced WA every quarter for three years and counting. 

"The use of construction data and examples for workforce demand is flawed. There are significant differences in qualifications required for railway engineering (for METRONET) compared to maritime defence – which is why the WA South Metropolitan TAFE provides tailored courses for maritime workers.  

"Even during the mining boom, South Metropolitan TAFE – the state’s leading defence industry training provider, was able to respond to the ramp up of workforce needs by the oil and gas sector by training 4,500 workers in around 4-5 years. This was done through industry collaboration to develop training products for new workers, and retrain and upskill existing workers. FCD will require a much smaller direct workforce making it even easier to assemble in WA."

There are significant costs associated with moving the sustainment responsibility

Western Australia says:

"The Flinders document fails to account for the costs associated with retaining FCD in SA, incorrectly calculates costs of transition and does not identify the savings from relocating FCD.

"If FCD is retained in SA, the work required to expand and redesign the Osborne Naval Shipyard would be substantial. It could also result in delays in the Attack program due to key assumptions having been made about the use of the existing FCD site. 

"The costs of moving have been heavily inflated and are false. Flinders:

  • overly inflates the construction costs for the Commonwealth by double counting the wages of workers already capitalised in initial estimates;
  • heavily overestimates personnel and training costs by assuming almost the entirety of the existing SA workforce is required for transition to WA over many years. This is false. WA will train a skilled workforce locally; and
  • incorrectly assumes a cost of site purchase for an expanded ASC facility at Henderson. The land is already WA government owned. Other infrastructure required beyond the ASC site would be met by the WA government as outlined publicly.

"Moving FCD will save the Commonwealth money:

  • The Osborne Naval Shipyard won’t need to be expanded or redesigned. The current plans for the Attack Class submarine construction yard won’t need to be changed which will save time and money;
  • The WA government will meet the costs of upgrading the Common User Facility and associated infrastructure (as mentioned above); and
  • If a PPP were used, the cost of moving FCD to WA could be very low and possibly at zero capital cost to the Commonwealth."

South Australia will not encounter workforce issues

Western Australia says:

"The document identifies that SA will heavily rely on overseas migration while acknowledging the issue of security clearance for those same migrants. WA has a local workforce already available, with additional Australian workers available to train. This would also minimise security concerns.

"In its latest Senate estimates hearing, ASC confirmed it is already losing its SA workforce to other local defence companies. Moving FCD to WA means workers in SA who worked on the CCSM program can transfer to the Attack and Hunter Class programs – anyone who wants a job in shipbuilding in SA will have one. Moving FCD to WA will reduce the poaching of ASC workers who are needed for CCSM sustainment."

WA workforce planning is not near completion

Western Australia says:

"The workforce planning for maritime workers is in an advanced stage. The plan will be released after an FCD decision by the federal government."

It would be prudent to strengthen the existing division of sustainment responsibilities between Osborne and Henderson 

Western Australia says:

"This ignores the position made in the Naval Shipbuilding Plan, which identified Osborne and Henderson as shipbuilding hubs. 

"Co-locating sustainment of submarines near operations is in line with international best practice (as already undertaken in the United States and France). It will serve the national interest, de-risk the Attack, Hunter and Collins programs and is the best value for money decision both now and in the long term. This was identified by the independent PWC report released in August 2019."

South Australia's opposition government doubles down

Following the report's release, South Australia's Labor Party also launched a formal submission to Defence SA to keep the submarine maintenance role in the state.

SA Labor leader Peter Malinauskas launched the submission with ASC submarine maintenance workers as they visited Parliament to press their case to keep their roles.

"The submission rejects Western Australia’s core claim – that South Australia cannot provide an adequate workforce to build the Attack Class and maintain the Collins Class – citing the fact a bigger workforce was required in 2014 when SA was building the Air Warfare Destroyers, sustaining the Collins Class and Holden was still operating," the submission from SA Labor reads.
 
"The submission also cites risks to the national interest if the sustainment is shifted to WA, including risks of delays and cost over-runs. There is also evidence the Collins Class sustainment is of almost equal value to South Australia as the construction of the new Attack Class."

"Western Australia is running a well-funded, high profile public campaign to steal our jobs, while Steven Marshall is sitting back and hoping," Malinauskas said.
 
"We must do everything we can to make the case to keep these jobs here and this submission is one element of that.
 
"Western Australia’s case simply does not compete with South Australia’s four-decade history of excellence in submarine construction and sustainment.
 
"The evidence is overwhelming – keeping these jobs in SA isn’t just in South Australia’s interest, it’s also in the national interest."

Your thoughts

As the two states continue their tug of war over the full-cycle docking sustainment responsibility for the Collins Class submarine, what are your thoughts on where the role should be based? Use the comment selection below or get in touch at This email address is being protected from spambots. You need JavaScript enabled to view it..

WA government seeks to ‘clear the record’ over university report claims
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