Following this articleand in response to my friend GhalibKabir’s interesting commentI comment:
Back in 2016, and to win that year's Federal Election, the Turnbull Government prematurely chose a future submarine builder (Naval Group) as a sweetener to win one or two critical South Australia seats. Those seats actually won Turnbull the election and South Australians continue to rejoice in having the $10 Billions new submarine construction contract in their state. The higher the cost of a defence project the more political it is - vested interests and all.
But the Turnbull Government's choice happened so quickly that the contractual basis was largely open ended in Naval Group's favour. Now all Australian taxpayers are living with that reality today in terms of an open ended, rising, project price.
In 2021 the Morrison Government can complain about open ended all it likes, but that doesn't alter Naval Group's stronger legal and political bargaining position.
In late February 2021 it is highly unlikely the Morrison Government would take the risky domestic political step of ending the Naval Group contract. South Australia remains hypersensitive to threats to its main manufacturing money earner, the submarine contract with Naval Group.
Morrison is now acutely vulnerable because yesterday Federal Member of Parliament Craig Kelly put serious pressure on the Coalition after leaving for the crossbench. This means Morrison’s Coalition government only needs to lose one seat in South Australia (in a possible October 2021 Election) for Federal Labor to win Government.
Also Defence Minister Linda Reynolds is already under major political pressure over the alleged rape of a female staff member.
Regarding my friend GhalibKabir floating Japan or Saab as possible submarine building alternatives to Naval Group. I comment:
Japan would probably offer the cheapest, fastest build in South Australia. But South Australians actually benefit from a slow, expensive build - more Federal money for their state. Japan also expects a much closer alliance in return for presiding over an efficient build of submarines in Australia. That is Australia strategically supporting Japan in Japan’s more immediate confrontations with China, even in the East China Sea, many thousands of kms north of Australia. Australia did not/does not want to buy into Japan’s neighbourhood confrontations with China and North Korea.
Meanwhile Sweden's Saab-Kockums has yet to prove (after a 20 year hiatus) that it can turn out new subs efficiently. Saab's A26 Blekinge class has still not been launched even for Saab’s own Swedish Navy. The last new subs Kockums built were the unpopular Collins (HMAS Rankin launched 2001)
Also there is the RAN's, Australian politicians' and the publics’ bad memory of numerous Kockums technical, cost and attitudinal problems in the building of the Collins (eg. the defective diesels are still in the Collins and still limit its performance).
So Prime Minister Morrison would be a brave man indeed to even implicitly float an alternative to Naval Group. South Australians are counting on Mr Morrison to deliver an unthreatened, long and expensive submarine build for their underfunded state economy.
Naval Group knows all this. So Naval Group are arguing with the Morrison Government from a Naval Group position of strength.
Pete