In a press release that went largely unnoticed, the prime minister announced a major change to the management of the naval shipbuilding program. Scott Morrison has established a powerful new sub-committee of the national security committee of cabinet called the Naval Shipbuilding Enterprise Governance Committee.
At the same time, he abolished the Naval Shipbuilding Advisory Council. However its chairman, former US secretary of the navy Dr Don Winters, has become a special adviser in the prime minister’s office.
According to highly placed defence sources, Dr Winter is not particularly supportive of Australia’s plan for a small scale, stand-alone project to build 12 conventionally powered submarines. He seems inclined to favour the nuclear option.
There is a suggestion that there is some concern within the Biden administration that Australia may not be able to pull its weight when it comes to counter-balancing China’s strategic influence in the Indian ocean and the South China sea.
In response, the government has elevated the cabinet supervision of the shipbuilding program. Scott Morrison will chair the new committee, which includes the Foreign Minister and Defence Minister, but the government says its decisions will still have to be endorsed by the national security committee of cabinet.
"The committee will ensure the naval shipbuilding enterprise and each component of it is on track to deliver against Commonwealth agreed outcomes, and emergent or forecast risks are identified that may impact or prevent achieving delivery of milestones," the government said.
The national shipbuilding plan was developed in 2017 when Malcolm Turnbull was prime minister and Christopher Pyne was the defence industry minister. Although South Australia claimed that it had the capability to build submarines at that time, since then it has built the Osborne dockyard and trained 1,000 workers at the naval shipbuilding college.
Unfortunately, the Turnbull/Pyne regime failed to develop a project management plan for any of the shipbuilding projects that were in the pipeline. As a consequence, the national shipbuilding plan has been beset with contractual disputes, design problems, cost blowouts and delays.
The prime minister has publicly expressed concern about the shipbuilding program. He asked the national naval shipbuilding enterprise team in the department of defence to prepare a report on what was happening with the projects. The result was a change in approach. The biggest concern was that the French company had not signed a contract and was being equivocal on the requirement for 60% local content.
This was resolved when the CEO of the French Naval group made a flying visit to Australia and signed off on the deal. Pierre Éric Pommellet said before returning to France:
"We will continue to work closely and ensure collaboration to create thousands of jobs in the Australian supply chain while creating business opportunities for Australian companies, up-skill Australian industry, through the transfer of technology."
Apart from the submarines, there are problems with the future frigates that are about to start construction under the auspices of BAE Systems. The Canadians have reported issues with the design of the frigates which are already being built in Canada. Some of these concerns involve local content.
The UK-owned company insists it is exceeding its requirements for Australian industry content, but Brent Clark from the Australian Industry Defence Network says local suppliers are concerned, telling the ABC recently:
"We really need to see evidence that local industry is being given every opportunity to compete in a fair and equitable way across all the programs because otherwise we just cannot achieve what the government's outcome was, which is the sovereign capability."
Finally, there is the political dimension.
The government needs to hold its seats in WA to stay in power. It is up against the combination of Mark McGowan’s popularity and Christian Porter’s unpopularity. The Prime Minister might decide that the whole of the future frigate project can be undertaken in the west. He could also decide to offer Geraldton as a base for the US Indian ocean fleet. This would diminish South Australia’s chances of having a shipbuilding-led manufacturing industry.