Arrested development: has Australia’s naval shipbuilding strategy stalled?

A Cabinet reshuffle has thrown into doubt the Australian Government’s 20-year plan to rejuvenate its naval shipbuilding industry. Julian Turner breaks down the $89bn investment in surface ships and advanced submarines, and asks if the nation’s federal defence organisations are fit for purpose.


HMAS Rankin

In August of this year the Australian centre-right liberal party under Prime Minister Tony Abbott announced an audacious 20-year plan to rejuvenate the nation's naval shipbuilding industry by investing over $89bn in surface ships and an enhanced submarine capability for the nation's navy.

The strategy involves fast-tracking the construction of SEA 5000 Future Frigates to replace ANZAC class vessels as part of a continuous onshore build programme to commence in 2020. The frigates were to be built in South Australia (SA) based on a competitive evaluation process in October.

Construction of SEA 1180 offshore patrol vessels (OPVs) to replace the Armidale class patrol boats would also have been brought forward by two years, with a continuous onshore build scheduled for 2018.

Packaging the plan as an emphatic vote of confidence in Australia's domestic shipbuilding industry, Abbott stated that the decision will "secure up to 2,500 ongoing jobs in surface naval shipbuilding".

"This is the first time in Australian history that a government has made a commitment to build not just a ship or a class of ships in Australia but to continuously build the surface fleet here in Australia," he said. "This is a very, very significant announcement, it is a historic change and the people of SA in particular should be very pleased that finally a government has bitten this particular bullet."

The coalition also pledged to reform the troubled Air Warfare Destroyer programme, which has been beset by cost overruns, delays and productivity issues, and undertake further reform of federal shipbuilding enterprise ASC, beginning with a strategic review of its shipbuilding capacity.



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If Abbott hoped the announcement would boost his flagging popularity in the country as a whole and in Adelaide in particular, then he was wrong. A little over a month after the announcement, he was gone, replaced following a dramatic late night party leadership ballot by Malcolm Turnbull.

On 21 September, Marise Payne replaced Kevin Andrews as Australia's third defence minister in less than a year. So, what does this latest reshuffle mean for the nation's naval shipbuilding industry?

All change: leadership churn in the Australian Department of Defence

With the future of the Australia's naval shipbuilding yards at stake, a lack of stability and continuity within the top echelons of the Australian Government is a legitimate concern, one voiced by Andrews, whose offer to stay on under Turnbull following the Liberal Cabinet reshuffle was rejected.

"We're about to bring out a white paper. We're in the midst of the submarine evaluation. We're in the midst of replacing the navy almost completely over the next decade or so," he said.

"It takes a long time to get on top of the complexity of defence and... I don't think it's good for the security and the safety of this country and for the well-being of our forces to keep changing defence ministers."

In 2013, the new Abbott government commissioned a 'First Principles Review' to ensure that the Australian Defence Organisation was "fit for purpose and able to deliver against its strategy with the minimum resources necessary."

The review noted there had been nine ministers, six secretaries and five chiefs of the Australian Defence Force since 1998, with an average tenure of just four years.

"Leadership churn and budget uncertainty are the critical root causes of the organisation's complacency."

"Leadership churn and budget uncertainty are the critical root causes of the organisation's complacency," the report states. "The frequent turnover in ministers and secretaries, in particular, does not enable effective leadership of change. The state of the organisation is symptomatic of one that has not been materially reshaped for over a decade and has been allowed to drift."

Abbott and his government also likely underestimated the extent of the backlash they would face over their perceived volte face on the $50bn SEA 1000 Future Submarine project, the highest value defence acquisition ever undertaken by Australia. Prior to the election, the Liberal Party promised to build the twelve submarines in SA, but once in power threatened to send the work offshore, with France, Germany and Japan competing for the contract.

The decision inevitably cast doubt on Abbott and his administration's commitment to the Future Frigate and OPV programmes, and to ending the boom-bust cycle that has blighted Australia's naval shipbuilding industry in recent years. It is worth remembering that the former Labour government failed to commission a single naval warship from an Australian shipyard during its six years in office.

"How is this promise to build the future frigates in SA any different from the coalition's 2013 promise to build twelve submarines in SA?" said Independent senator Nick Xenophon. "The government cannot expect Australians to believe it on the frigates until it delivers on its promise to build the $50bn submarines in South Australia."

Fleet upgrades: inside the Future Frigate, OPV and the Future Submarine projects

If the continuous shipbuilding programme was to receive bipartisan support, it would constitute arguably the biggest regeneration of the Royal Australian Navy since the Second World War.

Australia's eight Anzac class frigates, which are smaller than air warfare destroyers but larger than patrol boats, would be replaced with a new fleet equipped for improved submarine detection and response, reports ABC News. The future frigates will be designed to support both combat helicopters and unmanned aerial vehicles.

The 2009 Defence White Paper also planned for as many as 20 new OPVs to replace the navy's fleet of four types of modular patrol boats.

The single, multi-role vessels are expected to be larger than the current Armidale class patrol boats and weigh up to 2,000 tonnes. The OPVs are being earmarked for various operations including warfighting roles, border protection, long range counter-terrorism and counter-piracy.



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The SEA 1000 Future Submarine project seeks to acquire an enhanced submarine capability for the Australian Defence Force (ADF) beyond the planned withdrawal date of the Collins class vessels.

SEA 1000 will provide Australia with a new and more potent defence capability with greater range, longer patrol endurance and increased capability compared to the Collins class submarines. Key capabilities will include anti-submarine and anti-surface warfare, strike, intelligence, surveillance and reconnaissance, electronic and mine warfare and support to special advance forces operations.

The selected design was originally scheduled to be built at the ASC shipyard in SA, but by the end of 2014 the operational capabilities had still not been defined amidst increasing speculation that the Australian government would instead purchase Soryu class submarines directly from Japan. However, in February 2015, the Abbott Government announced the competitive evaluation process between competing Japanese, French, and German designs, with the winning design to be announced before 2016.

Future proof: will the Turnbull government commit to naval shipbuilding?

Will the proposed changes to Australia's naval shipbuilding industry and the pledge by the Abbott government to increase the national defence budget to 2% of GDP by 2023/24 actually take place?

The answer is likely yes, although in what form remains unclear. For now, defence minister Marise Payne refuses to be drawn on changes to long-term policy. Instead, she merely confirmed that the government's long-awaited 2013 defence white paper will be released in October or November as planned − and announced that she plans to remain in her new role for the foreseeable future.

"I can absolutely commit to being here for the long haul and to say that this is about an opportunity for someone to come into the role and to pursue it over an extended period of time," she said. "I have no intention of walking away from politics any time soon. I am a new member of Cabinet and I think that should be a very important message to defence, that this is the commitment this government gives. I have every intention of backing that up."