The Morrison government has infuriated Adelaide and Paris alike, as it counts the financial and reputational costs of its new nuclear submarine deal

The Morrison government has infuriated Adelaide and Paris alike, as it counts the financial and reputational costs of its new nuclear submarine deal
Brendan Esposito - Pool/Getty Images
  • More representatives for South Australia’s shipbuilding workforce have shared deep concerns over Australia’s new defence deal.
  • While the federal government has committed to the industry in the short term, the future of Australia’s nuclear submarine program is yet to be determined.
  • At the same time, the French government is incensed over the deal, which supersedes a prior $90 billion sub-building agreement between the nations.
  • Visit Business Insider Australia’s homepage for more stories.

Australia’s new nuclear submarine commitment could cost local shipbuilding jobs in the long term, workforce representatives fear, as the federal government prepares to spend in excess of $90 billion on its next-generation fleet.

The new AUKUS defense pact with the United States and the United Kingdom will grant Australia access to nuclear submarine technology, superseding the nation’s 2016 commitment to build 12 conventionally powered submarines in Adelaide.

The federal government says its “intention” is to construct its first-ever nuclear submarines in Adelaide, where workers had been gearing up to build diesel-electric subs with French manufacturer Naval Group.

But unions have expressed long-term concerns for the local workforce, saying there are no guarantees Adelaide will become a nuclear submarine powerhouse.

Electrical Trades Union national assistant secretary Michael Wright said the decision was a “betrayal” of Australia’s non-nuclear policies and traditional shipbuilding jobs.

“After completely bungling the Naval Group submarines deal, the Commonwealth Government expects us to believe it can be trusted to negotiate and manage the delivery of nuclear submarines,” he said Thursday.

“This is preposterous.”

The new fleet of nuclear submarines will require extensive offshore maintenance and know-how, Wright said, challenging the nation’s “sovereign capability”.

While unions demand answers over the project’s long-term outlook, the government has confirmed Adelaide’s shipbuilding industry will be put to work over the next few years.

Even with the Naval Group partnership set for the scrapheap and the nuclear project in its infancy, a life-of-type extension project to revamp Australia’s aging Collins Class submarine fleet, set to begin in 2026, will keep hundreds of ASC jobs in South Australia.

Separately, upgrades to the Hobart Class air warfare destroyers will begin in 2024.

The Advertiser reports some 5,000 shipbuilding jobs will be supported by the federal government in the next decade.

The commitment comes after a push by Western Australia to assume some of the nation’s advanced manufacturing capabilities.

“There is no celebration of the announcement to build nuclear submarines,” a SA Unions representative wrote on Facebook Thursday.

“What we welcome is the news… that the existing workforce who maintain our Collins Class diesel submarine fleet at ASC wont have their jobs sent to WA.

“The ASC workforce has been under threat for years of having their jobs sent to WA, [so] it is indeed a welcome relief to have assurance that their jobs will be staying in SA.”

Australia to count the cost in money and international reputation

As Adelaide’s shipbuilding workforce seeks clarity for the coming decades, the federal government is also assessing how much the new deal — and cancelling the old one — will cost in the years to come.

Speaking on RN “News Breakfast” Friday morning, Finance Minister and South Australian Senator Simon Birmingham echoed Prime Minister Scott Morrison’s claim the new submarine plan will “likely cost more than what we had assessed for the conventionally powered submarines”.

The Naval Group project had blown out to an estimated cost of $90 billion before delivering a single submarine, and had already drawn $2.4 billion of funding.

And Naval Group, which expressed its shock and disappointment to the news of Australia’s about face, may yet extract more money from the taxpayer.

The Australian Financial Review reports the contract’s break free could amount to $400 million.

“We’ve been quite upfront about what has been spent to date, but over the next few days and weeks, obviously [we] have to work through with Naval Group and other commercial partners to negotiate the out clauses of those contracts,” Birminghan said.

“And those figures will all be made public, just as what has been spent to date.”

The new project’s costs will become clearer over the next 12 to 18 months of assessment, he added.

Beyond the dollars and cents, Australia has expended a phenomenal amount of reputational capital on the deal.

While bolstering ties with America and the U.K., and by extension, their influence in the Asia-Pacific region, the AUKUS pact has incensed France.

Speaking to France Info, French Foreign Minister Yves Le Drian characterised the decision as “really a stab in the back”.

“We had established a relationship of trust with Australia, this trust has been betrayed… this is not something allies do to each other.”

In a joint statement with French Defence Minister Florence Parly, he also targeted America’s insistence on the deal.

It “signals a lack of consistency which France can only notice and regret,” they said.

Closer to home, China — the explicit target of the new AUKUS posturing — has expressed its serious concerns over the deal.

Addressing the media on Thursday, Chinese Foreign Ministry spokesperson Zhao Lijian said the submarine agreement “seriously undermined regional peace and stability, intensified the arms race and undermined international non-proliferation efforts”.

“The export of highly sensitive nuclear submarine technology to Australia by the US and the UK proves once again that they are using nuclear exports as a tool for geopolitical game and adopting double standards.

“This is extremely irresponsible.”