Sea Platforms

Australia's Johnston says he wouldn't trust ASC 'to build a canoe'

25 November 2014

Key Points

  • Australian Defence Minister David Johnston has told the Senate that he wouldn't trust state shipbuilder ASC 'to build a canoe'
  • Johnston made the comments after being asked about the status of the AWD programme, which sources have said is up to AUD800 million over budget and rising

Australian Defence Minister David Johnston has slated the performance of the government-owned ship and submarine builder ASC, saying he would not trust it "to build a canoe".

His remarkably candid assessment came as the government decides whether an as yet undisclosed type and number of replacements for the Royal Australian Navy's (RAN's) six ASC-built Collins class submarines should be constructed in Australia or overseas.

Adelaide-based ASC, the responsibility of the Department of Finance, sustains the Collins-class fleet and is partnering with Raytheon and Australia's Defence Material Organisation (DMO) in construction of three Air Warfare Destroyers (AWDs), an AUD8.5 billion (USD7.4 billion) project that is over budget and behind schedule.

Responding to opposition questions in the Senate on 25 November, Johnston said ASC was AUD350 million over budget on the AWD builds, adding: "I'm being conservative. It's probably more than AUD600 million, but because the data is so bad I can't tell you.

"You wonder why I'm worried about ASC and wonder what they're delivering the Australian taxpayer? You wonder why I wouldn't trust them to build a canoe?"

Analysis

Informed sources told IHS Jane's in mid-October that the projected cost of the AWD programme was about AUD800 million above budget and rising.
Notwithstanding a pre-election pledge that the Future Submarine would be built in Adelaide, the Liberal-National Party coalition headed by Tony Abbott has been steadily distancing itself from this undertaking.

On 12 November Johnston told a Submarine Institute of Australia conference that Australia did not currently have a complete submarine design or production engineering capability, and pointedly avoided any reference as to where the Future Submarine might be built.

On 20 September ASC's interim CEO told a Senate Estimates hearing the company believed it could build 12 new submarines for between AUD18 billion and AUD 24 billion.

These figures were described as "meaningless" by Finance Minister Mathias Cormann because the government had not yet told ASC what it wants in the new submarines.

The Abbott government is reportedly mulling the acquisition of Japanese Soryu-class submarines at a cost estimated in defence circles at between AUD20-30 billion.

However Germany's ThyssenKrupp Marine Systems (TKMS), Sweden's Saab and France's DCNS in partnership with Thales have also expressed interest in making bids if the government opts for an international tender. All three have reportedly indicated a price tag of about AUD20 billion and have said they would support local production, but without specifying to what extent.



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