Transcript – Submarine Announcement – 2GB Radio with Ross Greenwood

Money News with Ross Greenwood

2GB Radio

27 April 2016

E&OE……..

Topic: Submarine Announcement

ROSS GREENWOOD:

Australia’s biggest acquisition of defence than it ever has in its history. This is the building of 12 new submarines worth $50b. It was expected it could have been a Japanese victory in regards to building these submarines, although the politics of it were that those submarines would have been built in Japan and not in Australia. In particular South Australia and we knew the shipbuilders around Adelaide were very concerned about the decision, that it could have gone to Japan.

Instead the decision today came down today in favour of the French. The French company DCNS is going to build submarines that are called Barracuda Submarines. Now, at the moment it makes a 4700 tonne nuclear powered Barracuda Submarine, but in this particular case, it’s going to offer Australia a 4500 tonne conventionally powered version of that Barracuda Submarine.

So it’s interesting to see that this is what has taken place. Initially there’d be some 1200 new jobs as construction work starts on those subs. Malcolm Turnbull today said it would be Australian jobs and Australian steel, also indicating that it could be the next five decades that Australia is servicing these submarines.

Now, a man who was instrumental in much of this is the former Defence Minister, Kevin Andrews. Now he’s the Member for Menzies, the former Defence Minister and shortly before he left office as Defence Minister, he made the observation that he believed that the submarines would be built by the French. He joins me now on the line. Many thanks for your time, Kevin.

KEVIN ANDREWS:

My pleasure, Ross.

ROSS GREENWOOD:

You did indicate just before you left your office that you thought that the French bid was likely to succeed. It has, why were you so confident at that time?

KEVIN ANDREWS:

Well, when I visited Cherbourg in Brittany where the French build their submarines, it was quite clear that this was a seriously impressive submarine and a very impressive manufacturing operation on the part of the French. We had a Competitive Evaluation Process which I set up and I made it clear to the French, to the Germans and indeed to the Japanese this was a genuine process. This is, as you said, one of the biggest acquisitions by Australia in the whole history of this country and therefore it had to be sure that it was a genuinely competitive process.

ROSS GREENWOOD:

The Japanese, of course, it was always thought that the deal to make these, build these submarines in Japan could have been linked with our Free Trade Agreement with that country. Today, the Japanese Defence Minister, General Nakatani, said that the decision is deeply regrettable; we will ask Australia to explain why they didn’t pick our design. Why didn’t we pick the Japanese design?

KEVIN ANDREWS:

Well as I made clear, and the Government made clear at the time, the number one priority by far ahead, any other one, was the capability or the capacity of the submarine. We need a submarine which has very long endurance, given where we are in the world. We need stealth so it can’t be detected and this was ultimately going to be the issue. Now, the French submarine has come out on top in relation to those matters and therefore other considerations are not as important.

ROSS GREENWOOD:

What about the Centre for Independent Studies, Simon Cowan the researcher there, says Australia will have to spend tens of billions of dollars more to build these submarines in Australia, out of Australian steel, this is a waste of taxpayer money. Is there any justification that Australia is going to have spend more money to make these submarines in Australia?

KEVIN ANDREWS:

There is obviously a premium to pay for building them in Australia versus buying them more or less off-the-shelf from overseas so there is a premium, but the question is always what the cost of that premium is. The Rand Corporation did a study for me last year into surface ships and found that if you’re talking about a 30-40 per cent premium that was unacceptable but if you had a 15-20 per cent premium that was acceptable. Particularly if you, at the same time, set up a continuous naval shipbuilding industry which is what this is all about.

ROSS GREENWOOD:

The other point is also in regards to the actual submarine from France itself. Can you just explain the background of this, as to why this Barracuda is going to be a diesel powered submarine as distinct from being the off-the-shelf nuclear submarine that the French already build?

KEVIN ANDREWS:

Well, in Australia obviously the nuclear debate hasn’t moved to the point where nuclear energy, let alone nuclear powered submarines is generally acceptable. If we were going to get a nuclear powered submarine we could have bought off-the-shelf the US Virginia Class Submarine, which is a nuclear powered vessel, but we’re not at that point. So, there was no off-the-shelf submarine from any other of the bidding countries. In the case of Germany their submarines are smaller and generally operate at shallower levels of water than we need in Australia. The French submarine was a bit bigger than what we needed as you explained in your introduction and also nuclear powered and the Japanese submarine was about the right size but there was questions about whether it had the endurance we need for a submarine from Australia. So, there had to be modifications to whichever one was the case but as I said at the outset, the French Barracuda Submarine which will be modified is a very impressive submarine which has long endurance and provided we can have the proper conventional power to it to replace the nuclear power, then it will be a very good submarine.

ROSS GREENWOOD:

And what were you told when you were Defence Minister about the stealth capabilities of a diesel powered submarine versus a nuclear powered submarine?

KEVIN ANDREWS:

Well, as a general rule of thumb, nuclear power is stealthier than conventional power but having said that even the existing Collins Class Submarines which are getting towards the end of their life are very stealthy submarines. They’re very stealthy for conventional powered submarines. So, you can have conventional power, I mean conventional power means you have a combination of, for example, diesel power and batteries and when you need that ultimate stealth, you’re going to be using the batteries.

ROSS GREENWOOD:

Just one other thing, I did note that at some stage there were reports suggesting if the French won this bid that they would want to make the first submarine in France, so that they would set up the design and make certain it was all working and then make the remaining submarines in Australia. But it seems today, the political message coming out is that all 12 will be made in Australia. What’s the rationale about that?

KEVIN ANDREWS:

Well, obviously if we can make them in Australia and the premium is not too high then that’s an ideal thing to do. The French actually manufacture submarines for other countries overseas and so they’ve obviously learnt from that experience as well. But, we’re looking at a period of what probably seven or eight years before we start construction of the submarine here in Australia, there’s a lot of work that is going to have to go into the design, of training of Australian workers.  We have good workers for the Collins Class but techniques have moved on since then. I saw the manufacturing operation at Cherbourg in France and it’s very sophisticated. Now, we’ll need all those years to actually ensure that we have a workforce that is totally up to date.

ROSS GREENWOOD:

Our former Defence Minister Kevin Andrews who was instrumental in the contracting of that tender to try and get those 12 submarines built and especially ultimately here in Australia and Kevin we appreciate your time here on the program.

KEVIN ANDREWS:

My pleasure, Ross.

Ends……