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Hypocritical debate over ASC's capacity to even 'build a canoe'

By Brendan O'Reilly - posted Monday, 1 December 2014


Defence Minister, David Johnston was widely censured by all sides of politics (even his own colleagues) for saying that he would not trust the government-owned Australian Submarine Corporation (ASC), to build a canoe. He subsequently apologised. The apology, however, was so much at odds with his original statement that it was widely regarded as insincere. His apology included the remarks:

I regret that offence may have been taken. I of course was directing my remarks at a legacy of issues and not the workers in ASC whom I consider to be world class.

In my view no politician on any side comes out of this debate with any honour.

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I initially applauded Minister Johnston's candour. He basically said what most politicians, defence analysts, and bureaucratic insiders believe about ASC.

I was subsequently turned-off by his about-face under pressure, though I felt sorry for him. His promise before the last election that a Coalition Government would build Australia's new submarine fleet in Adelaide (a promise which he now seemingly wishes to break) does not sit well with his controversial remarks either.

South Australia's Liberal Party leader Steven Marshall described the remarks as "deplorable". "Unless he can rebuild some connection, some rapport, some confidence within the industry, then I don't think he has any alternative (but to resign)," Steven Marshall told reporters. Three South Australian liberal senators and some SA MPs (e.g. Christopher Pyne) also expressed criticism of Minister Johnston.

Labor's Senate leader Penny Wong has labelled the minister a disgrace. "Does anyone believe after his performance that this minister will make a fair and unbiased decision when it comes to the future submarines project?" she asked. "No-one in Australia believes that, no-one in this Senate believes that".

PM Abbott claims that despite a $350 million budget blowout on the air warfare destroyer programme the Government is working closely with ASC to improve shipyard performance and productivity. In remarks that come across more as politic than either believable or sincere, the PM reportedly also said that "It is early days but the government is confident that ASC and its partners will successfully turn the corner on this important build...".

The real reason why Government members and SA Liberals were upset by Minister Johnston's remarks is that South Australia is set for two by-elections (in the Fisher and Davenport state electorates) in the next couple of months, and the Party is afraid of losing votes in that state. In this context Johnston was probably politically naive (It was ok for him to think it but he was not supposed to say it.) and he gave Labor a "free kick" opportunity.

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In purely political terms nobody really expected Labor to miss an opportunity to score political points. At the same time most of those leading the attacks on Minister Johnston (especially former Finance Minister, Penny Wong) would have known that much of what Johnston originally said was plainly true.

Sydney Morning Herald journalist Paul Sheehan earlier this year summed up ASC's proposed submarine construction as:

...one of the biggest, most dysfunctional, most wasteful and most misguided proposed programs" ...."Not a word has there been about this gold-plated, $30 billion sinkhole....

ASC is a basket case. Its fingerprints are all over a sequence of expensive failures. It cannot be reformed, does not deserve to be saved and should be killed off before it can do any further damage to national security.

The idea that Australia should produce a dozen submarines in South Australia, at a projected cost of about $3 billion a vessel, is madness. One only need look at the Collins-class submarines. They were manufactured in South Australia by the Australian Submarine Corporation at a cost of about $1 billion per submarine - far more than projected. The navy has never had more than two of the six submarines in service at any time.

The new submarines will have a unit cost that dwarfs the Collins-class subs, if built here, or roughly three times the cost of acquiring the submarines from foreign shipyards. The navy disputes this disparity but history does not.

The grand South Australian submarine project is an unaffordable hold-over from Kevin Rudd's unbudgeted grandiosity. The government will save more than $20 billion if it brings this project down to size and offshore".

So there we have it.

While not everyone will publicly agree with Paul Sheehan, I know enough people in the services and in the Defence bureaucracy to be certain that ASC is definitely not held in high regard and that, if our Navy seeks value for money, it should buy its submarines overseas.

So what do I think of the barrage of criticisms of David Johnston's original remarks and his subsequent apology. Frankly, the whole hypocritical debate from all sides makes me want to vomit.

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About the Author

Brendan O’Reilly is a retired commonwealth public servant with a background in economics and accounting. He is currently pursuing private business interests.

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