Politics is stifling effective management of important defence industry work.
Australia is embarking on a massive naval shipbuilding program devised at a time when the world looked much less threatening than it does today.
Costing around $115 billion, the 12 Attack Class submarines and nine Hunter Class frigates represent the bulk of the new shipbuilding work and will be constructed simultaneously at the Osborne Naval Shipbuilding Precinct in South Australia.
Both programs are still in their design phase and, provided there are no technical or construction glitches, the first frigate is expected to come into service in the late 2020s, with the first submarine following a few years later.
I have always thought simultaneous construction at Osborne was a high-risk strategy that would overload SA’s skills base, and cause issues between the two prime contractors and the Department of Defence.
The department has investigated a variety of contingency plans to minimise some of the risks, including the relocation of all Collins Class submarine maintenance work from SA to the Australian Marine Complex, at Henderson, near Perth.
The six Collins Class subs, which are all based in Perth, entered service between 1996 and 2003.
Currently, ongoing maintenance involves four-yearly mid-cycle dockings, which take place in Western Australia, at HMAS Stirling and at the Henderson complex.
Major full-cycle dockings are required every 10 years and take two years to complete.
This maintenance work is currently undertaken at the Osborne facility, but I believe would be best shifted to WA.
Australia’s total shipbuilding and maintenance repair overhaul sector employs around 14,000 people.
By the mid-2020s, the new submarines and frigates will be in full construction at Osborne, requiring 5,000 skilled construction workers in addition to the 700 currently on deck for Collins Class full-cycle maintenance.
Thousands more will be needed in offsite supply chain and related industries throughout the build cycle.
While an extra 5,000 workers based at the Osborne facility may sound manageable, the truth is that highly skilled workers capable of undertaking complex naval work are difficult to find at the best of times.
During construction of the Collins Class submarines and the Anzac Class frigates between 1992 and 2006, the industry struggled to develop sufficient capacity and capability in its workforce.
This occurred even though the federal government of the day had the common sense to split the construction between Victoria and SA.
Put simply, if the Collins Class full-cycle maintenance stays at Osborne, at least 5,700 skilled workers will be required for the new submarine and frigate builds, and the 10-year subs refit.
But if that maintenance work moves to WA, the department will need just 5,000 workers in SA.
Of course, they will still need to deal with two technologically divergent and culturally different contracting teams building the frigates and submarines at Osborne.
These build teams will be competing for a similar workforce, suppliers, space, safety, industrial relations, extra expenses, and government decisions.
The government’s own research shows that complex project management is seldom done well on any global project other than Australian defence projects.
No-one needs to tell the Department of Defence that adding the Collins Class full-cycle maintenance program into the Osborne construction site will increase project risk. That is just contract management 101.
So why is the federal government dragging its feet on a decision to move the maintenance to WA?
I don’t think the delay has anything to do with national security.
Prime Minister Scott Morrison seems more engaged in a political exercise, concerned about whether two key balance-of-power senators from South Australia’s Centre Alliance will disrupt his legislative agenda if he moves the maintenance to WA.
Senator Rex Patrick from the Centre Alliance has been warning the government that moving the submarine maintenance could jeopardise his willingness to cooperate on legislation.
The nation needs the federal government to get on with the job of explaining to Senator Patrick that the billions of taxpayer dollars being tipped into his state are creating thousands of permanent SA jobs.
There are genuine concerns that skill shortages in SA will lead to delays and a reduction of Australian industry participation.
Every one percent of submarine work shifted overseas is $800 million worth of work lost to Australian industry.
We should all be concerned that power politics may end up keeping the Collins maintenance in SA.
Let us hope, however, that pragmatic contract management wins the day and the Collins Class maintenance is moved as far away from the Osborne construction site as possible.
Hopefully, our political leaders will have the courage to shift their gaze away from the ballot box and towards the west.
David Kobelke spent 15 years managing CCIWA’s Australian industry participation unit.
