Malcolm Turnbull and Defence Minister Marise Payne announced at a 12.30pm media conference that construction on the contentious build – which former PM Tony Abbott had indicated would take place in SA – would commence at Osborne from 2018.
However, it will relocate to shipyards in Western Australia from 2020, when ASC begins construction of the Future Frigates program – which Turnbull said was “estimated to be worth more than $35 billion and will directly create over 2000 jobs”.
Turnbull announced “the first pass approval for offshore patrol vessels with construction to begin in Adelaide in 2018, following the completion of the air warfare destroyers program”.
“Then the OPVs’ construction will transfer to WA when the future frigate construction begins in Adelaide in 2020,” he said.
“This is very important to maintain that skills base in Adelaide.”
Chris Burns from SA’s Defence Teaming Centre told InDaily the announcement was “good news” for SA, and consistent with the 2015 RAND report on Australian naval shipbuilding.
“It will preserve the workforce and allow us to move on to building frigates, which is consistent with what we’ve been asking for,” he said.
“The effect of doing that is not about just saving jobs, but you effectively get the first four OPVs for free because [you avoid] the cost of losing the workforce and rebuilding it.
“It’s a very positive outcome.”
Asked if he felt the Government had now delivered on its pledge to provide the OPV contract to SA, Burns said: “Yes, they have.”
“And they’ve done it consistent with the recommendations of their own report, and that’s what we’ve been asking for,” he said.
However, SA Senator Nick Xenophon sounded a note of caution, saying the announcement “still leaves SA in a state of uncertainty” until the contracts are signed.
“There’s no certainty about what percentage of the build will actually be in SA… it could be that the local content is driven down to an absolute minimum,” he told InDaily.
“Hundreds of millions of dollars will be wasted redirecting the vessels to WA… this is a reckless decision in economic terms, and in terms of jobs and national security, because you’ll get inefficiencies by shifting it.”
He said any money put towards the transfer is “money that could be directed to supporting Arrium and manufacturing in Australia, which is facing a crisis point”.
The fleet of 12 offshore patrol boats will replace the smaller Armidale-class vessels, which were built in Western Australia. Turnbull said three designers had been shortlisted for the job, two from Germany and one from the Netherlands.
“This program is estimated to be worth more than $3 billion and will create over 400 direct jobs,” he said.
The Weatherill Government has raised fears recently about the future of the contract, which Abbott had said would be “centred on SA”.
However, Payne send shockwaves through the local industry in February when she a Senate Estimates the OPV evaluation process “did not require that they were built in Adelaide”.
The OPV contract has been regarded by industry insiders as the only way of retaining a local workforce as the AWD project winds down, and avoiding a so-called “Valley Of Death”.
SA’s Defence Industries Minister Martin Hamilton-Smith told InDaily: “This is a really great day for jobs, and I think underpins the State Government’s campaign led by the Premier.”
He said “18 months ago it looked like we were going to lose the lot”, but that today’s decision “will keep up to 800 jobs going down at Osborne to cover the gap”.
“It’s a huge win for SA,” he said.
However, he repeated calls for assurances on a local build for the Future Submarines project, saying: “What’s essential is that they rule out an overseas build or a hybrid build.”
“I don’t think they could go to an election without having that clarified,” he said.
Turnbull was tight-lipped, though, on questions about Australia’s next-generation submarines, with cabinet’s national security committee set to begin the formal process of considering bids from Japan, Germany and France.
The PM batted away questions on the issue by telling reporters in Canberra: “We’re talking about surface vessels today.”
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