‘Hold their feet to the fire’: Pyne lashes subs builder

The Australian - - FRONT PAGE - BEN PACKHAM ROSIE LEWIS

For­mer de­fence min­is­ter Christo­pher Pyne has blasted France’s Naval Group for re­fus­ing to say whether Aus­tralian firms would get even half the work on the $80bn Fu­ture Sub­marines, call­ing on the Mor­ri­son gov­ern­ment to “hold their feet to the fire”.

Mr Pyne, who as min­is­ter signed off on the strate­gic part­ner­ing agree­ment with the com­pany, said Naval Group com­mit­ted to build­ing the boats in Aus­tralia, and “the ac­cepted stan­dard for an Aus­tralian lo­cal build is 60 per cent Aus­tralian in­dus­try con­tent”.

The in­ter­ven­tion came as De­fence Min­is­ter Linda Reynolds re­vealed she would raise com­ments by Naval Group Aus­tralia chief ex­ec­u­tive John Davis about short­falls in Aus­tralian in­dus­try ca­pa­bil­ity with her French coun­ter­part, Florence Parly.

Senator Reynolds said she was “dis­ap­pointed” by Mr Davis’s ex­plo­sive in­ter­view with The Aus­tralian this week and would dis­cuss “our very clear re­quire­ments to lift Aus­tralian in­dus­try ca­pa­bil­ity” with Ms Parly at a se­cu­rity con­fer­ence in Mu­nich on Fri­day.

The Aus­tralian can re­veal Mr Davis will be hauled be­fore the Se­nate’s eco­nom­ics com­mit­tee later in February to be ques­tioned over the com­pany’s views on the ca­pa­bil­i­ties of Aus­tralian de­fence in­dus­try play­ers.

Amid grow­ing fears in the de­fence sec­tor that they could miss out on lu­cra­tive sub­ma­rine con­tracts, De­fence and Naval Group is­sued a joint state­ment list­ing 137 “Aus­tralian com­pa­nies and or­gan­i­sa­tions” that had been awarded con­tracts on the project so far.

The list in­cludes the Aus­tralian branches of at least 26 for­eign com­pa­nies, in­clud­ing French

owned firms Safran De­fense & Elec­tron­ics Aus­tralia, Thales Aus­tralia and Bol­lore Lo­gis­tics Aus­tralia. De­fence said its def­i­ni­tion of an Aus­tralian com­pany was one “with an Aus­tralian business num­ber and Aus­tralian-based in­dus­trial ca­pa­bil­ity”.

The state­ment said De­fence and Naval Group would sys­tem­at­i­cally work with Aus­tralian in­dus­try to max­imise the in­volve­ment of lo­cal firms and en­sure sov­er­eign sus­tain­ment of the At­tack-class sub­ma­rine fleet.

It fol­lowed the Naval Group chief ex­ec­u­tive’s warn­ing in The Aus­tralian on Thurs­day that the ca­pa­bil­ity of Aus­tralian sup­pli­ers was pre­sent­ing un­fore­seen chal­lenges and the com­pany was un­sure whether the value of con­tracts to lo­cal firms would reach 50 per cent.

“We didn’t know the Aus­tralian mar­ket be­fore we joined the pro­gram,” Mr Davis said.

“Now we have a much deeper in­sight, and we recog­nise there is a lot more work to be done than we an­tic­i­pated.”

Mr Pyne, who works as a de­fence ad­viser for con­sult­ing firm EY, said in 2016 that up to 90 per cent of work on the subs could be done in Aus­tralia, but did not in­sist on a spe­cific Aus­tralian con­tent tar­get in the agree­ment with the ma­jor­ity French gov­ern­men­towned com­pany.

He stood by that ap­proach on Thurs­day, telling The Aus­tralian it would re­move com­pe­ti­tion from the process “and with­out com­pe­ti­tion, the navy is li­able to re­ceive a sub­stan­dard prod­uct”.

But he said 50 per cent lo­cal con­tent was “not sat­is­fac­tory”, and the gov­ern­ment should in­sist on at least 60 per cent. “The gov­ern­ment needs to hold their feet to the fire to en­sure they ful­fil their obli­ga­tion,” he said.

La­bor de­fence spokesman Richard Marles said if Mr Pyne wanted to en­sure suf­fi­cient op­por­tu­ni­ties for Aus­tralian com­pa­nies, he should have man­dated a tar­get.

“If Christo­pher has such strong feelings about Aus­tralian in­dus­try con­tent then he would have en­sured there was a com­mit­ment of a per­cent­age of lo­cal con­tent in the con­tracts he was re­spon­si­ble for sign­ing,” he said. “The Collinscla­ss (sub­ma­rine) which was ini­ti­ated un­der a for­mer La­bor gov­ern­ment, had a tar­get of 70 per cent, and it was ex­ceeded.”

De­fence In­dus­try Min­is­ter Melissa Price said man­dat­ing min­i­mum Aus­tralian in­dus­try tar­gets “fo­cuses on mea­sure­ments rather than proper Aus­tralian in­dus­try en­gage­ment to build sov­er­eign ca­pa­bil­ity”.

The chair of the Se­nate eco­nom­ics com­mit­tee’s naval ship­build­ing in­quiry, La­bor senator Kim­ber­ley Kitch­ing, said the com­mit­tee had re­solved to “ur­gently call” Naval Group and De­fence be­fore the com­mit­tee.

Cen­tre Al­liance senator Rex Pa­trick said the com­mit­tee needed to test the com­pany’s ap­proach to Aus­tralian in­volve­ment: “My big­gest fear is (it) is be­hav­ing as a sur­ro­gate for the French state.”

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