12 submarines at $150 billion
Australia's new submarine program will bring significant technological and economic benefits says Malcolm Turnbull.
PT0M55S 620 349The upcoming purchase of submarines is of special interest to South Australians but the price tag, the intended purpose of the subs and the risks associated with the purchase should make it of interest to every taxpayer in Australia.
In my early years in the Senate Labor botched, badly, a tender for Coastwatch services. The whole thing was a disaster from beginning to end. The Commonwealth ditched its regular supplier and selected a new provider, Amann Aviation. The short version of the ugly saga is that Amann just wasn't up to the task. It didn't have, and couldn't get in time, the necessary aircraft. Experience and reliability are crucial when you're talking big dollars, and Amann didn't have it. The Commonwealth not only botched in choosing Amann, it botched getting out of the contract as well.
Tony Abbott's views as to what was proper when outsourcing were quite different to mine.
The lesson learnt for me is that unless the decision maker looks at everything that is relevant, and not just prices and promises, you're in risky territory. In the case of the subs, with billions at stake, my head is ringing with beware buttons beeping ... loudly.
There's speculation the Australian government will announce the successful bidder for the submarine contract within days. Photo: Damian Pawlenko
In the early days of the Howard government I had responsibility for the biggest tender the Commonwealth had done outside of Defence: the outsourcing of the work done by the Commonwealth Employment Service. It was enormous, complex, and went without a hitch. The bureaucracy and the advisers in my office did a great job.
At the time, Tony Abbott was a parliamentary secretary, and while he had no responsibility for the tender he did have views. His views as to what was proper when outsourcing were quite different to mine.
In any event, when Abbott as prime minister visited Japan, almost everyone thought a deal for the subs had been done, sotto voce. Prime Minister Abe looked very confident. I didn't like the smell.
Japanese Prime Minister Shinzo Abe with prime minister Tony Abbott: a done deal? Photo: AP
No purchase, let alone one of this strategic importance and cost, should ever be done other than with proper process and transparency. Two blokes behind closed doors does not proper process make. I'd love to know what was said by who to whom.
Did Abbott do the unforgivable, namely step into the patch of two ministers without warning and/or without subsequent full and frank disclosures? The Foreign Affairs and Defence ministers were entitled to know everything.
This had all the hallmarks of, if not a captain's pick in the making, then at least the captain making his views clear. Or am I mistaken? Was this all media hot air?
Julia Gillard with Barack Obama: cringeworthy.
The Japanese do not have a history of technology transfer for submarines. Why would we want to be the guinea pig for that tortuous exercise? That's not to say it can't be done, but everything you do is harder the first time. The bucks are just too big to be bungling around learning about cross cultural cleavages. In other words, while they might have great subs, they are like Amann Aviation in a key aspect of the deal: technology transfer.
Putting aside the technical naval architecture issues, there's one small design mindset that the Japanese would need to overcome: our sub-mariners are bigger than theirs. It seems stupid to mention it, but they have to live in these things and their well-being and comfort should be high on our priority list.
Defence contracts have a way of getting out of hand. Go with a supplier, like Japan, that's on its first run and you are taking an incredible chance for no gain. If our government chooses to take that risk it would have to give us some pretty good reasons.
Going with one of the subs bidders with a proven record in technology transfer and in delivering on time within budget would be far more prudent.
There's been rumours about a wink and a nod from Uncle Sam in favour of Japan. If that is so, and I doubt it, we should politely suggest the Americans go first. Let them show us how easy it would be. Prime minister Julia Gillard's cringeworthy speech to Congress is still weighing on my heart. Remembering her childhood wonderment at the moon landing, she told them she thought then that they could do anything and – wait for it – she still thought that. Clearly the inability to care for thousands of their own after Cyclone Katrina had slipped her mind.
I am a big fan of the US, but we are friends not serfs. In fact we are in a great position as friends of both China and the US to encourage them both to realise they need to find a way share power in the Pacific. The US may not warm to that but reality will eventually dawn. Equally China may harbour top-dog ambitions and her domestic politics and history make a good relationship with Japan problematic. The reality will dawn on them in the way that the US has now built a decent relationship with Vietnam. There will have to be a dignified place for all.
In these circumstances, buying subs from Japan may send an unwelcome message to China. We might regret that. It would be stupid. Best, for that reason, to look to Europe.
The upfront cost of the subs is just the start. Over their life there will be plenty of spare parts and replacements. If you've got a home printer you'll understand, every time you buy new ink cartridges, that the cost over the life of the printer is very relevant. We need to understand an over-the-life cost comparison across the bids for the subs contract.
The subs have to be built here and not just because it's an election year. It's because of both the initial jobs and the skills transfer. These might seem like simple and obvious points. It's just that these sort of things have been overlooked before. Just look up the Amann Aviation scandal.
Amanda Vanstone is a columnist with The Age and was a minister in the Howard government.
54 comments
More comments
Comments are now closed