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A government who truly cared about jobs would have kept the car industry going rather than spending hundreds of billions on defence materiel

When the Australian National Audit Office (ANAO) delivered a scathing report into the government’s $89 billion Naval Shipbuilding Plan, warning of high levels of risk, cost blowouts and schedule delays, it was met with a typically arrogant and inadequate response from Christopher Pyne.

“Key risks relate to the delivery of expected capability, program cost, ability to meet program schedules, and management of the industrial base. The Naval Shipbuilding Plan did not address the management of these risks in any detail,” the report said.

“Schedule compression presents such extreme risk that cost and schedule over-run is likely and proceeding on the current schedule has the potential for severe reputational damage to Defence and the government.”

Successful implementation of the overall Naval Shipbuilding Plan will “depend on actively managing the high to extreme levels of risk”, the ANAO found, adding that Australia’s experience in this area, alluding to the Air Warfare Destroyer Project, suggested delivering these projects on time and on budget was “very high expectations”.

The ANAO recommended “That Defence, in line with a 2015 undertaking to the government, determine the affordability of its 2017 Naval Shipbuilding Plan and related programs and advise the government of the additional funding required to deliver these programs, or the Australian Defence Force capability trade-offs that may need to be considered.”

But the recommendation has been rejected by Defence and Defence Materiel Minister Pyne.

“Building an Australian shipbuilding and submarine industry is a huge undertaking, it’s a nation building project so of course it contains risk,” Minister Pyne said.  “The alternative would be to send the $200 billion of taxpayers’ money we are spending on the largest build-up of our military capability in our peacetime history overseas, creating jobs and advanced manufacturing opportunities in other countries.”

“We make no apologies for deciding to invest in Australian-built ships, creating Australian jobs and using Australian steel rather than buying foreign ships off the shelf and using Australian tax dollars to strengthen the defence industries and increase employment and wealth overseas.”

This from the government who decided a fibre NBN was too expensive.

This from the government who refused to, in line with all other manufacturing nations, subsidise the car industry.

Holden received $1.8 billion in Commonwealth Government Assistance between 2001 and 2012.  During that time, they generated $32.7 billion in economic activity for Australia and paid $21 billion to other Australian businesses such as component suppliers.

That is a very big return on a relatively small investment.

Unlike the ship-building program.

Starting with the small fry, the cost of establishing a Naval Shipbuilding College to provide training to future shipbuilding workers has already blown out from $25 million to $62 million before they have even begun and ongoing operational costs for the College have not been considered or included in any costings.

The Offshore Patrol Vessels (OVPs) build was brought forward to avoid a so-called “valley of death” in naval construction after the Hobart Class Destroyer project ended.  But the report said there was no cost-benefit analysis done on whether accelerating the patrol vessel build was the best way to maintain a domestic workforce and that the accelerated construction of the OPVs and frigates added $5 billion-$6 billion to their cost.

For the OPV acquisition, “reliable sustainment cost estimates were not provided to the Government at second gate approval, and commercial arrangements between the selected ship builder and Australian shipbuilding firms had not been settled when the tender outcome was announced.”

The report also warns that “A key potential risk relates to any decision to integrate the Aegis Ballistic Missile Defense capability into the selected frigate, which would require significant development work and be a departure from the Government’s guiding principle of minimising unique Australian design changes.”

When the contract to design our future submarines was awarded to a French company, Malcolm Turnbull stressed the 12 submarines would be built in Adelaide and the project would create 2,800 Australian jobs.

Defence SA figures released in 2016 estimated that “In 2026-27, the workforce is forecast to peak at 5805.”

Then CEO of DCNS, Sean Costello – who has since quit – said “over 90 per cent” of the build would occur in Australia but, at Senate estimates in June last year, DCNS would not commit to that target, telling the Senate committee it was too early to say whether it could be met.

The company’s interim chief executive, Brent Clark, told the committee DCNS had “no formal agreement” with ASC and that the company intends to “absorb” ASC workers.

A report by DCNS executive Marie-Pierre de Baillencourt posted on the company’s subscriber-only website in 2017 noted the project would see DCNS Australia “create 2000 jobs”.

“DCNS Australia today has around 30 personnel…this will ramp up to 300 to 500 in 2019-20 and 2000 direct employees from 2021, the scheduled start date for production of the first submarine in Adelaide,” the stakeholder update read, according to a translation.

It’s a far cry from the glossy brochure DCNS put out as part of its bid for the Future Submarines design contract, which broke down “the roadmap to 2900 jobs”, of which the French company would occupy just 100 and ASC would account for 1700.

Despite such assurances and Christopher Pyne’s declaration last October that “the valley of death is over and we are now seeing an upturn in employment”, a few weeks ago the ABC reported that “Government-owned shipbuilder ASC is poised to shed up to 223 jobs from its Adelaide shipyard by June.”

In 2015, the government asked the US-based military research thinktank Rand Corporation to review Australia’s shipbuilding capabilities and the costs and benefits of government investment in the industry.  It found that production in Australia “involves a 30% to 40% price premium over the cost of comparable production at shipyards overseas.”

Furthermore, a report prepared by the Australian Strategic Policy Institute (ASPI) warned that rapid advancements in underwater military technology could make the RANs future submarine fleet obsolete much sooner than Australia’s defence ministry is anticipating.

In 2013-14, 7,950 people were working in shipbuilding and submarine and ship repair.  The demise of car manufacturing cost about 50,000 jobs.

We abandoned an established industry that used Australian resources, employed many Australians, and brought significant economic return, for an industry that might employ a few thousand, at huge expense, making military hardware designed by foreign companies that will probably only ever be used for war games.

If the shipbuilding is anything like the Rheinmetal contract to build the LAND 400 vehicles, there are no guarantees about benefits to Australia.

The $5 billion contract was supposed to create 350 new long-term jobs in Ipswich with the government claiming that “Overall, the contract could support more than 1000 new jobs” in the area.

That’s only $5 million per job – except we don’t have the expertise to build them so “the first vehicles will be built overseas to train staff in construction before the operation moves to Australia” – or maybe if it moves to Australia?

And they claim to be better economic managers.


34 comments

  1. Alpo

    “A government who truly cared about jobs would have kept the car industry going rather than spending hundreds of billions on defence materiel”….

    …. and that just about smashes the Coalition Abbott-Turnbull governments into pieces….

  2. diannaart

    Alpo it does not matter what we think or even know

    And they claim to be better economic managers.

    The LNP remains rigidly in the Goebbels School of repetitive brainwashing and with a complicit and corrupted MSM, evidence to the contrary of this mantra is rarely heard.

  3. Michael Taylor

    Seeing the vehicle manufacturing industry destroyed was good for the government in one way: they were able to bash and blame the unions for the industry’s demise. And didn’t they get mileage (no pun intended) out of that!

  4. Kaye Lee

    Speaking of trade unions, yet another case from the RC has been dropped.

    Let’s see…..

    The charges against CFMEU organiser Justin Steele were dropped as were the charges against the CFMEU’s ACT secretary, Dean Hall,charges against the CFMEU ACT official Johnny Lomax and the Queensland CFMEU assistant secretary Andrew Sutherland and a not guilty verdict for the NSW official Michael Greenfield.

    Now the charges against John Setka and Shaun Reardon have been dropped.

    As far as I am aware, the hundreds of millions spent on the RC, their dedicated police task force, and their many failed court cases, have resulted in one conviction with a suspended sentence.

    Meanwhile, Kathy Jackson continues to swan around enjoying her ill-gotten gains.

  5. Richard

    Off the topic I am not receiving any emails from John Lord.Have had trouble in the past it was with the AIM server Michael Taylor helped me in the past.

  6. Yvonne Robertson

    In a sane world I’d agree with all you have written and then some. It was Abbott’s plan to jettison the car industry and to have the subs built in Japan what’s more with US guidance systems.

    Strangely it is these little implanted words from ‘everybody’s darling’ Christopher Pyne which cause me to pause :

    “…on the largest build-up of our military capability in our peacetime history…”

    and which give me a deep sense of foreboding. What do the world’s leaders know that they’re not overtly telling us – rather pouring propaganda and fire and brimstone against so called “Terrorist threat” and China’s supposed overt and aggressive plans for world economic domination. Maybe they haven’t seen it either and in all their military museum building, have not learned the lessons of history. Right now, everything that goes on here and in comparable parts of the world has all the hallmarks of WW1 with its Militarism, Alliances, Imperialism and Nationalism which are, in hindsight, said to be the major pillars of the “War to End All Wars”.

    No time for cars or the needs of the civilians. We’re gearing for war baby! Lest We Forget – indeed!

  7. Michael Taylor

    Richard, John hasn’t posted for a few days. He’s having a well-deserved break. John puts in a big effort.

  8. Peter F

    ‘The LNP remains rigidly in the Goebbels School of repetitive brainwashing and with a complicit and corrupted MSM, evidence to the contrary of this mantra is rarely heard.’ It is interesting to note the massive turnaround in Malaysia now that the mass media is no longer hog tied to the ruling junta. It could never happen here, or could it?

  9. helvityni

    Off topic, I’m already missing John Lord, and still missing Joseph Carli…not everything has to be about politics; Oz politics of the day is so depressing, we need some relief…any kind…

  10. richard

    Michael/ thanks for reply.

  11. Chris P Bacon

    One would hope the subs are only used for war games, if they have to face a Russian Kilo or Lada class they’ll be expensive scrap metal.

  12. etnorb

    The really sad part about all this closing of our car industries is that every other country in he world that has vehicle manufacturing has always “boosted” them by Government grants or subsidies, so why did Australia not do the same? Bloody inept, lying, so-called “liberal” government at its stupidest, ” best”, as usual! Fucking liberal shits. Do not care about the economy or the workforce, because it does not fit with their plans for a Union free workforce, “slaves” to the almighty bloody liberals! BASTARDS!!

  13. John L

    I tend to agree with you, etnorb!

  14. PK1765

    BOTH should have been done… Kaye forgets the power of being a sovereign currency issuing Government… it doesn’t have an affordability issue as it is the issuer of the currency… Federal Governments of sovereign currency nations should never outsource their purchasing and spending or send supply and service contracts, as all that spending creates jobs for Australians and is how they introduce money into the economy… along with sending on welfare, healthcare and education. A Government running a country has NOTHING in common with running a Business…

  15. johnyperth

    Talk about better management of the economy, well, how about dramatically increasing debt?? I live in Perth, and, the Perth economy is in a complete mess!! Around 60 Billion in debt that was left by the last Barnett LNP government!! So the words from this LNP government that there are better at managing the economy is nothing but lies, but, at the same time every time I hear this, I just have to laugh out loud!! What!!??

  16. Terence Mills

    Kevin Rudd famously said he wanted to live in a country that makes things. Conservative commentators suggested that he would be happiest living in China.

    But Abbott with his commitment to opposing everything that Labor stood for saw this as a challenge and made sure that the auto industry had no future in this country.

  17. Terence Mills

    Kaye

    I prefer your statistics but I’ve just hear minister Craig Laundy say that there have been twelve criminal convictions and nine civil convictions arising from the RC.

    But, yes, it is quite incredible that after the civil action succeeded against Kathy Jackson and did all of the heavy lifting that she has still not appeared before a criminal court and seems to have delayed the case once again until 2019.

  18. townsvilleblog

    Kaye nobody could argue the accuracy of your article however the apathetic Australian public usually move on and convince themselves that at least Turnbull is not as bad as Abbott was, when in fact he is worse. Ultra right wing ideology determined the demise of the car industry but it has continued under Turnbull who has no authority over the party he supposedly leads. He seems content to allow the ultra-right wing faction to do what they like provided they keep him as Prime Minister.

    The power struggles occuring within the Liberal Party/LNP with regard to the ousting of women from the boy’s club mean that Turnbull himself could very well be under pressure soon. Like the ALP their factions will be the death of them, which is precisely why I expect Turnbull to call an early election before his factions get well enough organized to topple him.

  19. Kaye Lee

    That’s interesting Terry. I can’t find any record of convictions other than Fihi Kivalu which led to a suspended sentence. Can anyone point me to the others?

    townsvilleblog,

    Unfortunately, Labor are also battling internal factional wars. I am so sick of their power struggles. They seem to care more about that than doing their job.

  20. Christopher

    We were at our peak in the 90s with mandates throughout public and private sectors to buy Australian cars. We had Mitsubishi, Toyota, Ford and GM as the major players in what was a huge industry for this country.

    The 50k jobs lost are iirc just the direct jobs. Taking that many wage packets out of the economy has a huge impact on Geelong, Melbourne and Adelaide in particular and the real number of jobs lost would be in the 100s of thousands. All on a whim, a display of petulance. And, to be replaced by around 5000 jobs in SA building subs that we have already proven we can’t make properly.

    The industry wanted a very small subsidy indeed to maintain the jobs and the manufacturing capability we have now lost. Pales into what is being spent to prepare us for war.

  21. Wun Farlung

    Terence
    Laundy would have said that because the compliant MSM lets him and others get away with it
    ‘Union thugs case dissmissed’ doesn’t fit the LNP/IPA fairytale or sell newspapers to the sheeple
    As Kaye has linked (thanks Kaye) it’s bullshit.

  22. Wun Farlung

    The Submarine build would be welcome to the (reatively) few workers that do get work on the project but given the rapid advances in underwater automonous drones in the past decade all manned submarines will be obselete before the first of the new fleet is launched.
    Hardly a replacement for the automotive industry but pushing the carmakers out of Australia was an innovative and agile way of getting rid of thousands of pesky Union members

  23. Kaye Lee

    Wun Farling,

    I have rung Mr Laundy’s office for clarification. They took my number and said they would get back to me. I cannot dispute Mr Laundy’s statement. Perhaps the cases were just not reported on? Perhaps he is including cases that didn’t actually stem from the RC? Perhaps he is including cases against employers? Perhaps he is including cases brought by the unions themselves? Who knows? If I find out any more, I will pass on the info. We shall see.

  24. Wun Farlung

    Kaye Lee
    I can only find one as mentioned above although there are plenty of headline grabbing accusations that appear to be unfounded and little more than malicious gossip

  25. diannaart

    Wishing some kind of alarm would shriek whenever a politician told a lie – we wouldn’t get to hear very much and that has to be an improvement.

    Kudos to Christopher

    Cost of keeping car manufacturing compared to arms manufacture.

  26. Chris Rand

    Christopher, part of what kept the car industry going was an excellent organisation that oversaw the government fleet, called DAS fleet. It was closed up by Howard, or rather sold to his banker mates, who then buried the organisation (it still exists, highly crippled in canberra as a small outlet). Analysis during Howard’s time already showed the deal was costing us real money. but it also helped cost us an industry. poeple on the right claim we can buy in engineering from overseas, but with no mecantile fleet of our own, in a crisis who will bring us this engineering? Remember, a large part of the success of the Allies in ww2 was it’s mercantile marine. Here is the report into the sale of DASfleet. interesting reading into how NOT to sell government assets oh, by the way, a lot of the trouble with the subs was from the offshore component, and those subs have performed brilliantly against the US fleet in trials. hardy a failure https://www.google.com.au/url?sa=t&source=web&rct=j&url=https://www.anao.gov.au/sites/g/files/net616/f/anao_report_1998-99_25.pdf&ved=2ahUKEwj5w9O32ovbAhWEXrwKHVS3BlYQFjAAegQICRAB&usg=AOvVaw2dKrg6iZ54hv5pBArlJ7PJ

  27. Andreas

    And all of that to secure Chrissie’s seat!
    Now there’s a “clever country”…

  28. DrakeN

    Wun Farlung, I suspect that as well as the technology of these vessels already being well understood by other nations worldwide, your reference to autonomous underwater drones is aposit.
    I am informed that such machines already exist and are being constantly improved, such that deployment by unmanned aerial vehicles and control via satellite is imminent.
    Hybrid intercontinental aerial missiles/rouvs are also a technical probability.
    The purchase of the Joint Strike Fighter is also a white elephant which will be a heavy drain on our foreign currency exchanges.
    The country with the greatest resources, human and material, – China – is becoming well placed to make the efforts of the USoA to remain dominant in world affairs somewhat ineffective.
    But with a Government with its military thinking firmly ensconced in the 1950s and a determination to return our society to the Dickensian period in history, there is little hope of rational decision making.

  29. Terence Mills

    Kaye

    I assume that Laundy’s office did not get back to you which is strange as no doubt they would have briefed him before the ABC RN interview which was flagged in advance to be about the collapse of the union charges.

    For anybody who didn’t hear it, this is the ABC RN interview where Laundy stated that there had been twelve criminal convictions and nine civil convictions : http://www.abc.net.au/radionational/programs/breakfast/blackmail-charges-against-cfmeu-bosses-dropped/9770178

  30. Kaye Lee

    You are correct Terence, they did not get back to me. I will try again today and maybe follow up with an email. I would like to know the truth of the matter.

  31. Kaye Lee

    An update on my request for further information from Mr Laundy…

    A second phone call, where the advisers were once again unavailable due to being in a meeting, was met with the same response – they will ring you back. In the mean time I have sent the following message to Mr Laundy…

    “Dear Mr Laundy,

    On 17/5/2018 on ABC RN you stated that there have been twelve criminal convictions and nine civil convictions arising from the trade union RC.

    Could you please provide a list of those convictions or the source from which you derived that information?”

    I have learned, don’t hold your breath whilst waiting for a response.

  32. Florence Howarth

    The CFMEU cases were dropped because evidence put forwarded to TURC. which like all evidence against CFMEU was taken at face value. Alternate evidence answering employers allegations was automatically discounted. The evidence from Boral & suspects Grocon has proven to be fraudulent.

    The courts have or are in the process of rejecting most of what Heydon accepted.

    There were a couple in Western Sydney that has been charged, likely to be convicted. Nothing to do with unions in general. I got the impression that Heydon wished they would go away. There is no way their alleged crimes would be detected in the normal course.

    It is time for the MSM to start focussing on why these cases are not even getting to court, Time for Cash to say it is nothing to do with her. Is a Victorian police matter. It was Heydon who referred he matters to FWC & police.

    She should be concerned what came out of TURC were nothing more than unfounded allegations. It was this government that ensured the men, some as they left the hearings, were arrest with full fanfare of the media. Full theatrical effect.

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