Under pressure to keep a multi-billion dollar contract to build new Australian submarines onshore, Defence Minister Kevin Andrews said the government would hold a competitive process to evaluate prospective builders.
“We will deal with this in a careful, cautious and methodical way,” Andrews told reporters Tuesday at government-owned defense contractor ASC in Adelaide. Australia needs a sustainable defense industry, he said.
Prime Minister Tony Abbott’s government has said it needs to replace its six Collins-class diesel electric submarines by 2026 in order to adequately patrol the Pacific Ocean and Indian Ocean. After winning power in September 2013, Abbott scrapped the previous Labor government’s plan to locally build 12 submarines, which the Australian Strategic Policy Institute estimated could cost A$36 billion ($28.1 billion).
“The need to maintain a healthy domestic shipbuilding industry is a really hot issue among voters in South Australia and the government’s decision seems to reflect that,” said Haydon Manning, a politics professor at Flinders University in Adelaide. Whatever the political or cost considerations, “when you’re buying high-tech defense equipment like submarines you need to get the best, safest equipment.”
Abbott on Monday survived a leadership challenge from within his own Liberal Party as his government’s popularity slumps amid voter disquiet at spending cuts and a slowing economy.
Andrews’ announcement of a “competitive evaluation process” follows media speculation Australia would bypass an open tender process to buy technology from Japan. He declined to specify if the government would invite Australian and international companies to bid for the project.
Abbott on Feb. 9 denied that his government had a “secret deal” to award the contract to Japan and said a final decision on the subs would be made before the end of the year.
Choosing Japan would be a bet that its technology will be workable and risks angering Australian voters who want the project kept onshore. Japan’s Defense Ministry has proposed the joint production of hulls for the submarines, the Mainichi newspaper reported last month, without citing anyone.
“You would expect the Australian government to want to get the best value; you would expect the Australian government to want to get the best product; and you would expect the Australian government to give Australian suppliers a fair go,” Abbott said in a Feb. 8 interview with the Australian Broadcasting Corp.
Japanese security officials met to discuss the possibility that the leadership turmoil surrounding Abbott could derail Japan’s interest in the submarine project, the Australian newspaper reported Feb. 7, citing a Japanese official it didn’t identify.
Andrews’ predecessor David Johnston previously said the government received “unsolicited proposals” to build the submarines from Japan, Germany, Sweden and France. Alongside Australia, countries such as Vietnam and India are expanding their submarine fleets as China seeks greater military clout in the Pacific.