AUSTRALIAN GOVERNMENT UNDER PRESSURE TO HOLD SUBMARINE TENDER
06 Nov 14. Reuters reported that Prime Minister Tony Abbott is under pressure from regional officials, labour unions and members of his own party to have an open tender to build Australia’s next-generation submarine, which would be a blow to Japan and the United States.
Reuters reported in September that Australia was leaning towards buying as many as 12 off-the-shelf stealth submarines from Japan in a deal that would net it a major portion of Australia’s overall A$40 billion ($34.3 billion) submarine programme.
Senior U.S. naval officers have been enthusiastic about the possibility of Australia partnering with Japan, which would give the three navies increased interoperability at a time of greater American strategic focus on Asia and as China’s navy grows rapidly.
But strong interest from European manufacturers willing to build submarines in Australia, a scenario that would bolster the country’s anaemic manufacturing sector and mollify the government’s blue collar critics, is making an overseas purchase a hard sell.
Buying the vessels from Japan could threaten Abbott’s hold on power at the next election, said Martin Hamilton-Smith, the defence and trade minister for the state of South Australia, which is home to 27,000 defence-related jobs including 3,000 in shipbuilding.
“It would be a very brave government that went to a federal election in around 18 months time arguing that it was a good thing to export this amount of work overseas while the other side of politics was arguing that it was a good idea to spend that money in Australia,” Hamilton-Smith, who defected from Abbott’s Liberal Party this year to become an independent, told Reuters.
Two sources with knowledge of Japan’s discussions with Australia said Tokyo might not take part in a tender if it meant getting embroiled in a bidding war, adding that Japan’s diesel-electric submarines were the only ones big enough to fit Australia’s needs.
If Australia wanted those vessels, Japan was ready to cooperate, said the sources, who declined to be identified because they were not authorised to speak to the media.
A separate senior Japanese source said if Australia held a tender, Tokyo would see what kind of vessel it wanted before deciding whether to bid.
Sources have previously said Australia was considering replacing its six ageing Collins-class submarines with vessels based on the 4,000-tonne Soryu-class ships built by Mitsubishi Heavy Industries and Kawasaki Heavy Industries.
Such a deal would mark Japan’s re-entry into the global arms market, just months after Prime Minister Shinzo Abe ended a ban on weapons exports as part of his efforts to steer Japan away from decades of pacifism.
For Abbott, the deal would avoid the costs and risks of developing a homegrown champion from scratch, after the locally made Collins-class submarines were panned for being noisy and easily detected.
EUROPEANS EYE AN OPENING
Australia says it is mulling several options for the submarine programme, including building the vessels at home or overseas, and will make a final decision in a broad defence review expected early next year.
Defence Minister David Johnston said last month there was no time for an open tender, and that Australia faced a “capability gap” if it did not get new submarines in the water quickly.
A spokesman for Johnston said the cabinet would use a “two pass” process to decide the project’s future, in which cabinet discusses the matter twice before reaching a decision based on advice from defence chiefs and procurement experts.
Abbott had previously pledged the submarines would be built in South Australia, where unemployment exceeds the national average, but his government began back-pedalling in July, signalling cost and schedule were paramount.
That shift coincided with a flurry of ministerial exchanges with Japan and an agreement on military equipment and technology t