Presumably BAE Systems execs had a word in the PM’s ear about the Valley of Death but his only public utterance came in response to a worker who bailed him up in full view of the TV cameras asked him to sign a union petition calling for future naval vessels to be designed and constructed in Australia.
Rudd promised a re-elected Labor government would turn its mind to the flow of shipbuilding projects.
A week later he returned to Williamstown to vow the Valley of Death would be crossed. That could only mean there would be no or reduced layoffs of skilled workers in the period between the end of current shipbuilding projects around 2015 and the start of the next tranche.
This would be achieved by bringing forward construction of replacements for the navy’s supply ships HMA Ships Success and Sirius, with the government at a minimum committing to a hybrid build starting in 2015-16 - essentially what’s being done with the new landing helicopter dock (LHD) ships where hulls are constructed in Spain and superstructure and systems installed in Australia.
This plan wouldn’t be the first choice of unions or business but it would likely be far and away the cheapest option, given reports suggesting Spanish shipbuilders would happily build hulls at not much more than cost to keep their yards alive.
Rudd’s policy was of course speedily overshadowed by his far less meritorious proposal to relocate Sydney’s Garden Island navy base to Brisbane and thence by his election defeat.
Over the year the Coalition has had plenty to say on the Valley of Death and it’s likely they will match the Labor plan, although that’s not all that obvious in the Coalition’s official election campaign defence policy, launched with much fanfare during a visit to the Holsworthy Barracks outside Sydney.
“We will work with the Australian defence industry to avoid production troughs by cooperating closely with companies big and small to provide consistency, continuity and a long term focus to the purchase and sustainment of defence capabilities,” this policy says.
It doesn’t specifically mention shipbuilding, although it does undertake to make the decisions needed to ensue there’s no submarine capability gap within 18-months. Considering the extensive work already under way on the next generation subs, it’s not clear just how the Coalition policy will be that different from what’s already happening.
Submarines
It also says work on the new submarines will be centred around the South Australian shipyards. That’s been interpreted as a slap at South Australia but is likely a reflection of the political reality that plenty of others, among them states miffed at SA’s substantial success in attracting defence business, will demand a share of what will be a very large pie.
Opposition defence spokesman David Johnston gave some ideas on Coalition thinking when he squared off against Labor’s defence minister designate Mike Kelly in a debate organised by the Australian Strategic Policy Institute (ASPI).
“I am not going to stand here and make the sort of promises that you are seeing unfold this week,” he said. Johnston said the full plan would be disclosed in the Coalition’s new Defence White Paper in 18-months time.
This, he said, would be a consulted and a costed plan.
“It will be a plan that has a huge amount of commonsense in it because defence know what they need. We have to marry those needs up with the available budget. That is our real challenge,” he said.
Can those shipbuilders teetering on the brink of the Valley of Death really wait around until the first quarter of 2015 for the new Coalition defence White Paper - probably not. Expect some decisions sooner.
On the face of it, the good times for defence and the defence companies could be rolling round once again, just as they did under the Howard government, albeit after a long period of neglect.
Central to the Coalition government’s defence plan is its promise to restore defence funding, starting with no more cuts and rising to two per cent of gross domestic product (GDP) in a decade, that is by 2023. Labor said pretty much the same.
ASPI defence budget analyst Mark Thomson calculated this sort of generosity from the Coalition could give defence more than $50 billion in 2022, which would sure fix its budget woes.
Thomson says it’s entirely possible for Australia to spend two per cent of GDP on defence and many nations spend much more.
“Absolutely yes - it’s simply a matter of priorities,” he said in a recent analysis.
However the other competing priorities include health, education, national disability insurance scheme, environment, broadband, infrastructure, border protection, diplomacy, trade, agriculture and everything else that government does.
Then there’s achieving a budget surplus. You can be absolutely certain the Coalition will be under just a much pressure as was Labor to balance the books and we all know where that went. Further, the two per cent of GDP deadline is a few elections away and getting re-elected trumps principle every time.
Ever the spoilsport on grandiose defence funding aspirations, Thomson said there’s simply no logic for spending to be pegged at an arbitrary two per cent, which pays no heed to actual strategic needs and places defence at the mercy of the winds of economic fortune.
And with defence funding already decided, what on earth is the new Coalition Defence White Paper Meant to achieve?
“All that remains is for the Services to divide up the ever-expanding bucket of taxpayers money according to their parochial wish lists. And there’ll be plenty of money available to divvy up if the government keeps its promise,” he said.
So providing the Valley of Death is bridged, the shipbuilders can look to a rosy future with an abundance of work building new subs, frigates and patrol boats, right up to the point in a few decades time when these projects wind down and we go through it all over again.
