Philip Smart | Adelaide
A new South Australian BankSA defence industry trends bulletin suggests that despite expected job losses and little momentum before the early 2020s, South Australia is well placed to benefit from the construction of Australia’s next submarine fleet, even if they are sourced overseas.
The bank’s latest economic bulletin, simply named Trends, was compiled in conjunction with Deloitte Access Economics. It “steps beyond the current debate and speculation about the future of South Australia’s defence manufacturing sector, and considers a range of possible outcomes and their impact on the State’s economy”, says BankSA.
The Trends report states that it is likely that two thirds of all costs associated with outfitting and maintaining the future submarines must ultimately occur in Australia, in addition to other work associated with the Future Frigates and Pacific Patrol Boat programs.
“Building submarines in Adelaide would be a great outcome for South Australia’s defence industry, yet it’s pleasing to note that our economic analysis has revealed that so too would building the submarines in Japan or Germany, if South Australia secures the outfitting and maintenance activities,” said BankSA Chief Executive Nick Reade.
The Trends bulletin suggests that a shipbuilding “Valley of Death” worst-case scenario, where every job is lost, would mean losses of the order of 2,000 to 2,500 people.
“Yet amid the heated debate, it is easy to forget the complexity of defence spending and its role in the South Australian economy,” says Trends.
“Decisions around the Future Submarines and Future Frigates programs are important for the State, and the ‘Valley of Death’ will present a significant challenge to the local shipbuilding industry, but that isn’t cause for despair.”
Mr Reade said South Australia has a strong set of competitive advantages in defence manufacturing and is globally competitive in many related fields. However, the local sector will be forced to adapt in the face of new developments and challenges.