28 April 2016
by David Wroe

Submarine deal: Christopher Pyne wrongly claims Defence made call on all-Australian build

Building all 12 boats in Adelaide shores up the government's political prospects in Christopher Pyne's home state of South Australia.

Industry Minister Christopher Pyne has wrongly claimed that the decision to build all 12 new submarines in Adelaide – which is expected to save Coalition seats in South Australia – was based on a recommendation from the Defence Department.

Defence recommended that either an all-Australian build or a so-called "hybrid build" in which the first boat or two is constructed in France, would be acceptable.

The all-Australian build goes against the preference of the French company that has been selected as the partner on the $50 billion project. DCNS has said it would be quicker to construct the first boat or two in France before shifting operations to Australia.

It is understood this "hybrid" approach would also be cheaper than an entirely local build, though only marginally.

Building all 12 boats in Adelaide fulfils the Coalition's election pledge and also shores up the government's previously shaky political prospects in Mr Pyne's home state of South Australia, including his own imperiled seat.

Asked on ABC radio on Wednesday morning why the government had ignored the advice of DCNS that a hybrid build would be more efficient, Mr Pyne said the decision was based on a "clear" recommendation from the Defence Department.

"I'm a member of the national security committee and we received a recommendation from Defence which was very clear, and that was that the French bid was superior and that an all-Australian build with Australian steel, Australian jobs and Australian subs was a recommendation from the Department of Defence and that's the one that we took," he said.

"It was a very clear recommendation from Defence and we've followed that recommendation."
The all-Australian build for the submarines goes against the preference of DCNS.

Defence said both the all-Australian build and the hybrid option would be acceptable.

Mr Pyne's office later declined to stand by the remarks and referred questions to Defence Minister Marise Payne's office.

Mr Pyne is not a regular member of the cabinet's national security committee but rather, as with all cabinet ministers, attends the committee's meetings when issues within his portfolio are being discussed, as is the case with submarines and industry.

As part of the "competitive evaluation process", the bidders from France, Japan and Germany were each asked to submit proposals on building the submarines in Australia, their home countries or a hybrid of both.

The Defence Department assessed these proposals as well as which country had the strongest overall bid.

France was the standout winner in terms of the technical strength of its proposed Shortfin Barracuda boat. But Australian Strategic Policy Institute senior analyst Andrew Davies said he would be surprised if Defence had categorically advised against a hybrid build.

"Given the obvious advantages that could accrue from a hybrid option, and the international precedents for that approach, it would be surprising if Defence would write it off as an option," he said.