Main finding
- The committee has taken a measured and balanced approach to presenting
and analysing the evidence. The lack of data in particular caused the committee
to be cautious in reaching its main finding. The evidence, however, was clear
cut—Australia's naval shipbuilding base is well-established, and in recent
years has become more efficient, motivated and highly skilled. It has produced
a number of outstanding world-class vessels that showcase the capability of Australia's
naval industrial base. In assessing the four major components of Australia's
naval industrial base, the committee found:
- Australian primes have an improved track record;
- SMEs and international subsidiaries form a vibrant, innovative and
competitive network of suppliers;
- past and current investment in heavy engineering infrastructure outside
the traditional ship building yards places the industry on a sound but flexible
footing to meet future demand; and
- initiatives by both the public and private sector are tackling
the problem of skills shortages to ensure that Australia has the knowledge and
skills to support the industry.
- The committee believes that this capability, built up over recent
decades, is an asset to the nation which should be encouraged and supported by
government, but with stronger emphasis on competitive productivity gains over
the long term.
- Not only does this industrial base have the capacity and potential to contribute
to the maintenance of a self sufficient and self reliant naval shipbuilding
industry, it also contributes in many other ways to Australia's industrial
manufacturing base, the broader economy and Australia's national defence interest.
The range of benefits include, but are not limited to:
- strategic self reliance for the repair and maintenance of the navy
fleet and commercial shipping;
- greater self reliance and independence for national strategic
defence capability;
- improved assurance of dependability and flexibility flowing from
domestic capacity for ship modification or customisation for Australian conditions,
and the development of innovative solutions for any of the Navy's unique
requirements which might be considered appropriate and practical;
- increased gross domestic product from capital investment;
- reduced pressure on the balance of payments;
- enhancement of the labour market;
- expanded indigenous research and development (R&D), design,
production and management capabilities;
- the acquisition and development of valuable new skills,
manufacturing techniques and processes;
- extensive technology transfer across a broad spectrum of
activities;
- a strengthening belief in Australia's own capabilities and
confidence in its own ability to exploit opportunities;
- enhanced potential for exporting;
- the maintenance of capability to support vessels throughout their
operational lives, shorter turn around for repairs with in-service support; and
- greater foreign investment.
- The committee emphasises the need to retain a viable shipbuilding and
repair industry to ensure that the Navy has the ability to respond quickly to
urgent operational requirements. A reliance on off-shore industry to maintain,
repair, upgrade or modify navy vessels would put Australia's defence interests
at risk.
- Further, the committee accepts that domestic naval construction provides
greater assurance for ongoing effective technical support, maintenance,
refurbishment and emergency repairs—as opposed to post construction technology
transfer from overseas providers. There is a direct and strong connection
between a ship's build and acquiring the knowledge, skills, experience and
resources needed to support the ship especially when a rapid response is
required.
- When taking account of all the factors that are to be considered when
acquiring a naval vessel, the committee believes that it is in Australia's national
interest to maintain a viable naval shipbuilding and repair industry.
- This requires a commitment by the government to have Australia's naval
vessels constructed in Australia and for the government and Defence to adopt
measures that would ensure the industry remains efficient, innovative and
competitive.
- Government should not allow itself to be captured by overly dependent
and uncompetitive suppliers. The trade off between the benefits of self
reliance and self sufficiency must be carefully measured against the best
possible international benchmarks so as to avoid debilitating subsidisation of
inefficient practices, but at the same time promoting improved productivity.
- While the committee supports in country builds for naval vessels, the
committee notes that for virtual commercial ships where there is no strong
strategic defence interest, such as the Delos acquisition,
offshore purchase may be appropriate.
- The Committee believes that to assist the shipbuilding and repair
industry improve its productivity, it is imperative that government develop longer
term naval defence strategies from which can be derived economies of scale and
continuity of demand, without which industry will continue to suffer.
Recommendation 1
- The committee recommends that the government make a public commitment to
maintain Australia's naval shipbuilding and repair industry. This commitment to
be supported by improved long-term planning of naval shipping needs in order to
maximise economies of scale and provide continuity for the broad but
specialised design and construction skills required for a healthy industry over
the long term.
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