This Quick Guide provides an overview of the Australian naval shipbuilding industry since the 2013 federal election. Specifically, three key questions are addressed:


	What is the current status of naval shipbuilding and sustainment within Australia?
	What are the positions of Australian political parties and independents regarding naval shipbuilding?
	What is likely to be done in the future

Nathan Church

English

Analysis and Policy Observatory (APO)

 ISSN 2203-5249 
 
 
 
 
RESEARCH PAPER SERIES, 2014–15 11 AUGUST 2014 
Australian naval shipbuilding since the 2013 election: a 
quick guide 
Dr Nathan Church 
Foreign Affairs, Defence and Security 
This Quick Guide provides an overview of the Australian naval shipbuilding industry since the 2013 federal 
election. Specifically, three key questions are addressed: 
• What is the current status of naval shipbuilding and sustainment within Australia? 
• What are the positions of Australian political parties and independents regarding naval shipbuilding? 
• What is likely to be done in the future? 
 
What is the current status of naval shipbuilding and sustainment? 
Australian naval shipbuilders are currently focused on two main projects, completion of the Canberra Class 
Amphibious Assault Ships (more commonly referred to as Landing Helicopter Docks—LHDs) and the ongoing 
manufacture of the Air Warfare Destroyers (AWDs).  
Landing Helicopter Docks 
Peter Donaldson’s article in the January edition of Naval Forces provides a detailed summary of the LHDs. The 
first LHD, NUSHIP Canberra, began initial sea trials in March 2014 while the second LHD, NUSHIP Adelaide, was 
delivered from Navantia’s shipyard in Ferrol, Spain, a month prior for fit-out in Australia. It has also been 
reported that the Australian Government is considering purchasing a ‘short take-off and vertical landing’ variant 
of the Joint Strike Fighter, which could operate from the LHDs. At a press conference in early June 2014, Prime 
Minister Abbott indicated that such a proposal would be addressed in the 2015 Defence White Paper. Later that 
month it was also announced that Australian company Kellogg, Brown & Root Pty Ltd had been awarded a five 
year sustainment contract for the LHD program. 
Air Warfare Destroyers 
Following the 2013 election, the Government initiated a review into the AWD program, which was reportedly 
suffering significant delays and cost overruns. Although the review’s full report has not been made publicly 
available, in early June 2014 the Government released a summary of the review’s findings. Additionally, the 
Australian National Audit Office released its report on the AWD program in early March 2014. Both reviews led 
to the establishment of a formal ‘Reform Strategy’ with commercial and legal advisers announced in mid-June.  
Collins Class submarine sustainment 
Maintenance of the Collins Class submarines is conducted at both Osborne in South Australia and Henderson in 
Western Australia, predominantly through ASC, a proclaimed Government Business Enterprise. In April 2014 the 
Government released the fourth and final review into Collins Class sustainment. Following the report’s release, it 
  
 
Australian naval shipbuilding since the 2013 election: a quick guide 2 
was determined that the improved performance of the submarines could facilitate extending the life of the 
Collins Class submarine, allowing more time for their replacement to be developed without a capability gap. 
Specifically, it was reported in mid-April 2014 that the Defence Minister was confident use of the Collins Class 
submarines could be extended into the 2030s, when the future submarines are expected to come online.                
The ‘valley of death’ and potential solutions 
The so-called ‘valley of death’ refers to an expected gap in Australian naval shipbuilding, where there will be no 
major projects from the end of AWD construction to the commencement of the Future Frigates and Future 
Submarine projects. There have been various views on how to overcome this situation. For example, the CEO of 
the AWD Alliance has advocated for the building of a fourth AWD, while the consulting firm ACIL Allen provided 
its own analysis to the Australian Industry Group in December 2013. The Australian Strategic Policy Institute 
(ASPI) Cost of Defence report contains an entire chapter on the Australian defence industry and more recently in 
late June the Productivity Commission issued a report on Trade and assistance, which made considerable 
reference to naval shipbuilding.  
 
Stated positions of Australia’s political parties and independents  
The Coalition Government 
The Defence Minister, David Johnston, has made several key statements regarding the naval shipbuilding 
industry since the 2013 election. Most recently, on 29 July 2014, Senator Johnston addressed the Defence + 
Industry Conference in Adelaide, stating that his priorities were ‘getting the AWD program back on track’ and 
ensuring ‘that everything is in place to ensure a continued naval shipbuilding industry is in Australia should 
industry demonstrate it can meet an acceptable benchmark for productivity and cost’.   
Other notable remarks include a doorstop interview at the Defence Science and Technology Organisation at 
Edinburgh, South Australia on 4 July 2014 and a media release from 6 June 2014 titled ‘Boosting Australia’s 
maritime capabilities’. This entailed plans to deliver new supply ships, patrol boats and bring forward work on 
the Future Frigates. Additionally, as part of its preparations for the new Defence White Paper, the Government 
has released a Defence Issues Paper, which indicates that ‘the Government wants to see shipbuilding continue in 
Australia, but not at any cost’. 
The Labor Party Opposition 
Since the 2013 election, the Australian Labor Party (ALP) has continued to advocate its plan of bridging the 
‘valley of death’ by bringing forward the construction of new supply ships and patrol boats in Australia’s 
shipyards. Additionally, the Shadow Minister for Defence, Stephen Conroy, has questioned the Government’s 
decision to not more fully support the shipbuilding industry, having already paid ‘the premium’ to initially 
establish the skills and infrastructure required. 
Other political parties and independents 
Clive Palmer, leader of the Palmer United Party, advocated in early July 2014 that Australia should investigate 
acquiring nuclear powered Virginia Class submarines from the United States, noting the benefits would include 
lower costs and better force integration/protection. Previously, Mr Palmer also suggested that these submarines 
could either be bought ‘off-the-shelf’ or built in Adelaide, with new infrastructure developed in northern 
Australia to provide servicing support to the fleet. 
Alternatively, Family First Senator Bob Day has stated that Australia should consider partnering with the United 
Kingdom in building nuclear powered submarines in the UK, ‘with the inclusion of South Australian labour’. 
Senator Day also cited ‘informed defence opinion’ which supported a minimum submarine fleet of three nuclear 
powered and six diesel-electric submarines.       
According to the Liberal Democratic Party’s (LDP) stated Defence policy, the LDP ‘does not support artificial 
maintenance of a domestic defence industry’, and furthermore would support selling off most of the Navy’s 
surface fleet. This would significantly impact the production of many proposed naval acquisitions.  
Independent Senator Nick Xenophon has stated his strong support for maintaining the Australian naval 
shipbuilding industry and has specifically criticised the Government’s decision to acquire new naval supply ships 
from overseas without allowing Australian manufacturers to bid for the work.    
  
 
Australian naval shipbuilding since the 2013 election: a quick guide 3 
Parliamentary debates   
Within the parliament there have been numerous recent debates on naval shipbuilding: 
• On 23 June 2014, Melissa Parke brought a motion of Private Members’ Business regarding Australia’s 
shipbuilding industry. Other speakers on the motion were Dan Tehan, Tony Zappia, Ewen Jones, Tim Watts, 
Teresa Gambaro, Gai Brodtmann and Andrew Nikolic.         
• On 17 June 2014, there was a Senate Matters of Urgency debate regarding Australia’s shipbuilding industry. 
Speakers were Stephen Conroy, Simon Birmingham, Nick Xenophon, Alex Gallacher, David Fawcett, John 
Madigan, Kim Carr and Ian Macdonald. 
• On 17 March 2014, Patrick Conroy brought a motion of Private Members’ Business regarding Australia’s naval 
shipbuilding industry. Other speakers on the motion were Dennis Jensen, Mark Butler, Matt Williams, Tim 
Watts and David Coleman. 
• On 6 March 2014 Don Farrell brought a motion in the Senate regarding Australia’s shipbuilding industry. 
Other speakers on the motion were David Fawcett, Alex Gallacher, Ian Macdonald, Doug Cameron and Sean 
Edwards. 
 
The future for naval shipbuilding 
The 2013 Defence White Paper (DWP) contained proposals for Australia to acquire a range of new naval vessels, 
including Future Submarines, Offshore Combatant Vessels, new supply ships, Future Frigates and Pacific Patrol 
Boats. The latter three vessel types were specifically addressed by the Defence Minister on 6 June 2014. The 
2015 Defence White Paper is also expected to provide greater clarity in terms of future naval capabilities. 
Future Submarines 
As part of the 2013–14 budget decisions, the previous Labor Government determined that it would suspend 
investigating military-off-the-shelf options for the proposed 12 new submarines, and instead focus on 
progressing either ‘evolved Collins’ or completely new design options. While in Opposition, the current Defence 
Minister also declared that ‘I want to confirm that the 12 submarines as set out in the 2009 Defence White 
Paper … are what the Coalition accepts and will deliver. We will deliver those submarines from right here at ASC 
in South Australia’. 
In early April 2014, the Defence Minister addressed ASPI’s ‘The Submarine Choice’ conference, where he 
reaffirmed both the Prime Minister’s and his own commitment that ‘work in Australia on the replacement of the 
current submarine fleet will be centred around the South Australian shipyards’. However, the recent Defence 
Issues Paper 2014 notes the ‘significant debate emerging about the future submarine and whether it should be 
built in Australia. The debate must consider the cost, risk and schedule as well as the benefits of the different 
options’. In this context, the Defence Minister further noted in late July 2014 that upon taking Government, the 
Coalition ‘had to reassess the way forward’ regarding the Future Submarines and accordingly ‘there is literally 
years of work-up in getting to the point where we make a decision’. 
However, the Abbott Government has already decided to reject the idea of replacing the current Collins Class 
submarines with nuclear powered submarines. In justifying this position, the Defence Minister contended that 
Australia has neither the infrastructure, training or expertise to operate such vessels and that to acquire such 
platforms would be cost prohibitive. Accordingly, in mid-June 2014, the Defence Minister stated that Australia 
was ‘interested in submarine technology in the diesel-electric area across a range of countries—France; 
Germany; Japan; we also get assistance from the United Kingdom and the United States’. With the visit to 
Australia in July 2014 by the Japanese Prime Minister, Shinzo Abe, speculation regarding submarine cooperation 
between the two countries intensified. For example, it was suggested just prior to Prime Minister Abe’s visit that 
Australia might engage in joint construction of Australia’s Future Submarines with Japan, while the Foreign 
Minister Julie Bishop noted in the same report that ‘having the Japanese so prepared to discuss not only their 
technology but even the prospect of purchasing even an entire submarine brings a different flavour to the 
discussions’.   
Offshore Combatant Vessels     
The 2012 Defence Capability Plan indicated the potential for Australia to rationalise its patrol boat, mine 
countermeasures, hydrographic and oceanographic capabilities into a ‘single modular multi-role class or family 
of around 20 Offshore Combatant Vessels (OCV)’, with initial operational capability scheduled to occur at the 
  
 
Australian naval shipbuilding since the 2013 election: a quick guide 4 
end of the decade. However, the 2013 Defence White Paper was non-committal regarding the program, 
indicating that the OCV was merely a ‘possible longer-term capability outcome’. 
Less than a month following the 2013 election, the Defence Minister supported consideration of the Littoral 
Combat Ship (LCS) that West Australian company Austal were delivering to the US Navy as an OCV option. Such 
vessels are reportedly a strategic priority, given the need to protect Australia’s naval sea lanes in the country’s 
northern and western approaches. A detailed US Congressional Research Service paper on the LCS program was 
published in mid-July 2014, but, to date, no decision has been made by the Abbott Government.   
New supply ships 
On 6 June 2014 the Government announced a limited tender process between Navantia (Spain) and Daewoo 
Shipbuilding and Marine Engineering (South Korea) to deliver two replacement naval supply ships. Senator 
Johnston affirmed that ‘competition between these two experienced shipbuilders is the best way to ensure 
delivery of capable, cost effective vessels in the time frame required’. Recent analysis by ASPI’s Mark Thomson 
indicates that Australia would likely save hundreds of millions of dollars in an offshore acquisition from either of 
the selected suppliers. However, the Government’s decision to exclude Australian shipbuilders from the tender 
process has attracted criticism from both the Opposition and Nick Xenophon, who claim that this project could 
have helped bridge the ‘valley of death’ for the naval shipbuilding industry.  
Future Frigates 
The Government has also committed over $78 million to preliminary engineering and design work to ascertain 
whether continued production of the current AWD hull would be appropriate to develop the Future Frigate. 
According to the Future Submarine Industry Skills Plan released in 2013, work on the Future Frigates is due to 
commence around 2021, with delivery of the first ship in 2026. Although bringing forward the construction of 
Future Frigates would potentially allow for a ‘rolling build’ and a degree of continuity within the shipbuilding 
industry, ASPI’s Mark Thomson and Andrew Davies have cautioned against this for economic and capability 
reasons, respectively. Tom Muir’s analysis of the Future Frigate also elaborates on possible design and capability 
options.  
Pacific Patrol Boats 
In order to replace the 22 patrol boats currently involved in the Pacific Patrol Boat program, the Australian 
Government has decided to allocate $594 million to facilitate construction of more than 20 new vessels. 
Accordingly, there will be an open tender for the construction, with an option for ongoing sustainment and crew 
training.     
More reviews 
The Senate Economics References Committee is currently undertaking an inquiry into Australia’s naval 
shipbuilding industry, incorporating analysis of the tender process for the Navy’s new supply ships (scheduled to 
report in late August 2014) while the broader inquiry reporting date is 1 July 2015. The last Senate inquiry 
specific to naval shipbuilding delivered its report in December 2006. 
The Government is also conducting key reviews across the Defence portfolio, with likely implications for the 
naval shipbuilding industry. For example, the First Principles Review will report in early 2015 with a focus on 
‘achieving more streamlined decisions on defence acquisitions and sustainment programs’. 
A new DWP will also be released in 2015, informed by the First Principles Review and a new Force Structure 
Review, according to the Department of Defence’s 2015 Defence White Paper website. The 2015 DWP should 
provide new clarity regarding future shipbuilding projects, including the Future Submarines.   
 
 
© Commonwealth of Australia 
 
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